The average credit-card holding household in America has a little over $8,000 in credit card debt. Meanwhile, the Economic Policy Institute estimates that the average wage worker is making about $40,000 a year. That puts the average household credit card debt at nearly a quarter of many household’s annual income after taxes. Those are some scary figures, but if you have a bit of a shopping problem, sometimes there’s value in a little scare.
If you carry a lot of credit card debt, there can be this constantly looming feeling that what is yours isn’t really yours. The items you have aren’t entirely paid off. The money you see in your checking account isn’t entirely yours – somebody is coming for a lot of it. It’s an unfortunate way to live. It can be suffocating. And while pulling back on spending can’t fix all of a person’s financial problems, it’s a start. And there are life-long benefits of developing healthy spending habits. Even if you’re fortunate enough to win the lottery one day, if you have bad spending habits, you’ll lose even those tremendous earnings. So, on that note, here’s how to stop making excuses for purchases you shouldn’t make.
Ask: is it an appreciating or depreciating item?
Any time you want to spend money on something, ask yourself if you’ll ever see that money again. In other words: is this an item that will appreciate, so you can sell it? Or only depreciate? Can you get anything out of it, ever again? Very, very few items appreciate. Most cars lose much of their value the moment they leave the lot (unless you collect rare, vintage vehicles that sit untouched in your garage). Most fashion items plummet in value instantly (unless some celebrity signs them). Focus on funneling your money into only appreciating items, and you’ll suddenly find that not many things fit that description.
Is it really an investment in yourself?
“It’s an investment in me.” You hear that a lot from shopping addicts. A beautiful coat or handbag. An apartment lease that’s way too expensive. People say it’s an investment in themselves – that potential clients will trust them if they live somewhere nice or wear high-end fashion. But is a jacket really an investment in you? You know there are perfectly good, professional-looking blazers at Target. A true investment in yourself is something like, a degree. Or, an assistant if you’re too bogged down with small, admin tasks to pursue more profitable activities.
Think of long-term financial goals
Consider your long-term financial goals next time you want to buy a pair of shoes or do another bottomless mimosas brunch at that place where waffles cost $22. Do you want to put a down payment on a home? Pay off your car loan? Pay off your student debt? Save enough to make an investment? Every single frivolous purchase sends you in the wrong direction – further away from those goals.
Is this linked to an emotion?
Do a little emotional inventory. It’s important in our retail therapy culture. Are you perhaps spending money to avoid negative feelings about something? To superficially address feelings of inadequacy? To feel a sense of power after an event that left you feeling powerless? To feel accepted by people who, don’t even really care about you (anyone who needs you to live large to accept you doesn’t care about you)?
Remember the last similar purchase
Think of the last thing you bought like this. Where is it now? Is it collecting dust in the back of a closet? Did it turn out to be quite fragile, and broke quickly? Did you forget all about it? Even if none of that is true, did it really add the value to your life that you thought it would when you bought it? Or did all the excitement die off, as soon as you swiped your card? Probably some combination of those scenarios is true because most physical objects can’t bring us long-lasting joy.
Do not shop with enablers
If you’re serious about kicking your shopping problem, you’re going to have to stop spending time with enablers. Others who have spending addictions will try to talk you into spending money, to make themselves feel justified in their spending habits. It’s very unhealthy. Beware of friends who say things like “You deserve it” and “You earned it.” They aren’t thinking about the fact that what you really deserve is financial stability – it’s more valuable than those earrings.
It’s not “a great deal” if you don’t need it
Stop focusing on the great deal. Stop thinking about how at one place, the item was $300, and here it’s “only $189.” Stop obsessing about how there are only a few left, and about how it’s 75% off. Nothing is a good deal if you don’t need it. You don’t save $111 by getting an item you don’t need that’s discounted from $300 to $189. You just waste $189.
How many days/hours to pay it off?
Put some real thought into the time you’ll need to spend at work to pay off this item. If you don’t like your job, you should really think about that. How many spreadsheets do you have to create? Or dogs do you have to walk? Or clients do you need to take on? How many hours does it really take to pay for this? When you put yourself there – really envision the work – you may realize it’s not worth it.
Consider what the money could be earning
Weekly mimosa brunches, for a year, could have been some serious cash that you invested. Let’s think: if the average one of these brunches is say, $50 after tax and tip (and that’s probably conservative), that’s $200 a month, and $2,400 a year. You could invest that money. It could be earning you more money, rather than just earning you eggs benedict and champagne that instantly go away.
What could that money do for somebody else?
This will entirely flip the script on your thinking. What if, instead of asking what the money could do for you, you consider what the money could do for somebody else. The $100 you want to drop on that dress could feed a family in need for a week. That $5,000 you want to drop on a spa weekend – it could cover part of a surgery at a non-profit children’s hospital. It does nothing, really, to enhance your life, but could save somebody else’s.
How’s your checking account been doing?
Be real with yourself for a moment. Rather than taking this day by day, and purchase by purchase, be honest with yourself about how your finances have been trending. If the number in your checking account has not been steadily increasing over the years, you should not be dropping money on things you don’t need. You should never really drop money on things you don’t need, but those who aren’t even in the green with savings definitely shouldn’t be. That’s the fast track to being broke.
What would your financial role model do?
Who does it seem has it all together, financially? When you think of someone who is in control of their money and always making smart moves, who is that? Okay, now ask yourself what they’d tell you, if they were here right now, standing between you and those suede boots. Shop with the intention of making that person proud – even if they’ll never know about it.
If you lost your job tomorrow, would you buy it?
This is a rapid and scary reality check, but sometimes a necessary one. We often justify purchases with our current financial situation in mind. But what if your situation changed in an instant (which it can). If you lost your job tomorrow, would you still buy that $300 dress? Probably not. Well, nothing about tomorrow is promised. Prepare for the worst, but hope for the best. Preparing for the worst doesn’t involve $300 dresses.
How much have you spent on things like this?
Calculate how much you’ve spent on items like this. Let’s say, for example, it’s a piece of jewelry from a high-end brand that you love. You buy three or four pieces a year from them, and each piece is around $150 to $200. On a pricey year, that’s $800 on this jewelry. Which does not appreciate. Instead of thinking of this one purchase, think of your pattern of these types of purchases, and what you could have done with that money if you’d saved it.
Have a “sponsor”
Just like those in gamblers anonymous or alcoholics anonymous have sponsors, so, too, should a shopping addict have a sponsor. Have somebody on speed dial who you can call when you feel the impulse to shop. And, like with any sponsorship program, it will benefit you to be somebody’s sponsor, too.