Stop Compulsive Spending - before it ruins you

Let's talk about compulsive spending - the most unwise spending that Americans engage in. It can ruin lives. I hope it isn't ruining yours.

Of all the discretionary spending that we do, spending based on compulsion is the most detrimental to our financial well being and peace of mind.

If you're involved in this type of spending, you're miles away from frugal living and the financial freedom it can offer.

Those involved with compulsive spending have been known to waste a good portion of their disposable income, perhaps all of it, and often their lives go into a tail spin.

Advertisers are focused on creating a compelling reason for you to spend money. Your unnecessary spending results in their increased revenue, so they have a vested interest in creating a compulsion for you to spend money unnecessarily.

The big questions are "how do I recognize it" and "why do we do it" to the point of putting ourselves at financial risk? Only after we answer these questions can we face it squarely and figure out what to do about it.

Compulsive Spending - the excuses

If you ask people involved in unnecessary and unwise spending, why they engage in it, they will quickly give you a good sized list of excuses for all of their discretionary spending. They're not reasons, they are merely excuses.

Let's look at the excuses to become familiar with the "cover story" for unwise spending. Following each excuse in bold, I give you my interpretation in italics. This is what's really behind the "cover story".

  • We need this. I can't distinguish "needs" from "wants" and I don't really want to anyway, so I just apply the label of "need" to everything. That makes it seem okay to me. It's a quick way of justifying nearly every purchase that has some useful application in our lives.

  • It was on sale. I just can't pass up the "on sale" ploy that retailers use to induce me to make a purchase. I'm weak and irresponsible, and they can have their way with me as long as I perceive it to be a good bargain.

  • Isn't this the greatest thing ever? I just couldn't resist pleasing myself with the idea of owning this item. It is self-satisfaction in action. Delayed gratification? I just can't wait for that. I have a "drive-through" mentality.

  • I thought you would like it. I'm handing you this excuse in the hopes that you'll feel like I did something for you, when in reality, I'm feeding my need to engage in the indoor sport of shopping.

  • Oh, it's just a little something for the house. I want it around the house so I can remind myself of how affluent I am, being able to engage in wasteful spending anytime I please. It feels so good to be an affluent American.

  • It's a new item. This is my latest excuse for irrational purchases. Making these purchases puts me out in front of the other shoppers, and it boosts my self-esteem to think that I am "out in front".

  • Oh come on, it isn't that big of a deal. I'm not concerned as much about the family budget as you are. Just handle it as you always do. Suck it up and we'll both smooth it over. You're the one making the big deal about it. I'll forget about the whole thing (just as soon as I come back home with more unnecessary purchases).

Are you starting to get the picture of what compulsive spending is all about? Call it an obsession if you will. It's really the same thing - you have an urge to spend money when you know it is unreasonable to do so.

In addition to these excuses, look for the following symptoms that will suggest that you or someone you know might be involved in compulsive spending.

  • draining your savings each month for routine bills
  • getting behind on monthly payments
  • checks bouncing
  • having the latest of gadgets
  • purchasing things that aren't often put to good use
  • insisting on the best quality
  • you recognize your worsening financial condition
  • buying things with appeal but limited function
  • spending other people's money
  • never feeling like you're financially comfortable

If you recognize a pattern of association between some of the symptoms and some of the excuses, then chances are good you're looking at compulsive spending.

Compulsive Spending - the whys

Compulsive spending is an emotional and psychological event, not an intellectual exercise in rational decision-making. Here are some of the motivating factors for compulsive spending. See if any of these "whys" look familiar.

Showing affluence - often when you buy things, you're parading the merchandise in front of people that can't afford to buy it as easily as you can, and that reinforces the idea that the purchaser is affluent.

Exerting influence - everyone needs an ability to influence the world, and some people are going to do this, if through no other means, than simply being a rabid consumer.

Feeling powerful - like a high bidder at an auction, some feel great being recognized and held in awe as the power bidder.

Being special - wealth can be expressed in terms of the merchandise you purchase, and the exclusive shops where you made the purchase, and that can make people feel special.

Envied by others - when no one else has what you have, you can be the envy of those around you.

Staying in fashion - those "alligator" shirts were a sure sign of being in fashion for the young men in my high school.

Being accepted - joining the outlandishly expensive country club can give you a sense of belonging and acceptance. Having a boat at the marina can do the same thing.

Recognized by others - buying the name brand or most expensive item can help you be recognized as having good taste.

Can you see how compulsive spending can seem to be satisfying and worthwhile? It's really just an expensive masquerade for an inner emotional weakness that needs to be addressed in another manner.

Somehow many of us learned to use spending as a "medication" for some of our emotional weaknesses. We've learned how spending can help meet those needs, and now for many of us it has become a compulsion.

Awareness is the first step. You should be aware of the symptoms of compulsive spending and the excuses we tell ourselves and others.

We also need to be aware of what it is we're trying to "medicate" with compulsive spending - the "whys" of our unwise spending.

If we can't confront compulsive spending head-on by recognizing it as a problem, then we'll never get a handle on it, and we'll always be susceptible to self-induced financial tail spins for the rest of our lives. Get a grip on your spending habits and get back to frugal living - your peace of mind depends on it.

Done with Compulsive Spending, take me back to Paying Off Debt

There certainly is a broad scope of topics here at Frugal Living Freedom. When you think about it, money permeates so very many activities in our lives, therefore, being frugal encompasses a wide range of interests, from being employed to taking a vacation, and just about everything in between. Enjoy the variety, pick up some new ideas, and start making frugality a part of your signature.

I'm a big proponent of being debt-free, and I mean entirely debt-free - no mortgage payment. It's not essential for financial freedom, but you'll love the feeling once you get there. If you didn't have a rent or mortgage payment, how much more could you do for yourself with your current level of income? I suspect plenty.

If you ever hope to see an abundance of wealth, you need to plug the hole in your boat. The wealthy don't necessarily make lots of money, instead, they know how to hang onto what they make, and make it work for them.