7 Spending Sins That Will Put You in Debt

Mismanaging Your Windfall

Let’s say you received a $1,000 check in the mail. What would you do with the windfall? If you’re like most Americans, you’d spend it, says certified financial planner Stuart L. Ritter, who works at T. Rowe Price.

“The idea of mishandling sudden money may sound counterintuitive,” he says, “but [consumers] will do a couple things that put them in debt. First, a big chunk of that money goes to taxes, and second, if they’re married, each spouse might go off buying what they want, or one will buy something with a monthly payment that’s usually out of the budget.”

Moral of the story: Plan as much as you can for a windfall and talk through priorities with your spouse, says Ritter.

“Recognize that you need to think about this money the same way you think about the other money you have in terms of important goals and how you’re going to pursue those goals,” he says. “[The windfall] doesn’t help nearly as much as other people think it will,” especially if you treat it as remodeling money, say, instead of money to put toward the household budget.

Erin Huffstetler, a personal finance expert with About.com, advises anyone coming into a windfall to reward themselves first with something small, then put the rest into savings. “Get used to having that money and think through all the tax strategies that need to come into play,” she says.

For more tips on managing a windfall, check out this MainStreet article.

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Losing Sight of Your Goals

Like the R.E.M. song, “Losing My Religion,” losing sight of your financial goals can feel just as hopeless. It’s one thing to covet your neighbor’s possessions, but adopting someone else’s money values entirely is a sure way to sidetrack your goals, says Ritter.

“Society expects the big wedding, consumers think, ‘of course I need a big wedding dress’ and family members are expected to pick up the check at the family reunion,” he says. But “letting other people decide how you should spend your money, whether it’s indirectly or directly, shows you’re not being principled in how you incorporate your own priorities into what you think people’s expectations are. People can end up with a disconnect between what actually fits into their household budget and what they think they’re supposed to be doing and end up spending their future income today.”

As with all goal-setting, prioritizing one thing means putting another on the backburner. Not that that’s a bad thing, says Ritter. His clunker of a car gets made fun of left and right, but he sees the money saved by not buying a new one as “an opportunity to send my kids to college.” Or as Huffstetler bluntly puts it, “I say the Joneses can kiss my assets.”

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Wanting it All

You know you’re spending in sin when you feel entitled to all you want, all the time. But when you’re trying to repent, taking your mind off of what you’re giving up takes a serious mind shift, says Ritter.

Terrence Shulman, founder and director of The Shulman Center for Compulsive Theft, Spending and Hoarding - a for-profit center that works with shopaholics - agrees, adding that if spenders feel like they have to treat themselves or they’ll go crazy, they’re bound to go overboard and start a cycle of shame, more spending and debt.

“You have to think of different ways to reward yourself,” Shulman advises, noting that having “accountability people or a support group,” or finding other creative ways to indulge can help keep consumers on track. Often, he adds, feelings of inadequacy rooted in one’s upbringing can be at play, so it’s important to work through those too, perhaps with a counselor or support group like Debtors Anonymous.

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Feeling So Cynical

“People are getting jaded,” says Shulman. “They’re seeing what’s going on in politics, the fraud in banking and mortgages, and they’re feeling like there’s no fairness. And because they feel like the whole ship is going down anyway, they think, ‘I probably can’t pay it off and this is just a big mess, so why not live now?’”

But the consequences of this devil-may-care spending habit might be worse: Carelessly piling on debt can lead to a poor credit score and all the headaches that come with it, from being denied a home loan to getting rejected for car loans and credit cards. Lacking a security cushion for you or your family could also put you in the unenviable position of having to take on a second job, or ask a distant relative for a handout. Not fun.

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Keeping Up With Your Parents

Young Americans may not trust our country’s big banks, but that hasn’t stopped them from aspiring to Mom and Dad’s cushy lifestyle, says Huffstetler.

“When you’re in your 20s and 30s, it’s really hard to get adjusted to spending what you’re actually making, and you move out and feel like you deserve the same things,” she says. “But people forget their parents worked for it; it wasn’t that they worked for it and got it overnight.”

It probably doesn’t help that many of these young adults are unprepared to handle even the most basic of personal finance issues or that they feel empowered by all the credit and student loan debt they’re shouldering.

So what can they do to change their sinful spending mindset? Huffstetler says to start with a shopping list.

“Go to the store with a shopping list and tell yourself you’ll stick to it no matter what,” she advises. “Put the item you want on a list, and see if you’re still excited after a cooling off period, maybe a day or so. If you still want it after that, save up for it and buy it.”

For another way to save, check out MainStreet’s bargains and deals.

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Living on Plastic

You and your cash are on non-speaking terms. You rarely see each other, and you’ve been sneaking around with a good-looking plastic charmer named MasterCard who takes you out on the town, buys you dresses and pays for dinner. But it all just feels so … empty, and sooner or later, you’re afraid he’ll expect something in return.

Sound familiar? Living dangerously on credit is exactly that, warns Huffstetler, who’s noticed more consumers putting monthly expenses like utility bills on their credit cards post-recession simply because they can’t rein in their discretionary spending. The price you’ll have to pay come Judgment Day (aka when your statement arrives in the mail) might be more than you bargained for, too, thanks to skyrocketing interest rates and fees.

Perhaps it’s time to end your affair with credit once and for all. For tips on how to do it, check out this MainStreet article, packed with tips from debt expert David Bach.

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Disney Parent Syndrome

Vacations are good for the soul: They offer a fresh perspective and some time to recharge from the daily grind. But a vacation away from reality or solely on credit can spell financial peril for guilt-wracked parents, says Gabrielle Clemens, a certified divorce planner.

“My number one worry when I see newly divorced parents is emotional spending,” she says. “If they have children, there’s a lot of guilt. The dad who’s left the house becomes Vacation Dad or Disney Dad, or moms try to overindulge their kids. It’s emotional impulse spending that can lead people to problems with debt—improper debt.”

You don’t have to be divorced to be an emotional spender. You might just feel like your life is lacking in some way, which as MainStreet reported recently, is a very real issue driving spending addicts to shop, shop, shop. But before emotion takes over and you whip out the plastic, Shulman of the Center for Compulsive Shopping and Theft recommends setting boundaries first with your kids and as we explained earlier, getting to the root of the problem by identifying what makes you feel insecure. The sooner you work on those issues, the sooner your financial future will start to look brighter.

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