MasterPo says: This blog is about topics and issues that are of importance to me. I am not one of the countless blogging lemmings that are tripping over each other scurrying down the hill and off the cliff of blogging oblivion trying to write the greatest blog on the latest topic de'jour. Your comments are welcome.

November 16, 2009

When Paying is NOT "Affordable"!

"Afford" :
· To be able to do, manage, or bear without serious consequence or adverse effect.
· To be able to meet the expense of; have or be able to spare the price of.

(source: afford. Unabridged (v 1.1). Random House, Inc. (accessed: July 24, 2009). )

In recent times it has become all the fashion to tell someone "You can afford to pay more" or "You can afford to pay for this-or-that."

Do NOT confuse the ability to find the necessary money to pay for something with that something being "affordable".

To put it another way, just because a person is able to buy for a product or service does NOT mean they can afford to buy it!

"Affordable" means the ability to repeatedly pay for a product or service without impact on your other expenditures. Almost anyone can spend a lot of money once in a while (especially if you put it on credit!). But that doesn't make it affordable. Likewise, if in order for purchase A you have to reduce or eliminate your purchase of B then A is not affordable. You can only pay for A by reducing your cost of buying B. If A were affordable you could buy both A and B.

For example, during the summer of 2008 in my area of Long Island the price for a gallon of regular gasoline was approximately $4.00. I had to buy it. I had no choice. My car is the only practical mode of transportation for me to/from work (see my prior article about Green Travel). Even if gas had continued to go up to $6 or $8 or more a gallon I still would have needed to buy it.

But that does NOT mean I can afford $4, $6, $8 etc. per gal for gas. I was able to pay $4/gal in large part by not making other purchases that summer. In other words, the money I would have spent on something else I now had to use to buy gas to get to work. And as a result of taking money from other intended purchases the providers of those products/services lost my business! (i.e. my money) There just isn't enough for me to pay for both (without going into debt and I wasn't going to do that!)

So when you hear someone say "Oh, that person is 'rich', they can afford it!" sure they might be able to pay what your talking about – but only at the cost of not paying for something else!

And that is not how an economy grows and prospers. Taking money from one place to put somewhere else is just a paper shuffle. It does not great jobs or economic growth. Those things happen when people have the ability to pay (on a regular basis) for both things!

Taking $1,00 out of one pocket and putting it in the other doesn't give you $2.00

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