Buying More Stuff Will NOT Save the Economy

(image via myluxmagazine)

This special, extra post of the week is brought on by one simple little sentence at the end of an article at the Consumerist. The author ends with, “So cheer up and go buy some stuff to do your part!”

Seriously, I’m sick of being told to “buy more Stuff” and spend more money to “save the economy!” Buying more Stuff will NOT save the economy. How do you think we got in this mess in the first place?  Spending more than we earn.  Debt to income ratios of 133%.  Gobs and gobs of credit card debt.

A quick Google search pulls up a multitude of articles addressing the topic. One in particular stuck out to me from one of my favorite business people AND owner of the Dallas Mavericks, Mark Cuban himself.  In his post “An Idea for the Economy that Will Freak Out a lot of People but could be Fun to Discuss,” he states (emphasis mine):

The Republican/ Tea-Party approach to job creation is to cut taxes. The theory being that more money in the pocket of individuals will cause people to spend more money in the economy thereby creating more jobs. Nope. Not happening. Why ? Because individuals have too much debt. Any money they get goes to pay credit cards, student loans and for the smart and fortunate into savings.

For me, this simple paragraph hit the nail on the head. “Because individuals have too much debt” and any extra money right now will go to pay that off.  My extra money at the end of the month?  Straight to debt repayment.  My meager tax refund?  Straight to retirement savings.  Any and everything that I have left at the end of the month is spent getting my debt down and my net worth up.

Speaking as someone who has debt FROM spending on things I can’t even remember, the last thing I want to do is derail my current debt repayment plan by “helping the economy.”  My life is changing as I purge the Stuff and build up my wealth.  I feel relief as I clean out my closet.  I felt extreme joy as I paid off my second to last credit card.  Every step I make to stop accumulating Stuff and paying off the debt that came with it, is one step closer to financial freedom for me.

I find it interesting that the two most stable economies in the world right now (Germany and Sweden), also have the two highest savings rates (see this article at learnvest for more detail). The article states that spending actually is necessary, “But if it’s spending fueled only by credit, it’s good only in the short term and very bad in the long term, ultimately undermining economic stability.

My advice to people would be save your money first and buy when you have enough money in the bank to afford that purchase WITHOUT credit. Stop this cycle of “ME, ME, ME” and wait for something. The freedom from being able to purchase something outright feels so much better than buying on a whim and not even remembering how you got so much credit card debt and what you might have possibly spent it on.

I want the economy to improve just as much as the next person, but I’m afraid it would take an entirely different mindset as a society than we’re ready to accept for it to be truly healthy.  In the meantime, I wish everyone would stop telling me to “spend more money” and start preaching a healthier relationship with money.


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