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10 bad money habits that rob you blind

As you work to get your financial life on track, it's not uncommon to find old, counterproductive habits undermining your progress. Here's how to change them.

By MSN Money Partner Apr 10, 2014 11:40AM

This post comes from Marilyn Lewis at partner site Money Talks News

Money Talks News on MSN MoneyThe good habits we've made carry us along almost effortlessly. That's positive. It lets us focus on the things that need our attention most.

But as you work to pay off debt, save and get your financial life on track, you'll probably find some old, counterproductive habits undermining your progress. They may have worked once, but now they’re holding you back.

Dropping bad money habits makes it easier to power up your financial life. Here are ways to drop habits you no longer want and adopt new habits to take their place.

1. Carrying a credit card balance

Carrying a balance on a credit card is like walking down the street with a hole in your wallet and your money leaking out. High interest rates on credit cards make plastic one of the most expensive ways to borrow, right up there with subprime mortgages.

Here's why: Suppose you decide to pay off a $5,000 balance on a card charging 15 percent interest. It'll cost you at least $7,000 in interest and take decades if you pay the minimum charge each month.

Think what you would love to do with that $7,000.

Build a better habit: To begin dropping a bad habit, analyze it. Suggests MSN Money:

Asking "who, what, where, when, why and how much" makes it much easier to identify and define new habits for almost any situation.
For example, if debt is your major concern, ask yourself where you are overspending and why. Are there any situations or triggers that tempt or cause you to spend more than you should? Can you limit your exposure to these situations or triggers?

One approach to erasing the card balance is to "snowflake" the debt, devoting every spare penny to getting rid of it. If you have other pressing debts, you'll need to make a plan for dealing with all of them. Here's how to kill your debt and write its obituary.

Keep the balance from building again by making it a new habit to pay off the entire bill every month -- no exceptions ever.

2. Failing to fund a retirement plan

There are compelling excuses to put off saving for retirement. But none will matter if you reach retirement age with little to nothing saved. And, if you don't take advantage of your employer’s matching contributions, you’re passing up free money every month.

How much should you save? "Ten percent is the minimum (monthly contribution) for anyone in any situation," Arlington, Va., financial planner Claire Emory tells Women's Day.

Build a better habit: Imagine yourself at age 70. Or 80. Picture concrete details -- how you'll look, your surroundings, how you're spending time and who’s with you. The more real your future self is to you, the more likely you'll care for her or him today.

Start paying close attention to your retirement savings. If you can't bring your plan's monthly contribution up to your goal immediately, increase it by 1 percent a month. Once a year check the performance of your investments and re-balance your portfolio.

Here are three online retirement calculators. Play around to set a goal and start saving aggressively:

3. Not shopping for monthly services 

If you comparison shopped when signing up for insurance policies and phone, Internet and cable, good for you.

But you may be missing savings if you're not checking prices again once a year.

I recently saved about $200 a year by bundling all my insurance policies with one insurer. The new auto insurance premium was higher than the old one. But my home insurance dropped a lot.

Build a better habit: Be willing to put some energy into improving your financial life. Once a year spend 30 to 60 minutes price shopping for monthly services. To make it easy, keep a list with each company's name, your account number and your monthly payment amount.

4. Paying for cable and landline

Cable prices are going nowhere but up. Free and cheaper alternatives make experimenting worthwhile. The question is, will you get out of your rut and try something new?

Build a better habit: Before trying a change, just observe yourself and your habit. Record your viewing habits for a week or two to see how and if you’re using the services. Ditto for your landline.

If you're able, drop the landline and use mobile phones only. If that seems too radical, refrain from using the service for one month -- or a week -- while you check out alternatives. Some possibilities:

  • Drop the premium cable tiers; learn to love basic.
  • Find out if you’ll pay less by bundling Internet and phone services with one company.
  • Get an all-inclusive mobile plan with unlimited text, data and phone.
  • Switch to Skype, Vonage, or another cheap or free Internet phone service. Don’t be scared of the new technology. It’s super easy to use.
  • Cut the cable and substitute sources like YouTube, Hulu, Netflix, Redbox and CDs from the public library.
  • Try a free Internet service.

5. Ignoring coupons and deal sites

If you aren't using coupons and checking daily deal sites, you're spending too much. However, exercise discipline when bargain shopping so you don't sabotage your good intentions with impulse buys.

Build a better habit: Tackle bad habits in small bites. Try just one deal or coupon site. For example:

  • Daily deal message boards like Slickdeals, LivingSocial and Woot for cut-rate prices.
  • Grocery store apps that deliver coupons and personalized savings to your computer or smartphone.
  • Grocery store receipts often have printed coupons.
  • Manufacturers' websites often have coupons.

6. Playing investing too safe

Safe investing is important. But there's safe and there's too safe. Keeping all your money in no-risk accounts means inflation will rob you slowly but surely.

