Economics

Help! I Have A Serious Spending Addiction

I have a serious spending addiction – any time I find myself with some extra cash on hand, I end up spending it. This is particularly troublesome, as I tend to salivate when I see an item that I really want.

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Spending
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Anytime there is a big sale, especially one with large markdowns, my spending problem comes out on the surface and I sometimes go through all of my cash on hand and sometimes even borrow money to spend. The exhilarating feeling of spending my cash is similar to probably what a drug addict feels when they get their daily dose. I look at the list of items I spent my money on, and it provides me with an internal sense of happiness and accomplishment. Sometimes, I even look for ways to save money from recurring expenses in order to have more money to spend. I am often scrambling to find enough cash, as I always have at least 15 – 20 deals on my radar, just waiting to be purchased.

I spend a large portion of my monthly income on dividend paying stocks. I willingly spend my money on dividend stocks because I know that I am contributing towards my retirement goals. I view every dollar that I can invest in a quality dividend stock at attractive valuation such as PepsiCo (PEP), Altria (MO) or Johnson & Johnson (JNJ), will work hard for me and produce several more dollars over their lifetime for me.

Over the past two months however, my spending addiction went out of control. There are a lot more bargains to be found. If we enter a bear market, we will have even more sales to take advantage of.  My fingers are itching on my trigger, as I see so many quality firms which are selling at promising entry prices.

Unfortunately, I would have to train myself to resist future sales in the future. This is because once I start living off our investments, I will have less money to invest every month. The month of April is usually a reminder of this future event for me. The reason why I will purchase a limited amount of stock in April is due to taxes. Once your income from non-salary sources becomes noticeable, you end up having to pay estimated quarterly taxes. Fortunately or unfortunately, my estimated payments were not sufficient to cover the remainder of taxes due. This is fortunate, because I had been able to deploy the funds at prices that were much lower than prices today. I would much rather invest the funds and get the chance of earning a return on them, rather than provide a zero interest loan to the government.

Luckily, by the end of April, I should be able to redirect my cash flows toward growing my dividend positions. Hopefully, the market is not going to increase too much by that time.

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Article by Dividend Growth Investor