7 practical tips to help you curb your overspending once and for all!
“I can’t believe I did it again.” You say this to yourself as you keep your eyes up to avoid looking at that shopping bag at your feet. Now that the thrill of shopping has worn off, you are a little bit disgusted with yourself. You’re ashamed that you got caught up in the moment; you’re disappointed in yourself.
Yup, you went shopping again. How do I know these feelings? Because these are the exact things that I would say to myself after I got home from a shopping trip. I felt horrible, and what’s worse is that I didn’t even really like what I bought, I just wanted to buy something. I was happy when I was buying it, but not anymore.
It’s a horrible cycle to get caught up in, and I don’t want you to keep running in this financial stress hamster wheel, so today, we’re going to go through my top tips on how to stop spending money so you can ditch the guilt and finally grow your bank balance!
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How to know if you’re spending too much
Some people can afford their lavish lifestyle, and if they have all their financial bases covered, then great, go ahead and buy the latest and greatest gadget. But for most of us, we’re not rich, and we really can’t afford to blow on money on things we don’t need.
So let’s dig into how to know if you’re overspending…
- You can only make minimum payments on your credit card
- You don’t have an emergency fund
- You don’t have a retirement account or aren’t contributing
- Your credit cards are maxed out
- You’re opening up new cards
- You spend more than you earn
- You don’t have a good idea of the total amount of your debt (but you know it’s a lot)
- You have lots of items with the tags still on them
- You avoid looking at your credit card statements
- You’re spending just to earn reward points on your credit card
- You constantly feel guilty after shopping
- Your paycheck is basically all spent before it even hits your bank account
- Your savings account is empty
Maybe some of those scenarios rang true for you, and others were a no. So how do you know if your overspending habit is veering into a legit spending problem? Is there even such a thing as compulsive spending? Yes, there is; let’s dive in.
Do I have a shopping addiction?
According to Very Well Mind, shopping addiction is “Oniomania (compulsive shopping, or what’s more commonly referred to as shopping addiction) is perhaps the most socially acceptable addiction. Shopping addiction is a behavioral addiction that involves compulsive buying as a way to feel good and avoid negative feelings, such as anxiety and depression.”
According to WebMD, “A 2016 meta-analysis suggests that about 4.9 percent of Americans are addicted to shopping. The prevalence is even higher among university students (8.3%).”
It’s easy to dismiss that you don’t have a clinical problem, yet when you break down the types of shoppers, you may find that you closely relate to one category. According to Psychguides, there are six types of compulsive shoppers…
- Compulsive shopaholics who shop when they are feeling emotional distress.
- Trophy shopaholics who are always shopping for the perfect item.
- Shopaholics who want the image of being a big spender and love flashy items.
- Bargain seekers who purchase items they don’t need because they are on sale.
- Bulimic shoppers who get caught in a vicious cycle of buying and returning.
- Collectors who don’t feel complete unless they have one item in each color or every piece of a set.
There is help available if you feel that you have an actual compulsive shopping addiction (vs. you just like to shop); the Schulman Center is recognized as one of the leaders in helping people.
What happens if I don’t stop shopping and I run up debt?
Everyone knows that debt is “bad.” But what actually happens if you run up debt and you can’t pay? Let’s go through a typical scenario…
- You max out your cards, and you can’t pay the minimum balances on them. So you rack up more interest charges, which keeps increasing the balance due. You may start getting late payment fees as well.
- Credit card companies start calling you, asking for payment. Bills and notices increase.
- Credit card companies report this to the three credit bureaus, and your credit score drops, and it keeps dropping.
- Credit card companies may sell your debt to a collection agency, which is a lot more aggressive in trying to reach you and collect payment. According to ValuePenguin, “If your issuer or debt collector cancels more than $600 of your debt, you’ll have to pay taxes on the amount forgiven. In this situation, the IRS requires that debt collectors file a 1099-C form stating that the forgiven debt is reported as taxable income.
For example, if you have $10,000 in credit card debt and your card issuer decides to take $8,000 and forgive the rest, then they will file a 1099-C. You’ll then receive a notice that you have to report the $2,000 in settled debt as income, which you must then pay taxes on.”
