This is the beginning of a new discussion series: The 5 Foundations of Personal Finance. I look forward to hearing your perspective too.
Shopping is easier than ever. You can compare prices online, find online coupon codes, “windows shop” — you don’t even have to get dressed.
Shopping has become a form of entertainment.
As easy credit became available to virtually anyone, our attitude changed from “save up first, then buy” to “buy now, pay later”. It can all be paid off in small monthly payments that you’ll be making for a long, long time.
I wrote earlier about how my husband and I became debt-free, paying off $30,000 in debt in less than one year. We don’t ever want to be in debt again. “Debt free” truly means freedom, and I enjoy the flexibility we now have.
That’s not to say all debt is bad. Some people will argue that debt is a tool, and I completely agree… in certain cases. Organizations like Kiva arrange microloans to help people in developing countries earn income for their families. Those stories are inspiring, and I love that those loans are available.
That is how debt can be used as a tool: when it’s used for building income, not when it’s used for personal consumption. After you’ve eaten that restaurant meal or grown tired of the new shirt, you don’t have much to show for that raging credit card bill.
Spending wisely is about choosing to spend with discernment and discipline. Once you’ve made that personal decision, there are cash-only plans, budgeting tools, coupons, sales… all kinds of methods to help you stay in control of your spending.
Our family does a No Spend Month every July in which we limit our spending to $250 for the entire month. (We’re doing it this year too if you want to join in.) During that month we keep to a strict limit, but even then the goal is not to stop spending money completely:
The true goal for No Spend Month is to practice making expenditures planned and purposeful, rather than impulsive and temporarily satisfying. Because it’s not about the $250, or whatever the budget may be, it’s about good habits and a clear perspective.
Does all this mean we should never enjoy ourselves and should only buy what we need? Of course not, but let’s keep in mind how discipline helps us to enjoy things more: the first ice cream cone tastes really great — the tenth, not so much.