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More useless advice about Black Friday

Ramit Sethi · November 26th, 2010

Black Friday: the biggest consumer spending day of the year. And also the day with the most annoying advice in the world.

Seriously, guys, you would not believe how many press releases I’ve gotten about how what a terrible, scary, foreboding day this is going to be for our country. And every “expert” is eager to take advantage of it.

“Americans are spending too much!” these so-called “experts” will cry. “They just need to _____ (keep a budget/stop spending/resist evil marketers).”

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They’ve been repeating advice like this for decades, but has anything changed?

No. We spend more and save less than almost ever before.

When your entire philosophy rests on urging Americans to NOT do something they want to do, chances are very good that you’ll fail. It’s like trying to push back a tsunami.

These so-called “experts” neglect the most important parts of personal finance — automation and psychology — and instead appeal to our fragile willpower. Bad move. It’s intellectually lazy and it doesn’t work.

For example, what happens to your willpower when you see that the flatscreen TV you’ve been dreaming about on sale today at for 80% off? Sales work — they work really, really well. And marketers are extremely sophisticated and can literally engineer desire to crush your willpower. I know because I’ve run these tests myself.

Rather than chastise you for spending — which evokes guilt for 20 minutes, then you learn to adapt/ignore it — I’d rather have you spend consciously on the things you love, as long as you cut costs mercilessly on the things you don’t.

That means you don’t try to say “no” to everything. You say YES to the things you value/love, but your system automatically saves, invests, and shows you how much money you have to spend guilt-free. This is the system I outline in extreme detail in my book. For example, many of you know about my friend who consciously spends over $21,000 per year going out — after handling all the rest of his finances. I personally spent more than DOUBLE that in 2010 on self-development.

It’s not a shameful thing to buy something you love — no matter how many personal finance pundits make us feel guilty about it. But if we focus on conscious spending… then we know exactly WHAT we can spend money on, guilt free.

Tonight, I’m on PBS talking about so-called “experts” lecturing us
Tonight, I’m going to be a guest on the PBS’s Nightly Business Report talking about all the critics bemoaning Americans spending habits. Check it out tonight (11/26) if you want to watch me illustrate why the same old advice doesn’t work. Here’s the schedule.

***

[Update: The show aired on 11/26.  Here’s a link to the video (I’m at the 23:13 mark): PBS NBR 11/26/10 and the transcript: “Overspending on Black Friday… Not a Deal Breaker”]

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14 Comments

 
  1. Amen to this post.

    Black Friday is “the day with the most annoying advice in the world”…truer words have never been written.

  2. These “experts” are the same people that will turn around and demand that people stop saving and spend recklessly because they claim our economy is based on consumption spending and if you don’t spend we’ll go into the next Great Depression.

  3. Chris Horner

    This article went a different direction than I expected. When I saw the title I thought it might be about time value of money and spending 8 hours in line to save $100.

  4. Brad Castro

    Enjoyed both this piece as well as the segment on NBR tonight . . .

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  6. missed it…can anyone point me to an online video of it?

  7. Brad Castro

    Dan –

    Try this link: http://www.pbs.org/nbr/info/video.html. Be aware though that there’s usually a few hour lag between broadcast time and when it’s made available online.

    Also, Ramit’s segment is the commentary segment near the very end of the show.

    • Thanks for the link….that wasnt at all what i thought it’d be..but good on ya ramit!

  8. Ramit Sethi- Useless Black Friday Advice « The Stand-up Philosopher

    […] wrote a post yesterday about how the typical financial pundit the media digs up for segments will whine and complain about typical Black Friday behavior. Black Friday: the biggest consumer spending day of the year. And also the day with the most […]

  9. Well said, Ramit! Your delivery on the show was nicely understated.

    Have you considered hiring a personal stylist? (And no, I am not one!) It would be great to see you on television more often; this would be more easily accomplished with camera-friendly styling.

  10. Amen to this post… again. I know you write about this quite frequently, but thank you for bringing it up again.

    I just wrote a post in my blog about how important it is for actors to allow themselves to spend money on what they love. It’s easy for anyone to carry guilt for spending on unnecessary items. It is especially easy for artists to do this, though, because so much of what an artist makes in a survival job has to be applied towards furthering his/her career as an artist.

    I really appreciate how you remind people of the importance of spending money on what they love. I believe it’s important for an individual’s success and mental well being. Constantly denying oneself the pleasure of spending in a recreational manner can hold that person back by reaffirming that he/she is not successful enough to spend money on x, y or z.

    I don’t believe everyone should be piling up debt by buying everything they could ever want. I do think it is extremely important for individuals to recognize what they care about most, though, and spend on that.

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  12. Robert @ The College Investor

    I also want to point out that most Black Friday deals aren’t really deals, just gimmicks. The $3 appliances advertised by Target and Wal-Mart usually sell for $5, what’s the big deal!

  13. Michele Foley

    Enjoyed both this piece as well as the segment on NBR tonight . . .