Thursday, June 23, 2011

5 Ways To Fight Those Overspending Bad Habits

Blueberry Papaya Cucumber Juice and Chocolate ...Image by Food Thinkers via FlickrYou have made up your mind to get out of debt. All your spending and expenses are laid out in you new budget. You are going to be different from almost half of all Americans who don't even have a budget. You have a plan.

The problem is old habits are hard to break. You used to be unorganized and didn't even know where all your money went. The reason for that was you were a splurger. You saw something you liked and you bought it. You didn't care about a budget or saving, you wanted it and you wanted it now.

The budget process is a lot like being on a weight loss plan. You plan to eat less and work out at the gym but that chocolate cake sure looks good. The temptation is very strong and it takes a consistent effort to not eat the cake. The same is true for your budget. Old temptations to buy something you know is not on the budget is an old habit that is hard to break. It is possible that you may never be free from the old habits, so you need to understand how and when these temptations come up and form a plan to avoid them.

Human behavior is a hard thing to change, so we have to set up roadblocks to this bad behavior. If we were on a diet we would not have a chocolate cake on the kitchen table, so also we must remove items that cause us to spend to much.

1. When making a large purchase, talk it over.
Before you go out and spend money on something talk it over with someone you respect. After talking it over with someone you may realize that you don't need to buy the item you want. You may see another or cheaper alternative to your need. Plus this delaying of the purchase may just put you off to it altogether.

2. Put an item in your budget for these splurge purchases.
It's you emergency cushion for slip-ups in your spending. Planning on your future mistakes will allow the mistake to not mess up the rest of your budget. If you don't mess up use this money as a reward for getting through he month successfully.

3. Stash your savings in penalty rich accounts.
Penalty rich accounts are accounts like Ira's or 401(K)'s where withdrawing from them trips a penalty and income tax payable. When you think about the money you will be losing upon withdrawal you will think twice about using it.

4. In your mind pretend you already own the item.
When in the store shopping you may see something you want to splurge on. You know you shouldn't, but you are going to anyway. Trick yourself by holding the item as you walk around the store. Soon the need to purchase the item will pass and you will put the item down.

5. Leave your money and credit cards at home when you are shopping.
When shopping just bring the cash you need to get the job done. You have physical removed the most important thing from the purchasing equation, your money. No money, no splurging. It may seem childish, but you are in a financial mess and drastic steps need to be taken.

Learn from your mistakes.
More people than ever are filing bankruptcies, don't be a part of that statistic. Be creative about fighting your spending issues. It's hard, but in the end it will be worth it.

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