The Price Isn’t Right: How to Stop Overspending and Stay Debt-Free

Summary

NerdWallet's Smart Money Podcast: Episode Summary Title: The Price Isn’t Right: How to Stop Overspending and Stay Debt-Free
Release Date: February 3, 2025
Hosts: Sean Pyles, CFP®, and Elizabeth Ayola
Guest Experts: Amanda Barroso, Sara Rathner, and Melissa Lambarina

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I. Introduction

In this episode of NerdWallet's Smart Money Podcast, hosts Sean Pyles and Elizabeth Ayola delve into effective strategies to curb overspending and maintain a debt-free lifestyle. The episode features insightful conversations with NerdWallet personal finance writer Amanda Barroso and financial expert Melissa Lambarina, addressing both proactive spending management and overcoming entrenched debt cycles.

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II. Implementing a Low/No Buy Year with Amanda Barroso

A. Understanding the Low/No Buy Concept

The episode begins with Amanda Barroso introducing the concept of a low or no buy year, a strategic approach to control and reduce unnecessary spending. Amanda explains that the primary objective is to set specific spending goals over a designated period—be it a month or a year—to foster mindful consumption and eliminate financial stress.

Amanda Barroso [00:57]: “The gist of a low buy or no buy is to create one or more spending goals for yourself and to stick to those goals for a certain period of time.”

B. Amanda’s Personal Rules and Strategies

Amanda shares her personal commitment to a no buy year, emphasizing significant changes in her purchasing habits. She outlines strict rules, such as refraining from buying new clothes unless they meet high-quality standards (e.g., 100% cotton, wool, denim) and avoiding non-essential items like makeup and household decor unless absolutely necessary.

Amanda Barroso [01:58]: “One of my biggest goals for the year is not buying any new clothes. I'm allowing myself to thrift clothes or to buy secondhand. But the items that I purchase have to be made of better quality than what I currently have.”

Moreover, Amanda discusses her strategy for managing children's toys by implementing a rotation system, thereby reducing the necessity to purchase new toys frequently.

Amanda Barroso [05:39]: “I'm going to focus on toy rotation. So putting some toys away in the closet and every few weeks, freshening them up, putting some things away, bringing some new things out.”

C. Goals and Tracking Progress

Choosing a year for this initiative allows Amanda to fundamentally alter her spending mindset and achieve substantial financial impact. She sets a mission statement aimed at reducing financial stress, curating a thoughtful life, and planning guilt-free experiences. To track her progress, Amanda uses a paper planner to mark successful adherence to her rules and logs any deviations, fostering accountability.

Amanda Barroso [08:19]: “I keep my rules intact, I cross through in green. And if there's a day where I slip up, I'm going to highlight it and put the amount of money that I spent I will report.”

D. Lessons Learned and Advice

Amanda emphasizes the importance of flexibility to prevent burnout, allowing herself designated days for spending, such as during special trips or events. She advocates for creating a "living contract" with oneself to adapt rules as necessary, ensuring the plan remains sustainable.

Amanda Barroso [06:22]: “That's where I stand on takeout and dining out. But for some people, that might be top of the list.”

Amanda offers practical advice for listeners interested in embarking on a similar journey, such as assessing areas of overspending by identifying excess possessions and engaging with online communities for support and accountability.

Amanda Barroso [12:43]: “Paying attention to what you have too much of might be a good indication of where you're overspending.”

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III. Addressing Chronic Credit Card Debt with Melissa Lambarina

A. Listener's Debt Dilemma

The episode transitions to a listener's question about enduring credit card debt. The listener, a 40-year-old who has struggled with maintaining debt-free status despite multiple attempts, seeks guidance to break the cycle of overspending and live within their means.

Listener [16:16]: “I have had basically non stop credit card debt since I was 18 years old and got my first credit card... I desperately don't want to fall back into the cycle and my husband has warned me that I cannot do it again.”

B. Financial Therapy and Understanding Money Behaviors

Melissa Lambarina highlights the importance of recognizing and understanding one's financial behaviors. She suggests that the listener consider financial therapy to uncover underlying patterns and emotional triggers that contribute to overspending.

Melissa Lambarina [17:24]: “I would urge them to consider perhaps seeking financial therapy. A financial therapist can help you identify patterns or habits that you might have around money and dissect your relationship with money.”

