Death by a Thousand Debit Card Swipes

            On the Indiana Bankruptcy Blog I typically focus on those who have debt problems and are considering Chapter 7 or Chapter 13 bankruptcy.  However, a bank statement that came across my desk the other day made reminded me that it is not only those who have debt problems that need to reign in spending.  The bank statement I saw the other day reminded me that when people do have enough money to pay their bills and have a little bit left over how easy it can be to squander that money.

          It makes sense.  If Susie has $2,000.00 of take home income and $2,000.00 of bills and living expenses to pay each month she must account for every penny or she will not have enough left to pay her bills and eat by the end of the month.  On the other hand, if Susie has $3,000.00 in income and the same $2,000.00 worth of expenses does she really know where that other $1,000.00 goes each month?  I assert to you that the answer to this question for most people is "no."  While it is excellent that in the second example Susie has more than enough money to "get by," the truth is that she could be throwing away $1,000.00 per month without even realizing it.

          In my experience the most common way that people blow through money without even realizing it is what I call Death by a Thousand Debit Card Swipes.  People swipe that debit card like crazy.  Most of the transactions are relatively small.  Typically under $50.00 and seem insignificant, but this is where the bank statement comes in.  Take a look at your bank statement.  Do you have 4 pages of debit card transactions?  Those little purchases here and there add up.  What I have observed is that most of those transactions are for useless stuff that we consume such as fast food, liquor stores, gas station snacks, etc.  It isn't that people go out on a shopping spree at the mall and spend $300.00 on a new outfit they can wear to work, it is that they go out and spend $300.00 on stuff that they eat or drink.  And when you have more than enough money to pay your bills is when it is easy to overspend on the little things that add up to make a huge difference.

          Have you ever heard the expression that when you make more money you spend more money?  I review income and expenses for people with financial problems for a living and I can say with certainty that this seems to be true in almost all situations.  Once we can afford the nicer car we buy the nicer car, house, gym membership, etc.  Think about how much faster you could achieve your financial goals if you simply froze your standard of living at your current income level.  With each raise or new source of income taking the remaining funds and investing them.  If you didn't spend the difference on gum and fountain drinks you would be able to have all the things you wanted much faster than if you increased your payments along with your income...because lets face it.  Just because you have something doesn't mean you own it.  Just because there is a new car parked in your driveway that is depreciating by the minute does not mean that you have achieved financial success if you still owe 59 payments.  True financial success is when the car of your dreams is parked in your front yard and you purchased it with cash.  At that point you actually own something and you aren't just making payments to someone else to own it several years down the road when it will be worth a fraction of its value today.

            But even more dangerous than the more expensive car example in the "make more, spend more" method is death by a thousand debit card swipes.  My advice is to go through your last 2 bank statements and see how much money you spent that you didn't really need to spend.  Add it up and think about how much money you are spending over a year.  How would you rather use that money?  A family vacation?  Funding Retirement?  The possibilities are endless.  Pay attention to how much you swipe that card and avoid financial death by a thousand debit card swipes.

Halcomb Singler, LLP, is a debt relief agency.  It helps people file for bankruptcy under the bankruptcy code.  No attorney-client relationship with the firm of Halcomb Singler, LLP, is created through this blog. Also, please note that Erika Singler is an attorney licensed in Indiana and does not seek to practice law in any jurisdiction in which they are not properly authorized to do so.  The information contained in this blog is general in nature and should not be relied upon for the circumstances of any individual(s) or businesses.