Where Did My Money Go? The Psychology Behind Continuous Overspending

OverspendingIf you have never had a single problem with your finances throughout your life, then you are one of the few. It has always been hard for the majority of the working middle-class to have a good grip on their finances. Often, the result is living outside their means.

Ending up with a bad credit score happens to the best of us. It is for this reason that people with multiple debts perceive online personal loans as a lifeguard. Rapid Loans adds that consolidating credit card debts and car loans can help you meet your repayments easier and faster. But why must you resort to loans in the first place? An American study explains.

Poor Credit Card Management

There is a difference between simply wanting to buy things and buying them regardless of emotional, social, and financial consequences. Falling into the second category makes you a shopaholic, meaning you tend to lose control over your buying behaviour.  

The problem is further worsened by poor credit card management, says a study in the Journal of Economic Psychology. The researchers note that compulsive buyers ‘bury their heads in the sand’ and ignore their credit card bill, which explains why people tend to find themselves buried in credit card debt.

This involves neglecting credit card statements, not paying credit card bills on time, and exceeding credit limits.

The Buying High

The research found that shopaholics continue buying despite their mounting credit card bill because they are looking for that ‘buying high’ in hopes that their new purchase will lift their mood. In some cases, they believe it will transform them as a person.

In the study, they admitted to ‘getting a buzz’ or being in better moods when buying new things. They also believed this new purchase increases their self-confidence, appearance, and relationships. The researchers note that these beliefs may be brought on by a low self-esteem and materialistic values. And values are not the easiest thing to change, the researchers add.

When it comes to loans, the same rule applies: prevention is better than cure. As much as fast loans can help you get out of a tight situation, there is still a need to find the underlying cause of continuous compulsive buying.