I want you to take a moment to consider this. How much will this purchase really cost you?
For an example, let's take something relatively small. Say you have Manolo Blahnik's Velvet & Snake d'Orsay shoes from this fall collection in your hand.
You want them. You need them. You have been working so hard and by god, you deserve them! If you had those shoes you would feel beautiful, invincible, like you were somebody important.
Okay. I understand all of that.
Now, lets break it down. The shoes cost $945.00. Add in 14% HST and the cost for you to carry them out of the store is $1,077.30.
But wait! Let us consider for a second the real cost to you.
I'm going to pretend you earn $20 an hour which gives you around a $41,600 income. The average tax someone in your earning bracket pays is 15.15%. That means to purchase these shoes you need to work approximately 63.5 hours just to pay for them. Picture yourself at your job, picture the clock ticking away minutes and hours of your precious life. Time that you can't get back. Time that is not spent snuggling your child, talking with your partner, taking a walk in nature.
What else could you have done with those 63.5 hours?
Now, if you are someone who just pays off the minimum on her credit card, then you are in big trouble and shouldn't buy those shoes. If you do buy them, in 10 years they still wouldn't be paid off and if your credit card interest is at 18.95%, you will pay $6,109.15 for the privilege of wearing those shoes. Which, by that point, probably have been relegated to the old shoe graveyard and still you would be paying for them!
The number one fear of women is that they will be destitute when they are old.
This is not an unjustified fear. Not only are the personal debt loads of the average citizen way too high, but everyday the U.S. government is spending over four billion dollars more than it takes in. Every day. This number does not include its Medicare and Social Security pension obligations. I believe that there is no way the government will be able to fulfill these promises, the numbers don't match up.
Therefore, before you buy that new car or those shoes or renovate your family room, look at your finances carefully. Don't just think, can I pay this off today? Think about your future. Have you saved enough that you will be able to live even if the company you work for declares bankruptcy and no longer is legally obligated to pay your pension? Have you saved enough so that you aren't reliant on getting a Social Security check from the government?
Do you want those shoes/car/renovation/tummy tuck more than you want to insure that your golden years aren't spent living under a bridge and foraging through dumpsters for dinner?
Before you buy any non-essential purchase, ask yourself how much it will really cost you and figure out if the short-term pleasure you will receive is really worth it?