Weekly Column: Don't Swipe The Small Stuff

Don’t Swipe the Small Stuff

In a recent New York Times article, www.nytimes.com/2016/09/10/your-money/a-little-nagging-can-reduce-credit-card-debt, researchers found that some infrequent and subtle reminders about the follies of credit card debt helped reduce the amount that people spent each month. Assuming that this would work for you, are you willing to make some changes in order to reduce your monthly spending?

Do the math

Check your monthly credit card statement to be sure that all charges are accurate. While doing so, add up all of the purchases you made for under $20 and consider if any of them were actually necessary. Could you have avoided those costs altogether? Might you have packed a lunch, brought a drink from home or resisted the temptation to splurge?

Carry cash

Experts agree that people are more reluctant to part with their cash money than they are to swipe a card. If you are having trouble paying your cards off in full or if you are surprised how much you spend in a month, try withdrawing your petty cash ahead of time. Use only cash for incidental purchases under $20 and, when your petty cash is gone, stop spending. If you find that you blow through a month’s cash too quickly, only withdraw what you need for a week and do your best to be more disciplined.

You may find that you adjust to this system quite easily, but you will not notice results unless you get family members on board. Discuss the plan and allow each individual to have a bit to spend. Let them see how quickly their money disappears and make it a family goal to reduce the monthly expenditures. You may find that you make fewer stops and have more time once the whole family decides against small, unplanned purchases.

Remember your goals

Set a reminder on your phone, computer, or write it on the calendar, to check your credit card balances mid-month. This will refresh your memory as to how much money you already owe, and might help curb the impulse to go spend more. If you haven’t already, calculate how much you will save by paying off your credit cards faster at http://financialmentor.com/calculator/debt-snowball-calculator. Jot down some goals that you would like to work towards and use your credit cards less as a way of meeting those targets.

Shop once a week

If you find that frequent trips to the grocery store often cost you more than you plan, set one designated grocery day and stick to it. Don’t stray from your list and shop only for the basics. Resist the urge to make quick stops for things you feel you can’t do without— but if you must, pay with cash for any purchases under $20. Bring drinks and snacks from home and do better at stocking up weekly--your budget will thank you. Need it be said that the drive thru is costing you more than it’s worth? Get in the habit of going straight home and eating what you have there. 

Make your groceries stretch—if you’re comfortable getting groceries 4 times a month, make it a goal to reduce that to 3 and track how much you save. Do an inventory of what you have on hand and get creative to use up food that might otherwise go to waste. Not every meal needs to be a gourmet feast. Ensure your family gets a nutritious, balanced meal while avoiding the temptation to buy take out. Again, if you find yourself grabbing a few extras, pay cash and don’t cheat on your petty cash limit for the month.

The real cost of credit

You may feel that it’s easy to put purchases on your credit card and forget about it, but consider the cost of paying 20% interest your gas station treats, phone apps, and window shopping splurges. Convince yourself that if you don’t have the cash in your pocket to buy it, you don’t need it. Save your credit card limit for a real family emergency and try to put those $20 bills back in your pocket to pay down debt, build your savings or invest in your child’s education. It might not feel like a big savings right now but combined, and over time, your self-control will lead you out of debt faster and into financial stability.

They say it takes about 66 days to form new habits. If you start today—carrying cash and reducing the number of small, trivial purchases you are putting on your credit card—by the start of December you will have reduced your credit card bill by using the card less, and hopefully reformed any tendencies to let money trickle through your hands. Be vigilant and disciplined to create new habits and see the progress you can make with your budget and spending.