How Will You Spend Your $300,000? Buy Now… Pay Later… Too Good To be True?

Sure You Can Buy It. Spend Whatever You Want.

A man is sitting in the locker room with a bunch of his club friends, when suddenly he picks up the ringing phone and puts it on speaker, “Hi honey, it’s me. I’m shopping on Broadway, and I found a cute leather coat that I love. It’s on sale for only $2,000.00. What do you think?” Without hesitation the man responds, “you know what, I’m feeling very generous today, sure, why not!”

The woman, seeing this opportunity says, “well, I happened to pass by the Lexus dealership and the new model that I had my eye on is out – what do you think?” The man replied, “how much?!” She said, “ummm, it’s $90,000, but -” He abruptly cut her off and said, “Wow, that is a lot, but if we are going to do it, I want all the options – whatever the cost!”

Thinking that her husband must of just gotten a big raise that she wasn’t aware of, the woman decided to press her luck. “Well honey, if today is in fact my lucky day, do you remember that house that I loved on Main Street – well, its back on the market and they increased the price to $1.8 million.” The man said, “if you really love it, in this market, I think we should go in aggressively at $1.99 million, with a quick close.”

She could barely contain herself – “I love you so much, I will see you later, honey!” The man hangs up the phone, picks it up while looking around and asks, “does anyone know whose phone this is?!”

In a world where the anecdote of a man authorizing extravagant purchases on a stranger’s phone might elicit a chuckle, the underlying truth it mirrors about our society’s spending habits is far from amusing. My fictional story unfolds against a backdrop of an economy that, on the surface, appears to be thriving. Yet, beneath this facade, a more troubling reality persists: most households are struggling financially, and an alarming number are living largely on credit.

The current landscape of consumer debt is a testament to this grim reality, with outstanding balances soaring to historical heights, exceeding $1.5 trillion. This staggering figure underscores a culture of spending beyond means, where the allure of immediate gratification often eclipses the prudence of financial sustainability.

The path to financial stability is not, however, out of reach. With discipline, planning, and the right guidance, individuals can navigate their way towards a more secure financial future. Here are a few impactful tips to help resist the temptation of overspending:

Create and Stick to a Budget: The first step towards financial responsibility is understanding where your money is going. By setting a realistic budget that accounts for all expenses, savings, and debt repayments, you can gain control over your finances and make informed decisions about what you can truly afford.

Distinguish Between Wants and Needs: Before making a purchase, ask yourself whether it is a need (essential for living) or a want (a luxury or non-essential item). Prioritizing needs over wants can help prevent unnecessary spending.

Save for Big Purchases: Instead of putting large expenses on credit, save up for them over time. This approach not only reduces reliance on credit but also instills a sense of achievement once the purchase is made.

Avoid Impulse Buys: Give yourself a cooling-off period before making significant purchases. This time allows you to consider the real value and necessity of the item, potentially saving you from regrettable financial decisions.

In an economy that often masks the financial distress of many, it’s crucial to remember that appearances can be deceiving. Don’t be afraid to ask expert advice from people tapped into the market. It’s not only for substantial commitments like home purchases or debt financing. You would be surprised at how working with experienced financial advisors can provide invaluable market insights and custom tailored strategies to your financial situation for the most basic and overlooked expenses you have.

Shmuel Shayowitz (NMLS#19871) is President and Chief Lending Officer at Approved Funding, a privately held local mortgage banker and direct lender. Approved Funding is a mortgage company offering competitive interest rates as well as specialty niche programs on all types of Residential and Commercial properties. Shmuel has over 20 years of industry experience, including licenses and certifications as a certified mortgage underwriter, residential review appraiser, licensed real estate agent, and direct FHA specialized underwriter. He can be reached via email at [email protected].