I was just listening to an excellent episode of the Mad FIentist Podcast and I had to stop listening to make this post. I’m just around 14 minutes into it and the host and guest (JD Roth) made great points about how spending is largely emotionally driven. The guest was telling of his history from being deeply in debt to conquering the debt. He also made the point that he knew the math side of personal finance very well, but lost control of the emotional side and that’s how he ended up in debt. Personally, I can relate to his story very well. I had fallen victim to the exact same disease: emotional spending. The emotional high that would come with a purchase and the crash that would come when I would have to ‘pay the man’ when the time came. I’ve still got to ‘pay the man’, but now I know why and recognize that much of spending is emotional (not just mine, but, I’d guess, everybody else’s as well).
Most people around the US have at least enough to cover their basic needs and more. There are two spots where most of the difficulty seems to come in: 1) lifestyle inflation (aka – ‘keeping up with the Jones’) and 2) emotional spending (aka – ‘this will make me feel good and I deserve it!’). As with most any ‘recovery’ program, you need to realize and acknowledge that you have a problem. A great thing to add is a solid plan for dealing with said problem. I had to go through this at least twice with my personal financial problem. Like the podcast guest, I knew the math and results on paper, but translating that into something meaningful, tangible and emotional was a bit more work. I’ll go a bit more into personal financial detail in a future post, but let’s say that I’ve learned my lessons about being in debt the hard way. I now recognize that spending is much too easy and every cent counts!