20 Money Suckers Draining You of Cash Right Now
Dear Rich Lifer,
The U.S. Bureau of Labor Statistics most recent consumer expenditure survey found that the biggest three expenses retirees should budget for are:
To be honest, I was a little surprised to see transportation take second place.
The BLS survey claims the average annual cost of transportation for households aged 55-64: $9,321 and 65-74: $8,338.
If your mind goes where mine does, you’re probably wondering how can that be?
If you’re retired, you’ve likely paid off your car loans and no longer commute to work every day.
Transportation should be a negligible cost… Turns out, it’s not for a lot folks.
Every year, you pay for gas, insurance, repairs and maintenance. And the older your car gets, the more it starts costing you.
Your car is one example of a “money suck” costing you hard-earned dollars. Here are 19 others to watch out for.
Money Suck #1 – Driving an Old Car
According to Junkacar.com, the average annual maintenance cost of a vehicle 7 years old is $1,000. This number skyrockets to $2,000 when you reach the 12-15 year mark.
While you might think you’re saving yourself money by driving your old junker into the ground, the truth is you’re likely wasting a lot of money every year.
Money Suck #2 – Trading In Your Car Before It’s Paid Off
On the other hand, if you decide to get a new car and you still haven’t paid off your old one, be careful rolling over what you owe.
A lot of times when you roll over what you owe, you end up paying more than what the new car is worth. Make sure you calculate the true cost of making the switch.
Money Suck #3 – Doing Your Own Taxes
Tax professionals live and breathe lengthy tax codes, and will find deductions and tax exemptions you have no idea exist.
While tax software may be able to take these into account, you still need to know what you can legally deduct before entering it.
Most tax accountants charge between $150-$250 for tax preparation. This is a small annual investment that will save you thousands over the years. Plus, tax preparation fees are tax deductible the following year.
Money Suck #4 – Buying Cheap Clothes/Jewelry
Buy cheap, pay twice. I like that saying.
High-end designer clothing is pricey and I don’t recommend you waste your money on it. But you shouldn’t buy cheap, fast fashion either.
Buy clothes that’s moderate-to-expensive. Clothing in this category costs a bit more because of the quality of materials and manufacturing but you won’t have to replace it as often.
The same rules apply for jewelry.
Money Suck #5 – Parking Tickets
The average cost of a parking ticket now is between $10-$50, depending on which city you live in. Compare that to 25 cents for parking and it’s a no brainer. Don’t get caught being cheap.
Money Suck #6 – BOGO Free Deals
Buy One Get One Free deals are everywhere. The problem is they’re never in the stores you’d want them to be. For instance, if toothpaste was BOGO free, that’d be a good deal.
However, most BOGO sales happen in stores you frequent less. Stick to buying what you need and don’t get sucked into buying more than you need because of a sale.
Money Suck #7 – Buying Food in Bulk
This might seem like I’m contradicting myself, but the trick here is limiting your bulk orders to non-perishable items only.
Avoid buying perishables in bulk unless you’re positive you’ll use them up before they spoil.
Think: large bags of oranges on sale at your local supermarket. The price is tempting but you know after a week, half the bag will spoil if you don’t eat them.
Money Suck #8 – Keeping Your Money in a Savings Account
There’s a surprising number of Americans who choose to keep their life savings solely in savings accounts.
The cost of doing so is that the average savings account yields an abominable 0.06 percent interest rate, which is much lower than the rate of inflation.
Instead, put your money to work for you by investing it. Don’t miss out on the opportunity cost.
Money Suck #9 – Buying Extended Warranties
Extended warranties seem reasonable at the time of purchase. You think, “I’m spending over $X on this…what’s another $19/month?”
Convincing yourself that extended warranties are worth the money is fear-based marketing working against you. Almost universally, extended warranties aren’t worth the money says Consumer Reports.
You’re better off putting aside the money you’d spend on an extended warranty to cover the cost of repair.
Money Suck #10 – Adding Products to Get Free Shipping
E-tailers have figured out sneaky tactics to get you to spend more online. Minimum shopping cart values to receive free shipping is one of the best.
