Wednesday

Four Leading Causes of Overspending


It seems even the most financially disciplined among us can sometimes slip up and spend more than they wanted to for something. Those more susceptible to the temptation of overspending are virtually surrounded by daily possibilities. To help identify the overspending trap here are four key reasons why we do it and how we can avoid it in the future.

Credit Cards

The factoid most bandied about concerning credit card debt is that the average American carries $8,000 of it. While I don’t personally know anyone that owes nearly that much, if it is a true average there are some people in this country that are seriously drowning in high interest debt and in need of credit repair. Your best bet to avoid this trap is to just not own any credit cards. Forget the regulatory reforms offered by congress. If you need plastic money, say for ordering items online or paying at the pump, use a debit card. To opt-out of receiving pre-approved credit offers visit OptOutPrescreen.

New Cars

I have never purchased a new car. But I know many who have, and I’ve heard most all of them complain about the monthly payments, fret about the slightest ding or scratch, implement no eating or drinking inside rules, spend top dollar to have them washed and cleaned, worry about how the weather might harm it, and on and on. All that for something that can depreciate from 10 to 20 percent in value in the first year of ownership and close to two thirds in value in five years. Let someone else take the hit. Buy your vehicles gently used, but severely depreciated.

Impulse

It seems that those who buy on impulse many times will either put themselves in the wrong situation or think that it will help some kind of unfulfilled perceived need. Because of everything from the candy and magazines in the grocery store checkout lanes to the tempting advertising that surrounds us everywhere, this can be a tough one to fight. Not having the money in the first place can help (see Credit Cards above) as well as not looking at the ads, grocery shopping on a full stomach and just staying out of the department stores. If you just have to buy something to make yourself feel better or to get over the bad day you had at work try an ice cream cone over those new pair of shoes.

Keeping Up With The Joneses

The Great Recession might have curtailed many from this annoying tendency, but I’m sure not all. My opinion is it is rooted in one of the darker sides of our nature, that of coveting what others have. But usually rather than stealing what our neighbors have we go further into debt buying like items. How to cure ourselves? Try to be happy with what we already have and stop paying attention to what everybody else has. Besides, most of what you are trying to keep up with has probably sunk the Joneses deep into a sea of red.

Related Reading:

What Money Mistake Do You Regret?

Why Do So Many PF Bloggers Start Off As Financial Idiots?

4 comments:

  1. I stayed home one year because I was overwhelmed with all I needed to get done. Had I just hired someone to clean the house every week, help with some of the laundry, and get a babysitter occasionally, our house would be paid off by now. That one year of single income had a huge negative impact on our pocketbook. Sometimes those extras can be used in such a way to make them profitable to us instead of trying to do too much.

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  2. One trick I have found to mitigate overspending is to save first. What I mean by that is to carve out 10% of your pay---the day you get it and put it into lock box. Too many treat savings as, what is left over. Instead, take it first. Sounds simple, but it is fundamentally different--and very important---especially for small business owners.

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  3. What you wrote in the site is so good , I like to read it. so you can do it better now !!

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