The “Do-I-Have-Enough-For-This?” Effect

This is a guest post from Baker, who writes about personal finance at Man vs. Debt. Baker is a potential Staff Writer for Get Rich Slowly. His first post described the many advantages of couchsurfing. Along with his wife and 15-month-old daughter, Baker has recently moved overseas to New Zealand, where his young family is passionately continuing their own personal “war” on debt.

“Do I have enough money for this?”

It's a very simple question, but one that has had tremendous implications in my financial turn-around. There was a time, not too long ago, when that combination of words didn't exist in my life.

Lately, I've stepped the phrase up a notch with some mental emphasis, “Do I really have enough money for this?” With the new emphasis included, my impulse purchases don't stand a chance. Well, at least most of them don't…

You see, our brains are incredible machines. They are bombarded by over a billion tiny bits of information on a daily basis. Without an amazing filtering system, we'd go insane within minutes. It's during the times I can't locate the keys in my pocket that I'm most glad I don't have to constantly think about breathing, walking, or swallowing.

Unfortunately, there's a downside to this miracle. From a young age, we have the responsibility of conditioning our brains what not to filter. We've been assigned the impossible task of reminding our brains, “Hey, stop… I want to notice, observe, or think about this.”

Take for example the feeling you get when you notice someone looking at you. Most of us have conditioned our brains to flag us when someone is observing us. We want to look up and make eye contact. “Why's this person looking at me?”“Do I look funny?”… “Are they hitting on me?” The point being that we want to know badly enough that we've cued our subconscious not to filter this type of event.

What in the world does this have to do with Personal Finance?
For me, absolutely everything. This is the single reason that convinced me to completely eliminate credit cards from my life. I noticed my credit cards seemed to thrive on numbing me to the buying process. I didn't naturally ask myself any questions when I pulled out my credit card to swipe. In fact, it was just the opposite. You know what I had anchored to my credit cards? “If I pay it off at the end of the month, it's o.k.”

Not a probing question. Not an obstacle to keep me in check. I had subconsciously attached a justification to my credit card use. Realizing this made me sick.

After more thought, I realized I had a different anchor to the process of using my debit card. I was so worried about overdrawing my checking account that my first instinct was to ask the million dollar question:

“Do I really have enough money for this?”… “Sure, I just got paid on Friday… wait… why the heck do I need the 50th anniversary edition of Scrabble. Is the standard one at home not good enough?”

This was truly a “holy crap” moment in my life. My first response with debit was to verify my purchase instead of simply validating it. It was one of the single most powerful moments in my financial life. Why is this? What's different? How can I leverage this effect? Are there other questions I could be asking myself?

Let me take some time to explain this isn't an attempt to change your personal credit card usage. That's not my objective. However, I do think it was worth outlining how my own physical use of each of them sent me down a drastically different mental path.

After this moment of financial enlightenment, I had two choices:

  1. Break apart and redefine the conditioned responses I had when using of my credit cards; or
  2. Stop using them altogether and maximize the benefits of substituting debit cards.

I'd like to admit here that both are viable options. I wasn't opposed to the little pieces of plastic that said “credit”; after all, it was my emotional attachments that were truly to blame. But instead of trying to rewire my thought process, I decided to embrace the existing system I had already built. The result was life-changing. Literally.

What does this mean for you?
That depends. Have you taken the time to think about your conditioned responses to using different forms of payment? I've talked to a lot of people who claim different spending methods don't affect their purchases at all. They could pay with “0% interest for 24 months” or by counting out individual pennies, it would make no difference. Surely, there are some of you out there. For me, though, I had tricked myself into thinking I was a member of this exclusive club when I really wasn't. Finally, I hit a point where being honest with myself was more important than being right.

My advice is to experiment with different purchasing methods and really concentrate on any conditioned responses you may have. That's what worked for me. Be honest with yourself no matter what the result. If things aren't up to your standard, fix them or change them. Most importantly, be aware of them.

Look, we all know J.D.'s “do what works for you” mantra. I'm a big fan of it, too. But, in my case, the “what” was no longer “working”. In fact, what I needed most was to experiment with techniques that increased my “what” options.

