If you’re over the age of five you’ve probably been told at least once that money can’t buy happiness. And in general, that’s true. For example, one of the biggest components of happiness for most people is to be healthy. And while money can buy treatments that will help with a serious illness, it can’t buy health. But despite what you might have been told, there are instances where you can throw money at a problem and it will make you happier. In other words, money can buy happiness.
Do you often suffer from buyer’s remorse?
If you’re very thrifty minded you probably do what you can to avoid frivolous purchases. On the other hand, if you have a problem with impulse purchases you’ve probably bought things you wish you hadn’t. This is called buyers remorse.
The harsh truth is that if you fall victim to impulse buying you’ll probably end up in many cases suffering from buyer’s remorse. But there is a way to head this off. It’s to make an impulse purchase only when you believe it will actually, and maybe even measurably, improve your life.
“Improve” is hard to quantify
The problem with the idea of something improving your life is that it’s hard to measure this. Let’s take a new laptop computer as an example. You turn on your computer one day and see an ad for a great new laptop at a heavily discounted price. The impulse part of you screams buy, buy, buy! But hold on a second. Stop and take a deep breath. Ask yourself how much that new laptop would improve your life. The answer is probably not very much versus its cost. Of course, if you use a laptop in your business this might be an entirely different story.
To hire or not hire a house cleaner
A recent article on Lifehacker told the story of the author and his wife and how they had spent years arguing whether or not they needed a housecleaning service. They finally came to the conclusion that they did and it turned out to be what they called a “life-changing” decision. They found there was hardly anything else where they could spend $75 every two weeks or $150 a month and buy as much of an improvement in their lives. In fact, they decided they would happily give up any number of recurring expenses before their housecleaning. They don’t have cable and said they didn’t miss it but without a doubt would miss their housecleaner.
Spend your money where you spend your time
This article also suggested what it called the comfort principle or spending your money where you spend your time. You should, of course, be putting money away for an emergency fund or retirement but if you have money left over don’t be afraid to use it to improve your comfort. Do you spend a lot of time in the out of doors? Then don’t be afraid to splurge on a new, more comfortable backpack or a warmer tent. If skiing is your thing go ahead and buy new, more comfortable boots or a better ski parka. If you’re the stay-at-home type and love movies then buy yourself a subscription to Netflix or Amazon Prime and get an Apple TV, a Roku 3, an Amazon Fire TV or a smart HDTV. We have one and whenever we’re in the mood for a movie we just press a button on our remote and there’s Netflix with all of its great content.
Of course, if you’re struggling to repay your debts you might not want to buy anything that will improve your life – at least not until you get those debts paid off. A recent article on the website www.forbes.com made the interesting point that there are three types of debts you might consider not paying on. This is a pretty startling idea but the article actually made a pretty good case that there are debts you may decide to not pay on. This is because there are instances where you could do this without destroying your credit and risking an avalanche of calls from angry lenders. Of course, there is a caveat here, which is that you should not ignore your other debts. In fact, you should be paying at least the minimum on all of your debts and more if possible. This is especially true of those debts that would have an effect on your credit score.
An unsecured debt
If you find yourself in a position where you can’t pay all of your debts you might consider stopping paying on one of your unsecured debts. These are debt such as credit card debts, medical bills, personal lines of credit and old cell phone bills. They are called unsecured because an asset does not back them. On the other hand, if you don’t pay on a secured debt like your auto loan, which is backed by an asset, you could lose your automobile as the bank will repossess it. Don’t get us wrong. We are not recommending that you stop paying on an unsecured debt as this would definitely have a serious impact on your credit score. But if you find yourself in a real bind you might think about not paying on some of your unsecured debts and not your secured debts so you don’t end up losing a valuable asset.
A mortgage that’s underwater
If your mortgage is underwater as a result of the great mortgage meltdown of 2007 – 2008 it might not be worth continuing to pay on it. If you’re having a problem making payments on it as well as some of your other debts your best option might be to just walk away – especially if you’re seriously underwater. While this will damage your credit score it might be better than wasting the cash you need on a house that may not be worth what you paid for it for many years. For that matter, if you’re underwater by 25% and the value of the housing market where you live doesn’t recover it would actually take you 12 years of payments just to get back to where your balance equals your property’s value
Really old debts
Did you know that federal law requires the credit bureaus to remove debts from your credit reports after seven years? Let’s say that you have a debt that’s 6 1/2 years old. In this case, why pay on it when it’s going to disappear in six months anyway? It’s already done about all the damage it can do to your credit score and if you make a payment this will just reset the “clock” so your seven years will start all over again. Another thing to consider is that as debts age they tend to have less of an impact on your credit. The reason for this is that lenders tend to pay more attention to how you’ve handled credit in the past year or two than what you did five or six years ago.