The Best Debt Payoff Plan for Compulsive Spenders
There are so many debt
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What is compulsive spending?
Compulsive spending is something a wide variety of people struggle with. Psychology Today puts it this way:
Compulsive spending, sometimes called compulsive buying disorder or oniomania, is spending far beyond what is necessary. Though it often causes financial harm, people of means may engage in compulsive spending without suffering serious financial disaster. In an increasingly materialistic society, it can be difficult to differentiate compulsive spending from the overbuying in which most people engage.
Read the full article on Psychology Today
Simply put, compulsive spending is the desire to keep buying things for the instant gratification that can sometimes lead to buyers remorse.
Buyers Remorse – The sense of regret after having made a purchase.
Why should you work to pay off debt?
Take a moment and add up the amount of money you pay toward debt each month. All debt (besides your mortgage), can fall into the following categories:
- Credit cards
- Student loans
- Loans
- Medical bills
- Car loans
Take a moment to add up how much money you put toward these types of debts each month. You can even check this credit card interest calculator to help you see how much extra cash you spend in interest!
Credit card interest calculator
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Imagine life without debt
Now that you’ve added up the total cost of debt,
That’s why you should be working to pay off debt. You are literally taking your own money back.
Best debt payoff plan for compulsive spenders
Because compulsive spenders struggle with the desire for instant gratification, it makes sense to find a debt payoff plan that gives them that same sense of instant gratification. In my opinion, the best method to do this is the Debt Snowball by Dave Ramsey.
How the Debt Snowball works
The Debt Snowball is designed to pay off your smallest debts first and then work toward your larger debts. You can watch a quick 5-minute break down of how the Debt Snowball works or read more here.
Why this method works for compulsive spenders
While some debt payoff plans insist the best way to become debt free is by paying off your debts with the largest interest rate, the Debt Snowball works by paying off your smallest debt first.
The Debt Snowball is the best debt payoff plan because you are a lot more likely to get that instant gratification that you feel similar to compulsive spending.
Instant gratification
When you find your extra $200 per month to begin the Debt Snowball method, you might even be able to pay off a small credit card within just a few weeks. This sends your brain a massive rush of serotonin.
You get to visually see your results
You can even
How to get started
Before you begin working on your Debt Snowball, make sure you have a secure $1,000 emergency fund in place. Here are some ways to build an emergency fund fast.
You can start the Debt Snowball by simply finding an additional $200 per month to put toward your smallest debt.
In order to find an extra $200 per month, you could work on reducing your monthly bills or find a side hustle to bring in more.
Can you bring in more than $200?
Absolutely! The more money you can bring in each month to put toward your Debt Snowball, the better. For our family, the additional income I made from blogging was enough to help us knock out all of our debt in 1 year. Learn more.
Extra tips for debt payoff plan success
The Debt Snowball plan is the best debt payoff plan for compulsive spenders because it gets quick results, but that doesn’t mean it’s always easy.
In order to keep yourself on track and get your debt paid off, there are some additional things you can do:
- Get an accountability partner whether it’s a friend or a spouse
- Join a Financial Peace University group near you
- Get helpful books on finances
- Create a vision board to help remind yourself why you started
Getting connected with others, keeping the knowledge flowing and reminding yourself of your big financial goals are sure ways to help you stay on track.
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I found this article at a good time. My girlfriend has a bit of a compulsive spending problem and I constantly try to help her with her finances, but just as things seem to be going good, she goes on a spending spree and reverses all the progress she’s made. For example, 6 months or so ago I helped her start automating a lot of her finances, get rid of her credit card debt, and start budgeting. It went really well for a few months: she got really organized and got rid of all her debt. But, a couple of months later she’s now back in debt and basically at step one again.
Knowing that all the progress she made just got erased makes me want to get mad but I know that’s the wrong way to go about it. I’ve talked to her about it too and she says she just loves shopping so I’m really having a hard time figuring out a solution to this problem. I’ve recommended she get rid of her credit card but she says she needs it for recurring bills that she pays (e.g. gym). I’ve also recommended blocking certain websites and trying to find something else she can replace shopping with, but she says shopping is her favorite thing to do.
Anyway, I’m helping her get out of debt again and I know that she will, but I’m afraid this cycle of getting out of debt and then getting back into debt will just keep happening over and over again. The other problem is that I’ve always been pretty good with my finances so it’s harder for me to understand her situation. I’ve never had a problem with overspending myself so I don’t really know what “triggers” her to load up so many purchases on her credit card in such a short time period. Even when she knows she only has $X amount to spend per month, she sometimes just can’t control herself going over that amount.
As someone who’s possibly been in a similar situation, do you have any suggestions to help her cut back? Or any recommendations for me on how I can help her? We’re pretty open about our money together so at least I can talk to her about it.
Hmmm…
First of all, I am so glad you are managing your finances well and are working hard to help her.
The best way I think to look at it is shopping is a coping mechanism. Like stress eating, cigarettes or alcohol. It makes you feel so much better for a second.That being said, the first step for any addiction recovery is that the person needs to SEE they have a problem.
She might be willing to let you help her and do all of these things but if she isn’t truly ready for change it may not work out. For me, I had to learn I was enough on my own without all the things. BUT I also think having a budgeted “shopping fund” might be helpful.
My top tips would be:
-Talk about her big goals. Does she want to travel? Have an awesome car or does she truly just want to have the most stylish clothes?
-Whatever her BIG dreams are, focusing on those is key. When you’re financially planning for something you REALLY want, it can help remind you how unimportant all the other things really are.
-I just bought a great book that breaks down budgeting as a couple really well. “Smart Couples Finish Rich.” The first few chapters focus on talking about your VALUES and then planning your finances around those.
I hope some of this was helpful. Addiction can be tough no matter what form it comes in.