073 - Do You Do This? The #1 Reason That People Impulse Buy

Imagine you’ve just had a rough week and you’re feeling deprived from the happiness that life’s supposed to have. 

Something pops in your head that you want but know you shouldn’t let yourself indulge in. 

Then you find yourself thinking about how hard you worked all week and that you deserve to have what you want. 

So you go out of your way to make that desire a reality. 

Let’s face it, we’ve all been there. But the question is, how often does this happen? 

If you have financial goals that you’re struggling to meet, this may be an area to make changes. 

Because left unchecked you’ll stay in that sinking boat.  

So let’s unpack why this happens and what you can do to combat it. 

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Transcript

Welcome to Roaming Returns, a podcast about generating a passive income through investing so that you don't have to wait till retirement to live your passions. Imagine you've had a rough week and you're feeling pretty deprived from the happiness that life's supposed to have.
Something pops in your head that you want but know you shouldn't let yourself indulge in. Then you find yourself thinking about how hard you worked all week and that you deserve to have what you want. So you go out of your way to make that desire a reality.
Let's face it we've all been there but the question is how often does this happen? If you have financial goals that you're struggling to meet this may be an area to make changes because left unchecked you'll stay in that sinking boat. So let's unpack why this happens and what you can do to combat it. Are we on? Hello.
If Tim sounds a little wonky today it's because his butt is sore. Butt is sore because I rode like probably 65 miles today. There's like one of the last nice days.
On his bicycle. One of the last nice days left in the year so I said hmm I'll ride a bike. I was gonna do it yesterday but I had a case of the digestive problems so I couldn't.
So I had to go today. So yeah. So if I sound not up to par I'm sorry but I'm not sorry it was worth it.
And speaking of addictions like Tim riding his bike the whole reason this podcast we're gonna do today started was because Tim was picking up num nums from the convenience store and. And you think it's an addiction? Are you serious your nicotine thing is not an addiction? Well it can go one of two ways. You mean the fact we can't get through a single podcast without you clicking in the background? Yes.
I was at Sheetz it's like a local convenience store here and there was a couple in front of me and they were and they were discussing finances while they waited in line because there's only like one line open because no one wants to work anymore. Completely different topic but it's only one line was open they were discussing finances about how they didn't have enough money for anything but they still deserve to buy chocolate and booze. Because yes in the convenience stores in Pennsylvania they sell booze now so they had chocolate and booze and they were justifying buying $40 it looked like $40 might have been more of chocolate and booze by saying we worked hard all week so we deserve this.
And that got me to thinking huh and then it just stuck in my brain for like a couple days I was like do people have that mentality so I started doing a little bit of research and yeah there's a lot of podcasts and like Frugal Friends if you never listened to their podcast they're actually pretty cool they have a podcast that deals with like minimalism and saving money and whatever. Ro Thomas never heard of that one and even yucky yucky Dave Ramsey has a podcast specifically for the I deserve it mentality plus he has I think it's the Ramsey and friends or something website that has like a whole bunch of pop-down shit that basically deals with the I deserve it mentality so apparently it's bigger than I thought it was so damn my bad I whiffed on that one well I never I'd never had that like I'd never use the word I deserve this we're like oh I worked 40 hours this week so I deserve to go like go drinking on Friday night it was never my problem is that I want it was I want I was like I want to I want to go booze and I never tried to tie it together with like I deserve with my finances or my work schedule or anything like that and the biggest problem that I came when I was researching this is a lot of people actually will sacrifice their current finances and their future finances for this mentality so what is it the simplest way that I can put it after doing hours of research is it literally is just a justification that we tell ourselves so that we can buy eat watch or do something that we know goes against what our life plan is it's a self-rationalization so we know we know what we're doing is not like in the best interest of our future selves but we still justify it by saying I deserve it so it's okay that and I have a funny thing that when Carm has me um do stuff or ask me about questions I'm I always say that's for future Tim to worry about so it's kind of the same thing yeah and it's always like shoveling more crap onto your future self it makes me giggle that's future Tim's problem yeah president Tim doesn't give a shit he's going playing basketball so that made me like once you like once you research this and you look into it then you're like why people do this becomes the question why would you risk finances like the shit that I do doesn't well um anymore doesn't really um cause financial problems there was a couple addictions that I used to have that were in the the gray areas we'll call them but so why why do people like sacrifice their future future happiness for something that ultimately doesn't really give them any satisfaction other than like a dopamine hit well it makes sense to me that they're doing something they shouldn't really probably be doing or they hate doing so they have to give themselves a win somewhere we've been evolutionary evolutionary evolutionized evolutionary program to know what is necessary to survive and what is extraneous so we know like we know that we need air we know that we need water we know that we need housing allegedly food we know that we need food so like all the things that we need we kind of know so why can't we just go with what we need as opposed to what we want that's the that's the the underlying question about this whole topic um because a lot of people can't distinguish what a need and a want is that's part of it but then society societally societally speaking humans do i think really try to keep up with their peers even if it makes no logical sense and they think that's part of the need cycle of being a human is to be i don't know pleasant or popular or cool in the eyes of their