Tag Archives: spending

5 Crazy Ways People Waste Money

Posted by on in Money • 18 Comments

In the world of personal finance blogs, we spend most of our time trying to share ways to better invest or save money. It’s a worthwhile pursuit, and can make us so focused on saving every dollar, quarter, and penny that comes our way that we start to take wise saving – and wise spending – habits for granted.

And then there are those people who act as if money really grows on trees.

I’m always baffled when I hear these stories, whether I stumble across them on the news, another personal finance blog, or hear them directly from a friend. They’re always good for a laugh; hopefully, you’ll get a chuckle out of a few of these… that is, if you’re not guilty of them yourself.

1. Getting an oil change every 3,000 miles. Have you ever checked your vehicle’s owner’s manual? If you’re still following the advice of the folks at Jiffy Lube and changing your oil every 3,000 miles, I’m guessing the answer is no. Most vehicles only require an only change every 5,000 to 7,500 miles; some go as high as every 10,000 miles. Oil changes are a necessary expense, but at $25-$30 for each oil change, why double or even triple your costs by following the repair shop’s directives and not your vehicle manufacturer’s?

2. Buying brand name medications. Most name brand medications have a generic substitute; and most insurance plans reward you for making the switch. On our plan, a generic prescription costs as little as $5 a month, compared to $45 for a 30-day supply of the equivalent name brand pill. While it’s true that some name brand medications work better than the generic in some people, by and large, your health won’t suffer any negative consequences from asking your doctor to write you a prescription for the cheaper generic.

3. Not checking your receipts, invoices, bills, and statements. Every month, I review my transactions online. Why? Because my financial life does depend on it. Sometimes, companies make honest mistakes and accidentally bill you more; other times, they’re actively fleecing you, like AT&T has done to me countless times. Whether it’s a grocery store receipt or a bill at your vacation hotel, check it line by line as soon as possible, and report any errors immediately to a customer service representative.

4. Paying for things you’ll never use. A friend’s mother recently paid $110 to get a new passport book…which would be fine, except the woman has a fear of flying and hasn’t boarded a plane in 30 years. She could have saved herself $80 and purchased a passport card for $30 instead, which she could use when she drives to Mexico, or Canada, or takes a cruise to the Caribbean. But it’s not just passports; people pay huge amounts of money for huge data plans for their smartphones, then use next to nothing. My rule? If you don’t use it, then lose it.

5. Buying what you could get for free. One of the hottest gifts of the 2012 holiday season were tablet computers, like the Kindle Fire, the Barnes & Noble Nook, and Apple’s iPad. All these products let you download music, videos, books, magazines, and more, but at a cost. The thing is, most large, urban libraries contain all this and more, and it’s absolutely free. Sure, it may lack the convenience or novelty of an iPad, but why spend hundreds of dollars on a tablet, apps, and media materials you could get at the library for the price of a gallon of gas?

What crazy ways do you and those you know waste money?

Learning To Spend Money

Posted by on in Money • 12 Comments

It’s a funny thing about money. Some of us have no problem spending every penny we earn, while others have strict rules about how they spend and save money.

In the world of personal finance, I’ve come across a lot of bloggers (and even more “commenters,” individuals without a website who comment on personal finance posts) who are amazing at saving money. They are great at budgeting, they keep track of every dollar, where it goes, how it’s invested. They build up huge emergency funds – which, by and large, they never have to use – and many of them contribute the maximum amounts to their tax-exempt retirement accounts. They pay down debt while refusing to take on new debt. In short, they lead exemplary lives from a financial point of view.

Except for one thing: they don’t know how to spend money.

And this is a problem.

This isn’t a problem unique to personal finance bloggers and those who read these sites. It’s a pretty universal problem, as illustrated by an old Fidelity commercial that shows a husband and wife following that ubiquitous green line as they learn how to spend money in their retirement years. We spend years learning how to save money, invest money, budget money – but, except for the spendthrifts among us – do we ever really get comfortable spending it?

I’ll admit, sometimes I have issues here too.

For example, my wife Lauren and I are finally taking our honeymoon this month. Back in September, when I asked you how much we should spend on this trip, we’d already started saving for it. In fact, by the time we arrive, we’ll already have enough money to pay for it in full. But, despite our solid budgeting, despite the fact that we’ve earmarked this money for this specific purpose from the very first penny, it’s still hard to actually hand over the cash – or check, or credit card, etc.

