Numbing the Pain Sensors
"How much should I spend on a car?" a friend asked me recently.
"How much cash do you have saved for a car?" I asked in return.
"About $18,000, give or take."
"Then I would spend $18,000 or less."
He stared at me for a moment, pondering what to say next. "But the car I want costs $35,000. How do I know if I can afford that?"
"It's pretty simple. You'd be able to afford it if you had $35,000 saved up. But since you only have $18,000, you definitely can't afford it."
He stared again. "What should I do, then?"
"Either buy a $18,000 vehicle now, or keep saving until you can afford a more expensive vehicle."
I think we complicate things too much, especially with vehicle decisions. Then, we add the psychological warfare of debt into the mix, and we get completely twisted up. That's where my friend went next.
"There's no scenario where I would spend $35,000 of cash on a vehicle. That's why I want to finance it."
See what's happening here? The debt pollutes our decision-making. He just admitted he would never exchange $35,000 of cash for a vehicle (because it's a lot!!!!), but he would mindlessly sign papers to finance $35,000, $45,000, or even $55,000. He said he'd have no problem financing a vehicle up to about $70,000, but wouldn't feel comfortable spending more than $20,000 of cash on a vehicle.
See the problem here? The debt numbs the emotional triggers that tell us something might be a questionable-to-poor decision. He would have an emotional breakdown paying $25,000 for a car, but he wouldn't flinch at spending $65,000 with debt. That's how we Americans have enslaved ourselves in crippling debt payments.
If we really want to make proper choices, we'd take debt out of the mix and look at everything through the lens of cash. Are we really willing to pay for something, or are we just trying to numb our pain sensors by slowly bleeding ourselves out over time?
Update: My buddy called me a few days later. After much consideration, he realized that he was, in fact, being heavily influenced by the debt. There's zero chance he would ever pay cash for an expensive vehicle, and the debt merely allowed him to "cheat the system," in his words. He said he'll likely save up for a few more months and pay cash for a vehicle in the mid-twenties range. I think that's a wise decision! His future self will thank him for that one.
Don't let debt numb you to the realities of your decisions. You'll think more clearly, make better decisions, and create far more freedom in your life. It's worth it.
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