Spending Too Much Money And Course Correcting

As of this moment, spending money makes me sick!  I used to spend on average $1,300 a month on my one and only personal credit card, but for the past three consecutive months I've spent $2,500-$3,000!  So what caused this sudden jump in consumerism you might wonder?  Well, part of it was due to a raise, another part was do to finally upgrading to a Macbook Pro 15″ from my 6 year old iBook, and the final part was due to the desire to experience new things and be more spontaneous.  Wheee!

Almost all of my expenses, including food, clothing, cell phone, travel, and entertainment are on my card.  What can I say, I love my home rebates.  Despite paying the card off in full every month, I've finally reached the breaking point and need to go the other way and spend 50% less than I normally do to restore balance in the force.  The reason is because I've actually started entertaining the idea of NOT paying off the card in full and just paying what I “feel is the right amount” i.e. $1,300-$1,500, thereby being stubborn and punishing myself by incurring extra interest charges.


1) Everybody has a natural spending range. It's kind of like your weight.  Everybody has a weight range they fluctuate in if they live a normal life.  It doesn't matter how much you work out, or eat right, you're never really going to break the band of your normal weight range, unless you go to the extreme.  I've discovered my natural spending point on EVERYTHING other than my mortgage is between $1,200-$1,800.  If I spend more or less, things start feeling annoyingly weird and I course correct.

Task: Find out what your natural spending range is by totaling your past 3 months of expenses and dividing by 3.

2) Making more money inevitably always leads to spending more money. After my raise, I told myself that I would bank the entire increase into savings.  I calculated my additional after tax income, and set up a bi-weekly automatic transfer out of my checking account and to my savings account.  The problem is, I was only a click away from transferring that money back into my checking out and spending it.  I failed to take that extra additional step, and transfer the money out of my “go broke bank” and to my savings bank.

Task: Transfer your extra income to a completely different bank now!  And if you have no extra bank to stash away your hoard, open one up.

3) More money can make you happier, but it can also make you more frustrated. I loved the experience of going to Costa Rica on a whim for a week.  The surfing was incredible and so was the food.  Too bad I'm currently frustrated about my overspending three months later!

Task: Devote extra time in capturing your experiences.  Use video, camera, and your laptop to record every single moment, down to the very details.  Then, go ahead and review your memories on a regular basis!


If I had that extra $5,000 cash, I could buy a shiny new gold watch for goodness sakes!  Just kidding…. maybe.  It's crazy how quickly things can add up.  The good thing is we have a natural mechanism to revert to our steady state.  Our body tells us when we are full and when we are tired.  It's good to just be cognizant of what our mind is telling us by studying our spending habits and reflecting.

As of today, my goal for the next three months is to spend half as much a month to get back to center.  It's important as a reader to forget about the dollar value above.  That's just my own number.  If you'd like to go on this journey with me, simply figure out what your normal spending range is, cut it down by 50%, and make a statement.  Let's see if we can do it!

Related: Things To Buy With Your Massive Investment Gains

Readers, do you feel you have a natural spending limit, which once you go over, you start feeling uncomfortable inside?  How do you course correct?


Sam @ Financial Samurai – “Slicing Through Money’s Mysteries”

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37 thoughts on “Spending Too Much Money And Course Correcting”

  1. I definitely have spending waves. I’ve been going through a larger than normal one over the last few weeks and I’ve got to get back to my better ways of saving. I took a look at all my credit card expenses for last year and analyzed how the spending fell out in different categories. That definitely helped me realize where my money’s been going. I also signed up for automated email alerts with my bank to keep an active eye on my credit card balances. It’s an ugly wake up call to get an email every day saying my credit card balance is $xyz – ouch. Time for me to cut out $8 lunches and go back to pbj for a bit.

  2. Great post- good that you are cognizant and self aware of your spending and it’s normal pattern. I don’t think you should punish yourself by not paying off the balance and paying interest. You already acknowledge that you have been overspending and therefore I don’t think beating yourself up will do anything.

    My natural CC spending is about $1000 a month too, sometimes I go up to $1500 (er, like this month) but some times it’s only $400-600. Hey you got a macbook pro- you can deduct your blogging expenses as taxes, so you’ll get some of that money back right? =)

  3. I’m with you. However, I’ve found that I’ve been spending less this summer. This means I’m already on my path. The down side of this is that I’ve kind of had to spend less since I made less. Now if I can just keep my spending the same when my salary naturally increases over the next few months, I’ll be looking good!

