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5 stupid things you spend your money on

You may be a smart person, but you probably make some dumb purchases. Here are five stupid things smart people buy over and over again.

By MSN Money Partner Apr 17, 2014 2:02PM

This post comes from Maryalene LaPonsie at partner site Money Talks News.

Money Talks News on MSN MoneyWe all buy dumb things.

Burning money © Lumina Imaging, Digital Vision, Getty ImagesI'm reminded of that every time I see the closet full of purses I just had to have. They're all lovely, but then I look in the mirror and remember I only have two arms and one wallet.

While we all have our individual weaknesses, some stupid purchases seem to cross boundaries. You may have a good reason to buy one of these items, but the following are five things we collectively seem to lose our ability to think rationally about and get sucked into spending our money on something dumb.

1. Gym memberships

You knew this was going to be on the list, right?

There's a good reason for it: Some statistics indicate that as many as two-thirds of gym memberships are never used. Even some club owners -- who are probably more likely to be optimistic about their membership -- say 25 percent of members go inactive after six months and half give up on the gym by a year.

Really, unless you are doing some form of training that involves specialized equipment, hit the pavement rather than the gym. And if you can't resist a membership, at least skip the contract and look for a gym with a month-to-month option.

2. Extended warranties

Now, I know the stores get us at our weakest moment.

You're going through the checkout, spending your hard-earned cash, and the clerk asks if you want to add the extended warranty. It's only a few dollars more, and it will protect you in case anything should happen to your new treasured purchase.

Or at least, that's what we hear. In reality, these warranties come with a laundry list of exclusions.

Plus, they may not be all that extended. Many items come with perfectly good manufacturer warranties. If the manufacturer gives you a year warranty and the extended warranty is covering the same year, what's the point of paying extra?

3. New cars

I can fess up to buying gym memberships and extended warranties, but I have yet to be seduced by a new car.

Despite what I can only assume is the thrill of being the first and only person to be behind the wheel, I can't get over the massive depreciation that occurs the minute you drive off the lot. estimates the value of a car drops nearly 10 percent with the first mile.

Rather than spend through the nose for the privilege of driving new, wait three years for the depreciation drop to level off. Not only will you save money, you may even still get a warranty because many manufacturers offer basic plans that are good for four or even five years.

4. Credit card interest

I don't care how good your credit card rewards are, paying interest for last month's groceries and gas is stupid with a capital "S."

The only time it makes sense to pay credit card interest is when you are self-financing a purchase for less interest than it would cost through a conventional loan. Even then, it might be smarter to save up some cash and skip paying interest, period.

5. Life insurance for your children

Finally, I know those Gerber life insurance commercials and mailings tug at your heartstrings.

After all, what sort of parent are you? Don't you care about your child's future? The implication is, of course, that if you really loved your child, you would most definitely be starting their college fund right now by buying a life insurance policy.

Emotionally it might make sense, but financially it's hard to make a case for child life insurance. The whole point of life insurance is to replace lost income and unless your child is the next Shirley Temple, I'm guessing the kid isn't pulling in much of a salary at the ripe old age of 3.

You might want to buy a policy if your child has a pre-existing condition that might make it difficult for her or him to buy coverage as an adult. Otherwise, take a pass.

And if you're feeling guilty about their college fund, start a 529 plan or Coverdell savings account instead. Both offer tax benefits and typically have returns that beat the pants off a whole life policy.

One of the beautiful things about Money Talks News is we have a diverse set of intelligent readers from all walks of life. I'm sure one of you can give a compelling argument as to why everyone should have a new-car experience. Or maybe you can think of another dumb purchase I didn't mention.

