How to Waste Money in 9 Easy Steps
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Could we be wasting money? You might wrongly consider yourself a frugal saver, but unfortunately, some of the best earners wind up throwing away money simply by going about their everyday activities. To obtain greater financial security without getting a second job, it would do us well to watch what we spend. Here are a few ways we may be wasting money without realizing it:
How To Waste Money in 9 Easy Steps
Remember that these are money drains and actions you should avoid making if you’re interested in saving money.
1. Only buy brand new vehicles. When you buy a new vehicle, you are taking a loss as soon as you leave the showroom with your shiny purchase. A gently used vehicle with a warranty is a better investment. Before buying, check the history of the vehicle through Carfax. It costs $34.99 for the service and you can check up to 10 vehicles to find the best one for your needs.
2. Use your charge cards for everything and always carry a balance. Pay off the balance of your credit cards every month so you never carry a balance. Why pay interest if you don’t have to? Use cash instead of credit cards whenever possible. Only use credit cards for major purchases when you want the reassurance of backup from the credit card company or to earn rewards for money spent. I’d also consider applying for balance transfer credit cards to try to pare down credit card debt at a quicker pace.
3. Pay whatever fees the bank charges you because they’re the boss. With the abundance of no minimum balance and free online high yield savings accounts, it’s foolish to be paying outrageous bank fees. Take control of your money. Shop around for free accounts so you never waste money on these unnecessary fees every month.
4. Pay the fee to use that ATM in a questionable back alley bar. Using an ATM anywhere you feel like it can be a convenience but it’ll cost you. So instead, plan your money requirements. Make planned stops at your bank branch to make ATM withdrawals so you never have to pay a fee. Use your free ATM bank card as a debit card rather than as a credit card when you make purchases in order to avoid incurring extra fees such as cash advance charges. Paying ATM fees is another foolish waste of hard-earned cash.
5. Keep your money in a non-interest bearing account. Review savings account rates and try to find the best cd rates available for your hard-earned money. Why not park your money in a two-week or one-month CD rather than let it sit around collecting nothing? For a little extra effort, you can put your money to work for you. It doesn’t make sense to let your cash sit around for a month earning no interest when you can invest in a short-term CD.
6. Avoid dollar stores like the plague. You’ll save a lot more money by swallowing a little of your pride. If you think you look cheap entering a dollar store, think again! Shopping in the dollar store shows you’re a savvy saver. Everyday purchases such as sponges, cleansers, soaps and paper goods are cheaper than buying at your local grocery store. Other smart purchases at dollar stores include greeting cards, party goods and holiday decorations.
7. Buy only name-brand products. As an alternative to branded products, generic alternatives are an easy way to save money on cereal, canned goods, puddings, applesauce, trash bags, spices and an array of everyday products. Save up to a dollar or more per purchase by simply buying generic products. Brand loyalty can cost you quite a bit more and often it’s a similar product in fancier packaging.
8. Live on take-out food. Take-out food and dinners out can get costly and unhealthy but eating on the run doesn’t mean spending three times more on food with double the calories. Choose healthy alternatives such as fresh vegetables, lean meats and potatoes. Grill them or toss them in a wok for a fast, tasty dish for a fraction of the cost. Have oatmeal or yogurt for breakfast and bring a bagged lunch. You’ll also feel better, maintain a good weight and have fewer visits to the doctor when you stop eating convenience foods all the time.
9. Leave lights on and appliances plugged in. You’ll be surprised by how much you’ll save on energy by turning off lights when you leave the room or your home. Make sure your appliances are unplugged when you’re out for extended periods of time. With rising utility costs, nobody can afford to waste electricity. Use energy efficient light bulbs to further cut down on your electrical bills.
As you can see, it’s not all that difficult to identify areas where we can potentially cut costs and save. In many cases, small adjustments can lead to huge savings; if you’ve got the resolve, you’ll be able to plug those holes you may have in your budget and find better use for the dollars you do end up saving!
Wasting Money Discussion:
What other personal finance practices have you found to be a big waste of money?
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So true, I always avoid ATM machines that are not with my bank so I don’t have to worry about the fees. Brand name means something sometimes, but not all the time. You can save by buying generic brand stuff. I disagree with the buying new vehicles. Just cause you buy a used car from Carmax does not mean it will last. Used cars tend to have more issues.
Recently heard that there is an option for doctoring Carfax reports; for the right price to Carfax a seller can have accidents/information omitted. Has anyone else heard of this? Perhaps it’s rumor only? In the end my boyfriend and I took this into consideration when deciding between purchasing a used vehicle of similar make or buying out his lease (we bought out the lease–which was largely a compromise between my not wanting to make car payments forever and him wanting to drive a relatively new sporty car).