- Your credit card issuer or a collection agency can decide to file a lawsuit, (called a judgment) against you to collect the outstanding debt. If a judgment is filed against you, it is best to answer the summons and explore the options you have. If you don’t respond to the judgment, you are nearly guaranteed to lose the case, resulting in forced debt repayment. If that happens, you could have your wages garnished, your bank accounts frozen, a lien put against your house, or any assets taken away from you. In addition, you can be charged for the legal fees accrued by the card issuer for any actions that it had to take to collect your debt.
In a worst-case scenario, ignoring a court order can result in contempt, resulting in a jail sentence. So it is best to always address these court notices, preferably with legal counsel, before they get out of hand.
- After all this, you may decide to declare bankruptcy; most individuals can file for two types of bankruptcy: Chapter 7 and Chapter 13. Chapter 7 bankruptcy requires a third-party trustee to liquidate your nonexempt assets to pay your debt collectors, but you could lose your house, your car, and any valuable personal possessions. Chapter 13 bankruptcy requires you to develop a plan to repay your debts within a reasonable timeline – three to five years – and then make payments to a third-party trustee who will pay your debt collectors. After a person successfully files for bankruptcy, the debt collectors are forced to stop most collection actions. Bankruptcy appears on your credit score for seven years if you file Chapter 7 bankruptcy and ten years if you file Chapter 13 bankruptcy.
How to stop spending money
1 . Know your financial goals and keep them visible
Everyone has goals; they may just not have defined them yet. Be thinking about what you really want. If you’re stumped at first, be sure to check out this list of the most popular financial goals.
Once you find something that you really want to work for, you need to make that financial goal visual. The first step is making it visible in your mind. Can you see yourself once you’ve reached this goal? For example, if you’re saving for a downpayment for a house, can you picture the house? Is it one story or two? What color is it, do you have a yard, what does the kitchen look like, is the sun shining through the windows? Can you hear the washing machine? Make it as mentally tactile as you can.
Once you do this, you become personally invested in this, and your brain and heart have a hard time giving it up. Now, you need to make it physically visual, like getting a savings goal chart to track your progress. Put the savings chart on your bathroom mirror; you’ll want to see it every day!
2 . Know your real hourly wage
Knowing your real hourly wage is such a powerful tool to helping you to stop spending money. Basically, you figure out how much money you make an hour after all expenses of working have been taken out. So your hourly wage may be $15, but after lunches, coffee and transportation, you may only take home $9.47 an hour.
So if you want a shirt that costs $79, then divide that by $9.47, which equals 8.3 hours worth of work. So, is that shirt worth it? Maybe yes, and perhaps no.
3 . Use the cash envelope budgeting method
It’s hard to overspend when you literally don’t have the money in your hand to spend! That’s what makes this budgeting method so popular!
At the beginning of every month, you withdraw cash (according to your written monthly budget) for your variable spending. You put the money in an envelope to spend during the month. So if you budget that you can spend $600 a month on food, you put that amount in an envelope, and when you pay for your groceries, it gets paid from that envelope. When the envelope is empty, no more shopping. You’re done spending, and you definitely cannot cheat and pull money from other envelopes or use a credit card to pay for it.
Note: cash envelopes are for your discretionary spending. Your utilities, insurance, mortgage should still be paid by check or debit/credit card.
If you’re curious about how much should go in each envelope, check out Dave Ramsey’s recommended budget category spending.
4 . Get rid of temptation
Why put yourself in direct line of unnecessary spending temptation? You’ll only cause yourself pain and frustration. So don’t do it!
1 . Lower credit card limits and close a few – If you have lots of credit cards, I strongly recommend that you cut a few up (but yes, you still have to make the debt repayments) so you won’t charge more on them. Then once they are paid off, close the account. You only need 1-2 credit cards, so pick the ones with the lowest interest rates and dump the rest.
You can also call the credit card company and ask them to lower your limit. This will help keep your spending down.
2 . Delete credit card info and saved info from shopping sites on your devices – Honestly, I’m a lazy person, so lazy that I know I won’t get up out of bed to get my wallet to input payment information to buy a shirt. My bed is warm and cozy, and that’s where I’ll stay! (BUT, if my info was saved on the site, I will hit the buy button.) Usually, I’ll look at the item in the morning and realize I don’t want it anymore. Win!