She explains that financial therapy differs from traditional financial coaching by addressing the psychological aspects of financial behavior, making it a crucial step for those trapped in repetitive debt cycles.

C. Practical Strategies to Prevent Falling Back into Debt

Beyond therapy, Melissa provides actionable strategies to help the listener manage spending habits and prevent future debt accumulation:

1. Budget Review and Allocation: Establishing a realistic budget that includes allocations for needs, wants, and savings can create a balanced financial plan.

   Melissa Lambarina [26:26]: “I think it's important to set a financial goal. This is the main reason you want to live within your means.”

2. Impulse Control Techniques: Implementing a 24 to 48-hour waiting period before making purchases can reduce impulsive spending. Additionally, removing saved payment information from online merchants can create friction that deters hasty transactions.

   Melissa Lambarina [22:46]: “Have a built-in plan for that. ... giving yourself 24 to 48 hours before making a purchase if it feels impulsive.”

3. Alternative Payment Methods: Switching from credit cards to debit or cash can limit the ability to overspend, as it ties spending directly to available funds.

   Melissa Lambarina [24:11]: “Switching to debit or cash can help keep your goals on track.”

4. Accountability Partners: Having a trusted friend or family member to discuss potential purchases with can provide an objective perspective and reinforce financial discipline.

   Melissa Lambarina [22:46]: “Having a safe accountability partner... allows you to Hear yourself out loud discussing the case for a purchase.”

5. Emergency Fund: Building an emergency fund can provide a financial cushion that prevents reliance on credit cards during unforeseen circumstances.

   Melissa Lambarina [27:25]: “An emergency fund can also prevent reliance on credit.”

6. Identifying and Eliminating Unnecessary Expenses: Regularly reviewing spending to identify "money vampires"—unnecessary subscriptions or purchases that don't add value—can free up funds for more meaningful expenditures.

   Melissa Lambarina [28:24]: “Determine what are some purchases that didn't really bring you joy, that weren't necessary.”

D. Final Thoughts and Encouragement

Melissa concludes by encouraging the listener—and others in similar situations—to seek professional help and remain committed to their financial goals. She reinforces that overcoming chronic debt is achievable with the right support and strategies.

Melissa Lambarina [29:44]: “I just want to urge them to consider seeking help if they feel like they need that assistance to get to the root of different financial habits.”

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IV. Conclusion

The episode wraps up with a reaffirmation of NerdWallet’s commitment to providing practical financial advice. Listeners are encouraged to reach out with their own questions and engage with the Nerds for personalized financial guidance.

Sean Pyles [14:40]: “Now let's get to this episode's Money Question segment... where I'm joined by Sarah Rathner to help a listener break a destructive debt habit.”

In summary, this episode offers a comprehensive exploration of both proactive and reactive strategies to manage spending and maintain financial health. Through Amanda Barroso's experiences with a low/no buy year and Melissa Lambarina's expert advice on breaking debt cycles, listeners gain valuable insights and actionable steps to achieve a debt-free life.

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Notable Quotes:

• Amanda Barroso [01:58]: “One of my biggest goals for the year is not buying any new clothes...”

• Amanda Barroso [08:19]: “I keep my rules intact, I cross through in green...”

• Melissa Lambarina [17:24]: “I would urge them to consider perhaps seeking financial therapy...”

• Melissa Lambarina [24:11]: “Switching to debit or cash can help keep your goals on track.”

• Melissa Lambarina [29:44]: “I just want to urge them to consider seeking help...”

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This comprehensive summary encapsulates the key discussions, strategies, and expert insights from NerdWallet's Smart Money Podcast episode, providing listeners with the necessary tools and motivation to manage their finances more effectively.

Transcript

[Elizabeth Ayola]

Do you ever find yourself doing something you know is bad for you, but you just can't seem to stop?

[Sean Pyles]

And what if that something is harming your personal and financial lives? This episode will help you break that bad habit for good. Welcome to NerdWallet's Smart Money podcast. I'm Sean Pyles.

[Elizabeth Ayola]

And I'm Elizabeth Ayola.

[Sean Pyles]

This episode, I'm joined by Sarah Rathner to answer a listener's question about how to stop a debt spiral from blowing up their life.

[Elizabeth Ayola]

But first, we are going to talk about what you can get from doing a low or no buy year. So here to talk with us about this is Nerd Wallet personal finance writer Amanda Barroso. Amanda, welcome back to Smart Money.

