Freezing Your Spending for the Short Term

If your spending is getting the best of you and creating more and more debt for your family, try freezing your spending for the next several months. Freezing your spending isn't easy, but it can stop your accelerating debt dead in its tracks.


What Freezing Really Means
Freezing means going cold turkey on your spending — you temporarily stop buying. For the short term, you cut out all but the most essential spending; your cuts will include personal appliances, home appliances, clothing, shoes, CDs, DVDs, decorative items, linens, computer accessories, and so on.

You freeze your spending for a predetermined amount of time — usually six to twelve months — and just stop shopping. Of course, you can still buy groceries and the required supplies for your home, but you don't buy anything else.

Reducing Temptation During a Freeze
People who temporarily freeze their spending usually find that the best way to stay the course is to steer clear of opportunities to spend money:

Don't read the ads that come in the Sunday paper.

Don't stop at outlet malls when you travel.

Dispose of all the catalogs you have in your possession.

Call all the companies that send you catalogs and have them both remove your name from their mailing lists and stop selling your name to other companies.

Don't visit Internet sites that sell products.

Don't go to the shopping-mall food court for a quick meal.

Don't meet friends for an afternoon at the mall or any other store.

Don't go window shopping at an appliance, music, or computer store.

Discontinue any music or book clubs, even if you have to buy your remaining required purchases to do so.

When grocery shopping, don't inadvertently wander into the consumer-goods section of the store.

Send gift certificates instead of actual purchases as gifts, so that you don't have to go to a store or browse a catalog or Web site.

The following sections will help you freeze your spending a little less painfully.

Establishing What's Really a Need
Understanding the difference between a need and a want is really the crux of sorting out your financial difficulties. In an effort to make ourselves feel better about being consumers, we continually elevate wants to the level of needs. But we actually have few needs, at least in the realm of products that you can buy:

Shelter
Clothing
Food and water
Thousands of years ago, this list meant a mud, straw, or wooden hut, along with some animal skins and just enough calories to survive. Today, we have escalated these basic human needs, and they have become so intertwined with wants that we're not sure how to separate them.

Yes, you need shelter, but you do not need a four-bedroom home with a formal dining room, a fireplace in the great room, a three-car garage, a kitchen with cherry cabinets, and a bonus room over the garage. That's a want.

The same is true for clothing. Humans need a way to stay warm and dry, but they do not need ten suits or eight pairs of jeans. Those are wants.

And while everyone needs food and water to survive, that food does not have to come from a five-star restaurant. You also only need enough calories to survive, not enough to add three to five pounds each year, as the average American does.

The desire to own and consume is very strong in Americans, and it enables us to justify nearly any purchase in the name of needs. Don't buy into it. Instead, use WORKSHEET 5-1 to list every need you have (you might want to use a pencil, though, and keep a good eraser handy). Be very specific in your list: Don't just list “house”; instead, write a description of the house you need and the amount it will cost.

WORKSHEET 5-1

Needs Versus Wants

Need (Description)

Cost

Consequences of Not Buying

$

$

$

$

$

$

$

$

$

Identifying the Consequences of Not Meeting a Need

After you've listed all your needs, identify what would happen to you if you didn't get each one, asking yourself the following questions:

Would you or others around you die?

Would you or others suffer physical pain or extreme physical discomfort?

Would your health or the health of others suffer in the long term?

Do you know for sure that you would lose your job without this item?

If none of these would happen, it isn't a need, it's a want, and you have no business buying it during a spending freeze. Remember this the next time your mind tries to talk your wallet into giving in.

Establishing — and Sticking to — a Shopping List for Your Needs

Before you leave the house and head out to spend money, write out a shopping list of your needs (which are likely to include only groceries and toiletries). Be sure that they're needs, and don't pad the list because you're in the mood to buy. Keep in mind that you are probably feeling deprived, so you may try to satisfy your spending itch by splurging on groceries and toiletries.

Don't justify veering from the list because something is “such a good deal.” Instead, remember that the best possible deal is to spend $0, so even if an item is half price, you can't buy it unless it's on your list.
Before you leave for the store, write down everything you need to get, and also scribble in an estimate of how much each item will cost. Then total the bill.

If it's less than you planned to spend, stop writing out your list and immediately go to the store. If the total is more than you planned to spend, begin crossing items off your list before you go, until you get down to the budgeted amount.

Then, buy only the items on the list. Don't add items to the list and then cross them off while you're standing in the checkout lane. Instead, stick absolutely to your list.

