Ask the Readers: How to Cope with Spending Addiction?

First off, congratulations on coming to the conclusion that you have an issue that you need to deal with. Don’t be too hard on yourself though; don’t see this as a personal failing but rather simply a tough situation you need to work on to get out of.

Second, Cutting up your credit cards is probably the best immediate advice to stop the hemorrhaging.

Third, I would suggest you consider either negotiating with the credit card companies to reduce your interest rate. I would start out by telling them that you have an offer for a balance transfer of 0% (bluff) and see if they will match just to keep you as a – apparently – good customer; just don’t tell them you cut up your cards. Alternately, consider looking for a good introductory rate, preferably 0%, on balance transfers; open the account, transfer the balances, cut the card they send you, set up automatic payments several days in advance of the due date, and forget it!

Fourth, start negotiation with your car loan company to get that interest rate down. I would look for a credit union that may be willing to offer a car loan refinance, or even just a personal loan with a better interest rate than what you are paying, which seems quite high.

Regarding the student loan, it kind of depends on whether the loans have been consolidated or not, whether you can refinance for a better interest rate. I see an option if you are correct about your interest rate, but it comes with a caveat. If you can’t refinance because you consolidated the loans, consider a personal loan from a credit union or bank if it offers a significantly lower interest rate. The caveat is that you will lose the possibility to write off the interest as a student loan interest deduction on your taxes, thus why the interest rate needs to make up for that.

Regarding your spending, the only thing that will work is discipline. I know some are suggesting that you use cash, but that comes with a whole other set of problems that will also lead to not having enough money. Using cash will lead to less oversight of what you are doing with your money, not more. I would suggest that you get rid of your credit cards, but keep your debit card and open an account with a money management site like mint.com that will help you categorize where your money goes and help you set up a budget. Ultimately, it comes down to a single thing and nothing else; discipline. Discipline to live an affordable lifestyle or make more money. Discipline to keep your spending in check. Discipline to not spend money on frivolous things. Discipline to not desire to live like a queen on a pauper’s salary. Discipline to delay gratification and save money.

I think it would help if you visualized for yourself what it is costing you to have bought all the things you did on credit. Think of it this way, if you bought furniture for $10,000.00 on the MasterCard a year ago, at your interest rate, that furniture, right now, actually cost you $11,156.30 ($10,000.00 + $1,156.30 monthly compounded interest, or almost $100.00 dollars a month just in interest, for which you received absolutely nothing). If you let it roll another year without paying anything (which of course is unlikely) the furniture would have cost you $12,446.31, $2,446.31 of which you received absolutely nothing material for.

Now, this all sounds discouraging if you consider that on that credit card alone you would have to pay almost $100.00 just to keep the balance at $10,000.00, but that is why you have to work on renegotiating and decreasing your interest on these loans.

Below is a link to an excellent excel debt reduction calculator that will help you visualize and chart your debt and show the effects of upping payments. It should help you motivate yourself when you see the real effects of reducing your debt.

http://www.vertex42.com/Calculators/debt-reduction-calculator.html

I hope you are going to be able to adjust your lifestyle to make the changes you need to make in order to pay off your debts.

Ciao

Marc

First, cut up your credit cards. Carry only cash and use the envelope system. Sell unused stuff around the house.

Since you lack budgeting/saving discipline, claim 0 exemptions on your W-4 and let Uncle Sam have an interest-free loan.

When you get your tax return, put at least 75% of it toward your debt. Treat yourself to something nice with the other 25% so you don’t lose hope.

Set up an excel spreadsheet so you can track your progress.

There’s a lot of good advice here. I’ve been through this too, like so many here. I’m afraid I don’t have any great words of advice because when I finally stopped spending I pretty much just stopped.

There were a few things I did to ease the temptation. For one I cancelled subscriptions to all fashion magazines and stopped buying them at the store. For me buying a fantasy designer life was a huge cause of my spending problem. You know what I found out? It doesn’t really matter if I don’t know what the new hot item is because I can’t afford it anyway.

I also budgeted myself a small amount (like $200) a month to buy whatever I want. I can spend it on lunches out, or I can get a new outfit or whatever I want, but that’s it, $200, no borrowing from next month, nothing.

Good luck Nicki, I know you can make it

Nicki, I think we’ve all been there to some degree. As you can tell from the comments above, many of us have lived the same experience. Here are my tips for frugal practices.
- first – determine from the suggestions what you can reasonable tackle.
- if you can’t get yourself to cut up your card, put it in the freezer in an inch of water.
- Make your new compulsive behavior be reducing debt.
- If you make regular payments on your credit cards and on time, contact them to see if they can reduce their interest rates.
- your student loan amount is over $10k, so research programs that offer a consolidation amount that has a lower interest rate or again, call the student loan bank to see if you can negotiate the interest rate down.

