I grew up watching Saturday Night Live with my dad, and there are a couple of skits that I will remember forever. Who could forget Chris Farley dancing with Patrick Swayze as they auditioned to be Chippendale dancers? Or hearing Matt Foley (Chris Farley again) telling a couple of kids that they would end up living in a “Van down by the RIVER!!”? One of my all-time favorites though was with Steve Martin, as he and his wife were trying to figure out how they could get out of their mounting debt. As they hem and haw about their financial situation, Chris Parnell comes behind them and recommends they read the self-help book that can help them finally get on top of their finances. It’s called “Don’t Buy Stuff You Cannot Afford!” They look at him like he’s crazy as they ask questions like “If I want something but I don’t have the money, shouldn’t I buy it anyway?” and “But then shouldn’t you buy it, and then get the money?” The response was, “No. It’s in the book. It is only one page long.” Don’t buy stuff you cannot afford! 

This hilarious skit is something that many clients, and people that I come across, face every day. They have to make a decision on what they should do when they want something but may not have the money to buy it. It’s a great rule to follow when you are weighing the pros and cons of any purchase. If you can’t afford it, you probably shouldn’t buy it. Many young people put themselves in the hole financially when they get their first taste of credit in the form of a credit card. It seems so easy when you can just buy new clothes, a set of golf clubs, or a nice dinner without paying cash or watching the money leave your checking or savings account. Then, the bill comes, and you don’t have the cash inflows to pay it off. Interest charged on these purchases often begins to compound and make the debt unbearable. It causes stress, depression, anxiety, and regret. 

That presents the question – should you refrain completely from making expensive purchases or buying things that could put you in a tight financial position? Absolutely not! Money is made and meant to be spent. But it is a good financial rule to use a budget, save by paying yourself first, and plan for a purchase that satisfies your want or need while remaining affordable. You can also capitalize on the rewards points that are offered by credit card companies by using the card to pay for the purchase. At the end of the month, you can pay off the expense because you had the money available. These types of expenditures are often the most enjoyed because there was a process to save for them, and they are “paid for.” Many people have to use credit cards when there is an emergency, or they have a large purchase that is immediate and their compensation or income is not regular. That is why our credit is so important to managing the fluctuating things that go on in our financial lives. Using credit but not carrying over debt can be a very good thing!

If you want to have this ability to balance your current wants and needs while building for the future and retirement, we would be happy to meet with you. Although we have more to offer in terms of financial planning and putting together a personal financial strategy for you, it can truly be summed up in one of the most influential books never written – “Don’t Buy Stuff You Cannot Afford!”

Jonathon Jordan, CFP®