Debt Free Destiny

It seems hard to believe with the state of the economy that many American’s continue in the downward spiral of overspending and accumulating debt. There are many outside factors that may be making it difficult for the average consumer to get their act together however a large part of the population is simply ignoring the lesson this credit crunch should be teaching. It seems many people are working longer hours, spending more money and relying heavily on credit resulting in rising debt levels and little if no savings to speak of. If this scenario sounds familiar it may be time to take a look at your lifestyle and determine why you are overspending and what changes can be made to stop the flow of money from your wallet.

What makes us spend money?

The reality for many of us is this, we work to earn an income to sustain a certain lifestyle which we have grown accustomed to, but what determines how much or how little we are willing to sacrifice in order to maintain that lifestyle? Beyond the obvious need to buy things in order to survive there are a few main emotions that drive people to spend money.

• Stress reduction- A leading reason many people spend money on things they don’t really need is in an attempt to reduce stress in their lives. Unfortunately this is counter productive, especially when spending money that isn’t really yours (credit cards), this results in a cycle of stress as you continue to worry about how you are going to make ends meet.

• Entitlement- Many people find themselves getting in trouble financially because they feel they are entitled to having certain material possessions in their lives. This sense of entitlement can lead people to spend their hard earned money on items that have no real use or value in their lives besides the pleasure of making the purchase.

• Keeping up with the Jones’- The need to fit in with or be better than your peers does not end when you leave high school. Millions of Americans find themselves struggling to maintain a lifestyle that reflects what their neighbors have. The problem with this mentality is each person and family has their own unique set of financial circumstances. What many people are discovering is the Jones’ didn’t have the money to afford that big house and fancy car and if you spend your money in an attempt to keep up with their lifestyle you may find yourself deep in debt with no reasonable way to get out.

Tips to stop overspending.

In order to regain control of your finances and your life you must find ways to cut costs and lower your expenses. Here are a few tips that may help get you back on track to a secure financial future.

1. Pay yourself first- When dealing with high levels of debt and less disposable income many people are tempted to put all their money into debt repayment. While it is essential to reduce your debt load you must remember to start or continue contributing to your personal savings. Most people find themselves in trouble financially due to a lack of savings in the event of an emergency.

2. Stop using credit- There are individuals that have a strong sense of discipline who are able to use credit responsibly however the majority of people dealing with high debt levels are not included in this group. Unless you are 100% certain you can use credit wisely, you need to stop using credit today in order to get your finances under control. Incurring more debt will only add to your current financial troubles.

3. Dollars are not disposable- A few dollars here and there can add up quickly. Track your expenses and determine where you are wasting money. Once you know where you are losing cash you can make the necessary changes to keep that money in your wallet or better yet to build your savings.

4. Give yourself a time out- Many purchases are made on impulse or based on emotional decisions. Before spending money on an item that you are not sure you really need, consider a cooling off period or time out to rethink your purchase. If you find after a few hours or a few days that you still wish to make the purchase you can do so without wondering if you are making an impulse buy.

5. Set short and long term goals- Sometimes it is hard to see the big picture when so many things need your attention each day. Take a few moments to jot down your short and long term financial goals. By putting your goals in writing you have something to reference if you feel you are getting off track.