Probably the second biggest expense every year is on holidays. Most people see a holiday as an entitlement, and will take a holiday, whether they can afford to do so or not. Many people these days will take more than one holiday a year, and some take several. In the UK, Princess Beatrice, daughter of the Duke of York, has had no fewer than ELEVEN holidays in six months; in fact, she is spending more time on holiday than doing anything else. Christmas and New Year was spent drinking champagne on board a yacht in the Caribbean.
Of course, most of us cannot afford that sort of lifestyle, but many people will take holidays that they really cannot afford, simply because it is what they want to do. There is an over-riding feeling that we “deserve” a break, and since it is what we want, we just do it anyway, regardless of the expense. There may come a point, when we return home, that we cannot pay some of the bills, but it can be another case of sticking our heads in the sand because we do what we want to do, rather than not taking a holiday if we can’t afford to do so.
An expensive car is another of the 5 things we spend most of our money on today. For many, the car is a symbol of affluence, not merely a means of getting from here to there, but a means of doing it in luxury. Owning a “better”, more expensive car than the neighbors shows the world how great we are, what a good job we have, and gives us a form of status. For this reason, auto manufacturers are constantly adding new “gizmos” knowing full well that they can charge more for the vehicle, and also knowing full well that we will pay it.
Many people will spend far more on a car than they can afford. Very few people can afford to buy a car for cash, so they make a down payment and borrow the rest at enormous rates of interest. At least gas prices are much lower in the US than in other countries. In the UK, for instance, gas is so expensive that it takes a considerable chunk of the family income. But the actual car ideally has to have all the latest accessories, and so we are prepared to spend more than we can really afford in order to feel better about ourselves, and to impress the neighbors.