PROBLEM #30: I’m Looking for Ways to Save. I don’t Want to Waste Money?
I hope you don’t throw dollar bills out your window . . . maybe you are looking to give back? But do we waste money in other ways? Do we waste money without thinking about it? YES, YES! We all have a limited supply of money (unless you are one of the 2000 or so billionaires in the world), so naturally we want to use the money we do have as efficiently as possible. If you feel like you’re wasting money – you probably are. This is a PROBLEM.
There are a few common ways people often waste money. Perhaps you are looking for ways that you can save. I’ll give you 3 ways that money is just thrown away.
Buying Things You Already Have.
I touched on this in a recent post about things you should only buy once every 10 years or more. But it bears repeating. Don’t buy something that you already have. For example: If you have a fully functional couch – you don’t need to buy another one. Many times when we “upgrade” our furniture or appliances it is based on a desire to keep up appearances. You remember the Jones’ – right? They’re the imaginary family next door that always seems to be doing better than us. We look at their house and their possessions and compare them to our situation. “Why do they always have an ‘Amazon’ box on their front porch? Now what did they buy?” We have a perception that our things are old and outdated.
Raise your hand if you’ve ever had this thought – “I need a new phone. Mine is at least 18 months old. . . that’s gotta be at least 50 in phone years!!”
I know people who still have and use flip phones! I’m as shocked as you are. But the bottom line is: If you only need a phone to be, well, a phone – don’t keep buying new ones every 1 or 2 years. This is a great way to waste money.
Buying a New Car
In case you don’t know, depreciation is a real thing. It does exist, and almost all cars depreciate (unless they are restored classics). Depreciate means to decrease in value. In other words, over time your car is worth less and less money – until it gets to around $500-$800. (These cheap cars may still have life, but are otherwise known as ‘beaters’, ‘deathtraps’, or cars that college kids drive.)
This depreciation starts right away – as soon as you buy that shiny new ride. That means that you will never be able to recoup your original purchase price when you are ready to sell your now worn out, tired set of wheels. When you sell a car you always take a loss. Do you like to waste money? Why wouldn’t you want to minimize that loss? You can do this one of two ways.
- Buy an almost new car, and keep it until the wheels fall off. The longer you keep it, the longer you have to spread out the initial cost. For example: If you purchased an almost new car (1-2 years old) for $22k, and kept it for 12 years (drive for ~ 150k miles) – your cost per year would be: $1833.33 or $153/month.
- Buy an older car for less, and sell it for close to what you paid. For example: If you bought an old car (7-8 years old) for $9k, and kept it for 3 years (drive for ~40k miles) – then sold it for $4k – your cost per year would be: $1666.67 or $140/month.
Contrast that with a new car that you purchase for $28k, and keep for 3 years. You can probably get around $20k – depending on mileage and condition. Your cost per year in this case is: $2666.67 or $222/month. Not so bad if you paid for the car with cash (interest is always front-loaded in a loan), but who does that? If you took out a loan, you might be underwater. Which only means that the value now (20k) is less than you still owe.
Granted, these two scenarios don’t take maintenance into account. That’s another topic entirely, but all cars require at least some maintenance.
Buying Small Items Everyday such as: Lottery tickets, Expensive Lattes, or Lunch
Lottery tickets – you will never win. Check out this post if you’re not convinced. This is one of the most egregious ways to throw your money away. The lottery has been dubbed ‘a tax on the poor’ or ‘a tax on the mathematically challenged’. Don’t be a sucker.
Expensive lattes – you know what I’m talking about. Those $3 or $4 drinks . . . that you have to buy . . . everyday. That’s $1k per year, just in coffee and other specialty drinks. A tub of good coffee grounds that you brew at home costs a fraction of ‘those special drinks’.
Lunch – this is similar to the specialty drinks. You can save loads of money by packing lunch (or having your spouse do it for you). In my situation, I go home for lunch – where my lovely wife makes my lunch. Isn’t she sweet?
Being conscious of the situations where we tend to overspend can be enlightening. You’re allowed to spend money on any of the items on this list – it’s your money after all. But if you want to make the most of your resources, these may be areas that you can cut back.
If you enjoyed this post, please consider sharing it using the social media links below. Thanks.