Feb 25, 2008

Psychology of Overspending: Buying Happiness

Check out the awesome interview with me over at LuluGal's HowISaveMoney.net in her weekly "meet the blogger" series!

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Ok, I'll admit it. I've been awful with my finances this last month.

I auditioned for this fashion assistant reality show that will air on CW and, prior to the casting, I used it as an excuse to spend way too much money on new clothes that I mostly didn't need.

The good news is I returned the things that I'll likely never wear. I've definitely passed my days of fearing going to a store and returning an item. Even though 59% of the time a return ends up equaling another purchase (just keep me away from the mall, ok?) I've gotten better about returning without buying something else, or buying something much cheaper to quench my spending arousal without bursting my budget.

Realizing that this need for spending is so deeply routed in my depressed childhood, well, it makes me want to spend a little less.

I think I've written about this briefly before, but I've been thinking a lot about it lately.

I was such a loner as a kid. I was "cootie girl" / odd girl out. I still am a bit of an oddball, but I've found my niche, I think. As a kid, it was unbearable.

All that made me feel good in life were compliments. Some of those compliments I'd earn from drawing a picture or something, but the easiest way I found to earn compliments was to wear something that would get me noticed.

Going to the store to shop was me the kid in a candy store. And my mom let me get pretty much everything I wanted. I didn't buy super expensive clothes, but at a fairly affordable department store like JcPenny, I could easily spend $500-$700 in one visit. I just bought a lot of things. My mom told me that if something fit I should buy a few pairs and have it in every color it comes in, even if I didn't like those colors.

Then we got home and my dad, who was making the money, would throw a fit about our spending. I felt guilty about that. It was, partially, my fault. That, I think, was one of the major rifts that formed between my parents early in their marriage. They shouldn't have been together in the first place, but without that shared understanding about finances, it couldn't work (yes they're still married and, no, they shouldn't be.)

As I grew up, the idea about buying happiness stayed.

I remember in middle school spending hundreds of dollars of my parent's money to buy my "friends" smallish $10 gifts. My friends was anyone I knew, I really, hoping that if I bought them some cute earrings they might like me a little more. I think maybe they did. I didn't get nearly the same amount of gifts in return, but then I was so naive and didn't realize that others at my own school didn't have the same sort of disposable income that my family did. Besides, people who I knew but weren't close friends with weren't going to get me gifts. Still, I liked the surprise they got when I gave them a gift. I thought for a milisecond, maybe they even liked me. And that was worth more than all the money in the world.

Nowadays, my biggest cause of overspending is the infamous "SALE" sign. I love feeling like I got a good bargain, as it gets me off in so many ways. First of all, I got to buy something (score) and secondly I got that something of preferably great quality for a large percentage off. The schadenfreude spot of my brain is laughing to itself and saying, with a Dr. Evil voice and pinky finger to my mouth - "hahahahahah, someone else actually spent $300 on this while I'm getting it for just $100!"

The problem, obviously, is that $100 is a lot of money and after a few items at $100 or $70, it adds up. Maybe not to what I would have spent on the original item at the department store, but I usually end up spending more on sales than when I go to a department store and buy one item at full price.

The only way I keep my spending in control now is by avoiding use of my credit card at all costs. But I've gotten to the point in my life where I want to start building my credit history aggressively, and I'm also getting fed up with the crappy rewards that my bank of america debit card offers (keep the change is kind of cute, but I'm not saving much with it.)

So I decided to sign up for some new credit cards.

I FEAR credit cards because I'm terrible at paying bills at times. I always end up with a late fee on a bill of $30 that ends up costing more than the actual bill.

OK, so I'm going to pay these bills on time, once I start using my new credit cards.

I've been reading a lot about the Chase Freedom Card and one of the American Express cashback cards (as soon as I remember the name I'll write it here.) I was reading about them on another frugal bloggers blog (as soon as I remember the name of where I'll add it here too).

So I never realized how much money I could save just by using a credit card for purchases, especially now that I'm spending quite a bit of money a year. I still can't put my largest purchase, my rent, on my credit card, but I can start saving by buying gas, clothes, food and other things on a CC. Sweet. I like me some savings.

For those of you interested in figuring out what credit card(s) would be best for you, I recommend checking out the Cash Back Credit Card calculator over at askmrcreditcard.com -- it seemes really helpful. I think it's accurate.

I'll be writing a more thorough post about credit cards and my cash back rewards in the future... once I actually get the cards, that is.



6 comments:

Fabulously Broke said...

Your story is just like mine.

I learned how to buy happiness and my dad would throw a fit when my mom and I went out.

I never really learned until I changed statuses from being a student to being a "professional" after finishing school and realized the magnitude of my debt and the stupid choices I made

Dana said...

Your childhood sounds a lot like mine. The cootie-girl thing didn't get fully underway until I was in sixth grade and a new school but yeah. And I didn't even have your spending outlet. My dad was lower enlisted in the Navy until about 1985 or so and he still wasn't making what you'd call great pay. A lot of my clothes came from yard sales. I didn't get to wear the cool stuff until I got as big as my stepmom, who had gone through modeling school recently and therefore had a lot of cute clothes (for that time period). Even then the kids didn't lay off of me until high school.

And please don't blame yourself for the spending your mom did when you were a kid. It was her job to be wiser about her spending and to explain all of that to you. You weren't really old enough to know better.

I can relate to the "my parents never should have married" bit though, too. Boy can I ever.

Alison said...

I have the American Express Blue Cash which has a great cash back program.

You could also save by applying for one of those 0% interest offers....that is, as long as you have self control over ur spending! It's a great way to keep your money in an interest bearing account. But always remember to pay off the balance in full before the interest rate starts kicking in

lulugal11 said...

I have Amex Blue cash and the Chase Freedom cashback card. I currently use the Chase card because if you get your cashback up to $200 they give you a bonus $50.

Mr Credit Card said...

Hi

Thanks for mentioning the calculator. Hope that helps.

tejl said...

We have the Amex Blue and Amex True Earnings, and some type of Mastercard. We get cash back on all of these cards. We put everything we possibly can on credit cards (including charitable donations and almost all of our wedding stuff in 2006) because we pay our bills in full each month and the rewards are great!

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