Avoid These Big Money Wasters

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Last updated on July 22, 2019 Comments: 17

CNN is offering a compilation of the ten biggest money wasters. These items would be obvious to most loyal Consumerism Commentary readers, yet it would not be out of the question to disagree with some of these money-wasters in some circumstances.

ATM fees. You shouldn’t be surprised that banks will charge multiple fees for the same transaction. If you use an ATM that isn’t operated by the bank that houses your account, the ATM owners will often charge for the transaction — as much as $5, Chase’s new ATM fee — and your bank could charge you for the transaction as well. This is why, even though I strongly recommend high-yield savings accounts that are often operated by online-only banks, it doesn’t hurt to have your primary checking account at a bank that has convenient ATM locations. While many online-only and some traditional banks will reimburse you for ATM fees charged by another banks, receiving this reimbursement could be a hassle.

I visit an ATM about once every two weeks. For me, I save $130 a year by not patronizing an ATM that charges $5. According to the source quoted by CNN, many people could stand to save $500 a year by ensuring they visit free ATMs.

Lottery tickets. For the most part, people who play the lottery tend to have a lower socio-economic status, perhaps those who think that winning the lottery is the only hope of financial freedom. The odds are stacked against winning a lottery jackpot, and if the money used to buy lottery tickets was set aside in an interest-bearing account, there is a better chance for strong finances later in life. That doesn’t stop office pools from buying lottery tickets when the jackpot is sufficiently high, however, and in some cases, income from lotteries run by states can be put to some good.

According to CNN’s source, typical lottery participants spend $520 to $1,040 a year on tickets. Another downside to lottery tickets: buying lottery tickets on your credit card can reduce your credit score.

Gourmet coffee. I’m not a coffee drinker, but I can understand why people pay $1,000 a year in order to help wake themselves at a certain time. The obvious resolution would be to save money by switching from the more expensive brands to coffee you brew yourself. This is the basis of David Bach’s Latte Factor, which illustrates how incremental savings can lead to significant increases over time.

Cigarettes. How much money you could save by quitting smoking depends on how much you smoke and how much it costs to buy each pack. In New York, a heavy smoker could save a whopping $13,000 a year! That’s just on the cost of buying the cigarettes; if you quit smoking, doctors say you will live a healthier life and a reduced risk of cancer, so being a non-smoker will result in lower health care bills over your lifetime, as well as lower life insurance premiums in some cases.

Infomercial impulse buys. According to CNN’s source, most infomercial purchases go unused. It’s not just infomercials — any impulse purchase or anything you buy that you end up not using is an unnecessary cost. I have some kitchen appliances that I have not yet used, though I hope to some day. I didn’t buy these from infomercials, but the result is the same. One way to beat this is to stop yourself from making the purchase without a night — or perhaps a week or a month — to think about it. I ended up not purchasing many things I thought I needed, after deciding to wait some time before completing the purchase.

Brand-name groceries. In many cases store-brand or generic items are of the same quality as brand-name items in the grocery store. I’m not a fan of all generic items. For example, I prefer Cotonelle over store-brand toilet paper, because I have yet to find a satisfying alternative. But rather than blindly go with name brands, I buy cheaper alternatives to discover where I am willing to compromise — if any compromise is necessary — to get buy with a lower price.

Eating out. This is a category of spending I’ve struggled with. (See my comment about unused kitchen appliances above.) For the most part, I have only myself to feed, and the healthier groceries are designed for multiple servings. As a result, I either overeat or buy the less-healthy options. I’ve improved my habits a bit, but this is something I still struggle with. Furthermore, when I spend time with my girlfriend, we often find it easier to go out to eat rather than cook for ourselves.

CNN also mentions bars and alcohol in this category. While I’m not interested in bar-hopping, the wine I may buy with dinner is often much more expensive than buying wine from a store. It’s not uncommon to pay $12 a glass when an entire bottle of wine that is just as good costs half as much.

Unused gym memberships. I haven’t yet fallen into this trap, but I know many who have. For about a month, I was getting the exercise I needed by running every other day, but as the weather turned cold, I let this habit slip. Now I plan to go back to my previous state of activity, and I’ve considered joining a gym in addition. I haven’t pulled the trigger because I haven’t been able to convince myself that I would use the membership to its fullest extent. This is similar to my experience with Netflix; I joined the subscription service to receive movies by mail after a referral from a friend, but I didn’t have the time to watch movies or TV series as often as I thought I would.

Daily internet deals. CNN comes out on my side of the argument regarding social coupons and group coupons. There are some cases where the deals work out well. In fact, I used one with my girlfriend’s family this past weekend to see a movie that didn’t interest me. But the key to these deals is that you pay up front for the deal and claim the items — in this case, movie tickets — later. Many people never claim the items even though they’ve already paid for the deal. And, as I’ve mentioned before, sometimes the deals aren’t that great in the first place.

Bundled cable or phone services. The reason these waste money is because you often result in paying for a service you don’t need. It starts innocently with bundled old-fashioned phone service, where you would have to buy dozens of features you didn’t need just to get voice mail service or call-waiting; now, the communications companies want you to buy voice, television and cable services together in order to qualify for the best prices. With cell phones, chances are you’re paying for minutes you’ll never use, so it helps to downgrade your plan to one that fits your actual usage patterns. If you don’t need smartphone features and don’t talk much, pre-paid plans could end up saving you money, but many middle class households don’t consider them because they’re marketed towards lower income families.

