BALTIMORE — If you find yourself being sucked into limited-time deals, adding items to get free shipping, or enrolling in credit card offers, you may be “spaving.”
"Spaving" is spending more to save more. Think lightning deals, buy-one-get-one-free or BOGO offers, and special credit card discounts. You feel like you're saving, but would you have bought the item in the first place, and how long until you pay it off?
“If I can get something cheap now that's better than having paid full price for it maybe two, three weeks from now,” Loyola University Maryland Accounting Professor JP Krahel said this is how we justify the purchase. “There's something satisfying about buying something. It's an event, it's like, oh, here's something new in my home. And a lot of merchants will take advantage of that psychology, and you've got to be able to fight back because then if you can't afford it, now credit card interest starts racking up.”
The average credit card balance among U.S. consumers was $6,501 in 2023, 10 percent higher than $5,910 for the previous year, according to an Experian report. Meanwhile, average credit card interest rates top 20 percent.
“And I try to tell my students, it is so easy to just say I'll pay the minimum I'll be in good standing and forget the rest. But they're not forgetting the rest and they're going to start attaching interest to it. And now you're in worse shape than if you'd spent nothing at all,” Krahel added.
So how do you resist the urge to buy, when the price is too good to pass up?
“You've got to be able to say no, there are bills to be paid. I could put that money toward my mortgage, I could invest that money, turn it into more,” Krahel recommended.
Ask yourself if it's something you already needed to buy and budgeted for, or if it's extra.
“And you can visualize – after this is done, will you have buyer's remorse? Would I be happier with those extra dollars in my wallet, or would I be happier with that experience, that item, that meal, that whatever?” Krahel asked.
Finding a great deal can feel like a game. Instead, try a different challenge like “no spend September,” or compete with your friends on who can get the best credit score. The number one goal should be to pay off high interest credit card debt that's cutting into your budget for other bills or big purchases you want to make in the future.
If you’re struggling with credit card debt, click here for information on nonprofit credit counseling agencies.