According to a recent study by NerdWallet, the average American household with debt now carries $15,355 in credit card debt and $129,579 in total debt. When all of America’s credit card, student loan, auto loan and mortgage debt is added up, it now amounts to a staggering $11.91 trillion.
If you are one of the many of Americans struggling with debt, there are plenty of ways to reduce and eliminate that debt in a responsible way. However, if debt has constantly been a problem throughout your entire life, the debt itself may not be the root of your problem and your debt issues may instead be a symptom of a larger problem: impulse spending.
The Behavior Behind the Debt
A new study by CreditCards.com found that 5 out of every 6 Americans make impulse buys. More than half of those surveyed say they have spent at least $100 on an impulse buy and one in five respondents admit to spending $1,000 or more on an impulse purchase. Perhaps most concerning is the growing trend in impulse buying. CreditCards.com found that impulse buying is up 9% since they conducted the same survey just a year ago.
E-commerce represented 45% of 2015 holiday spending, but nearly 80% of impulse buys are reportedly still made in-store. The remaining 20% take place on a computer, tablet or smartphone.
“When something is tangible and is right in front of you, it sparks the impulse to buy more than a picture on your phone,” financial planner Karen Lee explains.
Why Do We Impulse Buy?
If you often find yourself buying an item that you hadn’t planned to buy because of a sudden urge to get the item or if you repeatedly find yourself asking, “What the heck was I thinking when I bought that?” it may be a sign that you are prone to impulse overspending.
If impulse buying is a problem for you, don’t feel bad. Retailers use every psychological trick in the book in an attempt to lure shoppers into making impulse buys. Often, these tricks can be as simple as putting an item on sale. Did you really need a second raincoat? Probably not. And the fact that you got it for 75% off doesn’t change the fact that you impulsively spent money for an item that you didn’t need.
Other impulse buyers simply do it because shopping is fun and exciting and it makes them feel good. However, much like the high a drug user gets, the good feeling is often replaced with regret once it wears off.
Tips To Avoid Impulse Buying
If you find yourself struggling with impulse buying, here are several practical steps to take to keep it under control:
- Switch from using credit cards to cash.
- Impose a waiting period of at least a few hours between the time you see an item you want and the time you purchase that item. Often the urge to buy will pass relatively quickly.
- Avoid temptation by not visiting websites or stores that trigger your impulses.
- Always keep receipts so that when you slip up, you can return the items later. Returning even inexpensive impulse buys can also be a self- imposed punishment for not staying disciplined.
- When you do go shopping, take a thrifty friend and tell him or her to help support you in making financially responsible decisions.
The Bottom Line
While there’s nothing inherently wrong with impulse buying, the latest statistics indicate that overspending impulsively is likely one of the driving forces behind American debt. If you are struggling with debt, it may be time to sit down and take an honest look at whether or not impulse buying is the underlying cause.