Gather Little by Little

For those of you who watch professional poker or even play the game once in a while, you understand when a player is “on tilt”. Tilt is when a poker player is making decisions with emotion and not playing according to a disciplined strategy. Being on tilt is usually the result of an emotional reaction to the events of the game. A poker player who is on tilt can often be taken advantage of by the other players and if he does not get control of his emotions, his continued presence in the game is at risk.

In a similar way, many of our worst purchases can be made in the heat of the moment or when we are financially “on tilt”. Here are some ways to avoid making purchases while on tilt:

1. Know your weaknesses. My primary weakness is food. I should never be out of the house when hungry and I always spend just a few more dollars than needed both at restaurants and in the grocery store. My other weakness is that I get in spending moods, usually when I have a lot of bills to pay. Ironically, the more money that we have and the better our cash flow, the more frugal I become. As soon as we have a big medical expense or car repair, it seems like I get on a roll and start spending money like Congress. I get a feeling like, well, I just blew $1,000 on a transmission, what does it matter if I spend another $400 on a new laptop? There are times when I get on financial tilt around Christmas, it just seems like every day comes with a new opportunity to spend money and after a while, I just don’t care anymore. I am at my frugal weakest just after a big expense.

2. Avoid the pitch. Do not put yourself in a place to view advertisements or listen to salespeople, especially when the product is something that you like or need. Mrs. Stew and I once purchased new windows for our home after listening to a sales pitch and without doing the research ourselves. The product was good, but we overpaid because we bought in the heat of the moment immediately after listening to the salesman’s shpeel.

3. Make it harder to spend money. This is where credit card discipline comes into play. It is just too easy to swipe that piece of plastic when the mood hits. Do not carry the card, freeze it in ice, destroy it, whatever you have to do to control the card. Do not carry too much cash, force yourself to have to go to the bank, access and ATM or consult with your spouse when you are about to spend money. When shopping online do not use Bill Me Later or open a new line of credit in order to make a purchase. Add a step to the spending process in order to give yourself time to cool down when you are on a spending tilt.

4. Wait. Set a firm limit on how much money you can spend without waiting 24 hours. That 24 hours will help you to calm down and think clearly about your decision. Furthermore, the discipline of walking away might even cause the price to be lowered . . .

5. Talk to someone else. Do a little anecdotal research from friends and family before you buy. At minimum, you need to consult your spouse. Remember that poker player who  is on tilt? He would be a lot less likely to go all in with Queen – seven, off-suite if he was able to talk to his friend first.

In my financial life and experience, it has rarely been a mistake to wait. However, bad things almost always happen when you pull out that credit card while on tilt.

Photo by Yannick Croissant