Managing Your Spending Habits

Manage your spending

An extremely wealthy friend of mine once said to me, "If you can't afford to pay cash for it, DON'T BUY IT"! Of course this is an extreme scenario, because there will be times that we can't afford to pay cash for an item, but we will charge it anyway. When he said this, he wasn't referring to homes and cars or big ticket items like those. He was referring to the day to day impulses that we give in to. For example, that pair of shoes that catch your eye, but you don't really need it. That shirt that would match your new jeans, although you already have plenty at home. Taking all of your first dates to Five Star restaurants.

Managing your spending means watching your budget. It means cutting down on unnecessary expenditures. It doesn't mean depriving yourself of fun, it just means being smart about the expenditures you make. If you go out every weekend and spend $500 dollars, charged to your AMEX, MasterCard, Visa, or Discover Card. That is $2000 per month to party. If this is what you do, maybe stay in 2 weekends per month or do something inexpensive or free with friends 2 of those weekends. Maybe you might even consider doing something less expensive 3 weekends out of a month and then, maybe one regular weekend per month. We are talking about a savings of $1000 to $1500 per month with this simple modification. That doesn't include the interest payments that you would be saving!

Another thing to consider is to take a good long look in your closet and make note of how many items are sitting in there that have never been worn. Figure out the cost of that item that you may have charged to your credit card and calculate your credit card interest rate and the length of time it takes you to finish paying off that item and you may be surprised at the final cost for that pair of True Religion Jeans that you simply had to have. Or maybe it was a pair of Diesel Jeans, or Seven Jeans, or it could have been a pair of Lucky Jeans or any other pair of jeans that you spent over $100 on. The point that I'm making here is to not pull out your credit card at the first sign of something that catches your eye. Set up a goal for yourself and if you hit that goal, then allow yourself one treat. If you set goals and then reward yourself, you are going to see improvements. If you attempt to do something cold turkey, you might succeed for a while, but then again, you might relapse in a way that trumps your previous negative habits.