  4. I’m with you. I got a raise in Jan AND in May. Have I saved more? Nope. Paid off more debt? Nope. I’m ready for a jolt of change.

  5. I experienced this exactly. The month after we paid off our mortgage (we have two but this one increased our cash flow by $1000/mo), was the first month I didn’t have cash to pay off my credit card in full. First time in probably 15 years. I’ve been pretty good at funneling the extra into the second mortgage, but I did binge for a couple of months after.

    I’m really at a loss of what I’ll do when the second mortgage is paid off. I’m thinking I need to buy securities that have a penalty or something to them so that I’m not tempted to cash them out. I have a high interest checking account for “savings” but I regularly empty it..it’s just too accessible.

    My natural limit is around the same as yours. I’m happy if I’m under $1000/mo but rarely hit it, but am frustrated when the bill is approaching $2K/mo.

  6. Roshawn @ Watson Inc

    Sam, are you for real? This is freakin’ awesome. I am GLAD that you decided to have some extra fun. You paid off the card responsibly, and now you are going back to your normal spending habits. Overall, it sounds like you got the best of both worlds: you had your cake (extra money) and you got to eat it too (extra fun expenses). I always try to remind myself of this balance, but it doesn’t always work :)

  7. We spend about the same amount every month (including non-automatic saving like mortgage prepayments and IRAs, also insurance and charity, along with any taxes that aren’t deducted automatically, and business travel that will be reimbursed). That just doesn’t really change, even with income fluctuations. Some months we spend a bit more, but the next month we spend a bit less. I guess it regulates because if the amount of cash in savings goes down below that amount one month I feel less like eating out the next month and more like requesting FSA reimbursements and credit card rewards. I don’t really feel guilty about it though.

    In order for our spending to change, I need at least 10 million dollars. At that price point, we both quit our jobs and buy a modest million dollar home in the SF bay area and quietly enjoy life. At one million in dividend bearing funds, maybe DH quits his job, but we will see when we get there.

  8. Likewise with me…with my new apartment and furnishing, to birthdays, to various projects..I’m for the first time spending more than I make. I guess you would think the more you make, the more you spend kinda thinking got out of hand.

  9. lol. While there are many perks and advantages of using a credit card, and despite the “pay in full” mentality, it easy to forget the reality that we spend more when we use credit cards, period.

    1. I don’t agree at all. It is possible to buy what you need, but all on a credit card. Glad you think it’s funny though and sorry you can’t control your credit card spending!

  10. Hi Sam, As long as you paid off the cards in full, stop beating yourself up. Did you have fun and enjoy your expenditures? Did you do any long term financial damage? If not, just get back in the saddle and remember the fun experiences you had-and remember you made some wonderful memories. This is going in my link post this week. The lessons learned are keepers.

    1. I definitely did have wonderful memories, I just feel i’ve found my breaking point, which is overspending for 3 months. And now, I’m course correcting.

      I think everybody has a certain “overspending point”, and it’s up to us to discover what it is, and try not to get there.

      Spending too much is annoying!

  11. Tiny Potato

    If I go over the “normal amount” for a while, I start cutting back on discretionary stuff like lunches (bringing it instead buying).

    In terms of spending some of your raise, I think that’s acceptable (up to a point). Treating yourself for a little bit is ok, sometimes people just have to let loose and enjoy the benefits of all your hard work sometimes!

  12. Sounds like a good plan! Double your mortgage payment, means less disposable income to spend on whatever.

    Maybe there is an overspend thing going on…… due to pent up underspending from a year ago due to the crash?

  13. I agree, people do tend to spend roughly up to what they make (with minor adjustments for retirement plans, etc), so it’s huge to pay yourself first – retirement accounts, 529s, a long-term savings account or whatever.

  14. Money Reasons

    Since paying off my mortgage, I though I’d be saving over a $1,000 a month, but so far Murphy’s law is taking over. We have had credit card bills for the last couple of months that were over $3,000, effectively eating up the saving we should have by paying off that $1,000 from paying off the house.

    I’m really thinking of creating a spot budget on entertainment… That way I could cap the amount that I would be willing to spend on entertainment per month.

    1. That’s what I’m saying…. paying off your mortgage is effectively like getting a $1,000 raise for you it sounds. Yet, it doesn’t seem like you are close to saving that amount of money a month at all from what you just said.

