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What is Your Debt Personality?:

Overspending

Part 1

You have two options: make more money or spend less money.  We really wish there was another way around it, but there’s not.  First, we want you to know that you’re not alone: the average U.S. citizen spends $1.33 for every $1 they earn.  This may not seem like a huge discrepancy, but adjust this number to the average salary of a college-educated adult and all of a sudden we’re spending almost $60,000 for every $45,000 salary.  This overspending adds up.

 

But you can quickly overcome this trend by sitting down and creating a budget for yourself – less than 50% of U.S. citizens have a personal budget, and less than 29% have a budget AND follow it the majority of the time.  If you skimmed over our section on Building a Budget, go back and read it.  Right now.  The information in that section, and the structured budget you will create from it, will be absolutely invaluable.  

 

Tips to Eliminate Impulse Spending

  • Cash is king.  At the beginning of each week, take the money you’ve budgeted for day-to-day spending out in cash.  This is what you get to spend for the entire week, and once it’s gone, it’s gone.  Leave all your cards in your glove compartment or at home – keeping them on your person will just make it that much easier to cave if you spend your cash too quickly.
  • If you have one-click checkouts enabled on any websites, delete your payment information.  If you have a Paypal account, have a trusted loved one change the password or disable it entirely.     
  • If having your credit cards easily accessible ANYWHERE is an obstacle for you, get your hands on a mint tin or other small container and freeze them, individually, in ice.      
  • If this still isn’t enough of a barrier for you, you may need to consider destroying your cards.  Once you have reached a point where your spending is under control and you have paid off your debt, you can always request new cards from the issuing credit card company.

We also understand that overspending is often a symptom of something greater, and that following these tips may not provide enough of the push you need to change your spending habits.  Please reach out to a financial therapist if you think you have issues with impulse control, are using “retail therapy” as a form of self-medication, or feel you may turn to shoplifting if you are unable to purchase the luxuries you are used to.  You can find several resources for compulsive spending online or through your local mental health professional.

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But What if Overspending Isn’t My Problem?

Sometimes the core issue isn’t that you’re spending frivolously, but that you’re trying to live off less than a living wage in your area.  While – yes – you are technically still spending more than you can afford, it is not because of impulse spending or an extravagant lifestyle.  

 

The obvious answer is to find a higher-paying job, but this is easier said than done.  This should be your long-term goal, but in the meantime you have a few options:

 

More Hours or a Second Job

It might not be glamorous, but food service and retail businesses are almost always looking for extra hourly employees.  This can be a short-term fix while you work on lowering your monthly living expenses or finding higher-paying work.       

 

Lower Your Monthly Living Expenses

Again, it’s not glamorous, but if you look critically at your budget you’ll probably find some excess spending.  Here are some commonly suggested areas to cut costs:

 

  • Phone/Internet/Cable Bill – If you’re not required to have a certain level of service for your job, cut all unnecessary phone, internet, and cable services.  You’ll likely cut a good chunk out of your monthly bills and won’t be missing anything you couldn’t get through your local library.
  • Roommates – If you are currently living on your own, consider bringing in roommates to significantly cut down the monthly cost of your rent/mortgage.  Your rent should be no more than 30% of your take-home income, and even less is better.
  • Groceries – Take full advantage of any discount grocers in you area (such as ALDI) and always go shopping with a planned list.
  • Hold on, say it with us: COOK EVERY MEAL – We know this advice is tired and sometimes inconvenient, but the markups at most restaurants (even fast food) can be so high that you could easily eat for an entire day on the cost of one meal.
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Why Don't We Advocate for Get-Rich-Quick Schemes?

Because while they may pad your wallet with a little extra beer money, they won’t save you from long-term debt.  Our goal is to prepare you for responsible spending and investing for the rest of your life – focusing on short-term fixes will just put a band-aid over the real problems affecting your finances.  

 

Let us help you create a budget designed for your individualized resources so that you can get your spending under control, pay off your existing debt, and start planning for the future.  You can break the cycle of overspending and credit card debt, but it will take some work evaluating your current habits and understanding that solutions won’t appear overnight.  But don’t stress, we’re here to help you along the way.  

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Overspending Checklist:

 

  • Build yourself a budget and follow through.
  • Identify impulse shopping and take our suggested steps to break this habit.
  • Find ways to lower your living expenses or raise your income.
  • Once your spending is under control, you can follow one of our strategies for eliminating your existing debt.

Want to read this later? Download this guide as a PDF or eBook.

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