Dollars down drain © Stockbyte/SuperStockBuild a new habit: Don't break all your bad habits at once. Pick one and focus. Make managing your investments a priority, for instance. Learn your investing style by taking a risk-tolerance quiz like this one from Merrill Lynch Wealth Management. Next, read up on the basics of investing. Then -- taking your age and risk tolerance into account -- take another look at your investments.

Stacy Johnson of Money Talks News tells how to invest in a mutual fund and how to get started in the stock market.

7. Getting hooked on lattes

That $4 latte is killing your budget. One latte a day each workday adds up to $20 a week -- $1,040 a year. If you tip a dollar each time you're spending $1,300 a year. Tip 50 cents? You do the math. There's surely something you'd rather do with that $1,000.

Build a better habit: Substitute new habits you enjoy for the old ones. A latte is a way of treating yourself, so find treats that don't bust your budget.


  • If you've got a morning latte habit, start a new ritual at home that includes making coffee or tea or doing yoga or meditating.
  • How about 15 minutes more of sleep since you're eliminating the coffee shop stop?
  • You'd could even spend $600 on a used high-end espresso maker so you and your family and friends can enjoy espresso drinks and still save a bundle.

8. Living without an emergency fund

If you don't have an emergency fund, your life is a high-wire act with no safety net. Emergencies are inevitable. Life is full of them.

Women's Day says:

You should have enough socked away (in a money market account, perhaps) to cover three to six months of living expenses -- which should be less than three to six months of income, since income includes retirement contributions, taxes and money for unnecessary spending.

Build a better habit: Make a commitment to the change you want. Write it down and put it where you'll see it and reinforce your resolve. Keep the change at the forefront of your mind and tell yourself continually: "I can do this."

Commit and watch your savings build:

  • By taking on a few hours of extra work each week, whether it's overtime at work or watching neighbors' dogs.
  • By scheduling a small payment automatically into your savings account each month.
  • By paying off debts and diverting those monthly payments into your emergency account.
  • By cutting back -- or cutting out -- restaurant meals.

9. Buying retail

Paying retail markup is like setting a match to a pile of cash. Smart buyers find ways to avoid it.

This remarkable infographic at shows how quickly a new car loses value. The car's value drops 8 percent the minute it leaves the dealer's lot. At the end of the first year, it's worth 19 percent less. After two years, it's 31 percent less.

One caution: There are things you should never buy used -- blenders, hats, mattresses, underwear, swimming suits, vacuum cleaners, stuffed animals, tires and software, among them.

Build a better habit: Get out of your comfort zone. If you feel pressure to keep up with your friends or neighbors, ask yourself what that's costing you. Stay out of malls and brand-name stores except for researching products. Read up on prices online so you know a good price when you see it.

Shop at wholesale clubs and bulk stores, garage sales, consignment stores, thrift stores, online auction sites and classified ads. You'll find especially good deals on used cars, refurbished electronics, jewelry, furniture, housewares, clothes, tools, books and sports equipment.

10. Using shopping as entertainment

You know people with compulsive shopping habits. Maybe you are one. For some of us, spending creates a high that's addictive and can severely damage your budget and the financial security of your family. But even if you don’t miss the money, the inability to stop can eat away at you.

Here are a few signs of a shopping habit out of control:

  • There's a pattern -- not just an incident or two.
  • You buy things you don't need
  • You hide purchases or lie about spending.
  • You order things you don't open or don't use.
  • You wreak havoc on your budget.

See WebMD for more signs.

Build a better habit: Try a spending fast, remove your name from catalog lists, stay out of stores and hang out with friends whose idea of fun doesn’t include shopping.

But if none of these habit busters works and you're still struggling with your shopping habit, you may need help. Compulsive spending is a tough pattern to break.

Debtors Anonymous is a free, nonprofit 12-step organization based on the principles of Alcoholics Anonymous.

More from Money Talks News

Apr 10, 2014 1:42PM
the worst money habit is votine for a liberal, you can almost see their hands reaching for your wallet when you are in the voting booth. 
Apr 10, 2014 1:34PM
Save now and safe as much as you can and don't leave debts behind. But, always prepare for tomorrow which will become today and today will become yesterday. Plan ahead and don't live today looking back at all your regrets of the past.
Apr 10, 2014 5:37PM

Well I see MSN is still trying to pump up the market never missing an opportunity to hawk stocks.

This article failed to mention the huge costs of personal habits such as tobacco, alcohol and gambling. I was paying for gas the other day and I noticed a carton of Marlboro costs about 50 Dollars. These so called sin habits can shrink a wallet fast. IMO

#11 Voting for Democrats......the original way to get robbed blind!
Apr 10, 2014 4:40PM
Finally, someone touches on the fact that shopping isn't a hobby or pass-time.  This applies to both genders, but we all know which gender suffers from this at a much higher rate.  Gentlemen, I'd advise you to walk away from a woman that openly and proudly proclaims that she shops for entertainment.
Apr 10, 2014 2:36PM
As with all financial/money issues, the key is to live below your means and limit debt.  

