Are We Consuming Ourselves Into the Poor House?

(Doximity recently published this article of mine on the effects of consumerism. It originally appeared here, but some of you are not on Doximity so, with Doximity’s permission, I have republished it on my site for your reading pleasure)

School has gotten back into full swing and thus we begin another cycle. Will this cycle be better than the last? Every year we find ourselves in this same spot. Summer’s over, big vacations are in the bag, back to school shopping is complete and we start recovering from our summer spending.

But just ahead is another round of spending as Christmas approaches. We often haven’t yet recovered from the summer splurges before it’s time to start Christmas shopping. Then we begin to say things like:

“This was the year I promised myself to not borrow on my credit card for Christmas.”

“Our daughter grew out of everything this year and needed an entire new wardrobe for school. I had to put it on the credit card.”

“We couldn’t pass up the family trip to London since we don’t know how much longer the grandparents will be around for our kids.”

“I want the kids to have everything they didn’t get while I was in training.”

On and on we go, and the cycle never seems to get better. We just keep spending and consuming with no end in sight. Each year we say we will tackle the debt and each year something ‘important’ comes up and we postpone paying down the debt until next year. When will the procrastination end?

For most Americans, we are bombarded with advertisements encouraging us to spend our hard earned cash on things that yesterday we didn’t even know we needed. I saw an ad just recently for a new model SUV that had some bells and whistles that my 2004 model is lacking. Before the ad, I didn’t have any interest in buying a new SUV, but now…

Consumption is killing us with the death of a thousand cuts. It starts in college when we start borrowing to attain an education. We emerge from our training with a huge pile of debt. When we finally begin our career we are so far behind the eight ball that we don’t see a light at the end of the tunnel. 

In 2018, physicians graduated with an average of about $200,000 of student debt, according to The Association of American Medical Colleges. At a 6% interest rate, that averages $12,000 a year in interest payments. We have to earn about $20,000 a year so that after taxes we will have the money to pay the interest. That is a lot of patients to see just to cover the interest on our student debt, not counting all our other debt.

We start off our careers deep in debt and upon attaining our first attending job we begin to buy all those things we have been doing without during our training. After all, now that we have graduated into our attending salary, we should look and spend like our position warrants, right? 

One thing leads to another and our debt begins growing instead of shrinking. Didn’t we go into this education thing thinking that after we started work, we could quickly pay back our student loans with our new high income? Then comes the new house we have always wanted. The cars that limped us through training are on their last leg so we need new ones. But did it need to be a foreign luxury car? The kids need school clothes. We haven’t had a nice vacation in a long time. Suddenly, we are up to our eyeballs in debt.

I left my training with only a few thousand dollars of debt. But after three years of making “the big bucks”, we had accumulated $500,000 of debt. When we realized what was taking place, we decided to end our spending spree and get out of debt. It took us six years to become debt free, but we haven’t regretted the decision. I detailed how we dug out of debt in my book The Doctors Guide to Eliminating Debt.

There is a better way. Can we vacation closer to home this year? Can we get by with a $25,000 car instead of a $65,000 car? Or a used instead of a new car? Would a $350,000 house meet our needs just as well as the $800,000 house the realtor is encouraging us to buy? 

It is not things that matter most in our lives, but we often live our lives like these things are extremely important.  We need to bring our consumption habits back in line with our income. Bruce Lee once said:

The more we value things,

The less we value ourselves.

Now is the season to improve our financial position. Stop being hyper consumers, stop borrowing money to buy more stuff and start living within our means. Could this be the year we turn our financial future around? Can we learn to be content with what we have? Can our debt begin to shrink and our savings begin to grow? Can we begin to feel like we will retire someday with enough money saved to live the life we want? 

I propose we can. This year take close stock in how you spend your hard earned cash. It truly is hard earned. Make a plan to spend it in ways that will bring you and your family the most happiness and yet stay within your means. It’s not that hard to do if you just pay attention to what you spend.

Paying attention is the biggest struggle we face in this high consumption environment we live in. With only a little attention to our spending, we can make our money do what we truly want, without giving a large portion of next year’s earning to the bank in the form of interest. Take back control of your financial life. Stop falling victim to consumerism. You can do this.

Here are three steps that help curb consumerism to get you started:

1: Stop watching TV. Not only are the commercials getting us to spend more money, but the new kitchen remodel we just saw on HGTV makes our own kitchen look like it needs an update. (We stopped watching live TV. We record movies we want to watch and fast forward through the commercials)

2: Use cash instead of credit cards. This great study from MIT showed that people were willing to pay up to twice as much for tickets if they used a credit card than those who were using cash. Since paying with cash “hurts” more, we tend to spend less. (I use a credit card for frequent flyer miles but don’t use it for small purchases. I carry cash for that.)

3: Don’t use shopping as a form of entertainment.  Many people treat shopping like it is a sport or a recreational activity. Go shopping when you have something particular you need to buy. If you are not in the market for a new motorhome, don’t walk onto the RV lot “just to look around.” (I made that mistake once and drove off with my first motorhome!)

There are many other things one can do to curb consumerism. Find the ones that work for you and take back control of your finances.