More recently, just this sort of experimentation has lead me into spending based on the envelope budgeting system. If you are searching for over-sized helping of the “do-I-have-enough-money-for-this” effect, try standing in front of the grocery clerk and hearing, “That'll be 82 dollars and 12 cents”, only to look down at the measly $64 within your “FOOD” envelope. It only takes a couple embarrassing times of putting back groceries before you start to radically shift your purchasing habits.

After all, isn't positively changing behavior the ultimate goal? It is for me! Which is why I'm constantly striving for opportunities to stop and think, “Do I really have enough money for this?”

More about...Budgeting, Psychology

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Generation Y Investor
Generation Y Investor
10 years ago

It’s great that you were able to override the impulses created by advertising and begin spending consciously. I think that if we all just ask ourselves, “Do I really need this?” and “Can I really afford this?” it would solve a ton of overspending problems.

It’s so funny to me how human beings lived for so long and survived before the invention of tv’s, walk-in closets and 99% of the garbage that’s out their today. In reality our real needs are few and very simple, but now we have all this stuff out there confusing us lol.

-Gen Y Investor

Someone
Someone
10 years ago

Before I got to the focus on what different forms of payment trigger in the writer, I had already realized that the form doesn’t have any effect on me. Credit cards don’t remove the consciousness I have of whether I can “afford” something or not. However, I do notice that I need to be a little more conscious about referring back to what I already have when attracted to additional possessions. I JUST closed the tab for a shoe closeouts website that had some GREAT deals, because I realized that I already had a pair of shoes that “did” what… Read more »

Wojciech
Wojciech
10 years ago

I recently wrote about the benefits of credit cards, and the ‘boilerplate’ response by many is that credit cards will make you spend more. Period. Of course, the statistics back up this view, but I’m not so sure that credit cards are evil just yet. It’s simply that most of us use them as loans, instead of spending tools. I think you make a good point in that it’s not necessarily the tool that’s the problem, but our approach to using it. Changing the psychology of our approach changes the effects of what happens on the back end. Like you,… Read more »

Craig Ford
Craig Ford
10 years ago

Thanks for the reminder to personalize our purchasing decisions based on what “I” can afford. For a long time I purchased things with one question in mind – is it a good deal? I quickly began to realize that I simply couldn’t afford every good deal. Now I have two criteria – “what I can afford” and “what is a good deal”. Life is so much more simplistic when you do buy what you can afford.

Chessiq
Chessiq
10 years ago

Nice post! I totally agree that when I am using my debit card instead of credit card, I spend a few minutes to think: did i transfer money from the savings account to the checking to cover this? why am I paying cash NOW? etc. That’s why I prefer to use a credi card on most purchases! (Sorry, going the other way from you – but that’s what works for me.) I don’t buy what I don’t need most of the time. Actually, the interest on credit cards acts like a yellow/red light… that if I overspend, I may lose… Read more »

Zach
Zach
10 years ago

I think this would be a better article without the focus on credit cards. Yes, they seem to be trouble to a lot of people, but some use them responsible. There’s also a lot of people that would struggle with this question without using a credit card and they should’t feel like they’ve already won.

Barb1954
Barb1954
10 years ago

@Chessiq said, “I don’t buy what I don’t need most of the time.” The question isn’t do I need this? There’s a huge list of things my husband and I need and that our house needs. That doesn’t give us the green light to buy these things. The important question is do we have the money for this particular item at this particular time? We may have lots of money in the bank but if it’s earmarked for property taxes, an important home repair, a downpayment on a new car, whatever, then the new livingroom furniture, treadmill, new wardrobe item,… Read more »

Sandy E.
Sandy E.
10 years ago

I agree with Baker 100%. After paying off all my debt, my rule was that I could use my credit card so long as I paid the balance off each month, and I have. But I noticed that there was random, increased spending throughout several months using it, but since I could pay it off easily when the bill arrived, I didn’t give it much thought. And then there were 2 months in a row that really got my attention because I overspent my monthly income and then had to transfer a substantial amount of money from my savings account… Read more »

Jason @ One Money Design
Jason @ One Money Design
10 years ago

Shifting your thought process for spending takes will power, hard work and practice. I think you’re there when you have to put items back on the grocery shelf because you don’t have enough money; I loved this example. But it’s a daily practice. People are constantly influenced by different forms of media to buy, buy, buy! To resist temptation, I think we have to be careful about the different forms of media we put before our eyes and how often.

