5 Questions to Ask Yourself About Debt and Spending
Do you feel like you are drowning in debt? Do you lay awake at night wondering how you are going to pay the electric bill tomorrow? Or how are you going to scrape up the money for your child’s field trip? That one will cut you. I’ve been there and it is rough!
Take the time to ask yourself these questions. Dig deep and think about your answers.
What emotions do I associate with spending money?
Thought: Understanding the emotional triggers linked to your spending can reveal patterns. For example, some people might spend when they are happy, while others might splurge when they are stressed or upset. Recognizing these triggers can help you develop healthier coping strategies.
I am a spender no matter what I am feeling or what mood I am currently in. So, for myself, I will refrain from scrolling on social media and being influenced on this or that.
When and why did I start using credit or loans?
Thought: Reflecting on when you first started relying on credit can help identify the root cause of current debt. Was it due to an emergency expense, or a lifestyle choice? This can guide you in addressing the underlying issues.
I wanted a bigger lifestyle. I wanted to look rich if I am being honest. All those years I wasted money on stuff to look like I had money makes me sick. Nowadays, having a secure bank account matters more to me than pretending to be rich.
Do I have a clear understanding of my income and expenses?
Thought: A lack of clarity about income and expenses can lead to overspending. Keeping track of every dollar coming in and going out can highlight where you might cut back or allocate funds more efficiently.
Before we started budgeting, we had no idea where all our money was going. Sure, I could have told you; that we go out to eat a lot, but it wasn’t until we sat down & looked at our spending for the previous 3 months that I knew something had to be done.
Am I living within my means?
Thought: It’s important to assess whether your current lifestyle matches your income. Living beyond your means, even in small ways, can accumulate significant debt over time. Creating a realistic budget and adhering to it is key.
Our answer was No, we were not living within our means. We were using credit cards as an extension of our income. Then only paying the bare minimum when the payment was due. Do you do the same?
Do I have long-term financial goals, and are my spending habits aligned with them?
Thought: Setting clear financial goals can provide direction and motivation. Evaluate if your day-to-day spending aligns with these goals. This can be an eye-opener and help in making informed decisions towards achieving financial stability.
The short answer is NO. We had no goals; we had no savings when we were in financial debt. Once we paid all of our consumer debts, we saved up a 3-month emergency fund. It was the BEST feeling ever to have that money “in case we needed it”.
I hope these 5 questions will help you understand more about why you spend. When we began our debt free journey, years ago these questions made a great impact on me. I have attached a worksheet so you can write your answers down. Writing my answers on paper helps me to really dig deep and get a clear understanding of my situation. You may also want to read my blog on How to take charge of your finances.
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