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How to Quit Overspending

How to Quit Overspending

Overspending can be every bit a habit as drinking or smoking. While you won't die from overspending, it is deadly for your financial health.

The big question though, is how to just say no?

Look at root causes

Dr. Simon Rego, director of psychology training and the CBT Training Program at Montefiore Medical Center/Albert Einstein College of Medicine, as a cognitive-behavioral psychologist works with people to help them examine the role that problematic thoughts, behavioral patterns and emotions can play on overspending and how to change them. He offers insight. “Start monitoring the behavior. Write down what you want to buy, why you want to buy it (thoughts), how you are feeling before you buy it (emotions), and how much it costs – as well as how you feel and what you're thinking after (if you end up buying it),” says Rego. This not only will give you a clue into what may be triggering the overspending, for example, discovering that it often occurs when you're in a bad mood, but at times, having to write it out first may slow things down just enough to deter an impulse.

Mackey McNeill, CEO of Mackey Advisors, asks clients with spending issues to get in touch with what spending money provides them. “I have them list everything they want. Everything they can dream of, having, a big house, new car, down to new clothes, etc. Then I ask over and over, what does that provide? Whatever their first answer is, I say what does that provide and so forth? We go over every item until it is clear they all provide one thing. I have clients tell me things like love, joy, always something deep and esoteric.”

Challenge problematic thoughts

After self-monitoring, you may notice a theme in what you think before overspending, “This will make me feel better, or it's on sale, I'll never get a deal like this again.” Rego says to practice challenging these type of overspending-inducing thoughts by putting them “on trial” and “cross-examining” them the same way a lawyer would do. For example, is there any evidence to support the thought or thoughts? Any evidence to refute them? What would you tell a friend (who is in financial trouble) who had the same thoughts? What are the consequences of your overspending?

Swim counter to the culture

For all the inner stuff that causes overspending, there's no denying that America is all about consumerism. “A consumerist culture is woven into our DNA. We are essentially programmed to reach beyond our means, without fully understanding the value of credit. People take out credit cards and don't understand that money must be repaid,” says Jason Kolinsky, a certified financial planner with Kolinsky Wealth Management. “We live in a world where children are walking around with $600 iPhones and they grow up believing they need expensive sunglasses or jeans to fit it. There are people spending money that they don't have, and they don't even realize they don't have it,” he says.

Break the cycle

McNeill asks clients to make a list of five things that deliver the same feelings they get when spending, such as joy and love, that cost nothing or close to nothing. It could be something like time in the park, at the beach, in the woods, time with family or friends, or a good book from the library. She asks them to indulge in those five things often, and better still if they journal about their experience and meditate. “We talk about self-observation and the ability to go within yourself and become the observer of your behavior,” says McNeill.

Then she gets them to start saving money. McNeill begins with small amounts, even as little as $5 a paycheck, something they will always be able to manage. “The idea is they have never been savers, so we start small so they have zero chance of failure. They open a simple savings account.”

They replace their shopping time with the five, free or low-cost things that give them a similar charge. “I ask them only to buy things they can return and to wait 24 hours before they use it. If they are still willing to do what it takes to pay for the item, after 24 hours they can keep it. If not, they return it. After a few weeks and months I have found they get so excited about the changes, they keep moving forward.”

What's key though, is the person must want to change. “If they tell me they are the victim of circumstance and go through a laundry list of why the world is stacked against them, I send them to someone who works with people on their fundamental beliefs,” says McNeill.

Some come back to work with her on money after they shift their beliefs, and some stay stuck and she never seems them again. Says McNeill, “The bottom line is if the person doesn't believe they have choices, then I can't help them.”

Rego says that if you find that shopping is your chief method of relieving stress, seek relaxation elsewhere, such as breathing exercises. “If you find that you overspend when you are angry or anxious, find a new way to deal with that emotion. You may be able to discharge it, without 'charging' it.”

