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7 Ways to Curb the Urge to Splurge Print E-mail
(6 votes, average 5.00 out of 5)
Shopping - Everything Else
Written by the frugal nomad   
Thursday, 22 April 2010 05:30
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7 Ways to Curb the Urge to Splurge
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At one time or another, we all do it. Some of us do it way more often than we should - we splurge. We spend splurgeway more than we should on something that we can't resist but can do without. If you're like me, you probably have a budget busting Achilles heel that induces you to impulsively part with your hard earned savings. My weak point is travel - I don't even have a budget for it. If you find yourself regretting your spending excesses, try these 7 ways to reduce the urge to splurge.

    Use Cash

    There is something about parting with a real live dollar that breaks people’s heart. It’s always been an emotional experience for me. It tends to balance out against the craving for goodies that you might or might not need. Don’t kid yourself - even debit cards and checks don't stir the same primal instincts as cold green legal tender. There is no sweet sorrow in parting with cash - just sorrow. Cash comes with a built in defense system against splurging – you can't spend what you don't have in your pocket.

    Scrap the Credit Cards

    The corollary to the first point is to tear up your credit cards. Until the early seventies, very few people carried these little plastic demons in their wallets and purses.  Plastic was still considered an upper class privilege and banks didn’t offer it to the masses. It wasn’t until the eighties that teenagers and college students finally got their hands on the little devils. Until then, if you wanted consumer credit - it was secured. You could buy a major appliance on an installment loan secured by your fridge. If you didn’t make the payments - they came and took the fridge. These days, you get to charge your lunch at Burger King. Nothing has altered modern consumption habits like credit cards. And one way to change those habits back to historical norms is to cut them up and throw them away. For those of you that make online purchases or travel, keep one credit card with a low balance that you pay off monthly.

    Learn to Cook Well

    This doesn’t have to be you, but somebody in your home needs to know how to cook and do it well. When you have a virtual chef in your home, eating out will be a poor alternative to the fare on your dining room table. Even a modest dining establishment will charge you $100 or more to for a couple of steaks and a nice bottle of wine. If your domestic chef puts together the same meal, you'll spend closer to $25 and he'll cook it just right. Once you’ve gotten a knack for cooking, grab yourself a picnic basket and learn how to have a romantic lunch on the cheap.

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    Danie030  - Good tips! |2010-05-29 01:35:27
    I think these are great tips...though being in the younger generation and Canadian (one of the first countries to embrace debit) I find the opposite is true for me with cash. Like many people my age, cash was ONLY used for "mad money", and I've had online banking my entire adult life, so it's easier for me to keep track of my purchases if I use debit. I find if I have cash, its gone within days and I have no idea where I spent it. It's so liquid. I try to save receipts, but since I'm more in the habit of keeping track of debit spending it's difficult.
    Reply
    haverwench |2010-04-23 06:48:26
    "If you look at the percentage of discretionary income that people throw away on things they never use - it will astound you."

    Do you have actual statistics on this? Economist Elizabeth Warren found in 2003 (well before the recession started) that middle-class families were spending most of their money on fixed expenses--mortgages, car payments, health insurance, and child care/education--not on "things they never use." So I'm just wondering where this "astounding" figure came from. Can you give a source?
    Reply
    frugal nomad  - Elizabeth's thesis |2010-04-23 08:00:33
    I believe we're talking about her book - The Two Income Trap. The thesis of that book is that two income families end up spending so much money to get into the 'right house' in expensive suburbs so the kids can go to better schools. And when they buy that house, they make their decisions on what they can afford based on their dual income. So her thesis is based on an economic 'trap' that's self-inflicted.

    The definition of Middle Class in the American lexicon is any household making anywhere from 50,000 to 200,000 with a whole lot in the middle.

    So, let's work backwards - how is it that some families can make it on an income of say $70,000 and another squeezes by on an income of $150,000. The simple answer is consumption habits.

    In fact, one of the things Dr. Warren advises readers on is to plan ahead and take into account that one parent might lose their job.

    Her book also warns about credit card companies and how they gouge consumers. No argument there - unless of course you tear up your credit cards and refuse to be a victim of usury.

    Somebody is buying all that junk - somebody is wedded to brand name food products and clothing - somebody is buying a house they can't afford. And some people are getting by with a single TV while other households can't seem to get by with five. Some people are house poor by choice and others trade in their cars every two years. Believe me, people splurge. I know my own horrible record and I won't even bring up my ex-wife.

    And you know what they say about economists - always look for a one-armed economist. Because, as Truman observed, they'll always tell you on the "one hand" this and "on the other hand that."
    Reply
    Omiewon  - Self Storage Industry |2010-04-23 10:36:48
    I think the "urge to splurge" here also applies to houses which is probably the poster child of splurging from the last decade. If you buy a 5 bedroom house when you only need 3, then you are 'not using it'.

    The growth in self storage is also concrete evidence that the Middle Class has been piling up stuff that they just don't use. It's not the top 2% that are filling up those spaces.

    In 2000, there were 23,075 storage facilities in the U.S. At the end of 2006, there were 51,500 storage facilities representing 81% growth in 7 years. The remarkable thing is that this happened at the same time that house sizes dramatically increased and the population only went up by about 4%.

    Self storage is the definition of things that you own but don't use, so I think this is a pretty 'astounding' figure.

    I think there is also a tale of two middle classes. I think we like to make the middle class really broad. Nobody likes the term lower class and no one is comfortable being labeled upper class unless they have a ton of money. Everyone likes to be middle class, it's safe. People who are making $150,000 a year are certainly buying stuff they don't need especially if there aren't kids. But those who have kids, well they are buying stuff for the kids that aren't really necessities.
    Reply
    frugal nomad  -  |2010-04-23 13:24:05
    The average size of a house has doubled in the last 40 years. Most of us grew up in larger families and houses and apartments that had a single bathroom. Now you have couples with no children living in 3000 square houses with four bathrooms. In two income families, people take on house payments that claim an entire paycheck.
    Reply
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