[Amanda Barroso]

Hi there, Sean and Elizabeth. Thanks so much for having me back.

[Elizabeth Ayola]

All right, Amanda, so to start, can you lay out exactly how a no or low buy year works and what's your goal?

[Amanda Barroso]

So the gist of a low buy or no buy is to create, you know, one or more spending goals for yourself and to stick to those goals for a certain period of time. So it could be a year, like what I'm trying to do here, but it could also be shorter, like a month, if you're anything like me. Your social media feeds were full of people doing low buy or no buy challenges in December, or at least sort of setting up their challenges for the new year. As I was scrolling through those videos, it really got me thinking about my own spending habits and what goals I wanted to set for myself in the new year. Cutting back on areas of overspending and encouraging more mindful consumption are my two main goals. But there are others that you could pick too, like reducing clutter or making more ethical consumption choices.

[Sean Pyles]

So it seems like the overarching goal of a low or a no buy, however you want to do it, is to really reset, kind of from the ground up how you are thinking about your spending habits.

[Amanda Barroso]

That sounds right. Yeah.

[Sean Pyles]

What are the specific rules guiding your no buy year? Amanda?

[Amanda Barroso]

This is a tough question. This is like something I really sat and was trying to be really conscientious about. I think if I had to sum up my big goal for this year, it would be this. Like, this is sort of like my mission statement. I want to have less financial stress, a more thoughtfully curated life, and the freedom to plan new experiences without guilt. So that's my little mission statement. One of my biggest goals for the year is not buying any new clothes. I'm allowing myself to thrift clothes or to buy secondhand. But the items that I purchase. This is the rub. The items that I purchase have to be made of better quality than what I currently have. So we're talking 100% cotton, we're talking wool, we're talking cashmere, silk, denim. No more plastic clothes. I really want to build a closet that I love and that also reflects my personal style. And, you know, it's changed a lot. I have two kids. I just turned 40 last year. And so I've just sort of decided I'm not going to be spending any money on plastic clothes anymore.

[Sarah Rathner]

Right.

[Amanda Barroso]

The other thing is non essential items. So makeup, perfume, like, unless I need to replace something, I'm not buying it this year. I'm also putting a moratorium on household decor. And listen, homegoods used to love to see me coming. We have everything we need in this house to make it cozy, to make it comfortable. I can still take advantage of thrift stores to purchase items, but I'm looking to be more intentional and less susceptible to trends. And maybe you can feel me on that one.

[Sean Pyles]

Yeah, I mean, I also feel like you just saying we have everything we need is such a good mantra in general. Anytime you want to buy something, look at what you have. Realize that you probably have what you need already. Amanda, anything else for your no buy plan?

[Amanda Barroso]

The same goes for new books. I love to read, and I would say it's one of my biggest hobbies. And really I want to have like a robust home library that reflects a wide range of genres and topics. But books are free at the library. Did you guys know this?

[Sean Pyles]

Or on your own bookshelves? Look at the books you've already purchased.

[Amanda Barroso]

Listen, don't attack me, Sean, about my tbr. I hear you, I hear you.

[Elizabeth Ayola]

Speaking of attacking Amanda, I feel like you're screaming at me with the no new clothes thing. Okay, so I definitely felt that. But Amanda, have you heard of the Libby app?

[Amanda Barroso]

You know, I have and in fact is downloaded onto my phone. Thank you, ma'am.

[Elizabeth Ayola]

I hear it allows you to borrow ebooks and audiobooks from your local library. But if the book you want isn't available on Libby, then you can just check thriftbooks.com for inexpensive used books.

[Amanda Barroso]

I have heard Libby is great. And it is true that there are used bookstores in town that I could take advantage of. And you mentioned thrift books. I love online discount booksellers, especially for kids. Seasonal books like you can catch me at night scrolling and just seeing what I can pick up there. So those are all super great tips. And speaking of buying things for my kids. The next rule is going to be hard for me and maybe other parents can relate. Here's the rule. No new kids toys unless it's like a birthday or a holiday. Elizabeth, now listen, I tend to splurge on my kids and I don't know how you feel about your son, but like, I buy them this toy, we're out, you know, can I, mommy, can I have this? And they end up playing with the new toy for approximately six hours and then ditching it. And the kids have more than enough. And I think what I've decided is that I'm going to focus on toy rotation. So putting some toys away in the closet and every few weeks, freshening them up, putting some things away, bringing some new things out. So listen, as far as they're concerned, they're going to feel like they're getting new toys all the time anyway. It's just stuff they already have that's been in the closet.

