It’s no secret millions of Americans have a spending problem. Whether it’s binge shopping, impulse buying or trying to keep up with the Joneses, some consumers are finding themselves buried under massive debt and in hot water with creditors.
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For many over spenders, denial is the chosen copping method. After all, it’s much easier to pretend you’re not racking up the debt with that flat screen TV or $500 pair of shoes, but money experts say the first step in reigning in binge-buying habits is becoming fully aware of how much you are spending and evaluating a realistic budget.
When creating a budget, Paul Gentile, executive vice president of the Credit Union National Association, recommends calculating current income and spending levels and deciding how much you can afford to spend frivolously while still meeting all your debt obligations and putting money into savings.
“Consider making a list of the things that you really need as opposed to the things you really want,” he says.
Here are other expert tips to rein in your spending and help pay down credit card debt:
When it comes to overspending, temptation is the worst enemy. Experts suggest minimizing the temptation to overspend by avoiding any places where they might be likely to pick up a purchase.
“If people are over spenders they need to stay out of malls, discount stores and off the online shopping websites,” says Clare Levison, author of Frugal Isn’t Cheap: Spend Less, Save More and Live Better. “Instead of doing those kinds of things they should find free activities.”
Find Different Sources of Happiness
Rewind a few decades, and you’ll find a person’s success was measured by owning a modest home and having job security. Now, it’s all about the car in the drive, the size of the house and labels on the clothes.
In this material world, people are so focused on obtaining things they barely use rather than creating experiences or memories. A great way to reduce the urge to spend and improve your happiness level is to swap material goods for quality time with family and friends, says Levison.
“Start taking the emphasis off the material things in your life and your possessions and put it back on the things that are free,” she says. “The best things in life are free like friendships, relationships and quality family times. All those things don’t cost anything and enhance your life in ways possessions never could.”
Establish New Goals
Money experts recommend making your sole focus paying down the debt.
And while it’s impossible to cut out spending entirely, Gentile recommends using cash to limit bills. If you have to use a credit card, choose one with a lower interest rate and pay off the debt as soon as you can. The longer you carry a balance the more you’ll pay in interest rate charges. “Don’t borrow more than you can repay in several months,” says Gentile. “Remember that credit card debt is relatively expensive. And if you only make the required minimum monthly payment, you may never pay off the debt.”
Set Realistic Expectations
Curbing spending isn’t going to happen overnight, especially if you are used to frequent shopping trips. If you do get the urge and you can’t overcome it, experts say at the very least look for bargains and discounts instead of paying full price.
The internet has made it extremely easy to comparison shop and to find coupons, two surefire ways to spend less.
“You can easily save more than 10% on most items, sometimes considerably more, by comparing prices at different stores,” says Gentile. “But when shopping online, shop wisely. Be sure you are purchasing from a secure site and review emailed statements for accuracy as you receive them.”