Small expenditures, over time, can add up to big bills. When it comes to your retirement, the effect can be the equivalent of death by a thousand paper cuts. If you’re not careful, you could easily blow a hole in your budget and imperil your financial future. In this second installment, we look at more little things that can derail your budget and retirement goals over time — and how to get back on track.
Bank/ATM fees. The next time you review your credit card and checking account statements, take a hard look at your bank fees — including ATM charges. If you’re overdrafting your account, you and millions of others are paying for it to the tune of $8.82 billion annually. Then there are account maintenance fees, wire transfer fees and the king of them all, ATM fees. If you use an ATM that belongs to your bank, or to the network your bank belongs to, you may not be charged at all. But go outside that network and you’ll probably get pinged per transaction.
Some solutions: Use less cash, keep enough in your account to avoid overdraft and account maintenance fees and avoid taking out small sums frequently. And comparison shop for a bank with lower fees or lower minimum balance requirements.
Credit card interest payments. If you haven’t shopped your rate in a while, you could be paying upwards of 14% to 18% interest on your balance. And that’ll add up fast. There are times when you might need to use a credit card for large purchases — your dryer or the car breaks down. But resist the temptation to let those balances hang around for too long. And find a better deal if you can’t negotiate down your rate with your current lender. There are scores of different offers out there, from zero interest for a year or more to generous cash back rewards.
Un- or underused gym memberships. Unless you’re actually going to use that gym membership, cancel it. According to a USA Today study, 67% of those who have a membership don’t use it, so cancel before you rack up even more charges. If your gym has a contract, find out how many months are left and how much they’re going to charge to let you out of the contract, then turn off any auto-renew feature.
Other subscriptions. The same advice applies to other memberships and subscriptions: discount warehouses, the jelly of the month club and those meal in a box delivery services. If you haven’t used it in the last 30 to 60 days, cut it loose. If you’re going to miss it, you’ll know soon enough. And you may find the service sending you emails begging you to come back — and maybe even offering you a big discount to incentivize you.
Unconscious or impulse spending. The drive-through double mocha latte, fast-food lunches, the magazine at the checkout counter (or, worse, the candy bar), the sale item you don’t really need — these are the kinds of purchases we all make without thinking much about them. It’s time to start thinking. Do you really need premium takeout coffee every day? Is there an alternative, such as brewing at home and using a thermos?
Small tweaks in your spending can make a big difference. Your Financial Professional can help you set up a budget to help meet your financial goals. Send WellCents® an e-mail and learn how you can put those hard-earned dollars you save to work for you.
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