[Elizabeth Ayola]

All right? So honestly, I haven't bought my son a new toy in a while for similar reasons. And every time he asks me for a new toy, I tell him to play with the ones that he has first, especially the ones that I stepped on. And it works like magic. And since this is a space where we listen but we don't judge, I am currently stewing about buying him a Nintendo Switch for his birthday. He begged for it for a year straight, only to watch it collect dust on my office desk.

[Amanda Barroso]

These are hard lessons to learn.

[Sean Pyles]

Elizabeth, you may not know this, but the Switch 2 is coming out in just a couple months, so I'm pretty sure you're going to have to buy.

[Sarah Rathner]

That for yourself as well.

[Elizabeth Ayola]

Absolutely not.

[Melissa Lambarina]

Absolutely not.

[Amanda Barroso]

That's a devastating lesson to learn as a parent. I have my similar ones to learn about the thing that they begged for. Now simply collecting dust in the corner. It's tough.

[Sean Pyles]

So, Amanda, earlier this year on the podcast, we talked about things that we wanted to leave behind in 2024, and mine was leaving behind overly restrictive financial rules because I always end up rebelling against myself. I imagine that some folks listening might wonder whether, Amanda, whether your rules are sustainable or what kind of wiggle room there might be in these rules.

[Amanda Barroso]

Okay, so the last thing that I want to do is set myself up to fail, right? Life is hard enough. So I've carved out like pre planned days or events where I'm giving myself permission to spend. For example, my husband and I have already booked this trip to go to the mountains for my birthday in October. And the Town that we're staying at is like this little mountain town known for cute antique shops and boutiques. So I've already told myself, yes, it's January. But like, Amanda, you can shop while you're there. For some reason, mentally, that feels nice knowing that I have that permission. We're also going to go to the Masters golf tournament in April, and I'm definitely going to get some little swag, some goodies from the gift shop. Thinking about dining out or taking out. For some people, this is like really high on their list of rules. But as parents of small children, my husband and I don't eat out much or we don't do that much takeout. We're already kind of frugal when it comes to, you know, our grocery budget and things like that. So it's already kind of a treat. But I'm not going to be depriving myself of that unless it starts to feel like a financial problem, then I'll reassess. And I think that that's the. Is that you have to think about it as sort of like a living contract with yourself. So if other financial problem pain points appear, then you can change the rules on yourself. Right. And so that's where I stand on takeout and dining out. But for some people, that might be top of the list.

[Elizabeth Ayola]

Amanda, I love that you have a plan for how you're going to achieve this, because I'm not even going to lie to you. I thought about doing a no spend January and I probably failed within the first week. So with that in mind, I do want to know, why did you choose a year and how are you going to be tracking your progress and making, making sure you're on track and also, like, do you have any accountability measures in place?

[Amanda Barroso]

I chose a year because I really, really wanted to fundamentally change my relationship with spending, with scrolling online, with being influenced. And I just felt like a month might not actually break through what is going on in my brain. And the year gives me a chance to make a big financial impact. When I say it in my mission statement, like, I want to have planned experiences without guilt. I want a year's worth of savings on stuff that, you know, like plastic sweater that I might have bought or whatever to go toward meaningful experiences. Travel, taking my kids places, going to concerts, things that are going to be lasting memories. So that's why I chose a year in terms of tracking my progress. I am maybe still one of the few weirdos out there who has a paper planner on the month days every day that I Succeed that I keep my rules intact, I cross through in green. And if there's a day where I slip up, I'm going to highlight it and put the amount of money that I spent I will report. I logged into my banking app this weekend to pay a bill, and when I went to my credit card, you know, usually it lists your transaction history, y'all. There was nothing there for the first time.

[Elizabeth Ayola]

Amazing, let me tell you.

