Watch out for these eight common money pits and keep your cash for the things that are important to you.
1. Not having a spending plan.
If you don’t have a budget, or spending plan, you probably aren’t sure exactly where your money goes. But it’s a good bet that a lot of it is being frittered away on things that mean little to you, rather than going toward your priorities.
2. Not having an emergency fund.
From car and home repairs to job layoffs to medical emergencies, it’s hard to get through life without a few bumps along the road. Having an emergency fund can allow you to accommodate these unexpected expenses with aplomb. Without one, you may have to take on more debt just to make ends meet, and that means paying to borrow when you could have used your own funds free of charge.
3. Procrastinating on paying off credit card debt.If you don’t pay off your credit cards every month, you’re wasting money on interest payments. If you pay $200 a month on a $5,000 credit card debt with an 18 percent APR*, you will pay a total of $1,314 in interest charges by the time the debt is paid off, 32 months later.
4. Not paying attention to your credit score.Most lenders offer better rates on loans to people with high credit scores. If you let your credit score slide, you may pay more for auto loans, credit cards, a
mortgage, etc.
5. Making purchases based on price, not quality.If you automatically choose the lowest priced item without considering quality, you may end up spending more money repairing or replacing the item sooner than you would have to with a higher-quality alternative. This is especially true with big-ticket items like appliances. Price and quality both play a role in determining the best value.
6. Throwing away leftovers.American families throw out approximately 25 percent of the food and beverages they buy, according to the Natural Resources Defense Council, at a cost of $1,365 to $2,275 a year for a family of four.** Eat leftovers for lunch the next day or stick them in the freezer and eat them at a later date.
7. Not insulating, caulking and sealing your home.Up to 25 percent of your home’s heat is lost through small cracks and holes throughout your home, according to the Department of Energy. Stop those leaks to save money.
8. Buying bottled water.If you drink the recommended eight glasses of water a day, you would spend about $1,400 a year on bottled water. You could get the same amount from your tap for less than a dollar. Buy a filter if you don’t like the quality of your tap water.
