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11 Money Mistakes You Don’t Realize You’re Making

11 Money Mistakes You Don’t Realize You’re Making

If you’ve got money and you know it, take it out your pocket and show it. *snatches money out your hand and runs.* Thanks.

Here are some other mistakes you’re making with your money.

1. You Buy Extended Warranties

I’ve worked at a variety of retail stores, and they all require every employee to push the extended warranty. They do this because it’s a sale where you’re giving them money for a product they don’t have to stock. They gain free money, because the odds of you actually using that warranty are slim. If your product lasts six months, it’ll last two years, unless you break it in a way that’s not covered by the warranty anyway.

“Use warranties that come with the product or service,” says financial expert Harrine Freeman. “Keep the original packaging and receipt so if an issue arises, you can get the item fixed without delay.”

2. You Have Too Much Insurance

You’re required by law to meet certain insurance requirements for your vehicle and any collateral loan. Insurance agents will push to give you more insurance because they’re commissioned salespeople. Whether it’s your car, home or body, don’t buy more insurance than you need, or you’re just paying to keep everyone else’s premiums low.

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Also avoid cell phone insurance at all costs – these plans are difficult to use and cancel, and they’ll often charge you more to replace your phone than the actual phone manufacturer, the retail store you bought it at, or your service provider.

3. You Pay for Free Services

You can monitor your credit report for free by getting a copy once every year, yet credit monitoring services charge you for the privilege. It’s like paying to park in a free lot (which you’ll also do if there’s an event nearby). Avoid paying for anything you can do for free.

4. You Upgrade Too Often

When Apple releases a new iPhone, people wait in line for it. Android users are getting just as bad. Usually, the upgrades are minor. Sure, I can use my phone as a projector, but how often does that really come up?

Don’t get distracted by all those shiny features – buy a phone within your budget, and hold onto it for 3-4 years. By the time you upgrade, you can get a free (or extremely cheap) phone that’s still an upgrade over your current one without paying an arm and a leg

5. You Ignore Hidden Fees

Banks make their money by charging fees. They’ll charge both you and the merchants you shop at as much as possible, and many businesses pass these fees on to customers. Shell, for example, charges you for using your card. Shell is also notorious for keeping their gas prices higher because they have a branded credit card that many people confuse for a store card. The reality is that card can be used anywhere, so use it to shop elsewhere.

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“Avoid using out-of-network ATMs,” adds Freeman. “Get enough cash from your network ATM on a weekly basis to avoid fees. Avoid multiple trips to the ATM during the week. Keep track of your bank balance to avoid overdraft fees.”

6. You Don’t Save

I’ve been on my grind since I was five years old. When I was 10, I got a paper route, and my parents made me put half of my money immediately into a savings account (which was actually an envelope in a file cabinet in their house because banks don’t give accounts to ten-year-olds). As annoying as it was, it was a great way to learn about savings

You don’t have to give up half your paycheck, but you do need to put a set amount aside. Treat your savings account as your most important bill – it’s for you, and you shouldn’t short-change yourself for the benefit of any bank, grocery store, service provider or anyone else.

7. You Overpay Taxes

I get that most people don’t understand taxes. I understand that feeling of starting the year with a huge tax refund. If you don’t have the discipline to save, it can be tempting to let the government do it for you.

The problem with this line of thinking is you’re giving the government free money. They deposit it and earn interest that could’ve been yours. You think you’re making a smart financial decision, but what you’re really doing is losing money. The ideal tax situation isn’t the huge refunds advertised by H&R Block and all the other accountants; it’s zero.

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8. You Buy Things You Don’t Need

If you can’t decide between an Xbox One and a PS4, the answer isn’t both; it’s neither. You may like purses and shoes, but you don’t need so many of them. Just because you see celebrities showing off all their swag doesn’t mean you should be doing the same thing. Learn to separate wants from needs and live within your means.

9. You Join Too Many Clubs

If you have a membership to Costco, Sam’s Club, Amazon Prime, and more, you’re wasting your money. Trying to keep up on all those frequent shopper clubs is toxic too. You’ll end up spending more on fees and unnecessary purchases than you’ll save from any of their deals. Their business model is set up specifically for this purpose.

If you’re single, consider asking a friend or family member to be added as an additional user on their account. A single person doesn’t need too many bulk items, especially perishables.

