Telis Demos recently wrote about consumer behavior for Fortune Magazine. Interviewing investment specialist Edward Kerschner, he identifies his perspective that consumers are at “a behavior inflection point” — that thriftiness is here to stay for quite some time. Clearly families are pinched from all angles these days: mortgage debt, income reduction or at the very least insecurity, and mounting bills through inflation for basic staples and balooning healthcare costs. But he goes on to state that “it’s not about price. It’s about the whole value proposition.”
This doesn’t make sense for those with debt. Price has a lot to do with the whole value proposition, and someone with financial insecurity and no emergency fund in place cannot afford expensive upfront items that, albeit valuable over the long term, simply increase their financial insecurity in the short-term to the point that emergencies will cost an arm and a leg.
Instead, someone with debt should make their financial decisions based on their budget plan. By defining a target amount for anything based on its ability to fit within a specified budget, thereafter striving for the most value-laden option amongst the several fitting the cost limitation, one can take advantage of the items that have “the whole total value proposition” without breaking the bank.
Raj Patel writes for DebtGoal.com, a do-it-yourself system for getting out of debt and lowering your interest costs. DebtGoal.com incorporates all of the techniques discussed in this post and can help users understand and get visibility to and manage their debt finances.
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