If you see something you're sure you need but it isn't on your list, put it on next week's list when you get home. Today, you can buy only what's on your list. Be vigilant about this process, and you'll never overspend on groceries and toiletries again.

Putting Away Your Credit Cards

No, seriously, put them away for at least six months. Put them in a safe place that's hard to get to, such as a safe-deposit box at the bank (which will probably cost around $20 per year, an amount that's worth spending if it keeps you from getting further into debt). The farther away the credit cards are from you, the better.

For six months, pay for all of your day-to-day purchases with cash and pay your bills with a check. When you're shopping for purchases that are allowed — such as groceries and toiletries — write out a list before you go, estimate how much you'll need, and take no more than $10 over that amount.

When you're not supposed to be making any purchases, limit the amount of cash you carry around to $5 and a few quarters. That will allow you to pay for parking if you need to, but not lunch or a flat-screen TV!


Tucking Away Your Debit Card
Although a debit card is technically like cash or a check, in reality it feels much more like a credit card. Because you don't hand over cash, you may feel as though you're not really paying for this purchase, much like when you use a credit card.

And if those funds are earmarked for other needs (like paying off your debt or saving for a vacation), you'll end up without enough money to meet your needs by the end of the month.

If you take $80 in cash to the grocery store, you'll be very careful not to exceed that amount with convenience foods. But if you take a debit card, you're not likely to be nearly as careful. Put the debit card in the same place you put the credit cards — your best bet is in a safe-deposit box.

Creating a Wish List

A wish list is an outlet for your hot little fingers and creative mind while you're in a spending freeze. The basic idea is that you write down everything you'd ever like to buy. The list may range from a new TV to whitening strips for your teeth to a sailboat. Anything you're not allowed to buy during a spending freeze is fair game. Nothing on the list has to be sensible or practical or a wise financial decision.

Sometimes when you're not spending, you feel disconnected from our consumer-oriented society, and a wish list makes you feel like your old self again. When you feel the itch to spend, go online or look at a friend's catalogs and write down the item number, description, page number, and so on of any item that looks interesting.

Act as if you're really going to buy the item. But don't. Just add the item to your list and let the list sit for a while. The act of writing the item down will feel, strangely enough, very similar to how you feel when you actually buy something. It sounds completely crazy, but it works!

When you brainstorm your wish list, think pie-in-the-sky. You're just daydreaming right now — later, you can make your list more realistic. So write down whatever you can imagine in your future. But make sure it's your wish list. Don't put a sailboat on your list if you really don't like water!
Paring Down the Wish List

Just listing the items can be cathartic when you want to buy, buy, buy. But listing the items on WORKSHEET 5-2 can also help you cross some items off the list. When you write down an item's name and cost, also check off one of the three needs categories: “Need Today,” “Need This Month,” or “Would Like Someday.” If none applies, don't check anything off.

Tomorrow, revisit any item that you indicated you needed today. Is the need still strong? In a month, review any items that you needed this month, and also look at the items that you'd like someday. Do you still feel strongly about them? Cross off any item you no longer feel you need and/or check off new categories for some items.

WORKSHEET 5-2

Your Wish List
Item Name

Cost

Need Today?

Need This Month?

Would Like Someday?

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

Reviewing a Sample Wish List

Your wish list may look like TABLE 5-3:

TABLE 5-3

Sample Wish List
Item Name

Cost

Need Today?

Need This Month?

Would Like Someday?

Smoothie maker

$30

✓

Honda Element

$26,000

✓

Garden arbor

$275

✓

New luggage

$350

✓

Two pairs of jeans

$130

✓

iPod

$249

✓

Cabin in the woods

$210,000

✓

Now, suppose 30 days have gone by, and the list looks like TABLE 5-4:

TABLE 5-4

Sample Wish List, Round Two
Item Name

Cost

Need Today?

Need This Month?

Would Like Someday?

Smoothie maker

$30

✓

Honda Element

$26,000

✓

One pair of jeans

$65

✓

iPod

$249

✓

Cabin in the woods

$210,000

✓

TABLE 5-5

Sample Wish List, Round Three
Item Name

Cost

Need Today?

Need This Month?

Would Like Someday?

Smoothie maker

$30

✓

One pair of jeans

$65

✓

iPod

$249

✓

At this point, you've narrowed your list to items you would clearly like to own and can begin to save for when your spending freeze is over. You also have a ready-made list if anyone asks you what you really want for your birthday.