their tribe it's called belonging it is a human need it's not a human need but it gets bastardized and how it gets whatevered for sure and then we went into after doing more research i found that as humans where there's a lot of trauma trauma triggers which can manifest in in numerous ways um one of the biggest triggers that i know of personally and Carm knows about personally is deprivation deprivation is huge for me like something that is needed or when you're denied something huge like my whole promise of all the reasons i do crazy stuff and stuff that sabotages myself is because i am so burned out from obligation and deprivation because of obligation it's not to be confused with that deprivation there's two different words that sounds very similar deprivation and deprivation one is spelled d-e-p-r-i and one is spelled d-e-p-r-a so there's what what's the difference you spell both of them the exact same right there no it's d-e-p-r-i is deprivation that means it's something that you're you're denied something d-e-p-r-a is the one that's like bad that's like uh you're doing something bad depraving someone else's like life or some shit like that there's that oh that has that has nothing to do with deprivation though but there's the word sounds very similar so people get them confused depraved so people do get confused so don't confuse them we're talking about deprivation i'm just saying irrelevant side sidebar whatever it's oh anyway deprivation is a really strong trigger for a large portion of the population and this strong trigger actually contributes to ridiculous amounts of unnecessary buying so i know for a fact that all of mine is through this because i want to be out in the van going exploring taking pictures i've been geeking out over fall foliage literally geeking out i just literally hijacked my mom we went up to the Catskills slept like we crammed in so much crap in like about a 24 hour period it was insane like insane insane insane because i am depraved yep nom nom right there because i am depraved and normally what i do when i can't go travel is i like eat food i literally just like shovel food in my mouth i hate it so it's my way of getting like variety variety is my addiction as we discussed right good this yours is a variety mine is mine is stimulus well stimulus and variety are mine pretty bad i'm not suggesting in any way that you should never splurge on something i mean there's people out there that do the minimalist lifestyle where they don't buy anything outside of needs i'm not even suggesting that what i'm actually i think more interest that's depraving more interested in is that you become more informed in what you're doing or buying self-aware yeah self-awareness and not a need so let's identify what a need is versus what a want is and then we can roll from there okay you want me to be quiet during this right because i'm going to hijack everything you can go right ahead i'm pretty sure i'm going to hijack this go hijack it away they probably want to hear you anyways uh-huh needs are those items in your budget this is all like finance related finance related needs are those items in your budget that are necessary for your health and well-being uh physical emotional mental or financial health and well-being it doesn't literally could argue all sorts of stuff in this favor if you stop spending money on these items there would be severe negative consequences like life loss and being homeless and that type of nonsense mental health is also one of those things wants on the other hand are those items that may improve your quality of life but aren't entirely necessary cutting these items out of your budget might be uncomfortable or feel uncomfortable but in the end you could easily survive without them now there are gray areas obviously with like everything in life there's like me talking about what i'm talking about right yeah yeah when so when you're trying to differentiate between a need and a want like i think these are very subjective for the individual but we all agree that food is a need right yeah but food's one of the hard ones because but buying food can translate into spending 150 at the grocery store for a week's worth of food or spending 150 in one meal at a nice restaurant in some cases people actually think that 150 out of the restaurant is a need when it's not it's a want yes even though it's technically still food so there's where it gets gray area that's what i'm saying it's great but they can use common sense people have that don't they some people have that don't they not when they're emotionally invested in the thing that they want for whatever reason that they've tied to emotionally i mean that's like the simplistic approach like water is obviously a need but then is people that only drink bottled water that's a want you can have a filtered water you get a filter and yes all that fun shit you can totally do that experiences are a need oh are they but there are so many free experiences that you can do so it's very difficult to justify spending like when we spent i don't know five thousand dollars to go to universal studios that's what we did not spend five thousand dollars whatever we spent that was that was a want that wasn't a need i think it was like a thousand dollars for five days i was super mad about it because it wasn't worth it and that was the same amount that we spent in two weeks in greece yeah we had a trip to las vegas and here i was guilty of a want we went to las vegas and there was all sorts of free experiences doing las vegas and i spent money gambling well i went out by myself with my camera yeah and left the retards that i was with in the casinos casinos are well i mean i went in the casinos too but my week i was playing with flamingos and diamond studded horses and all sorts of fun stuff fountains so like obviously you can make there's the gray areas seem to be pretty quick cut and dry and certain there are certain aspects like food obviously grocery store or planting a garden seems to be a better use of your resources than going to a restaurant again you could subjectively argue but what if you want organic food so you spend more at the grocery store on organic food even though organic food is literally just a label they put on the food at the grocery store to make you think that you're eating better another topic but what if you want organic food you go to the grocery store is that at that point a need or a want because you can get salary how did i say that wrong salary he says salary so you can get salary for like a dollar 29 for non-organic or you can get salary for like four dollars for organics you're spending more of your resources on organic so like then it gets super fuzzy unless you're my mom and you die when you eat