6 Little Things That Cost You BIG Money

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1. Credit Card interest charges

one of the most common ways people lose money right under their noses on a regular basis is with credit card interest charges credit cards have the highest interest rates of any bank loan where some go up to 25% interest rates but credit card companies do not calculate your debt yearly it is calculated on a daily basis this can make the interest that you pay much higher or much lower depending on how you manage your account so for example let’s say that you have three thousand dollars in your credit card balance and you have a 20% APR a PR means annual percentage rate to calculate your interest rate let’s divide your APR by 365 days some banks divided by 360 so we get zero point zero five six percent daily interest rate now let’s get your average daily balance since your interest is calculated daily it is important for us to get our average daily balance and you can get this by adding your daily balance and dividing it by the total number of days of the month for simplicity let’s say that you did not add any balance to your card and you did not make any payments throughout the month so your daily average balance is $3,000 so now let’s multiply our average daily balance by our daily interest rate and multiply it by the number of days of the month for simplicity let’s say 30 days in a month this gives us our interest for that month and we got $50 in forty cents interest those are fifty dollars are coming out of your pocket every month that could have gone to your savings or investments account this is specially dangerous if you only pay the minimum payment allowed if your minimum payment is $75 this means that 50 out of those $75 goto interest and not to your loan minimum payments are away banks make more money from you if you have a credit card balance it is recommended to not just pay the minimum amount but try to pay it as soon as possible now interest does not apply if you do not carry balance to the next month if you pay your total balance before the following month then you will not pay any money and interest there are two main options to avoid these unnecessary charges number one pay your balance in full each month this way you won’t be charged any interest on your daily balance it can be better to have a smaller savings account and a credit card balance because the interest that you’re paying heavily outweighed the interest that the bank pays you for having a savings account and two if you already have a big balance a good idea might be to find a loan or a card that has no interest rates or at least a lower interest rate that you already have and transfer your debts to the new credit card and try to pay it as soon as possible now make sure to talk to your financial planner to find out what is the best route for you this example is for illustration purposes only another unnecessary way.

2. overdraft

people lose money is with overdraft in late payment fees in many cases a simple change can save you hundreds of dollars in many cases people are not aware of their bank account balances and end up spending money that isn’t there creating negative balances in their accounts causing overdraft fees now how many times does this happen you get paid you put money in your savings you pay your bills and there’s some money left over for you to enjoy and spent but there’s always that one small bill that didn’t come through until after you spend some money and all of the sudden you are a couple of dollars overdrawn according to a study the average overdraft fee is $33 this means that if you overdrawn even by a dollar you end up paying around thirty three dollars in overdraft fees all due to that one charge another fee that can bleed your account of cash a late payment fees this can be dangerous since in many cases late payments are tied to your credit and if you have a few of them this can hurt your credit making it harder to finance anything get a good apartment or even increase your interest on any loan you get if there are linked payments on loans this could not only charge you a fee but it also means that this fee will be added to your debts which will now be used to be compounded in other words you will not just pay a fee you will have to pay the interest that the fee produces these fees can potentially make a dent in your bank account and in your credit but they are absolutely unnecessary and fairly easy to fix by organizing and understanding your expenses you know how much you will pay how much comes out of your bank account you can make sure you are not left vulnerable to overdraft fees and by using automated payment systems and/or schedules you can make sure you are not missing any payments avoiding those late paying fees and keeping your credit score strong.

3. Monthly Subscription Fees

now something that lurks in the dark leaking money out of your account our monthly subscription fees now many of them are things that you want things that you signed up for with the intent of using it continuously but they might be a few subscriptions that might still be there even though you don’t really use this can be things like free trials that you never cancelled services that you only wanted to use once but forget to cancel or even things that you wanted to use but don’t really use things like magazine subscriptions online learning platforms or even gym memberships I know that you have all the intention of going to the gym and getting those muscles but if it’s not in use it’s taking money out of your account every single month according to a study over 1.8 billion dollars a year are wasted in unused gym memberships fitness clubs can legally sell more memberships than they can physically hold since gym owners know that only around 18 percent of their members will use the gym consistently for example a study showed that Planet Fitness sells an average of 6,000 memberships per gym when the facility can only hold 300 people now of course going to the gym is great but it can fall under unnecessary expenses if they go unused so it is always a good idea to go through your bank or credit card statements to check for unused subscriptions that are taking money from your bank account every month.

4. college

college now I know this is a controversial one but stay with me here college and university prices are no joke a 4 degree can cost up to $40,000 and in many cases more new college students are encouraged to go to college even if they don’t know what their major will be they are encouraged to decide while they’re going to school switching majors mid-career is common according to the US Department of Education one-third of students on a four-year degree switched their major at least once and it’s worse for science majors with 40% of their students with a science major end up switching majors this increases the amount of classes the student has to take for their new career which makes their classes they already took and paid for absolute not to mention that some college careers did not give the return on investment to justify the large expense now there are many careers that are lucrative and need a college education these are typically specialized careers like doctors or nurses attorneys lawyers or accountants so if college is something that you want to do it would be a good idea to do your research and avoid paying more than you should.

5. Seasonal Fashion or Fast Fashion

The fashion industry has created many ways to encourage customers to consistently buy clothes fashion trends are so effective that we have names for them we have seasonal fashion where people go and buy new clothes to match for that season or fast fashion where companies take it a step further and have never-ending continuous stream of new fashion and low prices to encourage customers to shop regularly in her book overdressed Elizabeth clean writes how in the 1930s the average American woman owned an average of nine outfits today each by more than 60 pieces of new clothing every year in many cases these are clothes that we end up wearing once or twice and end up collecting dust in her closets according to Fairtrade org the UK spends 27 billion pounds on clothes each year with no sign of slowing down.

6. Gaming or in-app purchases

Did you know that the game fortnight generated over 3 billion dollars in in-app purchases in 2018 a survey showed that 69% of players spent an average of $85 in app purchases inside of the these are called micro purchases they don’t tend to be expensive purchases but slowly add up and this is only one game a study found that iPhone users spend an average of 58 dollars in app purchases in 2017 in growing in 2018 especially with the growth of popularity of Apple pay again this can be small unnecessary purchases that slowly add up and take money out of your pockets in the comments below let me know what are other ways we might be unnecessarily spending money on that I did not cover.

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