Good luck.

A few years ago I did a dream map of some things I wanted to accomplish including moving to a tropical location. I put the poster beside my bedroom door, insuring to look at it every day. Doing this kept me focused and taking the steps to make it happen. I am now living in an even more amazing location than I had initially envisioned, exceeding my goal. While not the same, maybe a dream map would help you to keep sight of your goals as well.

Short story about two of my good friends…
Ann’s boyfriend John had a similar issue with debt. John asked her for help and allowed Ann access to all of his information. John had received some applications for new credit cards with 0% financing. She transfered the balances she could to these, then again as the time for the percentages to increase came near. For the amounts that they couldn’t transfer he requested a reduced interest rate on the remainder. He was able to get a small reduction because he paid on time. He cut his spending and focused on some goals.

John was able to get out of debt with Ann’s help. His goals, similar to yours were to get married, have a family, home, and a boat. John has said to me that having these goals really kept him on track.

A lot of banks will now allow you to schedule payments for a set date and amount. You do NOTHING. Setting it up would take only a few minutes and pretty soon you wouldn’t even notice the difference coming out of your check.

It sounds like you have the desire, now it is just baby steps to success!

You can do this, Nicki. If I can — and everyone else who has given you support here can — you can do it too. My first steps of advice:

1. You put the call in for help — so you are now truly ready to stop getting into more debt, and your starting line STARTS TODAY, RIGHT NOW.

2. The only way to truly begin (or get off the debt treadmill)is to CUT UP YOUR CARDS. There is NO OTHER ALTERNATIVE.

3. Hold tight for 6 months no matter what and ride the waves, as there are sure to be many that come up (ie. sick dog; girls’ night out; wedding gift)– Murphy’s Law; as soon as you decide to make a major change, you’ll get tested. BUT YOU WILL FIND A NEW WAY TO SPEND & LIVE. I PROMISE.

Getting out of debt won’t happen overnight, but what you do (and don’t do) each and every day from here on out will get you closer to your goal. The process will be hard as you break old habits and develop new ones, but you’ll end up with something better at the final moment of your last debt payment: A person who not just understands money is a concept that reflects your core values and beliefs, but honestly LIVES by these values and beliefs.

All that stuff like cutting up your credit cards is like going on a diet unless you figure out how to permanently change yourself.

Buying stuff–coffee treats and clothes and all that–is a substitute for being genuinely fulfilled. It’s empty existential calories.

I am able to live within my (very limited) means because I have good self-esteem, and while I do want to look good, I don’t worry too much about looking like everyone else and having what everyone else has. And I have a life that is full of things that I am passionate about–that make me really really fulfilled.

If I was a spendaholic and wanted to change, I would:

1. Start some kind of meditation practice. Christian, Kabballah, buddhist, taoist, yoga, TM, it doesn’t matter. Just *do something* to stop the chatter inside your mind that makes you feel insecure. People who meditate have more self-control, more self-awareness, are less impulsive, deal with stress better and are more hopeful.

2. Volunteer regularly for a cause you really, really care about. People are happier when they are a part of something larger than themselves, and when they are doing good.

3. Use these experiences to figure out what makes you feel bad or empty. Do you spend money because your job is meaningless to you? Are you in a lot of friendships that sap your integrity and strength? Do you feel empty because you only think about yourself?

Having some self-awareness and a couple of regular practices that compete with your regular spending life will help a lot.

(as will cutting up the cards…)

Have you had enough yet? Enough pain? I think it’s got to hurt before we spenders make changes. I was sick and tired of being without money because of debt, and sick and tired of wasting money on interest. It feels good to be on the other side of 0, and have people paying me for my money rather than me paying others for the use of theirs.

Hi JD,

Only one point is good [one regarding tracking the money]. I don’t think rest of five suggestions will be of any use in her situation. I will recommend that she should read the book “richest man in babylon”.

A few people have mentioned the book “Your money or your life”. Who wrote that? There are quite a few books on Amazon with that title, e.g. one by Alvin Hall and another by Russell Corben and Brian Smith.

I am SO in this gal’s situation – I have $11K on an American Express, $25K on Visa, $9K in student loans, and $10K in lines of credit and I’m 30. Now I traveled quite a bit, went to school, and had no income for three years, thus the big amounts. HOWEVER, last year I was doing really well at paying things off and then I, in all honesty, got frustrated and bored and I GAVE UP. I started spending again. I was so pissed that it was going to take so long to get myself in the black again, and that even then I wouldn’t be able to have the same “lifestyle” that I had, I just went back to old habits. It isn’t an addiction – it is a whiny four year old saying, “I WANT” and the 30 year old in me just gives up and gives into that four year old. All the time.

