Gena Bigler: Worth it? Deserve it? Can’t afford it? Why do smart people overspend

Sometimes, smart people do stupid things. There is a quote from Fight Club, “We buy things we don’t need with money we don’t have to impress people we don’t like.” Unfortunately that seems to be true for a lot of overspending Americans.

The average American household carries almost $16,000 in debt just on credit cards. On top of that most have mortgages, car loans and college debt. A recent study showed college debt averaging a staggering $40,000. Our young adults are literally starting out with less than nothing.

Many are competing with more experienced job seekers for entry level positions. For a part-time administrative position, I received resumes from two law school graduates. When meeting applicants, one young college graduate kept saying, “I have my bachelor’s degree.” He couldn’t fathom that wasn’t enough to get the job. In years past, it would have been enough. But as unemployment climbs, fresh graduates are competing with seasoned workers and not coming out on top.

With all of these unavoidable problems, making simple financial mistakes can have a greater impact than they might have a few years ago. Even filing for bankruptcy is more expensive and difficult than it was a few years ago. With an estimated 84% of college graduates returning to live with their parents at some point, every dollar really does count for most families.

Growing up in a credit nation, most Americans don’t know what they can’t afford. Recently, I reviewed a young man’s budget with him. He was underemployed, living rent free at home and still struggling to pay his bills. After hearing he couldn’t afford to keep the cable and high speed internet package he had, he was flabbergasted. He couldn’t grasp daily life without those luxuries. He considered those a basic need instead of an extravagance outside of his earning capacity.

I’m often surprised at what some people consider necessities. We all have our weaknesses when it comes to spending. Most of us know when we are breeching our budgets. Sometimes though, we all do stupid things. Once while working fulltime and going to college, my roommate and I forgot to pay our electric bill and came home to a dark house. Our miscommunication was expensive; we had to pay the outstanding bill and a reconnect fee. It was a stupid mistake. We were lucky that we could afford the added fees.

It’s amazing how much credit is available in the US. You can get cash today at a check cashing store; they never mention how much you pay for the convenience in the plentiful ads. You can buy either a sofa, a washing machine or even a lamp for $20 a week; never mind that in the end you will have paid several times its worth. Nearly every department store has its own credit card with ‘discounts’ for using their card. You can buy nearly anything on credit in America. But should you? Are you buying because you actually need it or because you think you are supposed to have it? Is this a Fight Club purchase?

The tighter your budget, the more vigilant you have to be. We often have a sense of entitlement in our society. We are bombarded with commercials and advertisements that tell us that we are “worth it” and that we “deserve it.” We may be worth it, we may deserve it, but if we can’t afford, we can’t have it. I’m not sure if the young man I spoke to canceled his cable. Sometimes even smart people do stupid things. Moving beyond all those messages of entitlement to reality can be a difficult path, but in the end it can be the difference between bankruptcy and financial stability.

Gena Bigler is passionate about public service and credits her time serving nonprofits in AmeriCorps and Volunteers in Service to America (V.I.S.T.A.) with teaching her extreme budgeting and bargain shopping. Gena is now CFO of a Kentucky business and serves on the board of the Kentucky RiverKeeper. Gena would be happy to hear from you at lgbigler@gmail.com.