Off-Limits: Certain money habits are always bad ideas

Depending on who you talk to, money is greatly debated as far as what is smart, prudent and good and, of course, what you want to try to avoid.

But as much as we discuss, often time common ground eludes us on things like budgeting, paying off credit card bills and other money related issues.

There are, however, some money habits that we all can agree are bad news, no matter who you are or what perspective you take with them.

For starters, if you’re someone who pays for vacations, groceries or bills with your credit card, you’re living beyond your means and your budget needs a serious overhaul, without question. That type of behavior is not only going to put you in debt but it is a cry for help that your income is not what it needs to be.

And as long as we’re discussing credit cards, are you only paying the minimum on those? If that’s the case, you’re setting yourself up for a lifetime of debt. Instead of the minimum, why not follow the lead now being set forth by the card companies who have to tell you what amount will get you out of a debt faster, such as suggesting a $100 per month payment that will have the card paid off in three years rather than the minimum of $35 and 20 years of debt with one charge card?

Budgeting also is paramount, and if you’re one of the millions of individuals that has no budget and just earns and spends without a care in the world, you’re not doing yourself any favors as far as saving money is concerned. Budgeting is the lifeblood of saving, and without one that is true to your income, your expenses and all the little incidental buys you have throughout the course of a month or year, you’re only sabotaging your ability to save.

You’re also making it very hard to have a nest egg, savings account or emergency fund. Call it what you will but what it boils down to is you should have money in hand just in case something happens you’re not prepared for at this very moment. Otherwise, you’ll be begging, borrowing and only increasing your debt.

To go along with budgeting, you can’t overlook financial decisions you make with a budget in mind, such as spending more than 35 percent of your income on a home and thus becoming “house poor,” a term coined that suggests all of your income is being sucked up by your mortgage payment.

Money will always be a polarizing topic, but some money mistakes are blatant, obvious and so bad that the masses have no problem nodding in unison at them.

Tech-Savvy: How technology can help you save money

Do you fancy yourself as a smart, financially prudent individual? Do you have a budget, track what you spend and make sure you know what your expenses are versus your income?

If you answered “yes” to all of those questions, congratulations on being smart with money.

That isn’t to suggest, however, that you’ve reached your financial pinnacle as it relates to saving money, and in fact, you have just started.

You see a budget is more than just the basics, more than just the obvious expenses, and understanding that is going to really help you devise a budget that works, versus one that looks good on paper.

And you might not be quite as keen on those incidental expenses, and that can present a problem simply because you have expenses that aren’t tracked and thus can’t be identified. The only reason you know something is wrong is that you don’t have as much money leftover at the end of the month as you might think.

Enter the world of wonder that is technology.

As much as banking still centers on paper checks and hand made deposits, you can’t underscore just how much technology can really be an eye opener when it comes to how you spend your money beyond things such as your car payment, mortgage or other expenses you never overlook.

My forage into technology as it relates to banking started with what is called a virtual wallet, something that manages your money and, at first glance, is an elaborate, overblown ledger that is lot of colorful charts but also allow you to see where your money is going as almost the version of an adult picture book of banking.

What this showed was a penchant for overspending incidentally to the tune of nearly $900 at a well known, national convenient store famous for its made to order food and gas. The gas part is totally understood, but I was able to separate that from the actual purchases of anything from bottled water to iced tea, a cup of fruit on the go or a breakfast sandwich before work. Little did I know I was spending nearly my mortgage payment on that in just one month. Needless to say, I was appalled and realized that my previous budget that I thought was nearly perfect was hardly even worth the paper (or spread sheet) it was written (printed) on, and thus totally changed my perspective on how to budget.

That led to a better understanding of saving money and how I spend, thus creating a real plan to put money aside that actually works now.

Bad News: Debt is bad, but do we really understand why?

As much as the word “debt” carries with it a negative connotative meeting, the majority of the world, to the tune of 50 percent or greater, has at least $20,000 in unsecured debt. Sounds a little like a contraction?

If we know at the core of the money discussions that debt isn’t a good thing, why do so many people have it? Do we really realize that debt is bad, and do we assume that debt is a part of life, something no one can escape and thus we accept it for what it is, just as routine as brushing your teeth or showering?

The fact is debt is bad, and we all know it. But what tends to get in the way of that thinking is our wanting to buy what we can’t have, own what we don’t need or have the things that others do with the means to own it.