Melissa
Melissa
10 years ago

I would certainly think differently about my purchases if I used cash, checks, or a debit card. When I use a credit card, I rarely even bother to pay attention to the amount of Stuff I am putting in my shopping cart. Because I know that even if I don’t have the money “right this second”, I’ll have it by the time the bill comes due. But despite not paying attention to what I’m Stuff-ing into my cart (pun intended!), I’m generally a thrifty gal, and overall I don’t buy anything I can’t afford to pay off as soon as… Read more »

frugalscholar
frugalscholar
10 years ago

At this point, I have a hefty savings account, so I do have enough money for many things. My question to myself is more–Is it a good value FOR ME?

Baker @ ManVsDebt
Baker @ ManVsDebt
10 years ago

@Craig – You bring up an excellent point. I sometimes find myself repeating “just because it’s a good deal, doesn’t mean I should buy it” to help with this. After reading your comment though, I like “I can’t afford to buy every good deal” as well! @Chessiq – I like how you’ve mentioned that the possibility of paying interest can sometime deter you even though you use credit cards. The point of the discussion is to be AWARE, which you clearly all. Cool perspective. @Sandy – You’re personal story is nearly word-for-word my own. It’s so similar it’s actually scary.… Read more »

Erica Douglass
Erica Douglass
10 years ago

This is one of my favorites so far in the parade of audition posts. It’s really important to start thinking differently about money. My parents (who both are 65) do not have enough saved so that they are able to retire. When I asked my mom how much they spent every month, she gave me a panicked look. I asked her, “If you don’t know how much you spend, how do you know how much to save?” She had no idea. There are plenty of people out there who overspend. I spent a week with my parents and aunt in… Read more »

KC
KC
10 years ago

With the exception of maybe a house and a car if you have to ask your self “Do I have enough for this?” Then the answer is a definitive “NO”. The only reason I exclude cars and house is because there are so many factors involved in their purchase. And in the case of a car the purchase can be unplanned, like when you have a wreck. I used to ask myself this question too, when I’d buy things. Almost always I’d answer “Yes”. Now I have my stuff together, am out of debt and have money to spend. I… Read more »

Sandy E.
Sandy E.
10 years ago

@Baker – it’s great to be on the same page w/someone, all the way in New Zealand too, and yes it was a little eerie for me too! But eerie in a good way. Here’s some final thoughts I had, prompted by your story — Using cash has really changed the way that I spend. It has truly been life altering too. All of a sudden, when I make the connection that I really can’t afford an item, it loses its appeal to me and the purchase doesn’t become impulsive, like it had been with credit cards. Instead, the purchase… Read more »

Annemarie
Annemarie
10 years ago

For those of you who use the cash/envelope system, do you have any clever way of dividing the money/carrying it around? I’ve been looking for something that my grandmother had many years ago which was a spiral bound book with just envelopes in it for an application just like this and it was sized to fit in your wallet. Any ideas?

Tyler Karaszewski
Tyler Karaszewski
10 years ago

I gave up using credit cards about five years ago when I realized I was unable to use them responsibly. My life has been wholly better since then. Would I be able to use them responsibly if I tried again now? I see no point in finding out, I’ve been doing fine without them. That said, in those ensuing five years, I’ve changed a lot of other things about myself financially as well — my income has gone way up and my desire for “stuff” has gone way down. Now, the answer to “Do I have enough for this?” is… Read more »

Kevin@OutOfYourRut
10 years ago

Adam–You’re describing the “mechanics” of spending–that almost hurts! Most of the time we never think about what we buy or how we spend, which is why it becomes a problem. It’ll do no good to say “I’m going to spend less money” without having an thought process that makes us interupt our natural inclination, which is of course to spend. We really do need to analyze why we do what we do, and then start to add different ways of thinking and other options we can take. It’s like psychological warfare with ourselves. I’ll bet that wasn’t easy the first… Read more »

