Monday, January 11, 2010

7 Ways We Throw Money Away by Not Paying Attention



Most of us are so busy being frugal that we don't always notice how we throw money down the drain.While food waste is a well known example, some aren't that obvious. Although they won't cause a dent in your retirement fund, refraining from doing these small steps can sometimes add up to significant savings.

1) Not utilizing what you've already paid for
Unused gym memberships are all too common today. Likewise, there are other memberships and subscriptions that you could consider terminating if you are not directly benefiting from them. Another 'purchase' that often slips through the cracks are the routine checkups with our doctor/dentist/optician. Although you won't have to pay for them other than a potential copay (plus the insurance premiums you've already paid), missing them could potentially cost an arm and a leg if something that could have been nipped in the bud were to significantly alter your health down the line.

2) Not using up funds in your flexible spending account/not planning ahead to cover all expenses.
Many employers offer the benefit of a flexible spending account to salaried employees. It is basically an account funded monthly by pretax dollars based on a predetermined total you set.You use it to cover expenses that are not covered by your insurance such as over-the-counter medications or personal expenses like eyeglasses and contact lens solution. The catch is that you don't end up getting back any funds you haven't used by the end of the year. So the key is to find a balance between estimating the predetermined amount to cover all expenses while not setting aside too much. Worst case, you could always stock up on nonperishable items that you use routinely.


3) Not mailing out rebates
Enough said!


4) Buying things just because they are on clearance or are a 'good deal'
Too often I have fallen victim to the "X % off" sings at stores only to come home and see things like pulled threads, missing buttons and lipstick/makeup stains. Returning such items shouldn't be a problem if you notice the snag before you wear it, but most of the best deals are final sale. In such cases, look for replacement buttons or threads and do your best. Sometimes your efforts however will be in vain. The simplest solution is to take the time to inspect everything before buying or not buy what you don't need just because it's a good deal.

5) Late fees
As I've mentioned before, I missed my credit card payment on quite a few occasions. Yes that wasn't very responsible of me. But since I almost always pay my balance in full, in every one of those times but the first, I asked for and received a late fee waiver. Now not to push my luck, I've set up email alerts.

6) Not shopping around for better rates
We all do it. We do our research and aim to buy things that give us the most bang for our buck. But once we have it we get comfortable with the status quo until it's time to renew or replace it. For example, cell phone/internet plans or notoriously cheaper for new customers. So instead of re-signing with your current provider, you might be able to snag better deals by switching. Insurance is another example where you can shop for a better rate at any time. Some employers offer reduced rates via affiliated programs, and you can always investigate for missed deductions like the safe driver discount. Coincidentally, Wojciech Kulicki of the Fiscal Fizzle mentions a rate reduction for a new baby.

7) Brand loyalty
Brand loyalty is a funny thing. For no good reason, we pledge allegiance to a particular brand and never stop to consider the options. Maybe the brand we're addicted to was economical to start with, but that might not be the case all the time. New and competing brands enter the market all the time, so it's wise to keep your eyes open. For instance, When my baby was born, I got a ton of coupons for baby formula from competing vendors. Being a first time parent, I asked my pediatrician for a recommendation and stuck with that brand. Much later, I happened to compare the ingredients on the two formulas, and noticed that they were very similar. But by that time it was too late to use the $7 off coupons for a $17 can of formula!

11 comments:

  1. Lol, your gym membership paragraph reminds me of my last gym membership. I only went twice (Yeah I'm embarrassed)...

    Needless to say, that was the last time I bought a gym membership.

    Everything was spot-on! The Rebates are a good point! People really need to fill those out!!!

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  2. Paying cash when you could put it on a credit card, earn the points or (for some cards) get a discount, is as good as throwing money away (assuming you pay off the card in full each month).

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  3. @Don: Glad to know I'm in good company:)

    @traineeinvestor: Good observation! Even though I pay with plastic, I'm guilty of forgetting to redeem my points!

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  4. In regards to #1... if everyone used their gym memberships they wouldn't have to pay nearly as much in future health care costs. I consider my gym membership as one of my best investments!

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  5. True Ryan. But gym memberships aren't effective for everybody. For instance, while I enjoyed jogging or hitting around a tennis ball with a pal, the idea of going to a gym to exercise is not really that exciting, especially if you're a recovering germ-ophobe like me!

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  6. I'm with Ryan on the Gym membership and since I decided to do a marathon this spring, I am utilizing the opportunity to work out much more often. It helps to be fear driven;o)
    You are right on about not utilizing what you already have. This has been a nemesis I am consistently battling.

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  7. @Tracy: Having a tangible goal is a very effective way to exercise! Very smart of you Tracy :)

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  8. Hey Thirftygal! I've seen you around the FS comments and figured I'd check it out.

    Good article, especially #6 I actually just finished a similar topic on my own site.

    See you also have a graph-gravatar.

    Will be looking around and happy blogging!

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  9. @FinEngr: Cool gravatar you've got there :) Glad you stopped by. Looking forward to reading your post!

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  10. Great read!
    I had too much in my flexible spending account when my my insurance paid more on a crown than I expected. You will be surprised what you can buy with this money. I even knew a guy who bought Nicotine gum and sold it on Ebay!

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  11. So many people waste by not shopping around! Also late fees on bills , rentals and all sorts are little expenses that build up.

    Thanks for a great post.

    Forest.
    http://frugalzeitgeist.com

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