Debt gets in the way of having the things we want to have that matter, the kind of good debt we all want: buying a house, owning a car or being able to fund our education wants and needs. That type of debt is what would be considered a need, something that is going to either gain in value (house), allow us to be more efficient (car) or earn more money as we continue to learn (education).

Having debt or buying unnecessarily and not having a controlled, followed budget also keeps you from retiring on time (or early) and building a savings account in the event that something unforeseen happens, such as medical expenses, home repair or car issues that allow you to have the money on hand to fix or pay these, rather than borrow more money.

Probably the most daunting element of debt, and why we should think longer and harder about just how much it is a negative: stress. Debt and having it is extremely hard on your nerves, which in turn can cause ailments, medical issues and other relatable problems that you can draw back to when you’re fretting over how you’re going to pay your bills from one month to the next.

Yes, we know debt is bad, but yet we give it somewhat of a free pass. We take debt as a part of life we just have to cope with, rather than viewing it the way it should be, and that is as something we all should be striving to eliminate once and for all.

Retired Lament: Why you won’t be able to retire on time

For those who have retirement on the brain, you can tune out at this moment, because you’re undoubtedly well on your way to getting the funds set aside to call it quits on your terms. You have a retirement plan, and you’re following it to a tee, but sadly you’re in the minority for the most part when it comes to saving money for the day you stop working.

The rest of us have retirement on our minds, but hardly at the forefront. We want badly to have the right amount of money so we don’t have to work into our late 60s or early 70s. Our bad habits when it comes to money tend to hold us back, however.

For starters, you know retirement is important. That doesn’t keep you from spending money all too freely as a result, and you’re not so much concerned with the future as you are with present day and that means you might be inclined to buy too much house or a brand new car when a used when could save you thousands.

And then, you have those who just aren’t paying any attention to their retirement whatsoever. They don’t get involved in the company 401K, even if their employer employs a company match. If there’s nothing offered by the company, this group still doesn’t look into a retirement plan on their own or invest in an IRA to boot.

What often is overlooked when you aren’t able to save for retirement is the thought that you can’t put money aside because you have to much invested already: into debt, that is. Having too much debt means you’ll be paying on it for quite some time, and those monthly payments, particularly if you have more than just a few, are going to take away from money you could be saving and putting toward retirement.

Finally, you have to really take a long, hard look at your retirement and determine what is realistic to the point that you know when you can retire and how much you’ll need money saved wise to be able to live comfortably for more than just a few years. Often retirement numbers and goals get bloated due to the masses wanting to have a plethora of cash to travel or spend as they see fit, and don’t do it in a way that makes the most sense as far as how they’ve saved and spend for the 30 years they’ve been working.

Retiring will never be viewed under the same light as everyone, but discounting its importance is just plain silly.

Budget Believability: Do you really have budget you follow?

How many times have you written out a budget and felt really good about it, only to realize after a few months that you really aren’t paying much attention to it?
In fact, maybe that budget isn’t worth the paper its printed or written on, and at the end of the day, you still are losing money at the end of every month.

What you have written may not be what is coming to pass, quite frankly, in that your budget isn’t really working for you and is just there, doing very little to help you save money.

The real key to saving money and having a budget is paying attention to more than just the line items on it, but rather viewing a budget as an all encompassing entity that extends beyond utility bills, car payments and rent.

As much as financial experts and those adept at saving money will tell you to track every last cent you spend, that process really doesn’t do much by frustrate you and leave you questioning how someone does that and still manages to have a life, truthfully.

Instead, think about trends that you see as being issues or would be problems that are causing you to lose money in the long run, thus making saving nearly impossible. For instance, you may not think much of a movie or two being purchased through your cable company but three movies per week at nearly $7 each is costing you almost $100 per month. That trend means you’ll spend over $1200 per year on renting movies. Do you have that kind of extra money?

Furthermore, a $10 lunch bill every day seems harmless if not superbly convenient for you as far as not having to worry about packing a lunch. But that $10 means you’re spending $50 per week or $200 per month on just one meal per day. Think about the money you’re already spending on groceries and you realize you’re paying twice for food.

Incidentally, that lunch bill is costing you more than $2000 per year, hardly worth the convenience or that salad or soup you’re enjoying.

As much as you want to get super specific, the only time you want to dial down that closely is for the aforementioned purchases that come across as more trends than tedious watching. Budgeting can be done in a way that best fits the person, rather than trying to fit your square peg thoughts into the round hole of thinking that others tend to use.

Budgeting Blow: Don’t plan on saving without budgeting

Everyone has a friend, family member or co worker that wants to save money and when asked or pressed about how they’re doing it, they don’t have any answers.

