Wednesday, April 12, 2006


The Benchmark For Sane Spending

Gregory Karp at the Allentown Morning Call has this column on spending. "There was a time when it might have seemed outrageous that Americans spent $36 billion a year on their pets, including custom-made parakeet caskets. But no more. The benchmark for sane spending has shifted, often crossing a line into the ludicrous, contends Sarah Ball Teslik, CEO of the Certified Financial Planner Board of Standards. Teslik recently wrote an article called 'Parakeet Funerals,' delving into the absurdity of keeping up with the Joneses, which today has become an all-out sprint."

"It's natural to set your own spending standards by what your neighbors are buying. 'The trouble is, our neighbors are wacko,' Teslik said in an interview."

"Many Americans claim they cannot save enough money for their future. But they collectively spend billions of dollars on smoking, gambling, electronics and chocolate, Teslik said."

"But Teslik doesn't blame you for overspending. She's becoming more convinced that it's simply human nature, and we've always been like this. An intense impulse to consume immediately serves us well in times of scarcity. But in an era of overabundance, coupled with the availability of easy credit, that impulse has led consumers to spend their heads off."

"Consider the following: In the 1950s a third of American homes didn't have complete indoor plumbing. Today, many newly built homes have three toilets. And despite the ease of getting drinkable water from their plumbing, Americans today spend nearly $10 billion a year on bottled water because, well, just because."

"By the end of the 1950s one in five American households had no access to a telephone. In 1953 just two-thirds of homes had even a black-and-white television."

"Presumably children born in the 1950s and today would be basically the same, but expectations sure have changed. Try taking away the Xbox video game console or iPod and giving them a Hula-Hoop or clump of Silly Putty."

"Credit cards were in their infancy in the 1950s, and nobody used them for everyday purchases. But now, anybody who can fog a mirror can get a credit card and instantly separate their consumption from payment. 'I remember the cash, and I equate it to my credit card. My kids don't,' Teslik said. 'This divorcing of cash from the spending of cash is huge. You can hit zero and go below zero with a credit card, whereas you can't' with cash."

"'It's not that human nature has changed. It's just the ability to spend tomorrow's earnings as well as today's is new,' she said."

"So it's clear that although Americans of the 1950s were happy, they didn't live better. We just expect more now. If we could readjust our expectations and live just a little more like the '50s, maybe we'd feel more comfortable not spending on parakeet funerals."

More OT: I cashed a check the other day and got one of those funky new $10 bills. I was just wondering whether the introduction of all these new bill and coin designs has the potential to play a part in any nefarious Washington plans. It seems innocuous enough, but you never know . . .
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