You were among the first batch who rushed into the store to grab Black Friday deals. You overcame significant odds to get your desires: A big-screen TV, 50% off; drill, 40% off; bicycle 50% off; camping gear 70% off. You estimate these deals saved you around $700, with the average deal being 50% off.
It’s time to celebrate! Call your friends to brag-just a bit-about your breathtaking deals. Besides, you finished your Christmas shopping, to boot. You can’t believe these colossal bargains which have allowed you to complete your Christmas shopping early for the first time.
Forgive me, truly, I do not want to rain on your parade, but I have four questions?
First, where are the $700 you saved? The ‘original’ prices of items bought amounted to $1,400. Your amazing deals resulted in 50% discount; therefore, you spent $700. Please explain how you saved $700? Listed price of items are irrelevant; the reality is you spent $700. If the items were $10,000, and you paid $700, you saved zero but spent $700.
I hear this response to my question often: “Well, prices totaled $1,400, and I spent only $700, and so I saved $700.” Really? How can you save when you spent $700? Where did you put those Black Friday savings through the years? Where are they now? Did the stores give you these so-called savings? Are they in your savings account?
Second, how did you pay for your $700 buys? Did you use your credit card? Probably, you did. Instead of saving $700, you spent $700. Even so, that’s just the start of your spending. Likely, you will carry a balance on your card. Like a snowball rolling down a hill, this balance will grow, and grow, and grow, and stunt your finances for years.
Third, is any consumer item worth a “debt sentence” that will impair your future? Wake up; you can’t save when you spend. It is insane to stand in line, rush in a store, buy any item on credit and not pay the full balance monthly. When the negative effects start, you will tell folks you can’t pay your bills. Naturally, this insane act will guarantee you won’t pay your bills. Among those bills are these unneeded buys you call deals.
Fourth, early January when you must adjust your lifestyle because of your irrational spending, whom will you blame? Merchants? Banks? Government? The “one-percent”? Your poor judgement?
Please remember, a deal is a debt enhancing act of lunacy that is guaranteed to leave you depressed, empty, anxious, and lonely. Still, you will have these deal items you waited in line to buy. How many prior Black Friday deals were in your last garage sale? Think deeply about this.
Budgeting to buy needed items on sale for cash or on credit without carrying a balance is smart. Even so, when you buy these items, you save nothing. You might pay a lower price than you expect, but that does not save you a dime. Instead, you spend less than budget, which is not a saving.
Plan to change your vocabulary in the new year so merchants do not trap you with the ridiculous idea of saving when you spend. Perhaps this slogan will trap you this Black Friday: “The more you spend the more you save.”
© Copyright 2014, Michel A. Bell
Michel A. Bell is an author of five books, speaker, founder and president of Managing God’s Money, and adjunct professor of business administration at Briercrest College and Seminary. For information on living a debt free lifestyle, visit http://www.managinggodsmoney.com/.
*First published on Managing God's Money blog on November 28th, 2012.