[Amanda Barroso]

I really felt so proud of myself. Obviously, another piece of accountability is just checking in. I don't know if you've ever felt nervous to log into your bank account. This is sort of shifting that. Like, I almost feel proud to log in. So I've also started a note in my phone called what I wanted to Buy but didn't, and it's sort of hilarious. And it is a wild ride through Amanda's emotional journey of trying not to be influenced by people on the Internet. So I've been jotting down the things that I wanted to buy and how much they cost. And so maybe monthly, I don't know, I'll total up the money and just see, like, what did I save by not impulsively buying those things? And then I. Then I thought to myself, you know what? As birthday come up, as Christmas comes up and people ask me, well, what do you want for Christmas? What do you want for your birthday? I'm gonna have a list already ready to go. The other piece of the list is I kind of just want to remind myself that it's okay to get comfortable with the idea of wanting something but not immediately buying it for myself. I feel like, as adults with jobs, if there's something that we want, we tend to buy it for ourselves. But maybe I just need to sit in that discomfort of saying, like, I want that, but I'm not going to have it right now.

[Sean Pyles]

There is something about delayed gratification that makes you feel, like, very responsible with your spending habits.

[Elizabeth Ayola]

Yeah, I saw this funny meme on. On maybe Instagram that was like, treat yourself. And I never stopped treating myself after, so that's how I feel sometimes.

[Listener]

Yeah.

[Sean Pyles]

Well, Amanda, after a whole year of changing your spending habits in this pretty dramatic way, how will you know whether it was a success?

[Amanda Barroso]

Listen, if I can hire a house cleaner, I say this jokingly, but I really want to feel more in control of what comes into my home. And I want to use the money that I would have spent on just, like, stuff to help solve this other pain point in my life, which is cleaning my house. That would free up Time, energy, anger, all of these things that every time I have to scrub my shower, I cycle through. But, you know, I'm also hoping to use the time I spent online shopping to reinvest into building a community and hobbies. Shopping is not a hobby, even though I think I might have described it that way. Like, Amanda, what are your hobbies? Oh, I like to shop. It's not a hobby. I want to put my energy into relationships and doing things that I love. Not making returns to Old Navy. And I'm not here to slander Old Navy, but when the woman at the cash register begins to recognize you, which is something that happened to me, like, I knew something had to change. And then becoming uneasily influenced, I think is going to be another huge marker of my success. Like, why am I letting strangers on the Internet tell what I need? I want to give them less power and space in my brain without giving up the Internet altogether. Like, I've got to figure out how to strike that balance. You know, there's a lot of community to be had online, but being online doesn't mean that I need to be spending money.

[Sean Pyles]

Yeah. One resource for that is the Anti Consumption subreddit. I find that to be a really vibrant place for folks to talk and share tips for not spending or consuming as much.

[Elizabeth Ayola]

I love that. I need to join that.

[Amanda Barroso]

Me too.

[Sean Pyles]

Well, Amanda, if folks are interested in starting a no buy year or maybe just a month, what's your advice for them? Where should they start?

[Amanda Barroso]

Paying attention to what you have too much of might be a good indication of where you're overspending. So do you have a shelf full of unburned candles or, like, a cabinet full of unopened lotion bottles? Do you have clothes in your closet that still have tags on them? I took out a sweater the other day that had a tag from, like, two years ago. So, you know, no judgment when it comes to setting your rules. I found it really, really helpful to see what others on social media were doing just searching for low buy or no buy. And the search bar turns up tons of users who are participating in the same kinds of challenges. You could watch their videos, see what rules resonate with you. It's also nice to plug into these spaces so you can feel a sense of solidarity and accountability.

[Elizabeth Ayola]

Amanda, I am inspired. Okay. And I hope that listeners are, too. So, Amanda Barroso, thank you so much for joining us.

[Amanda Barroso]

Thanks for having me, y'all.

[Sean Pyles]

All right, we're about to get into this episode's Money question segment, but before we do that listener. You know what time it is. It's that part of the show where we ask you to take a moment and think about where you could use a little nerdy financial wisdom.

[Elizabeth Ayola]

Maybe you're feeling inspired by the last conversation and want to overhaul your spending habits but want a little more guidance. Or maybe you're preparing to buy a home later this year and want to make sure your credit is in good shape. Whatever your money question, we nerds can help you.

[Sean Pyles]

Leave us a voicemail or text us on the Nerd hotline at 901-730-6373. That's 901-730-N E R D or email [e-mail] and we're planning to talk with.

[Elizabeth Ayola]

Even more of you live on the podcast this year. So if you want to join us to talk about your money question, just let us know. One more time, leave us a voicemail or text us on the Nerd hotline at 901-730-6373. That's 901-730-N E R D. Or you can email [e-mail] okay, now let's get.

