The 2009 film, Confessions of a Shopaholic, continues to be one of my favorite movies. Most recently, it's been more relevant in my life than ever. Not because of the extreme debt the main character Rebecca Bloomwood accrues, but because I recently got my first credit card! In the film, Rebecca is addicted to buying new things and eating out everyday, and finds herself in massive debt. She makes impulse purchases on her credit cards with ease, believing that she can afford these purchases, not thinking on how this will effect her in the future. She lands a job at a financial magazine and begins to learn the difference between cost and worth.
"They said I was a valued customer. Now they send me hate mail." - Rebecca Bloomwood, Confessions of a Shopaholic
Spending money has become easier than ever. Amazon's Door Dash buttons and 1-click purchases completed by simply clicking "buy now" make non-essential impulse buys seem effortless. Until the bills come, that is. That was Rebecca's flaw. She enjoyed the benefits of having available credit but disregarded the future payments. So how do we live as fabulously as Rebecca without her debt? I've collected some financial takeaways from Confessions of a Shopaholic:
What is credit?
Credit is defined as a trust given to another person for a future payment. A creditor is the company who the credit is owed to, typically called a "lender."
What makes up a credit score?
This can vary, but typically a credit score is comprised from looking at the amount of money you owe, your payment history, and the number of accounts you open. Credit scores are important because lenders look at this to determine what kind of "risk" you are as someone they are lending to. What could Rebecca do to improve her credit score? Well for starters, she could pay her bills on time. Paying off debt and checking her credit report regularly could help too.
How do you find the right "magic card?"
Although Rebecca describes the plastic pieces as "magic cards," the money you spend with them doesn't disappear. Every cent you pay with your card has to be paid back in full, sometimes with interest. With so many choices to pick from, it's important to look at the terms for each card before you open the account. Is there an annual fee? When is the minimum percent payment for each month? Is there a grace period? Rebecca probably didn't consider these facts before opening her many accounts.
How are cost and worth different?
There's an iconic scene in the movie where Rebecca sees a green scarf through a store window. She advances towards the scarf wrapped around a mannequin and has an internal monologue with herself explaining why she *must* have this scarf, knowing that she can't afford it. Cost is subjective. To some people, paying $200 for a scarf seems outrageous. It's up to you to determine if the scarf is worth that to you based on your personal finances and wants. "These cashmere gloves I need as it is winter, and I have.... hands" -Rebecca
I suggest you watch or re-watch Confessions of a Shopaholic. It's hilarious and I think there's some great stories you can learn about finance woven through the scenes. Let me know what you think!