Congratulations, everyone! I saw on the news this morning that for the first time since 1991, consumer debt was actually down last month. In this consumption-based economy, that’s quite a milestone. On the one hand, this puts added pressure on those who make their income from the sale of retail goods; but on the other, it seems a testament to the idea that we really can prioritize and cut back when we need to (or we’re forced to).
I imagine that for many people, cutting back on discretionary expenditures and credit card debt was even tougher given the gas prices over the summer (and for those of us who live in the Southeast, a gas shortage that lead to even higher prices last month). Personally, there have been many times this past month that I’ve had to take several deep breaths as I stood in front of the gas pump, willing myself to choose the debit card linked to my bank account instead of the credit card with its outrageous interest rates.
Sometimes credit cards just feel safer; and frankly I think that’s what gets most of us in trouble with them. If our checking account balance is a little low, or we haven’t taken the time to run the budget numbers this month, it’s all to easy to plop down the credit card instead — knowing that we won’t be at risk for overdrawing our account or being unable to make the bills because of this purchase.
This strategy can be both simple and convenient. It can also be dangerous. That little plastic card is a buffer between us and reality. It allows us to make purchases without having to calculate, strictly, whether or not we can afford them. It removes the pressure of forced-choice from our spending habits… instead of having to decide whether I can afford a night out with friends or a new pair of shoes, I simply put both on the card, thinking I’ll sort all that budgeting stuff tomorrow. Besides, I need the new shoes for the night out with friends. Hello?
The problem is, I don’t always sort it out tomorrow. In fact, I don’t always figure it out at the end of the week or even the month. I just keep trucking along, spending as usual, having basically forgotten the shoes and the night out when the next spending opportunity comes around. And the next thing I know, there’s a credit card bill that is bigger than I can pay in a month or two; and once the interest starts compounding on those babies, I could be in this spiral for years.
The issue is, I think, that credit cards separate our behaviors from the consequences. That big fat credit card bill I get at the end of the month might make me feel overwhelmed, frustrated, confused and even depressed; but rarely does it make me think, “I should’ve skipped the shoes and had water at dinner.” Because of the time lapse between the decision and the consequences, the consequences no longer have much meaning; and it becomes harder to shape our own behavior.
Think about it this way: you wouldn’t let your dog pee all over the carpet throughout the month, and then rub his nose all over the house on the 15th of the next month. No, anyone who’s ever owned a dog knows that you basically have to catch them in the act for them to associate the punishment with the crime. [Dogs, by the way, have an attention span of about 1.3 seconds, so if you're punishing Rex for something he did an hour ago, he just thinks you're crazy and temperamental.]
Humans aren’t much better. Without frequent, timely and appropriate checks on our behavior, it’s hard for us to change. That’s why it’s not helpful to dredge up the thing that happened 3 years ago in the argument with your spouse, or to let your frustrations with your child build until you explode like a parenting volcano when the proverbial straw breaks your back. These things might feel gratifying in the moment, just like making a huge credit card payment when your balance is high, but they don’t shape behavior.
It’s a shame that it takes such tough times to force us to look at our spending habits and to be more disciplined. I’m sure most of us who helped contribute to the lower consumer spending numbers were none too happy to do so. That said, maybe we can learn from these hard times by improving our habits and paying attention to the consequences of our choices. That will leave us wiser, more careful and ready for the good times when they return.