[Sean Pyles]

To this episode's Money Question segment, where I'm joined by Sarah Rathner to help a listener break a destructive debt habit. That's coming up in a moment. Stay with us. Today's episode is supported by Range Rover Sport. Some things in life demand a second thought, like choosing the right financial advisor or deciding whether to trust a restaurant with no reviews. But when it comes to driving, you should never have to second guess your ride. That's why there's the Range Rover Sport. With a dynamic, sophisticated take on sporting luxury, the Range Rover Sport is as refined as it is powerful. It delivers smooth and composed handling thanks to adaptive dynamics, which reduces unwanted body movements. And when conditions change, dynamic air suspension keeps things balanced, optimizing agility, so your drive always feels effortless, even when the pavement disappears. Adaptive off road cruise control has your back. It adjusts in real time so you don't have to overanalyze every bump in the road, which means you can save that energy for debating your next credit card signup. Bonus. Visceral, dramatic, uncompromising, the Range Rover Sport leads by example, just like you do build yours [e-mail] Again, explore the Range Rover Sport@land roverusa.com We're back and answering.

[Sarah Rathner]

Your real world money questions to help you make smarter financial decisions. This episode's question comes from a listener's text message. Here it is. I have had basically non stop credit card debt since I was 18 years old and got my first credit card. I'm 40 now.

[Sean Pyles]

I go through the cycle of racking.

[Sarah Rathner]

Up thousands of dollars on my credit card and maintaining it for years. About three or four times over the last 20 years I've basically paid off all my debt. But then I go, oh, perfect time for this expensive vacation or other such irresponsible things and continue to live outside of my means just to rack up debt again. I've once again paid off all my credit card debt and I desperately don't want to fall back into the cycle and my husband has warned me that I cannot do it again. I need tips on how to live within my means and remain debt free.

[Listener]

To help us answer this listener's question on this episode of the podcast, we're joined by Melissa Lambarina. Melissa is a personal finance writer whose work has been featured by the Associated Press, the New York Times, Chicago Tribune, the Washington Post, USA Today, and Yahoo. Finance, among others. Melissa, welcome.

[Melissa Lambarina]

Thank you for having me. It's a pleasure to be here Melissa.

[Sarah Rathner]

I hope that you are in a comfortable seat because I think we will all be armchair financial therapists this episode and I'm only really half getting there. But I'm wondering what are your initial thoughts about our listeners long term debt problem?

[Melissa Lambarina]

First, I want to applaud the awareness of the listener in identifying this pattern and repetitive cycle, because that's a key first step. The next step is seeking advice to make a change in their financial journey. So they're already taking these steps and I think that's a great place to start. It appears that they are aware of what's leading to the debt, but perhaps despite their best efforts, they have not been able to break this cycle. Since it doesn't appear that it's due to an unexpected emergency or perhaps a matter of lack of funds, then I would urge them to consider perhaps seeking financial therapy. And this would be different from seeking the help of a financial coach or advisor who can help you with money management. A financial therapist can help you identify patterns or habits that you might have around money and dissect your relationship with money. And that can be especially helpful to helping you unlock different things that you might be doing or repetitive cycles. For some people it can be really hard to admit that they might need a little bit of help, but the truth is that we all do now and then, and those who seek it can get to their goals much faster.

[Listener]

I agree, and financial Therapy is this burgeoning subfield within the field of therapy. And there's a really good reason for that. You know, we learn certain money behaviors and patterns well before we manage our own money. I mean, children pick this stuff up well before they can even really express themselves. That's how young this stuff begins to show up. It seems like these patterns not only are affecting the listener's goals in life and their ability to live a life that would make them happy, but it is also affecting their relationship with their spouse. That means that there may be some relationship conflict going on that really would benefit from being talked about with a neutral third party.

[Sarah Rathner]

Yeah, I so wish that we could talk with this listener because I would love to hear more about the why behind their debt. From their message, it does seem clear they're not going to this debt to cover necessities. They are knowingly living outside of their means and it seems like they're making decisions that they know are not in their best interest, like going on expensive vacations. I'm very curious about their thought process. When they have gone back into debt, what is it that they expect this spending to achieve for them in the long run, even if they know it's actually not good for them to be doing this?

