How to Recover from Overspending
December 18, 2018
One aspect of the global economy that makes it difficult to save is consumerism. Difficulty saving can also be attributed to keeping up with the Joneses and ensuring our outward appearance is up to the status quo. An unfortunately common by-product of this consumerism is overspending.
Credit card companies and retail brands have made it easy to overspend through impulse buying or by selling an image or a feeling. Granted, once you purchase that item you likely feel good, but as time goes by you may enter the phase of buyer’s remorse.
Regret is normal but the effects on your financial situation can add up, and recovering from overspending can be an intimidating task. This article will outline several ways you can stop – and recover from – overspending, ensuring that your personal finance journey gets back on track.
Eliminate Credit Cards
The first step is to eliminate credit cards altogether and begin using cash only. Overspending is easy when you have a high credit limit, knowing you’ll still have your cash at the end of the day.
If you have a credit card balance, pay it off as quickly as possible. This not only eliminates your debt but also frees up cash flow you can use elsewhere. While using your cards may feel good in the moment, the future can become stressful as your financial obligations increase.
Revisit or Build Your Budget
If you find that you have overspent, don’t panic – it is certainly not the end of the world, and odds are it will happen again at some point. But positioning yourself in the best possible way to avoid overspending is ideal, and you can achieve this by having a budget in place.
A budget is essentially you telling your money where to go. Many times, the cause of overspending is not having a game plan. When building your budget, you can allocate money to unspecified spending, but make sure you also have money to save and to recover from your latest shopping spree. Once you are back to normal, you can begin tweaking your budget to fit your needs a little more.
Eliminate Unnecessary Spending
With your budget in place and your credit cards destroyed, you can now expedite the recovery process by eliminating unnecessary spending. This includes eating out, purchasing “stuff,” and spending on entertainment. While these items are perfectly fine to have in your budget, the idea now is to quickly recover from overspending and get back to a place of stability.
An added benefit to trimming your budget while “in recovery” is that once you have fully recovered, you may look back and find that you in fact didn’t need to spend all that money on food or entertainment, allowing you to eliminate that kind of spending from your life permanently.
Overspending can be demotivating, especially if you are serious about obtaining and maintaining good financial health. But you will be able to rebound from 99% of overspending mistakes quickly and get back on the path to financial wellbeing if you first eliminate credit cards and then look at your budget and ensure you are sticking to the game plan. Lastly, eliminate all unnecessary spending until you’ve fully recovered.
Don’t let a little bit of overspending derail your financial progress. Don’t give up. Money management is a marathon, not a sprint.