Target Ads and Learning To Live Within Means

Target Ads and Learning To Live Within Means

Since the financial crisis started, Target has been running a series of ads that imply saving money by a combination of reining in absurd spending and (of course) buying stuff at Target. The ads are cute, but they do bring up a point that I have sometimes made over the last few years, such as in this piece (search for "Cutting Spending").

My experience, living in the San Francisco Bay Area, and over the last few years here in the Boise area, is that an awful lot of people have bought an awful lot of expensive stuff--and the direction of ownership has become a bit inverted: the possessions increasingly become the owners, not the owned. Yes, it is awfully nice to to go to McCall and go water skiing. But the boat wasn't free, neither was the trailer, and instead of driving to the lake in a family sedan that gets 22 to 25 mpg--you need to drive a truck or SUV that gets 15 mpg, because you need the towing capacity.

I felt really, really extravagant when I bought the Corvette back in 2002--but it only cost me $32,500 for a nearly new sports car that was still under warranty. I look at people in their 20s and 30s who I see driving $90,000+ sedans (and there are a lot of them in Boise in now) and I wonder what these people must be doing to afford cars this expensive--and what they will do if this source of income disappears. Just a bit down from that are vehicles like the Cadillac Escalade. For almost $62,000, you can buy a Chevy Tahoe (which is mechanically identical) and have $25,000 left over (which should fill the Tahoe up at least several times).

If all of this money that people are spending were coming from a bottomless pit, I suppose that it would much matter. But I rather doubt that this is the case. I look at the vast amount of wealth that is being spent just on rolling stock around here, and I conclude that one of the following must be true:

1. There are a vast number of people in Boise who are obscenely rich (many millions of dollars in net assets) and for whom spending $90,000 for a Mercedes S-class is nothing. (This may explain why Obama bumper stickers here are at least as common as McCain stickers.)

2. There are a lot of couples in Boise making $200,000 a year or more--and who are not even slightly worried about someone losing their job.

3. A lot of this apparent wealth is built on a vast ocean of unsustainable consumer debt.