Are you ready to start Christmas shopping yet? Is it too early?
Are you emotionally ready yet? Can you imagine buying whatever you want: An
iWatch, or even a new iPhone, that handbag you keep eyeing off as you walk past
the store, a new jacket, or the latest sports shoes. Put it on your credit
card, or split it over two credit cards, then it won’t seem as bad when you
look at the statement.
We’ve all done it and it feels good. Coming home with bags of
goodies, trying them on in secret, then when quizzed weeks later “When did you
get that?” you retort “This old thing”. Haha, they’ll never know. Surely you’ve
heard the old saying that “You live up to your income”, as your pay-cheque or
income rises, so does your lifestyle. There’s nothing wrong with living well.
But, and there is always a But… that one-off spending spree is
very rarely a “one-off”. It is addictive and gets the pleasure endorphins pumping.
“Why not do it again, next week, it was fun and there’s still credit available
on the card” And on top of all that the airlines are giving you reward points!
Why wouldn’t you use your card?
Did you know that Australians owe approximately $33 billion in
credit card debt. Here’s an easier number: Thirty-Three Billion Dollars.
Personal debt per credit card holder is $4301.00 with an average of $723.45 in
interest per annum. Yikes!
For many of us refusing to use a credit card is simply not an
option. Without one it’s difficult to pay bills and even make reccurring
payments. So use it for that and not for shopping. What should you use for
shopping and spending I hear you murmur sarcastically, Use a debit card. You
can’t spend more than you have in the bank that way. You’ll find you will spend
less and when you next look at your bank statement you’ll even question what
you are buying and maybe start to budget.
While you’re at it, have a look at your monthly credit card
statement. It shows how long it will take you to pay off your balance and how
much interest you’ll pay if you only pay the minimum each month. (The short
answers are “forever” and “heaps.”)
So overspending once in awhile is good for you;
hopefully it shows you how addictive it can be and gets you to review the
financial consequences of that binge. Although a “once-off” may not impact you
that much now, think about those endorphins that are working to create a
monster, and there’s nothing more destructive than a spending monster. What
about all that money you are spending on short term pleasure, and could be
using toward the car, or house, renovation, holiday: the big ticket items that
need saving for. Shame as those would be long term memories, not just a day of
short term pleasure, even if it is in the name of Christmas.
What can you do to resist the “spending-money-I-just-don’t-have”
Firstly use your debit card more than your credit card. Secondly
put a simple budget in place, and then you’ll know what you have to spend, and
what you don’t. We like to call a budget ‘Your Spending Plan’ as that is what
we are all working around:Spending.
Here’s a helpful downloadable guide to control your spending and
build your savings. 6-steps to Financial Security, aFree e-book from Your Money Sense. It’s a good starting point to
get you in the right mindset to manage your money.
So next time you go for a bender at the shopping centre, take a
few deep breaths before walking in, and think about the long term financial