Put More Cash In Your Pocket by Plugging Your Money Leaks

This article is part of our 12 Keys to Lasting Wealth Series – (Key 3: Don’t Let Small Holes Sink Your Financial Ship).

Imagine what it would feel like to find an extra $500 lying around at the end of the month. Imagine five crisp one hundred dollar bills sitting in your hands. Yes, those Benjamins are feeling real good.

What would you do with this small windfall? Could an extra $500 a month help you get ahead and keep you from living paycheck to paycheck?

Would it rid you of that pesky bill collector calling morning, noon, and night?

Perhaps you could pay down your credit card debt instead of watching the balance creep skyward?

Does finally being able to stash away money for a rainy day bring a smile to your face?

An extra $500 a month would be nice. Best of all, you can make such a windfall a reality simply by plugging your money leaks.

We all have them. Like the slow, maddening drip from a faucet, our money leaks slowly transform into tidal waves of lost money.

Plugging these holes is like finding an extra $500, $600, $700 or more each and every month.

Let’s take a look at some of our most common money leaks.

Money Leak:

Wasted Food
The average family throws away 14% of the food they purchase. This may not sound like much until you realize it adds up to $614 wasted every year for a family of four. Talk about throwing money out with the trash.

Fix:
Your fridge may be the prime culprit. The temperature inside many refrigerators is above the recommended 35F-38F leading to premature spoilage. Purchase a cheap refrigerator thermometer. It will allow you to set the proper temperature, keeping more of your food from going to waste.

Check your garbage periodically to determine what items are consistently being thrown away. This will allow you to adjust your buying habits accordingly. After every shopping trip rotate the old items in your refrigerator to the front and the newly purchased items to the back. This ensures things do not linger in the back of your fridge and go to waste.

You don’t have to be Rachel Ray or B. Smith to give your left-overs a nice makeover. Stock up on eggs, potatoes, and salad greens. These can be used to create delicious dinner omelettes, stuffed potatoes, or economical dinner salads. Don’t forget, left-overs also make great lunches.

Money Leak:

Mindless Habit Spending
Yes you grab that morning Starbuck’s coffee or the noontime snack from the vending machine without even thinking about. We all make these mindless habit purchases, whether it’s the pack of cigarettes, the daily lotto ticket, or the Krispy Creme doughnut on our way home from work.

Yet, these habit purchases can be downright costly. One $2.99 latte in the morning costs you nearly $715 a year!

Fix:
The problem with habit spending is that we don’t realize we’re doing it. Get ahead of the game by taking the time to actually identify your habit spending. Why not make this the year you kick your smoking addiction? Drop that lotto habit once and for all. It’s hard at first but the financial payoff is exhilarating. Make other items a treat instead of a daily expense. A hot drink enjoyed once a week tastes much better than one purchased daily.

Money Leak:

Sneaky Fees
Fees have proliferated like wildfire. Late with a credit card payment? There’s a hefty fee. Want to pay your bill over the phone? There’s a fee. Need to see a bank teller? What do you know, a fee! You can’t turn your head without running into one. In fact, a survey conducted by the Ponemon Institute concluded that sneaky fees costs the average American $956 dollars a year.

Fix:
Fight back. Automate your bill payments so you never pay late fees again. Yes, I know it’s a pain but take the time to read the fine print on your purchase or service agreements. That’s where the “hidden” fees are usually spelled out. A little bit of reading now will save you lots of financial pain later.

Finally, resist the temptation to use out of network ATMs. A $3 ATM fee may not seem like much but over the course of a year such fees cost you several hundred dollars.

Money Leak:

Interest Charges
The typical American family has nearly $9,000 in credit card debt. On this balance an 18% interest rate will create nearly $1600 a year in interest charges. This is possibly one of our largest money leaks.

Fix:
Credit cards can be seductive. It doesn’t even feel like you’re spending real money as you hand your card over. This is exactly what credit card companies are counting on. Quite simply, if you can’t pay cash don’t buy it.

Money Leak:

Recurrent Charges
Yes, you ordered a free credit report after seeing the cute jingle on television. What you may not have realized is that in the process of requesting your free credit report you were signed up for a $14.95 credit monitoring service. This service is being quietly charged to your credit card each and every month. Companies are working overtime to find ways to trick you into signing up for recurrent credit card charges.

Fix:
Watch your credit card statements like a hawk. I once signed up for Major League Baseball service that allowed me to watch my favorite team’s games over the internet. Yet, even after the baseball season ended my credit card was still being charged every month.

Money Leak:

Poor Driving Habits
The average family spends $2,715 a year on fuel and oil. Yet, our aggressive driving habits and need for speed creates a huge money leak in the form of increased fuel charges.

Fix:
Observing the speed limit pays off. According to the US Department of Energy, each 5 mph you drive over 60 mph is like paying an extra 24 cents per gallon of gas! Aggressive acceleration also diminishes your car’s fuel efficiency. Remember to keep your tires properly inflated. This can improve your fuel efficiency by 3.3 percent, saving you nearly $89 a year.

Money Leak:

Unused or Under-utilized Services
It’s January 1st and you vow to get in shape by signing up for a gym membership. By April you’ve visited but a handful of times.

Years ago you upgraded to the premium cable package but with your hectic lifestyle you barely have the time to watch the extra channels.

You look at your cellphone bill in disgust as you notice nearly 1,000 unused minutes.

It’s simply amazing how much money we waste on unused services.

Fix:
Check to see how much you’re actually using the services you pay for every month. Stop paying for unused cell phone minutes. Visit websites like BillShrink.com where you can analyze your cell phone usage and find a more suitable plan.

Determine the per use cost of your gym memberships or how much it costs to watch each of your favorite episodes on your premium channels. I realized, for instance, that by visiting my gym once or twice a month I was paying nearly $27 per visit!

Money Leak:

Utilities
According to the U.S. Department of Labor the typical family spends nearly $3,649 a year on utilities. Yet, a lot of this money literally flows out the door in improperly insulated homes or flows down the drain from wasteful water practices.

Fix:
Consider an energy audit. Trained professionals will visit your home and determine how you can make your home more energy efficient. Many utility companies offer free or discounted audits. Install energy saving devices such as low flow shower heads and compact fluorescent light bulbs. Programmable thermostats control utility costs by heating or cooling your house only when you’re home.

Money Leak:

Newspapers, Magazines, and Books
How many times have you purchased a book but never made it past the first chapter? Unread books sitting on your bookshelf are a huge money drain. Just one or two books purchased a month adds up to $200 to $300 spent over the course of a year. Do you actually read the entire newspaper every morning? Probably not. Yet, a daily newspaper could cost you $365 or more a year.

Fix:
Your local library has books you can borrow for free and if you never get around to reading them there’s no money lost. Friends of the Library book sales allow you to purchase recent best sellers for as low as 50 cents a book, a real steal. Use the web to catch up on all the daily news or use an app to have popular news stories pushed to your smart phone.

Are you ready for an extra cool $500 or more in your pocket at the end of every month? Seal those money leaks and it could be yours.

In the next post we’ll take a closer look at how mindless spending wreaks havoc on our finances and what we can do about it.