#7 is a big one for me, especially in the grocery store or someplace like Target. Most of the time the store’s brand of a particular product is actually made by the name brand company! In these cases, the name brand and the generic brand are literally the same product in different packages.
As for money wasters that weren’t on the list, my biggest waster (and one that I’ve recently gotten off of ) is coffee. This actually goes along with #8, but I think for many people it may deserve its own category. I certainly haven’t given up drinking coffee, but I have stopped buying coffee on the run. The coffee I brew at home is much cheaper and just as tasty.
@ Craig, I agree that buying a used car isn’t always the best idea. Even with a warranty you are, by definition, going to have more problems sooner with a used car. I think the bigger waster for a lot of people is the habit of buying or leasing a new (or used) car every couple of years. I bought a new car in 2006 that I plan on driving until the wheels fall off. If I keep the same car for 15 years, then it will end up being a better saver than a used car that lasts half as long.
@Zach I agree with you, that’s how I look at my new car purchase as well.
Shopping without coupons or a club discount card.
Buying the latest cellphone everytime a new one comes out because you have to have it.
Not turning the thermostat down when you leave the house.
I have a great example for 7. I had to get tootsie rolls for a recipe, so I went to the candy aisle and had 2 options. A bag of tootsie rolls, or a an “off brand”. The off brand was a clear bag full of tootsie rolls individually wrapped in the tootsie roll wrapper. About half the price, and obviously the same product inside.
Mortgage escrow. You pay your taxes and insurance every month with your house payment, the bank sits on your money, invests it, uses it and then makes your payments for you. The first chance I got to do away with it I did. Now I collect the interest and benefits off my own money until it is time to pony up and pay the tax man and insurance guys.
This isn’t anything new. Every finance writer has been saying this for years.
Totally agree that carrying a balance on your credit card is the worst thing you can do.
Credit cards are such a great deal when used responsibly. They’re essentially interest-free 30 day loans, every month, with rewards!!
God, I love revolving credit.
I’m going to go buy something from Amazon right now.
I’ve been guilty of all these at some point, but I’m getting better. My biggest money waster was NOT keeping up with the checking account and then incurring overdraft fees (this was over 10 years ago). I ran across my old bank statements a few months ago and realized that I paid over $$1,800 in 14 months in overdrafts!
Man I was an idiot.
Very practical tips indeed. In this critical times where money is scarce, we need to know whether we are actually saving or losing money on things that we do. Thanks for this nice advice.
Great tips, they all should be known but its surprising how many people don’t think about it. I’ll be violating the back alley bar rule in about 6 hrs.
I actually use my credit card to earn money thses days.
Buying a car that’s a few years old is always a good move. You don’t get the COOLEST new car, but you do avoid the initial depreciation hit.
@craig @zach
I totally agree with your car stories.
In 2004 I bought a gently used car with a warranty. It did well until 2008 when an engine part failed and caused the engine to seize. The car needed a new engine but the warranty wouldn’t cover it because it didn’t cover this one little insignificant part. Essentially the whole thing was null and void. If I’d been the original owner, however, the factory warranty would have covered the whole thing.
So I bought a new car with the same company so that I can get the full backing of that warranty. Like you Zach, I’m gonna drive it until it’s dead. So even though I lost value on a new car, I bought the base model (no power anything) with a stick shift. I feel I got a pretty reliable car. I financed through my credit union at an impressively low rate.
I think the problem with new cars is that everyone gets excited by the shiny new things in showrooms and they get pushed around by salesmen. I had to fight hard to get what I wanted. Believe me, they didn’t want to sell me the base model.
I agree with some of the guys here. There’s really nothing new here. BUT WE KEEP ON DOING IT! try something new. This time, why not follow the tips?
Of course this isn’t anything new. Fact is, we’re unlikely to see any astonishing breakthroughs in the field of personal finance any time soon, especially when it comes to saving. But that doesn’t mean that these tips aren’t helpful, if for no other reason than they serve as reminders for those of us who are already savings-conscious. Like IM says, many of us keep on making the same mistakes. We get lazy, we get too busy, or we become forgetful, and we miss easy opportunities to save money. Lists like these help wake us up a little bit and encourage us to become proactive in the savings process.
@Zach
Amen! Very true.
In response to #9:
When I went hunting for my first apartment, I checked for the number of electrical outlets which were routed to the switches in the apartment. The reason I chose my current apartment was because all but one outlet in each room was connected to a switch. This helps because I can connect all my appliances and electronics to these outlets and flip the switch off before leaving for work, going to bed, and going out of town so I do not use electricity. I also program my thermostat to only operate during the hours I am home and awake.
The previous tennants averaged a electricity bill of $110 for 12 months. My current average over the past 8 months is $38. My lowest bill to date was $17.79.
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