With prices for homes as high as they are now, measuring ones spending habits and budgeting skills are as critical as ever. Lenders only use the buyers’ gross income for the loan qualification so the net income and how much is spent on food, utilities, internet, entertainment and so on are not taken into account. That brings me to this topic of “spending triggers”. I attended a financial confidence training through NeighborWorks last week and wanted to share some points related to this. The idea is to help you identify these spending tiggers to avoid financial regret and over-spending. Here are some of those triggers according to their material:
Protecting your image. Expensive purchases projects success. ex. designer clothes, electronic gadgets
Spending to maximum income level. Spending money just because you have it. A raise or unexpected income could be the trigger.
The emotional high of spending. Many get an emotional kick out of spending.
The need to feel powerful. This can feel good, especially when others react and acknowledge that power.
The need for immediate gratification. We want instant everything: internet, food and credit can seem like something that promises to satisfy needs now. When purchases used to be made with cash, spending was harder. Credit cards have made instant gratification much easier.
Lifestyle spending. Purchases made just “because I’ve always done that” are a telltale sign of overspending.
The need to overcome past problems. Purchases may reflect the need to make up for whatever was lacking during childhood.
Validating self-worth. Some people need to spend money (retail therapy) in an effort to bolster their self-esteem. Often these purchases are items that are self-focused (think manicures, fancy jewelry, personal convenience or care items.)
Identify with these traits? It is interesting, I think.
As always, I can assist you with your real estate needs. Just email at rogelio@rentandbuyhome.com or text 720-253-8513.