Sandy E.
Sandy E.
10 years ago

@Annemaria — this was important to me too because I did not want to deal with paper envelopes. I went to the $1 store and bought 4 wallets there, in different colors. They sort of look like checkbook covers, but they have a snap that you can open & put your bills inside. (They are 7″ by 3-1/4″). I use my regular wallet for my grocery money, and these for my other living expense categories. Even though I get paid monthly, I load these wallets weekly, so every Monday, because for myself it ensures I’ll have money available each week,… Read more »

RB @ RichBy30RetireBy40
RB @ RichBy30RetireBy40
10 years ago

Being honest with oneself is definitely key. At the end of the day, it ABSOLUTELY is about changing your lifestyle and mindset. Just like keeping the extra weight off your body, you have to change your health mindset and eating habits to have permanent change.

Even though I have now 5 years worth of savings in one of my banks, I never look at it. Instead, I look at my “GO BROKE” bank, where there is just a razor thin margin of money there, which keeps me disciplined from spending much.

Best,

RB

Sara
Sara
10 years ago

I use credit cards for almost every purchase, but I use budgeting to pre-determine if I “have enough money for this.” The question I ask is, “Does this fit into my budget?” I’ve built up a lot of savings, so I can afford to go over budget on big-ticket items like appliances or furniture, but I think long and hard about whether it’s worth it to dip into my savings for something. I also allow myself to borrow from other months as long as I stay under budget in each category for the year. For example, I keep my gift… Read more »

Steve @ TechLifeMashup
Steve @ TechLifeMashup
10 years ago

Longtime reader. First time poster. I have to admit the money envelope system Baker mentioned in his post brings back some good memories. That was one of the first ways I learned to stick to a budget (without making exceptions!). You might find it frustrating at first though when you come up short for the $100 concert tickets you wanted to buy because you’re “entertainment” money envelope only has $40 left for the month. The payoff though as many have eluded to is that you really feel good meeting your goal (and more importantly STICKING TO YOUR BUDGET – thereby… Read more »

Tim
Tim
10 years ago

good article that reminded me of a recent purchase. we haven’t carried cc balance in years, but i recently bought something for $16k on my cc a few months back. What troubled me, wasn’t that i couldn’t afford the purchase (I could and had the cash in the checking account), but why i was thinking i could run a balance and pay it off in three payments rather than just paying it off by the billing due date since my cc has a low interest rate. i completely ignored the fact that the reason i used the cc rather than… Read more »

Chiefcaba
Chiefcaba
10 years ago

I started as a debit card user and switched to a credit card for the better rewards but psychologically I treat my credit card like a debit card. If I haven’t budgeted for it and the money isn’t in my checking account then I don’t buy it. I never consider my savings as spending money but instead “live paycheck to paycheck”. Where I get in trouble is actually when I do something that requires I carry cash! If I take out 60 bucks from the bank and don’t use it at the thing I took it out for all of… Read more »

Ann
Ann
10 years ago

I prefer the “How many hours did I work to afford this item?” I asked that question for every major–and most minor–purchase…except for the home. Asking that question for the home would’ve made me cry.

Hunter
Hunter
10 years ago

@Chiefcaba I agree with the cash thing. If I have money in my wallet it is as good as gone. I have found that by paying for everything with checks it has cut down on my spending. Writing a check is a pain but I have one of those huge business type checkbooks and I really don’t want to carry it around the store with me.

kitty
kitty
10 years ago

“I recently wrote about the benefits of credit cards, and the ‘boilerplate’ response by many is that credit cards will make you spend more. Period. Of course, the statistics back up this view …” A word of caution on statistics. I find that there are a lot more people quoting statistics and studies than people who actually understand it. I have a question – how many posters here quoted statistics to support their argument? How many of them had at least one college statistics course? There is an example often used in epidemiology – a kind of hobby of mind,… Read more »

Manisha Thakor
Manisha Thakor
10 years ago

Baker, Bravo! My favorite two lines…

You know what I had anchored to my credit cards? “If I pay it off at the end of the month, it’s o.k.”

VERY powerful concept – it highlights the fact that even people without a revolving monthly credit card balance can still have a credit card issue. Thank you for emphasizing the importance of conscious spending.