[Melissa Lambarina]

I would have to speculate here, but it's possible that they might be rewarding themselves after paying off a mountain of debt, because it sounds like that this is something that they do. They feel free to spend once they have paid off their debt and then the cycle continues. It's important to get to the root of why they choose to overspend when they get out of debt. Sometimes it's because you felt deprived for so long. If you had a really strict get out of debt plan and once you're out of debt, there's less of a risk to splurging or overspending, at least in the immediate form. A financial therapist can potentially help you get to the bottom of it, and it sounds like that's what the listener wants to break this cycle. It's important to note financial therapy does cost money, so that may present an obstacle when you're already struggling financially. But it could still be a worthy investment if it offers a long term solution that can keep you out of debt and save you money over time. Consider the benefits that it might mean for your lifestyle, for your goals or even relationships that it might be hurting.

[Listener]

Yeah, you know, I'm somebody who's gone to non financial therapy over the years on and off, and it is a cost, but I Consider it an investment in yourself. Sometimes in life you need to assemble what I call the paid village of care. We always say it takes a village. Sometimes you talk about that in terms of having kids, but adults need their village too.

[Sarah Rathner]

Yeah, takes a village to heal your inner child.

[Listener]

Exactly. And maybe your friends and family are not able or equipped to help you work through this particular issue that you have with debt. That's where you can pay somebody who does have the tools available to help you explore what's going on with you and help you find ways to get out of this cycle.

[Sarah Rathner]

One thing that I'm thinking about, especially in the context of financial therapy, is this idea of money scripts, which are basically common patterns and relationships that people have with money. One is called money worship, where people view and use money to get a higher level of happiness or stability. The more money that people have, the better they think their life will be, essentially. And in reality, we know that more money isn't an exact corollary to a better life. But as I sit here sinking deeper into my financial therapist armchair, it seems like our listener could be experiencing this money script potentially. Then the next question is why might they be following this script? And how can they find more productive channels for creating their own stability and happiness?

[Listener]

So we've talked about exploring the backdrop and what's going on for this listener and maybe how they got to this point. But we should probably also talk talk about some tactical ways they can prevent themselves from going into credit card debt again, especially if there's maybe some time before they can talk to a therapist. What's something they can do, even starting today, to potentially better their situation? Melissa, what are your thoughts here?

[Melissa Lambarina]

I think the best place to start is to review your budget once you're debt free, ideally you have more wiggle room to do those things that you enjoy within your means, of course. So make sure that you have money earmarked for the essentials, but also make sure that you're leaving room for fun. Have a fun category, or even a few for movie nights, date nights, vacations or treats that align with your budget. And if you know you're impulsive, have a built in plan for that. I've talked to experts who suggest giving yourself 24 to 48 hours before making a purchase if it feels impulsive. Not keeping your payment information on file for online shopping can also help you think twice about a purchase. And having a safe accountability partner that is more of a sounding board who doesn't offer an opinion can also be useful. It allows you to Hear yourself out loud discussing the case for a purchase, and this way you can try to unpack whether it aligns with your goals and values.

[Sarah Rathner]

It also seems like this listener may have a dysfunctional relationship with credit cards specifically. I know at NerdWallet we're big fans of using credit cards in smart, tactical ways. I'm wondering whether this listener might want to actually avoid using credit cards for at least a period of time. If not, you know, maybe forever. What are your thoughts about that?

[Melissa Lambarina]

I think for some people it makes sense to not use credit cards. It's a great idea to stop using credit cards for some people, especially if they know that they are prone to impulse spending. Research has shown that credit cards lead to overspending, so switching to debit or cash can help keep your goals on track. But if that's not ideal, not all merchants accept these forms of payment, like cash, for instance. Then you might want to keep a cash envelope with money earmarked for those areas where you tend to overspend. For instance, if you overspend on dining out, then you have an envelope with a certain amount of money for that category. And once it runs out, it runs out. And this is one way you can stick to your budget. Also consider what might be leading to the overspending. Do you tend to overspend when you're sad, stressed, or feel some type of way? Or is it when you're scrolling through social media and those personalized ads get you or perhaps something else seeking help or assistance can also help you get to the root of it and also gain a new perspective on what you might be missing.

