The impulse to overspend with credit cards can strike at any time. But it’s important to do your best to resist the siren song that’s coming from your wallet. Charging more to your credit card than you can pay off in one month can lead to huge interest charges and possibly a damaged credit score.
To overcome the urge to overspend, ask yourself these five questions before plunking down the plastic:
1. Is this a need or a want?
You might think that asking yourself whether or not you need an item you’re about to overspend on is silly – if it wasn’t, why would you even be considering it? But folks in the United States have a bad habit of shelling out big bucks on stuff that’s not strictly necessary: The Commerce Department estimates that Americans spend $1.2 trillion each year on non-essential items, according to a 2011 article in the Wall Street Journal.
That’s a lot of senseless purchasing, so before you fall into the same trap, be sure that what you’re about to go into debt for is actually a need. If you’re having a hard time deciding, consider rephrasing the question. Ask: If I don’t purchase this item, will my health or safety of someone I love be jeopardized? If the answer is no, keep moving.
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2. What’s my current balance?
It’s easier to overspend when you’re not sure exactly how deep you’re in the hole. A 2013 study from San Francisco State University showed that people who shop too much are unaware of the amount they’re spending and how much debt they’re carrying. From a press release about the study’s findings:
“Out-of-control-shopping was primarily driven by poor credit management, such as not paying attention to credit card statements, not paying credit card bills on time and exceeding credit limits.”
This suggests that taking a peek at what you already owe on your cards could be an effective way to stop a spending spree before it starts.
3. Is it essential that I purchase this item today?
Considering whether it’s necessary to make a purchase right this second is another good way to put the kibosh on a swipe. It’s a neat psychological trick and reduces the feelings of deprivation, because you’re not telling yourself “no,” you’re telling yourself “not right now.”
Walking away from an item for a few hours, days or weeks will usually cause one of two things to happen: You’ll decide you don’t want the item after all, or you’ll figure out a more sensible way to pay for it (see below). Either way, you’ve avoided going into the red.
4. Is there another way I can pay for it?
Your day-to-day credit card isn’t the only option for paying for a large item. If you’re not in an emergency situation and have the time to shop around, consider applying for a personal loan or a card that’s offer a 0% APR promotion. One of these alternatives could go far in saving you money on interest.
5. How am I feeling today?
Overspending is more appealing when we’re in an unstable emotional place. Research from a 2008 study shows that we’re likely to pay significantly more for an item when we’re sad versus when we feel neutral or normal. This implies that assessing how you feel before making a large purchase is critical. Recognizing that you’re racking up debt because of your emotions is the first step to getting your finances (and your feelings) under control.
Spending money image via Shutterstock