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I spent $9,000 on a handbag and didn’t realise I was overspending

Fashionable set of glamour black and white handbags, shoes and gloves for women can lead to debt.
Jenny Jacob's mantra was, 'I deserve this', but the debt kept mounting. (Source: Getty)

It was during a pinnacle point in her career that 35-year-old Jenny Jacob's spending habits changed.

Back in 2018, when she was promoted to managing editor, she felt it was time to invest in herself.

Also by Emily Chantiri:

At first, it was a luxury handbag, then shoes and then expensive restaurants that led to her spending spiralling out of control.

"I was promoted to a high position in the company,” Jacob said.

“At the time, I said to myself, ‘I should open a savings account, so I have some emergency fund, or maybe I could invest the money into something worthwhile’.”

But an increase in salary spurred the spending.

“The luxury bags I bought ranged from $3,000 to $9,000 - the most expensive one - which was really more than I could afford.”

Peer pressure added to her spending.

“The overspending went on for almost a year and a half,” Jacob said.

“I think what triggered it was not only the salary increase, but my workmates, who also bought luxury bags and shoes, and I’d go shopping with them.”

Reflecting back to her time as managing editor, she said she was happy working for the publishing company, and deserved to reward herself.

“Somehow, I thought my spending was the fruit of my labour and efforts for my work,” Jacob said.

“My mantra was, ‘I deserve this’. But I spent much more than what I deserve.

"I usually had money to pay for the luxury goods but my lifestyle changed over that time, and on top, I had extra bills to pay.

"I realised I was overspending when I bought bags and shoes and, as time went on, the debt just increased."

She said she had no idea how much she was spending because she was using a credit card.

“Things got out of hand when I started dining out in expensive restaurants almost every day, and I couldn't control my money.”

Jacob believes she lost track of her spending due to a busier workload with the new role.

“I just forgot about it, until all the bills started mounting up.”

The first thing she did to recover some of the debt was to sell a few of her purchases.

“I sold shoes and handbags and moved into a cheaper apartment,” she said.

“This was a critical lesson for me. I took two years to pay off all my debt and, when I did, I finally opened a savings account."

Jacob understands there is nothing wrong with rewarding oneself.

“What I’ve learnt is to think of the consequences,” she said.

“Will I have money left for the bills, food and for an emergency fund? If yes, then go ahead and buy the item"

Warning signs you’re an overspender

Here are some signs that you’re living beyond your means:

  • Living pay cheque to pay cheque

  • Credit card balance remains the same or you’re not paying it down

  • You reach out to a payday lender

  • You have no idea how much you’re spending

  • You have no idea how much you have in savings

What can you do?

Money coach and financial planner Matt Hern said Jacob’s story was similar to many who had fallen into the trap of overspending.

“We tell ourselves, ‘I earn good money so I can afford this’, or, ‘I work hard, I deserve this’, without setting a limit,” Hern said.

“Another reason we overspend is lack of willpower to resist spending. It’s easy to get immersed in a spending cycle.”

Smiling woman looking at smartphone screen, with laptop and various papers on a desk.
Planning is crucial to clearing debt. (Source: Getty)

He added that before anything would change, there had to be a strong reason to, such as a desire to live a life one could afford.

Next, stick to a plan that makes saving easy with minimal reliance on willpower.

The system includes a plan of what you can afford to spend on your priorities, and the plan to implement it.

One key technique is to compartmentalise your accounts into goals, commitments and impulses.

  • Goals: Anything you are working towards - holidays, home deposit, wedding, car

  • Commitments: Everything you will spend money on - groceries, utilities, clothes, gifts, health, car rego and servicing

  • Impulses: Anything unbudgeted - take-away, last-minute night out

Use automatic transfers to save for your goals and cover your commitments.

If there's nothing leftover for impulses, then your lifestyle is overcommitted.

Remove the triggers to spend money by unsubscribing from marketing newsletters, unfollow influencers and avoid browsing at shopping centres and online stores.

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