So recently I did what JD said and I cut up my credit cards. However, what I have now is a pay as you go credit card so if I need to use a card for something (securing a rental vehicle, buying something online) I have one – but I have to have the forethought to load it with cash at least a week in advance, so that is that built in time for reflection. That for me is my ‘spending’ money budget – I think I will load it with about $50 a month and then once I get enough, that’s where I’ll use for entertainment, clothes, etc.

Essentially, what I need to do is tell that whiny four year old in me to shut the hell up and to, as my sister in law would say, “suck it up buttercup”. Spending more won’t get me out of debt, and yup, my lifestyle will suck ass until I pay things off. But if I make that a main goal and just do it (to be cliche) it will be better in the long run.

Take responsibility for yourself.

I got into debt in part because I grew up in a family that did not have very much money and I grew tired of not having enough money always being the excuse for why we couldn’t do things. Might be good to attack the root of the problem from that angle, but it doesn’t need to define you any more.

What helped me was being accountable to other people. Might help you, too, since you posted here. I suggest joining the Women in Red forum on msn.com. People post their initial debts, like you have here, and then post their progress each month. It’s a nice way to get some support while you struggle to change your habits. You’ll also see lots of people in similar situations or in much worse shape then you (both of which can be empowering). Check it out.

Otherwise, track your spending, make a plan (a budget and find a debt consolidation calculator), and buckle down. You can do it!

I believe the easiest way to break an addiction is to substitute another one. I have now picked up the habit of compulsive shopping for free items. I read all the blogs for CVS, Rite-Aid and Walgreens and plot and plan how to get the items for free using coupons, sales and store rebates. I already have over $125.00 in rebates for this month. I have a designated an area where all the items are stored neatly so as to not cause stress by having things all over in bags. I look at the items proudly like a hunter who has bagged a trophy. I also hate clutter so I will donate 90% of these items to the homeless at Christmas. I will begin to fine tune my “hunting” to only items that I can make money on from coupon “overage” since I buy so many items that I will not use (but they are free). This has certainly tamed my spending and I also was able to pick-up gifts for others.

Calling spending too much and impulsive purchases an addiction is an insult to our intelligence.

It is not an addiction; calling it one is simply coming up with an excuse for the behavior, a behavior that may be entirely appropriate for some people.

If you really want to get out of debt and get your finances under control, you have to start with a goal. “I want to be debt free by my 30th birthday” is a start. I would break that down into smaller, more manageable goals that are Specific, Measurable, Attainable, Realistic, and Time-bound. (SMART)

Then, everything you do with respect to your finanaces must be guided by the goal. If it really IS your goal, then your behavior will change.

We’ll have to agree to disagree – semantics is like that.

I think it’s an excuse for behavior, contrary to what Oprah might say. If addiction = behavior you don’t really want to stop, then yes, it’s an addiction. By your definition, someone who doesn’t like to workout and would rather sit at home would be “addicted” to sitting on the couch. When they are 350 pounds, they can claim the “addiction” as the reason, instead of taking responsibility.

Edit:

I’ll use myself as an example. Up until not that long ago, I smoked cigarettes. There was a time, many years ago, I was certainly addicted to nicotine. I broke that addiction, and for several months did not smoke at all.

Then, I started making poor choices. I would smoke, but not every day, or even every week.. I just LOVE to smoke. I know it’s stupid, but can’t seem to stop myself.

It wasn’t until I realized that my behavior wasn’t due to an addiction (I could go a week with no desire for a cigarette, then have some behavioral trigger – for me a long drive – and in two days smoke a pack), but my choice to value my love of smoking over the short and long term health effects. Once I realized I actually value my health more than I like smoking, I stopped making the decision to smoke.

That’s very different from the person smoking a pack a day who can’t go 12 hours without feeling bad – THAT’s an addiction for sure, and is very hard to break.

When Nikki decides she values financial independence and building wealth more than she values getting new shoes every week, she’ll change her behavior.

Read Secrets of the Millionaire Mind by T. Harv Eckert.

There is a chapter devoted to divvying up your finances. Keep repeating the process until it is a habit.

It sounds like your priority is spending and not managing your finances. Once you have a core set of money values you will be less likely to want to be a compulsive shopper.

Sometimes we impulse shop because we don’t know what do with our money. My suggestion is to read that book over and over until some of the ‘secrets’ become practice in your life.

