“Buy now, pay later,” is nothing new.
Hamm refers to an economic concept called “Consumption Smoothing.”
Hamm says we like to envision a future version of ourselvessomeone who is financially successful and makes rational decisions.
But this isn’t realistic.
Hamm points to two possible outcomes of this mindset:
You do become perfect.
You remain the same, and/or an unforeseen event arises.
You’re in no position to take care of this event and/or your past spending.
You’re stuck in debt, and you don’t have as many options.
Instead, living beyond your means today usually leads to burdening yourself tomorrow.
Hit the link to read more about his thoughts on the matter.
Does Consumption Smoothing Really Work?
| The Simple Dollar
Photo byk rupp.