It’s almost always better to pay for shipping or wait to place your order until you have another necessary purchase to bump up your order value.
Money Suck #11 – Paying Only the Minimum Balance
When you don’t pay off your credit card balance each month, you’re overpaying for the purchases on your card. So even if you got an amazing deal, you’re giving that money back.
You need to make a plan to start paying down credit card debt using the snowball method, avalanche method, or whatever winter-themed debt repayment method works for you.
Money Sucker #12 – Cable Television Packages
Americans spend more than $100 a month on cable TV packages. You can save yourself a significant amount of money every month by canceling cable and replacing it with streaming services and a digital antenna.
Subscribing to more than one streaming service, like Netflix, Hulu, and ESPN will still cost you less than a traditional cable TV package each month.
Money Sucker #13 – Unneeded Insurance
If you’re retired and your kids have all moved out of the house, you maybe should think of cancelling your life insurance policy, especially if your mortgage is paid off.
Don’t get stuck paying for things out of habit. If you’ve always budgeted for annual or monthly insurance payments, reassess these payments and decide whether you still need the insurance.
Money Sucker #14 – Unused Gym/Club Memberships
We’ve all done it. You sign up for a gym membership with the intention of going every week but you miss a few weeks, those weeks turn into months, and then you end up paying for a full year gym membership that goes unused.
There’s no point in paying for a gym or club membership if you don’t use it. If you haven’t used your membership in the last two months, cancel it. You can always sign up again when you’re more committed.
Money Sucker #15 – Two Phone Lines
If the only people calling you on your land line are telemarketers trying to sell you something, then it might be time to ditch the home phone altogether.
Nowadays most smartphone plans offer nationwide calling and text messages for free. You’ll save yourself $40-$50 a month by cancelling your home landline and only using your smartphone.
Money Sucker #16 – Cleaning Products for Every Job
Buying a different cleaning product for every room, surface, or appliance in your home will clean out your wallet, too.
The truth is most cleaning products are good marketing convincing you of problems that don’t exist. Your grandmother was right when she said good ol’ fashion baking soda and vinegar will clean everything.
This combination can clean your countertops, tubs, toilets, kitchen sinks, unclog drains and get rid of carpet stains. All for a fraction of the price of brand-name cleaners.
Money Sucker #17 – Professional Landscaping Services
If money is tight, you don’t need to have the most pristine lawn in the neighborhood.
Of course, your yard shouldn’t look like a mess, but with a little hard work, and a lot less money, you can have your lawn looking as good as the Joneses next door.
Try buying low-maintenance plants, use rocks and logs to add a decorative touch, or if you can afford it, mulch your beds to save time watering each week. Spring is a great time to save on home garden supplies at your local garden center.
Money Sucker #18 – Avoiding Energy-Saving Appliances
I know, I know. They don’t make fridges like they used to. But the trade off is you overpay in electricity every month by holding onto inefficient appliances.
The same goes for light bulbs and your thermostat. If you don’t have energy efficient lights installed in every room, begin changing your lights over as they start to die.
And, I can’t stress this enough, invest in a programmable thermostat and you’ll save yourself 5 to 10 percent on your annual heating bill.
Money Sucker #19 – Ditch Your Debit Card
Ditch your debit card and you’ll lower the chance of triggering courtesy overdraft protection fees. These kick in when you use a debit card and exceed your account balance.
Overdraft fees now average $32.74 per transaction, according to Bankrate. Find a good cash-back or points credit card and do all your shopping on it instead. Just make sure you pay the balance in full every month.
Money Sucker #20 – Eat Out Less By Cooking More
If you’re eating out more than three times a week, consider cutting back by cooking larger size meals so you have leftovers.
Also, what you cook matters. You can just as easily blow your budget by cooking expensive meals. Stick to staples like rice, potatoes, and pasta, and add smaller portions of meat and vegetables to keep costs down.
To a richer life,
The Rich Life Roadmap Team