How Do You Decide What to Spend Money On?

LizSara asked: How do you decide which things you want are necessary (like cell phone) and which are luxuries that you won’t buy until you are out of debt?

I decided at the very beginning to hold onto three luxuries: living alone (it would obviously be cheaper to have a roommate), keeping my iPhone (I could save about $40 a month with a cheaper phone), and alcohol/going out with friends. I explain them more here, but they were basically quality of life decisions and it wasn’t that I absolutely refused to compromise on any of them, but I knew that I could still do this pretty quickly without giving those things up.  I still consider them luxuries, since I could do without, but they are worth it to me.

With everything else, my basic rule is don’t spend anything at all, which actually works much better for me than constantly entertaining the idea of buying things.  When I want something, the answer is always no.  That solves about 95% of the to buy or not to buy dilemmas I face.

Most things are pretty easy to deem luxuries and because I have the end in sight, I can say you can have that when you’re out of debt. That is a trick I play on myself, because I will forget about most of the things I had to have by the time I have money to purchase them.  Even if I really want something and I am considering making an exception, I try to push it off as long as I can, hoping I’ll just get over it (I’m looking at you iPhone 4).

It’s harder with the things that exist in that gray area between need and want.  Most stuff is easy to avoid, because I don’t even see it.  I don’t go window shopping or even look at things online.  But, food and cosmetics can be harder to decide on.  I try to spend as little as possible, but I’m not out to torture myself and I never had any intention of eating rice and beans for 14 months.  Sometimes I’m more lenient and other times more strict, but I want to be out of debt so badly that I’m usually willing to sacrifice.

And I do make some exceptions, most of which I have confessed here.  But, I try not to make any impulsive money decisions.  Even if I’m going to spend money on something I don’t need, I do it deliberately.  I especially try not to let myself get caught up in sales.  It’s tempting when that TV show you’ve wanted on DVD forever suddenly drops $20 in price, but I can wait until I really have the money for it (Exception: Daria).

Even though my default answer is don’t buy it, there are still decisions to be made, and it isn’t always easy.  In fact, not buying stuff is probably the most difficult part of this journey.  It would be easy for me to make a lot more exceptions.  I mean, what’s an $8 bottle of nail polish when you’re putting $1700 a month toward your debt?  I guess I just want to be out so badly that I’m not willing to make many exceptions.