What helps you not spend? Could use some advice.

[KrystalKF]

Hi, I think I have a spending problem and although it's not making it hard for me to pay my bills I just think it's so incredibly wasteful that sometimes it makes me sick. I really could use some advice besides "cut up your credit cards" because I can't cut up my debit card.. LOL.

Here's my story.. I'm 20 years old and I make $35K/year. My few bills are: car payment ($200), braces payment ($200) and cell phone ($90). My cell includes my Dad's phone line which I'm paying to pay back $2000 they gave me as a downpayment for my Invisaligns. I have 2 credit cards: Discover ($820) and American Express ($2700). I'm pretty confident that I can get them paid off within the next few months as I have stopped using them completely.

My problem is that I have so much extra money after I get paid, even after making very large credit card payments, that I just buy so much unnecessary stuff. Mostly clothes and shoes. I buy semi-expensive brands but always on clearance or on Ebay (ugh!). I don't feel that I'm drowning in debt but it's still very bothersome. I could have so much in savings yet I see that goal as very far away, while these very cute shoes so close and attainable.

And it's not that I'm at malls constantly.. I mean, I am there probably once a week.. But still, it only takes one trip and one hour to spend hundreds.. And I am constantly online at my work and Ebay is the DEVIL! Would you believe that I bought brand new $495 BCBGMaxAzria shoes for $50? My reasoning is that it's such a good deal I can't pass it up.. But the problem is that pretty much everything on Ebay is a really good deal..

Too much of a good thing truly can be bad..

[KrystalKF]

Not that it really matters a whole lot but my credit cards are at 16% interest on the low balance and 4.99% on the higher balance until it's paid off. I have $440 in my savings but it's just to pay taxes on my car.

[rizzmo]

Hi there. I had this problem and here is a suggestion that work well for me.

First, when you find a great deal on something, it might help to ask yourself if you are buying it because of function or simply to posses it. Let us use your example of the deal you found on brand new shoes. If you needed a new pair of shoes, then find a great deal on E-bay or somewhere else, it would make sense to purchase the shoes at a discount since in therory you were going to purchase that particular pair of shoes anyway (In this case you would have saved yourself $445). However if you didn't need new shoes, it just ended up costing you $50 since you wouldn't have bought them otherwise. I found by looking at possible purchases in this way I avoid making a lot of discreationary purchases I later regret on some level.

Hope this helps!

[Caoineag]

Put your savings on automatic monthly withdrawals. That way you see it as another bill to pay and not as free money to spend. Start small and then gradually increase the amount as you grow comfortable with your lower take home pay. I did this with my Roth IRA and it helped tremendously.

[bjl584]

Well, if you have a whole bunch of extra money after you pay your bills, you may want to consider either putting that extra money toward your debts before you get a chance to spend it on frivilous things, OR you can up your contribution percentage to your 401K or open up a savings account, ROTH IRA, or other brokerage account and have your money automatically wired to it on pay day. This way you won't ever miss it.

[bjl584]

One more thing. You could ask your employer to block E-bay from your computer. Tell them you are having some money problems and that you don't need the temptation. They will probably be happy to do it for you. You can even butter them up a little explaining how much more of a productive worker you will become or something like that.

[jIM_Ohio]

Use two accounts. Hook the debit card up to one, and do not have debit card on the other. Maybe 2 seperate banks.

Pay the bills out of the one without the debit card. Write checks or do electronic banking. Only put modest spending money in the one with the debit card.

In addition, pick an investment and send money automatically to it.

[rob62521]

I concur with a couple of other posters -- pay down your debts early and then have automatic deductions for 401K or Roth or even just a savings account. Then, look at the statements as your money grows. Perhaps writing out a budget would also help, not because you need to, but just to help yourself stay within this budget and you might not be tempted to spend as much.

The second thing would be find a hobby that doesn't involve a lot of spending so you aren't tempted to buy things. If you are busy with the hobby you won't have as much time to pursue purchases.