non-organic so does that actually count as a need well see this is where you do have to boil the sound for yourself specifically and i don't know where you're going with the rest of this episode but i don't either this is this is why i really like to do the whole lifestyle evaluation thing and like we allow ourselves to splurge on this stuff that are really really deep wants that i would actually consider needs for me my personality tim tim's personality like i did just buy a three thousand bike so it was a want that was a want but it actually helps his helps his exercising makes him healthier fill in the need area but it was a want it helps him sleep better it gives him actual like more clarity of mind like to me that's something that actually becomes a need because it's there was like five hundred dollar bikes and a thousand i know but you had been actually sacrificing riding those i think it was a six hundred dollar bike for like several several years went through the paces made sure it was a hundred percent something you wanted to pursue and level up in so it's saved saved a bunch of fucking money into bullet shares for like 16 months i believe i've saved up in bullet those are the ones that i think are like great because it's like you you know you want something you confirm you want it and then you put in a crap ton of work you save your butt off like it's intentional we'll get to that is part of the strategy what to do yeah portion of this but yeah like if you budget for it and you like you know you're going to have say you want um everyone needs like transportation to get to work so say you want a 2025 i guess it's coming up 2020 2025 car if you save for it all during 2024 or 2023 while driving a beater to me that actually is justified in buying what you want slash need at that point because you actually went through the process you made the informed um decision that i want that and i'm going to save it i'm not gonna i'm not going to sacrifice my future finances for that because i'm actually going to take my paycheck i'm going to put a hundred dollars or whatever the case might be into a bullet share thing and once i get up to where i need to be where i can pay cash which is a huge thing that we'll get to well yeah if those people are putting that on credit cards and not doing the whole better be getting lots of points yeah they either better be getting lots of points or i mean i could justify that buying food at the grocery or the gas station for the five percent but it's all about the uh we're gonna do a credit card episode because i just went buck wild i know last episode i said i was only going to do one credit card and then think about another one in six months yeah i like totally applied for three different ones that lasted six minutes this is like yeah a day and i was like well that doesn't make any sense and we'll i'll explain that in that episode as why i decided to do that i threw so i'm hoping like so you can kind of differentiate between the need and the want right for now you still have problems again it's gray but when i see those posts that people are like i need this it's like it's a materialistic consumption thing and they're the people that literally buy the widget freak out for a day and then it goes into freaking storage and then they're looking for the next widget that is not a need i was watching um yucky dave ramsey and he said basically he said what if i told you a large portion of americans lose twenty four thousand dollars every five years i was like what so basically he was talking about new cars people have to buy new cars they buy new cars as soon as you drive as soon as you drive off a lot it's worthless like ten thousand dollars less than you paid for it he said so basically unless you're paying cash for that you've already lost like within five years you've lost like sixty percent of your investment so it's not even an investment at that point because then you're paying interest so it's a it's a want with no means to actually make money from it whereas there's people that want to have real estate portfolios and they'll buy the pay for houses or duplexes or whatever in cash so they're in short term they're wasting their financial future but long term they're actually replenishing their financial that's an investment that's different than like a consumable in my opinion some people are all about that like we know a guy like he did he sold my house and that's all he's about like all he cared like he eats drinks and breathes breeze um real estate that's all he cares about so that to him it's a need well that's like you with stock stuff right i feel like that's a need for you it's not really a need it's just it's a tool to get me to what i want to do but i think the biking kind of also falls in that category for you biking's a need just like me with my experience variety addiction thing that i got going on and hooping and pooping okay so like so that we're babbling now but now that we've identified enough of a difference between wanting to need so let's look at what the the final financial impact of this i deserve it mentality can have on your retirement so planning what are you talking can i can i say something you've been saying something i know i know i know but i was going to make a point i got sidetracked what i was saying before with like the lifestyle design thing like i prioritize the experiences and i cut out the crap that i don't care about like when we go on vacation we don't pay for hotels oh we don't pay for like eating out we don't pay for like all this other crazy stuff we sleep in trunks we sleep in trunks of cars and we use a gas burning stove that we cook whatever we brought yeah and we ride bikes places and we do all sorts of stuff like every now and then we'll get a hotel that's normally like a hypothermia scare but well but well that probably was actually a need at that point because that's a possibly near-death experience but my whole point is
Ready to It might look like I'm spending crazy amounts of money in this possible rationalization of the want thing we're talking about, but it's a well thought out, calculated. Again, that's in the what to do portion. Do you want me to cut all that up? No, you can keep talking, but we're going to get to it.
If you actually budget for it and save for it, it's completely different than if you just spur the moment by it. Carry on. Okay, so here's some data that hopefully will open the eyes of people listening and be like, wow, really? Wow, like, oh, Wilson, wow.
People don't get statistic boners like you do. I mean, the part that's like, so you have the research that I found is pretty much 95% self-reporting, which means probability-wise, the numbers are much, much worse. Yeah, they're probably way worse.
