Cheapskate Principle #5: No Compulsive Buying

I usually do not have a problem with compulsive buying. However, it is the holiday season and I know I will want to buy more for my family and friends than what I can really afford. The first goal I am making for this season is a list. Actually, I'm making two lists. One of those I want to get gifts for and one of the items I want to buy. Making lists is one way to cut down on compulsive buying. Trent at The Simple Dollar has created a list of ten ways to cut down on compulsive buying.

1. Keep Reminders of Your Dreams Next to Your Cash and Credit Cards
You may want to keep pictures of your kids or dream house in your wallet. If you do a lot of spending online, keep pictures or post its near your screen. The important thing is keeping the "main thing" the main thing and not losing sight of it.

2. Use Ten Second Rule
Whenever you go to purchase something, count to ten and consider how it fits in the bigger scheme of things. Don't just do this with major things. Our lattes and candy bars add up quickly. If you can save $10.00 a day, that adds up to $300.00 in a month. If you can save 10.00 a month, that becomes 120.00 a year. The key is to consider all purchases if they work towards your goals.

3. Keep Clean and Confident
Many times we stop striving for a goal because we loose confidence in ourselves. If we maintain our health and hygiene, then we will maintain our confidence. As parents, the first thing we take from the budget is our haircuts, dental appointments, and routine check ups. If we do not exhibit confidence in ourselves, who will?

4. Don't Take Your Credit Cards or Cash With You
This is great advice went you hit the malls. If you take more cash than you plan to spend, then you will probably spend. It may be as simple as stopping in at the food court to get a soda or a cheap jewelery store to get matching earrings, but you are still spending more than you budget for the trip. Don't take the extra cash nor the credit cards and you will build in the extra waiting period.

5. Avoid Situations Where It's Easy To Spend.
For me, it's an electronic store. Right now, Best Buy and Gamestop are offlimits to my son and me. We just want everything in the store and everything is "on sale". I know I can rationalize any purchase in my head, just not in the budget. So, I stay away from the electronic stores. For you it can be a drug store or an antique shop. Just stay away from where you are vulnerable.

We will continue the next five later today.

In a recent article on CNNMoney.com

In a recent article on CNNMoney.com, banks are beginning to discuss the idea of a credit card bailout. The article mention a bailout that would forgive up to 60% of the debt that consumers have racked up on plastic. My immediate reaction is yes- get me out of the hole I dug myself. Surely others would say the same thing.

Now my concern is "How we put up the shovel?" Have we truly learned to control our spending habits? Have we trained ourselves to spend less than we make? I would dare to answer no. Dealing with teen age students on a daily basis, I know that the greatest learning takes place when the kids apply the lesson I have taught them. I am learning my lesson about spending less than I make, give me an opportunity to apply it.

Shining Moment

Today was one of those moments that make all of my struggles worth it. My sixteen year old daughter wants a dog. She wants a dog so bad that she has given up a trip to Germany and her own car. After she gave up those items, I realized how bad our debt situation was and I realized that I couldn't afford Germany, car, or a dog. She received enough money for her sixteenth birthday last week to go to the local humane society and adopt an adorable pup. However, I made her sit down and research how much the dog would cost per month. She did her diligent research and came up with her totals including vet bills and local license requirements. Very impressive for a sixteen year old. Glad she takes after her mother. But back to main point, I sat down with her and showed her that she would have to put money in savings little each month to pay for the annual or quarterly costs. What has taken her father 37 years to learn, my daughter has learned at the 16 years old. She is now planning to get the job and pay for dog. She also is planning to pay the difference in insurance to place her on the auto policy. Now to work on the thirteen year old and the text messaging.

Taking on Water

If you are like me, you probably don't really realize where your money is going until you write it down. I was using Microsoft Money for years, only tracking my checking account. I knew I was making payments on my credit cards and other loans, but I really didn't grasp where my money was going. I begin to use other money management software and actually linked by credit card accounts to the software. In one month alone, interest and fees accumulated over $1000.00. On a monthly income of $5000.00, you could easily see that I was bailing water out of a boat with more leaks popping up daily. Most of the credit cards I have charge 39 dollar late fee in addition to the ungodly monthly interest rates at 18%. Multiply that by seven, add in the normal bank fees, you can quickly see how my little row boat was being hit by full blown tsunami. Of course, if I had planned and saved better in earlier years, I wouldn't be where I'm at now. One thing to improve your situation is negotiate your fees with your bank. The bucket I have chosen to bail water with is a debt management plan (DMP). There are pros and cons to this measure, but my thoughts are credit is going to be very stingy to come by for the next couple of years and if I didn't do something quick, my kids could be kissing college good bye. I know it will reflect on my credit report until I come out of it, but again my boat was almost under anyway and credit will be extremely tight. The other benefit of going this route is I have accountability built into the system. Most people can start on the new budget process, but it is so hard to continue following it without having their feet held to the fire. The DMP will do that for me, plus cut the time of eliminating debt paying only the minimum from 26 years to just under 5 years. Of course, I'm in severe trouble and more than one person has recommended bankruptcy. I totally discounted the idea of bankruptcy as lasted longer on the credit report and did not fit with my religious beliefs. Again, the way I'm bailing water out of my ship may not work for you (may not work for me), but that is the beauty of going on this journey together.

Another thing by writing down how you spend your money or itemizing it, is you find out you spend your cash. So many times our financial boat takes on water because we allow ourselves to spend money in small amounts. "It will be okay if I get a drink out of the machine or stop and get a biscuit on the way to work." If you stop and write down every dime you spend, not just cash withdrawals from the ATM, you would be amazed at the amount of money you spend. You truly find out where your money is going.

As Robin Williams' students in Dead Poet Society called out "Captain, my captain", be bold, be brave, and keep the boat afloat!