Big Money Wasters

Show Notes

Forget to cancel a subscription or fail to get gas where it’s cheaper and you’re out a few bucks. But don’t pay attention to some big money wasters and your finances can really take a hit. We’ll talk about them today on MoneyWise. We’re going to tell you some ways you can waste a lot of money. Of course, the idea is that if you know about them, you won’t do them.

• The Wall Street Journal did a survey of several personal finance experts, authors, and even a Nobel Prize winning economist to find out what they considered big money wasters.
• The first one they named is something they called “compensatory purchases.” That’s a fancy name for “keeping up with the Joneses.” And it’s anything you spend money on to make other people think you’re successful. But in reality, you’re doing it because you don’t feel successful.
• Compensatory purchases would include luxury goods and high end clothing with visible logos to indicate you have money and status. But the experts pointed out that these can include small-ticket items purchased over and over like designer coffee.
• Another big ticket money waster is buying too much house. One of the experts explained that peoples’ thinking about big houses hasn’t caught up with technology that enables us to live comfortably with less space.
• Take large, elaborate kitchens for example. Readily available prepared foods have made them obsolete. But what the experts didn’t say is that pre-packaged food items can also be a money waster.
• Another example of buying too much house is having a rarely used room, an extra bedroom that sits empty most of the time, or the workshop in the basement gathering dust. Or space for bookshelves when we have e-books that take up no space at all … although maybe it’s not as much fun to curl up with a Kindle.
• For one expert, a big money waster was buying a new car, at least for many people … and especially if you’re just trying to impress someone. You’ll have to work two to three months just to make the payments and insurance. A better option for many people is a dependable late-model vehicle with low mileage.
• If you simply must have that “new car smell,” you can now buy it in a can and make any car smell brand new for around 10 bucks.
• But we always point out that buying a new car is fine if you can afford it and plan to keep it for many years. It’s especially fine if you can buy it with cash. As we like to say, if no one bought new cars, we soon wouldn’t have any cars at all.
• Of course, with today’s high interest rates and sky high car prices, it’s more important than ever to buy a car for practical reasons, like affordable, dependable transportation.
• Okay, the next money waster is a touchy one for many parents. It’s spending money on adult children for things they should be paying for … like keeping them on your car insurance or cell phone plan. If you no longer need a family plan and an individual one is cheaper, you’re just wasting money.
• The experts also mentioned over-scheduling younger children with too many expensive activities. Better to have the kids focus on one or maybe two things they really enjoy because the cost of extracurricular activities and transportation to them continues to rise.
• Some of you may be old enough to remember playing “sandlot” baseball or football with the neighbor kids when you were young. And while that sort of thing still happens, for the most part we live in an age of organized sporting activities — a lot of them — so choose carefully.
• And speaking of physical stuff, you want to avoid getting a gym membership unless you’re absolutely sure you’ll use it. Otherwise it’s just another money waster. Having an unused gym membership has been described as “the failure to recognize future laziness.”
• Another money waster? Unplanned trips to the grocery store. That’s when you go in thinking you just need to grab one item but you end up spending $100.
• Also mentioned were pre-packaged sugary snacks that could easily be replaced with something less expensive like an apple, better for your wallet, and your waistline will thank you.

• If you buy a second house, can you recast your mortgage?
• How can you dig out of debt on a limited income with a special needs child?
• How do you determine what to do with a home passed on from a deceased parent?
• Is bankruptcy an acceptable option for a Christian?

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