Ways to Waste Your Money

I saw this piece on Yahoo today about 25 ways to waste your money. I thought I’d share the more interesting ones and my thoughts on each of them.

1. Carrying a balance. Debt is a shackle that holds you back. For instance, if you have a $1,000 balance on a credit card that charges an 18% rate, you blow $180 every year on interest. Get in the habit of paying off your balance in full each month.

This one is obvious, but I’d go a step further and say don’t carry a credit card at all. You can do anything you need with a debit card, no need to use credit. Get out of debt as soon as you can.

3. Keeping unhealthy habits. Smoking costs a lot more than just what you pay for a pack of cigarettes. It significantly increases the cost of life and health insurance. And you’ll pay more for homeowners and auto insurance. Add in various other expenses, and the true cost of smoking adds up dramatically over a lifetime — $86,000 for a 24-year-old woman over a lifetime and $183,000 for a 24-year-old man over a lifetime, according to “The Price of Smoking” (The MIT Press).

Another habit to quit: indoor tanning. There is now a 10% tax on indoor tanning services. As with cigarettes, the true cost of tanning — which the World Health Organization lists among the worst-known carcinogens — is higher than just the price you pay each time you go to the salon.

I’ve never understood why people purposely do things that they know will eventually give them cancer. Not only are these things terrible financial moves, they will kill you. Just don’t start.

4. Using a cell phone that doesn’t fit. How many people do you know who have spent hundreds of dollars on fancy phones, and then pay hundreds of dollars every month for the privilege of using them? Your phone is not a status symbol. It is a way to communicate. Many people pay too much for cell phone contracts and don’t use all their minutes. Go to BillShrink.com or Validas.com to evaluate your usage and see if you can find a plan that fits you better. Or consider a prepaid cell phone. Compare rates at MyRatePlan.com.

This one I have a tough time with. I have an iPhone and I really love it. It is expensive, but I really can’t see myself getting rid of it. It is certainly a good idea to check minutes, data, and texting rates to be sure you aren’t paying more than you need to, but I can’t fault you for having a smartphone. It is really convenient, and like I said before, I probably won’t be without one.

20. Making impulse purchases. When you buy before you think, you don’t give yourself time to shop around for the best price. Take the time to compare prices online, read product reviews and look for coupons when appropriate.

Make it a policy to give yourself a cooling-off period in case you’re ever tempted to make an impulse purchase. Go home and sleep on the decision. More often than not, you’ll decide you don’t need the item after all.

This one goes along with having a budget in my opinion. You have to know where your money is going. Impulse purchases are fine as long as you have the money in the bank for it and you know that’s what the money is for. My wife and I get a set amount of blow money each month and we have to limit ourselves to that amount. If we want to spend more than that, we have to save it up. I’ve personally been saving for an iPad for quite awhile now, and I just got to the point where I can afford one last month. Next week when I get it, it won’t feel like a waste or an extravagant purchase because of been saving for it for a long time.

21. Dining out frequently. Spending $10, $20, $30 per person for dinner can be a huge drain on your wallet. Throw in a $6 sandwich for lunch every day and you’ve got quite a leak. Learning to cook and bringing your lunch from home can save a couple hundred bucks each month. When you do go out, consider getting carry-out instead of dining in (you’ll save on the tip and drink), skip the overpriced appetizer and dessert, and search the Web for coupons ahead of time.

This is a big one. Most people have no idea how much money they spend eating out. If you don’t currently have a budget and keep track of your spending I’d challenge to do it for just a month to see how much you are spending on food. I’ll bet you’d be surprised how much those lunches out every day can add up to.

Feel free to share your thoughts on these and other money wasting activities in the comments below.