Everyone has weak spots in their spending, places where our money seems to disappear before our very eyes. Most people have no idea this is going on and are not aware of exactly how much money is getting sunk into these bottomless pits.
I won’t say you need to get rid of every single one of the things on this list but you should at least be aware of them and make your own choice on whether you can live without it or not.
#1. New Things / Upgrades
How much money do we spend every year upgrading to the latest gadget or toy?
Cell phones are a big one, this can cost you around $800-$1000 every year, and if you are buying for your family that could be around $4000 a year. A significant fraction of an average american worker’s salary gone in an afternoon.
I don’t think I need to tell you how bad of a financial decision this is.
Same goes for new clothes, these a things that degrade, if you must spend money on it for a job or an occasion, make sure to at least get it on sale. There are plenty of stores online that sell great deals on clothing. I’d avoid malls and large shopping centers in the middle of town, their prices are usually sky high.
#2. Going Out To Eat All The Time
It blows my mind that so many people love to eat out for almost all their meals, the money used for one night out could be used for a week of groceries.
This extends to buying a daily coffee, if you buy one everyday at (let’s be generous) $3 dollars a day, multiply that by 365 days in a year and that’s $1095, so for the price of a cell phone upgrade, you are getting coffee everyday. This isn’t counting a larger size, or snacks that you may get along with it.
Maybe this doesn’t sound so bad but realize that this is how much you could be saving a year just by making your own coffee at home.
#3. Brand New Cars
Buying a brand new car instead of a pre-owned car is one of the worst financial decisions you will ever make.
And not many people know this, but the more expensive your car is, the quicker it loses it’s value. The reason for this is that luxury cars have very expensive parts and as the car gets older, it will need more frequent repairs.
If you get an older, more reliable car like a Honda or a Toyota they retain their value longer because everyone knows they last forever.
Another benefit of getting a pre-owned economical car, is that since they are more common, the parts are cheaper and easier to find. Making the repairs less stressful on your wallet!
Avoid luxury cars unless, you are an aficionado who genuinely loves cars or a CEO who doesn’t need extra money. If you are just getting a Cadillac as a fashion statement, enjoy your costly repairs, I hope impressing strangers on the street is worth it.
#4. Avoidable Penalty Fees
One of sneaky ways the rich make extra money and keep the poor people poor, is through penalty fees.
A common one is an overdraft fee from the bank, before I got my own account, I saw how it stressed my mom out every month because she would buy things not knowing she didn’t have enough money in the bank and she would get a 35 dollar penalty just going over her balance by amounts as low as a dollar.
As soon as I applied for my own bank account, I made sure to select “no overdraft protection,” it’s really scummy how they make it seem like they are protecting you when really, it’s just a way to squeeze a significant amount of money out of you.
I’ve heard someone say “You don’t need to pay for the privilege of spending more money than you have.” And when they put it like that, it makes the whole concept of overdraft fees absolutely idiotic.
All you have to do is check on your bank amount whenever you feel like you are running low and avoid making big purchases when you are.
Gambling is quite an unusual addiction, and is super prevalent in our society. Even in our vocabulary we use phrases like “making a bet,” “against all odds,” “the luck of the draw,” and “hitting the jackpot.”
When someone wins a prize after gambling it is seen as a glorious thing, instead a dumb decision that just happened to work out. Study after study has shown that in the long run, you will absolutely lose money gambling unless there is a significant amount of skill involved like in poker.
So it feels good to buy a lottery ticket and spin the roulette wheel, but there are other ways to feel a thrill besides betting money on it. If you want to believe you could be a millionaire, then stop buying lottery tickets to dream and work for it.
“Stop using your wishbone and start using your backbone.”
Gambling is a toxic addiction, and even though it is socially acceptable, you must avoid it at all costs.
Originally published at https://forgefinancialfreedom.com on November 11, 2019.