Even though the one answer you’re looking for is the easiest of them all: have a budget and stick to it.

The “sticking to it” part won’t mean a whole lot if you don’t even have a budget and you’re simply paying bills blindly as your paycheck or other sources of income are tallied but hardly tracked accordingly.

What is a budget so important?

Mostly because the majority of people know how much they make, they know how much their paycheck is for and that it goes into the bank. But conversely, they aren’t as sure what they are spending.

Sure, the big ticket items are covered and understood, such as cars, utilities, your living quarters, and even credit card or other debt you’re on the hook for, but what about all those incidental spending sprees or minor buying that you do consistently?
Are you account for that as well?

Chances are, every time you buy a cup of coffee, pack of cigarettes or bottled water, you’re not tracking that kind of spending. But perhaps if it is something that is consistent, you should be. Far too often, budgeting is broken down or loses its grip on saving money when you are spending money that isn’t part of that budget and thus you don’t realize at the end of a month why you haven’t been able to saved as planned.

Often times, incidental expenses or even things like clothing, eating out at restaurants or just buying a movie through your cable company a few times per month go unnoticed, when in actuality they can quickly close the gap between having a few hundred dollars left at the end of the month to being in a negative (particularly when you’re talking about restaurant dining and clothing).

Some even forgo tracking spending that goes beyond bills and will forget about grocery store shopping as well, even though those large ticket items can’t be ignored (you can say the same for gas for your vehicle or even a vacation that isn’t on the books).
Saving money starts and ends with a budget but having one isn’t the same as following it and making sure you have it down to the very last penny when possible.

Waste Not: Wasteful money habits plague ability to save

When it comes to saving money, we tend to let most of those extra dollars slip through our fingers. And, that typically happens in the most obvious ways.

That is, of course, if we are paying attention, and most of the time something so “obvious” as far as wasting money and not saving it tends to be harder to see that you think.

Wasting money from a financial perspective isn’t so much about spending as much as it is about not being able to save and going counter productive to what is in your budget. If you are spending money on items and services that aren’t needs, and your budget is in the negative, that’s waste at its pinnacle.

Extra money needs set aside for retirement, into a savings account or put away for the proverbial “rainy day” should you need to tap into money for an emergency.

What exactly is money wasted?

One of the more common spots where your money isn’t doing so well tends to be outside the kitchen of your home, most notably wasting money eating out at restaurants. This isn’t to suggest that you can never have a meal outside of your home, special occasions, birthday celebrations or anniversaries, but rather more along the lines of spending for food in two separate failed swoops.

You’ve already spent money on groceries and now you’re spending upward of $10 for lunch and another $20 for dinner and that leads to thousands spent unknowingly by the end of the year on food.

Did you know that Americans also spend more than 11 billion dollars per year on bottled water? The next question: how much of that is yours? Another wasteful spot on your budget is that bottled water trend that could soak you for hundreds of dollars or more per year with every $1.50 you spend on a bottle of water or event the cases of 24 for around $4 to $5 that last you a few weeks at best. If Dasani has taught us anything, it’s that their “bottled, spring water” is just purified tap water, and spending money on bottled water is money thrown down the drain.

While some argue that wasting money is about perspective, there are universally agreed upon areas where people spend more than they should or need to as it pertains to wanting to save money. Someone who eats out every day and spends money on bottled water may have the means to do so but that doesn’t change those purchases from being anything but prudent.

House on Hold: Why some expenses at home can be cut

Saving money starts at home, whether that’s clipping coupons for grocery store shopping or spending less on clothing via at second hand stores or online auctions, and anywhere else you can pull together money for our savings account.

But instead of staring blankly at a change jar that gets all those loose pennies, how about really getting serious about saving money and looking a little deeper at household expenses that you really can cut or eliminate altogether.

First and foremost has to be your television, more specifically your cable and internet package. The internet, for your entertainment purposes, might be needed but streaming is the way to go to save money. Cable can easily be eliminated if you’re perfectly fine with getting your news via the internet and not nightly and feeling as though movies and television shows can be enjoyed via Hulu or Netflix. The costs of those streaming services pale in comparison to the enormous amount spent on cable, probably close to five times expensive for cable or satellite.

When was the last time you stood in line, bought something and realized that you just spent anywhere from $50 to $200 on an “extended warranty.” That number grows exponentially when you buy something like a vehicle, too. Extended warranties are typically viewed by the consumer as protection for the “what if.” But most of the time, that “what if” never comes to fruition and so when it comes to lower cost items or even that car, truck or SUV, say no to the warranty. You’ll find if you read the fine print that the extended warranty really isn’t all its cracked up to be.

