Wednesday, March 05, 2008

Budget Bombs: Avoiding and Recovering from Spending Attacks

Stealth attacks happen: I permanently park the shopping cart. I consciously forget the mall's store directory. And then -- Boom! -- fiscal disaster strikes. My savings plans will be decimated by a spending binge.

That's a "budget bomb," according to this article from 6 Budget Bombs By Shelly K. Schwartz. Here is the list of spending bombs:
1. Cut out all the fun stuff. : "All budgets should allow for entertainment. Think about where your recreation priorities lie and add up how much you spend each month on those activities. If the total is more than 10 percent (5 percent is ideal) of your total household budget, it's time to scale back. But don't blunder by eliminating recreation altogether or your best-laid plans will eventually self-destruct. "

On that list, #1 really hits home. An overly rigid approach to budgeting leads to collateral damage. Basically, it's pocketbook rebellion. When I'm too rigid about planning the budget, I attempt to balance my emotional accounts by overspending. But without a plan, I overspend. The solution: Create a plan with perks. I like the 5 percent target suggested in the article.

Here's my plan for avoiding and recovering from spending attacks.

1. Be honest. Sneak attacks occur from the deep pockets of low self-esteem, dishonesty or frustration. Key questions: What do I really need to spend? How can I reward myself for good behavior? Can I really live within the confines of this budget? Do I need to add some wiggle room? Am I being honest about wants vs. needs? And my personal favorite: "What's really bothering me?"

2. Go for a walk: Long walks really help me to maintain balanced emotional and financial accounts. As I walk past large homes with beautiful gardens, I am reminded of how much I need to save and earn to reach financial goals. On the other hand, sometimes I chat with a homeless woman named Marie. She's about my age -- maybe a little younger. (It's hard to tell.) I give her money and muffins. She gives me a constant reminder of my good fortune.

3. Balance Check: On difficult days, I am tempted to run off to the nearest Day Spa and just stick my head in the deepest mud bath. Fortunately, my Day Spa Diva moves back to reality after checking the status of various accounts and outstanding bills. Invariably, I realize that my available funds are low relative to the high cost of a mud bath.

1 comment:

HindsGirl said...

i can relate to minimum credit payment .messing with that you'll be paying forever...literally.