After the events of the past year, who hasn’t heard about bubbles? The real estate bubble of 2008 popped with a bang that we are continuing to suffer from. So loud was its burst that the oil bubble is now a distant memory for most. How do these things happen?
Countless studies have been completed and many more continue trying to understand what mechanisms brought us to this point. No doubt there is enough blame to go around; government policy promoting home ownership, federal regulations or lack thereof, the greedy Wall Street bankers that repackaged home loans into complex derivatives or even you and I, the people that were willing to finance more than we could afford on houses that were really worth less than we paid.
There will never be agreement on what the primary triggers were, but does it really matter? It happened, and it will happen again. Whatever the trigger, bubbles are created because of our tendency to herd.
We see it in nature all the time, “birds of a feather flock together”. It’s just another way of saying “keeping up with the Jones.” When we see everyone else buying bigger and nicer homes, we are compelled as well. When others are getting into oil, we follow. When everyone else goes shopping, so do we.
The end of this week marks the beginning of the Holiday shopping season, Black Friday. Retailers will be pulling out all the stops to separate you from as much money as they can. They will be opening earlier and closing later. Their best salespeople will be on hand while temporary support staff will be hustling in the background. Joyous Christmas music will be playing overhead, the decorations will be hung and delicious aromas will be wafting in the air.
As you tour the stores in search of presents, every opportunity will be taken to entice you to buy just one more thing. Don’t be herded!
If you must go…
Plan ahead, make a list and check it twice. For each person on your list try to determine in advance what you will buy them for no other reason than to limit your time in the stores. If you absolutely have no idea what to buy those on your list, determine in advance how much you will spend on them and then stay within that budget.
Leave your credit cards at home. While the debate continues about whether or not a person will spend more when they use a credit card we have to admit that with cash, once it’s gone, it’s gone! It’s the only guaranteed method to make sure you don’t spend more than you want to.
Additionally when using credit, unless you are going to pay it off at the end of the month, added interest will guarantee that you will pay more in the long run.
Better yet, Just Don’t Go!
With technology available today and a mailbox full of Holiday catalogs, going shopping is no longer a necessity. Shopping on-line or over the phone you will severely reduce your exposure to the urge of impulsive buying.
For everything you do find on-line and with every retailer, make a quick search in Google for any discount codes you can take advantage of and frequent sites that offer free shipping like Amazon or search for coupons that provide free shipping at sites like FreeShipping.org.
“A fool may earn money, but it takes a wise man to keep it.” – Scottish Proverb