If you’ve ever felt that no matter how hard you work or how much you earn, you’re still falling behind financially, you’re not alone. Although not every aspect of our finances is within our control, what we choose to spend our money on often is. Some expenses even make others rich while draining our wallets.
By identifying and eliminating these expenses, you can gain control of your finances and be closer to financial freedom. Here are some such expenses you should try to cut out.
1. High-Interest Credit Card Payments
It’s no secret that credit card interest can quickly make anyone poor. All unnecessary expenses you continue to accrue in credit card debt will only make the credit card issuer rich. Instead, focus on paying your credit card in full each month by purchasing only items you’ve budgeted for.
Get into the habit of paying for most items in cash. This way, you’ll avoid relying only on your credit card to make purchases. Additionally, you’ll think twice before impulsively using credit when you have money to spend.
2. Payday Loans
Payday loans are short-term loans derived from income. They often carry high interest rates since lenders take a huge risk in lending others’ money, which may become their own debt trap. Instead, try trimming all unnecessary expenses to pay off your debt yourself over time.
This will require you to build a budget that tracks your monthly cash flow. Find ways to earn additional income, such as selling items you no longer use or flipping items you purchase from garage sales.
3. Extended Warranties
The extended warranty industry is booming. Although you get an extra layer of security by purchasing an extended warranty for your beloved gadgets, you must first understand what warranties are available. Most electronics carry a manufacturer’s warranty for up to two years. Cars also have a warranty on major parts for years to come.
Instead of paying for monthly insurance to protect your stuff, consider the last time a warranty actually came in handy. You’re better off relying on the manufacturer’s warranty or the additional protection your credit card may offer.
4. Car Leases
Most car leases are advertised at low prices, but they’re rarely actually cheap. Car lease companies may not intentionally aim to deceive customers, but after you factor in tax and additional fees, you’ll easily spend hundreds. However, places like Turo offer additional options to consider.
5. Upscale Gym Memberships
Be honest with yourself about how you use the gym. If you’re paying over $50 a month for a gym membership that includes a pool or basketball court you rarely use, consider switching to a less expensive gym that carries quality equipment without the unnecessary bells and whistles.
6. Expensive Cable Packages
If you’re still paying for cable to watch sports or your favorite show, consider researching streaming options that are more affordable. To ease your transition, don’t cancel your cable subscription until a month or two after getting familiar with other streaming options. Cable alone can cost you a few hundred dollars a month, depending on your provider.
7. High-Fee Investment Accounts
Expensive mutual funds are pricey, but they often promise to beat the average market return. The only problem with this is that even if your annual return is higher than average, you have to deduct high fees. You’re better off capturing the S&P 500 average and paying low fees with index funds. This way, you’ll still be likely to outpace inflation and pay low fees.
8. Branded Clothing
What separates T-shirts and other clothing from similar items is branding. However, fancy branding doesn’t always mean a better product. If you’re struggling to pay off debt, you’re better off not purchasing branded clothing and focusing on quality. When paying over $200 for sneakers or T-shirts, the brand-name companies are the clear winners. Instead, purchase clothing that is on sale or try your local thrift stores.
9. Frequent Dining Out
Restaurant prices are rising. Limit your spending to dining out only a few times a month at most and save the extra money. Even if you can pay for your meal in cash, you’re better off saving or investing for your future.
10. Gourmet Coffee Shops
Instead of spending $5 for a cup of coffee, pay a fraction of a dollar by making it at home. You’ll save time driving to the coffee shop and waiting in line to pay more than five times the cost of making it at home. If you truly enjoy a certain cup of coffee, consider only indulging a couple of times a month.
11. Tech Gadget Upgrades
More often than not, you don’t need to upgrade to the latest gadget. Doing so will slowly drain your wallet and make other companies profit. Nowadays, many smartphones cost over $1,000. Video game consoles are also increasing in price. With inflation, you can rest assured that most items will continue to cost more, which is why it’s important to limit your tech upgrades.
12. Exotic Vacations
Domestic trips will cost you a few hundred dollars, while international trips can cost thousands. Traveling is more challenging than ever if your income hasn’t increased in the past few years. The good news is that you can still travel; you just need to be mindful. Have a budget and stick to it. When you land in different countries, try to stick to your itinerary so you don’t go over budget.