I would try to first cut back on insurance costs as they have always been one of the major issues in this country.  For healthcare, you're on your own, but for car insurance you can definitely find some budget rates.  Aim for $25~ month (check Insurance Panda)​… for car insurance there's really no need to get an expensive policy from places like GEICO, Allstate, etc… a minimum policy is enough for most situations.  You can use the saved money to expand your bank account or pay off your debt.

Also, you need to make sure you don't have outrageous interest payments or anything like that.... that's just throwing money away.  So, you need to limit your student loans, mortgages, credit card, bills, whatever... If you MUST be in debt, you need to do it the smart way (and not the way that leads to huge interest payments every month).
Apr 11, 2014 6:00AM
They left 2 off the list ...1. Ex-wife 2. Government
Apr 11, 2014 11:30AM
the worst money habit.  Voting for a representative that thinks they are entitled to spend your money and give it to others too lazy to work. We love to complain about the government but are evidently too stupid to do anything about it.  
 Just take a look at the pictures of Russian leaders lined up in red square during a military parade back in the 80's, look at the faces and the age, that's what we have  in congress today…a bunch of fossils that are out of touch with reality, who still think this country can just wave some cash around and get what it wants. This country is bankrupt, but we will continue to act as if it isn't as long as we can. 
Apr 11, 2014 9:47AM
Voting Democrat is the #1 Worst Money Draining thing you can possibly do.  Watch them tax the sh!t out of you and give your hard earned $$$ to ingrates, illegals and lazy idiots.
Apr 11, 2014 1:03PM

Allowing those that vote themselves money to live has always been the worst mistake a society can make.

 Our trash element is so ignorant it is rapidly bringing about it's own demise by assaulting the rights of those that carry them.  They will soon have the choice of starving to death or being killed trying to steal from those worth the oxygen they use.

No sympathy here, they and their leaders have proven they deserve it.

Apr 10, 2014 6:01PM
I think that possibly the biggest contributor to today's bad spending behavior (notice I didn't use the word "habits") is that people have either consciously or subconsciously developed an attitude of hopelessness for tomorrow and so they want to get what they can out of life today.  "Let tomorrow take care of itself" seems to be a growing attitude.  And, when you look at how the government is extorting our future, it is difficult to maintain a positive outlook on our future in the USA.  Spend your money as quickly as you can because otherwise the government is just going to take it from you - one way or the other - and waste it anyway!

On the other hand, aren't people just following the example set by our government?

Apr 10, 2014 5:28PM
 Paying Tax to the nazi government so drooling moron democrats are kept on the plantation.
Apr 10, 2014 4:05PM
Some of these deserve some real thought, I know many of you can't go there but do your best!
Apr 11, 2014 4:53PM

One last bad habit for everybody's wallet. 


Electing Obozo for a 2nd term.


phuck all of you brainwashed cretins, and, have a nice day! :)

Apr 10, 2014 10:51PM
I think they meant "snowball" the debt, not snowflake.
Apr 11, 2014 3:28PM

11. smoking drinking drugs and gamballing.

seriously :| this stuff is horrible for your wallet and your health in technically health is a double whammy when it comes to health care.

Apr 11, 2014 6:53PM

#11 Electing a Republican to the White House. After 4 straight balanced budgets under Clinton the GOP cut taxes on the bottom bracket by 1/3rd from 15% to 10% so the poorest 43% no longer pay any federal tax after standard deductions. The GOP then increased spending by $1.6 trillion almost doubling the 2001 budget of $1.9 trillion, bringing the Bush's last budget to $3.5 trillion and the deficit to $1.5 trillion in 2009.

    After 4 years of Obama federal spending has fallen by $100 billion to just $3.4 trillion and the deficit has been cut by more than half to just $653 billion, the largest deficit reduction in history. Only a madman would choose to return to the massive spending and incompetent fiscal management the GOP gave us. No more USSR ( United States Socialist Republicans )

Apr 14, 2014 11:51AM
Can someone explain how this money article opens the flood gate for political hate speech?
Apr 10, 2014 2:22PM
They forgot to mention,  us draining your wallets... to put implants in your brains.   What?  You think we do that for nothing?
Apr 11, 2014 7:47AM
Oh, how will people survive following these suggestions?    Take a drive through a mall parking lot.   Try getting a seat at a restaurant like the Cheesecake Factory.   I think these same people come home to watch their reality TV cable shows.   You will be depriving them of their current pleasures so they can be old and have some $$$ in the bank!  
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