Often lost in the household expense conversation is the topic of credit cards, fees and interest. If you have a card that has a high interest rate, move it over to another card or focus on paying that one off first. You’ll save hundreds or thousands of dollars in interest that you’re avoiding. Furthermore, if you have credit cards that have annual fees or fees in general that aren’t interest, walk away. No, run. There’s no reason why you should be paying interest on a card along with fees that have no business even being part of this agreement between you and your card.

If you can’t look around the house and see spots where you can save money, then chances are you’re complacent with your budget and aren’t really looking hard enough to in the place where it is easiest to find savings.

Spending Flee: Why post-holiday shopping will sabotage you savings

Raise your hand if you used your credit card over the holidays.

This year. Last year. Any year, really.

Chances are that hand is up and would be up for the last several years as the majority of shoppers tend to lean on their plastic during that time period.

What you tend to forget and where most of the money missteps happens are the months after the holidays. Of course, you know most consumers tend to find those after the holiday sales when you save 70 percent off Christmas decorations, for instance, or also the retailers and their propensity to discount clothing to clean off the shelves of their winter gear and start prepping for spring.

But beyond just the merchandise and buying, mistakes after the holidays tend to center on credit and credit cards. More specifically what you do with them, and how they’re used after they’ve, well, been used.

The two worst things you can do with a new line of credit actually reside on opposite ends of the spectrum, and that’s using it too much or closing it altogether. The latter is a natural reaction, particularly if you opened a card to save a certain percentage of a purchase and the really have no interest in using it again. That, of course, is understandable, but you’ll always have that “what if” moment, and closing cards actually allows your credit to take a hit just as much as a hard inquiry on your credit as well.

Typically, what you want to do with store credit cards is use them for the discount and pay them off completely, but not necessarily closing them, either. That said, you never want to forget about the new cards. Sometimes opening a card and letting it sit just means that the creditor eventually will close it on its own due to inactivity so make sure you use it once and a while, sporadically, and then pay it off right away. That element is a must for all store credit cards, too, since they typically care with them a 20 to 30 percent interest rate after the first month when you don’t pay in full.

Naturally, using it too much is the basis on which bad credit stories come to fruition. Every credit story that turns from good faith to a nightmare focuses on opening a card for something as simple as a balance transfer and then you end up maxing it out on things you can’t even remember.

Credit can come in handy but only when it is used correctly and not as a means to gain products, particularly ones that come during the holidays and especially the ones after that time period concludes.

Get Smart: Why successful people keep the process of saving money simple

Do you consider yourself smart when it comes to money? Yes, of course.

The more important question is if you are successful when it comes with money, and that is a totally different skew than being smart or what your opinion of the matter is.

Those who are successful with money, quite frankly, have it. But “having it” doesn’t just mean making good money or being able to finance a couch or a trip to Florida when you want to without worrying about applying for credit or spending money on a flight.

“Having it” means that you make good decisions, long term, about money.

The first question you have to ask yourself: Do you have a built up emergency fund?

And if you don’t, when do you plan on starting one?

An emergency fund is having money set aside for just what it says: if something happens unexpectedly as a result of anything from fault plumbing or carpentry in your house to those braces for your kids that you hadn’t planned on as early as last week.

Being successful with your money also means you realize that just because you have it doesn’t mean you have to spend it: all of it, that is.

Those who have a budget and stick to it are the ones that are able to put money aside, build that fund but also have the peace of mind that they don’t live paycheck to paycheck. In short, they live below their means and don’t push their income threshold to the point where their expenses butt right up against it. If you make $5,000 per month, that doesn’t mean you have to have a mortgage that is $4,000. Living below your means doesn’t mean you can’t have or buy things for yourself, but more along the lines of using the 50 to 50 rule. If you make $5,000, your expenses should be about half of that. You have to remember that those who are successful with money are the ones that have the leftover capital to not only save money but to think about things like upping your retirement contribution or having a plan if that monthly income suddenly gets cut in half. Losing a job or having wages cut is a harsh reality that exists and can happen in an instant.

But, will you be ready? You will and can answer that with an affirmative “yes” if you have budgeted accordingly and lived below or well within your means.

Those who are smart or successful with money know one thing: money is only as good as the person who is managing it. You can gauge your own definition of “successful” but those who have already shown they can be dubbed that will tell you that the term centers on saving, budgeting and having a lifestyle that is conducive what you earn.