How do the items we buy trap us? Things can trap us psychologically, physically and financially. In this article I take a deeper dive into each of those perspectives. And share a couple mental hacks to change the buying decision process.
Physically
You may be a hoarder, know a hoarder or have seen one on TV. This sad situation that affects many people around the world. And is likely more common in wealthier countries. I found several articles citing the average US home has 300,000 items. The source is a small survey of homes in Los Angeles, so I’m not sure of the accuracy. Regardless of the specific number, our volume of stuff per capita has increased for a couple reasons:
- Our homes are bigger. Medium home size has increased 13% in the last 20 years:
- Our household size has decreased by 1.6% during that time frame:
Zooming out, this report goes back to 1960 and shows the average household size in 1960 was 3.33. A 24% reduction to today.
So, we have larger homes with fewer people living in them. This encourages people to fill their homes with more stuff. And less people are using that stuff.
Psychologically
Buying items costs mental energy. Setting aside the mental energy involved in the initial decision. Consider the care and upkeep of the item. Especially for a bigger ticket items like vehicles or furniture. We’ve all observed or been part of the scene. Kid spills something on the new couch. Owner loses it. Going on and on about taking care of things and how it’s now ruined. Reality is, you can clean it up or flip the cushions over. Likely you’re not thinking about the simple solution or what you’re saying to the youngster. I’m guilty as charged here for losing my cool over stuff at times. But what is more important, things or relationships? And if the stuff is so expensive that it can ruin an afternoon or weekend if damaged, ask yourself, do I own this or does it own me?
Financially
If overspending on items prevents you from investing enough to meet your goals, it’s time to reevaluate priorities. The Money Guy show relates this to vehicles, “if your car payments exceed your monthly investment amount, then you’re doing something wrong.” It’s easy to trap yourself into payments that extinguish your flexibility. Education decisions trap us into jobs to afford student loan payments. Homes and other big-ticket items and their monthly payments keep us on debt treadmills. When trapped on our treadmills paying for past decisions, it is time to reevaluate.
What to Do?
When buying something we weigh the cost against the perceived value it provides and make a decision. I ran across a new paradigm for purchase decisions and it’s changed how I evaluate them.
Mental Hack #1: Life Energy Calculator (your real hourly wage)
We know our gross pay and our net pay. And those on hourly wages know their hourly rate. For those on salary your true hourly rate depends on how many hours your work in a given week. Further, there are many other hidden factors that we should account for, but don’t. Sneaky costs.
- income taxes (state and federal)
- daily getting ready
- work attire
- commuting (gas, tolls, vehicle wear and tear)
- extras (such as lunches or coffee with coworkers)
- recovery cost (expenses that we incur to wind down for the day and recover enough to work the next). This could be alcohol, entertainment, shopping. Anything that you wouldn’t otherwise spend on, if you weren’t needing to de-stress.
And all the time associated with these activities adds to the cost. Getting ready time, commuting time, networking time and recovery time.
Stop reading this article right now and get your real hourly wage. Provided to you by the creator of Your Money or Your Life. The actual number may shock you. It was eye-opening for me.
Now apply it. With this number in mind, use it in your spending decisions. Now you know how much the Amazon item, splurge dinner out or big vacation costs you in time. In fact, if the vacation is to de-stress from work you should go back to the calculator and add it into recovery cost 😊. This time cost is a powerful evaluation tool for big decisions. But it’s as powerful for the smaller ones we make daily. Or are we making those smaller decisions? Do we consider the day-to-day purchases or make them out of habit? I challenge you to consider how much these smaller purchases cost you in time.
Mental Hack #2: Replace Your Shopping thrill with Investing thrill
There are many studies on the dopamine hit of shopping for and buying the next thing. Often, the newness wears out after a few weeks and we’re on to the next item. It’s the thrill of the hunt that excites. Consider rewiring your brain. Instead of a rush from each new item, get excited about brokerage account additions. If automated investing detracts from your excitement, automate the contribution, then login and make the specific trade. A word of caution, I don’t do this for retirement contributions. Those go straight into investments. This is a simple paradigm shift, but it may help you keep investing instead of habitual spending on items.
To conclude, time is a precious resource. It’s finite for us all. Don’t let things trap you and steal your time. Precious time that you can spend with family, friends or on interests that excite you. Shift your paradigm. I hope these mental hacks help. Share below any others that have worked for you.