On the science of spending, weekend cash and a money clip instead of a wallet:

George Loewenstein is a professor at Carnegie Mellon University in Pittsburgh who studies the way people feel when spending money. He’s examined how brains react when someone parts with cash, and the reasons why some people are more prone to play the lottery.

His research into how people feel when they spend is groundbreaking, and he hopes to one day fully explain why people are likely to rack up thousands of dollars in credit card debt.

His hypothesis: Credit cards take away the pain of spending.

Your brain wants you to spend wisely

Earlier, his work showed that people who trade cash for purchases make decisions based on how painful it is to part with their money. From a Carnegie Mellon Today article summing up his work:

“Their findings, recently published in Neuron, suggest that there’s a battle in the brain between immediate pleasure and immediate pain when we’re deciding what to buy. … The subjects in the MRI study weren’t thinking about what benefits they would gain at some later date if they chose not to purchase The Family Guy DVD set now. Rather, they were deciding based on how painful (or not) they thought paying for it would be right now.”

I’ve been thinking about how this applies to my personal spending habits, and how I, and anyone else, might be able to alter spending habits and save money by using this knowledge.

These strategies may not help you create a monthly budget or reduce your credit card interest rate, but they may lead you to rely on cash more. And, taking what we learned from the good doctor Loewenstein, we can use our brain’s natural system to maybe cut down on impulse buys and unnecessary spending.

Hurt so good: Save money by using the pain of spending

A cash-only weekend. I don’t typically carry much cash. But recently, I started getting out some weekend cash on Friday and making that my budget until Monday. I find this works really well. At any moment when I’m out on the town I can do a quick check and weigh the pros and cons. If I take a cab tonight I may not be able to go out for brunch. An ice cream cone at the zoo could equal a cocktail out later.

When I’m all credit, it’s easy to keep pushing the gas on the spending and do it all: Meals outs, extra treats, cab rides. I won’t see the damage done until I’m shaking my head as I look at the receipts later.

Carry fewer cards. A few years back I switched from a wallet to a money clip. I guess I was finally tired of sitting lopsided at work. But another benefit is that it limits what I can carry. After my driver’s license, a couple business cards and a few dollars, I can only keep one or two credit cards on me.

The upside? I can’t keep bouncing from credit card to credit card and racking put the charges. I’ve only got one, and I try to save that for major purchases and emergencies. With fewer cards, I’ll need to rely more on cash, which could help stave off emotional or impulse purchases.

Be honest with yourself about big purchases. Here’s one that’s gotten me in trouble plenty of times. I need a big purchase – a new computer, airplane tickets – and I can’t pay in cash. Maybe I’m buying online.

Often I start by making a deal with myself: I’ll put this on my card and then pay off the bill in full when it comes. And then the bill comes. And then I let it slide.

Why? I have no idea. I guess because it’s easier. Even if I have the means to pay off the full balance on my credit card I might only pay part – even though I told myself I would pay it all off!

While Loewenstein hasn’t fully dissected why this is, I think we can avoid this situation by being honest with ourselves.

If you need a credit card for a big purchase go right ahead. But before you whip out your Visa for a new pair of shoes or at dinner on Friday, be honest with yourself: Will you really pay that back right away? And if you don’t, can you afford to keep that debt and pay interset on that purchase for months to come?

This weekend, when you’re out and about and thinking about when and where to spend keep this in mind: Your brain wants you to spend wisely, get good deals, stick to your budget and stay out of debt.

If you feel like you’re losing your mind over massive credit card debt, you may want to explore Chapter 7 bankruptcy and how it is designed to quickly clear credit debt.