THE NORTH AMERICAN CONSUMER: HYPNOSIS OF THE MASSES

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I was talking with a friend of mine the other day. A great guy, married with a couple of young kids. He purchased a new car about three years ago, a Hyundai Sonata.  At the time, I remember him telling me that he had financed the purchase over six or seven years, as it made the payments manageable. He drives the car to work, and puts about 15,000 miles on annually.

When he bought the Sonata, his wife had her own car.  It was a nice late-model sporty hatchback of some sort, to be honest I can’t recall the make. She still had a significant amount left owing on the car, but loved it.

A short time later, my friend and his wife were back at the Hyundai dealership getting some warranty work done. While they were waiting, a salesperson approached them and started a conversation about the great deals being offered, and proceeded to show them around the floor.

Another car caught their eye. My friend’s wife loved it, and the next thing you know a trip for some warranty work included the purchase of a new Hyundai Veloster to replace her very nice hatchback.

This is an EXTREME example of an impulse purchase,  an unwise spending decision based purely on emotion and a persuasive salesperson. Unfortunately, no consideration was given to sober second thought.

It gets worse! Fast forward a couple of years, to a week ago. I ran into my friend at a coffee shop and he mentioned that he was on his way over to the Hyundai dealer to pick up his NEW car!

“What? But I thought….”, it didn’t compute. As it turned out, my friend allowed himself to be lured into making yet another costly impulse spending decision, one that will see him waste thousands of more dollars over a number of years.

Here’s how it happened. New car dealers often contact their previous customers a few years after a new vehicle purchase. The salesman confirms over the phone that their client is still driving the car. They inform them that they have a lot of people looking for that exact year, make and model of vehicle. Because of this incredible demand, the dealer is able to offer rock bottom prices to buy the vehicle back on trade if the person agrees to upgrade into a brand new vehicle.

The salesperson always points out that it’s best to act quickly before the vehicle depreciates too much to make the offer worthwhile.  What they neglect to mention is that the highest rate of depreciation has already occurred over the first three years.

That was precisely the call my friend received, and within a week he had traded in a 2013 Hyundai Sonata with only 45,000 miles on it for a 2016 Sonata. Same car, same colour, very similar features. He was in a negative equity position on the car he traded in, meaning he still owed more than he was offered for it. The dealer was more than accommodating of course.  The amount was conveniently included within the new loan and the term was ratcheted back up to seven years at a higher monthly payment.

In short, he got fleeced.

If you’ve purchased a new vehicle, you’ve likely received these calls.

Don’t be fooled. Car companies exert a lot of calories on this sales tactic because it makes them a boatload of money, at your expense. To get you into the dealership, you are told that they will only recommend making a trade if it makes financial sense for you.

It won’t, it never does.

The car dealership is the only winner in the transaction. They have ways of masking the true costs, so you’ll feel as though you’re making out ok. You’re not.

WHAT DOES THIS ALL MEAN?

If you are like most people, your financial well being and by extension your quality of life has been surrendered to the control of consumerism.  In all likelihood, like my friend and his wife, you don’t even realize it. It’s as though you’ve been hypnotized, lured into a state of consciousness in which you feel unable to act voluntarily when it comes to spending money. This state of being should make you angry, you should be fighting mad! Yet most people are apathetic, resigning themselves to giving in to their impulses again and again.

I’m here to tell you that although you are constantly faced with the persuasive powers of our consumer culture, you have a mind of your own.

You have control over your spending decisions. You have choices, you can say no, you can take action.

Maybe you’re not tempted by the lure of new cars. It could be anything. How about your smartphone? I’ll admit, thats one that hooked me for many years until I broke the addiction.

Most of our society, in fact most of the planet, is absolutely addicted to these devices.

For most, spending hundreds of dollars on a new phone every couple of years has become automatic.

Consumers are being locked into contracts and paying upwards of $80/month for a convenience that only a few short years ago we had no need for.  In many families several smartphones in use, multiplying the costs several times over.

I actually got rid of my iPhone recently, (my wife and I decided we could share one) and whenever I mention it to people they look at me like I’m insane. I’ve never encountered more stunned looks than those of my friends and colleagues trying to grasp the concept of me having to (gasp) share a phone.

But that’s exactly why I got rid of it. Not only am I saving money, but it’s another way my family is becoming freed of the clutches of our consumer culture.

I want to challenge you!

This is the kind of thinking you need to have to become financially free! You will not achieve your goals by doing what everyone else is doing.  Choose a better lifestyle!

By resisting the impulse to spend, you are avoiding frivolous luxuries that aren’t improving your life, and increasing your level of financial freedom!

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