Why you can't stop over-spending!

A quick stop at the coffee shop on the way to work, $10…your co-workers daughter is selling cookies to raise money for the school, $22….you forgot to pay a colleague back for your bosses birthday gift, so you are taking her to lunch today instead, $28….it’s not even noon and you’ve already spend over $60 bucks on your credit card! Before you know it, that credit card statement will be in your mailbox and it will make your eyes pop out! How did your balance go from $200 to $2000 seemingly overnight?!

One transaction at a time.

According to a recent study conducted by Capital One and posted in the New York Post, cash IS different than plastic. And, what’s in our wallets, or NOT in our wallets, may surprise you!

• 1 in 4 Americans rarely or never carry cash at all anymore

• One Third of Millennials claim they rarely or never carry cash anymore

• 41% of Millennials were more likely than any other generation to deem paying for something by cash as “inconvenient.”

• Credit Card spending now outweighs the use of cash when buying the following:

  • Groceries

  • Gas

  • Dining Out

The tendency to overspend is so easy nowadays. We can just “swipe” and we have groceries. “Swipe” and we have the kids soccer uniform paid for. “Swipe” and we have a new outfit for the wedding we are attending, along with the newlyweds’ gift. The problem is that when we use our credit card, we don’t necessarily feel the impact of a swipe, or money being spent. It’s almost like magic in a sense because we swipe, insert, touch or hover a little plastic card over a point-of-sale box and we get to walk out with goods, food, and other merchandise instantly. It isn’t until we get the bill and actually open the mail 28 days later do we feel the impact. And, even then, many people believe they will always be in debt, so does it really have an impact?

With the use of a credit card, we often see spending increase. Studies have shown consumers are willing to pay up to “83% more when paying with a credit card than when paying with cash,” according to Value Penguin. Not only do we spend more, we leave tips that are 13% larger (on average) when using plastic to settle dining bills than when we use cash. And, we tend to spend 10% more if our card sports a credit card logo, such as with a debit card.

If your goal or resolution this year is to get out of debt or pay off your credit cards, the number one thing you can do to stop overspending is USE CASH! Take out money for the groceries, use cash for whatever you budget for clothing, spending, and/or gifts for the month. Keep that cash on hand and you will be immediately more mindful of your spending. When you spend real, physical dollar bills, there is something that happens that doesn’t happen with a credit card. You FEEL the money leave. You FEEL the impact right then and there! It is very different that swipe, swipe, swipe. When you are out of money, you can’t physically spend anymore. Try this for a month and you will see (and feel) the difference in your spending habits!

And if you are serious about getting out of debt, don’t just leave the plastic at home…cut up those credit cards and change your spending habits starting today!