First Person: The Sad Truth of Why I Overspend

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I've decided to invent my own "blue laws," which have nothing to do with buying alcohol on Sundays. I need to stop shopping or trading stocks when I'm feeling blue. I also need to make money difficult to access. According to a new study by professors at Harvard, Columbia and University of California, sad people make foolish money decisions. During the study, the average sad participant was willing to take $37 right away rather than receiving $85 in three months. Researchers say the unhappy people were willing to take 13 to 34 percent less money now compared to neutral people so they could "accelerate consumption" or practice what I've always called "retail therapy." Knowing about this new money study made me think about some of my habits.

Spending money on experiences

I've read other studies that show people tend to be happier when they spend money on experiences rather than on material possessions. When I look at my budget, I can see that I actually spend less money during the month following a weekend getaway with my husband. However, when I go too long without a vacation, I find myself buying new furniture for the house or clothes that I don't need. I also shop less often after enjoying a date night with my husband, even if it's a frugal date night in which we share a meal.

Looking at my portfolio less often

It's tempting for me to want to look at my investment portfolio during the week when the stock market is open. However, when stocks are down a lot, I tend to get depressed. It's a vicious cycle because I may even decide to sell a stock that's down. By setting up automatic buy and sell orders, but not monitoring my account every day, I have a better return on my money. I don't need to watch a stock every day to see when it will hit $30 a share, for example, because I can just set my account up to sell it when it does reach a profitable price point.

Waiting to make major decisions

After a loved one died in the early 1990s, everyone in the family received a small inheritance. We used the money to buy clothing and other items needed for returning back to college. Looking back, I wish I had simply put the money in savings. Financial experts say it's never a good idea to spend money or sell real estate after a loved one has passed away. In the future, I plan to wait at least a year before making any major decisions about money after a death.

Being quick to pay off bills

Even though I want to be slow to spend money on material things, I think it's smart to immediately pay off debt and bills. In fact, I've found that putting extra money toward my mortgage or paying off a small bill can give me the same kind of high I used to get from going to the mall. Although I've experienced buyer's remorse on a number of occasions, I've never felt regret about paying down or eliminating a debt.

If I'm going to be rash about money, I rather err on the side of using my money to help others, pay off debt or bond with loved ones rather than buy material things. After reading the study about how sadness makes people want immediate gratification, I've identified ways to be happier without spending any money. When I am occasionally blue, I follow my "blue laws" which keeps me out of the malls until the sadness passes.

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