Democratization of Luxury
I had the opportunity to hear Tom Sine talking about the democratization of luxury. This is a trend over the past few decades for the normalization of luxury items. With a little push from the advertising world of pop culture came the idea that everyone deserves at least a little bit of the high life. You need it. Not only do you need it, but you have a right to it. You deserve it. Even though you make $30,000/yr you have a right to buy a $25,000 sport car. This is America and this is how we live.I have found myself getting caught up in this thinking. I started thinking about the decision that Dawn and I made last year to buy her car. We had enough money from insurance on her old car to buy something nice and reliable, just not very cool. So we made the decision to buy a cooler car for more and take out a loan for part of it. Now we make minimum payments every month.
Some people have the money and that’s awesome. But that’s not the majority of Americans. The majority are in this middle class. And though we may not be rich, we deserve to live like it!
Naturally there are some inevitable outcomes to this lifestyle. Like credit! Eventually most things get paid for…but along the road are many payments. It would take too long to save up those payments and buy it in cash down the road. By that time you may not even want it anymore because it would be out of style. The freedom to buy now and pay eventually (and after a lot of interest) has made slaves of many. Many people are only paying for the interest and not even getting out of dept. That’s the case in our mortgage. Interest only. I know it’s the worst kind of loan to get but that was the only way we could get into the housing market here.
I’m going to write a couple more times on the subject, but here’s a question to think about until then. How has credit affected your life? And what luxury items do you need? Or maybe you don’t think it is a luxury item, it’s just something everyone has, but almost everyone takes out a loan to get. (Motorcycles don’t fall into that category, they are a necessity to life.)
posted by Tim Oas @ 9:47 AM
2 Comments:
Hey Tim, you knew I'd write something on this hot topic. As a coordinator for Financial Peace University at our church, I am meeting people who are saddled with huge amounts of debt. Most didn't get this debt all at once, it was lots of poorly thought out purchases on credit cards, car loans, etc. over many months or years. People today don't know how to live on what they make, let alone on less than what they make. The good news is that there are resources available, like FPU, for those who want to get out of debt and don't want to work for Wal-Mart when they are 75. But, the lack of personal responsibility and feelings of entitlement suggest that credit card companies will have plenty of business for a long time. As Dave Ramsey says, "Act Your Wage!"
Bob,
I'm excited to take your class in the fall. Could you borrow me a few buck to get enrolled? Also, what does the class say about loaning $ to friends and family?
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