20 Ways to Waste Your Money

by Erin Burt
Thursday, July 23, 2009provided by
Whether
a newbie or seasoned budgeter, nearly everyone has spending holes --
leaks in your budget that drain money with you hardly noticing.These
small drips can add up to big bucks. Once you find the holes and plug
them, you'll keep more money in your pocket. That spare cash could be
the ticket to finally being able to save, invest, or break your cycle
of living paycheck to paycheck.Here are 20 common ways people waste money. See if any of these sound familiar, and then look for ways to plug your own leaks.
How to waste your money

1. Buy new instead of used.
Talk about a spending leak -- or, rather, a gush. Cars lose most of
their value in the first few years, meaning thousands of dollars down
the drain. However, recent used models -- those that are less than five
years old -- can be a real value because you get a car that's still in
fine working order for a fraction of the new-car price. And you'll pay
less in collision insurance and taxes, too.Cars aren't the only
things worth buying used. Consider the savings on pre-owned books,
toys, exercise equipment and furniture. (Of course, there are some
things you're better off buying new, including mattresses, laptops,
linens, shoes and safety equipment, such as car seats and bike helmets.)2. Carry a credit-card balance.
If you have a $1,000 balance on a card charging 18%, you blow $180
every year on interest. That's money you could certainly put to better
use elsewhere. Get in the habit of paying off your balance in full each
month.
3. Buy on impulse.
When you buy before you think, you don't give yourself time to shop
around for the best price. Resist the urge to make an impulse purchase
by giving yourself a cool-off period. Go home and sleep on the
decision. If you still want to make the purchase a day or so later, do
your comparison shopping, check your budget and go for it. Oftentimes,
though, I bet you'll decide you don't need the item after all.4. Pay to use an ATM.
A buck or two here and there may not seem like a big deal. But if
you're frequenting ATMs outside your bank's network, the surcharges can
add up quickly. Put that money back in your pocket by using ATMs in a
surcharge-free network such as Allpoint or Money Pass.5. Dine out frequently.
A habit of spending $10, $20, $30 per person for dinner can be a huge
drain on your wallet. Throw in a $6 sandwich for lunch and a $4 latte
in the morning, and you've got quite a leak. Learn to cook, pack your
lunch and brew your coffee at home and you could save a couple hundred
bucks each month.6. Let your money wallow. If
you are stashing your savings in your checking account or a traditional
bank account, you are wasting money. You could put it in a
high-interest online savings account and get paid to save. You can even
get an interest-bearing checking account through such reputable
companies as Everbank, Charles Schwab, E*Trade and ING Direct.7. Pay an upfront fee for a mutual fund.
Selecting no-load funds can save you more than 5% in sales charges. Of
course, no matter how well a fund has done in the past, you can't be
sure how it will perform in the future. But if you pay a load, you'll
begin the performance derby in the hole to the tune of the load. See
the Kiplinger 25 for our favorite no-load funds.8. Pay too much in taxes on investments. Are you investing in a tax-sheltered 401(k) or Roth IRA? If you're not maxing out those accounts before you invest in a taxable account, you're spending too much.9. Buy brand-name instead of generic.
From groceries to clothing to prescription drugs, you could save money
by choosing the off-brand over the fancy label. And in many cases, you
won't sacrifice much in quality. Clever advertising and fancy packaging
don't make brand-name products better than lesser-known brands (see
Similar Products, Different Prices).10. Waste electricity.
Of the total energy used to run home electronics, 40% is consumed when
the appliances are turned off. Appliances with a clock or that operate
by remote are typical culprits. The obvious way to pull the plug on
your energy vampires is to do just that -- pull the plug. Or buy a
device to do it for you, such as a Smart Power Strip ($31 to $44 at
www.smarthomeusa.com, which will stop drawing electricity when the
gadgets are turned off and pay for itself within a few months.11. Pay banking fees.
Overdraw your checking account and you'll pay $20 to $30 a pop, so it
