How to prevent buyer's remorse: Audit your spending habits

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I can't say for certain, but over the holidays I think I saw former Treasury Secretary Henry Paulson in the dollar store. Given the tough times, perhaps it's not surprising to see him shopping there.

Yep, we've entered a new economy, and that means we need some new approaches for managing our money, and our lives. The easiest place for most people to start getting their financial house in order is by reining in their discretionary spending.

Researchers have found that most of us regret nearly 80% of the discretionary purchases (i.e. the nonessentials) we make within a year of making the purchase. That's a big wad of cash we could better use for other things, and it also represents a whopping carbon footprint that we could avoid and an unnecessary waste of the earth's resources. If only there were a vaccine to prevent buyer's remorse, or a pill we could take before we go shopping, to keep us from buying all those things in the first place...

Instead, sit down as a family and conduct your own "What the Heck Was I Thinking?" audit. Pull out your sales slips, charge card statements, and check registers, and take a look at the major discretionary purchases you've made over the past year. Then ask yourself one simple question: "If I had it to do over again, would I still buy that item?"

Chances are you'll see some trends in terms of purchases you've made that you now regret. It's important to recognize and learn from those mistakes. For example, maybe you regret purchases from some stores more than others, or maybe clothing or tech gadgets are your Achilles' heel when it comes to impulse purchases.

Take note of those trends, and make a list of specific items you've purchased recently that you now regret. Carry the list in your wallet or purse, and take a good look at it whenever you go out shopping — it'll help curb your discretionary spending and prevent buyer's remorse later. And as you're auditing your recent purchases, it's also worth checking to see if you can still return or exchange an item that you no longer want; more and more retailers have extended refund policies if you still have your receipt.

As I've said before, for most Americans, conservation needs to start by simply consuming — and that generally mean spending — less. If we regret 80% of the discretionary items we buy, that's the place to start. Your bank account will thank you, and so will Mother Earth.

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