The summer of 2011 brought us the debt-ceiling debacle, winter of 2012 was characterized by the fiscal-cliff crisis, and now we are ushering in the spring semester with a sequester. With the national debt currently over $16 trillion, this pattern is beginning to be characterized as zombie politics begetting a zombie economy.
Unfortunately, debt isn’t only an issue in the White House -- it’s rampant in the average American household, too. Credit card debt had reached a peak in 2008 at 1.28 billion, or $8,640 per household, and then dropped to $7,000 per household after the recession. 2013 has revealed a new record with Americans (excluding mortgages) owing an average of $22,720. That means there are currently 383 million open credit card accounts, and that our total consumer debt is at 11.34 trillion.
It doesn’t help that malls are the new factory, where consumption, rather than production, is the engine of the economy. The good news is that this history of indebtedness is causing the next generation to be both plastic-shy and pro-giving, no doubt inspired by Bill Gates’ and Warren Buffett’s radical Giving Pledge. As a result, there are more ideas than ever out there for how to be a smart shopper in the age of the Shopping Dead. Here are 10 of them:
Do a Spending Fast
Ana Newell Jones put herself on a spending fast and found herself $18,000 lighter 12 months later, and debt free the following year. If Lenten-like deprivation is too much for you, her Spending Diet at least helps curb the biggest shopping temptations.
Barter (it’s not just for the 17th century)
You’d be surprised how many stylists would trade a cut and color for some engagement pictures. The rise of the U.S. barter economy has resulted in $12 billion worth of goods and services exchanged every year!
Read up on the Fulfillment Curve
The Fulfillment Curve reveals the relationship between the amount of money we spend (horizontal axis) and our experience of fulfillment (vertical axis). When survival is paramount in our lives - like at the beginning - we experience more fulfilment with the more stuff (i.e. basic needs) we get. There’s a point, however, when the curve begins to descend, as does our fulfilment, and the trick is to be able to identify when we have “enough.”
Befriend a tailor
Not only does a tailor allow you to buy what you actually love in the store (even if it’s a size too big), it also allows you to refresh your closet. Even though hemming your bridesmaid’s dress can cost $20, it can be cheaper to shop your own beloved closet than to buy something new.
Avoid store credit cards
There are a few things that make store credit cards a hidden shopping pitfall. For one, their low credit limits of $500 - $1000 make it easier for you to damage your credit score once you max out that TJ Maxx card. Furthermore, they often have 20% or higher interest rates, cancelling out that 10% you saved when you signed up for it.
Remember the Pareto Principle
Italian economist Vilfredo Pareto gave us the 80/20 rule when he realized that 20% of the country’s population owned 80% of its wealth. Countless studies have shown that this principle relates to all areas of life, including our wardrobes. For most of us, 20% of our closet makes up 80% of what we wear. In other words, Pareto would say to concentrate your spending budget on the basics, and reserve only a fifth of it for those once-in-a-lifetime (or year) outfits.
Say yes to cold water
For your clothes, that is. Not only does cold water extend the life of your clothes, but 90% of the energy used by your washing machine goes into heating its water. That means cold-water washing is good for the environment, as well as your shopping budget.
Draw your credit card statement
Kate Bingaman-Burt discovered that one way to curb one’s consumption is to draw it. In 2004 she drew all of her credit card statements until they were paid off 6 years later.
Compare before you buy
Although it’s hard to leave a store without that perfect shirt, it’s a lot easier when you know you can buy it online for $30 cheaper as soon as you leave. There are dozens of price comparison apps available now, like Amazon’s Price Check app that allows you to scan a barcode or take a picture and compare it to Amazon’s price.
Have "fewer better things"
This principle is also known as “quality over quantity” or “cost over price.” Retail consultant James Dion explains its secret: “Price is what you pay today, cost is what you spend over time.” It turns out that investing in your wardrobe actually does save money, in the end.