Smart Money: 5 Ways to Waste Money

11:09 AM, Nov 20, 2013   |    comments
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#1 APPETIZERS AND BEVERAGES
• Does it make sense to spend $5 or $6 on extra food when restaurants already give us plentiful portions and many of us keep an eye on the scale?
• A family of four could also save $10 by ordering water instead of soft drinks at a restaurant.
• Changing these habits should produce healthy results for your wallet and your body!
• Cost for a family of four that eats a weekly restaurant meal: $60 per month or $720 per year.

#2 NEXT-DAY DELIVERY
• Online shopping has made spending money easier than ever.
• Hopefully consumers are demonstrating self-control with their online purchases.
• At a minimum, plan ahead and exercise a little patience. A few days represents more than a few dollars saved!
• Next-day shipping at one retailer was $23 more than 3-6 day shipping. Even 2-3 day shipping was an extra $10!
• Cost for a family that orders online two times per month: $46 per month or $552 per year.

#3 IGNORING EMPLOYER RETIREMENT PLAN CONTRIBUTIONS
• Many employers offer a 401(k) or other type of retirement plan.
• In addition to providing a tax-efficient mechanism for retirement savings, employer plans frequently offer matching contributions.
• The amount of employer contributions will vary by employer. However, 2% of compensation is a fair estimate.
• Cost for two-income family earning $80,000 in combined compensation with 2% employer match: Approximately $134 per month or $1,600 per year.

#4 KEEPING A LAND LINE
• The ubiquitous nature of cellular phones arguably makes a land telephone line a luxury today.
• Although there may be reasons to retain your land line (e.g. baby sitters), this is one to strongly consider.
• Even an inexpensive VOIP land line costs $18-$20 per month after taxes and fees are added.
• Bundled services may offer perceived savings but will still represent an incremental monthly cost.
• Cost for a household with a basic residential land line: $20 per month or $240 per year.

#5 CREDIT CARD INTEREST AND BANK FEES
• We all should know the dangers of overspending by abusing credit cards. Don't amplify the problem by paying interest on credit card balances.
• Annual credit card interest rates are often 10%-15%. Miss a payment and that rate can easily jump to 30%!
• ATM fees of $2 or $3 per transaction at a bank other than your own are not uncommon.
• Bank overdraft fees could easily amount to $20, $30 or more per bounced check!
• Cost for a household that maintains a $2,000 credit card balance at 15% APR, pays ATM fees on two withdrawals per month and bounces a check every other month: $41 per month or $492 per year.

Total money wasted in our scenario: Roughly $300 per month or $3,600 per year!

Courtesy:

www.hungerfordnichols.com 
616-949-3200

 

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