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How The Average Consumer Spends Their Paycheck

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If only we could all stop eating.

Not overeating … just eating in general. We’d save a huge amount of money – about $6,372 a year for the average consumer unit – if we didn’t need to eat to survive.

Then there’s housing. If we didn’t need shelter, we could save even more money every year. How much? Try an average of $16,895 for every consumer unit – that’s you and your family, by the way – every year.

Unfortunately, most of us don’t relish the fact of living on the streets. And the rest of us certainly don’t want to starve ourselves to death.

So we do have to spend large chunks of our paychecks just to survive.

Here’s the key, though: By taking a closer look at what we’re actually spending our money on each year, we can go a long way toward cutting our annual expenses and keeping more of that paycheck for ourselves.

Check Those Credit Card Bills

It can be pretty scary to get those credit card bills every month. Since the start of the Great Recession, consumers have been cutting down on their credit card debt. But there’s some debate over how this is happening. Many economists say that banks and other credit card providers are simply writing off more consumer credit card debt as uncollectible. As this debt disappears, it looks as if consumers are paying off more of their credit card debt than they actually are.

And no matter where you stand in this debate, you can’t argue with the numbers: Most studies show that the average consumer with credit cards still has more than $7,000 worth of credit card debt.

That’s a lot of debt to be burdened with. And it’s why most of us hate getting our credit card bills in the mail each month.

But be brave. Look at those bills. You need to be honest with yourself if you truly want to change your negative spending habits and pay off your skyrocketing credit card debt.

Little Expenses Add Up

As the (infographic attached) to this story shows, there are many expenses that you can do little about. You need to eat. You need to pay your mortgage bill each month.

But when you take a close look at your credit card statement, you’ll undoubtedly find a host of purchases that weren’t exactly … necessary.

For instance, did you really need to charge that fast-food hamburger and fries on your Visa card? Couldn’t you instead have saved $6 by bringing your own lunch from home to work? And what about all those charges at your local gourmet coffee house? You could save big money by brewing your own store-brand coffee at home and taking it with you in the morning.

Of course, it’s more exciting to eat out and buy expensive premium coffee.

But cutting down on credit card debt isn’t about fun or excitement. It’s about having the commitment to work toward a debt-free lifestyle. Besides, think of how much fun it’ll be to end each month knowing that you won’t face any pesky interest charges from your ever-growing credit card debts.

Change your Negative Spending Habits

The best way to regain your financial health is to identify and change your negative spending habits. Once you determine that you spend nearly $100 each month on gourmet coffee, you can take the steps you need to eliminate that expense.

For some of us, though, identifying our bad behavior isn’t enough. We need to understand why we overspend and what triggers send us rushing off to the shopping mall.

If you can’t control your impulse to overspend, you might consider working with a non-profit credit counselor. These counselors aren’t free, despite the “non-profit” in their title, but they can help you set a budget, identify your spending triggers, and eliminate your negative spending habits.

The sad truth is, if you don’t eliminate these bad habits, you’ll never truly conquer your problems with credit card debt.


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  • SirWobbles

    You forgot to include most peoples largest single expense – taxes and government fees.

  • Cpalm1217

    That was already displayed in the “Income before Taxes” displayed in the center of the graphic

  • NHKev1

    As Cpalm1217 pointed out that Income (before taxes) and expenses are in the center of the chart

    I assuming taxes are included in the “everything else” category.

    Given the credit debit and people spend more than they make after taxes, and the net taxes(Federal/State Income) after deductions/credits on $62K would be minimal. Sales/Property and other taxes would likely be more significant.

  • NY120897

    thats very unnerving. if people looked at how much money they were spending, how much stuff they have, and this chart, they would find that they could save mone by doing some eco friendly things. biking saves mney on transportation, growing food saves money on food, less going out and eating out saves money on food and entertainment, not smoking as much or at all aves money, and same for drinking.

  • Sdgsg

    So let me get this straight. Healthcare costs, at 6% of pay, are too high. But housing prices, at over $1400 per month, are too LOW?!?

    What kind of crazy people are we?

  • Mdofperth

    You left out government (taxes). The cost of government in the example case is bigger than all the others except housing. If you include all the taxes, like sales tax, on the other items then the cost of government is the biggest, bigger than housing.
    Before worrying about what you consume in food, consider if you are getting value for money in government. I know I’m not getting value for money there and the only two parties available both keep making it worse.

  • Missing Info

    This chart needs student loans attached to it to become even close to accurate.

  • Mdofperth

    That is correct, but it reduces the impact of seeing it as a percentage of expenditure; further, there are tax components to all the other categories shown and it would be useful to see the total tax bill for the average person as a slice of the pie.

  • Mdofperth

    NHKev1: “I assuming taxes are included in the “everything else” category.”

    Not even close. Taxes are hidden in that they are taken before we get to spend anything, and they also form a substantial chunk of each of the other categories because they are all taxed over and above income tax.

  • Joe J

    I think it's interesting that the first line in the article complains about how we spend so much money on food, when we spend less on food (as a percentage of our income) then just about any other country in the world. On the other hand, Americans spend disproportionately more of their income on housing and transportation than most countries. If there is a place we need to cut back, that's where it is, not food. If Americans were more concerned about the cheap crap they put in their stomachs, then healthcare costs wouldn't take up as much of our income.

  • Booch221

    I don't get the Rented Dwellings–$2,860 part of the graph. What does that mean? $2860 divided by 12 = 238.33. Are they saying rent is $283/month? Not anywhere I'd want to live!

    The $7000 credit card balance is something everyone should work to pay off. I had a friend who had $8,000 in credit card debt that was costing $100/month in finance charges at 16%/month. Meanwhile, she had $8000 in the bank, earning less than 5% interest (this was in 2006). I talked her into paying off the card.

    She was worried about not having any savings, but you can always get a cash advance on the credit card and a savings account that COSTS you $800/year is no way to save.

  • dumdedumdum

    A way to show this would be to allocate government spending into the same buckets and show that as well. Of course, a decent chunk of govt spending is on infrastructure or social safety net stuff (i.e., social infrastructure) and allocating that would be interesting

  • dumdedumdum

    I don't eat fast food burgers, and wouldn't put them on a credit card if I did, but explain where I get that free sandwich from home that I can use to save the $6 on fast food meals!

  • Golden_mesa

    Another glaring omission is the amount of household savings. Could it be that the amount was so small that it disappeared as a rounding error?

  • gbuddha2012

    The money goes to the racketeers that run us and the economy. Don't bitch about taxes, they are more than offset by what 2 kids in school for 13 yrs would cost if you had to pay out of pocket 300k. Besides our incomes don't keep up with inflation – so 40% of americans pay no fed tax.

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