Money can buy freedom – freedom from trading hours for dollars. Money can buy options – the option to do what you want to do instead of what you have to do. Money is great to have as long as you manage and spend it wisely. But most of us never do – we waste it and we don’t even realize it.
How? Why?Because many of the items and services we buy aren’t worth what we pay for them. Here are 18 common money wasters to beware of:
- Bottled Water – Water is one of the most abundant, freely available resources on planet Earth. So is air. If I bottled some air, would you pay 2 to 3 dollars a bottle for it? I doubt it. Bottom line: Buy a water filter for your tap and stop wasting your money.
- Magazine and Newspaper Subscriptions – The same exact articles are online for free. I can read them right now and I didn’t pay a dime. Why are you?
- Printer Ink Cartridges – If you’re buying brand new ink cartridges every time you need new ink for your printer you’re paying about $8000 a gallon for ink. Yep, that’s right! Computer printer ink is one of the most overpriced consumer goods. For home users, instead of buying new ink cartridges, take your old ones to a store that will refill them for half the price. For businesses that do lots of printing, consider outsourcing the bulk of your printing.
- More House Than You Need – When you buy or rent a house that’s bigger than you need, you end up wasting lots of money on larger monthly payments, higher upkeep costs, higher utility bills, and lots of random ‘stuff’ to fill up the extra empty space.
- Insurance – Car insurance, homeowner’s insurance, title insurance, etc. Insurance companies love to rip us off. And while you can’t totally avoid them from a legal standpoint, you can shop around and save yourself a boat-load of cash. Don’t get comfortable paying what you’re paying simply because you’re used to it. Make sure you’re getting the best deal.
- Premium Cable or Satellite Television – Hulu.com offers thousands of television shows and full-length movies – all for free. And Netflix charges $9 a month for access to hundreds of thousands of television episodes and movies on DVD, or you can stream them live to your computer. So if you’re paying more than $9 a month, you’re wasting your money.
- Retail Furniture – Most people don’t realize that home furniture has a 200% to 400% markup on it. A typical retail furniture store must maintain warehouse inventory, a showroom, commission salesmen, etc. which all equates to a fairly high overhead. For this reason it is normal for furniture retailers to maintain extremely high markups. A typical piece of furniture that has a ‘suggested retail price’ of $500 will usually cost the retailer less than $200, so even when they put it ‘on sale’ for $400, they’re still making over 100% profit. The best way to save big money on furniture is to buy from an online furniture store with low overhead, buy wholesale, or buy slightly used on eBay or craigslist.
- Restaurants and Prepared Foods – I don’t need to tell you this. Eating out is ridiculously expensive. So is buying prepared foods at the grocery store. Buy both every once in awhile as a treat, but learn to cook and prepare your own food on a regular basis. It’s not just cheaper, it’s healthier too.
- Nutritional Supplements – Protein powders, vitamins, sports drinks, etc. – all of them are overpriced and have been proven by doctors to be mediocre sources of nourishment. The answer to good health rests not in a once or twice a day supplement solution, but in an integrated approach to good baseline nutrition though healthy eating habits that give us the energy we need to enjoy our lives and the best chance of warding off illnesses.
- Luxury Name Brand Products – A car gets you from point ‘A’ to point ‘B.’ A purse holds your personal belongings. A pair of sunglasses shades your eyes from the sun. A shirt keeps you warm. If you’re paying premium prices just to get a fashionable brand name labeled on each these products without any regard for how efficiently the products actually serve their practical purpose, you’re wasting your money.
- New Cars – See my previous point. A car is a means of transportation to get you from one place to another. If you’re buying a new car every few years even when your old car works perfectly fine, you’re likely trying too hard to impress the wrong people… and you’re going broke in the process.
- Electronics Warranties – When you buy new electronics a warranty might seem like a decent thing to invest in. After all, a warranty covers everything from technical problems to spilling soda on the circuits. But don’t be fooled. Most of the time the numbers just don’t make sense. For instance, a two-year extended warranty on a $400 laptop at Best Buy will cost you upwards of $280 – that’s about 70% of the original price. You’re better off saving your money and taking your chances.
- Retail Computer Software – Most retail computer software is marked way up. You can easily find OEM copies of the exact same software online (on eBay and similar sites) for 25% - 50% less. Also, look into free open source software alternatives. For instance, Microsoft Office Professional 2010 costs $300 at Best Buy, but you can download OpenOffice.org’s professional office suite which has all the same word processing, spreadsheet, etc. capabilities for free. And OpenOffice.org is 100% compatible with Microsoft Office files.
- Medical Issues that Can Be Avoided – Eat right and exercise regularly! Keep your body and mind healthy! Major medical problems drain back accounts, increase insurance rates, keep you from working and earning money, and generally guarantee that you will have long-term financial problems.
- Prescription Medication – The previous bullet leads directly into this one. Prescription medicine has one of the highest markups of any consumer good. The sky high cost of prescription medications is crippling parts of the US economy and keeping necessary medicines out of the hands of those who need it most – people living on fixed incomes with acute or chronic health issues. Unlike other countries, there are no price controls on prescription medications here in the US. So we end up paying 200% - 5000% markups on essential medicines and drugs such as Prozac and Xanax. The solution is to buy wholesale at wholesale resellers such as Costco. Costco’s prices are typically half the cost of the local retail pharmacy on many popular prescription medications.
- Jewelry and Precious Gems – All jewelry is subject to volatile changes in price and high markups. The industry average markup varies widely – 100% to up to over 1000%. And jewelers thrive on the uneducated buyer, so do your research. Also, jewelry is almost always an emotional purchase, so you need to think logically about what you’re getting, how much you’re paying for it, and what your other options are. And even then, you probably won’t get a great deal. Buying and wearing less jewelry is always the smartest choice.
- Second-rate Entertainment – The best things in life are free. Stop wasting your money on movies, games, and other second-rate entertainment and take a good look around you. Mother Nature offers lots of entertainment free of charge. Go hiking, go skinny dipping, play in the rain, build a bonfire with your friends, watch the sunset with your lover, etc.
- Nasty Money-sucking (and life-sucking) Habits. – Smoking, drinking and gambling are all perfect examples of bad habits in which you choose to trade short term pleasure for long term debt and discomfort. So light one up, shoot one down, and toss another chip across the table. It’s only your life and livelihood.