Despite the continuing economic malaise, American spending habits appear to be alive and well, overleveraging already beleaguered budgets hit hard by the housing crisis, high unemployment and rising unsecured debt loads. In fact, despite lessons learned from the recent recession, Americans continue to spend about 15% of their household incomes on luxury items defined by “wants” instead of “needs.”
So where (and on what) are we wasting our money this time?
According to an article from 24/7 Wall St., reviewing our latest spending habits and the changes in spending patterns over the past two decades, “The ten categories of unnecessary purchase can be balanced against the ability of Americans to save money or pay off debts. The “average” American household which has an income of $63,000 spends more than $8,000 on goods and services it does not actually need. The credit crisis might not have been so bad if all that money had been put into savings accounts between 1989 and 2009, but the period would not have been nearly as fun.”
Apparently the top ten categories for consumer “fun” are as follows:
10. Buying and Maintaining Apparel
The report found that on average Americans spend half of 1% on apparel and related cleaning and storage (or about $249) each year. In this particular case, the findings showed a positive trend towards smarter buying habits as yearly expenditures on things like dry cleaning, shoe repair and watch and jewelry maintenance, etc. had actually decreased (from $266 per year) since the late 1980s.
9. Tobacco Products
While the number of folks “lighting up” across the country has steadily declined over the past 20 year, expenditures for smoking supplies still average $380 per household, accounting for a greater part of American budgets than spending on fresh fruit and milk combined.
8. Nonessential Entertainment Equipment
Spending on bicycles, trailers, camping equipment, hunting and fishing equipment, sports equipment, boats, photographic equipment and supplies accounted for a little less than 1% of American budgets at around $400 per year.
Spirits remain a big-ticket item for American households, with consumers spending around $435 for beer, wine, hard liquor, and mixed drinks—more than expenditures of all non-alcoholic beverages combined
6. Admission and Fees
Stepping right up to buy those tickets to sporting events, movies and concerts cost the average American household $628 a year, doubling the figure from 1989.
5. Vacation Lodging
American households averaged $670 per year on vacation homes, hotels and rentals, with Northeasterners spending about double the amount as their Southern counterparts.
4. Hobbies and Pets
Furry companions and fast-moving games accounted for another chunk of American budgets. According to 24/7 Wall St., “The average household spent nearly $700 on pets, toys, hobbies, and playground equipment. Nearly 80% of the expenses in this category come from pets, including food and veterinary bills. In contrast, households only spent $140 on toys and games.”
3. Electronics (TV, Radio, Sound Equipment)
Around 2% of annual American spending goes toward cable TV, video game hardware, and movie players, more than twice what we spent in 1989. Interestingly, households polled in higher income brackets spent the least on these items, while poorer households accounted for the higher end of spending for these types of luxury electronics.
Despite our legacy of consumption, Americans do spend a large part of their incomes on others. The average amount spent on gifts per household was $1,067, constituting 2.2% of average budgets.
1. Eating Out
Not surprisingly, a whopping 5.3% of average American expenditures are related to food away from home. “ Food away from home includes all meals at fast food, take-out, delivery, full-service restaurants, and at vending machine and food carts. In 2009, the average household spent $2,619 on food away from home, compared to an average $1,762 in 1989. The group which spent the most in this category, relative to household income, are those which make less than $5,000 a year. This group spent an average 6.2% of their total budget on food away from home. Those making between $5,000 and $9,999 spent 4.7%."
If you splurged on any of the above in previous years and are now experiencing the “headaches” of a buying binge, you have options—viable options for discharging debts under a Chapter 7 liquidation or Chapter 13 restructuring bankruptcy. Once taboo, these types of filings are becoming commonplace measures for millions of men and women hoping to restructure their debts into a more affordable payment option or, in most cases, dispense with them completely by liquidating unsecured budgetary blights. The bankruptcy attorneys at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, they represent the best medicine to get over any spending hangovers. Just call toll free to +1-919-646-2654, or find them online during off hours at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.