What would it feel like to check your bank balance and find a pile of money you didn’t know you had? That could happen and it doesn’t have to involve getting a second job or convincing the family how much fun it would be to fast two days a week.
Stop wasting money on goods and services that don’t matter in the long run. You just might see the equivalent of working a second job in your wallet.
1. BUYING FROM A TV AD
Face it: Infomercial products are overpriced and hardly ever turn out to be as wonderful as depicted. And those risk-free trial periods? Don’t believe it. You’ll have to pay the return shipping costs plus a restocking fee, if you ever get around to it.
Plug the leak: Whenever tempted by an infomercial product, take a second to look up the item on eBay. You’ll be shocked to find dozens at a fraction of the price because that’s where they unload all the “as seen on TV” products that get returned. Ask yourself, why so many returns? By then the infomercial should be over and you can get on with your day.
How much you can save: How about two easy payments of $49.95? Plus shipping and handling. And the shipping charges to return it during the “free” trial period.
2. IMPULSIVE CRAFTING
Remember the beading supplies and tools you bought because you were sure you’d love the activity, but are now sitting in your basement? Or how about the entire scrapbooking outfit that seemed so perfect when you attended a home party? Did the albums even make it out of the bag? It’s way too easy for those of us who share the impulsive gene to make snap decisions.
Plug the leak: Instead of jumping in with both feet, sign up for a class to check out a new hobby. A few sessions will tell you how committed you are to the craft. And if you decide it’s a go, visit an auction website like eBay.com, Amazon.com auctions and Overstock.com auctions. You’ll be amazed by what you can find for sale by others who got a bit too anxious and bought the whole caboodle.
How much you can save: When you consider that enough yarn to knit a sweater can cost $75 or more, or that a beginning scrapbook kit costs about $115, looking before you leap could keep hundreds in your wallet.
3. INSISTING ON BRAND LOYALTY
Sure, we all have our brand favorites, but opting to pay double for things that don’t really matter adds up to one big waste of money.
Plug the leak: Opt for the store or generic brand whenever it makes absolutely no difference. Flour, sugar, salt, spices, milk, eggs, meat―all of these items must adhere to the same federal standards regardless of brand. Pain relievers like Advil and Aleve all have generic alternatives that share identical ingredients for half the price. Read the labels to compare. And when a cheaper alternative does not make the grade, return it for an exchange or refund.
How much you can save: Generic or store brand clones are at least 25 percent cheaper than their name brand equivalents. But don’t assume anything. Always check and compare.
4. FAT CHECKING ACCOUNT
Keeping a tidy $5,000 balance in your checking account might give you a sense of security, but you’re wasting money needlessly if you are not earning interest on the balance.
Plug the leak: Attach an online savings account to your current checking account. Now you can simply move funds back and forth as needed.
How much you can save: Keeping $4,000 of your typical balance in the savings side at 1.5 percent APY will put $60 in interest into your account each year.
5. FAILURE TO RETURN
It doesn’t fit right or the color is wrong, but who has time to trek back to the store? You do. Failing to return your shopping mistakes is way at the top of the biggest money wasters. Think of all those clothes you’ve worn once―or not at all―that could have been converted back into cash had you acted the moment you realized they’re just not right.
Plug the leak: If you still have receipts, try to get a refund for all the NWTs (new with tags) you’re harboring. At least try for store credit. List them for sale on eBay or take them to a consignment store. If none that works, there’s always re-gifting. In the future, always ask about the store’s refund policy. Save your receipts and do not fail to make the return.
How much you can save: Writing about this prompted me to check my closet. I pocketed $68 by returning a couple of shopping mistakes that had slipped my mind.
6. PILING ON LATE FEES
If you’re a later-payer, you know we’re not talking about chump change here. Late fees on credit card accounts, mortgages, car loans, automobile registrations and property taxes are so high they’ll take your breath away. Being sloppy when it comes to paying your bills can place a needless drain on your finances.
Plug the leak: Anticipate your bills. Don’t wait until the last minute to pay them. Better yet, set up for auto bill pay directly with the service provider or use your bank’s online bill paying service. If despite your best efforts you do incur a late fee, call immediately. Most creditors will waive the fee if you have a good payment record.
How much you can save: Credit card companies charge as much as $39 flat for paying late. The typical late fee on a mortgage is 15 percent of the amount due. Ouch!
7. GYM MEMBERSHIP YOU NEVER USE
Want to make sure you never exercise? Sign up for a gym membership and agree to have $39 a month automatically withdrawn from your bank account for the privilege.
Plug the leak: Call immediately to see what it will take to cancel the membership you have already. At the least, switch to a month-to-month plan. Or, opt to work out free in the great outdoors.
How much you can save: $468 or more a year.
8. CREDIT-CARD DISABILITY INSURANCE
This type of insurance promises to cover your payments if you get sick or disabled. Here’s the truth: While your monthly payments might be suspended, interest will continue to accrue on the balance that will not be forgiven. So the debt will pile up and be waiting for you when you recover.