But here's some of the fancy numbers that I found. Okay, according to a survey by Ladder and OnePull, $18,000 per year is the amount of Americans spend per person on non-essentials, meaning stuff they don't need, stuff they want. 18,000 per year, that's a shit ton of money.
How much is that per month? Where's my calculator? I don't know. $1,500 a month! $1,500 a month. That's literally our budget for van life.
Yeah. Oh my God. Cool, so the second point, according to Bain and Company Report in 2022, 1.45 trillion was the value of the global luxury goods market.
Luxury goods obviously being like clothes and shoes and foods and things of that nature that are way above like what- I'm assuming organic falls in that category? Way above what I spend money on. 1.45 trillion. That's cray-cray.
Okay, and from January 2022 to January 2023, even with the crappy economy, as they keep saying- Quote-unquote. And inflation was super bad, according to the U.S. Department of Commerce, retail sales increased 4.7% year over year. So even with all the backdrop of all the crazy shit going on, the American consumer still spent 5% more on retail sales than they did the previous year.
Retail is typically a non-essential. Yeah. Yeah.
Ramsey Solutions, that's the website, Ramsey Solutions. No. According to Ramsey Solutions, $3,768 is the average cost of impulse buys that individual Americans make each year.
Well, that's way lower than that $1,500 thing. That's like $10 or $12 a day. $314 a month.
Yeah, so it's more than $10 a day people are spending on impulse buys. That's crazy. I think we do that at the grocery store.
Nah. Bah. Nah.
Okay, according to the same people at Ramsey Solutions State of Personal Finance Study, apparently this is something they do periodically, 72% was the increase in impulse spending since 2020. So from the 2020, I think this was 2023 when they did this. So in three years, the impulse spending went up 72%.
Well, I'd be curious to know how much advertising went up as well. I mean, there is that component that I didn't really get into the second. That's a whole other rabbit trail.
The psychological component of the people that make us feel that we need to own stuff are really fucking good at their jobs. Yeah, and there's a documentary, I think, on Prime. Didn't you say there was something about advertising, marketing, something, something? It was on Amazon Prime, but I don't remember what the hell it was called, but yeah.
Yeah, so there are documentaries on that. It is pretty scary, but it makes sense that if you feel a huge void and somebody's pimping 3,000 advertisements at you a day, impulse spending should, in theory, go up. This one here is just fucking cray-cray, but according to a report in 2023 from StorageCafe.com, 21% is the amount of Americans who spend money on a self-storage unit in 2023, with 40% of those saying they use one because they don't have enough space at home for all their crap.
They didn't say that for their crap, but I'm adding that in. We are super anti-storage units. And another 15% plan to use one in the future, so they're actually pre-planning a nesting spot for their crap.
Well, you know, we were actually considering getting one once we get rid of the box. To live out of. Yeah, as a place to store a central location where we can swap out winter gear for summer gear, but that's gonna be way, way, way cheaper per month than actually owning a house, so.
So that's insane. Just think about one in four Americans have a storage unit. That's it? I thought it was like 90%.
But there's multiple, this is just one in four. Of the one in four, they have multiple storage units because they have so much shit. Well, you would think that they would if they already have one.
They're more likely to get a second one. Okay, according to earth.org, which is, I guess, some tree hugger thing. I don't know.
11.3 million tons is the amount of clothing thrown away each year in the United States, which equates to 85% of all textiles, or 81.5 pounds of clothing per person per year. Again, we could go down a huge rabbit hole here with the whole fashion trend nonsense that changes each season, if not sooner than that. But don't people realize that they're throwing away 100 pounds worth of clothes a year? I don't think they care.
They're too concerned with keeping up with the trends. It's a little disturbing. God.
It's really cool if you shop at thrift stores in rich developments because they just dump all their. Yeah, where we live at, we live in a poor part of the rich town, and the rich town has all the people that are better off, and they'll take their clothes to the community aid, the local thrift store, and they'll donate them there, and you can go buy them for pennies on the dollar for what they're worth, if you care about that type of shit. I don't, but other people.
It's a nice way to save money, for sure. Other people do. That's a huge way to save money.
If you're a clothie. A what? A clothie. Clothie? How there's a foodie.
A clothie? Clothie. If you're a clothie, and you have to have new clothes, if you buy from thrift stores, you are saving at least 85%. That's one huge way to save money if you can't control your urge to have clothes every year.
Okay, this next one just blew my mind sock. According to Ransley Solutions again, 66% of all impulse buys happen in bed on a smartphone, so it seems like a simple solution to not buying impulsively is to not have your phone with you in bed. Which you shouldn't do anyway, because it screentards your blue light, your eyeballs, and disrupts your sleep circadian rhythm and whatnot.
Totally screws up your hormone levels. Which is why you need coffee in the morning. Going back to that Ransley Solution, they found out that nearly nine in 10 Americans, 88% report they are spending weekly on things they want, but don't absolutely need.
And about two in three, 63% are spending $50 a week or less on wants. And one quarter, 24% are spending more than $50 a week on the wants. So let's go through that again.
