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The role of money in one’s life contentment is a topic that often makes news. In fact, there has been so much talk about the correlation between the two that a new name, “affluenza,” was invented to describe the effects of excessive wealth. Is there any progress being made in our understanding of whether or not money can buy happiness? Recently, the Wall Street Journal published an article titled “Why You Are Spending More and Enjoying It Less,” which explored the delicate connections that Americans have with their own spending.
The article also emphasised the more emotional emotions that come with higher purchasing ability.
Veronica Dagher, the article’s author, spoke with different people who were overspending for a variety of reasons. Despite their differences in upbringing and socioeconomic status, they all seemed to have one trait: their spending habits were not producing the desired effects of increased positivity and contentment. Because of their excessive spending, they experienced a great deal of financial worry and strain, which negatively affected their future financial stability. It appears that increasing one’s expenditures does not lead to contentment and fulfilment.
What is considered maxing out a credit card?
A maxed-out credit card is one where the balance owed on the card is equal to the credit limit. This can happen for a number of reasons, such as making large purchases or using the card for everyday expenses. If you find yourself in this situation, it’s important to take action to bring the balance down. There are a few things to keep in mind if you have a maxed-out credit card. First, your credit score will take a hit.
This is because credit utilization, which is the ratio of your credit card balance to your credit limit, is one of the factors that determines your credit score. So, if your balance is close to or at your credit limit, your credit score will suffer.
Second, you’ll be charged high interest rates on any new purchases you make. This is because maxed-out credit cards are considered to be high-risk by lenders.
So, if you do need to make a purchase with your card, you’ll be paying more in interest than you would if your balance was lower. Finally, you may have trouble getting approved for new credit. This is because lenders will see that you’re already maxed out on one card and may view you as a high-risk borrower. If you have a maxed-out credit card, the best thing you can do is to start making payments to bring the balance down. You may also want to consider transferring your balance to a new card with a lower interest rate.
But, before you do this, make sure to read the terms and conditions carefully so you understand the fees and charges you’ll be responsible for.
If we’re not buying happiness, what are we buying?
According to the article, much more than we need. The convenience of using a credit card to buy more has made overspending a prevalent tendency, despite the fact that having the financial means to do so is frequently seen as a proxy for success and happiness. It’s nice to see a return on our money when we invest in something that will last a long time. When we consistently overspend on mundane, non-essential items, it might be read as a sign of our financial instability or a sign that we’re giving in to temptation. This trend of spending more and more of our income on things that provide less satisfaction is problematic. So what can be done to take back financial power?
Evaluation is key to successful spending…
One of the main points made by Dagher is that no matter your spending personality, taking the time to evaluate your spending triggers is a critical part of making positive changes. Without understanding what’s really behind your spending motivation you might very well feel trapped in a purchasing pattern that seems never ending. She also suggests stepping back and looking at the “hot buttons” that tempt you to spend. Once you know the why of your spending habits, you’re more likely to understand how to go about changing them.
… and taking action is, too
Once you’ve realised your spending patterns and identified your spending triggers, you’ll be ready to take control of your finances. We’re multifaceted beings, so it’s easy to feel bewildered by the ins and outs of our monetary responses and routines. One thing is certain, though: while it’s crucial to examine these factors, it’s even more crucial to take action to modify and experiment with new approaches to chasing pleasure that don’t rely on material possessions.
Small changes matter
One of our favorite personal finance bloggers, Stefanie from the Broke and Beautiful Life, was quoted in the WSJ article and we were thrilled to read about her budgeting strategy for funding an upcoming trip. Through based on a small spending adjustment, the change has allowed her to redirect her cash flow into a longer-term goal. It’s a testament to the impact of small steps on larger financial goals. Further, it shows how satisfying it can be to work for our goals, and independently achieve a goal that we’ve set.
Swap for experience-based purchases
Altering your present spending patterns is important, but you may also want to reevaluate what you believe to be a worthwhile investment. It might not be the flashy red Corvette you’ve been eyeing, but the road trip that comes with it. Few studies have compared the emotional effects of investing in experiences versus purchasing material goods. There’s a near-unanimous agreement that, unlike with material goods, there’s no denying the satisfaction we get from investing in new experiences. The burdensome spending cycle that results in a stuffed closet but a depleted bank account at the end of the month can be broken with only one new experience. So how about you, do you find yourself struggling with your spending or challenged in a particular financial area?
