Gauging Your Interests

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People love a good bargain. Somewhere along the evolutionary path—perhaps not long after we developed opposable thumbs—Homo sapiens advanced our innate hunting and gathering skills to the search for sale tags.

It's the thrill of the hunt. The acquisition. The bragging to the pack about shoe racks conquered and salesclerks defeated.

The discovery of fire? That's admirable. But the lawnmower purchased during a warehouse clearance sale, with a 10 percent discount for using the club card, plus a manufacturer's mail-in rebate of $20? It's a feat worthy of the largest brontosaurus drumstick around the ol' campfire.

Few can deny the rush associated with saving a few bucks. And so it seems only natural that those who hawk the big-ticket items are appealing to our basic instincts to resuscitate their lagging earnings amid a dreary economy. Call it survival of the fittest.

A 30-year fixed rate on a home loan can be had for an annual percentage rate of 5.99, which is bargain-basement shopping by San Diego's real estate standards. A 2003 vehicle from General Motors, Ford or DaimlerChrysler can be driven off the lot with 0 percent financing, or cash back through certain incentive programs. Even credit-card companies, known for loan shark–like interest rates, are getting into the act with introductory APRs of nada, nil, zilch.

All are designed to persuade people to indulge in a pay-tomorrow mentality, despite soaring consumer debt, a tight labor market and the prospect of war.

LET'S NOT FORGET where all this began. Soon after September 11, patriotism was at an all-time high, and consumer morale was at an all-time low. General Motors led the automobile industry's charge to, as their slogan put it, “Keep America Rolling.” It was what the industry—and corporate America as a whole —needed.

But what started as a temporary fix has become a longtime crutch. Carmakers continue to extend their cheap credit offers, even more than a year after the terrorist attacks. Showrooms from El Cajon to Encinitas continue to bustle.

Dianne Smyth, a San Diego–based CPA, says she's been astounded at the response her clients have had to the incentives. They're not just buying cars when they need them. They're buying shiny new models because they want them. Smyth, who is admittedly conservative when it comes to financial planning, just doesn't get it.

“Zero percent doesn't entice me at all,” says Smyth, who works in the San Diego office of AXA Advisors LLC and is on the board of the 400-member Financial Planning Association of San Diego. She says some people, even on tight budgets, are convinced low interest means “good” debt. “Good debt or bad debt, it's still debt,” she says. “A car payment is a car payment.”

Debt, indisputably, is a component of our culture. According to the National Consumer Council, whose catchphrase is “Returning America to a debt-free standard of living,” the average household has 10 credit cards. Almost half of U.S. households report having trouble scraping together enough green to meet even minimum monthly payments.

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