8 spending habits that eclipse your savings


spending habits that eclipse your savings

Poor spending habits can snuff out your savings, just like the moon snuffs out the sun in a solar eclipse. The sun comes back out, but will your savings?

Today many of us in the US got a celestial treat: the first total solar eclipse in nearly a century. At the place where I work there is a high concentration of technical people, so we were all geeking out outside and enjoying the show, complete with pinhole cameras, polarizing sheets, colanders, and eclipse glasses.

Spending habits can be the difference between night and day

Just like the moon covers up the light of the sun, poor spending habits can cover up your savings, and then some.

Spending less than you earn is what responsible personal finance boils down to. Nothing else is sustainable in the long run.

Here are eight spending habits that are best to avoid if you want to save money and have good personal finance:

· Large student loans. A college degree is an income-booster, generally. There are also insanely expensive ways to go to college, just as there are cheap ways to go to college. Coming out of college with a load of student loans — which, by the way, are notoriously difficult to get discharged — can substantially cut into your ability to save for years. (Or, even worse, failing out of college with debt. Ouch!)

· Lavish, over-the-top weddings. Having gone through a wedding myself, I fully understand the desire to have a great day. It should be an once-in-a-lifetime event (kind of like a really good solar eclipse). At the end of it all, though, you'll be just as completely married after a $3,000 wedding as you will after a $50,000 wedding. The only difference is the bill. And if it comes with a five-figure credit card debt afterwards — well, the honeymoon will be over more quickly than you realize. Opt for a budget wedding and you'll be happy you did (and your guests probably won't think any less of you, either).

· Buying as much house as the bank will approve you for. When I was getting our loan approval for our current house, I was flabbergasted by how much they would lend me. If I remember, it was an amount that would result in a mortgage payment of nearly half of my take-home pay. That was way, way too much for me! But … the banks know that you'll move mountains to make that mortgage payment, so they don't really care too much if you are strained financially by it. Our mortgage payment is something more like 15% of our take-home pay. The less the better!

· An addiction to new vehicles. Buying new vehicles is a nice luxury if you can afford them and pay cash, but borrowing for them is like throwing thousands of dollars down the drain. New vehicles lose 15% or more the second they're driven off of the lot, and there's basically no way to get that back, ever. Buying used cars has the advantage that the first owner paid the depreciation for you. They'll still go down in value, but not nearly to the extent that they did the first year. (Buying used is a great saving tips in general, too!)

· Eating out all the time. Eating out once in a while for special occasions is a nice treat, but when it's one or two meals a day, every day of the week, it takes its toll on your bank account. Learn some simple meals that you can make yourself (here's my favorite soup for starters).

· Mountains of credit card debt. I get it: Sometimes credit card debt is unavoidable. Stuff happens beyond people's control: a serious accident, or a serious illness, or both. But a lot of it is completely and utterly avoidable with some good spending habits and some self-restraint. Simply don't buy stuff that you can't afford.

· Crazy-expensive vacations. Though it's unwise to cheap out too much on a vacation, it's equally unwise to vacation beyond your means. The vacation hangover is usually bad enough without a giant bill or humongous credit card balance to pay off.

· Expensive toys with lots of maintenance. Think boat (which is an acronym for Bring on another Thousand), or a swimming pool, or a vacation home, or a time share. These toys have a lot of fees and maintenance costs that are ongoing; buying the toy is just the down payment.

Postingan populer dari blog ini

Determining What Kind of Investor You Are (Part 1)

Gambar
Many investors have no idea of what kind of investor they are. Instead of dealing with the question early on, they plod along with no idea what they are and what they are doing wrong. This question is vital in finding out what your goals are, how you handle risk and how you respond to gaining or losing money – factors that greatly impact your investments . Understanding these factors will help you avoid errors in choosing your investments . This will not only spare you from going through restless nights due to taking so much risk but also from losing bright opportunities to gain significant wealth. Let us look at five various kinds of investor to help you appreciate the importance of this matter. The conservative investor The conservative investor is one who takes great effort in charting his or her course and safeguarding his money. Such type is a safe player, always concerned about gaining a better gain compared to merely holding on to cash; although this ind...
Baca selengkapnya

7 Ways You Can Get More Money in Retirement

Gambar
According to the 2017 Retirement Confidence Survey, about 24% of workers said they had less than $1,000 saved for retirement, and a whopping 55% had less than $50,000. Only 20% had socked away $250,000 or more -- and even that seemingly hefty sum won't provide for the comfiest of retirements. Clearly, many of us have not set ourselves up to have the money we'll need in retirement. Fortunately, though, there are some ways to get more money in our golden years. Here are seven ways you can get more money in retirement. 1. Work a little longer before retiring Most people probably don't want to put off retiring, but it can be a very effective strategy , giving you a bigger nest egg to retire with and fewer years that it will have to last. You might enjoy your employer-sponsored health insurance for additional years, too, perhaps while collecting a few more years' worth of matching funds in your 401(k). Not convinced it's worth it? Well, imagine t...
Baca selengkapnya

4 Personal Finance Tips from Billionaires

Gambar
Here are some solid words of wisdom on generating wealth and being generous with it as well. You may be looking for an edge in your personal finances -- something that can help you rethink your approach to money and start getting ahead financially . If so, you might benefit from hearing what billionaires have to say and learning from their experiences. So, here are a few lessons on frugality, investing, and generosity from some of the wealthiest people in the world. 1. Live simply and be frugal Most people don't associate billionaires with penny-pinching, but that's how famed investor and billionaire Warren Buffett approaches his personal finances. Buffet bought a relatively modest house back in 1958 for just $31,000, which was around $275,000 in today's dollars, and he continues to live in it to this day. For context, the median home price in July of this year was $313,700. Buffett has summarized his views on success and happiness like this: Succ...
Baca selengkapnya