Trend: Buying the latest electronic devices.
With the popularity of electronics such as smart phones, tablets and video game consoles on the rise, people will wait for hours–even days–to pay hundreds of dollars for electronic gadgets. Why? We know these gadgets will be old news tomorrow.
I recently read about an extreme case: a teenager in China sold his kidney to buy the latest iPad. That was too a high price to pay.
To avoid buying on credit, I saved for months to buy an iPad. I bought it in early 2011. Come mid-April, I found out the “new” model was out. Now my old one is outdated and the new one is $100 cheaper than mine. At least I still enjoy my iPad anyway and I use it on a regular basis. I even feel like I can’t live without it.
Trend: Relying On Credit To Buy In These Tough Economic Times
Consumers would be surprised if they reflected on how much they actually pay for items when buying them on credit. If I were to buy an item for $850 with an interest rate of 25.24% (the lowest interest rate credit card offered by a popular electronics store), and made a payment of $20 per month, it would take me 99 months to pay it off, at a total cost of $1,980. In this example, by charging your purchase, you’ll end up paying more than twice the original purchase price and create more credit card debt.
(Past) Trend: Refinancing To Get Money To Pay Bills
During the time of easy credit, many people used credit cards to supplement their income. Consumers charged everything from gas, lunches, dinners and computers to refrigerators. If consumers maxed out the credit cards, they could refinance their homes to pay them off. When consumers could no longer afford their mortgages, they lost their homes. Ironically, many consumers lost their home over things they charged on their credit cards years ago, computers, video games, food, clothing, gas and even coffee.
Now that consumers don’t have the luxury of refinancing, many turn to bankruptcy. In fact, year over year bankruptcies are on the rise at an average of 20%.
Many consumers have, indeed, sacrificed their homes, their marriages and event their health to buy material things they could not afford. Think before charging the latest gadget. And, consider Benjamin Franklin’s advice, “Contentment makes a poor man rich: discontent makes a rich man poor.”