[gackle]

Originally Posted by "KrystalKF

My reasoning is that it's such a good deal I can't pass it up..

This reminds me of a show that Oprah did on hoarders. This lady said the same thing. Every room in her house was piled with junk ("good deal" has morphed into "junk") to the ceiling. There was enough room in her house just to walk from room to room. It was disgusting. Obviously her quest for a good deal went beyond reason when she didn't even use the purchase. I don't know what motivates you so I thought I'd throw this out there. Good luck, you are in a lot better position with your money than so many others. I hope that you can benefit from it.

[mom-from-missouri]

I would have the extra put into savings automatically.
I would "block" ebay on the computer.
Don't carry your debit card/credit cards/or checkbook on a daily base. Only carry it when you plan to get grocery shopping/get gas....

[disneysteve]

Originally Posted by KrystalKF

I can't cut up my debit card.. LOL.

Actually, you can. Just go to your bank and request an ATM card only. You will be able to use it to get cash at an ATM but not as a debit card for purchases.

[mom-from-missouri]

Steve, I wouldn't be able to do that.

Our local fuel stations here require pay at the pump with a card only. I'd have to drive 17 miles to get fuel if I cut up my debit card. Our 2 stations no longer have an attendant as the owner closed the C store portion. On the positive side, they are now open 24 hours since they went all automatic.

In fact, Kansas City MO now has a pay at the pump or prepay policy also, in effort to prevent drive offs. Even in daylight, I hate having to take the kids in to prepay (safety issue). I could pay cash there, but I just read where they are seeing an increase in muggings now at stations as people (mainly women) are walking in to pay. Theives know those women have cash on them (if they were going to use a card, they would have used it at the pump) and they drive buy and take their purses.
Whats the world coming to anyway...

[lgslgs]

I'd really break the workplace E-bay habit fast. Not just to save money.

Most companies can and do track your internet usage. Even if you do your job well, it's a good way for companies to have a nice handy reason to downsize you or fire you if they need to cut staff in a hurry to cut their expenses.

Before internet usage was common, the standard "ace in the hole" trick for being able to fire someone without severence pay was "innappropriate use of company property". Especially with highly paid exectutives they used to watch company credit card spending like a hawk, and if they wanted to run someone out they'd start spitting hairs over business travel and moving expenses - looking for things they could lable as misuse.

At the company I worked for I saw people run out because for some reason the organization no longer wanted them there, but they'd justify termination through things like missing receipts for a moving expenses or other things that were often no more than errors on expense reports.

In the past few years, though, electronic monitoring of e-mail and internet usage is the tool of choice when you need an excuse to fire someone. If they can make a case that you do your shopping on company time, they can spin that as non-performance. Same with catching up on the CNN headlines, posting on a forum, sending personal e-mail, or making personal phone calls.


I'd suggest that if you feel you have a lot of extra money, you build a strong emergency fund so you can handle periods of unemployment in case you are ever downsized. At age 20, it is likely that sometime in your career you are going to work for an employer that gets in a financial pinch and needs to cut staff. Preparing your savings so you can easily skate through times like those should be one of your top priorities. It should really be ahead of clothes and shoes.

A lot of companies are going to be under pressure soon to make their profits look better. One of the fastest ways to do so is to cut expenses fast, and that usually means cutting jobs fast. That doesn't always mean that good people are going to keep their jobs. If you work in a department with 5 people, and they are all good at what they do, it could be any one of you that ends up getting the axe and your employer really doesn't need a particularly good reason to justify it.

Hopefully that helps make the idea of banking 6 months of living expenses feel like a more important short term goal than something flashy at the mall.

Lynda

[cptacek]

You, my friend, are ready to become an investor. You don't spend all of your income, you see a big pile of money in your checking account, and because it is not allocated to something, you felt you could blow it on whatever.

But, now, you are questioning your spending habits, and want to do something to change it. That's good. You have the will. Now, all you need is a plan!