Plug the leak: First, figure out if you’re already paying these silly fees without knowing it. This will appear as “Loss Protection” on your statement or something close to that and the fee is likely to be about six or seven bucks per month. If you see that you’re paying for this, call and cancel. And ask for a retroactive refund since it is not something you requested.
How much you can save: $6.95 per month is typical―$84 annually.
9. EXTENDED WARRANTIES
Statistically, if the item is going to fail, it will do that early on, which means the manufacturer’s warranty will cover it. The cost of an extended warranty, which is only a service contract, is mostly profit for the retailer. Since extended warranties are claimed so rarely, the profit margins on them run as high as 40 to 80 percent, according to Consumer Reports. No wonder they push so hard.
Plug the leak: If you can’t imagine life without an extended warranty on that laptop computer you drag with you wherever you go, or your treadmill that gets a major workout every day, do this:
Open a special account and deposit the money there instead of in that salesperson’s pocket. Now if the item fails (odds are on your side that it won’t), you have the money to cover repairs. And when all is well, you get to keep the money.
If by some chance you do need service, you’ll have the money set aside to cover the cost. And you won’t have to wade through all kinds of fine print and deal with customer service personnel who will do all they can to make sure your claim is denied.
How much you can save: I kept the $495 they wanted for an extended warranty when I bought a big screen television eight years ago. It’s still working perfectly. The extended warranty period offered has long since expired.
10. PAYING FOR STORAGE
Don’t get me going on this one. Look, if you’ve got so much stuff that you need to pay to store it, there’s a serious likelihood that you’ve got too much stuff.
Plug the leak. Take the plunge and unload everything you don’t use or need. Turn what you can into cash at websites like Craigslist.org, eBay.com or Half.com. Give things that are still serviceable to charities like Goodwill.com or SalvationArmy.com. Check out the FreeCycle.org chapter in your area. Your hard work will be well rewarded with peace of mind and a fatter wallet, too.
How much you can save: A tiny storage unit can run $50 a month up to hundreds for larger ones.
11. NOT ACCEPTING EMPLOYER’S MATCH
If you’re eligible for an employer-matching 401k, but you’re not signed up, you’re throwing away free money. What a waste.
Plug the leak: Call HR immediately to find out if you are eligible. If yes, sign up for your 401(k). If your company matches employee contributions, it’s like getting a 50 percent return on your money without any risk. You are nuts if you pass that up.
How much you can save: Kristen B., 23, has just qualified for her company’s 40l(k). In 2011 her employer’s contribution to her account (that’s free money) will be $998 a year. Even if she only got that same amount every year (doubtful, since it’s based on her annual salary), at 5 percent growth, that free money added to her 401(k) each year will grow to $142,634 by the time she retires at age 66.
12. OVERDRAFT FEES
A tiny slip-up can easily turn a $5 burger into a $40 overdraft fee. Or for Chris K., an NYU student, $217 in fees on a $240 overdraft of his checking account.
Foolishly, he opted in when the bank offered to allow him to overdraft his account using his debit card, something he forgot about. Instead, he assumed his debit-transactions would be denied once his money was depleted. Boy, was he wrong.
The bank not only allowed $240 in purchases on his $0 bank balance, they charged a $31 overdraft protection fee for each individual transaction. So he had to pony up for the $240 plus $217―money he didn’t have and had to borrow from his mother. Don’t you hate when that happens.
Plug the leak: Don’t assume anything. Check your account every day. Keep track of your bank balance. If you’re getting close to $0, don’t even think about testing the system to see if you can let one more purchase slide through before payday.
Sign up for overdraft protection that links your checking account to a savings account or line of credit; the fees and other costs involved are generally much lower than when you bounce a check.
How much you can save: Banks charge hefty overdraft fees of $30 or more per item, for each infraction. Then, they can even pile on a daily fee for every day your account is overdrawn. We’re talking hundreds of dollars a year, easy, for the habitual overdrafter.
13. NOT RACKING UP DISCOUNTS
Failing to ask for discounts on your auto and home insurance may be costing you a bundle. Got a youthful driver in the family who also is a good student? You may qualify for a good student discount. Did you recently install a home protection system? Does your car have anti-lock brakes? Air bags? Most insurance companies give premium discounts for both, plus others too numerous to list. But you’re not likely to see them unless you ask.
Plug the leak: Call your insurance agent and ask for a quick review to determine the discounts you qualify for. As you experience life changes, call again. You may find yourself qualifying for even more discounts that reward efforts you take to lower risk.
How much you can save: One family I know says her family enjoys a 25-percent discount for their full-time registered student because she maintains at least a 3.0 grade average.
14. BUYING IN BULK
Walking the aisles at the warehouse club, it’s easy to get carried away. No matter the price, if it’s more than you can reasonably use before the stuff turns stale, rotten or passes the expiration date you’re throwing away more money than you’re saving.
Plug the leak: Determine how much you really need and then consider the price. If you must buy in large quantities, invest in a vacuum sealing machine or larger freezer for storage.
How much you can save: You can easily save 50 percent of the full retail price when you buy some things in bulk. And you will lose 100 percent of whatever you pay if it lands in the garbage because you just couldn’t use it up quickly enough. Do the math.