Saving Savvy

 

"Can any of you tell me?" Roy challenged us.

"I can!" Cathy had waited a long time to vindicate her passion for plastic. "Debt is the ultimate forced-saving plan. You have to make your payments or . . . or—"

"Or you're in big trouble," Tom helped out.

"Precisely," Roy smiled. "'The ultimate forced-saving plan' is an excellent way to phrase it, Cathy. There's no way a spendthrift like James would ever have saved up enough money to buy that beautiful RV of his—he doesn't have the discipline. By borrowing, he forced himself to save—after the purchase, mind you, but still he had to save. And he could enjoy his acquisition in the meantime." For once, James Murray chose not to disagree or expand upon a point.

"I'm not suggesting that every time you want something you go out and borrow the money you need to buy it, Cathy," Roy said pointedly. "Sooner or later, you would end up in bankruptcy court. And, not only can excessive borrowing tap your cash flow, it can also cause stress. You'll find sleep comes more easily when you're earning interest than when you're paying it.

"Another thing that bothers me about borrow-to-buy is that you miss out on the feeling of satisfaction that comes from saving up to buy something you really want. Today, some young adults have never experienced that feeling of deferred gratification. They have borrowed to buy literally every major asset they have—from their TVs and their cars to their homes."

"There's a lot of truth in what you're saying, Roy," I chimed in. "Sue and I saved for three years to buy our car outright, and it gave us a tremendous feeling. I honestly think that we enjoy the car more because we know it's fully ours."