Excerpt from The Money Trap...
Billy's Story...a pretty stark example of how overspending is not about earning enough.
Billy owns a small but hugely profitable company that he built from the ground up. But no matter how much the company earns, Billy spends more. He is afflicted with what his friend called, "fabulosity." There don't seem to be enough luxury goods in the world for Billy. No amount fills him up. Although he has a Merceds and a Range Rover, he became obsessed with buying the new Bentley. He is an extremely handsome guy and women are very attracted to him, but he becomes obsessed with the ones who only want to be with someone even richer than he is. Billy has an annual dinner party that costs more than most people make in a year (not that his lesser parties would ever be called economy affairs). He is obsessed with how much money his friends make, and he is forever feeling bad about himself compared to one or another of them.
The problem is that in order to afford his lifestyle, he puts himself into more and more debt every month. And this despite the fact that he could have a very luxurious lifestyle even if he spent within his means. He just can't. In the middle of all this luxury, there isn't much luxury in the peace of mind category. The shame and guilt he feels as a result of his creditors' demands has begun to catch up with him. He owes his creditors so much money that he can't sleep at night. His biggest creditor is threatening to foreclose on his business. Nevertheless, Billy just bought a new boat. The idea that he can't afford something is so intolerable to him that he can't stop--even in the midst of lawsuits and Marshalls and foreclosure threats.
Most casual observers are at a loss to understand why Billy doesn't just see the logic of his situation and do something about it.But addicts don't go by logic. They go by deeper needs. They go by craving, and relief seeking. They do whatever works to get them through. And nothing works better to soothe the troubled soul of a compulsive spender than spending money.
Billy believes that the stuff he buys will somehow insulate him from his deepest doubts and fears (though probably not so consciously). Compulsive spenders like Billy would rather keep on keeping on for a long as they possibly can, even when the abyss comes into view, than face reality one minute before they absolutely have to.
When your sense of self worth is entangled with your earnings, with the things you have, and with the impression that gives the world--then your feelings about those things will probably rule the day rather than any sense of prudence or planning. Keeping pace with your own self-regulated image of how you're doing becomes a demanding job.