Common Reasons for Overspending
Overspending is a addiction that must be eradicated. It starts of as simple habit of indulging in a few things such as cigarettes or brewed coffee. Then it goes to things such as shopping sprees and gambling. Then it graduates to acquiring big ticket items you can ill afford such as cars, houses and boats. What started as a simple addiction to small things eventually grows and grows until it takes your life into a tailspin.
Overspending is a bad habit no different from smoking or drug use. It starts with small doses. Then incrementally increases. Afterwards, it reaches to a point it hijacks your life and takes it over.
It takes a lot of discipline to avoid this dilemma. It is so easy to overspend especially with the advent of easy credit brought about by credit cards. It seems like you spend nothing with these cards. Just flash your shiny piece of plastic. Affix your signature. The item is yours. Its just that simple.
Overspending is a problem of the government and the individual as well. The problem brought by overspending is the massive debt that usually follows. This puts you under the mercy of creditors and loan sharks. It also deep sixes your credit rating and could pretty much ruin your life. Debt eventually leads to more debt and pretty soon you spend the rest of your life just working to pay it off. It eventually erodes your standard of living. Here are the commons reasons for overspending.
Credit Card Abuse
Having a credit card does not give you a license for wanton spending. Despite the credit card’s reputation of digging people deeply into debt, the credit is not at fault here, it is the person using the card who is at fault. The credit card is merely an implement or a tool. It is how the owner of the card uses the card that makes it good or bad.
The problem is that many people fail to remember that every dollar coming out from the card is not your money. It is money loaned to you by the bank at interest. To add to this, the bank has all sorts of other charges such as late payment fees, overdraft fees and annual fees. If you cannot handle the temptation to use the card, cut it in half and return it to its sender.
Shopaholics Anonymous
Well you have heard about alcoholics anonymous, well here is the shopaholic version of it. These are people who make shopping a hobby and feel tremendous pleasure in doing so. They associate the “shop until you drop” philosophy with pleasure. Shopaholics feel happy shopping around for new stuff and constantly try to upgrade things such as their furniture, clothes and gadgets with the latest ones in the market. The feel a feeding frenzy during a sale and tend to gobble up items on the cheap even if they are not needed.
The problem with this kind of condition, is that it leads to plenty of wastage. Imagine upgrading your mobile phone every couple of months. Imagine having a mountainful of items you do not really need or want at home just because they were cheap during a sale. Not to mention is the amount of wasted money used to buy these items. Worse is if it were borrowed money coming from a credit card.
Vices
Vices such as drinking, smoking, gambling and womanizing can really sap your financial resources to the point of going bankrupt and going into debt. The sad thing about vices is that they are addictive. They are so addictive that they tend to burn a hole in your pocket. Then you end up pawning off all your belongings and getting into debt. Get a hobby instead. Try collecting things or get engaged in sports.
Being a Social Climber
This is the case of keeping up with the Joneses. Having some of the stuff the rich have do not make you rich. It is your asset base that makes you rich. As you waste money trying to pretend to be rich, you actually end up poorer. Stop playing make believe, start saving money and be on the right path to actually be rich.
Be secure with what you have. You do not need the most luxurious car. You do not need to eat at the fanciest restaurants. You do not have to strut around in the finest designer clothes. You do not have to change your cell phone every six months. If you can still make do with what you have then do so.
Lack of Planning
Failing to plan is planning to fail. Plan your expenses. Make a budget. Stick to it. Do not just go on life spending money like water. A fool and his money are soon parted.
There are many people who go through life taking things as they come without thinking ahead. Despite them getting income increases at times, they still end up poor and broke. How is it when you were a rank and filer, you made the money you had fit your expenses? Now you were promoted and make twice as much, you are still broke. How is that possible?
Latte Factor
David Bach, the author of the best-selling book “The Automatic Millionaire” and “Start Smart Finish Rich” has used the term latte factor as a symbolism that we tend to spend money on little things and these tend to add up to a huge sum of money over time. According to him, these little things could be as trivial as coffee or bottled water. By cutting down on these little things, you could save a huge sum over your lifetime. That $3 cup of java could easily be worth tens of thousands of dollars throughout your lifetime.
Make a list of your daily expenses. Find out what you waste money on. It may seem trivial to you, but this waste accumulates and costs you a fortune.
Not Shopping Around
If you do your homework you could save some money. Look for the cheapest grocery or supermarket. Check out the different brands. Look for the lesser known ones or the store brands which are often cheaper. Look at the different sizes. Will you save if you buy in bulk? Shop around before buying an you could cut off some of the money you waste buying stuff at higher prices. The same goes for cars, appliances and what have you. Overpaying will equal overspending.
It may take a lot of will power but you must break free from the overspending habit. Take control of your own destiny. Do not let a habit hijack your life. Take hold of the steering wheel and get your life in order. Get it out of your system and live happily and prosperously.