Make it difficult to overspend. “It's hard to overspend if you don't have money or credit cards available. If necessary, restrict access to them until the behavior is brought under better control. Lock away credit cards or speak to your bank about putting a limit on them. Carry only the minimum amount of cash you need each day. Turn off '1-click' purchasing on websites (or block access to them – or the Internet, temporarily),” says Rego. Everything you can do to make it harder to overspend, can make it more likely you'll succeed, he says.

Don't go it alone

Kolinksy says one way to help break the cycle is to find a financial role model. “We all know people who are great with money, whether it's your co-worker who always packs a lunch or your coupon-clipping aunt. Take notice of the little things your financial role model does and try to emulate them yourself.”

You need an accountability partner, be it a friend, family member or a professional like a financial advisor.

What's important though, is just like the alcoholic has to admit they can't handle booze, come clean. The first step in getting better is realizing there's a problem.

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paoli2   |     |   Comment #1
Thanks for the article Sheryl but sometimes we aren't responsible for certain overspending.  For example, why don't doctors ever know how expensive some of the meds they prescribe are?  They should at least have someone in their offices to check out the meds and see if they have a cheaper alternative.  I have spent days trying to find where I can get an RX  for less which our plan does not cover.   I would not care if it were something he only has to take for a couple of months but this doc put 14 refills on it!  Medical overspending is not something we can always control.  I'll tell you one thing.  Docs do not like it when we bring up money to them or why can't they find a less expensive drug for us. No matter to me.   I either pin notes to DP's shirt if I don't go in with him or make sure "I" ask about the cost.  Money is money and I am not the one driving the Mercedes.
Anonymous   |     |   Comment #2
I do not believe Sheryl Nash was referring to over spending on the necessities, ie. food and medical care.  Her article pertains more to the over spending on the wants rather than the needs.  One simple solution boils down to SELF CONTROL.  Plain and simple. 
my2cents   |     |   Comment #4
While there is no easy answer for every situation, here's one easy solution:

Automatically (even if you have to do it manually) take at least a small portion of whatever income you get, and immediately take it away and set it aside as if YOU NEVER HAD IT. If you get paid $100, take $10 of it (for example) and pretend your check was only for $90 -- and set that $10 aside in account that you DO NOT withdraw from. If it helps some people, you can purposefully make it HARD to withdraw from such account (perhaps having it be an add-on CD account that you can add to, but not withdraw from, or a savings account at a bank that is NOT closeby that you can ACH funds INTO but not OUT of -- and then simply cut up the ATM card).

Just like if you're trying to lose weight, one of the best things you can do to avoid late-night snacking is so simple it's ridiculous: brush your teeth early. You're not going to want to eat and have to brush your teeth again after just having brushed your teeth.

Don't go overboard, but take just a bit away from everything you get and pretend it NEVER EXISTED, and set it aside.

