People struggle with actually taking action and continuously put off small tasks that seem insignificant, but can cost them thousands of dollars every year. Read on if you want to see some Common Money Mistakes and how a little action can correct them in an hour.
Common Money Mistakes: Banking
Abysmal Interest Rates
I am shocked how many people still use traditional banks to house their savings accounts and emergency funds. I just checked and our savings account (that has almost no money in it) gets a WHOPPING .05% at the traditional bank we use for our checking account.
When I first started our Emergency Fund I did some research and found that online banks are a lot more competitive. You can find the best available rates at Nerdwallet.com, many of them have very low minimums and hover around a 1% interest rate. Still not great, but a hell of a lot better than .05%!
I use Barclays (no affiliation) and they have paid out $40 in interest year to date on our $9,000 Emergency Fund balance. It took 20 minutes to setup my account with auto transfers without a single phone call. That’s a free bag of dog food!
Late Fees/Interest Payments*
Last month, I made a mistake reading my credit card bill that resulted in me paying interest! That goes against one of my yearly goals…
At first, I thought the bank made a mistake as I paid off my balance in full, but I misinterpreted the closing date for the current month as the payment due date. The interest charge was $25.97, which really pissed me off.
I called the bank quick and decided to play dumb and inquire as to why I was charged interest even though I paid my balance in full. After about 3 minutes the customer service rep explained my mistake, mentioned that I had never had a late payment and promptly wiped the interest charge. I didn’t even have to ask. Awesome.
*Unless you are calling the government – I have not had good luck with those battles
Credit Card
I know a lot of people don’t trust credit cards, and some of my fellow bloggers even stay away from them, but you absolutely need to use one. It will require you to be responsible but I guarantee with a little discipline and awareness you can do it.
We just paid for 2 round trip flights to Mexico for a destination wedding with credit card points, saving $1,150. On top of that, we get a free checked bag and $25 worth of in flight purchases for each ticket. They also gave us 12 free in flight wifi passes – which turn my flight into productive blogging time!
Common Money Mistakes: Employer Benefits/Selections
401K Contributions
You will find this on every personal finance blog at least 5 times, but people still don’t do it. It takes minutes to enroll yourself if you select a pre-packaged allocation. Just do it.
For those of you who have a little more time – take a look at this post and make sure your 401k isn’t packed with high expense ratios and poor performance.
Common Money Mistakes: Overpaying
Car Insurance
Car insurance companies are battling for your business. If you have been a customer for a few years and aren’t getting discounts its time to make a call and ask what your options are. If you current provider is not willing to work with you – finding a new one doesn’t take long.
We use the same agent for our house, cars and personal property and get a TON of discounts. On top of that, every 3 years without a claim the rates drop further.
Cable
For those of you that still have it, after the awesome introductory period ends and your bill spikes 50% over the next 6 months…. Call the company, tell them you want the introductory rate back. If they say no – cancel the service. If they don’t cave then and there, they will call you back once you actually go through with the cancellation and magically come up with a better deal.
Another option is to switch to Sling TV, for $30 a month we get a ton of channels and can record/store 50 hours. This has saved us over $70 a month!
Amazon Prime
This may not be for everyone, but I am a HUGE Amazon Prime fan. A ridiculous amount of stuff will be shipped to your door step for $99 a year.
We easily save $99 a year by not using our car to run errands. 80%+ of the non-grocery items we buy are delivered to our doorstep. Between the free delivery and the low price online, dog food almost pays for our membership itself.
Take away
A little bit of action can go a long way, anyone is capable of knocking this list out. Pick the ones that apply to you and stop procrastinating – just do it.
Did I miss any Common Money Mistakes that can be corrected in an hour? Have you had success with any of the above items?
Some products that can help you:
Acorns: Acorns is an automation app that collects and invests your spare change when you make a purchase. I connected Acorns to my checking account and my credit card. If you are interested in trying it, you can use my referral code here (both of us will get $5 in our account)
Personal Capital: Personal Capital has a ton of great Free features, you can track your spending, net worth and even analyze your portfolio. It has top notch security and I am able to connect all of my accounts. Saves a ton of time! (I may be compensated if you use this link)
I’ve been on the fence a long time about the Amazon Prime membership, but I can certainly see the advantages in having all of your stuff delivered to your door. It makes it a lot easier to avoid temptation of spending more than you intended on your quick run to Target or Walmart. The only annoying thing I’ve experienced with ordering online with Amazon is that in our state, we have to go back and pay taxes on all of the purchases we made during the year on Amazon.
We recently changed our insurance, but I’m sure there are other ways we have been overlooking saving a little extra money. These are all very common and easy to fix if you sit down and do it. Our insurance didn’t save us that much because we ended up having to put newer model vehicles on the insurance, but every little bit did help us adjust our budget and build a cushion for our unexpected HVAC blowout:( You never know what emergency life is going to give you so I always recommend looking for additional ways to save money before you need it!
Latoya, we were on the fence about Amazon Prime for a long time too, but Prime comes with free access to tons of movies like Netflix for about the same price when averaged over a year, so we signed up when we dropped our cable.
We just started using the streaming feature! It also includes cloud storage that I didnt know about.
With time it will only get better, Amazon is a great company and their CEO is customer focused.
I don’t know about US but the 50% introduction rate is applicable on internet here in Canada as well. I’ve gotten to the point where I call our ISP every 6 months or so to get a new deal.