Hope this helps. Take care.

Nikki, you’re not alone. If you’re ready, join debtors anonymous. they will be in the phone book. you don’t have to say anything if you don’t want to. just go. listen to suggestions.

i’ve been there – big time. a book you might want to look at is HOW TO GET OUT OF DEBT, STAY OUT OF DEBT, AND LIVE PROSPEROUSLY by Jerrold Mundis.

I wish you all the best.

It’s semantics. Y’all are calling what I would call a ‘compulsion’ an ‘addiction’.

Doesn’t matter if our friend Nicki realises what she needs to do and does it.

One of the keys, IMO, is understanding microeconomics and how it applies to our decision making. Every choice you make is one of valuing something more than something else.

I’m not judgemental at all that someone, for example, pays interest on a car loan to get that awesome new BMW. If you wanted that car more than you wanted to build wealth, good for you! Go get the car. That doesn’t fit with my goals, but who am I to impose my goals and values on you? If you want to learn how to build wealth so you can get the car and not need a loan, let me know.

Everyone needs to understand those concepts, then adjust their values based on appropriate goal setting.

After that, it’s all about making the right call for the goal. The tips and tricks help for sure, but don’t matter if the goal isn’t in place and real.

Sorry for cluttering up the comments with a discussion – this would be more appropriate on the forum, but I haven’t joined.

Cut UP the credit cards.. I HAD to do this. If you no longer have the cards you can’t go crazy with them. (think consumer cocaine, thats all a credit card is.)

Use cash only and implement the envelope system. Also never carry cash on you just to have cash. I only carry cash on me if i need to go buy something, and then I only carry the amount the item(s) are going to cost. That way once I buy the necessity, the cash is gone and I’m not tempted to impulse spend. For instance, I know I will spend 50 dollars on food for the week, I take 50 dollars cash out of my food envelope and buy my food (im usually within 1 or 2 dollars). Therefore, if i am tempted to impulse spend, I have to make a decision, buy the food I need to survive, or buy this other thing I dont need. When you carry just enough cash to cover a planned purchase, it makes the decision MUCH easier. As for the car, Sell it and look for a cheaper one thats in good condition. There are MANY good cheap used cars to be found with a little hunting and when you walk in with a wad of 100′s and start waving them seductively in front of the seller’s face, alot of times you can get a heck of a bargain. My car is currently 5 years old but only has 37,000 miles on it, fully paid for and its worth more to me than any overpriced “new” car is because without any payments, no one can come take it away if my job happens to go away and with it, my income. Life is MUCH more secure that way.

Nicki:

I believe the advice above is good, and would like to add one more thing that I think will help.

Find a way to track your progress and make it real.

While a traditional bar chart comes to mind or a line graph, have fun with it, be creative. You’re returning to sewing, maybe create a ‘debt free patchwork quilt’. Each month add a piece of cloth equal to how much your debt went down.

Plus when you have a way of tracking, and you see how easy it is to get rolling, it’s that much easier to push on to savings, and enter a saving lifestyle.

-MBirchmeier

Hi Nicki,

There have been tons of great advice, mostly dealing with cutting up credit cards, disciplining yourself, and finding groups of peers with whom to share your situation. My wife and I teach Dave Ramsey’s Financial Peace University, which encompasses each of these things in a 13 week course. With such a duration of the course, you get enough reinforcement of the principles to actually break the spending cycles and to go through 3 months of budgeting. You can go to http://www.daveramsey.com to find a course in your area.

I wish you luck.

I had a similar problem. My debt load was a little lower(20-25k). My salary a little higher(3.2k after taxes).

My solution. I replaced my expensive addiction(spending money on crap) with a cheap addiction. I got myself addicted to warcraft, joined a hardcore raiding guild, and for 2 years didn’t have time to spend money. I’m not kidding.

For 2 years, my entertainment spending dropped from several hundred a month to $15 a month. I didn’t need cable anymore. I was busy on most nights raiding so I couldn’t go out to bars anymore. I didn’t have time for all sort of other fleeting “hobbies” that cost a lot of money anymore. Since I wasn’t going out anymore other than work, I didn’t need to buy new clothes other than work clothes.

This may sound crazy, but it literally freed up a little over $1000 a month, even after accounting on increased spending for takeout food. That $1000 was set immediately on autopay to service the debts.

The day I paid off the debts I did 4 things.

1) Burned the shopping bag full of credit card bills.
2) Uninstalled warcraft
3) rerouted 70% of “extra” money to savings/retirement
4) rerouted the other 30% paying for fun things again.

Been a year now. Still debt free. True Story.