mustsavemore   |     |   Comment #6
Paoli2 advocates taking the bite out of doctors' salaries to pay for the rest of us. Officer thinking to be sure, but it doesn't go far enough. EVERYBODY must pay, and only the government can make that happen. Not popular to be sure, but then again Paoli2 might be surprised that doctors might like like his/her idea either.
paoli2   |     |   Comment #8
#6  What does my post about expensive meds have to do with "taking the bite out of doctor's salaries?" I am not asking them to "pay" for my meds. 
mustsavemore   |     |   Comment #9
You said "money is money and I am not the one driving the Mercedes". Believe it or not, I know doctors who don't drive a Mercedes because they aren't that rich.
paoli2   |     |   Comment #11
#9  I was just playing off of the recent post which said doctors were going to make house calls and drive up in their Mercedes.  I know they all don't own luxurious cars.  What I don't understand is why you didn't find anything wrong with that poster's mention of doctors owning Mercedes.  If you are a doctor and feel I insulted you, please accept my apologies.  I apologize for whatever I said, or might ever say in this life and in any other.  Now are we ok? 
mustsavemore   |     |   Comment #12
#11- No offense taken. For the record I don't have a Mercedes or can afford that either. But I do know some doctors and their reimbursements are so ridiculously low that many of them are going out of business. It was a real eye opener for me to see that financially. Yet no one talks about the businessmen, bankers, lawyers, politicians, etc. who are making BANK.
paoli2   |     |   Comment #13
#12  Thank you for understanding.  I just would like to say that I don't begrudge my doctors whatever they make.  I see on my Explanation of Benefits how their payments are cut down and now they are stressed doubly by having to make everything electronic.  Whenever I have gone in to see them lately, they seem in worse shape than I am trying to deal with patients and then having to type everything on the computer. I just hope we don't lose more of them the way things are going in the medical profession.  I have great doctors.  They keep me alive and if anyone deserves a Mercedes.  They do!  Have a good evening.
Anonymous   |     |   Comment #10
You can write millions of articles like this one, but people do not like to be changed.
I know people who are so much opposite of being spenders, that they are almost mentally ill.
My neighbor has 2.5 millions in the bank, but they drive 25 years old car, never bought new furniture since the 1960 and eat macaroni and cheese every second day.
They are afraid to buy anything that is not on sale and are always miserable, day in day out.
They will die rich, but they live like in a dog house all their lives. Never socialize or go on vacation.
My other neighbor on the north side of me is the person you explained in your article and he lives with his 2 daughters and spends every penny he gets from his work and then some more on credit.
He has everything up to date, from 2013 model car to the latest 60 inch LCD with wi-fi built in.
He is happy as it gets and never worried about tomorrow. He travels, takes cruises and never complains about anything.
My question to you is, which person you like to be friend with, the spender or the heaver and why?
Just don’t tell me the middle of road is the answer, because it is not. I’m the middle of the road person, moderate and saves more for the rainy days and live a mediocre life (not to the fullest potentials).

Conclusion: If the life you choose to live is not making you happy, then there is no point in live to live like that. If there is no diversity, we all will be miserable and mostly unhappy if the main goal in life is money at all cost. And once you choose the money over happiness, there is no point to call yourself social being, because the money changes the happy person that once you were and if that is the price to pay, then count me out.
Pablo Savin
Pablo Savin   |     |   Comment #15
Spending money is not the problem. Not saving a certain percentage of your take home pay is the issue. I am almost 50 years old and have saved 20 percent of what every money I took home after taxes for the last 30 years. I am enjoying life, but have trained myself to save the percent every week. We have never had a budget, I find it hard to know what your expenses really will be. So pick a percent to save and go for it. Will be retiring by 54 and couldn't do it without this plan. Money is not everything, but it does help, and you can help others with it.
Anonymous   |     |   Comment #16
You got that right, Pablo Savin #15!

I was taught by my parents when I just a kid and started earning small change from doing chores around the neighborhood, to save a portion of my earnings.  Followed that philosophy all through life and happily retired at 55.  I am now 68 and still very comfortably enjoying retirement.  Thank you mom and dad.

And by the way, I was just another blue collar worker, not a professional earning the big bucks.  The point being is to not live beyond your means and always save a portion of your earnings
Anonymous   |     |   Comment #17
Really? You think readers of this blog need to be this? Pointers, tips, nuances, obscure facts, reminders,... Sure. But the basic fact of spending more than income leads to loss?

May get me banned, but government (and Keynesians)  need to be told this. Not us.
paoli2   |     |   Comment #18
#17  I certainly don't think you should be banned for giving your opinion since you did it without being rude.  However, no matter how strict we may be with trying not to overspend, it doesn't hurt to be reminded of ways other people are doing to keep themselves in toe.  What I personally enjoyed about Sheryl's article is that it triggered off a response from others as to how they got into the "saving" routine.  I certainly do agree with you that our government needs to learn how "not" to overspend.  It seems to be easier to waste other people's money than one's own.