Shopping is so easy to do these days. You can use a store’s app for curbside pickup without even setting foot in a store. Hit “Buy Now” on Amazon, and your purchase is shipped before you can even put down your device. Convenient, yes, but that convenience can also land you in a lot of debt if you’re not careful.
If you’re addicted to shopping, the temptation is everywhere. While consumerism may be good for the economy, it’s not always good for your wallet. Kicking your spending addiction is a smart move that will pay dividends down the road. Here are five ways you can.
1. Use Debit, Not Credit
Credit used wisely can be a good thing. It helps you afford major purchases like a home or a car. That’s because it allows you to spend more money than you actually have on hand at the time.
It’s that spending-more-than-you-have ability that can land an addicted spender in major debt. It is indeed the stuff bankruptcies are made of.
Kick the habit by using your debit card for purchases and leave your credit card in your wallet. Although you may be tempted to spend more than you have in the bank, you won’t be able to. Instead, you’ll start to spend within your means and build healthier purchasing habits.
Of course, there are times when what you have in your checking account may not be sufficient. Think Christmas or vacation spending. Stick to debit when you can and need more; rely on credit but pay it off right away.
2. Stick to a Budget
We all work to buy things we need, like groceries and things we want, like new shoes. But few of us take the time to develop a budget that will rein in spending.
Sticking to a budget will give you the money you need to spend on whatever’s important to you. It will also help you keep you from using a credit card to buy something unnecessary. You’ll have to ask yourself, “Is this (insert name of item) in the budget?”
The budget should account for sums you plan to deposit into a savings account or retirement plan every month. It should also include payment amounts for credit card debt and secured debt (like a home loan). This could include paying an extra $50 toward the mortgage principal to work down the debt quickly.
If “budget” sounds constricting, call it a “spending plan” instead. This puts a positive spin on budgeting and can empower you to stay the course.
3. Set and Focus on Major Goals
Setting major goals will help you avoid minor spending roadblocks. For example, set a goal for accumulating the money you need for a down payment on your first home. Focusing on that goal will make it easier to skip buying that shiny new tech gadget you don’t really need.
Saving for retirement is always a worthy goal, too. Unless you think you can survive on Social Security, you’d better have a plan.
Conventional wisdom is that you need 80% of the income you’re making when you retire to be comfortable. If that’s $75,000 a year, you’ll need $60,000 a year in income to retire. The maximum benefit allowed under Social Security doesn’t even get you close. So, making retirement saving a priority is one way to bridge that gap.
Major goals don’t have to be huge. Skipping that daily $5 coffee for a month saves enough money to buy the smartwatch you’ve been coveting. Just keep your eye on the prize and keep the small stuff out of your line of sight.
4. Boost That Credit Score
Spending addictions typically lead to increasing credit card debt which leads to decreasing credit scores. Good credit scores qualify you for loans and garner lower interest rates. To reach some of those major goals, like buying a house, you need a boost from your credit score.
If you have significant credit card debt, it can feel like you’re not making any progress toward paying it down. Remember, you have to pay more than the monthly minimums and stop using the card. Otherwise, you really are stuck in a rut. But reducing your consumer debt will help improve your debt-to-credit ratio, which will improve your credit score.
A visual is a great tool to watch debt go down and your credit score moves up. There are many spreadsheet templates you can use to monitor debt, but you can keep it simple. Just list your credit cards down the left column and the months across the top.
Record the outstanding balance for each card each month with a cumulative total at the bottom of each column. Leave those zeros when you hit them and watch your debt taper off like a bad habit.
“spark joy” philosophy a little too hokey, ask yourself some questions about each item. Do you need it? Do you love it? Is it sentimental to you?
If the answer is “none of the above,” ditch it. Sell it, donate it, recycle it, and get it out of your space. Once you’ve pared down your stuff, commit to getting rid of something every time you buy something new.
You might find that decluttering your life makes you happier about the things you do keep. That, in turn, might help you ratchet down the wanton consumerism you’ve been addicted to.
Kick the Habit
It’s never easy to stop doing something you’re addicted to, but it’s always healthier. The best way to deal with this habit is to quit cold turkey. Stop buying all those bright and shiny things you don’t need. If you need to let yourself down gently, taper off. Resolve to spend a little less each month on non-essential items.
Everything is best in moderation, including your spending and debt. A few small changes now will add up to a lot of change down the road. After all, it’s better to collect the toll rather than pay it.