63% are actually doing all right, they're spending less than $50 a week on wants, which still is damn near $7 a day, so that's still fine. Oh, okay, but these are also probably the same people who say they cannot save for their retirement. What I'm saying, but I'm saying it's underreported.
These are like actual survey, like the Buzards. So, but. Yeah, yeah.
And four in 10 Americans, 40% admit that they have tapped into their savings to pay for something that they really, really, really want, but don't need. I do that. Tapping into your savings? That's what bullet shares is for.
No, it's the whole point of savings, your bike. That was not savings, that was my bullet shares. That's still technically savings.
You're saving up for it. My money made money while I was making a decision to buy a bike. See, I don't like that non-differentiator of savings because we have multiple savings accounts.
And this next one actually just ripped my mind sock off and threw it on the floor and peed on it. Now, if they're talking about your emergency fund, that, yes, I get that. The Ramsey Solutions asked people what they might do with money if they were given $1,000.
32% said they would drop the money into a retirement or savings account. Another 32% would pay down debt. So whenever people are given a lump sum, they know what they should be doing with the money.
That is very interesting. When they get their paycheck, they're like, eh. But you know what? It's probably because of the whole point of this podcast, this I deserve.
It's because they got the money for free so there was no hard work put in, no. Which means they can do the right thing with it. They don't have the stress, they don't have the whatever.
I interpreted that as people know what they should be doing with their money, they just choose not to. That's how I interpreted that. They stress not to.
They're like, eh. They stress impulse or they coping mechanism. So that's just some of the statistics.
If you really wanna get into this, which I'm assuming none of you do, go to the Ramsey Solutions and look up that state of personal finance study. It's disgusting. Well, the thing I have a problem with, all these numbers and stuff tend to make people feel worse than they already do, which then actually compounds the problem and makes them go out and wanna do the I deserve or I'm coping so I'm gonna be spending.
They do deserve to feel like shit. 81.5 fucking pounds of clothes a year in the dump. Are you serious? Jeez, they could burn it and it would be better for the environment.
Okay, so now we're gonna get down to the ways to avoid the pitfalls of impulse spending. So here is where she keeps trying to go. Impulse spending.
How is this impulse spending when it's supposed to be I deserve? I deserve impulse spending. Is it? Yeah, majority of it's impulse spending. The way that they justify their impulse to spend is by saying I deserve it.
Oh, the rationalization. So this is technically one of the impulse spends. I got it, okay.
Okay, the first thing is to set clear goals, okay? I mean, that seems like the first thing you should do with any financial impacting decision like for your whole life from the time you're five or whatever when you're getting money in your birthday card and shit like that. And when they say clear goals, you need a specific amount of quantity, a specific time threshold. Yeah, specific financial goals which gives you a sense of direction and purpose.
Whether it's saving for a vacation, a new car, or in my case, a new bike, or retirement, you have to have clear goals which will help you stay focused. So I knew my bike was gonna be $2,000 to $3,000 so I knew what I had to save. I didn't go out and put it on a credit card, go into debt.
I just kept putting money in. I mean, we put it on a credit card for points, but. I kept putting money into bullet shares to the point where I actually finally had enough to buy the bike.
So if you have a clear, specific financial goal and you have it spelled out like so if you wanna go on vacation say in August, start saving up in September so you have 11 months so it's not going to impact your financial future by having a specific plan to save for your vacation. Don't just say, eh, or never, never. The one that really pisses me off and we've mentioned it before is people that literally use their tax refund as a means to impulse spend.
Or they literally just take on debt to go on a vacation or whatever and then they wonder why they keep digging a hole. And now the goals need to be realistic though. Just saying I will save a million dollars or some shit like that is.
Well, you can do that if you have a plan and you take massive action. But the probability of that happening is slim. So, realistic.
Well, okay, so basically be mindful that your goals are short-term enough that this suffering and quote-unquote deprivation that you do isn't going to throw you in the opposite direction. So they are, it is, it can be feasible long-term to save a million dollars, but that would not help you like literally at all with impulse spending. Probably not.
And if you equate this to anything, if you've ever been dieting because most people will understand this whole thing. It's the people who wanna lose like 100 pounds and then like they lose five pounds, 10 pounds and then it's so hard to do that they freaking ricochet the other direction and end up gaining weight because they fall off the wagon. Well, the first thing they do wrong is they listen to the media about dieting.
But that's- Again, another rabbit hole. Another rabbit hole. The media tells you how to diet and all that does is make you gain weight and you're like, oh my God, I'm a worthless human and then you spend money.
Well, yeah, because then it's a guilt trip and then it's the bad feelings and then you smother them with food. But that's the one thing that they found is it's a super vicious circle like the psychological component of this. You feel bad, so you spend money.
Then you have- And you feel guilty. A moment of, eh, I feel great with the dopamine hit but then you feel guilty for buying something that you don't want. Buyer's remorse.
Then you get buyer's remorse, then you get depressed and then you basically are back to where you started and you start spending money again because you're depressed again. Boy, if that's your coping mechanism, yeah. That is crazy to me.
