What was I thinking when I bought ... ?
For the "..." you can write in something from almost every room in my house.
Take the juice extractor, which was used a handful of times at most. And the cupcake maker, which was fun the first time we used it, and the paint sprayer, which has never been used.
I hear endlessly from readers that New Zealand is a low-wage economy and it's impossible to make ends meet.
Yet we are throwing our money away on white elephants that we never use. I had to reorganise my relatively uncluttered house to fit an extra person in and the exercise nearly killed me. The ensuing declutter has yielded a couple of hundred unnecessary items, which have either sold on Trade Me or been given away.
The truth is, I could be $5000 or more richer if I hadn't bought this stuff. I was chewing this all over at a Russell Investments conference last week. If that $5000 was invested in an Aon Russell Lifepoints Growth KiwiSaver for 20 years at the five-yearly average return of 11.9 per cent per annum, less possible inflation of 2.9 per cent on average, that five grand could be worth $28,022 on retirement.
That $5000 would only be worth $2823 in real terms on retirement, but invested, it could have gained $7055 in simple interest and $18,144 in compound interest after inflation.
I could find more to sell at home, but a policy of "non-accumulation" would be more useful, as one conference-goer had for 10 years before having children. The advantage of that is your $5000 goes straight into investment instead of shrinking considerably by the time stuff is sold or given away.
Some of my subjects admitted they spent way more on unnecessary stuff than they had realised. One found that on top of kitchen appliances, both the husband and wife had two bicycles each and the $1000+ road bikes hadn't seen a road in 18 months. Then there was the bike wind trainer in the loft. And so on.
Marc Wilson, Associate Dean of the School of Psychology at Victoria University, conducts research in the area of consumer psychology. He says we buy things for an instrumental function, an expressive function or a combination of the two.
A car helps me get to work, for example, so it's instrumental. But a red car makes me feel fast and tells other people I'm the kind of person who has a red car, so it's expressive.
What about the stuff we buy that we don't need and never use? These purchases tap into our brains' reward system even when a purchase was irrational, says Wilson.
In the case of online shopping, we order it with ease and when the doorbell rings our neurotransmitters light up and we have the thrill of Christmas all over again, he says.
I know that surge of when a parcel turns up at the door.
We can't admit we do this because we need to think of ourselves as rational and sensible human beings and it can be confronting to admit we didn't need that strawberry cutter or extra-long Ethernet cable.
"We rationalise to ourselves that it was an okay thing to do," Wilson says. "Because it was a bargain or will be useful 10 years down the track."
Sadly, knowing you screwed up won't stop you because at some point you want the thrill of the purchase all over again.
Of course, there's the buzz in getting rid of the stuff as well, which I have been experiencing. Wilson speculates that when we give stuff away and convince ourselves it's for a worthy cause there is a "warm rush of neurotransmitters and the belief we're making the world a better place, or helping people".
Selling a purchase, even at a vast loss, can allow us to think it wasn't such a loss after all. Particularly if we get "a good price" for it. That price is a fraction of what that money could have been worth if we had overcome basic psychological failings. Just look at the KiwiSaver example.
Finally, should I or shouldn't I buy a mega-expensive new camera with that 200x zoom? I can justify it by saying I don't want to miss images of my son's best moves on the football field - and he's growing up fast.
If I buy it, however, in a year or five years, will I be saying: "what was I thinking"?