You’re Making Yourself Broke and You Don’t Even Know It

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Having cool stuff is fun, and sometimes even necessary, but when does your stuff start to get in the way of living the life you truly want? According to Joshua Becker, the amount of stuff we own in the United States is getting out of control. And I think he’s absolutely right based on the facts presented. For instance…

  1. There are 300,000 items in the average American home
  2. Of the people that own two car garages, 25% of them can’t even fit a car inside
  3. The United States has 50,000+ storage facilities, which is 5x more than the number of Starbucks
  4. The average child own 238 toys, but only plays with 12 daily
  5. Nearly half of American households don’t save any money, but they have more television sets than people

You’re Making Yourself Broke

Isn’t it absolutely insane? The average person owns more stuff than they know what to do with, and little do they know that it’s actually making them more broke in the process!

Based on my experiences, there are many different types of people in this world that have wants. Some people have absolutely nothing, but they want a brand new car, while there are others that own $200,000 sports cars that would really like a private jet.

Related: Stop Your Wanting. Be Grateful

Our wanting continuously takes us to new levels, which is great for the economy known as capitalism, but not so wonderful for an individual’s happiness…

Buying Stuff When You Shouldn’t

making yourself broke

Your income is low, your credit cards are maxed out, and you’re thinking that you have no other options. You really need a new washer and dryer (need…in your own mind you need… If you were a normal person you’d just go find a laundromat, but that’s probably a rant for another article…), and you have absolutely no money to pay for them.

You’re smart enough to know that a payday loan is a terrible idea, so you decide to see what options the retail stores have for you.

Somehow it’s your lucky day (according to the salesperson that’s about to slay you). There is a brand new washer and dryer for sale for just $19.99 a week! You’re able to get approved and you proudly take home your new machines.

So…when will you actually pay off these machines? And how much will you end up paying for them in the end? These are questions that most people don’t ask….and it’s making them extremely broke. Even more broke than they were before!

According to the ad, the washer and dryer will be yours in just 25 short months! …Sheesh…over 2 years? How much does this total to? Drum roll…….. $2,098.95, which is over $1,100 more than the regular price of the washer and dryer.

Did you know I just bought a washer and dryer that work perfectly fine? I bought it for our new rental house…for a total of $80. Instead of making 105 payments on a brand new washer and dryer that are making you broke, you could have scrounged up $80 and effectively purchased the same thing.

You Can Afford It, But Should You?

“I’m smarter than my friends because I make a point to pay cash for everything. If I don’t have the cash, I don’t buy it.”

While it is smart to avoid debt, buying everything with cash doesn’t necessarily put you into genius status. The real question is, what are you buying?

  • If you currently own a 1/4 acre of land and you buy a brand new full size lawn tractor with cash, that’s not smart.
  • If it took you 4 years to save up $25,000 and you decide to blow it all on a brand new car that will tank in value, that’s not smart.
  • If you always buy your clothes with cash, but you still end up spending hundreds of dollars every month….that’s not smart either.

Just because you can buy something with cash doesn’t mean you should. So how do you know if a purchase is right for you?

1) Take your time – Emotions can sometimes get the best of us. If you wait a couple of days and are no longer excited about the purchase, then you know that you shouldn’t buy it.

2) Consider the opportunity costs – Think about the other things that you’d like to do with the money. How much would it grow into if it were invested? Many times, if you start thinking about the true opportunity costs of your purchase, you’ll hold off on it.

3) Think of how often you’ll actually use it – Some people go out and buy stuff on a whim and then hardly ever use it. Guys, this might be a tool that you’ll only use once each decade. How about you just rent or borrow it instead? Ladies, this might be a bread maker. Sure it’s fun to use once, but when will you actually pull it out of the cupboard again?

There’s absolutely nothing wrong with building up cash. In fact, it can make life a ton less stressful. Instead of buying the latest model car, it can almost be more satisfying to know that you could survive for many months at a time even after a job loss.

It’s the Same Stuff, And It’s Making Everyone Broke

No matter if you live in a shack in the rough part of town or the executive ranch high up on the hill, we’re all staying broke, and it’s all because of the same stuff. TV’s, cars, gadgets, food – whatever it is, nearly all of us spend everything we have and save nothing. We buy depreciating assets and delay our investments year after year.

You think that making payments is stupid? You’re right. But, owning four different televisions sets is pretty dumb too.

Before you do anything else today, think about how someone that earns $40,000 a year can survive, and can do it quite easily actually. Now think about yourself. How much do you earn? And how little of that do you save each year? Why is it that it costs you so much more to live than someone that earn $40k a year? Basically, it’s due to your wants. You want more, you buy more, and you save little. Nearly everyone in this world is broke, and it’s because we just can’t say no to ourselves.

Are you making yourself broke? 

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Battle of the Mind Money

Derek

AUTHOR Derek

My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.

5 Comments

    • That’s insane. An entire 3-car garage filled with stuff?? Instead of the average 300,000 items, sounds like they have closer to 1 million, and I bet they’re no happier than anyone else.


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