Spending Addict: Here Are Three Problems You Can Overcome

You have been on a spending spree using cheap money to improve your lifestyle. Everywhere you go, people tell you that interest rates are at record lows and that you should look for opportunities to spend before rates start to rise.

Your key purchases include a car, furniture, appliances, home renovation. you feel flattered that invitations to apply for credit cards keep coming. People tell you that you need good credit to get more credit, but even with your debt mounting, finance companies continue to offer you more credit.

People compliment you on your beautiful home and car! Your invisible debt masks reality, even for you! That is why, at this stage, life still seems good to you, with credit so easy.

You ignore the advice to work on a budget and keep spending because you must take these amazing offers How can companies afford to offer so many no-down-payment deals on such a wide variety of items? Just imagine, zero payments for two full years; wow! Really, you’re happy as long as these great deals keep coming your way.

Two years later, he is surprised when he starts receiving letters informing him that he must start paying off these loans. How can you owe $40,000? She didn’t think her spending was excessive! The monthly payment requirement for each item was reasonable. How could her total spending be that much, two years earlier?

Still in disbelief, you decide to review all those loan documents you signed and face your first big challenge. Where did you put those contracts you signed? You are in shock; How could you miss them?

Does this situation sound familiar to you? It is quite common and suggests three problems that I will briefly discuss:

1. uncontrolled spending
2. Lack of responsibility
3. Lack of a recovery system.

1. Uncontrolled spending

Uncontrolled spending is the most common reason people get into debt. Even so, it is the easiest thing to fix, if you accept responsibility for your actions and decide to change. Of course, you have to be disciplined and patient.

Studies show that 60-70% of supermarket purchases are impulsive, unplanned. Also, the longer a shopper stays in a store, the more they will buy. That’s why it’s critical that you plan your shopping trips and shop with a list, every time.

Get started with your shopping. Create a master list of the grocery items you buy on a regular basis. In the list, it shows the prices and, if you buy in different supermarkets, it indicates the name of each one next to the items on the list. Weekly, or whenever you normally shop for groceries, prepare a list specific to that trip; take the list with you and stick to it. For training, in the early stages of implementing this system, if while in the store you forget items you wanted, stick to your list; be prepared to make additional trips. You’ll be glad when shopping with just a list becomes second nature!

Between grocery shopping sprees, use a magnet to keep a blank piece of paper on your refrigerator. As items run out, or as you remember them, write them down on the list. Every time you go grocery shopping, review the list with your master list, and then make a list for this trip.

Extend this method to all your purchases. You will notice that you will significantly reduce your expenses if you follow this process. Later, this will lead to the regular use of a spending plan or budget.

2. Lack of accountability

Credit is easy to get. Credit is seductive and people spend impulsively. This is a bad combination that will trap you. Therefore, asking someone you trust to hold you accountable for following the above procedure could be an essential step for you to take control of your finances.

You can decide how many details of your finances you will share with this person. However, simply giving that person the right to ask how you are doing at agreed-upon intervals is fine.

3. Absence of a recovery system

Note that I didn’t mention a “file” system. You want a simple system that can access your key documents quickly. To develop it, ask yourself three questions:

1. What receipts and bills might you need later?
2. Why might you need them?
3. What keyword(s) could I use to remember where I stored the item?

Suppose you buy a computer, where will you put the receipt so you can find it quickly if you need to return it soon after you buy it? Do you file it by vendor name? Bills? Computer? Where? To answer this, try to imagine that you need to find the bill now. How could you think about it? Every home should develop a simple recovery system. To start, I suggest a seven-slot accordion folder for these items:

1. Church and charities
2. computers and accessories
3. Education
4. Finance
5. Furniture and appliances
6. Repairs and home maintenance
7. Transportation

The three solutions suggested above are difficult lifestyle changes, not easy financial juggling or engineering. They certainly require discipline, but the rewards are great and can be long-lasting: freedom from debt, family harmony, and peace of mind!

Copyright (c) 2011, Michel A. Bell