Excessive spending is the number one reason most people end up with credit card debt. I’ve spent a lot of time analyzing excessive spending because this was a major contributor to how I ended up with over $150,000 in debt (not including my mortgage).
As someone who finds the mind fascinating (I even studied psychology as an undergrad student) I wanted to know why I kept spending beyond my means. I knew this was a bad idea, yet I kept doing it. Your reasons for overspending might not be the same as mine, but I hope my insights will help you find the meaning behind your excessive spending. Often where there’s meaning, there are tools we can use to change our behavior too!
For me, there were three main stages I progressed through on my journey to curb overspending. I’m simplifying here, and stages will vary depending on your situation. Here’s what it looked like for me: First there was a wake up call, then an understanding, and finally action steps to change my behavior.
If you’ve read my post about the snowball effect and how easy it was for me to keep going deeper into debt, you’ll see that echoed here. I knew for a very long time that I was over spending, but I had so many reasons why it was a good idea. Spoiler alert: It was not a good idea!
My excuses ranged from things like, “But this is for my kids, so it doesn’t count” to “This is an investment, I’ll get the money back.” If you have kids, I understand how you might be tempted to buy them the best of everything. You’ve probably also heard the advice that kids don’t need stuff, they need your time and your love. These things are all true, and since you’ve likely heard them before, I’m going to leave it at that.
Those things I was categorizing as “investments” were almost always courses. While I do believe there is value in investing in yourself, that’s not the same as a financial investment. With a financial investment such as a Guaranteed Investment Certificate, you earn interest when the investment matures. When you invest in yourself, while it might feel good, the truth of the matter is you aren’t guaranteed a financial reward from doing so. Just because I invest in a public speaking course, doesn’t mean I’ll be speaking to sold out audiences in the near future.
I felt as though each thing I purchased (that I couldn’t afford) was somehow going to help me improve my financial situation when it was actually doing the opposite. Then one day, I had a wake up call.
For me, this wake up call came in the form of not being able to make some of my loan payments one month. Until that point, I had juggled my finances around and paid debt with debt, which I recommend you avoid if possible. So, I had to let some accounts go unpaid, because there was nothing else I could do. I hated that.
This rock bottom point made me realize that all those things I was purchasing weren’t going to get me any closer to my goals. They were actually taking me further away from them. It was as if I was looking for some magical solution to all my financial problems. The hard truth is this doesn’t exist. Changing your financial situation takes work.
Have you ever experienced buyer’s remorse? This where instead of feeling good about something you’ve purchased you feel terrible about it. Some cases of buyer’s remorse continue for weeks or months. In my case, I would often fixate on my purchases and get so angry with myself I couldn’t let it go. This isn’t healthy.
I finally understood that once you move on from your mistakes, you can start to feel better and make a plan to change your behavior. In the journal prompts section below, you will find some questions you can reflect on to help you do this.
It can take time to figure out why we’ve developed the negative financial habits we have and that’s okay. Start by noticing things around you. What kind of overspending behavior are you susceptible to? How do you feel after you overspend? What would help you stop overspending?
When it comes to practical strategies for dealing with excessive spending, you could try removing the availability of your credit cards. If you find you are always charging items you don’t need on your credit card, then remove that opportunity. Cut up your cards or call your credit card company to cancel them. If you are going to cancel your cards, make sure you keep one in case of emergencies (legitimate emergencies only).
Start noticing when you are most likely to overspend and see what you can do to change that situation. For example, when I was in university, I liked to go shopping to cheer myself up. I was living off student loans, and I would go on major shopping sprees, purchasing clothing, CDs (can you still buy those?), makeup, and anything else I didn’t need.
To stop this excessive spending, I needed to find a better way of making myself feel better. I started going to the gym with a friend. The gym was free for students. Not only did I get the feel-good benefit of exercise, but I also got the benefit of having a good heart-to-heart with my friend too!
If you’ve read any of my other posts, you know that affirmations are a part of my financial improvement strategy. I use them for many other things besides personal finances. They really help encourage positive thinking and put an end to obsessing over past mistakes. Here are a few you can try:
If these affirmations don’t resonate with you, use your journal to brainstorm some that do.
Journaling was key in understanding my behavior. Writing down my thoughts about money helped me let go of my negative thinking and come up with an action plan. Here are some prompts you can use in your own journal.
When was the last time you experienced buyer’s remorse?
As icky as it is to experience those feelings of regretting a purchase, it’s important to understand your behavior in this situation so you may change it if that’s what you wish to do. Write in as much detail as you can about the last time you felt badly after purchasing something. This doesn’t have to be a large purchase. Sometimes we regret small purchases too.
What are some patterns you’ve noticed about your excessive spending?
Noticing patterns is helpful in changing our behavior. If you are always sad when you overspend, like I was in university (I still do this sometimes), you’ll know you need to come up with something else to do to make yourself feel better. Call a friend, go for a walk, read a book, or watch a funny movie.
Are you ready to take drastic actions to reduce your overspending? Why or why not?
When answering this question, I’d like you to write more than just yes or no. Answer the why or why not part too. Think about the practical strategies I noted above. Would any of those strategies work for you? You might also want to consider tracking your income and expenses for a month so you have an accurate picture of what is going in and out of your bank and credit card accounts.
I’m not saying I have one-hundred percent curbed my excessive spending. I completely admit to being a work in progress, but using the above strategies has reduced my spending and debt tremendously over the last few years. By getting real with myself and implementing some practical strategies, I’m in a much better place to improve my financial situation, and I wish the same for you. Believe me, if I can do it, so can you!
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From Mari:
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Author bio: Michelle Cornish is the author of Prosperity Planner: Manage Your Personal Finances and Get Out of Debt, an undated planner where she shares more about her personal financial journey and her TREE Method for keeping her personal finances in check.