Here’s another example: a friend of mine has been saving up for a new car for literally years. Each month, he funnels a portion of his paycheck into his designated “new car” account. He’s almost reached his goal…and yet, now he’s starting to waffle. He’s making excuses (“I don’t really need a new car; my old clunker gets me where I need to go” – this is a fallacy, as his car has more starts and stops than Lindsay Lohan’s movie career), trying to come up with a reason – any reason – why maybe he shouldn’t spend the money on something he not only needs but wants. It’s not that he’s suddenly decided he doesn’t want that new car; rather, he’s getting gun shy about pulling the trigger on such a big purchase.

I can understand that; I can sympathize with that. I know that it can be almost painful to spend money, even if you’ve spent a lot of time budgeting to spend it for exactly that purpose.

But here’s the thing – if you’re going to make the effort to save all that money, shouldn’t you at least feel good about spending it? Shouldn’t you bask in that sense of accomplishment (“I saved for X, and I reached my goal!”) instead of feeling guilty as you make the big purchase?

Do you ever feel guilty making a purchase, even if you’ve budgeted to spend that money in a specific way?

5 Things We Need To Buy, But Hate To Spend Money On

Posted by on in Spending • 17 Comments

In life, there are needs, and then there are wants. I need to pay my rent, my utilities, and buy food; and while you might debate what constitutes wants vs. needs, I could survive without spending money on my iPhone (and the accompanying data plan), a gym membership, and dinners out.

In life, there are things that just about everyone spends money on, whether we like to or not. These are the types of expenditures many of us forget about or even resent. Here are things I consider to be the worst offenders on this “need to buy” list (whether I currently need them or not).

1. Tires

If you own a car, then at some point you’re going to have to replace your old tires. Even the cheapest tires for a small sedan cost around $50 each – then you have to pay for installation and disposal of your own tires. Buying these low-grade tires – with a lifespan of maybe 20,000 miles – will virtually ensure that you’ll need to buy them again sooner rather than later. Suck it up and get a good pair of tires and you won’t have to worry about them again for awhile.

2. Insurance

Car insurance is a must, and you don’t want to get in an accident and suddenly owe thousands of dollars because you didn’t get full coverage, so I don’t suggesting getting just the minimum.

You don’t really need to buy life insurance if you’re single; even if you’re married, it’s not a necessity. But once you start a family, having a life insurance policy moves squarely into the “needs” category. What’s worse than spending hundreds of dollars a year to insure your own life, knowing that in order to cash in on the policy you’d have to die? Talk about a buzz kill…

3. Passport

Admittedly, you don’t have to travel outside the United States. But if you do, you must secure a passport from the U.S. State Department before you go. The fees for this document are rather astounding. First-time applicants who need a passport book and card must pay a $140 application fee and a $25 execution fee, a grand total of $165. Then, you’ll have to pay another $140 in fees to renew your passport every ten years, whether you used it during that time or not, whether you changed your name (like through marriage or divorce) or not, whether you changed your address or not.

4. Expensive Drinks at a Bar

I don’t go out nearly as much as I used to, but that doesn’t mean I’m able to avoid every happy hour or birthday party that takes place at a bar. And while I don’t mind spending $10 for a 6 pack to bring to a friend’s house when we watch a game, the thought of dropping $10-$15 on a single drink at a bar makes me cry a little on the inside.

I’m not going to be the cheap person who holds out (or brings a flask to a bar), so I pony up and sip that beer so it lasts just a little longer so I don’t end up getting too many of them. But looking at the menu will always make me cringe. Maybe the best idea is to order blindly and not look at the final bill?

5. Gas

I drive about 15 miles each way to work. I end up filling up my tank about 3 times a month, that’s another $130-$150 a month that I need to spend. It’s a bad feeling paying $45-$50 and putting something in my car that I know is so temporary. This one definitely feels like wasted money, but it’s absolutely a necessity. Without it, I’d be going on a grueling bike ride for about 4 hours a day. Not a realistic option at all.

Reader, what things do you hate to buy, even if you “need” to?