It is possible to spend too much, despite most people trying to avoid debt. However, there are many common money-wasters that lurk in the shadows and want to steal your money. Let's get rid of these money-swindlers.
Do not be discouraged if this list is checked. The average American is estimated to have wasted approximately $18,000 each year. It's a great opportunity to review your expenses and find out where you might be spending too much.
1. Bank Fees
Even small fees such as withdrawal fees from out-of-network ATMs, or maintenance charges for a checking account can add up over time. According to a Bankrate survey the average monthly fee for a non-interest checking account, which excludes free checking accounts, was just over $5. For those who didn't qualify for waivers, interest-bearing checking accounts were charged more than $16.
The answer is simple. Change banks.
Although it seems unlikely, Bankrate reports that almost half of all checking accounts do not charge monthly fees. You will likely pay more in interest than fees if you cannot avoid monthly fees with your current Bank.
2. Late Fees
Late charges on credit cards can range from $15 to $35. Ouch. Late payments on rent, utilities, mortgages, and mortgages can result in fees. You will be charged for late payments on mortgages, utilities, and rent.
Not only will it cost you money but it can also damage your credit. However, most lenders won't report late payments until they have been made within 30 days. Late payments can lead to credit card penalties and APRs that can significantly increase your interest rate.
If you are having trouble paying your bills on time, setting up autopay will allow you to pay the minimum amount by the due date. Mint and other apps can remind you of when your bills are due. You can also use your trusted calendar to alert you about upcoming payments.
Another thing. If you have made an error in paying the bill late, your credit score may be waived. Most companies will not penalize you if you make one mistake and are good at paying on time.
3. Insurance You Don’t Need
"This is a common mistake because people often believe that more insurance is better," Leslie Tayne of Tayne Law Group, a debt-relief lawyer. "But some forms of insurance are not necessary and can cause you to overspend.
Tayne claims these insurance products are wasteful
Identity theft Insurance is available for credit cards that include fraud protection. This applies to most credit cards, including the Citi(r), Double Cash Card.
- Children's insurance is designed for children who have little to no assets. The cash value component of a child's insurance policy is often referred to as a savings component. This can be used to pay down a house or go to college. However, the fees are more expensive than the returns so it's better for parents to put their money elsewhere. In an emergency, it is better to set up a 529 savings account or to fund your child's expenses.
- Rental car insurance can be purchased if your existing car insurance covers rental cars.
- Collision insurance for older, low-value cars. Your deductible and damage may determine whether collision coverage is necessary.
- Your credit card will provide travel insurance if you book your trip on that card. To find out if your card covers trip cancellations or lost luggage, contact your card issuers such as Chase Sapphire Reserve(r) and Chase Sapphire Preferred(r).
4. Ghost Subscriptions
Subscriptions can be obtained online, so it is easy to get one. It is also easy to forget about canceling subscriptions. Chase actually found that almost two-thirds (or more) of respondents forgot to cancel at least one recurring payment in an April 2021 survey.
Automatic payments, which can include utility bills, are convenient and avoid late fees. But, they can end up costing you a lot in the long term.
For example, a subscription to investment-information service Morningstar runs $34.95 monthly and $249 annually. If you are not active, it should be easy to keep that subscription.
You should cancel any unutilized subscription immediately. You don't want to be hit with an expensive auto-renew.
Trim or Truebill can make this easier. These tools can monitor your bank statement or credit card statement to determine which subscriptions could be cut.
5. Interest in Credit Cards
According to the Consumer Financial Protection Bureau Americans spend an average of $1,000 annually on high-interest credit card fees and debt. Credit cards can have many benefits, including increasing your credit score as well as earning cashback and discounts. Even though this is true, carrying a balance can cause financial strain.
Also, if you're in debt, pay down the existing balance first and then put your cards on hold. Make sure you can pay the full amount before you make any purchase. If you are unable to pay the full amount, don't buy concert tickets worth $150.
6. Energy Vampires
Duke Energy explains that an energy vampire is a device that uses energy even when it's turned off. They are everywhere in your home, including cable boxes, phone chargers, and coffee makers. These phantom energy suckers account for 20% of your monthly electricity bills.
Energy vampires are "bricks" or "wall warts".
- Wall warts are devices with a large plug (e.g., cellphone chargers) Even when it is not being used, it still consumes energy.
- The brick is a small, black box that can be found on televisions and cable TV equipment cables. If left plugged in, these bricks will continue to consume energy.
How do you stop energy vampires? You can unplug devices you don't use very often. Another option is to plug bricks and wall warts into power strips and turn them off when they are not in use.
7. You Should not Adjust Your Thermostat
You want your home to be comfortable. But, is it really necessary for your home to be 72 degrees during your absence?
You can save as much as 10% per year by simply changing your thermostat from its default setting to 7-10 degrees for 8 hours each day. A programmable thermostat can set the house to heat or cool it to your preference before you arrive home. You can avoid ghost readings, which are unnecessarily high and low temperatures. The thermostat should be mounted on an interior wall, away from sunlight, drafts, windows, and other direct light sources.
