Just because it's on sale...

I saw an article on MSNBC this morning that grabbed my attention. Consumer spending was up in January. Apparently, after six months of sluggish sales, people are spending again. Huh?

With all of the job layoffs, fluctuating gas prices, declining home values, plunging retirement savings.... Consumer spending was UP. Does that makes sense?

The article goes on to explain that consumer spending exceeded analyst's predictions, and that while spending on high cost items (like cars, boats, RVs) were down significantly, spending overall was up and leading the charge was purchases on food and other non-durable items.

Now, I'm no economist and I'm sure there are dimensions to the analysis that I don't fully understand; but to be honest, reading the article gave me a sinking, pit in the stomach feeling. I wonder: Are we so addicted to spending money, that even in the times when we know that we should be spending less, we still can't stop ourselves? And from a personal perspective, am I contributing to this spending obsession by pointing you in the direction of special discounts and promotions that entice you to get more of this unnecessary stuff?

Well, after ruminating on this for a few hours now, I've got to get this off my chest:
JUST BECAUSE SOMETHING IS ON SALE, DOESN'T MEAN YOU SHOULD BUY IT.
Now, wait. Go back and read that again. You've got to be really clear on this one.

Do you understand? Buying something you don't need because it's a good deal (free shipping, a discount, a coupon...) is wasting money. It's only a good deal if you needed to buy it and you find a way to reduce the amount you have to spend.So to reinforce this message, I want to share with you the three simple questions I ask myself before I make a purchase:
Do I want it?
Do I need it?
Can I afford it?

Now, the first question tends to be rather easy to answer since my desire to have something is probably motivated by my wants. But occasionally I realize that I'm interested in a new purchase just because everyone else has one... not because I really want it. So, it's important to do a self check.

The second question requires a lot more honesty and self assessment. Do you NEED it. Often we mix up our wants and our needs, so this can be a lot harder to answer. Can you survive without purchasing something? Do you have an older model that can last a few more years? Do you know someone who can lend it to you instead of purchasing your own? Are there alternatives available that wouldn't cost you anything? Just because it is on sale, doesn't mean that you need it!

Finally the third question - can I AFFORD it? Too often we just say yes and put the charge on a credit card, but don't really know where the money will come to pay it off. I suspect that this is how people get themselves into trouble. The only way to get around this problem is to know that you are earning more than you are spending (or spending less than you are earning).

Do you want it, do you need it, can you afford it? Start the discipline of asking before you hand over the plastic.