[Listener]

Yeah, you mentioned trying to avoid saving your credit card information with online merchants. Technology has made spending money nearly frictional experience. And when you write about payment technology, you hear a lot of the innovations that are going into helping consumers buy with one tap or one click, or use virtual credit card numbers. All these things that add a lot of convenience to online purchases, but they also make it way too easy to just spend, spend, spend on impulse. Put some friction back into the buying experience, and that can give you some time and space from the initial impulse to buy something to actually, actually making the purchase. And that space can help you reconsider. And if you have to go so far as to literally freeze your credit card in a block of ice, do it. Yeah, put in the back of your freezer behind some leftovers. You know you're not going to eat, right?

[Sarah Rathner]

A lot of personal finance and budget management can be about putting the right guardrails in place for you to almost curb your worst impulses. It seems like our listener would benefit from that. Let's talk about how to live within your means generally, since our listener is asking about that. Melissa Sarah, what suggestions do you have?

[Melissa Lambarina]

I think it's important to set a financial goal. This is the main reason you want to live within your means. Perhaps you want to travel more or buy a house. Whatever the goal, let that be your motivation for staying on track. Having a realistic budget that includes those things you're going to spend on can also be useful. And don't be afraid to experiment with different types of budgets. The 503020 budget can be a good place to start. It's balanced, suggesting that you put 50% of your monthly income towards needs, 30% towards wants, and 20% towards savings and debt repayment. You can also resolve to save a little each month for big purchases like a friend's wedding or a vacation, and track your spending to understand whether you're staying on the right path or straying from your budget. An emergency fund can also prevent reliance on credit. Even $500 to start can help lower the risk of going into debt.

[Listener]

Yeah, and I'm a big fan. Also, not just saving for the things that you want to do or need to do, but also learning to say no to stuff that doesn't actually matter to you and would cost you money. So let's say you're invited to a wedding of somebody that's kind of an acquaintance from college, but you haven't really spoken to them in a decade and it would involve travel. Maybe just say no to that. You don't really talk to them. Your relationship's not where it used to be. Why spend fifteen hundred dollars on going to a wedding when you're probably not even going to speak to the bride and groom for more than five seconds, right? This way you can allocate more money to the things that do matter to the wedding. For the friend you talk to five times a week, look through your recent credit card statements and really just, you know, determine what are some purchases that didn't really bring you joy, that weren't necessary? Obviously, putting gas in your car might not bring you joy, but it's something you have to do if you have to use your but what did you buy that you realized was a mistake? Are you paying for any subscriptions that you don't use? What are those money vampires that are taking money away from the things that you really want?

[Sarah Rathner]

I think a question our listener could ask themselves is why whenever they're going to make a purchase. Why am I spending money on this? Am I doing this if it's not going to help me meet my financial goals? Or why am I so set on this being my financial priority right now? That I think will help them have some self reflection which it seems like they're already beginning to take on and really get to the root of their spending habits and make sure their money is focused toward where they really want it to go long term for the health of their finances and their relationship.

[Listener]

One other thing worth mentioning is if you've already overspent on your credit cards and you're in debt, there are ways to lower your interest payments so you don't have to pay such a high price for your overspending. For example, there are zero balance transfer fee credit cards with introductory APRs that could significantly lower your monthly interest payments. NerdWallet has a write up of the best no balance transfer fee credit cards to help you compare your options and we'll link to that in today's show Notes. I will say, however, you don't want to fall into the trap of transferring a balance from card to card to card to keep kicking that debt can down the road. Use this as a tool to get out of debt interest free and then once you're out of debt, start working on staying out of debt.

[Sarah Rathner]

Melissa, do you have any final thoughts for our listener or anyone else who might be struggling with spending habits that they know are not good for them?

[Melissa Lambarina]

I just want to urge them to consider seeking help if they feel like they need that assistance to get to the root of different financial habits. There's no shame in asking for that help, especially if it's going to help you up level to meet your goals in the long term.

[Sarah Rathner]

Melissa, thank you so much for sharing your insights with us.

[Melissa Lambarina]

Thank you. It's been a pleasure.

[Sarah Rathner]

That's all we have for this episode. Remember listener that we are here to answer your money questions. So turn to the nerds and call or text us your questions at 730-6373. That's 901-730 N E R D. You can also email [e-mail] visit nerdwallet.com podcast for more info on this episode. And remember, you can follow the show on your favorite podcast app, including Spotify, Apple Podcast and iHeartRadio to automatically download new episodes.

[Listener]

And here's our brief disclaimer. We're not financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances.

[Sarah Rathner]

And with that said, until next time, turn to the nerds.