Spiraling down. That's how people rack up like 40 and 50 and $60,000 in credit card debt because they just keep buying like, oh, I need to buy some clothes because yesterday I bought clothes that weren't good and I feel like crap. That's what happens with me and food.
It's a sad thing. It's insane. I do get it.
So, is that clear goals? Step number one. Got it? Good, okay. Step two.
When you have your clear goals in mind, create a budget. A well-planned budget is your financial roadmap. So basically you have to track your income, your expenses, your savings, blah, blah, blah, blah, blah, ensuring that you're living within your means.
So basically write it down or take months worth of, you don't even need to keep receipts. You literally, if you pay with a credit card or a debit card, it comes out, you'll come up on your statement. And they do have apps.
Just tabulate that shit. They do have apps. You can like link everything to to do it for you.
But I definitely think if you want to categorize your spending, it probably is better to at least track it for yourself or maybe start there and then export. What I found, I thought of this all on my own, because I'm so smart, is maybe, just maybe think about making the budget visible to like people somehow. Whether it be like a family group or like a friend's group where you guys are all trying to save for a wedding or a vacation or whatever.
Have your budget visible so you have outside factors keeping you- It's called external accountability. Keeping you accountable to your budgeting. And that's what we're planning to do when we start our group.
We can actually have that kind of- Well, that's why I said I found that I am less likely to spend as much on stupid shit because I know we make our expenditures public for all of you people. So could you imagine what I'd be spending if I didn't have that amount? No, I wouldn't. I am fully aware of what you've spent on in the past and it has caused me great suffering.
But I think it actually would help a lot. So basically, you have to create a budget. So you have to take your, I would say take three months of statements from your credit card companies and your bank account and then just put your, what you make and then what you're spending and be honest with yourself.
I mean, it's gonna be embarrassing at first. So maybe not, don't make it visible until you've worked with a little bit. Step one, again, is awareness.
So it's like knowing where the heck you stand is one thing and then you can align your goals up with whatever and figure out what really doesn't matter to you and cut it out or figure out free ways to sub certain things in and out. We've talked about this in quite a few episodes. You can get as crafty as you want.
It's easier to stick to the budget if you do have realistic goals like step one. So our goal was to move into the van. So it makes it very easy to stick to the budget for the most part because I know where I wanna be.
The problem is this fucking condo has just been like the money pit of a, like if you ever saw the movie, The Money Pit, that's this condo. Well, and it would also help if I actually had somebody helping me work on it. Oh my God, you keep saying that.
I've been helping you and nothing, shit has not gotten done. You're born at your parents' house. So shush.
So create a budget, budget, budget, budget. We're going back to like the first episode, like our second episode. I forget whatever episode it was.
It's super important for every aspect of your financial wellbeing to know what you're making and what you're spending. And if you don't like the word budget, call it an intentional spending plan, ISP. I like that better.
That's what you need. Because budget makes me feel depraved. Deprived.
Depraved is bad. Whatever. Deprived is good.
It makes me feel deprived. There you go. It does.
Step three, practice mindful spending. This is where if you're at the grocery store and you see like, I don't know, a candy bar, before you make a purchase or put it on the little conveyor belt thing, pause and ask yourself if it's a need or a want. This simple practice can help curb impulse spending if you basically stop yourself, ask the question and then hold yourself accountable because you have a financial plan in place and you have a budget.
So like, then you'd be like, well, is this really something that I need? It's going to go against step one and two. Okay. Okay.
The Budgetnista read her book. It's actually really, really good. What she started doing is she actually has bracelets so that when she's spending, she like has them on her arm and it says, need it, want it, love it, like it.
And she goes through that, like which category it is before she actually like pulls the credit card out. And then she talked about, I think this makes more sense is actually putting like stickers or like writing this crap on your credit cards. Like that way you're looking at it every time you go to spend and you're like, oh, which category does this fall into? It's like a check and balance system.
Cause so it hopefully like checks you out of your emotional thing you got going on. And my hack for this is pay for stuff in cash. I actually prefer a card, but that's me.
That's part of the problem that they're finding with people. If you give people a hundred dollar bills and tell them they can spend it, they have such a huge time, hard time getting rid of a hundred dollar bills. They have no problem charging a hundred dollar bill to their debit card.
Well, I mean, if this is the problem, going cash mode might actually help you get into it. For whatever reason, people have such a connection or a desire to not lose cash. They're like, no, no, no, but here's my card.
It's so weird. But they found that like the psychology behind it, like people are just, so if you pay for cash, you can get over that hurdle where you can start using cash for stuff. It actually will make the mindful spending easier because then you have to part with the hard cash that no one wants to get rid of.
Well, it could be like breaking the big bills cause I hate breaking the big bills. Whereas Tim's the person that like breaks the bills and gets a whole bunch of freaking ones and pennies. And I'm like, what is wrong with you? I've been over there like digging pennies out of my thing to try to not break the 20 or not break the 50.
I'm all right with ones. Oh my God. Because what I do, right? Is I put the $100 bill in the center of like 95 ones that people think, oh, this guy just went to the strip club.
