Since the late 1960’s and the onset of credit, Americans no longer concern themselves with what things are worth. If you don’t believe me take a look at any car ad. You will no loner see what the price of the car is but what the price of the monthly payment will be. The car industry has been able to refocus the American consumer on only the monthly payment. The car industry has been able to de-sensitize people to longer terms; from a norm of 2 to 3 yrs to about 5 yrs.
America now lives by payments, and has been conditioned to think about the payment amount-rather than the purchase amount. By doing so, car companies can charge much more for the car. Think about the following: a car that sells for 30,000- costs 30,000 pretty simple right. Well the same car that sells for 30,000 on a 5 year plan @ 10% now costs you 637$ a month for get this- a total price of 38,220. The car company has just made 8,220 on finace charges through the consumers ignorance.
The insidiousness of this practice has permeated all of Americas consumer transactions. As that happens we tend to lose sense of what things are worth. The credit card companies, banks and housing industry understand this and the American consumer does not. They have enslaved the American consumer to debt. Hence many Americans live paycheck to paycheck to pay off that monthly obligation.
This inability to see the value of things and the cost of financing these purchases has grave consequences. If you don’t believe me take a look at the following documentary called Maxed Out and see some real disasters of people not knowing the value of things.
If so may people are enslaved by debt- what is the solution to this problem. Just do the opposite of what they do.. Pay in cash and live within your means. There is a great skit on Saturday Night Live that sheds some humor into the consumer problem
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