Set a Limit on Impulse Buying


by Reginald Duval - Date: 2007-02-04 - Word Count: 402 Share This!

I had the unique opportunity to review financial statement of many consumers. One thing I found, on paper, most people has enough discretionary income to be financial stable. Discretionary income is defined as money left over after all obligations like mortgage, utilities, car payment, consumer and credit cards debt have been met. However when I point out the fact that they have a significant amount left over after all obligations is met, very few people knew where the money went. Some folks told me money tend to disappear in thin air. Of course we know money does not disappear, it is most likely spent on these "what you may call it" you did not know excited until you saw it at the store. That money is spent at garage sales and flea markets. That money was used to take advantage of bargain and sales so we can accumulate our future garage sales inventory!! That money is spent on impulse buying.

I would be crazy to think that you would stop buying on impulse. It would be just that: crazy. I also know that it is fun to shop until we drop. Some folks use shopping as a form of entertainment, a way to relax. So I would not suggest to stop having fun, instead I am suggesting that you decide how much money you will blow every month, and blow less than planned. I am suggesting you put 50% of your discretionary income in an envelope in each pay period. You may want to have that money in $20 bills.

Every day, you will put one or two $20 bill in your wallet. In the evening, you will put the left over cash in the envelope. It is important to use cash because statistics tells us we spend less money when we use cash. It is ok to adjust the amount on a daily basis; on weekends, for example you may do $60. The key is that once there is no more cash in the envelope, you need to postpone your fun until the next payday. It is our hope you will have money left at the end of the pay period. You can then put that newly found cash to good use like paying down debt, increase saving. After 3 or 4 months, you will feel good about your achievement and hopefully you have developed a new good habit and still have fun.


Related Tags: mortgage, foreclosure, loss mitigation

If you need a financial coach, you can email me at reginaldduval@gmail.com

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