Bellar
Bellar
10 years ago

Fully agree with you. Once we get loss control in using credit card, then we will get suffer with monthly “debt payment” we have to pay for. The most appropriate thing to do with credit card – I think – is to consider it as shopping tool instead of loan facility. By implement this way, every penny of card swiping is obliged to be paid by the end of the month. As general conclusion about credit, let’s apply loan facility for productive purpose (i.e give some additional money back to us), not for consumption purposes. Otherwise, we will be stuck… Read more »

kitty
kitty
10 years ago

@Ann “How many hours did I work to afford this item?” Me too. This was something my parents taught me when I was a little girl and wanted a toy. They’d say “mommy has to work this much time for it”. This was more dramatic in the Soviet Union where some toys cost a significant portion of money earned in a day and people saved for 3 months to buy a nice pair of shoes. Another thing I do almost automatically is to think of amounts of money in terms of what else the same amount can buy. This helps… Read more »

Baker @ ManVsDebt
Baker @ ManVsDebt
10 years ago

@erica – Ultimately, that’s exactly what I needed… a wake-up call. It would be awesome to help provide that for someone else, as well! 🙂 @AnneMarie – To be 100% honest, Courtney and I started using the envelope system using Dave Ramsey’s enevelope product. It comes with your Financial Peace University course we took a while ago. Though, I am really fond of @Steve & @Sandy’s suggestion above. @Tyler – Like you, being aware of my responses to different types of spending is only one part of the equation. While I’m not quite to the point you are yet, I’m… Read more »

Tyler Karaszewski
Tyler Karaszewski
10 years ago

The “how much time did I have to work for this item” line becomes a bit ambiguous for salaried employees, or people who have taken money out of investments. For example, say you work a variable 30-50 hours every week, and get paid a fixed $1000/week, of which you have 15% put into an ESPP (employee stock purchase plan) that cashes out with (variable) interest every six months. At the end of the six month period, say your stock value has gone up by 25%. Given my ESPP, this means that you’ve worked somewhere between 780 and 1300 hours for… Read more »

Bear
Bear
10 years ago

Great article Baker. I can really appreciate the no CC point of view. I wrestled through that too and for about the first five years after being debt free I was a cash only guy (even tougher before there were debit cards). However, my epiphany around finances and savings was when I got my head wrapped around the concept of the “opportunity cost” of money. For example, take eating out lunch everyday at work vs bringing a bag lunch. If the eat out lunch costs $6.50 and your bag lunch costs $3.00 to make at home you would save $3.50/day.… Read more »

Foxie@CarsxGirl
10 years ago

I think I’ve always done this…. For some reason, I got lucky with the credit card/plastic conundrum. To me, it’s ALWAYS my money… Just not right now, but it sure will be! I use my credit cards to feel a bit safer, but also for rewards and to keep my spending in check. Yeah, I’m weird — Give me cash and I’ll be broke by tonight. Give me the same amount on a card, and I’ll hoard it until something *really* sparks my interest. However, my husband can’t seem to use credit very well. Nothing against him, he just doesn’t… Read more »

Avistew
Avistew
10 years ago

About the envelope system… I recently started it, after moving into our new place, and you have no idea how wonderful it felt when, after finishing shopping with my husband for our groceries for the first week (we have a “FOOD+HOUSE” envelope), our total was $99.25… And we had $100 in our envelope. That was thrilling, realising that you spent exactly what you were hoping to. That even though we bought some treats (chocolates, for instance) and some bulk items (8kg of rice, 4L of cleaning vinegar, 2kg of baking soda…), we didn’t go over our limit… It took some… Read more »

Janette
Janette
10 years ago

Frugal scholar- I have a major savings account as well- the question STILL is “Can I afford it?” for me. Now I balance things off of my desire for a great retirement lifestyle. Affording things today takes away from tomorrow.
GREAT article- best in the series!
Funny one after the one on getting credit cards to get miles for plane trips (I used to do that- then the airlines started deleting miles-I no longer play that game:>)

SMB Kevin
SMB Kevin
10 years ago

I think the real challenge of most people is not only asking themselves this, but being honest. Too many times the impulse to buy is so strong the person is really a victim to it. Everyone should learn how to defend against the loads of advertising and information (read: You Need it now!!) being thrown at us every day.

