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Cabbage Patch Kids. Ferris Bueller. Miami Vice. The 1980s were quite a decade.
But not everything from the 80s was totally tubular, dude. It was a decade filled with its own trendy ways to mess up with money. Looking back, some of the popular methods to save and spend were uglier than Cyndi Lauper’s wardrobe.
If you were an adult in that decade, you might remember these five uncool money moves:
1. Everyday Use of Credit Cards
Credit cards weren’t new in the 80s—that’s just when they hit their stride. People were using plastic left and right. How bad was it? According to the Federal Reserve Bank of St. Louis, the total outstanding credit card debt in the United States went from $50 billion in 1980 to around $200 billion by 1989.
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What’s worse, people started viewing cards as the “normal” way to buy instead of cash. That’s why Americans have nearly $900 billion in credit card debt today. When you add in interest, late charges and collector calls, the situation becomes downright grody.
2. Getting a Sky-High Mortgage Interest Rate
It’s not often you see a credit-card-like interest rate on a mortgage. But in late 1981, banks were charging up to 18.45% because of inflation.
People probably felt stupid once they signed the loan papers. They definitely felt stupid by 1987 when rates dropped to around 6%. Whatever the case, huge debt with a high interest rate is a bummer—as borrowers in the early 80s can tell you.
Related: 5 Must-Dos Before You Buy a Home
3. Investing in Commodities
There was a lot of noise in the 1980s about investing in commodities such as oil and precious metals. But there are two huge problems with this kind of plan to build wealth. First, you invest to make money. That didn’t happen as gold, silver and oil prices tanked during the decade. The value of gold actually dropped from $615 per troy ounce to $381. Yikes!
Second, commodity prices are usually driven by speculation, not supply and demand. You don’t want some broker’s opinion to be the reason you lose money. Unfortunately, that happened a lot in the 1980s and people paid for it. Google “Silver Thursday” to see what we mean.
4. Not Diversifying Your Retirement Accounts
Many retirement advisors in the 80s told people to invest in single stocks rather than mutual funds. That has “bad idea” written all over it. What happens when you buy shares of a hot stock and the company goes bankrupt? Or it is found guilty of fraud? The stock price plummets along with your net worth. Bad plan. We should have left playing the stock market to Gordon Gekko in Wall Street.
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5. Purchasing Timeshares
Lots of big moves happened for the timeshare industry in the 80s. Floating time, where you pick the week you use the unit, was introduced in 1981. Industry giant Westgate Resorts was founded the next year. The amount of resorts shot up 400% and the number of timeshare owners increased 300%.
People found that buying a timeshare is easy. Getting rid of it is a nightmare. Would you want to pay annual dues on a property for 30 years whether you use it or not? Gag us with a spoon!
While the 1980s brought several money pitfalls, the smart ways to handle cash don’t change over time. Make a budget. Live on less than you earn. Diversify your investments and don’t go for get-rich-quick schemes. Learn contentment.
If you practice these principles, then your money situation 30 years from now will be rad. Totally rad.