How to Avoid Unnecessary Expenses
Our spending is easy enough to keep track of when it comes to fixed payments and monthly bills, but those are things we can plan around and budget for. What about those hidden expenses that we don't, or can't, see coming until we're staring at our bank account in confusion? We can be knocked off of our budget by things such as hidden bank fees, high energy costs, or even something as simple as a magazine or gym subscription. What you may not know is that a lot of the expenses you're currently paying are completely unnecessary.
Avoid unnecessary day-to-day expenses
Life can get hectic – there's no question about that. In our rush, however, we could be spending more than necessary. Just by simply paying a little closer attention to your purchases throughout the day you could find some serious savings.
ATM fees can be a pain, but if you're in need of cash, the fee of a few extra dollars may seem like a small price to pay for the convenience. If you take cash out via an ATM weekly, and the average fee for using an ATM that isn't from your bank is around $2.00, you could be paying up to $104.00 annually in ATM fees alone. An alternative to this unnecessary expense is to ask for cash back at the store when making a purchase with your card. This allows you to receive cash without an added fee from an ATM.
Hidden costs can come in other forms that are not as obvious as a "set fee." Morning coffees on the way to work, that fast food you grab for lunch because it's nearby, and that frozen dinner you grab on the way home because you don't have time to cook dinner for the family – those small daily purchases we hardly even think about when we're doing them can really add up. Instead of buying lunch every day, try pre-packing all of your lunches the night before the work and you can easily put an inexpensive lunch together on a busy morning. Don't have time for dinner? Invest in a slow cooker for your home and you'll be able to start dinner in the slow cooker in the morning and come home to a finished meal ready to be served.
If you're a city dweller, you have the luxury of not needing to pay the exorbitant gas prices, but are still subject to the monthly cost of public transportation. Depending on where you live, your monthly expense will vary. In a city like Boston, you can expect to pay around $75 per month for travel on the Subway, whereas New York public transportation could cost you up to $117 for unlimited monthly travel on their transit system. Instead of paying for a monthly pass, consider walking to work and only paying for single rides in poor weather. Closer to the suburbs and tired of gas prices? Perhaps you could start a carpool in your office and take turns driving. Keep in mind - the more people included in the carpool, the less you'll have to spend when the group splits the gas costs.
Avoid unnecessary monthly expenses
It's not just our daily purchases that can throw us off balance when it comes to budgeting. Surprising energy bills and late payment fees are just some of the hidden monthly expenses that we can avoid by paying closer attention.
We all know that our heating bill tends to be higher in the winter (or at least it will for those of us in the Northern states). What you may not know is that it doesn't have to be that expensive to stay warm. There are several things you can do to your home to winterize it and prevent your energy bill from going through the roof. One of the things we suggest is getting a home energy audit. With this you'll be able to find out where your home is losing the most energy and what you can do to prevent it. If you're unable to pay for the weatherization of your home, you may be eligible for weatherization assistance. Contact your state weatherization agency to find out how to apply for this assistance.
Speaking of not being able to make payments…are you having difficulty paying your bills on time? Late payment fees can make an already difficult financial situation even worse. There is typically a payment grace period, but it's important that you understand the length and terms of each grace period so that you avoid late payment fees as much as possible. With installment loans, such as for a house, car, or college loan, typical have a specific amount of days after the due date before you're considered past due.
Credit Card payments are a little different than loans in how their grace periods are defined. To avoid paying interest, it's crucial to pay your credit card payments in full before the due date. If you consistently pay your account off in full by the due date, you will be able to avoid accruing interest. However, if your payment is not paid-in-full by 5pm (in the creditor's time zone) on the posted due date, you're considered past due. However, it may not affect your score or report since the standard for the credit industry say the payment needs to be a full 30 days, or full cycle past due. Still, we suggest paying attention to all due dates and payment cycles to best avoid paying late fees.
Avoid unnecessary sporadic expenses
Some expenses don't come on a timeline. They aren't predictable and they're hard to avoid due to their sporadic nature. Traveling comes with its very own set of unnecessary fees that are just as easily avoidable as the rest we covered earlier. From checking your luggage on an airplane, to buying your plane tickets in the wrong month, your summer vacation may cost a little more than it needs to.
On airlines such as American Airlines and US Airways, flights within and between the U.S., the U.S. Virgin Islands, Puerto Rico and Canada have baggage fees expensive enough to cut a few fun activities out of your travel budget. With your first checked bag costing $25 and any extra checked bags costing $35, $150, and $200 respectively, you could end up paying a hefty price that can actually be avoiding with some careful planning. Invest in vacuum-sealed storage bags and use those to conserve space in your suitcase and avoid extra baggage. If you're unsure about whether or not you'll have access to a vacuum at your destination, opt for specific travel bags that don't require a vacuum but still save you just as much space. Still have too many bags to check? Try selecting clothes that are easily worn more than once during your stay without much need for laundering as opposed to several different outfits that take up most of your packing space.
If your baggage isn't what's driving your vacation costs up, perhaps it's your plane ticket buying strategy. Did you know there are best and worst times to purchase your plane tickets? That's right - you could potentially be paying hundreds of extra dollars just from purchasing at the wrong time. According to a four year analysis done by the Airline Reporting Corporation, the cheapest prices for a domestic flight could be found around six weeks prior to departure. For international trips, those cheapest tickets were found at around 24 weeks prior to departure. The analysts agreed that, while it's possible to find a cheaper price closer to the departure date if the airline decides to put the seats on sale, the safest bet is to purchase your ticket according to these findings.
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