First, pay off the credit card. 16% interest is TERRIBLE!!! Get rid of it!!!

Next, I agree with jIM_OHIO...get two seperate bank accounts, or a checking and saving account. You have to decide how much money you have to spend on bills every month, how much money you want to spend on other stuff every month (I'll call it blow money), and how much money you want to invest every month. It is your choice, but it is very important that every dollar you make has a plan for how you are going to spend it. That's called a budget.

Don't run away screaming! You already have a budget (pay my bills and blow the rest of it), you just need to change it to include saving and investing. Then, put the bill money and the blow money in one account and the saving and investing money in another account. Don't charge anything else on the cards, pay them off, and decrease the blow money to a comfortable level for you. (You are not comfortable now because you have too much blow money, so decrease that until you are at a comfortable level. If you go too far, though, you won't be comfortable and might rebel against your new budget). Do that for a few months, and once you get the hang of it, then start looking to invest the money you have saved.

[Mikeee]

Originally Posted by KrystalKF

My problem is that I have so much extra money after I get paid, even after making very large credit card payments, that I just buy so much unnecessary stuff.

With all the debt, what is the highest rate, the cards? Pay them off fully each time.

Sounds like you should put those cards in the freezer for a while.

A bargain is no bargain if the item is not used. Also learning need versus want is important.

Best Wishes

[rizzmo]

Originally Posted by cptacek

You, my friend, are ready to become an investor. You don't spend all of your income, you see a big pile of money in your checking account, and because it is not allocated to something, you felt you could blow it on whatever.

I second that advise, it is much easier to save when you have your dollars allocated. Investing makes savings all that much more exciting!

[lucasrd]

look at your spending as a function of time. If you're blowing $500 a month...that's $6000 a year and $60K in 10 years not counting in interest. I'm sure you'd rather have a bank account with 60K in it in 10 years than some old worn out shoes and pants...add in just 5% return and we're talking almost 80K

When ever I am going to buy something or modify my budget I put into this excel sheet I have that calculates my worth out over then next 35 years...it's funny, but a few grand early on can result in tens if not hunderds of thousands of dollars difference down the road (depending on how you invest it).

If you can keep that in the back of your head the next time you drop $200 on some shoes it might make you change your mind.

[PrincessPerky]

I discovered my desire to own things was greatly reduced when I started donating some. reducing the pile made me look long and hard at a good deal..one that may have sat never worn/used for months.

Also donating time to those with less, helps keep me thankful for what I have, rather than wanting more.

Not to mention less time to shop is less time to spend.

Ditto all the 'make it automatic' ideas. My bank account automatically pays extra on my car each month, I still have to think about it when we have overtime to spend, but not the basic budget. you could do the same with your CCs first, then when they are gone, try it on the braces or car.

Also all the time to set the auto up is time you are not on ebay . which btw, I also agree is dangerous ground to be checking at work. if you are not selling, with all that debt I would not visit period.

[Ariadne]

I used this trick a few years ago, and you only have to do this for 1 month to get started (it's so easy)...

Estimate how much money you need to survive for the next two weeks. Add 20% extra for 'wiggle room'. Take that money out of the bank in cash. You'll have to live off of cash until the next pay day.

Put 1 credit card in a safe hiding place at home, so that you can access it when you need it in the event of an emergency.

Put all other cards in a plastic cup, fill it with water and put it in the freezer.

2 weeks later, go back to the bank, withdraw cash and live off of that.

If you get the idea that you "want" to buy something, you'll need to wait for the cards in the freezer to defrost before you can get what you "want".

Just my 2 cents.

BTW, stay off eBay at work. It can constitute 'Just Cause' for terminating your employment. And whatever you do, don't ask them to block eBay on your computer. Besides, they probably know that you're on there anyway.

[Ima saver]

I have not been to a mall in about 7 years. It really works for me. why buy something that i don't really need. It is much more fun to watch the savings and the interest pile up!!