You’re Wa$ting Your Money!

With the exception of those who earn minimum wage or are unable to find full-time work, we all spend too much. Even some of the most financially worried people I know (the ones who complain the most about being broke/poor/underwater/etc.) have the time and funds to buy a coffee at Dunkin Donuts every day.

Over the past six months, my husband and I have talked with our friends, family, and colleagues about their expenses and financial worries, looking for ideas about how to save. It looks like it all boils down to three main mistakes that everyone makes:

Credit card debt: “Once we pay off this card….” or “Well, we don’t have the cash right now so we’ll just charge it…” are two of the most dangerous phrases you can utter. If you HAVE to charge it, you can’t afford it. If you’re paying the minimum every month, you might as well throw your money out the window.

Credit is important—it’s essential to build your credit score if you want to purchase a home or get any sort of business loan—but it’s also incredibly risky. Every single time you pay the minimum (or any less than the balance), you’re paying interest. It might not look like a lot on your statement, but it’s there, and it’s a huge waste of your time.

Car debt/leasing: Cars. They’re expensive. And they’re necessary. Here’s the mistake: First, new cars. Everybody loves that new car smell, but you’re paying a ridiculous premium for something that will be worth 15% less in just one year. Sure, it’s a great feeling to say, “I bought this!” but it’s not that smart when you are renting an apartment instead of buying or financing your car with a six-year loan instead of finding a more affordable option. Car debt isn’t good debt, like student loans or your mortgage. It’s bad debt. It’s debt that you’re paying for an item that will never, ever increase in value.

Leasing: the worst. The worst thing I can think of to do with your money. You’re paying roughly the same amount as it would cost to BUY the car, but with a slightly smaller down payment…and you’ll have to restart the cycle in a year or two. You’re not actually putting that money towards anything, and you won’t get a penny back. If you own the car, at least you can always sell it!

Cell phones: If you’re paying for a new model before your upgrade, stop. If you’re waiting in line for the next iPhone, stop. I know some of you will say, “Well, if I really want it and have the money, who cares?!” That’s fine, but only if you a) have no debt, b) aren’t paying rent, c) don’t ever complain about money, and d) are contributing to your retirement account. If I had a dollar for every time I heard a person complain about how little money they have while typing on their new iPhone, I’d be able to buy a brand new iPhone 6 Plus by now.