Is there a Money Wasting Hole in your Budget?

The possibility that you have flaws or “holes” in your budget is actually quite high and, sort of like a leak under your sink that you don’t know is there until you start smelling the stink of rotting plywood, you probably haven’t even noticed them. But, just like that slow drip under the sink, these small holes in your budget can, over time, add up to quite a bit of wasted money.

The solution of course is to check your budget occasionally, search for “holes” that might be leaking money and plug them in immediately. Below you’ll find quite a few excellent tips that will help you to do just that, including resources and advice that will help you to get your budget in order and cut away and any unnecessary expenses that might be leaking money right under your nose without you noticing.

Budget hole: Carrying a balance on your credit card.

Carrying any type of balance on your credit card from one month to the next isn’t a good idea but, unfortunately, many people carry huge balances on their credit cards over months and even years. This can absolutely drain your money, lower your credit score and even cause you to pay higher interest rates on new loans. For example, if you have $2000 on your credit card and that card charges you and 18% interest rate, you’re wasting $360 every year solely on interest. That’s about the same amount as the car payment on a midsize luxury car! If you can plug this hole and pay your credit cards off quickly, you’ll potentially save thousands of dollars.

Budget hole: Ignoring generic and buying Brand Name products.

No matter what the product, from groceries to shoes and even prescription drugs, buying nationally known brand names will generally cost you between 10 to 30% more than their generic equivalents. That’s a lot of extra money to pay for the sake of having a brand name and the truth is that the extra cost is usually because of the high amount of money that brand is paying an advertising fees and packaging design. When it comes to prescription drugs the extra cost can be substantial. For example, the cholesterol drug Lipitor will cost you $154 for a 30 day supply but its generic version will cost you just over $70 or half as much. Buy generic and you’ll plug this hole quickly and easily.

Budget hole: Not paying bills on time.

Paying any bill late, including credit cards, utilities, car payments, the cable or cell phone bill and so forth, is one of the most common, and most detrimental, budget holes to be found today. Missing a credit card payment, for example, will cost you at least $25 in late fees and, if it’s the second time you’ve paid late within the last 6 months, will cost you even more. Late payments affect your credit score as well since they account for 35% of said score, carrying more weight than any other single factor. The easiest way to plug this hole is to have a system in place (any kind of system, as long as it works) to make sure that every bill, every month, is paid on time.

Budget hole: Purchasing insurance you don’t really need.

Here’s the thing; if you’re single or, for whatever reason, don’t have any dependents, you don’t need life insurance. Credit card insurance is practically unnecessary as well, especially if you pay your cards off every month and, unless you are extremely accident prone, paying for extra insurance on your rental car isn’t necessary either. When it comes to your mortgage, a regular term life insurance policy is much more comprehensive than most mortgage life insurance policies. The best way to plug this budget hole is to talk to an insurance specialist that you trust implicitly and determine exactly  what insurance, and how much, you need for your age and situation.

Budget hole: Spending more for gas and oil than necessary.

We’ve talked about this many times in our blogs on how to save money on fuel. The fact is, unless you have a very high-end sports or luxury car there is absolutely no need to purchase premium gasoline. Not only that but today’s new cars can go 5000 to 7000 miles between oil changes (and most have sensors that will tell you when it’s time to do so). When having your car’s oil changed, unless you live in an area of the country that is exposed to extreme heat or extreme cold for an extended period of time, you can usually get by on regular motor oil and avoid the “premium” oil that comes, of course, with a premium price.  Plug this hole simply and easily by using regular gas and regular oil in your regular car.

That’s it for today’s blog but, in the next few days, will have a second with even more budget holes that are leaking away your hard-earned dollars. We hope that you enjoy today’s blog and, if you have any questions or would like to leave us any comments, please do will get back to ASAP.

4 thoughts on “Is there a Money Wasting Hole in your Budget?

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