5 Types of Overspenders: Which One Are You?

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Money Going Down The Drain
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Northwestern Mutual recently released the Planning and Progress Study which offered a startling picture of the state of debt in the U.S. The report revealed that 75% of Americans struggle with debt while almost half of the country’s population spends up to 50% of their monthly income on debt payments. [1]



These are some crazy numbers – and the report highlights that there is indeed a growing reliance on debt to fund personal expenses, education, transportation, and even food! This is a huge problem.

If you belong to the millions who spend a significant portion of their income paying creditors and are not making any meaningful dent in their debt balances, it is quite likely that you got into this position because you are an overspender. So what type of overspender are you? The odds are high that you’ll recognize yourself as one of the following. Which one are you?

1. Image Spenders

These consumers tend to always pick up the tab at fancy restaurants, driving the flashiest cars, and purchasing the latest items from designer brands. They want to project themselves as uber-successful by displaying the most expensive clothes, bags, and shoes and traveling to places where their fellow overspenders frequently go to.

2. Compulsive Shoppers



This type of spender is characterized by frequent preoccupation with buying or impulses to buy items that have remained unused, with the tags still on them. Some consider compulsive shopping as a mental disorder and a form of addiction. [2] People who are into compulsive hoarding are closely linked to compulsive spending which is common in our materialistic culture.

3. Bargain-Hunting Spenders

These people always wanted to get the deal while taking the seller down. This type of spender does not give much ado on getting a good value from their purchase. They just aim to make a killing during the negotiation process with sellers.

4. Extravagant Gift Givers

They routinely overspend on the best presents for their family members or friends, from new toys and designer clothes to expensive restaurant meals and high-end wines. Overspending for these people is a way to please others or make them likable. They throw away money to win acceptance, approval or even love at any cost.



5. Bulimic Spenders

They are high-earning individuals who get rid of their money through spending until they are broke. They gain satisfaction from returning to a broke state. However, they feel ashamed when they look back on their decisions.

How To Avoid These Spending Habits and Find A Better Financial Situation

If you recognize yourself in any of the types of overspenders above, it is not too late to change. Here are ways to improve your spending habits.

• Make payments on time to improve your credit score and avoid mounting fees and interests.
• Avoid maxing out your credit cards and keep your credit balances low.
• Create a household budget listing on how much money you earn monthly and how much you can afford to spend.
• Assess your need when shopping by including only those things that matter most. Festive seasons mean high discounts, but they might not always be in the customer’s interest.
• Many people overspend due to the lure of plastic money and net banking. You could break the overspending blues by replacing the card with actual money and following the old adage of our grandparents: Don’t spend it before you have earned it. [3]

There is no free money – and remind yourself that “Buy Now Pay Later” means that you will PAY later. Get that concept embedded and it will be so much for the better.

References:

[1] Daniel Woolston. July 11, 2017. What Northwest Mutual’s 2017 Planning & Progress Study Shows Us About the U.S. Debt Crisis

What Northwest Mutual’s 2017 Planning & Progress Study Shows Us About the U.S. Debt Crisis

[2] Donald W. Black. February 2007. World Psychiatry
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1805733/

[3] Andrew Beattie. July 19, 2017. Should You Pay in Cash?
http://www.investopedia.com/articles/pf/08/pay-in-cash.asp







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