For Lisa van de Geyn, a freelance editor and mother of two preschoolers in Vaughan, Ont., rolling upgrades like granite countertops into her mortgage was an investment in her family's long-term future in her home. "When you're already spending an enormous amount, what's a few more bucks over the course of 25 years?" she says, with an edge of sarcasm.
"But it makes me cringe when I'm at the grocery store and realize I'm spending $11 on cherries."
That's the $64,000 question: Why is it that we're so nonchalant about big-ticket expenses, yet we'll scrimp on comparatively tiny sums, colouring our own hair at home to save $60 at the salon, or clipping coupons to save 80 cents on a jar of pasta sauce?
Margaret Johnson, the founder of Solutions Credit Counselling Service Inc. in Surrey, B.C., says, "When we're buying something at the grocery store, we're actually buying it outright, and we'll do anything to save a dollar when we see the money in our hand."
Yet, "when we're upgrading, or supersizing, as I call it, we're only looking at the monthly payment,' says the counsellor who has been working in finance for nearly four decades.
Willow Yamauchi, a Vancouver writer and artist, believes it's easy to splurge on the bigger-ticket expenses in our lives because "the numbers are too astronomically large for us to wrap our heads around," she says.
She also suffers from penny-pinch low/spend freely high syndrome: For instance, she has been eyeing a pair of John Fluevog shoes online – two-toned leather T-straps that look like they might have been teleported from the 1930s. "They started out at $269; now they're down to $189. But I decided I'm not going to pop on them until they go down to $100."
Knowing that university tuition is looming for her daughter, who's now 15, and son, 12, Ms. Yamauchi won't get out her credit card until those Fluevogs are marked down to her magic price point.
Yet when she and her husband recently got quotes on building an infill house in their backyard, they didn't flinch – even though the figure was between $200,000 and $300,000. "I thought to myself, 'Oh, that seems reasonable!' Like, what's an extra $100,000?
"I was so casual about it, and that shocked me. Here I am torturing myself over the extra $89 for a pair of shoes, and I'm talking about $200,000 or $300,000 like it's two or three eggs."
Ms. Yamauchi also thinks one of the reasons we can disconnect ourselves from the pain of the bigger price tag is that we handle so many financial transactions online that spending has come to feel surreal, like a video game.
We also may overspend on big-ticket items because, well, most of us are still primal beasts. As Victor Ricciardi, a behavioural finance professor at Goucher College in Baltimore, Md., says, "For self-gratification, we'd rather spend money today at the detriment of saving for the future."
He points to what financial planners call the annuity puzzle: The fact that investors won't put their money in safe, boring annuities if the selling point is "you will have $1,000 a month in retirement income," but they will if it's framed as "you'll have $1,000 a month for golf when you retire."
We are also aided and abetted by the banks' willingness to keep lending us more money, at historically low interest rates. If you have a line of credit pegged to prime, you're probably feeling pretty smug that the Bank of Canada announced last week its trendsetting interest rate is staying put. When credit is so cheap, there's no reason not to splurge.
"Why not do the renovation you need if it's only going to cost 3 per cent?" notes Catherine Harris of Toronto, an executive at a cultural institution.
Frugality emerges when it's comparison-shopping at the retail level. "If I'm shopping for clothes at Joe Fresh and everything is under $20, then the gorgeous merino wool sweater they have at one of the boutiquey locations seems like a king's ransom at $49, even though that's a steal!' says Ms. Harris.
"Talk to me about a bathroom renovation at $10,000 and suddenly, doing a second bathroom and making it $20,000 seems like no big deal."
For prime-of-life professionals who bought houses a decade ago and now have decent equity, "It takes a day to walk into the bank and get a $30,000 home equity line of credit," Ms. Yamauchi says. "They're so dangerous, because you never have to go back and get re-approved – you can just keep spending."
We spend that extra money because the banks have preapproved us to do so, and also because owing money doesn't carry the kind of stigma it did for our parents. Even as recently as the early 1980s, when Ms. Johnson had a job greenlighting or rejecting mortgage applications, she says the average Canadian's credit card debt was $3,000. Now cards might have a credit limit of $65,000, and some spenders use it as if it's their own money, rather than the high-interest loan it really is. "People get a Visa Gold card in the mail, and they think they got a raise," she says.
How should consumers get their spending back to realistic proportions? For one thing, we should take into account that those five- and six-figure splurges usually end up costing more. "An extra $10,000 is never just $10,000; over 25 or 30 years, it's more like $25,000 or $30,000, when you factor in the interest you'll pay on it," says Ms. Johnson. "But nobody ever thinks about that. When we're buying a car, we say, 'Let's get the sunroof!' or, 'I want the leather seats – it's only another $75 a month.'"
And to protect ourselves from astronomical overspending, Ms. Johnson, who has made a career of helping people recover from bankruptcy, says it's as simple and as complicated as asking yourself a single question before you buy anything: "Do you have to have it now?"