Tips & Information

Are the Small Expenses Costing You Big Time?

Are you feeling more fiscally conscious these days as you continue to recover from last year's holiday bills and prepare for your taxes? If you're still having that desire to make serious financial changes for 2006, this may be a good time to take a look at where some of that money is going.

How many times have you said “It’s only $5 dollars”; or “This candy bar is “only” fifty cents”; or “The bus “only” costs $1.50”; or “This CD is on sale for “only” $9.95”?

Those “it’s onlys” may be putting you over the edge each month. What I find even more insidious is how this language sets you up for minimizing and ignoring the whole financial exchange and then staying oblivious to your spending.

Now if you zoom this out on a larger scale, the real issue is lack of paying attention to spending in general. Most people are so entrenched with the routines of their lifestyles that they never stop to even notice how much they are spending on any daily or monthly basis.

Let’s look at some examples of how your money is trickling away on the small stuff.

1. Bottled Water
   Even ignoring the issue of whether a particular brand is actually safer or purer than another, let’s look at how the cost of bottled water totals up.
   
   Instead of buying the small bottles by the case for a discount and being sure to carry them with you everywhere, do you buy those convenient bottles of water at the gym, theatres, department stores, or airport? Are you paying $1.50 - $3.00 for each when you could be spending 25c each buying it by the case? At $3.00 a day, you could be looking at over $1,000 a year.
   
   Isn’t there a piece of furniture, clothing, a weekend trip or some paid off debt that would give you more satisfaction than buying overpriced bottled water?

2. Lattes
   Everybody knows the latte story already. But just as a reminder. If you add up that one daily $4 latte for just the work week, think of how you are drinking away $20 a week and $1040 a year. Now seriously, if you are a latte fan, are you really having only five lattes a week total?
   
   Any ideas what you would do with an extra $1040 a year?

3. More Small Stuff
   Notice the ATM charges when you don’t use your own bank, or the fees charged by some stores when you use your debit card or get cash back on your debit card purchase.
   
   Be especially careful if you are using your credit card for cash advances. Those high instant finance charges will drown you.
   
   If you are willing to pay 19.98% for a quick $200 of cash, perhaps there is a friend or family member you would rather give that kind of interest money to so you can circulate the money in closer circles. Think “win-win”. Of course this can be a very touchy topic, so if you go this route, be SURE to pay off that $200, with interest immediately on the agreed upon due date.
   
   Where have you noticed some of the small fees in your daily life?

4. Too Busy for Bills
   Is your life so busy you get behind in paying your bills? That late payment fee of $25 - $35 or bad check fee of $30 - $50, adds up mighty fast. Could you be saving hundreds of dollars of fees each month if you would take the time to slow down your life, or find a way to be more organized?
   
   Make the time to balance your account and know if you have enough money to pay bills. Then pay your bills on time, (whether through an online bill pay service or automatic withdrawal). You could literally save hundreds of dollars a month – potentially thousands a year.
   
   What bills could you have already paid off with just the total of the late fees?

5. Dialing for Dollars
   The whole topic of phone bills, programs, information charges etc., is enough to make anyone crazy. Just when you think you finally start to understand your bill, the service changes. The point still is, pay attention. Know what you have and what you don’t have.
   
   Do you even know what your program offers? If your lifestyle is one where the phone is like an extra appendage for you, be sure to find a program that has unlimited minutes or some program that fits your needs.
   
   Always ask. Call the companies and ask about their latest promotion. What program would work better for you, and save you money, based on your calling history?
   
   Can you think of other ways you would rather spend the extra $100s a year saved by paying attention to your phone plan and phone use?

6. Memberships
   Review your credit card statement and look for spending areas you can cut back. Are you paying a $9 – 15 every month for some credit card or cell phone protection insurance plan, travel service, entertainment program, online diet membership, or other online subscription service you don’t need or no longer use – or don’t even know you are on?
   
   Are you paying a membership for a gym or other organization you are no longer participating in? Cancel these programs and redirect that $15 - $60 to your savings or a mutual fund dollar cost averaging program. Have something to show for your money three years from now.
   
   If you have been wanting to donate to your favorite cause on a monthly basis, wouldn’t this monthly expense be more satisfying to you than the money being wasted each month for an expense you don’t even use?

7. Use Cash
   It doesn’t take long to see how fast the money goes when you shift over to straight cash. One woman decided to start using cash and stop using the credit card after seeing how high her credit card balances were getting. After one day of this new routine she was shocked to see how fast $100 of cash slipped through her fingers! By the time she stopped at the convenience store at the end of the day to pick up two cartons of milk, she was ready to have a fit when she saw the total bill. With that one change, she brought the whole money issue into a much clearer focus and started reducing her spending.
   
   Along these same lines, people have found some revealing insights when they started actually tracking their spending on a daily basis -many used my Budget Kit workbook. They were amazed, as they used the workbook, to realize they were actually starting to save more and spend less once they started getting in touch with their spending.
   
   Wouldn’t you like to be spending less and saving more?

Your Turn
Now take a look at your own spending on the small stuff. How many areas can you identify where you see small amounts of cash just trickling away? How much could you save each month by just making a few behavioral changes with your spending and your thinking?

How would your life be different if you paid attention to the small stuff and actually had extra cash in your budget?

As always, I appreciate the email feedback. Please keep it up! It’s always exciting to hear your comments.

For more information, feel free to contact me at
judycents@moneytracker.com

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