Why do so many people spend consistently more than they earn? They fall deep in debt, their quality of life plummets, they retain their cherished buys, but do not enjoy them fully. Sadly, they believe seductive lies merchants put forth while peddling goods.

For over twenty years, I have been working with mainly churched individuals, couples, and families on personal financial matters. Many were in deep debt, concomitant stress, and joyless for long periods. Some emerged debt free in different time periods, while others stayed trapped in the debt cycle. During this time, I noted specific attitudes and behaviours that led some people out of debt, and attributes that appear to keep some folks trapped.

10 Reasons people spend consistently more than they earn

Particularly, I noted ten reasons many folks seem to spend consistently more than they earned, and so remained stuck in a debt cycle. However, one significant observation surprised me. Folks who chose to stick to some of the items on the list only, never had the sustained success as others who stuck with all of them. So, it was not good enough to set a goal, do a budget, and plan for emergencies. Instead, folks needed to be alert to all items to crawl out of debt and stay out.

1. Ignored consequences of decisions
2. No process to decide to spending
3. No budget
4. Easy credit
5. Herd mentality
6. No accountability
7. Anticipated funds
8. Emotional satisfaction
9. Instant gratification
10. Ignorance

1. Ignored consequences of decisions

Folks spent, PERIOD! They were not concerned with the effects of spending. How this might reduce their ability to do something else later was not their issue now. Indeed, they considered nothing but spending to get the current item.

2. No process to decide spending

People who remained in debt did not think it was necessary to follow a spending decision procedure before spending. They saw this as time consuming and unnecessary. Still, without a process to help you look at alternatives including the alternative of not acting, you will let situations lead you. And you will end up with debt.

3. No budget

Most folks I see do not want to budget. Moreover, they do not want to learn about a budget because they believe it is a strait jacket.  But a budget is nothing more than a guide to help you get to your goals in a stress free manner. Certainly, it is not a constraint. You prepare it. You implement it. The budget helps you consider opportunities and challenges in a future period so you might prepare to deal with them. Often we tell people to budget and all will be well. But that’s just part of the journey. We need to review and update it regularly as events change.

In the budget we can plan for emergencies that will arise. We don’t know when, but we know they will arise so we plan for them.

4. Easy credit

It’s easy to get credit. And it can be cheap. Besides, it’s invisible money, so people spend confident they can make a small minimum payment for years. Indeed, I have seen folks with over seven credit cards, juggling monthly payments over long periods. I am not against having one credit card provided we convert it to a check.

5. Herd mentality

Keeping up with the Joneses’ has never been easier. People follow their friends, family, neighbours. However, they forget two critical matters. First, their neighbours et al, might be deep in debt with no outward sign. Second, the neighbour might be at a different life stage where she can afford to buy that new car for cash.

6. No accountability

Folks spend and spend and spend and do not have to account to anyone. In families this can be a huge issue. Husband or wife spends while the other is distracted, then voilà!, reality hits and the other party realizes the couple is broke and doomed for a long debt sentence. 

7. Anticipated funds

Your boss promises you a raise and a bonus. Immediately you leave her office you spend it on goods you yearned for. Before the raise and bonus materializes, the company is in trouble and you are laid off. Ouch! You can’t return the items; you are stuck. That’s why it’s crucial you never spend funds before you get them. God alone knows the future.

8. Emotional satisfaction

Some folks spend to boost their image. They feel good after buying that new dress or new car (yes, a car, I have seen that a few times). They had a rough morning, or tough week and go strolling in the mall, and without thinking, they buy stuff on credit. Reality hits much later.

9. Instant gratification

We want that item now. Not tomorrow, not next week, now! That’s the society we live in. We hear it always. Why wait? The merchant says if you wait the price will go up. To be sure, there is always a sale, so you shouldn’t react to that hook. Often, waiting means you get something better and more effective for your purposes.

10. Ignorance

Ignorance comes in many forms, but the main area I see is people spending to save. So many folks believe they are great handling money because they get many deals. They are proud to tell you how they saved 50%, 70% on major buys. Sadly, they don’t realize that buying in these sales mean they spent; they saved nothing. Another area I see is people not reading the fine print. These folks get trapped with cell phone contracts, TV arrangements, and other contracts where understanding aspects of the fine print is crucial. The third ignorance area is people buying extended warranties whenever it’s offered. Research shows consistently that for most items, buying an extended warranty is wasteful.

Summary

I believe sincerely, if folks reflected on these ten items, and examined their situations, they might see opportunities to lower spending. Indeed, they might decide that minor attitude adjustments will help them spend consistently less than today. And they might be able to get off the debt cycle, sooner rather than later.

© 2016 Michel A. Bell

More like this:

Personal Finances: Credit Scores to Debt Freedom

How to Stop Living Pay Check to Pay Check

Effective Stewardship as you get out of debt

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