The Problem With Borrowing To Finance A Lifestyle

Modern society nicely paints the image of how to live a good life.  It appears as if the media is to blame for most of it, yet people end up imitating what they watch on television regardless if it’s a conscious decision or not.  If you see your favorite star wearing the latest fashions or driving the latest BMW, you typically want those things too even when you can’t afford them.    

The biggest problem in trying to live like stars in magazines or characters on television and in the movies is that the vast majority of people can’t really afford that type of lifestyle.  They have to finance that lifestyle with loans and credit cards, all the while accumulating debt far beyond what they can reasonably pay back.     We, as a society, have also been programmed with the mentality of “right now”, and “only the best and most expensive is good enough”.  Unfortunately, this is the root cause of the problem.   

Anytime you must finance a certain lifestyle, you can safely bet that you will have to continue to finance that lifestyle in order to maintain it.  For example, anytime you incur debt to just to purchase shoes, food, transportation, and clothes.  Only in the event, where your income would drastically increase, would you ever be able to pay off your debt while maintaining the lifestyle to which you have become accustomed.

Most consumable goods start to depreciate in value the moment they are purchased.  It would not even be possible for you to sell them in order to pay off the debt.  It gets worse when you are no longer able to use those goods, and yet you still have to pay on them for months or even years.  With high interest rates, it’s possible that you could pay over $1000 for a purchase that was initially only $100! 

Bad debt prevents you from putting money into savings.  It’s another safe bet that if you happen to be financing your current lifestyle, that you are not saving any money.  What would you do if you lost your job, or there was a large emergency expense?  Could you afford to still pay the bills?  If your cards are maxed out, then you cannot depend on those.  Depending on the amount of your current debt, you might even be denied for additional credit cards or loans to get you through the tough times. 

Any lifestyle that is fully financed is not good for your financial health.  You are only able to live above your current means a short period of time before it catches up with you.  Living a lifestyle where you are free of bad debt does not instantly grant you a worry-free lifestyle, but at the very least you won’t have any stress over owing bad debt.