No one likes to throw money away. You are throwing away money when you receive no benefit to the added expense. Charities do not count as throwing away money since your intended benefit is to help someone else. If we could reduce the number of times you throw away money, you would be in a much better financial position. These four things might be robbing you blind.
The state you live in
Is your state taxing you more than most? Could you do your job in another state? If you live in New Jersey, you live in the most taxed state in the USA. New Jersey residents pay an average of 12.2% of their income to the state. Many of the northeastern states, excluding New Hampshire, are in the top 10 most taxed states. Would a move to another state increase your take-home income? Maybe you could move to one of the least taxed 10 states: Alaska, Nevada, South Dakota, Tennessee, Wyoming, Texas, New Hampshire, South Carolina, Louisiana, and New Mexico. The weather is great down here in the South. Come join me.
Brand names versus Generics
That’s right. Your weekly shopping trip can be your enemy. In the past, generics were looked down upon, and to some degree, they still are. However, more and more people are discovering that in many products, it is hard to tell the difference between the generic version and the brand-name version. Many of the companies producing the generic version of the product also produce the brand-name version. You should always check the formulas of the ingredients on the product’s label. Many times, the ingredient list and percentages of the ingredients used are exactly the same. Generic product makers do not advertise their products, so they can sell their products for less. Some brand-name products, such as shoes, can be made with better stitching, materials, or design, making them better products. Overall though, generic products have made huge strides to match the quality of the brand-name products. When buying brand-name products, think about whether you are paying for the “name” or the product.
Interest
Interest is not your friend. Everything you pay interest on should be evaluated. The first stop, your mortgage. Perhaps while the banks are stabilizing, you could have your home appraised. This might change the amount you owe on your mortgage, or you might be able to negotiate a lower interest rate on your mortgage since an increase in your home’s value would mean less risk for the bank. Maybe you’ve managed your money well over the past three years and believe your credit score has improved. If you are using a credit card, you should check to see if you can get a lower interest rate on the card, from them or another company. Interest gains power with time. Even tiny changes in interest rates can make a big difference over 20 years.
Insurance Policies
Insurance policies should be reviewed periodically. Never assume you have the best deal. Insurance companies are constantly coming out with new products. Maybe you had a few car wrecks several years ago, and your insurance company dropped you. You now have a new auto insurance but with a much higher premium. You have now gone several years without a wreck. Are you still paying the premiums from your year of bad luck? Your health insurance might be the same way. Maybe you were a smoker when you got your insurance policy so your financial planner convinced you to lock in your policy and premiums before they got worse. It seemed like a good move at the time, but now, just a few years later, you are smoke-free. Insurance companies significantly add to your premium if you smoke. Maybe you bought your insurance policy when you were considered overweight or in bad health. Since then, you have changed your lifestyle and are in much better shape. Are you still paying the premiums of the old you? It might be time to reevaluate your policies.