All he has is like 95 ones. If they ever find our wallet, they'll be like, where's the honey? Where's the honey? I never know where my wallet's at, never ever. Step four, automate savings and investing.
So basically before you even get money into your bank account, have the automatic transfers going to your savings and your investment accounts. Cause if you don't see it, you don't miss it. That is another psychological component.
If you don't see it in your bank, like if it goes into your bank account and you have to like manually transfer say 150 to your investing account, for whatever reason, that is a trauma in people's heads. It's a loss. Whereas if you just have it automatically come out and then you have whatever from your paycheck going to your bank account, you don't normally miss it.
That's kind of how they did the streaming services shit where you have like 12 different streaming services for the $10. You don't actually see it leaving your bank account. So what I actually like as a suggestion and something I'm gonna actually implement here soon is having two separate bank accounts.
And when you get your paycheck, it goes into one account. Everything gets paid from that or allocated, pre-allocated for all your bills, all your expenses and like whatever your, whatever, all that stuff, your savings, your investing, yada, yada. And then whatever's left gets moved into the other account.
And if you have your app on your phone, you literally see how much money you have. And to me, that's the same as cash without having cash. Because if you spend whatever's in your account, like that makes it easy for you.
You don't have to worry about the bills at that point. If you can figure out how to set that up for yourself, that's like huge, I think. You make it easy.
You make it idiot proof. Equal success. Just give me a lot of money.
A lot of cash, I'll be good. You're ridiculous. And the fifth part of my plan would be basically a follow up from last week.
Educate yourself. Financial literacy is a key to making informed decisions. I hope you liked the financial literacy thing last week about how illiterate most people are.
Hopefully you're better than them. Read, ask questions, engage in financial conversations. And I know a lot of the time it's gonna be embarrassing or uncomfortable, but that's how most humans grow is by going out of their comfort zone.
But if you think about anything you've ever pursued, you always start in the novice or the noobs category. And you suck. You're just bad.
But as soon as you start getting a little experience, you start going through the motions and you actually start improving, then you actually have achievements to talk about. And then you actually start getting self esteem and all these other things. And you'll learn to love it, honestly, once you get to that point.
Tonight I have financial conversations all the time. And I talk about finances with everybody at this point, which is hilarious. Because the financial literacy thing that we just went through, once you read about it, educate yourself, you'll understand that there are many more fees associated with your impulse spending than just what you're paying at the cash.
You have, most people put it on a credit card, so you're gonna have the interest associated with it. And late fees. But then also, like your Amazon, a lot of people don't even look for free shipping, they just buy the thing and then they pay a fee for shipping and handling.
Or subscription fees, they don't even acknowledge, I have six subscriptions open, so they have fees coming up for that. And then you have the storage, we've just pointed out, most people need to get storage units for their shit, so they don't even take into account that I have to go actually rent a storage unit for $100 a month to pay for like, to stuff all the shit that I'm buying. And because shoes, clothes, and electronics are all, like there's three, it's like 34, 33, 32, I forget the order they go in.
But they're the highest impulse buying items. Those are the number one things in storage units, is clothes, shoes, and electronics. So those are costs that you don't even know you're spending at the time of your impulse buy, because you're just focused on the dopamine hit of whatever you want.
So that's part of the financial literacy that I think most people know about. But hopefully, like the short-lived dopamine hit, it does nothing for your financial future. And instead of saying, I deserve it, maybe you should train your mind to say, I deserve, I don't know, financial independence, or I deserve financial freedom in the future, or something like, something better than I deserve it.
Like that. Well, I think distinguishing between something that's actually caring for yourself, or investing in your future self, or investing for your future self, instead of punishing, or like, you're kind of like living in the past, if you're, I deserve it-ing. If you're, you know what I mean? I don't know, it just feels like it's like backwards.
Well, I actually like that, and I'm going to try to do that. So I'm going to see if I can, if I can do it, then most people can do it. Or anytime I'm going to try to buy something I don't need, I want, I'm going to say, I deserve to live in the van, and do whatever the hell I want, so this is meaningless, this is pointless.
And what's so absolutely crazy, and this is kind of a sidebar, but it's totally related, but I just had an issue with a friend, and I started reading these books about boundaries, and this and that, because it's something I struggle with, and the one I was reading last night was talking about how people, most of us, I swear to God, have grown up in very dysfunctional families, and that creates these neglected, neglect and enmeshment issues, and a lot of the coping mechanisms that they were talking about actually roll back to the ways we spend money, and one of the ways they were talking about was actually the constant compulsion to, like. Well, you pronounced that word weird. Oh, sorry.
Compulsion. The constant compulsion, I was going to say a different word. Compulsion.
I was going to say a different word, sorry. Say cram. Cram.
Yeah, okay, there you go. Compulsion. Say salary.
Salary. Compulsion. Shut up, Tim.
Damn it, I lost my flow. Compulsion. But basically, it goes back to that constant consumerism, materialism type thing.
