The dangers of YOLO spending

I’ve noticed a number of articles recently on YOLO spending. YOLO, as I’m sure you know, is an acronym for “You Only Live Once.” It’s been trending lately as a rather despairing response to high costs of living and low wages, and the frustrations that people – especially younger adults – feel with an economy that’s against them.

YOLO spending (sometimes called “doom spending”) is exemplified by reckless expenditures on unnecessary items because, hey, you only live once.

Consider, for example, this video about a frustrated young woman complaining about her $8 coffee while drinking $8 coffee. She says: “So as I’m sitting here, sipping this $8 coffee, I’m just wondering if I’m the only girl living in the delulu land, because I cannot afford this $8 coffee. I honestly can’t afford s***. I can’t afford my car, my house, groceries … I mean, like, how can this coffee be $8 when minimum wage is literally, like $8? So excuse me while I just continue to live in the delulu land while I continue go get my coffees I can’t afford, because I’m going to continue to live and dig myself deeper and deeper and deeper into a gigantic financial hole because it cost too much to f***ing live. Thanks for coming to my TED talk. Bye.”

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My husband is the one who brought this video to my attention by asking, “How much does coffee cost per pound these days?”

I had just been to the city for our once-a-quarter Big Shopping, so I knew precisely how much coffee costs. “I just filled up some bags with fresh-ground coffee at Winco for $8 a pound,” I replied.

That’s when he pointed out this video on the $8 coffee, and we speculated how many coffee drinks could be made with a pound of ground coffee. Short answer: A lot.

But hey, you only live once, right? Why shouldn’t this woman enjoy her expensive coffee? Everyone deserves a little treat now and then.

The problem, I’m speculating, is the $8 coffee is not just “now and then,” nor is it the only thing she recklessly spends money on. As she admits, she’s “going to continue to live and dig myself deeper and deeper and deeper into a gigantic financial hole because it cost too much to f***ing live.”

I get her frustration. I sympathize with her frustration. For younger people trapped in a cycle of debt and with very little hope of home ownership or other milestones of adulthood, flippant spending seems justified in their minds.

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Consider the article “Gen Z Is Splurging on Luxury Goods to Soothe Their Economic Despair“: “What really matters anyway? That’s what Nia Holland, 24, thought after spending $2,500 on a vintage Chanel bag, draining her savings. Earning little money with campus research jobs during graduate school, she knew her money could be better spent, saved or invested. But at the same time, she said it didn’t feel irresponsible. With traditional milestones – like homeownership and a life with kids – so far out of reach, denying herself ‘little luxuries’ wasn’t going to make a difference. And if anything, the lambskin tote with a 24-carat chain made her feel better. ‘The economy sucks, there’s global warming, there’s constant political and social unrest globally. … It’s just easier to spend money on things that will bring you immediate fulfillment.'”

But how will it end? The debt from YOLO or “doom” spending won’t go away just because the spenders are frustrated and angry. In other words, doom spending can become a self-fulfilling prophecy.

In another article, entitled “Economists are sounding alarm on ‘YOLO’ credit bubble,” the author writes, “A growing percentage of Americans are becoming reckless with their spending, fueling what one economist calls a ‘super duper’ credit bubble. In a note to clients, economist David Rosenberg of Rosenberg Research warned that Americans are taking on too much debt to buy things they really don’t need. He calls these people ‘YOLO spenders,’ which refers to the catchphrase, ‘You only live once.'”

The article documents the amount of credit card debt people are taking on (reaching all-time highs) and points out the obvious dangers of splurging on credit when it can’t be paid off.

The BBC also notes, “While some of this spending reflects the rising cost of necessities, Americans are also still buying big-ticket items and laying out tons of cash for experiences. This ‘YOLO’ attitude towards money bucks the spending trends of past economic downturns – and some economists have been left scratching their heads, especially as consumer sentiment on the economy remains overwhelmingly pessimistic. … This sustained period of ‘you-only-live-once’-esque spending amid rising debt and dwindling savings has confounded many economists. … Even though many people are still employed and earning pay cheques … they’re not necessarily happy – wages still are not keeping up with the pace of inflation.”

I entirely agree wages are not keeping up with the pace of inflation. As the woman in the video noted, how can a coffee cost $8 when minimum wage is $8? The logical solution, it seems to me, is not to purchase $8 coffees if your wages aren’t commensurate with your spending. Ditto with vintage Chanel purses.

YOLO spending differs from survival spending. In this economy, a lot of people are maxing out their credit cards simply to pay their bills. I get that. I totally get that. In the past, we had crushing credit card debt due to the economic reality of raising a family on a very tight income. It took many years to climb out of that financial hole. In fact, those debt years left me with something of a psychological scar, and now I have an almost pathological fear of owing money.

YOLO spending strikes me as irrational to the point of madness. It’s one thing to max out a credit card because you’re desperately trying to keep your head above water. It’s a whole different thing to max out on non-essential YOLO luxuries. These spenders must know a day of reckoning will loom, right?

While I understand – and sympathize – with the frustration expressed by the younger generation, I can’t help but feel there are better ways to go about enjoying the small pleasures of life without digging yourself “deeper and deeper and deeper into a gigantic financial hole.”

Debt is terrifying enough if it’s incurred simply for survival. But debt incurred simply to live it up in the moment seems like madness. What advice – or hope – can you offer doom spenders, besides not buying $8 coffees or $2,500 Chanel bags?

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