K
K
10 years ago

Great article – I accidentally discovered the same mental connection while making purchases. I am still paying off cc debts and changing to debit really helped me control my spending. After this initial success, I went one step ahead and tried all cash. This was extremely effective by creating barriers. Ramit Sethi on iwillteachyoutoberich(dot)com talks about creating these barriers to help control spending. Consider this-Lets say I want to buy something at the local store. Scenario one – Hop on the car, go to the store, swipe my cc and end up with $1000 cc bill at end of the… Read more »

Ann
Ann
10 years ago

@Tyler #32 – I’m salaried, but it’s not rocket science to do the math to figure out the hourly equivalent if I work a 40-hour week. I don’t work a 40-hour week; this week was 68 hours, but I believe in KISS (keep it simple, stupid).

Of course, if you really want to make it complicated, then you can calculate the hourly amount after tax. However, I don’t believe money should be complex. If you keep it simple, it’s easier to get a handle on it and it can even be fun.

Zeke2040
Zeke2040
10 years ago

This was a great article. I really enjoyed it! Hire this man!

Mona
Mona
10 years ago

@Melissa # 10 – how about using the libary and borrow books?

Fred
Fred
10 years ago

@Tyler #32: your example is a good $20/h net.

brooklynchick
brooklynchick
10 years ago

GREAT post! I have gone back and forth deciding if the envelope method is for me….but your story about the grocery store sounds like a painful lesson that would be REALLY good for me to experience.

Debbie M
Debbie M
10 years ago

I also like the comment, “I can’t afford to buy every good deal.” A similar mantra I use is “My house isn’t a museum,” meaning I don’t have to own everything cool. On the other hand, asking myself, “Do I really need this” wouldn’t work for me at all. All I really need is air (thank goodness, freely available everywhere), water (also, since I like tap water and live in a city, freely available everywhere), food (not all food, just nutritious food), and protection (I need shade in the summer, cover during a hailstorm, etc.) I’d hardly ever get to… Read more »

A Dawn
A Dawn
10 years ago

this is something that most of us must learn. dealing with spending habits that is out of our range. it’s just as easy as to remember first what is your basic needs and sticking on your budget. we dont need to spend on something that we can live without.

Dave
Dave
10 years ago

Great post Adam!

Thoroughly enjoyed!

Best line: This was truly a “holy crap” moment in my life. My first response with debit was to verify my purchase instead of simply validating it.

Dave
LifeExcursion

Erica Douglass
Erica Douglass
10 years ago

J.D., comment #27 is great and I’d love to see a whole article about this from someone well-versed in statistics.

-Erica

kitty
kitty
10 years ago

@Baker @ ManVsDebt (31) – regarding your questions about the particular article about studies. It’s interesting, but all of the studies have the following limitations: 1. They uses students, i.e. not a very mature segment of population and also the most broke one 2. They rely on models or estimates and questionnaires – the most unreliable method. None of the studies use actual purchasing habits with real credit cards and the real spending, they are all questionnaires or estimates or experiments with tiny gift cards. 3. Some experiments had a very small number of people – 30 people in one… Read more »

kitty
kitty
10 years ago

@Debbie (44) ” I’ve told myself I’m not buying any more clothes until I lose ten more pounds.” Just noticed this phrase. This is what I do too, though to me it’s often just a few pounds or not fitting into size 5. Right now, for example, I don’t want to buy size 8 out of principle, but I can no longer fit in size 5 so I end up not buying anything. I did lose a larger number of pounds in the past – 18, but I have recently gained 6 pounds and am desperate to lose them. I… Read more »

Melissa
Melissa
10 years ago

@Mona, #41 I don’t use the library because it’s a hassle to have a set amount of time to read a book and then have to give it back. And that’s if they even have the book I want in the first place. I love to re-read my books, so I feel it’s worth it to buy them. Plus I never know until right that minute what book I want to read. All that being said, I do plan to renew my library card and try to use it now and then, if only for books I don’t want to… Read more »

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