CNN Money

Article comments

Anonymous says:

For years I have made a new year resolution to buy a lottery ticket every week. So I never remember. The past 2 months I have bought 3. So I’m doing better. Can’t win if I don’t play. I don’t think 52.00 is going to break me. IF I remember to play, that is.

Anonymous says:

Uggh I have a few of these money wasters. I will have to reevaluate our finances and have a heart to heart with hubby to see if they are worth it.

Anonymous says:

Based on this list we are doing pretty good. We don’t pay for cable, we don’t buy lottery tickets, we don’t eat out a lot, we don’t smoke, etc. We are guilty of buying more expensive produce though (organic) but to me it’s worth it. My health is important.

Anonymous says:

Did subscribe to both. Cheers!

Anonymous says:

There are little pleasures in life. Magazines and a cup of coffee are 2 of them. If a person is frugal and chooses one or two things that make them feel good, then that is why we save in other ways.

Anonymous says:

I tend to agree with most of the items on the list. Gourmet Food (not just gourmet coffee) can be added to the list as well as magazine subscriptions. Would people consider season tickets for sporting events or the theatre a big money waster?

Anonymous says:

Great article! Another big money waster–buying anything other than gas at a gas station. Gas station convenience stores sell stuff at huge markups, counting on your impulse purchasing, and you not wanting to be bothered to purchase the same items cheaper at another store.

Donna Freedman says:

P.S. The things that seem obvious to me (and to other readers) are revelations for people who’ve never lived frugally before. Heck, at the beginning of the economic downturn I remember reading a newspaper article in which an upper-middle-class woman was fretting about groceries, and said something like “If this keeps up I’ll have to plan all my meals based on what’s on sale.”
Um….I thought that was how EVERYBODY shopped.

Donna Freedman says:

I buy an occasional lottery ticket (with cash!), which drives some people nuts. Yes, I know the lottery is a tax on people who are bad at math. But the same people lecturing me about wasting my dollar have their own little splurges, whether they be baseball tickets, hardback books or that gourmet coffee.
I have very few vices. A $1 lottery ticket is not going to break the bank. If I were buying huge stacks of them each week, believing — really BELIEVING — that one day I would hit it big, then I might have a problem.
Moderation in all things. Including moderation.

Anonymous says:

Most of these I would agree with, but some of them I have mixed feels about. Specifically, gourmet coffee, brand-name groceries, and eating out.

I drink tea rather than coffee, but I can still understand why people get it;. If you enjoy it, it’s something you look forward to every morning and enjoy quite a bit.

Non-brand-name groceries are often comparable to brand-name ones, but not always. For instance, my boyfriend strongly prefers Boar’s Head sliced turkey to other brands. It’s more expensive, but it’s worth it because the quality is better.

Eating out…is something we should do less than we do. I’m always so tired after work though, so it happens. If you’re in a good situation financially, eating out once or twice a week is fine.

Anonymous says:

I don’t know. This list is a bit incoherent and thrown together, isn’t it? (I know you didn’t write it). Gourmet coffee – whatever that means – and eating out are treats/things with real value. Smoking too, for many people, I guess. Whereas ATM fees and unused gym memberships and the like are just money down the toilet. And branded groceries and bundles cable etc may be “hmm never thought of that” suggestions. Seems like the CNN phone-it-in monkey could have dragged three bad articles out of this list instead of just one!

Anonymous says:

I didn’t know you could buy lottery tickets using a credit card, and that it can hurt your credit score. That is news to me. Thanks for the heads-up. I don’t buy lottery tickets at all, but I know a lot of people who do, and that’s good information to know.

I am neither a smoker nor coffee drinker, and I am a teeny bit of an extreme couponer (mostly so I can donate stuff to my friend’s homeless ministry, though). I also got rid of my unused gym membership, but the eating out…I’m blushing in shame just typing this. 🙂

Anonymous says:

Don’t forget the other big money wasters: kids, name-brand colleges, pets, organic food (as in chemical-free and not fresher)

Anonymous says:

I think classifying kids as a money waster is more an opinion that actual fact. Sure there are plenty of things associated with kids that are big wastes of money, but kids in general don’t have to be.

Anonymous says:

Plus if your kids or grandkids end up caring for you when you get old they may just be an investment/steal cost wise. Just not something you can count on. Then some people think kids are worth the cost. To each his own on this one i guess.

Anonymous says:

So are you saying you were a waste of money? I bet family, friends and other people who love you would disagree. I have WONDERFUL children I raised as a single parent that I am sooo proud of as they have transitioned into their adult lives. I hope and pray you learn how special and unique you are. Life is good, not perfect.

Anonymous says:

It’s not just the eating out and the gourmet coffee—how about those processed pre-made meals from the supermarket? I save a fortune on food in our house by actually cooking. It doesn’t have to be complicated stuff. You can top a pasta with different sauces or fresh tomatoes and spices and eat great stuff cheap.