Monday, March 5, 2012

Excess and Deficiency

Last night as I sat in front of the TV for my mom to cut my hair, I saw an ad for a massage chair that costs $10,999.00 on a local Vietnamese station.  It is essentially an over-sized Lazyboy that can squeeze your legs and your arms...something that you can do yourself with your own hands.  So I made a comment of how could anyone afford something that ridiculous for such an outrageous price.  And without a moment of hesitation, my mom said, "Trã góp." (which means "monthly payment" in Vietnamese).

Here lies the problem of most Americans.  It actually shocked me to hear her said that.  She would be the last person that I would expect to respond that way because she has no credit history and has always pay for everything in cash.  But the mentality of "living on credit" is so pervasive that even she knows how to get something that is unaffordable by simply paying for it over 60 months.

The problem of paying over time is that people think they can make something unaffordable into something affordable.  In reality if you can't afford it outright, you probably can't afford it ever.  If the price seems ridiculous as a whole amount, why would it be less ridiculous if you break it into 60 payments plus interest.

We American consumers have been brainwashed by the retailers for so long that we can't even believe the facts right in front of our noses.

Of course, my mom would never buy that massage chair for that price, but only because she has no interest in such a chair.  But if instead of chair for 11K and in its place is a new kitchen and dining room for 40K, she would not even blink twice before joining the rest of America to live beyond her means...which is exactly what she is doing at the moment.

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