An article titled Men Don’t Buy Tampons which relates how her husband ended up spending about a hundred dollars for a $3 box of tampons (a very funny read that I can relate to having endured the stares when asked to do so in Japan) lead Baselle over at Baselle’s Financial Diary to come up with the 4 E’s of overspending:
Emergency: so important that most of us have a fund named for it. Some emergencies are real (life and limb) and can’t be helped, but there are many emergencies that are fake. Save your money for the real ones. Embarrassment: It keeps grown men from buying just a box of tampons, grown women from negotiating properly for a car or even for a raise, and it keeps all of us from thinking – why should I spend money on this? – or from asking questions – or from thinking – no, I will not buy this – or from thinking – everybody has more money than me, why bother! Emotion: If you’re happy, you want to spend money to celebrate; if you’re sad, you want to spend money to console yourself; if you are stressed, you want to spend money to get out of the situation. Turns out that functional psychopaths make the best financial decisions. The amazing fact for most of us is that we can save the money that we do, despite our emotions. Easy: easy monthly payments on a house or a car or a credit card which will keep you from seeing the total of what you are spending; easy to buy rather than insult the sales person (or embarrass yourself); easy to burn gas waiting for an upfront parking space.
When it comes to debt reduction, these are the four demons that you need to battle to keep your budget in line and doing so is not necessarily easy. It only takes one of these areas, to balloon a budget and find that your debt reduction plans have been completely foiled.
One of the best ways to begin a debt reduction plan is to understand which of these budget busters are the ones that have been keeping you in debt in the first place. Take a look at the way you spend money and figure out which of the four categories best describes the way you spend. Once you have determined what has been putting you in debt in the first place, you will be on much firmer ground when tackling your debts.
Once you know, you can take firm steps to keep the area(s) where you overspend under control. If you know that you are an “Emotional” shopper, you can decide that shopping is not do be done after a stressful day. If “Easy” is your demon, you can determine to figure out the total cost of everything before making a purchase. By knowing what it is that has put you in debt in the past, you can take the steps needed to prevent this from happening again and ensure that your debt reduction plans don’t get foiled by old habits.