It is easier to overspend today that it has ever been. With the advent of credit cards, lines of credit, car loans, home equity loans, and all those “buy now, pay later” offers, there are just so many ways to go into debt. It may seem that the solution is to stop overspending, but unless you examine the causes of overspending and understand how to solve these common problems, that is unlikely to happen.
Credit Cards and Monthly Payments
Credit cards are one of the leading causes of overspending, simply because anyone can get a credit card. Even if you have poor credit or declared bankruptcy recently, you might still find yourself eligible for thousands of dollars worth of credit cards. And they’re so easy to use. Hand them over to the store clerk and worry about paying for them later. Before you know it, you’ve charged hundreds or thousands of dollars to your credit card, and you have no way to pay it all back.
If you always pay your credit card bills in full, every month, then credit cards might work for you. However, if you’re like most people, you carry a balance. And that balance continues to grow each month as you continue to use your card. The interest alone might be enough to sink your personal finances. The only way to deal with this problem is to get rid of them. Cut up every credit card, come up with a plan to pay off the bills, and never use a card again.
Of course, then you’re still left facing those monthly payments. Examine your monthly payments carefully. Is your minimum payment higher than the interest being charged? In many cases, it won’t be. If you minimum payment is lower than the interest charges every month, that credit card can never be paid off. It will only continue to grow. Pay more than the minimum, and never use the card again. This way, you won’t be able to overspend using a credit card, and your debt will cease to grow.
Peer Pressure and Keeping Up With Friends
Going out with friends can really be hard on your wallet. Movies, dinners, and clubs are certainly not cheap. And yet you don’t want to beg off and be left out. However, you may simply not be able to afford to go out all the time, and if your friends have more money than you do (or are simply willing to spend more than you are), this can lead to some socially awkward situations.
This is one of the hardest causes to isolate and correct. It’s hard not to go out with your friends, to spend the money they’re spending. However, if you really want to curb your overspending, you may have to. Try suggesting that your friends come over for a night of movies and board games, or video games, or whatever it is that you and your friends like to do. Have everyone bring a snack and you’ll be surprised at how much money you’ll save.
Of course, sometimes it’s not about what your friends want to do. Sometimes you simply want to keep up, whether it’s with your friends, a family member, or even a coworker. Purchasing items simply because you need to ‘keep up’ will get you nowhere except further in debt. If you truly intend to curb your overspending, you’ll have to learn how to be satisfied with what you have.
Sales and Impulse Buys
Everyone loves a good deal. However, a deal is only a deal if you were going to buy it anyway. It’s so easy to justify a purchase simply because it was on sale. But remember, if you never intended to by it, then you overspent.
This same rule applies to impulse buying. Products are packaged as to encourage a buy, but if you have to be encouraged to buy it, then you really didn’t need it in the first place. Before purchasing something that wasn’t on your ‘need it’ list, go home and think about it for a week. If you still decide to buy it, at least it wasn’t an impulse buy.
Emotional Causes of Overspending
Sometimes overspending has nothing to do with access to credit or peer pressure. Sometimes overspending is the result of allowing your emotions to decide when it comes to purchasing. If you buy things because it makes you feel good or to fill an emotional void in your life, then you have fallen victim to this very powerful cause of overspending.
This is an extremely difficult habit to break. If you truly believe that buying that handbag will make you feel better, help you fit in, or cure your own boredom, then you probably won’t stop. You’ll spend until you are so far in debt that you simply cannot get out.
It’s important to realize that while overspending may feel good in the moment, eventually it will catch up with you. When that credit card bill arrives, you won’t feel very good about how much you owe. Avoid the emotional impact of not being able to pay all your bills and reevaluate the reasons why you overspend.
Giving Your Children Everything
Most parents want what’s best for their children. And often this translates into buying whatever they want whenever they want it. The intention may be good, but it’s important to realize that if you can’t afford to buy it for yourself, you probably can’t afford to buy it for your children either. Overspending on your children sets a bad example, so do everyone a favor and curb the impulse to spend.
There are so many reasons to overspend. You might be greedy, or maybe you really don’t realize you can’t afford it. Whatever the reason, and however much society seems to encourage overspending, it’s important to realize that overspending will eventually lead only to one place — overwhelming debt.