If you've ever battled the credit card demons and felt like you were on the losing side, you've probably stopped once or twice to wonder about the psychology that drives up your debts and eats at your savings. What's going on in that head of yours, and how do you develop the healthy judgment to spend appropriately?
This question sparked a fascinating discussion on the Credit Cards and Consumer Debt discussion board, home of much tough love and sage advice about digging out of consumer debt.
There are many reasons we tell ourselves that spending money for something we don't need is perfectly fine, from rewarding ourselves for a bad day to the intense desire to never let a bargain or sale pass us by. How do we get control of the power that money can sometimes have over our reeling brains?
To summarize the insights of Fools who contributed to the discussion, I've drafted some questions you might ask yourself before spending your money in a way you might later regret. Read the whole thread or join the conversation here.
- Can I easily neutralize the excuse for buying? Try juxtaposing your excuse with an opposite question. If you tell yourself you can't pass up a great sale, ask yourself how and when you'll use the item to get your money's worth.
- Am I just bored? Sometimes triggers spur us to spend money when we'd otherwise not. You may have a pattern of spending when you're bored, when you're lonely, when you're happy, when your favorite football team wins a game. Who knows? If you can identify a pattern, you might be able to break it. You can also figure out what else you could do to relieve the boredom.
- Does it fit the budget? Allocating your money to certain specific spending categories can make you more conscious about how overspending harms your ability to meet your basic needs and live within your means. It can also help you separate your needs more clearly from your desires. A budget can bring a little more accountability to your spending, and it can also free you to spend money you've earmarked for fun.
- What's the deeper issue? Compulsive spending can sometimes reflect a need to fill some psychological or emotional hole we may not even see. In other words, spending can be a symptom of a bigger disease. If, for example, you've never learned to value yourself without measuring your material possessions, you can make headway on your debt by tackling the deeper issue.
- Where did I learn this behavior? Sometimes we pick up money behaviors from our parents, grandparents, religion, culture, or other influences without ever thinking about it. Sometimes we rebel and do just the opposite. See if you're spending without thinking for either of these reasons.
- Am I spending more for flash? It's easy to talk yourself into buying a more expensive television, toaster, or shampoo by telling yourself the better version is only a few dollars more. A few dollars here and a few dollars there, suddenly you've spent a lot of money. If you don't need the extra features, don't spring for them.
- Am I keeping up with the Joneses? If envy or the quest for perfection drives your purchases, you might not be shopping in the best frame of mind. It might also not be very satisfying. As said eloquently by SeattlePioneer, "I try to look at what my SELF really desires and wants in life. This requires a goodly amount of introspection."
This is one of the biggest perks of Fooldom -- the opportunity to learn from other Fools. If you're struggling with credit cards, the Credit Cards and Consumer Debt discussion board is a great place to get advice and support. You'll read some really inspiring stories of people who've been on the dark side of credit cards and worked their way back to health.
You can also learn about the workings of the credit industry and read about strategies for paying down debt in the Fool's Credit Center. Or if you're looking for investing ideas, credit card companies may not be a bad investment. For example, Inside Value recommendation MasterCard
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