Are You a Binge Shopper?

Whew, we made it to Friday — hope your week included lots of satisfying work, some time for relaxing, and above all, no debt! Before the weekend is upon us, we wanted to discuss a few things that have been in the news this week that might relate to you and your financial goals.

  • Have you ever felt like you can’t stop shopping — even when you want to? If so, you may be someone affected by binge shopping. The Wall Street Journal reported this week on how binge shopping increases during the holiday season. What is “binge shopping” exactly? It refers to what happens when people cannot say “No” to a purchase (or even worse, a whole shopping cart full of purchases!), and are compelled to continue buying even when they know they shouldn’t. It’s like an addiction, in that it gives people a thrill when they find and buy their targeted items, but the thrill quickly fades and is replaced by a desire for the next ‘fix.’The holidays can exacerbate these feelings because they make us focus on our wants and needs, both material and emotional. If we feel that something is missing, shopping can sometimes become a psychological crutch as we attempt to replace whatever is missing. So how do you know when regular shopping crosses the line into binge shopping? Experts say it’s when you lose the ability to stop even when you want to. So be aware, and if you think you’re a binge shopper, try to identify the underlying causes and focus on addressing those things instead of buying more stuff. If your problem is severe, consider seeing a counselor who specializes in treating these kinds of addictions.
  • Have you ever read your credit card agreement? The whole thing? Probably not, because they are usually thousands of pages long. That’s a good thing for the credit card companies, but not so good for you. It would be better if the agreements were simple and easy to understand, so that you couldn’t be caught by surprise later with unfair late fees or interest charges. Help might be on the way: the Washington Post had an interesting article about how a simpler credit card agreement is being tested by the Consumer Financial Protection Bureau. It’s two pages, and it includes all the information about fees and interest rates in a clear and concise format. The new design will be tested at the Pentagon Federal Credit Union, and if it seems to work, then it may eventually become a requirement for all credit card agreements. That would be a very good thing.
  • We’ve talked a lot about student loans here on the ReadyForZero blog, and it’s a topic we’re paying close attention to. This week, the New York Times published some statistics about student loan holders. Their data shows that 90% of bachelor’s degree recipients have less than $40,000 in student loan debt, and that only one percent of bachelor’s degree recipients have more than $75,000 in student loans. One statement in the article created some controversy: “With a bachelor’s degree, even $40,000 may be a manageable level of debt over the long term.” Many people commenting on the article remarked on how difficult it is for recent graduates to get jobs and start paying off student loans in the current economy. We’d certainly agree. That’s one reason we’re happy that ReadyForZero now allows you to link your student loan accounts and track your progress in paying them off.
  • And finally, earlier this week we wrote about Balance Transfer Day, which is scheduled for December 11. We recommended that you think carefully before doing a balance transfer — they can definitely be helpful in some cases, but as with everything else financially-related, the devil is in the details. You will need to know the introductory interest rate as well as the long-term interest rate and any fees you’ll be charged for transferring. We also pointed out that there’s really no need to do this on December 11. The organizer of Balance Transfer Day has been found to have ties to a website that profits from balance transfers, which calls into question the meaningfulness of Balance Transfer Day itself. Bottom line: if a balance transfer makes sense for your financial situation, you can do it at the right time for you.

What was your favorite news article of the week? We’d love to hear about it.

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