Living Paycheck to Payday Loans | Habitual and Excessive Spending Habits

Dissolving Debt In 2009

Welcome back to the payday loans money blog at personalmoneystore.com.

Continuing on yesterday’s topic in the article, “Increasing Income , Decreasing Debt | Payday Loans Blog Resolutions for 2009,” today we will continue the topic by exposing habits we possess that keep us tied to or continuing the cycle of financial debt.

Where Does The Money Go?

Do you ever find yourself looking at your pocketbook and asking the question, “Where did the money go?” If so, you would be well served to consider the advice below.

Living In A Financial Fog?

Apart from the larger monthly expenses such as your house and car payments, you may be a little foggy as to what consumes the rest of your income. “Where does the money go?” is a question that is usually indicative of poor budgeting and or spending habits.

Know Where Your Money Is Being Spent

If you don’t know where your moneys is being spent, it is difficult to see the areas where you can save.

For one month, devote yourself to recording each and every one of your daily purchases and expenses. At the end of the month, categorize each into their own respective categories such as food, entertainment, home and utilities, etc. By taking a careful inventory of these monthly expenses, you will begin to see some interesting patterns emerge. These patterns will fall into two separate categories that we will call excessive spending and habitual spending.

Meet Daryl, Your Average American Consumer

For this example we are going to use Daryl, a debt burdened consumer, who has completed the above exercise, so that we can illustrate the patterns that you might expect to see when doing this exercise for yourself.

Daryl is an average American consumer with just more than $9,000 in consumer credit card debt. He has found himself paying only his minimum monthly payments at the end of the month due to a shortage of funds and occasionally he has to borrow payday loans to avoid late payment penalties in on his mortgage payment.

Before the above exercise, Daryl said that he occasionally goes out with his friends but does not buy a lot of consumer goods like his friends do. He considers himself a fairly conservative spender. He just can’t seem to make any headway on his debt. He blames his job, saying that he just doesn’t make enough to live on. So we asked Daryl to do the above exercise to see just how conservative he really is.

Daryl’s Spending Habits

Below are some of the habitual spending habits that Daryl found after completing the above exercise.

• Morning double shot espresso purchases two to three times a week before work at a cost of $4.25 each.
• Lunch twice a week at fast food establishments at a cost of $6.50 each.
• Movie once a week with refreshments costing an average of $16 each.

After doing the math, Daryl found that each month he was spending $51 on “wake up” coffee. $52 on lunch outings and $64 on movies and refreshments, for a grand total of $167.

Daryl did a little better in the excessive spending category finding only the following after completing the above exercise. But it was a big one.

• Groceries bill meeting and exceeding $150 dollars a week

This may not seem to be that much of a grocery bill, but considering that Daryl is “Batching it,” or in other words living solo, a grocery bill of $600 per month for one person is extremely excessive.

So between Daryl’s grocery bill and his habitual spending expenses, Daryl was spending $767 dollars each month.

What Could Daryl Do Better?

The advice given to Daryl after he completed the exercise saved him greatly in his monthly expenses. Here is what was suggested to improve his financial out look.

Cutting Out The Coffee

Instead of getting that morning cup of espresso at the drive-through three times a week, cut back to just one espresso a week. Better yet, eliminating these expensive cups of mud altogether by making his own coffee at home.

If coffee is not an acceptable substitute, purchasing an espresso maker would pay for itself rather quickly with the extra cash saved each week and could be considered a viable option as well.

Pack Out, Don’t Take Out!

Instead of indulging in fast food lunches twice a week, making a lunch and bringing it to work with him would save Daryl the extra money and his cardiac health too.

Subtituting the weekly movie and refreshments, with a RedBox or Netflix movie and some cheaper finger food with the friends, would eliminate his monthly dependence on payday loans.

Buy The Groceries, Not The Store

As far as groceries are concerned, Daryl could substantially lower his costs by going to the store with a planned list of needed food items, thus eliminating a lot of the more expensive junk foods he was getting before. This would lower his monthly grocery bill to the more typical average food bill for one person which should be in the neighborhood of $250 to $300 dollars.

The Conclusion

By subscribing to Netflix ($15), purchasing only one espresso each week ($17) and lowering his food bill to the higher end of the average food bill for one person ($300 dollars), Daryl will have room for beer and refreshments for movie night once a week and save $435 dollars each month.

If Daryl Can Do It, You Can Do

Looking at Daryl’s circumstances and the potential outcome,  a very small sacrifice is made for some extraordinary savings.

This shows the importance of implementing a budget or system to track your expenses each month so you can isolate areas where you can save money and regain financial territory lost to consumer credit debt.

Posted courtesy of Personal Money Store, your payday loans source.