More from Money Talks News

Apr 17, 2014 3:04PM
Unless you're a car mechanic, married to one, best buddies with one - a new car is not a stupid purchase.  I buy a car new and expect to drive it at least 10 years.  When I've purchased used cars, I drive them for a couple years and then start having to replace everything.  Plus - living alone - I don't have the luxury of "honey come get me" transportation back up.  So where would you rather put $500 a month?  That nice new car or supporting your local mechanic?
Apr 24, 2014 1:23AM
and of course, buying a 650 dollar iPhone isn't on the list...
Apr 20, 2014 8:42PM
After reading several msn money articles I've come to the conclusion my biggest waste of money is my internet connection.
Apr 17, 2014 2:30PM
My problem is, I have to keep buying an X-Wing Fighter. For some reason every time I land on the planet Dagobah, I crash.
Apr 17, 2014 9:13PM
these  people  who  say  buying a  new  car  is  stupid because  of  early years  depreciation are  cretins------ buy new  keep car  15 + years  and  u  dont   buy   some  slobs  lack of   care and  you   get   full  warranty   to prevent  lemon  which  u  can get used
Apr 17, 2014 7:51PM
Life insurance on children also covers burial costs if the child should die, and also locks in insurance for the child as an adult. If my father didn't have a family policy that had all of us children on it, I wouldn't even have life insurance today. No, most children aren't bringing in income, but funerals are costly, and for some middle-class families like the one I grew up in, such a large expense would greatly impact the parents. Life insurance prevents survivors from being burdened with the expenses, which in some cases could otherwise bankrupt survivors.

Also, the author failed to mention one of the stupidest things ever, bottled water! Most of the bottled waters is tap water. Buy a reusable bottle, fill it from the tap at home. If your tap water isn't too good, buy a filtration system. which is what I did.

Apr 17, 2014 3:00PM
I love my gym membership - I've got a two pre-school kids and I'm pregnant.  There's no way I would get out the door and do any exercise myself without the benefit of day care.  I could ride my bike, or possibly go running with a double stroller, but that's about it.  And who am I kidding - I don't have that kind of motivation to consistently drag my cranky kids out (and what about bad weather days?)  I've tried doing fitness at home, but as anyone with kids knows ... as soon as you look like you're about to do anything interesting, both kids are suddenly hanging on your legs and trying to get you to smack them in the head with your dumbbells.

But if you don't take advantage of your gym membership, it is definitely a huge waste of money!

Apr 18, 2014 8:44AM
Car - Sorry but unless you have a trusted friend in the business, you are just buying someone else's problems.
Apr 17, 2014 2:48PM
Ditto on the extended warranty. It really depends on what make a model of car you buy. We had two and got about twice the value in repairs out of the extended warranties.  Also, we added a Child Rider to my wife's Term Life Policy for a couple of dollars a month, hoping it would be a waste of money.  In January of this year we lost one of our kids, and between the hospital costs and the funeral costs, the insurance money really came in handy.  And we have really good health insurance!
Apr 17, 2014 11:46PM

A gym membership is a better buy than a pool and spa, or a set of gym machine. Or cluttering up a room with weights. Walking is good exercise, but the weather does not always cooperate. And  the streets are not always friendly. Also, many people find a exercise class helps them work out.

I buy a new car every 10 years- thus we make each car last about 20 years. Deprecation is over rated- it is an accounting fiction. Every time I look at the price of used cars, I feel that they are overpriced.

Apr 29, 2014 12:18PM
Bottled water should be on the top of this list. You have to be an idiot to buy it. It's the best example of skillful marketing over common sense.
Apr 24, 2014 6:01PM

WOW!  Big news about companies shrinking products....DUH!  Check out the size of the holder of toilet paper and the width. Check out the fact that some yogurts have cornstarch in them.  Check out the fact that there is no more is 14 oz. or less.  Ice cream is now 1 1/2 qts. not a half gallon.  and on and on and on.   We are smarter than we least I am.  But do we have a choice no.  You "fat cats" are getting fatter in the bank while we get fatter and poorer.  Give the nation a break.

Buy MADE IN THE USA. if you can find it !!!   No, lets all contribute to slavery out of our country, bad working conditions,  abuse of women, or, best of all immigrant slavery here in the USA.  Get a grip government!!  GREED BREEDS POVERTY!   STOP IT !