Credit card is getting bad vibe nowadays thanks to these financial gurus. If you can’t pay your balance in full each month, makes sense to cut your credit card(s) up. But if you can pay balance in full every month, I don’t see why you shouldn’t use credit cards, especially if you can get reward points from using these cards.
Its usually 30-50% cheaper for the first 6 months to a year here then gets out of control if you dont do something about it.
Yea, credit cards are portrayed as the villain but in reality its the people swiping that cause the problems
Thanks for the tips AE. And awesome work getting them to wipe out the interest charge!
We cancelled cable but still haggle with our ISP (similar to Tawcan) regularly over our rate. Thankfully Google fiber is coming to town shortly so we’ll have a competitor in the market.
We could use some competition in our neighborhood, its just a matter of time before internet and streaming serives are a commodity and hopefully consumers win while companies duke out the prices.
I think you’ve created a comprehensive list, AE. Imagine the realized savings one could accumulate if he were taking these steps for the first time!
I have had similar wins with my credit card company. It never hurts to play dumb and test your luck!
For sure Mr. Superhero! If you are new to personal finance you could tip the scales pretty quickly!
I had to call the bank just the other day about a fee – the first one ever! I had never used PayPal to pay for anything (just had ebay sale money put in my account there). I had to pay a consult fee over PayPal and found out it was hooked to my savings rather than checking account. (And I don’t keep much in that account…) So I had an overdraft fee – I called and they waived it too. I was pretty happy about that because the fee was almost as much as the charge! Great ideas – take action, the small $ adds up.
AHHHHHHH that is a sneaky overdraft charge! Being a good customer has serious benefits! they want to keep you happy!
I love prime! I don’t drive. I have a stack of 5 12-double rolls of toilet paper in my side room just waiting for me to need them. I also like prime pantry since you can fill up a heavy box for such a small delivery fee. I get my heavy things without having to lug them from the grocery. I also discovered that you can get a prime pantry credit for slow delivery on some items; I took advantage of this when sending my nephew a present.
I haven’t started using the Prime Pantry portion yet, the grocery store is pretty close to our house but I do hate going to the grocery store.
I should start tracking how many miles we save but having prime. We just got rawhides delivered today – who needs a pet store!
Thank AE!
Good old marketing is a big catch for some people.
I’ve seen people getting sucked into introductory rate credit cards only to be slugged with a rate of up to 15% more after the honeymoon period…… Ouch!
#readthefineprint
AE you hit on a bunch of savings tips here that I have implemented myself (cable and car insurance especially). Also I love that you were able to wipe out that late payment fee just by calling the bank and letting them know you had a small slip up. One thing I absolutely must look into is getting into a savings account with a higher interest rate.
Still can’t believe they wiped an interest fee that easily.
You have to get into a “high” interest account – do it today
Prime is such a deal at $99 a year. I ship way more than $99 worth of Amazon products a year. Add this to a fantastic steaming service and a bunch of free Kindle titles, it’s a great deal. I do the same as you do with my cable company. Every 24-months, they try to hike my monthly fees. Now, that I’ve negotiated my price down a few times every other year, I now have my cable company’s customer retention team’s email address. Every two years I email my friends and they lock me in at a low rate for 24 months.
Nice work! Calling the cable company is not enjoyable, their customer service is crappy. Sounds like you found a way around that and avoid most of the battle
Hey AE,
Very true – It’s amazing how quickly you can do things and save loads of money – some people are extremely lazy and it’s costing them hundreds if not thousands of dollars. We just rang our energy company and saved over $200, worth it.
Tristan
Nice work! How did you get a win with your energy company? I have never heard of someone going that route in the US
Yes! Amazing how people do all of the above, wasting thousands a year, and don’t realize it! I love Amazon Prime-makes comparing prices easy, plus delivered to your door!!! And on top of it, we cut cable and only watch Netflix or Amazon Prime, so $99 for free shows and free delivery? I miss it, we just moved to Kuwait and Amazon won’t deliver, ouch! But we are keeping Prime for the shows. Can you tell I love Amazon?!?
Wow – moving to Kuwait sounds super interesting
Amazon is the best, hands down.
I think the biggest surprise to me is keeping emergency funds in a crazy low interest account when they can be moved so easily
These are great tips! We recently switched banks and got $600 in new account bonuses plus a rewards card that is 3 times the amount of the card we were using. We were being charged $1.75 for a paper statement to be sent in the mail each month by our previous bank. On top of all of that, our new interest rate on our checking account is more than triple our old interest rate. I have no idea why we didn’t switch sooner.
We are attempting our first travel hack this fall with the rewards from our new card plus some old ones that will be expiring if we don’t use them soon. Wish us luck!
Good luck with travel hacking!
Sounds like you got a great deal at your new bank, its crazy how easy it is, yet so many people do not do it.
Good post. We swear by our credit cards as well. We get so many great rewards with them, it literally pays us just to use them. Thanks for the tips!
– – [email protected]&Teal
Great tips. Thank you for sharing. I made a promise to myself to never forget a payment on my credit card. Last year I signed up for automatic bill pay. I pay it off every month but in case I forget the minimum with be deducted from my bank account. I love all the perks of my credit card. They may not be for everyone but they sure have great rewards.
Awesome! Loved this
When we first started with Amazon Prime a few years ago, it was to make sure our Christmas presents would arrive on time. Since then, we’ve been enjoying the prime music and movies as a pretty awesome bonus. The video service keeps us off of cable and lets us join the cord-cutters without any additional costs. Our oldest son loves the music so much, we got him the premium package for his birthday. That’s tons cheaper than buying hundreds of $1 songs on iTunes.