pays to keep tabs on your balance. Plus, are you still paying for a
checking account? Free deals abound -- but make sure they're really
free. For instance, will the bank charge a fee if your balance drops
below a certain level or if you download your info into a
personal-finance software program? That's not free.12. Buy things you don't use.
This sounds like a no-brainer to avoid, but how many times have you
seen something on sale and thought you couldn't pass it up? Even if
something is 50% off, you're spending too much if you don't use it.
href=Couponing, for instance, can be a great way to save on your
grocery bills. But if you buy things you wouldn't have purchased in the
first place simply for the sake of using the coupon, you're wasting
your money. The same goes for buying in bulk. A bargain is no bargain
if it sits unused on your shelf or gets thrown away.13. Own an extra car.
Okay, so a car is a necessity for most people. But face it -- cars are
a huge drain, from their loan payments to insurance fees to gas and
maintenance costs. Own more than one car and you'll double or triple
those expenses. Ask yourself if that second or third car is really
necessary. Are you holding on to an old car for sentimental reasons?
Can you or your spouse carpool, take public transportation or bike to
work?14. Ignore your local dollar store.
Shopping at the dollar store can be hit-and-miss, but it's not all
kitsch or junk. If you know what to buy, you can find some real
bargains. For instance, my local dollar store charges 50 cents for
greeting cards versus the $3-plus at a drug store or gift shop. (I have
a big extended family so I figure this saves me more than $100 per
year.) You can also score a deal on cleaning supplies, small kitchen
tools, shampoos and soaps, holiday decorations, gift wrap and balloon
bouquets.15. Keep unhealthy habits. Smoking is
not only bad for your health, it burns up your cash. A pack-a-day habit
at $6 a pack costs $180 a month and $2,190 a year. A junk-food or
tanning-bed habit can be costly as well. Not to mention the money
you'll waste on medical bills down the road.16. Be complacent about insurance.
Your bill arrives and you pay it without a second thought. When was the
last time you shopped around to determine whether you're getting the
best deal? Rates vary widely from insurer to insurer and year to year.
Reshopping your auto, home or renters insurance might save you hundreds
of dollars.It also pays to evaluate your insurance needs. For
instance, upping your out-of-pocket deductible from $250 to $1,000 can
save you 15% or more on your car insurance. Consider using the same
insurer for your home and auto insurance -- you could snag up to 15%
off for a multiple-line policy. And make sure you're not paying for
insurance you don't need. For instance, you need life insurance only if
someone is financially dependent upon you (such as a child).17. Give Uncle Sam an interest-free loan.
If you get a tax refund each April, you let the government take too
much money in taxes from your paycheck all year long. Get that money
back in your pocket -- and put it to work for you -- by adjusting your
tax withholding. With a little discipline, you can use that extra cash
each month to get started saving or pay down debt (or make ends meet to
avoid going into debt in the first place). You can file a new Form W-4
with your employer at any time.18. Pay for something you can get for free.
Dust off your library card and check out books, music and movies for
free (or dirt-cheap). Don't pay to receive your credit report when
you're allowed to get it at no charge by law. Take advantage of
kids-eat-free promotions. And dial 1-800-FREE-411 for free directory assistance.19. Don't use a flexible-spending account.
Your employer may allow you to set aside pretax dollars to pay for
medical costs not covered by insurance. You can use the money for
expenses such as therapy, contact lenses, insurance co-payments and
over-the-counter drugs. You may be able to do the same for child-care
costs.20. Pay for unnecessary services. How
many cable channels can a person watch? Do you really need all those
extra features for your cell phone? Are you getting your money's worth
out of that gym membership? Are you taking full advantage of your
subscriptions (such as Netflix, TiVo or magazines)? Take a look at what
you're paying for and what your family is actually using. Trim
accordingly.
Copyrighted, Kiplinger Washington Editors, Inc.

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