3 . Unsubscribe from stores and influencer emails and unfollow social accounts – If I don’t know about a store’s big sale or that they just got in their new spring collection, then I won’t be tempted to go shopping. Plain and simple, I can’t miss what I don’t know about. So unfollow and unsubscribe. I promise you won’t even miss them!
5 . Know your spending triggers
Everyone has some sort of spending trigger, it may be subtle, a tiny influence, or it could be a megaphone in your head. Do you shop when you’re bored or depressed? This is emotional spending. Do you shop when you see your BFF with something new? Do you stock up when something is on sale? Or maybe when you can’t sleep, you scroll Amazon’s deal pages? Or were you plagued by an impulse purchase, (every time you’d go out) that added up to a lot of consumer debt?
A common reason people go into debt is that they have a spending habit, that they think is necessary but really is a bad spending habit. For example, if you stop and get a coffee and a bagel sandwich every morning on your way to work. That seems reasonable, as you need to eat. But spending $12 every morning is slowly sinking your ship. You could easily make your coffee and breakfast at home and only spend $1-2 a day on it. The math of $12 a day (5 days a week x 40 weeks a year) is over $2,500). That’s a lot for a bagel & caffeine!
Start thinking about what is influencing you to buy, and then develop better ways to handle those emotions or situations.
For me, I get hangry, and then I go through the drive-thru which is a bad habit on multiple fronts. There goes $12 at McDonald’s for me and my little. Ugh! So to help combat this, I started packing car snacks, not for my kiddo but for me! My car door pocket has small mixed nut packets and fig & fruit bars. They are a lifesaver! If I’m hungry, I eat one of those, and that’s enough to hold me over until we can get home.
6 . Practise gratitude
When you’re shopping, you’re happy; you’re on a high. But does that happiness high last more than a few hours or days? Probably not, soon guilt creeps in about spending money that you know you should have saved. Going around with guilt is no way to live your life. So what do you do?
Now this one is very cliche, but it still is absolutely true. When you are grateful for what you have and content with your life, you aren’t constantly thinking about what would make your life better. You aren’t lured into buying the latest & greatest. You are happy with what you already have, so you don’t need to fill that hole by buying unnecessary things.
Below, Dr. Brown says we can’t find true joy without gratitude, which is a powerful statement. Focus on the first 90 seconds of the below clip.
7. Plan for having a shopping “replacement”
If you typically use shopping as a soother, or to celebrate you need to find healthier ways to still get those feelings. Identify the feeling that you crave and brainstorm a bunch of ways you can create those same feelings. For example, if you shopped to feel better, then what else can you do to feel better? Watch a favorite movie on the couch with popcorn and hot chocolate, or give yourself a pedicure, get creative and paint or color – there are some great coloring books for adults!
Make a big list and keep it handy for when you are feeling the urge to shop. Also, make it easy for you to do these things. If you identified cooking or baking as an activity go ahead and load up your Pinterest boards of recipes you want to try. If you want to read more, then grab the Libby app and connect it to your local library and go through some books, and tag the ones you want to read.
The key is to make this replacement activity as easy as possible so you can jump right in!
Questions to ask yourself before you buy
- Do I need this, or do I just want it?
- Could I borrow this from someone?
- Do I have something that could do the same thing?
- Is this a quality item?
- How often will I use it?
- Do I have a place to store it?
- Can I afford it?
- Is it in the budget?
- Is this bringing me closer to my goals or taking me away from my money goal?
At the end of the day
Figuring out how to stop spending money is unique to each individual. Maybe try one of the tips above or try four of the things I mentioned. Whatever it is that works for you, I want you to double down on it.
I just don’t want you to feel like you’re stuck, a victim to impulse spending and living paycheck to paycheck. You can change your future! You just have to start taking the small steps.
Soon, I promise you that your natural mindset will change as you will stop wanting to spend money, you will be focused on your financial goals, and be content with what you already have. And that feeling of being on your way towards financial freedom can’t be beat!
Articles related to How to Stop Spending Money Once and For All:
- Problem Overspending? Your Real Hourly Wage is the Solution!
- 8 Questions to Ask Yourself if You Want to Overcome Your Buying Triggers
- The #1 Thing You Need to do to Dump Your Money Anxiety