Discussion Question 1. Larraine makes many financial choices that others are critical of: not selling her jewelry,...

Discussion Question

1. Larraine makes many financial choices that others are critical of: not selling her jewelry, spending her food stamps on lobster, paying for cable TV instead of saving. From Larraine’s perspective, why do these choices make sense? What do these choices mean to her? What does Matt mean when he says that Larraine spends money because she is poor and not the other way around (i.e. she's poor because of her spending)? Have you ever spent money you didn't really have on something you really didn't need? Why?

Solutions

Expert Solution

Lorraine could be rich or poor. This decision can't be made based on the spending she make. A person spends his or hermoney based on their personal satisfaction and desire irrespective of the amount of money they may actually have. Some people prefer to buy items on credit card and boast luxury when actually they could be a victim of debt circle. Some people would be very cautious in spending money as they very well know the value of hard earned money.

From my point of view, decision by Lorraine is pretty much fine. This is because, jewelry are always assets whose value keeps increasing with time. Selling them at time unnecessary would always be a foolish decision than selling them at a time necessary. As far as lobsters and TV are considered, they are never considered expensive and is purely the desire or mental satisfaction which she opts for. As far as myself and many people I know, it can be understood that 90% of purchases made are worth and would be used without wastage. The remaining 10% purchase might be impulsive but could be at some point for personal satisfaction and saving money for those would never add up to a huge money in future life.

Sydney Mullin answered 9 months ago

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