After a year and a half of lockdowns and deprivation, and all that we’ve been through with the coronavirus pandemic, it’s only natural to have the urge to splurge.
As restrictions began to ease, 67 percent of U.S. adults said that they plan to do more discretionary spending during the second half of 2021, according to a June CreditCards.com poll. Topping the list of categories is travel (35 percent), followed by out-of-home entertainment (26 percent), restaurants (26 percent), home renovations (25 percent) and clothing and accessories (21 percent).It’s Called Revenge Spending
As the economy is reopening, some people — including yours truly! — are spending with a vengeance to compensate for missed travel, retail purchases, online shopping and more.
Initially, my husband, Earl, and I had planned a nice, long three-week beach getaway in July to coincide with our anniversary and my birthday. But that didn’t seem like quite enough time to fully recharge, so we extended our vacation by another two weeks. Then we booked first-class airline tickets and upgraded concierge-level accommodations to presidential hotel suites. We even sprung to have our teen daughter’s best friend come along for the last two weeks of the excursion. Honestly, we acted like we'd never been anywhere, or that it would be our last vacation ever!
We extended our vacation by another two weeks. Then we booked first-class airline tickets and upgraded concierge level accommodations to presidential hotel suites.
Can you relate to frenzied spending? Earlier this year, I told you about “5 Reasons 2021 Can Make Clearing Debt Easier.” And, in fact, Federal Reserve data indicates that credit card balances fell by 17 percent since early 2020 and into the first months of this year. Now, many folks apparently have tired of all the belt-tightening, especially with stimulus checks, tax credits or increased savings tempting them to search sites like Costco and Expedia for vacation ideas.
The thing is, according to the creditcard.com survey, 44 percent of U.S. adults also said that they will take on debt to “treat themselves.” And, if you don’t have the funds to pay for that fun in a timely manner, be prepared for a financial hangover. Here are five signs that your revenge spending is getting out of hand:
1. Your spending has become impulsive, reactionary or mindlessly on autopilot (buying things you didn't even realize you purchased)
2. You keep fibbing to yourself about how much or how frequently you'll spend ("just this one time")
3. You find yourself repeatedly rationalizing excessive spending
4. Your spending is completely disproportionate to your income
5. You feel guilty afterward and have major buyer's remorse
Admittedly, in my husband’s and my quest to relieve all this pandemic pressure of the past year and a half, we’ve opened our wallets like a water spigot. But here’s why we were cleared for takeoff: We ran the numbers first. Everyone’s budget is different. If you decide to indulge yourself, set reasonable boundaries and financial caps that work for your circumstances.
In our case, my family hadn’t vacationed since 2018, due to our relocation from New Jersey to Texas in June 2019 and the pandemic in 2020. That means we’d spent nothing on travel for nearly three years! We had money set aside for birthday and anniversary celebrations. And, we’ve had the benefit of having lived for two years in a state with a much lower cost of living than we’d had previously. The median home price is about $250,000 in Texas versus over $400,000 in New Jersey, for instance. Lastly, we chose to travel to Mexico. This not only saved us on airfare, since it’s close to Texas, but it also allowed us to stretch our travel dollars because of the favorable exchange rates and the much lower costs of goods and services . How to Have the Splurge You Deserve Without the Guilt You Don’t
When the COVID-19 pandemic forced Carol Bowe to put off taking a trip to celebrate her 18th wedding anniversary, she wasn’t happy about it. Ditto for the big 50th birthday bash she had long wanted to throw for her husband, Eddie, last August, which also had to be nixed.
Still, “we really haven’t done any crazy spending at all,” she said. Instead, the couple has decided to continue nesting and beautifying their McDonough, Georgia home. Their one splurge: putting in a hot tub and pool, which they completed before July 4.
“During the pandemic, we saved a lot of money,” Bowe says. “It was more than not traveling,” she adds, noting that she and her hubby cut out everything from restaurant meals out and attending summer festivals, to doing couples nights with friends and shopping trips.
She’s still cutting back on those areas. But as a person who enjoys entertaining and having family and friends over, Bowe’s pool addition is more like restorative spending, allocating money strategically on what heals, comforts and enriches one’s life. The Bowes are a good example of how to spend within your limits even if you’re tempted to go big.
So what’s the fine line between healthy, restorative spending and over-the-top revenge spending?
Here are four basic do’s and don’ts to guide your spending and keep you in the healthy zone in the post-pandemic era.
Don’t be ruled by FOMO. Bowe says she sees people posting on Facebook and elsewhere about their vacation plans and travel. But she’s not getting a case of FOMO — fear of missing out. On the contrary, she’s happily telling herself, “I’m lucky that I get to bring my vacation here to my home. So if I want to pretend I’m in Barbados, I can do it right here from my pool.”
Try to pay off the balances in full the following month. If that’s not possible, a good guideline is to limit credit card charges to whatever you can repay within three months.
Also, regardless of whether you’re paying with credit, debit or cash, don’t engage in spending that’ll only lead to buyer’s remorse. I have a friend who recently confided to me: “Did I really need a pair of $250 AirPods Pro when I already had over-the-ear headphones? I justified that they would incentivize me to go running. But, nope, they haven’t worked any magic so far,” she said. “And I could have gotten an exercise buddy for free.”
Do reward yourself (within limits). If your income has remained steady, you can probably loosen the purse strings and enjoy things you’ve put off, like shopping for special items, traveling within your budget or gifting something nice to others (or yourself). In the process, simply give yourself a spending limit and stick to it.
Do evaluate the overall return on your spending. One reason the Bowe family decided on their pool as their one big expenditure is that they viewed it as an investment that will accomplish several goals: long-term savings, increasing their future property value and family unity. The pandemic turned Bowe into a whiz at creating themed family nights for her husband and daughters, Annaya, 21, and Sanai, age 11. “I do movie nights, sip and paint, game nights, arts and crafts, even tropical night with jerk chicken tacos, mango chutney, pina coladas and Caribbean music playing; anything to keep us all busy and together.” Besides, this is the Bowe’s forever home, she says. “We might have grandkids who come and play back here. I want family and friends to feel welcome and just enjoy themselves.”
