The Advantage Advisor

Have you ever found yourself spending money you don’t have just to keep up with your friends, family or neighbors?

If the answer is “yes,” you’ve succumbed to a spending habit sometimes referred to as “contagion spending.”

Webster’s Dictionary defines a contagion as, “A corrupting or harmful influence … The tendency to spread, as of an influence or emotional state.”

And that’s exactly what contagion spending is, money you spend because you have been influenced by someone else’s spending habits.

Maybe your neighbors bought a new car, and suddenly your 1999 model isn’t looking so good. Maybe your friends are making reservations at a restaurant that is way out of your price range. You don’t want to admit you can’t afford it, so you go along and spend the money you had set aside for your car insurance on one night out. Maybe you buy new clothes you can’t afford in order to compete with the office fashion plate.

There are many examples of this type of spending. The question is how do you stop it?

The first step is to be honest with yourself about what you can and cannot afford. Learn to separate life’s necessities (food, clothing, shelter, reasonable transportation) from wants (dining out, vacation, a new car).

Next, watch your spending habits to see if you succumb to contagion purchases. Make a pact with yourself, or your spouse, that you will not be influenced by what others are spending.

The final step is to say no to what you cannot afford. If you decide to be up front with others about your situation you may discover that you’re not alone.

You may even find other friends who are trying to keep with a lifestyle they can’t afford. As a group you can retool your spending habits and forget about the neighbor’s new SUV or dinners at pricey restaurants. Opt instead for movie nights at home or free days at a local museum.

 

Q: What is the difference between a state statute of limitation and federal law regulating how long negative items can appear on my credit report?

 

A: State statutes of limitation determine the length of time that a debt is considered legally enforceable. After a set amount of time has elapsed, creditors or collection agencies can’t legally collect on the debt. Statutes of limitation vary by state and type of debt, but range between four to six years in Pennsylvania. The expiration of a statute does not prevent a creditor from filing a judgment. If creditors file a judgment and debtors do not provide evidence that the statute has expired, they may still be liable for the debt.

The statute of limitations begins with the date of the last activity on an account. If a debtor makes a payment to a collection agency three years after the last action on an account, the statute will begin anew.

Credit reporting laws are federal and different from state statutes. In general, a negative mark will remain on a credit report for seven years beginning 180 days after the delinquency that caused the account to charge-off or pass into collections. If a collection agency continues to report on an account after the set time frame has elapsed, an individual has the right to challenge that account’s presence on his or her report.

As with any rules, there are exceptions. Before taking action on an account, consult with a certified counselor for credit concerns or an attorney for legal questions.

For more information contact: (888) 511-2227

Your health can affect your spending habits and ability to track your finances. Some mental health issues such as depression, Attention Deficit Disorder or bipolar disorder can wreak havoc on your personal finances.

If you would like information about mental health services in your area you can contact:

·        The National Alliance of Mental Illness at (800) 950-6264 or online at www.nami.org

·        The Pennsylvania Department of Public Welfare at (800) 692-7462 or online at www.dpw.state.pa.us

·        The U.S. Department of Health and Human Service’s National Mental Health Information Center at (800) 789-2647 or online at www.mentalhealth.samhsa.gov

 

It’s been a terrible day. Work was a mess, traffic was worse, and your family isn’t helping. Sounds like the perfect time to pick up a little something to brighten your day, right?

Well, maybe not. Shopping to feel better may seem innocent enough, but at its heart it is merely a distraction from the larger problems in our lives. And before you know it, the spending can get out of control, piling on debt and straining family relations. With the possibility of such negative consequences, what causes us to engage in this self-destructive behavior? You may be surprised to know our motivation doesn’t lie with finding the perfect pair of jeans. It runs much deeper. 

“Retail therapy” shoppers are frequently drawn to the checkout lane by the need for instant gratification. That purchase temporarily fills an emptiness within us with a rush, a sense of pride, or accomplishment. But behind that emptiness lays the real culprits such as boredom, stress, depression, anxiety, loneliness, or low-self esteem. When we’re done buying, those feelings are still there, and may even be worse.  
It’s important to recognize patterns and know if you or a loved one has developed an addiction to spending. There are many varying degrees of compulsive shopping, but the following are a few characteristics to watch out for:

·        Shopping when depressed, angry or anxious.

·        Irresistible bargains -- buying things you won’t use just because it’s a great deal.

·        Excessive credit use/spending more than you can afford.

·        Feeling guilty after a spending spree, or hiding or lying about purchases to loved ones.

·        Arguments centered around spending and credit card use.

·        Having closets full of unused clothes and goods.

·        Frequently buying more than you intended.

If any of these sound familiar, it may be time to rethink your behavior. Your situation doesn’t have to be critical either. In fact, you may be within your budget’s limits, but still feel you need to spend in order to be happy.
So how do you begin to correct the situation? The first step is being more aware of all of your purchases. It may be necessary to keep a spending journal for a time. A record of all purchases can really open your eyes and shake off any lingering denial. Here are some more key ways to prevent compulsive spending:

·        Question the true motivation behind your purchase.

·        Put away or cut up credit cards.

·        Use only cash, debit or checks.

·        Set limits for yourself when shopping.

·        Use a shopping list ... and stick to it!

·        Shop only when you need something.

·        Avoid “window shopping” altogether or leave your money at home.

·        Fill “shopping time” with exercise or a constructive hobby.

Seek professional help if you really feel out of control. You can see a therapist or try a support group like “Debtors Anonymous.”

We believe that material goods will cure our ills for a number of reasons. Turn on the TV and you’ll be promised love and happiness with the simple purchase of a sandwich. Advertisements play on our desires and perceived inadequacies. Of course it’s easy to think you’d get a better job and a hot date if only you had the right pair of shoes. However, as consumers, it is our responsibility to be aware of these tactics and examine the true motivation behind our purchases. And always think twice before swiping that plastic!

 

Debtors Anonymous: www.debtorsanonymous.org or (781) 453-2743.

Recovery Connection: www.recoveryconnection.org or (800) 993-3869. This is a referral network that helps people seeking addiction treatment.

 

Find a new outlet for stress if you currently use shopping as a means of stress relief.

If you are feeling stressed, think of other activities that can relax your mind and body.

Try taking a warm bubble bath, reading a book or watching a funny movie with friends.

Exercise is also a great stress reliever for some people. A walk outside during warm weather or at an indoor track or on a treadmill during the winter months may help you control your stress.

If you are concerned shopping is wreaking havoc on your budget, a credit counseling session may be a good start to assessing your financial needs and getting your budget in order.

For confidential credit counseling, get started
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