Apr 19, 2014 9:39AM
I always buy new cars.  Don't want someone else's hidden problems.  If you do  some homework and buy a car with low depreciation, then that's not a big problem either.  You get at least a 3 yr warranty, so there will be no big unexpected repairs to pay for.  You have the very latest safety features and of course the newest looking model.   A 2 or 3 yr old car isn't that much less than a new one anyway, unless the new one was an unpopular car to begin with.
Apr 19, 2014 9:32AM
Gym membership?  Nonsense.  I've had one for over 30 years.  These days Blue Cross insurance even pays $20 of my membership monthly.  It's essentially FREE as long as I work out 12 times a month.  Not hard since I use the gym 4 or 5 days a week. 
Apr 24, 2014 9:53PM
Gym memberships and COMCAST cable connection should be tied for # 1.  Actually, I run into some pretty sights tightly wrapped in SPANDX all the time at the Gym.  They leave little for the imagination, and very much to be desired!  So, I guess Comcast Cable is the worst waste of money!
Apr 17, 2014 3:13PM
When you buy  electronics and they try to sell you the 2 year extended warranty, they are really selling you a one year warranty as most computers, T.V.'s etc come with a 1 year included warranty. I must admit though, I have benefited from a 50 buck extended warranty on a laptop and used it for extensive repairs with 2 months left on the 2 year warranty period. Where you really have to be careful is when it comes to new car extended factory warranties. They can be really pricey as dealers set the amount they charge you. If you want an extended factory new car warranty shop several dealers of that make, you can easily save a grand or more. New car bumper to bumper extended factory warranties are the only ones with no exclusions or surprises if your car should have parts or systems fail beyond the basic warranty period that are not normal wear and tear or abuse. If you keep your cars up to 7 years consider all the complex expensive electronics in todays cars and the price of repair work, these warranities can easily be worth the cost for the piece of mind. All warranties are a gamble of course.
Apr 17, 2014 9:01PM
Don't "buy" the storylines that the press is trying to feed you. Look around , look at the decay happening all around you.  
Apr 21, 2014 12:59PM

In the last 35 years, I have bought exactly one used car.  The rest have all been new.  With one exception I have kept each new car at least 10 years.  Buying new is alright because if you shop wisely, get what you really need (and want), take care of it, they will last a long time. 

I have found that buying used is a crapshoot.  Way to much odometer fraud, potentials for buying a accident vehicle or other unknown problems combined with the fact that it is hard to get exactly what you want in a used vehicle so you tend to buy/sell more often.  Throw in the sales tax on each buy and it adds up too.

Does buying new cost more than buying used?  I am not so sure that it does or has to.  But it depends on a lot of factors such as buying smart, how long you keep your vehicles and what vehicles you are buying.

Apr 28, 2014 10:48AM
The reporter must have no kids.  I bought a life insurance for both of mine at birth and am glad  I did.  One of my children has a "pre existing condition" that was not diagnosed until she was a teenager.  Thankfully we already had life insurance in place for her because she would not be able to apply for insurance without disclosing said condition and then the insurance companies would no doubt deny coverage.  Or perhaps the child is in an accident and loses a kidney....probably will be denied insurance because of that.  Bottom line, buy the policy from a reputable insurance company, make sure it has a provision that additional insurance can be purchased on that policy in the future if desired and secure that peace of mind for yourself and your child.
Apr 28, 2014 4:23PM
Who are these delusional people who keep writing comments that buying used cars is a waste of money? Are you kidding me? First that new shiny vehicle is designed to last 12 years max people, yep your refrigerator is designed to last longer than what's on the road these days.  And yes I'm the 4th generation kid of mechanics (both sides of my family) so I do have a bit of favoritism here. Second of all, why are you presuming that a used car hasn't been inspected as thoroughly as your new car being purchased from the same dealer? If you are buying off Craigslist sure you run the risk of a lemon with known damage, but dealers aren't about to unleash an entire fleet of cars that will break down in a month, only to be returned under a limited warranty and ruin their reputations in their communities.
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