Piling up savings but not paying off your credit card
One common mistake I see over and over again is people that have accepted the notion that they will always have to live with credit card debt.
Because they’ve already accepted this as fact it’s not uncommon to see couples or individuals build up their savings at 1% or less and pay credit card interest at 18% or more.
This is totally backwards! Stop playing these mind games.
If you have the money to pay off credit cards then do it. Minuscule savings returns won’t save your from your credit cards.
You’re not really saving unless you’ve given the K.O. punch to your credit cards and department store cards.
Take action – Take your emergency fund and set it aside. With your savings your have left knock out your credit card debt. Stop paying steep credit card interest rates when you have savings sitting in the banking earning little to no return.
Not making savings automatic
Making saving automatic is easy and necessary to achieve your financial goals.
Let’s be honest. We’re human and we make mistakes. We are easily susceptible to impulsive check out buys and memory lapse. However, computers are not.
Nearly all banks that offer checking and savings accounts will encourage your to make an automatic transfer biweekly or monthly.
I love automatic savings because you’re doing the right thing and you don’t even notice the money has moved. After a few weeks fly by and you get your bank statement in the mail (which your read, right?) you’ll remember that you’re automatically saving now. You’ll be surprised how much you’ve already saved and how easy it was.
Take action – The next time you’re out running errands stop by your bank (some banks allow you to do this online). Open a savings account with an automatic transfer. Start small; you can always increase this amount at any time if you want to really save big.
Dipping into retirement accounts when you’re desperate
This is a huge no-no, but some people just can’t resist when their backed into a corner with no more options.
As dreadful or potentially embarrassing as it is bankruptcy is sometimes unavoidable.
Going bankrupt is more acceptable than trying a last minute bail out by cashing in your retirement savings.
Retirement savings are protected from bankruptcy. This is arguably the only silver lining when filing for bankruptcy.
Take action – If your retirement savings is the only thing that can keep you from bankruptcy don’t touch it! Go ahead and file, your retirement will still be safe.
Not having an online savings account
There are many benefits to having an online savings account. The biggest of them being a higher APY compared to their brick and mortar counterparts.
Online banks don’t have nearly as much overhead as a physical bank that you can open the door and walk into.
For online savings accounts to compete they pass on the overhead savings to you. Step into the 21st century and set up an online savings account for bigger savings.
Take action – Begin your online savings account search at Bankrate.com. Here you can compare many different accounts to see which one works best for you.
Not writing down a grocery list and shopping when you’re hungry
I’ve been guilty of this many times. Grocery shopping is time consuming and if I don’t make a list I’ll end up spending more than I should.
Making a short list of all the needed items will only cost your five minutes of your time but not making a list will cost your more money.
Based on my shopping experiences I would wager that without making a list I spend (on just myself) about $15-20 more. This adds up after a few weeks and it’s something I need to be more disciplined at.
Take action – After a satisfying meal take a short moment to make your grocery list before heading to the store. A full stomach and a short list will keep your shopping trip focused and save you some impulse buys and maybe some calories.
Getting a department store card to save 10% but paying high interest
One of my pet peeves is Kohl’s blaring over the speaker every five minutes that I can save some extra money by opening a charge card.
How many people do you think open a charge card to save 10% and then pay off the debt over a period of several months at 20%?
I would be willing to bet that 8 out of 10 people do this.
Maybe you will save 10% and maybe you’ll get coupons in the mail but in the end house always wins. Don’t be penny smart and pound-foolish.
Take action – don’t fall for department stores, “I’ll give your one dollar if your give me two later.” If you’ve got to have those new pants then pay cash or put them on layaway. Immediate satisfaction is quickly deflated after you swipe your card.
Not brown bagging your lunch
Want to save $120 buck a month on fast food then take a lunch to work. What could you do with $120 extra each month?
Maybe save it? Spend it on your kids? Help someone in need? Save it for the coming holidays?
This is one of the quickest ways to amp up your savings since everyone eats lunch every day of the week.
Making a lunch and taking it to work will not only help your bottom line but your waistline. A turkey sandwich is much healthier than a Big Mac and fries.
Times have changed. Since more people are spending less money on quality grocery items and more on fast food it’s no wonder that spending money on medicine has dramatically increased with our value meals.
Take action – stop eating out for lunch every day. This will help your wallet and you health. You don’t want to pass up this two for one deal.
Paying your cables bundled price after your introductory rate is over
This happens to almost everybody. Nearly every time I relocate and sign up for cable I find myself trying to figure out how many months I’ve had HBO for free. I sure as heck don’t want to pay for it.
Once when my roommate and I had a cable bill that almost doubled after our introductory period, which is ridiculous. We only watched like 5 channels anyway, we didn’t need 500. So, we called them up and found out that for a small fraction of the price we could get 100 channels for $20. Of course we had to haggle with the sales rep for half an hour but it saved us about $60 a month.
Take action – review your cable bill and stop paying for premium channels. Most of your favorite shows you can watch online for free anyways. Just plug your laptop into your TV and you’ve got your favorite shows for free on a big screen. There are other options like Netflix and Apple TV as well.
Buying popcorn and drinks at the theater and not seeing the early show
I love watching movies at the theater. To save a few bucks I always make an effort to see the early matinee. This allows me to see three matinees for the same price as seeing only two late night show times.
I also avoid the $9 drink and popcorn combo. I just can’t stomach the 1000% profit they are making off that stuff. Besides, I would rather see two more movies than have the snack.
Take action – Stop buying $9 snacks and see more early movies instead. Matinees are less crowded and more affordable. If you desperately need a snack then have your girlfriend or wife sneak in some treats in her purse, who hasn’t done that?
Going out to eat because you ran out of groceries
Of all ten of these ways to save money this is the one that gets me every time. I don’t buy many groceries when I go shopping and maybe that’s my problem but every week I run out of food. Unfortunately I usually run out of food on the weekend and thus end up eating out because it’s just the easy thing to do.
If I were to buy one or two more items I bet I would able to make it through the week. The more mouths you have to feed the more the lack of groceries is compounded. Fortunately for me I don’t have a big family. If I did were sure wouldn’t eat out much.
Take action – Don’t fall into the lazy mans trap of running out of groceries like me. From now on lets make sure we have enough groceries to last us the week. This act alone could save me $20 buck a weekend. For a family of four the savings are much more.
I appreciate your reading some of my saving mistakes ideas. What are some savings mistakes that trip you up? I would like to here what challenges your facing or what helps your stay on track. Share a comment below.
Photo provided by 401K’s
Head back to the home page.