What reality TV teaches us about credit and spending

By Dawn Papandrea

Reality check: We as a society need to learn how to better manage our money. That's why it shouldn't come as a surprise that a whole new slew of reality shows are aiming to address our collective interest in all things financial, from saving money and spending wisely, to turning our clutter into cash, to dealing with debt.

No matter your motivation, as you flip through these money-focused reality shows, here's how to look beyond their face value to pick up some priceless money and credit strategies.

Reality check: We as a society need to learn how to better manage our money. That's why it shouldn't come as a surprise that a whole new slew of reality shows are aiming to address our collective interest in all things financial, from saving money and spending wisely, to turning our clutter into cash, to dealing with debt.

No matter your motivation, as you flip through these money-focused reality shows, here's how to look beyond their face value to pick up some priceless money and credit strategies.

"Downsized" (WE tv)

Photo credit: WE tv

The 411: A real family of nine faces foreclosure and is forced to downsize their spending.

Why you should watch: This cautionary tale reminds us how easy it is to lose our way with credit and the consequences therein.

The credit takeaway: You can put yourself on a debt diet, too, by learning how to live on a strict budget. "The first step in getting out of a hole is to stop digging," says Matt Wegner, a certified financial counselor who writes the personal finance blog, Living In Financial Excellence. "Get rid of the credit card [debt] and believe that you can live without borrowing money," he says.

To do that, you'll need to plan carefully, and stay committed to your goal. Start by developing a written monthly spending plan and setting aside a small emergency fund of about $1,000 before paying off your debts one by one, says Wegner. "This starter emergency fund helps you avoid going back to the credit cards when life happens (car needs repairs, water heater bursts, etc.)," he explains.

"Pawn Stars" (History Channel)
Photo credit: ©2009 AETN/Joey L

The 411: Upon hearing the title, you might conjure up images of selling your things in a desperate bid for cash, but the show delves into some interesting pawnshop transactions involving really rare and cool items.

Why you should watch: It's fun to try to spot a fake, learn a bit about the pawn and appraisal businesses, and listen to the back stories of the customers.

The credit takeaway: Understanding the value of your purchase (and how it will change over time) will help you use credit and make purchases more wisely. "You'll notice on the show that many people are disappointed in the negotiated price of their item," says Wegner. That's because most people don't realize that the very minute you take an item home,  it becomes "used" and, therefore,  worth less than the original price. In other words, he says, think of a purchase made on credit as a consumable good that will lose value over time as opposed to an investment.

Photo credit: TLC/Hugh Kretschmer

The 411: Realistically, most people don't have enough hours in a day to strategize a complex coupon game plan the way the folks on this show do. But there is much to be learned from listening in, from how to spot a bargain to stacking coupons to finding deals.

Why you should watch: Simply for the "wow" factor of how much people can actually save.

The credit takeaway: Putting in the time and effort to find the best deal -- whether you're making a purchase or shopping around for a credit card -- can be worth your while.

"Shows like 'Extreme Couponing' illustrate that everyone can and should put in some work and dedication to better their financial lives," says Kim McGrigg, spokeswoman for the nonprofit Money Management International. "The next time you are tempted to accept that credit card offer that comes in the mail, take a few minutes to research whether or not it is actually the best card for you."

"American Pickers" (History Channel)

Photo credit: ©2009 AETN

The 411: Sure, they drive around looking for the treasure that can be found in someone's trash heap, but the team of pickers offers priceless lessons on antiquing, how to bargain and negotiate, and more.

Why you should watch: Not only will you get a history lesson via the antiques that are discovered, you'll think twice before tossing those trinkets grandma handed down to you. Selling them might actually pay off.

The credit takeaway: Before you even think about "picking" (buying) a high-priced item like a flat-screen TV or a piece of jewelry you've been eyeing, ask yourself two questions: "Can I get a better price by waiting or shopping around?" and "Can I really afford it?" If the answer isn't yes to both, be prepared to walk away, just like the Pickers. As McGrigg notes about the show, "they have a limit in mind when negotiating price. That way, they don't get caught up in the moment and don't pay more than they intended." 

"Til Debt Do Us Part" (CNBC)
Photo credit: CNBC

The 411: A financial expert helps couples facing financing crises work their way out of debt.

Why you should watch: Money is said to be the biggest source of marital stress and even divorce, so watch and learn.

The credit takeaway: Gail Vaz-Oxlade, host of the show, stresses that you need to keep the line of money communications open with your partner. "Money isn't a dirty subject. As long as we keep treating it like a taboo, we'll continue to not learn from our mistakes, or the mistakes of our friends and family," she says. "If you can't talk to your mate about money, then you shouldn't be getting married. It's that simple."

Wegner adds that open communication about finances (minus the finger pointing and blaming) is critical to a successful marriage. "It's important for couples to create their spending plan together so there are no surprises and there's an element of accountability to each other," he says. "It's imperative for both sides to give a little and find the middle ground on spending. Compromising to turn individual goals into joint goals helps the relationship last much longer."

Conclusion optional....

While there is much to learn as you lounge in front of the tube, don't forget what reality TV is all about.  "We have to be careful to remember these shows are still television productions designed for entertainment, and that not everything is as real as it seems," says Wegner. "Be careful to research the facts before taking action based on what you see in these shows."

See related: 7 simple ways to create an emergency savings fund, Top 10 credit card television episodes, Q&A with Gail Vaz-Oxlade

See related: 7 simple ways to create an emergency savings fund, Top 10 credit card television episodes, Q&A with Gail Vaz-Oxlade

Published: July 22, 2011

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