10. You Waste Food

Regardless of whether it’s bulk or single serving, don’t buy more perishable goods than you can eat. Every crumb you throw away is a crumb you paid for. You may as well just dump the contents of your wallet on the ground every time you go to the store.

Track your diet – it’s good for both your health and wealth. By focusing on your food intake, you’ll have an idea of your eating habits. This will help you make smart spending decisions at the grocery store. From there, all you have to do is cook the food you have instead of going out to eat all the time.

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11. You Lack Patience

Merchants love taking advantage of our impulse to spend money. It’s easiest to see this concept with movies. If you want to see a movie on opening night, you’re paying the highest price possible. You can’t even use a coupon because it’s a special engagement. If you want to see a movie in theaters, wait until it’s in the dollar theater. Otherwise you can see it on Redbox for $1 or Netflix for free. All you have to do is wait.

Now stop making money mistakes and start living like a shark.

Featured photo credit: Nuzree via pixabay.com

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Last Updated on March 4, 2019

How to Use Credit Cards While Staying Out of Debt

How to Use Credit Cards While Staying Out of Debt

Many people will suggest that the best thing to do with your credit cards during these tough economic times is to cut them up with a pair of scissors. Indeed, if you are already in huge debt, you probably should stop using them and begin a payback strategy immediately. However, if you are not currently in trouble with your credit cards, there are wise ways to use them.

I happen to really love my credit cards so I will share with you my approach to how I use mine without getting into deep financial trouble.

Ever since about 1983 when I got my first Visa card, I continue to charge as many of my purchases as possible on credit. Everything from gas, groceries and monthly payments for services like my cable and home security monitoring are charged on credit. Despite my heavy usage, I have maintained the joy of never paying any interest fees at all on any of my credit cards.

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Here are some tips on how best to use your credit cards without falling into the trap of paying those nasty double-digit interest fees.

Do Not Treat Credit Cards as Your Funding Sources

Too many people treat their credit cards as funding sources for major purchases. Do not do this if you want to stay out of trouble. I use my credit cards as convenient financial instruments so I do not have to carry around much cash. In fact, I hate carrying cash, especially coins. When you buy things on credit, the purchases are clean and you will not get annoying coins back as change.

I do not rely on my Visa, MasterCard or American Express to fund any of my purchases, large or small. This brings me to my golden rule when it comes to whether I will pull out any of my credit cards either at a retail or online store.

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I never purchase anything with my credit cards if I do not have the actual cash on hand in my bank account.

If I really cannot pay for the item or service with cash that I already have at the bank, then I simply will not make the purchase. Remember, my credit cards are not used as funding sources. They are just convenient alternatives to actual cash in my pocket.

Make Sure to Always Pay Off Balances in Full Each Month

The next very important part of my overall strategy is to make absolutely sure that I pay the balances in full each and every month no matter how large they are. This should never be a problem if the cash has been budgeted for my purchases and secured in the bank. I have always paid my full balances each month ever since my very first credit card and this is why I never pay interest charges.

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Using Credit Cards with Rewards

Most of my credit cards are of the “no annual fees” type, including one MasterCard on a separate account I keep at home as a spare in case I lose my wallet or incur any fraudulent charges. However, I do use a main Visa card which does have an annual fee because all purchases on that card reward me with airline frequent flyer points. For me, the annual fee is worth it since I do travel and I get enough points to redeem many free flights.

You have to decide for yourself if you will charge enough purchases on credit each year without paying interest charges to warrant a credit card that rewards you with airline points (or other rewards). In my case, the answer is “yes” but that might not be the case for you.

I occasionally use a MasterCard or American Express card on small purchases just to keep those accounts active. Also, I have been to the odd retailer that accepted only a certain type of credit card, so I find that having one from each major company is quite handy. Aside from my main Visa card which earns the airline points, the rest of my cards are of the “no annual fees” variety.

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So this is how I use my credit cards without getting into any financial trouble with them. This strategy is recommended only if you are not in debt, of course. In fact, it is worth keeping in mind once you’re out of debt so that you can keep your credit cards active and treat them responsibly.

What are your credit card usage strategies? Let me know in the comments — I’d love to hear what methods you use.

Featured photo credit: Artem Bali via unsplash.com

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