Happiness on Credit

From an economic standpoint, debt has some important functions. And from a psychological standpoint, sometimes treating yourself to something you want can make you feel good.

But combining the two is a recipe for disaster.

If you want to maximize the happiness you get from a monetary expenditure, then save up for it. You’ll maximize “anticipation happiness,” you’ll feel a sense of earned pride, and your actual purchases will be more sensible. If you splurge on a new widget (and that’s fine to do here and there!), but put it on your credit card – now you’re stuck paying money for nothing for however long it takes to pay it off, because from the perspective of your dumb lizard brain (the thing you were satisfying with the splurge in the first place) you already have it now, so money is just going down the drain.

Debt is fine as a way of gaining assets and smoothing out income curves. It has its place as a leverage and investment tool. But the point of “splurging” is to give yourself a quick shot of happy chemicals, and doing that on a credit card is really close to just doing drugs. You’re not just trading away money for happiness, you’re trading away long-term happiness for short-term happiness.

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