      I think I’m only saving about 60-70% of of my raise as well. I want to save 90-100% cuz I’ve been happily living off my previous base salary for 5-6 years and nothing has changed expense wise! In fact, things will go down soon due to refinancing!

  15. Hi Sam,

    Interesting post. I don’t have normal spending patterns. Basically I don’t spend much / save 80% of after tax income, no 401k’s or anything like that since I get no breaks from local tax.

    However my wife and I do indulge from time to time. My sister is getting married in Upstate NY next weekend, we are traveling across the world for that, and will give her $10K in cash as a wedding trip. We brought another 2-3K for spending money including going up to Montreal for a few nights to check out the city.

    Another indulgence we are thinking about is spending $5K for a 5 day / 4 night trip to the Maldives. Pretty expensive but I would like to check it out before it goes under water, that is, if sea levels rise 12 inches!

    In 2010 we made a trip to Brisbane, Australia and Europe- Switzerland, Germany, France – and that was a fun indulgence.

    Because we have no car or house payments we have a nice discretionary income fund. I see that with lots of people in Asia- they don’t make much but 60% of their income is used for discretionary spending because they live with family and pay no rent. Or they live with lots of other people so the rent is very cheap.

    The US is the opposite- all of the fixed costs (mortgage / rent, car payment, health insurance, car insurance, internet, cable, mobile phone) make it so discretionary income is 20% or less- no way to live in my estimate!


      1. True- you can get EPL of course as well as Australian football & Rugby but no college ball.


  16. I completely agree on the three aspects you learned. I agree more so on the second point as I’m currently working a lot of OVT at my job and all of sudden have this extra money that is appearing in my checking account every week. It now has come to my attention to make that money harder to spend!

  17. Kevin@InvestItWisely

    Hey Sam,

    I’m fairly comfortable with my current level of spending, but if my income were to drastically increase, you can bet that some of my spending would as well, though I would try to bank most of it.

    1. I think it’s easier said than done. Do you know what income level, or spend amount rather you think you’d have that is optimal? Is it where you are now, or higher? If higher, by what percentage?

      I’ve been at this $1,500/month range for a long time now… maybe 5-6 yrs.

      1. Kevin@InvestItWisely

        Not counting the apt, I don’t think I spend anywhere near that… unless you amortize things like vacations out over the months. Then I’m not sure, but the last big vacation was 9 months ago and I won’t be taking another one like that for at least another year. ;)

        1. Kevin@InvestItWisely

          If I had 10x more income, I think my spending would double or at the most triple. It wouldn’t rise by 10x.

        2. Kevin@InvestItWisely

          Haha. Well, the more money I make, the more I would bank. As a % of total income my spending would decrease, but in absolute terms, I think it would always increase. Give me a trillion dollars and I guarantee you I would find ways to spend at least some of it, even if only 1% (10 billion)!

          P.S. Your comment form is too fat :P

        3. Kevin@InvestItWisely

          Gotta say that that 10 billion would not all be on cars and stuff like that. I guess investing counts as banking it?

        4. So at what gross income level do you think you’ve reached the peak of your steady state then? $200,000? $250,000? $500,000? Watch out for Obama if you are over $250K though!

      2. Kevin@InvestItWisely

        Finally, to answer the original question… I am already at an optimal level. Most of the income I generate beyond this point I am going to put toward exiting the rat race earlier, building up side investments and savings, and traveling. I have a low threshold for material consumption, so I don’t need a high income to satisfy it.

        However, isn’t this relative? If I had even 1 billion dollars, I think I could change my perspectives for sure… you can bet I would buy the nicest and most expensive car simply because I wouldn’t even feel the hit to my wallet. If I “only” had one million though, my habits would not change all that much from today.

        1. Sounds great man. Then you are in personal finance nirvana if you are in your optimal level for spending and saving.

          I didn’t reach the ideal level of income until about 30 years old. Now it feels pretty good, but I still feel bad overspending.

          Can’t change the comment field width. Maybe i’ll go ask Chris!

  18. This is a great article and a something I have been working on my self. I have found that the website Mint has really helped me know where the money is going and just how much I really need to allocate to other areas. I would definitely recommend it if you are trying to curve your spending also.

  19. I weakness is eating out and international travel. those are the only two things that I can make me overspend. Clothes, cell phones, gadgets, shoes, I can care less.

    If I overspend I just make up for my cutting back on other stuff

    1. International travel… i hear ya… that’s like a regular $5-10,000 expense of mine every year. Decided to do one trip local this year (Napa) to save several thousand.

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