“We don’t have a trillion dollar debt because we tax too much; we have a trillion dollar debt because we spend too much.”
President Ronald Reagan
President Reagan was right and in order for you to stop being a debt slave you must stop spending more and more and more.
Here are 6 easy ways to help control the amount you spend:
1. Stay away from stores except when there are things you need to buy. Impulse shopping equals more money spent. And whatever you do, don’t go to Costco or Sam’s Club when you’re hungry. There’s a reason they both have a battalion of grey-haired ladies all serving tasty food with those wonderful smells. When you get to the store, buy what is on your list and leave.
2. Always have a purpose or plan when you go shopping by making a list and sticking to it. People tend to spend less when the get only what is on their list and resist the impulse buy.
3. Go to the store once a week, or only when you need to go. Multiple trips to the grocery means you can spend up to 25% more money than you planned.
4. If you are planning a social outing, leave the credit cards at home, then have fun, but take only cash.
5. If you’re “down in the dumps” don’t go shopping at all. There is no such thing as “retail therapy.” This “therapy” gets you farther into debt and does nothing to build your financial future and can actually contribute to depression.
6. Find a substitute for shopping. Do something other than go to a store. Go for a walk, or hike, read a book or call a friend. Your life is not at the mall, it’s inside you.
To Shop or Not to Shop… That IS the Question
Stop right there! Is that fabulous new blue sweater what you need, or just what you want? The sweater better be fabulous because if you use a credit card to buy the sweater instead of paying cash, you’ll spend about 32% more for the sweater in the long run because of interest rates and fees than you would if you paid cash.
When you get the urge to spend, ask yourself these three easy questions:
• Will this purchase help me meet my long-term financial goals?
• Do I need it or can I do without it for a while
• Will this purchase help make me money so I can pay off my debts faster?
If the answer is, “No” to any of these questions, pass on the purchase (for now) and put your money to better use, like paying down your credit cards.
Self-control (I know, it’s almost a four-letter word, but hang in there)
Developing your self-control doesn’t happen overnight, just as your spending habits didn’t either. When faced with a big problem many business people say “You need to eat the elephant one bite at a time and don’t worry about eating the whole thing in one bite.” It’s good advice. The way you change your habits and develop more self-control is to pick one simple spending habit you want to change each week over the next few months.
Once you’ve picked a few habits you want to change, you need to develop a plan so you can measure your progress along the way. To make your plan have a better outcome for you I suggest that you also set a deadline for yourself to evaluate if the habit has been changed.
For example, your goal might be to save ten dollars a week, or cut your grocery spending by 5%. See the Quick-Start Checklist: Self Control at the end of this Key for how you can start controlling the amount of money you spend.
Just like working out, you need to practice your new habits daily. Do something every day to help you reach your goal. Research says it takes twenty-three days to form a new habit, so don’t panic, it does happen.
A great way to “force” yourself to have self control is to simply remove all of your credit cards from your wallet or purse, that way you MUST be on a cash (or debit card) only system from now on. I do this every day and it really does keep the amount I spend in check. If I can’t afford what I want, I wait until I can.
If you are unable to take this step, because right now you are living on your credit cards, take as many credit cards out of your wallet or purse as you can. By removing the ease of using credit, you remove your future debt. You can do this, and it’s not too hard. Yes, there will be times that are difficult, but if you do what’s easy, life is hard. If you do what’s hard now, the rest of your life will be easy.