That might actually be rooted in unmet needs from childhood. Well, that is. That is something I literally just had kind of like an epiphany thing with last night, and I think this whole food issue I'm dealing with, specifically right now, it's like, oh my God, if my eating is literally contributing to the fact that I never had love as a child, I am so just annoyed that that's a thing.
Well, if you never, like we brought up before, if you never educate yourself and you rely on the experts in investing, you're always going to lose because they only recommend buying stuff whenever it's high so they can make money off it. So if you only, so the same thing applies to impulse spending. If you only ever focus on what you want.
Or the trend. Or the trend, or what your neighbors are doing. Or what they think.
You're not going to get ahead. Both instances are where you're just, you're holding yourself back by not thinking for yourself, educating yourself. And if you really want a mind blown thing, read the book, The Millionaire Next Door.
Like that is a great, great book about the different habits between people who are actual millionaires and the people who are trying to pretend that they're rich. Pretending before you're there. Like it's one of those catch-22s where the people who are actually millionaires don't look like they're millionaires because they're not spending their money on stupid shit.
Or frivolous stuff. Or superficial crap. That makes them look rich.
So I feel bad because there's no tickers in this one. Why do you feel bad? So there's nothing for them to jot down. But this like, I think was a super important podcast because I believe the number is at least 80% of Americans have the I deserve it mentality.
At least. Whether we'll admit it or not is completely different. But I'm betting 80%.
You know what, I just had an epiphany. I never actually say the word in my head I deserve but I definitely go through something in my mind that's according to I am suffering. So I want.
That is essentially the same thing as I deserve. Like if you have, whatever you need to do to basically identify the things going on in your head to basically then it'll snap you into the five things we just mentioned with the plan and the budget and the mindful spending. Like whatever you need to do to snap into that.
So you're like oh my, I don't really need this because you deserve to have a financial future more than most people will admit to themselves and that's what we've been trying to do for five years now. How long has it been? It's been a year and like a couple months. Feels like five years.
We've talked so much. This is more than I've talked in like 20 years. You're so full of crap.
But it's definitely prioritizing the things that you truly, truly want. So if you go back up to step one, for example. I mean I should have mentioned this.
Prioritizing. I should have mentioned this when we were up here in step one. Set clear goals.
Where do you want to be in five years? Where do you want to be in 10 years? Where do you want to be in 20 years? Those are actually part of your set clear goals. We want to be in a van so that made it pretty simple. Yeah, we don't want a house.
We don't want all these bills. We don't want to pay for all this crap that really gives us no quality of life that we don't perceive as a quality of life because all we want to do is go out and explore which means we'd never be home. So what's the point of having a house? Unless it's on wheels.
But that's just us. Yeah, exactly. And I was trying to like, I initially started this because I wanted to find more nomads but I'm betting that this is going to pertain to a lot of people.
So this podcast and the emails and everything is actually going to shoot out to more than just nomads. But if you're a nomad, you have your clear goal. You want to live in your van and travel.
So rock on. But that's the other thing too about your goal setting. If you look at your goals and you realize the lifestyle you're living is not sending you in that direction.
You want to be an Airbnb hopper, whatever the case may be. Exactly. If you want to travel more, what are you doing? Being in one place and never ever doing it.
And if you want to travel more, I very rarely do this. But if you're not familiar with Karen Nate, which pretty much everyone is, Nate has a ridiculous credit card plan in place where you actually get points on your credit cards and pay for all your traveling. Yeah, like Capital One does have absolutely amazing cash back that has unlimited like, so it's not like capital.
Check out their podcasts about the credit card, how he pays for like these first class flights from like Singapore to like Dallas and shit. For free. For free.
It's ridiculous. Like what he has going on is so good. He's so good.
Next week, I was hooping and pooping last week and one of my homies, he's like, hey, I really want to do investing, but I don't know where to start. And I was like, well, you should probably talk to me. He's like, that's what I'm doing.
I said, well, good. He wanted to know like where he should start. And I said like saving money or like do you have money set aside to invest? He said, I have money, I don't know where to put it.
So he wanted me to give him three investments to get into. And that's what I'm working on right now. So next week's gonna be a three investments that you can buy right now for the next decade.
That's for next week. Next week will be good. And if you haven't subscribed for the email, you might want to do that at some point.
The email's really good. It gives you like, we mentioned it all the time, like what I do every week in the portfolio. Yeah, so if you want to see what we're actually trading in stocks and whatnot, you get that every week.
Every week, I give you the portfolio update. And we just did a lot of work in the portfolio. So if you hang on for like, even if you don't want to sign up for the email, that's cool.
We'll go over it probably in December or we'll mention the ones we sold and the ones we picked up, why we picked them up, why we sold the ones we sold, other experiments we're trying because I do experiment with stuff before I actually like really start pimping it out to people. But yeah, I have a really crazy experiment going on right now that I'm fairly excited about because it so far seems to be working. All righty.
But next week, three things to buy right now for a hold for a decade. That aren't apparently the growth stocks we talked about before. Not growth stocks, they're dividend stocks.
All right, guys, we will see you next week. Next week, later.