I got to thinking about the nature of a lot of advertising, and about the general fact that so much marketing and advertising seems geared towards trying to get people to spend more money than they can actually afford.

I won't get into needless commentary about the sketchy world of people getting into debt over their head and the general "evils" of debt... instead I want to focus on this issue of buying what you can actually afford.

Business BUILT on Overspending?

More specifically: the other day I ran across a comment somebody had made in response to people and their spending habits in which this commentator asserted that most companies would go out of business if people only spent as much as they could afford.

Pause for thought.

Maybe that sounds logical enough, but let's unpack it a little bit more.

Even the concept of debt is — in most cases — a result of people wanting to have money to acquire something that costs more than the amount of money they have on hand. In some cases, I suppose "borrowing" makes a bit of sense... after all, if you had to save up your money to buy a house with cash, few people would buy houses before age 40 or 50... and they'd still need somewhere to live for the preceding 20-30 years of their lives. Hence, mortgage loans.

However, borrowing at 29.9% interest because you "have to" have a $15,000 Rolex watch does not make sense... at least not to me. And yet? Lots of people do that!

Fiscal Restraint? What's THAT?

Having grown up with a father who was of the mindset that "if you didn't have enough money in your pocket for something then you couldn't afford to buy it" I've always been somewhat curious about the whole concept of affordability and overspending. And how that often is tied to a tendency to try to persuade the buying public to spend more money than they actually should be spending.

I remember when I bought my first house, I made it very clear to the realtor that I wanted to spend no more than $120K (mid 1980s), yet she kept showing houses in the $150K to $175K range because she knew I qualified for that. We went around in circles about this, and I ended up with a different agent... who did the same thing.

Part of what got me to thinking about this is a problem we're having with a lack of affordable housing here in our town. Earlier today, I passed by some new dwellings that looked like some very nice small scale semi-detached houses along one of our busiest streets.

No Affordability for You!

I looked at them from the street and thought "Ah, they are finally getting a CLUE, as to what is needed around here!" Then I noticed that there was a sign there that said that they had been put up by Habitat for Humanity. Habitat for Humanity is a charity volunteer organization that basically builds homes for people in extreme need, using largely donated materials and voluntary labor.

In other words, affordable housing, but not created by a building firm!

Which led me to the conclusion for the Nth time that people who actually build houses for a living don't (want to) build houses that people can afford! Many of the "luxury homes" they do build end up sitting empty for months or even years, and are then bought by investment companies rather than individuals, who turn around and rent them out at rents most people can't afford.

I say this in part from the perspective that at some point within the next 5-8 years we will be looking to move to a smaller and more economical place to live. The problem isn't going to be the desire to move, nor selling our current place, the problem is going to be to find something that actually fits our wants and needs.

For starters, part of what is wrong with our "wants and needs" is the fact that we're only going to buy as much house as we can afford and are willing to pay for. And I mean genuinely afford. Problem number two is the fact that there is no new construction out there being put up that involves just smaller and fairly basic houses that maybe have two bedrooms and one and a half bathrooms, without anything fancy.

Buy something older? Not so much, because most of the smaller affordable older places have been have been — or are being — renovated to become bigger and more luxurious.

A lot of people would like to point out that demand leads to market. But that is a bit of an ambiguous statement in the sense that the market is being "guided" — that is to say, the market is being guided by the offerings that are being put out there and what we are "being told" is desirable.

"Guiding" Demand...

It would be a bit like restaurant owners deciding that they don't want to sell $11.95 dinner specials anymore, so they "insist" there's no demand for them, and instead only have a menu of $24.95 entrees... leaving a whole lot of folks with the options of either "buying more dinner than they can afford," or not eating out, at all.

Ironically, "affordability" has become a scarcity... and by the fact that it is scarce, it also becomes less affordable!

Meanwhile, everybody is out there trying to get the most they possibly can — and damn the consequences — of whatever it is they want, and it's likely costing 20% more than they can really afford. The more I look at it, the more it seems like the marketplace supports overspending rather than living within your means.

So what can you effectively do?

I ain't buying this!

Vote With Your Money!

In our case, we're very simply canceling services and turning things off. Putting that $20 that might have gone to something "nice to have, but non-essential" into investments instead. We eat at home, and we grow more and more of our own food. The other day, we ate out with a friend who's moving away... for the first time in about 8 months. It came to almost $90 for three hamburgers and two sodas, once taxes and tip were added! Instead of that tempting "stream now" movie for $12.95 from some service, we borrow the movies on DVD from the local library.

What you can effectively do, is vote with your dollars. Simply refuse the choices that don't serve your needs, even if the choices you do want aren't on the market.

Which closes the loop back to the point made early in the post: What would the business landscape look like if people only bought what they could actually afford, and nothing more? What would not be there, anymore, if anything?

=^..=

Curator Cat, 23rd November 2023