NEW YORK (MainStreet) Getting into debt is like littering; everyone's against when everyone else but himself is doing it. When you're throwing a cigarette butt on the sidewalk, it's O.K. When you make a bad investment, it happens. But all other people need to be more responsible, and spend within their means, and blah, blah, blah.
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The truth is we all make certain money mistakes we're human. We overpay to treat ourselves, out of laziness, or for a variety of reasons that are our own. We justify these expenditures, because we've earned them, we make enough money, it's a holiday or we enjoy certain creature comforts. Whether you're in the 99% or the 1%, odds are you're guilty of one of these money mistakes.
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1. You Don't Do Repairs
You're required to insure your car, as well as any collateral loan. Other than your health, there's nothing else you should be paying to insure. There's no need for a $7 a month cell phone insurance plan or any extended warranty. Just respect your belongings, and, if something does break, look up how to repair it online.
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There is no end to the DIY books, videos, and pictures online, teaching you (for free) how to fix anything. When my Xbox 360 red-ringed a few years back, I fixed it myself, despite having never taken apart a video game console. You can learn to paint, fix a toilet, replace parts in your appliances or anything else online.
"We're living in the age of how-to and DIY content marketing," says Jody Lamb of RepairClinic.com. "Since our founding in 1999, three million customers have saved $250 million by completing repairs on their own."
2. You Have Too Many Obligations
"Water, food, housing, are things we need," says Los Angeles Realtor Chantay Bridges. "It's imperative we know the difference between what we can or cannot live without."
Instead of focusing on the basics, we have subscriptions to Netflx and Hulu Plus on top of our already-too-expensive cable bill with more packages added on than anyone has time to watch. Our phones need unlimited everything, and still we download more apps and games and pay for all of it, because it fills a gap for us.
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We leave our houses, and we join VIP clubs and gain prime memberships. They're all designed to save us time so we can avoid the gym, fitness center or yoga shala we pay for. Then there's the annual dues for our professional groups, homeowner's associations and every other contract we sign to pay more people more money for non-essentials.
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3. You Spend Money You Don't Have
You're not Lil Wayne you don't have cash money or young money or any money, really. By the time you leave college, you have student loan debt at best. You likely have vehicle debt as well, and you're looking to jump into a mortgage debt because you heard it's a great investment.
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"Never spend your money before you have it," offers Patrick Lee, a public speaker who impersonates Thomas Jefferson, and other American patriots. "[Jefferson] wrote that in his 'Decalogue of Canons for Observation in Practical Life' as an old man, age 81, summarizing a lifetime of experience and wisdom."
Lots of investments are great, but you may not be the next Oracle of Omaha.
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Your net worth isn't how much you have it's how much you have vs. how much you owe. If you have $1,000 in the bank and still owe $200,000 on your house and $10,000 on your car, you have negative$209,000, no matter how you spin it. You can't fast-talk the bank.
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4. You Eat and Drink Out
"The number-one thing consumers should consider is not making it a practice to buy alcoholic drinks when going out," says Brook Larios, CEO of PlainClarity Communications. "You can save a considerable amount by drinking that gin and tonic or glass of wine with friends before or after hitting the restaurant."
Every so often we don't have the time, energy or resources to cook a full meal. It's O.K. to eat out every so often, but it should be a treat, and when you do, avoid spending extra on alcohol. Restaurants make the bulk of their money from beverage sales, especially alcohol it's second only to hotel and airline markups.
The more self-sufficient you are at home, the less money you'll spend. A cake can cost anywhere from $10 to $10,000, but you can find flour, sugar, and eggs for a couple bucks.
5. You Don't Budget
If you don't properly budget, you can't forecast what you'll need, and you'll waste a lot of money. Our economy runs on supply and demand, and businesses know exactly how to get their supply in your demanding face and squeeze as much money as possible out of you. With proper planning, you can predict (and minimize) your expenses.
"Cleaning products, health and beauty items, and even most all grocery items go on sale for about half off, but not every week," explains Teri Gault, founder of The Grocery Game, a website that provides listings of grocery sales, tips, and tools to savvy consumers. "When consumers wait until they run out of perishables like orange juice, which has a date of up to two months, they pay twice as much as they could have a few weeks ago when it was on sale."
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This concept applies to yogurt (6 weeks), sour cream (2 months), eggs (6 to 8 weeks), and nearly everything except for fresh produce and milk. And it clearly applies to deodorant, shampoo, toothpaste and laundry detergent.
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Money makes the world go round, and the way we handle it determines our position and success in life. In order to get a hold of your personal finances, it's vital to face the facts about your actual spending habits.
Own up to your mistakes, and you'll be well on your way to readjusting and getting yourself back on the right path.
--Written by Brian Penny for MainStreet