Ramsey County

Making $ense of Dollars and Cents

June 30, 2008

Controlling the Urge to Splurge

          Books, classes and news columns – like this one – on financial management often have advice on how to get out of debt and how to stay our of debt.  An important aspect of debt that is not always discussed is why someone is in debt in the first place.  Unexpected medical expenses, natural disasters, like the floods in Iowa, and rising home mortgage costs can quickly push even the most balanced budget out of whack.  But for many individuals, it isn’t a large disaster that causes their credit woes, but rather a lot of small disastrous decisions.

          Why you did someone get too deeply into debt in the first place. Why did we keep charging items we can’t afford? Why did we feel the urge to use those plastic cards for things that aren’t necessary? What causes compulsive shopping?

          A negative aspect of using credit cards instead of cash is that you don't feel like you're spending real money. The pleasant feelings you experience when you purchase the item are disconnected from the unpleasant or painful feelings of making the payment when you get the credit card statement. Studies show that most people are much less likely to buy, or less willing to spend as much, when paying with cash as opposed to credit cards. Try leaving your credit cards at home. Pay with cash, check, or a debit card.

          Make an effort to notice how you interact with money and what beliefs and attitudes you have about money. Studies also show that people with low self-esteem engage in more impulse spending and buying things they don't need. Remind yourself daily that money or a lack of it doesn't determine who you are.

          Try adding the “waiting game” to your purchases. When you spot an item you wish to purchase, no matter how much or little it costs, wait somewhere between 7 and 30 days before purchasing it.  Often during that waiting period, the desire for that item evaporates. – which means it was a ”want” in your life, not a “need”. Some people like to create a list of their desired purchases and review their list form time to time.  Reviewing their list helps them reconsider the importance of that item.  

          Set a future financial goal. If you don't have specific financial goals, it's more difficult to resist spending money on items that don't really have any meaning to you. Once you're already saving regularly towards your most important financial goals, you may want to have a fund to use specifically for occasionally spending money on unplanned items. Then you can indulge in occasional impulse spending without jeopardizing your financial future.

          Avoid advertising and temptation. Steer clear of situations that expose you to advertising and opportunities to spend your hard-earned dollars.  Walking through a mall is a proven budget-buster for many people.  

          Consider taxing yourself whenever you make an impulse purchase. Take 10% of what you paid and put it into savings. This not only helps build up your savings but can make you more aware of your spending habits.

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Devils Lake  ND  58301
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email - ramsey@ndsuext.nodak.edu