8. Plumbing Problems
Toilets and faucets that leak can cause you to be awake at night, as well as a loss of money. A bathroom faucet that drips 10 drops per minute is an example. According to the U.S. Geological Survey's drip calculator, three leaking faucets would dribble 43,200 gallons per day at this rate. This is a lot of water, even though water is quite cheap. 1 042 gallons of water would typically cost around $1.50.
However, running toilets can drain a lot of water.
Leaky toilets can waste 200 gallons of water each day in the average household. This is approximately 6,000 gallons per year or $108. A leaky toilet repair costs an average of $18.55 per toilet. Prices can range from $17.36 to $19.75. The flip side is that labor and materials cost $223.63 for a toilet. Prices range from $202.77 up to $244.49.
9. Food Waste
The Natural Resources Defense Council states that 40% of American food is never eaten. Sometimes this happens. There are always bad apples in our lives that should be thrown out. You can reduce food waste with the help of the Food and Agriculture Organization of the United Nations.
Only buy what you really need. Prepare your meals ahead of time. You should also make sure you follow your grocery list to avoid impulse buying.
- Avoid eating unattractive fruits and vegetables. Fruits and vegetables with unusual shapes or bruises are often thrown away because they don't conform to arbitrary aesthetic standards. They still taste the same.
- You should store food in a smart way. You should arrange your fridge or cupboard so that old products are at the top and newer ones at the bottom. To prevent insects from entering, make sure that open food is kept in sealed containers and in closed packets in your fridge.
- Love your leftovers. If you don't want to eat every meal you make, you can freeze leftovers and use them in another dish.
- Start small. Take small portions to restaurants and share large meals at home.
10. Unclaimed 401(k) Matches
Contributing to a 401_ or similar employer-sponsored retirement program can increase your nest egg's value, according to FINRA. If you make $40,000 and contribute $1200 each year to your 401k, you're 30 years old and you contribute 3 percent to your 401k. Let's say you have the same salary as before and make the same contributions each year until you reach 65. Your 401(k), after 35 years, will have brought you $42,000.
Imagine what it would look like if your employer offered you an employee match. The match can be dollar-for-dollar, up to 3 percent of an employee's salary. Even if you don't increase your investment value, you will still have $84,000 when you retire. This is double the savings amount. You can contribute 100 percent more for free.
A 2015 study showed that one-fourth of employees do not invest enough in their 401(k),s in order to receive a full employer match. The match was not earned by employees who wasted $1,336 of their own funds.
You will not have financial security in the long term if you miss out on this money. To get the maximum employer match, talk to your accounting or human resources department.
11. Mutual Fund Fees
An expense ratio (or percentage) represents the total amount you have invested in mutual funds. This is explained NextAdvisor. They typically range between.5% and 1.5% for actively managed funds. For passively managed funds they range from.2% up to.4%. Any fee exceeding 1% should be avoided.
For every $1,000 you invest, a mutual fund with an 11% expense ratio will cost $10. It is small, but it adds up over the long term.
Experts recommend that fees not exceed.2%. Anything more than 1% could eat into long-term investment returns. Fees of more than 1.5% and even 2% are too high. Experts recommend passively managed funds because they have low fees. Many of them charge less than.2%.
12. Use Coupon or Discount Code Not Available
Rebecca Gramuglia from TopCashback, a consumer expert said that one of the most common ways people waste money on their purchases is to pay full price rather than looking for discounts or ways of lowering the price before they purchase. You could be spending more than you need, which could result in extra money being saved or used for other purchases.
13. Extended Warranties
An extended warranty is available on almost everything, from TVs and appliances to cars. Although you might think that purchasing an extended warranty is financially responsible, it is usually not worth the cost.
Extended warranties generally do not cover the most common issues in their fine print. Manufacturers also offer free coverage in their warranty plans. The FTC warns that extended warranties are not worth the effort.
Is there a better alternative? You might save money on repairs and replacements if your possessions fail.
14. Gas Hogs
Be honest. Is your vehicle really in need of premium gas? Unless your car manufacturer tells you otherwise, it's unlikely. Major gasoline brands use additives to keep your engine running smoothly. So, a few gallons of premium gas won't be enough. Premium gas is required for certain vehicles because of turbochargers or high-compression engines.
Other ways to save money and fuel
- Check that your tires are properly inflated. To improve your gas mileage up to 3 percent, make sure that your tires are properly inflated
- You can take it easy with the brakes and gas. According to the Department of Energy, gas mileage drops rapidly if you drive faster than 50 mph. This will cost you $0.23 per gallon.
- Get your engine tuned. According to the U.S. Department of Energy, fixing a serious problem like a damaged oxygen sensor can increase your mileage up to 40%.
15. Unclaimed tax deductions
According to IRS data, 20% of taxpayers are eligible for earned income tax credits, but they fail to claim them.
Other tax credits are also not claimed. Taxpayers make many tax errors, including not choosing the correct filing status and not itemizing deductions.
Online tax programs can help you find the deductions and credits you are eligible for. Hiring a professional tax advisor may be a good idea for complex tax situations such as when you are itemizing your taxes or starting a new business.