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10 ways Americans waste money

Saving money isn't as hard as it seems. Step one? Stop needlessly blowing it.

By Stacy Johnson Sep 26, 2011 12:01PM

This post comes from Stacy Johnson at partner site Money Talks News.

 

According to a new report from the Census Bureau, in 2010 the average American household income was $49,445. Adjusted for inflation, that's about where it was 15 years ago. Even more depressing: The 2010 poverty rate in the U.S. is more than 15% -- the highest since 1993 -- which translates into 46 million souls.

 

Suffice it to say that for many Americans money is in short supply, which makes it all the more important to preserve the cash that comes our way. In the video below, I cover a sampling of ways Americans waste money. Check it out, then read on for more.

You just saw five ways to blow money. Now let's recap, add more, and take the list to 10:

  1. Buying new. Getting something in the original packaging often means paying twice the price. This mistake is most costly when it comes to cars, but it applies to many things: furniture, clothing, textbooks, etc. So whenever practical, skip the stores and showrooms and choose thrift stores, yard sales, eBay and Craigslist.
  2. Accepting initial offers. Many sellers of goods are willing to negotiate because they want your money as much as you want the product. In "Confessions of a serial haggler," I explained how I've gotten discounts on cable service, hotels, doctor bills, and more. It never hurts to ask.
  3. Buying brand names. People are finally wising up to this one; generics have been gaining market share since 2006. While prescription drugs have the biggest price tags vs. generics, the dollars add up at the grocery store too. In many cases, the only difference between generic and brand name is price. Can you really tell the difference between name-brand and generic when it comes to water, cleaning supplies, or spices?
  4. Buying a bigger home than you need. In 2001, Americans spent about 12% of their income on "residential and transportation energy," but this year they're projected to spend almost 20%. Living in a big house with unused rooms or bigger rooms than you need is like driving a stretch limo: You're buying energy for unused space.  A bigger house means more furniture, higher maintenance, higher taxes, and more time spent taking care of it. When home prices were rising, there was some logic to leveraging potential profits by buying the biggest. Now, that extra space is nothing but a cash drain.
  5. Paying interest. This should go without saying, but too few people get it. Borrowing money to live beyond your means makes lenders richer and you poorer. Using credit cards can be smart -- unless you can't afford to pay your balances in full every month. The only time you should ever pay interest: if what you're buying has a decent chance of rising in value at a higher rate than the interest you're paying to own it.
  6. Eating out too much. We recently wrote that Americans eat out about every third day, and offered some tips to save. But even if you drink water and take home half the meal, the cost per person is higher than cooking at home.  Cut back on the dining and you'll keep a few more dollars -- and maybe lose a few pounds.
  7. Keeping unhealthy habits. Smoking a pack of cigarettes a day at $6 each costs more than $2,000 a year. The U.S. government estimates the actual cost is closer to $10.47 per pack, once you add in the medical expenses smokers will face, including insurance costs. Excessive drinking is also an expensive and destructive pastime, as is gambling. There are plenty of healthier and cheaper ways to use free time: See "26 tips to save on entertainment."
  8. Paying for freebies. Why do we pay for things we could get gratis? From TV to travel -- even housing -- creativity and flexibility can often replace money. Check out two of our most popular stories: "10 things people buy they should get free" and "9 best ways to get free stuff."
  9. Turning down free money. As I said in "My 10 dumbest money moves," if your employer is offering matching money for participating in your company's 401k or other retirement plan, and you're not participating to the extent necessary to get the full match, you're literally refusing free money. You're also ignoring an opportunity to get a tax deduction and grow your retirement savings tax-deferred. (Are you saving enough for retirement? Try MSN Money's calculator.)
  10. Paying too much for insurance. You have a fender-bender and do $500 of damage to your car. Would you report it to your insurance company? If you answered "no" due to the justifiable fear of a rate hike, then let's hope you don't have a $250 deductible. If you do, you're wasting money on higher premiums than necessary. Raising your deductible from $250 to $1,000 could save you 10% to 20%. (How does your vehicle compare on insurance rates?)

Did I leave something out? Add your favorite money-wasters below.

 

More on Money Talks News and MSN Money:

77Comments
Oct 6, 2011 7:48AM
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I always mow my own yard, repair anything broken (read a book on repairs - it is amazing the info out there on just about anything!! I not only save money but teach my children how to do it - great way to teach them the value of a hard days work !!

 

Oct 6, 2011 1:58PM
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These tips are right on, and if more people followed them, we'd have lots fewer people depending on handouts.  We all need to be thinking frugally as if we are in a Great Depression.  We are!  We need to be stretching meals, growing gardens, reusing, and generally resisting the mass consumerism that has come to define our culture.  When we see third graders with their own cell phones, drinking those $5 lattes, we have let the excess overtake our sensible side. 

To save $ you can: 1:be sensible at the grocery store.  Really look and see what is cheaper.  Buy in bulk when possible, use coupons, try store brands (most are nearly impossible to tell) and avoid the over processes, over-packaged stuff.  AND stop wasting food.  Use those leftovers.  Over cook (especially meats) on purpose that will be used in future meals. Train your kids to eat what they take.  Pay attention and stop throwing food away because it went bad before you got around to it.  (and while you're at it, teach your kids to recycle!!! - personal soapbox unrelated to saving$)

2: grow a garden.  It's cheap, educational for kids, environmentally friendly (especially if you also do a compost pile) and the food is wholesome if you avoid pesticides and such.

3: Think before you buy.  Do I REALLY NEED this?  Do my kids REALLY need this? (rarely!!)  Can i get it used?  Will I outgrow it, grow bored of it, will my kids lose it?  Possessions should be useful, beautiful or loved.  All the rest of it is just "stuff"

4: stop allowing your kids to tie their identity to wearing the latest name brand crap from Abercrombie and all the rest.  They do NOT need that to be stylish and in tune with their peers.  We should all be aghast at T-shirts for $38(+?).  If we stop buying it, they'll stop making it and charging for it.  You know that shirt cost $2 in labor and materials to make!!

5: Keep in mind that sometimes buying one good thing is better than having to replace the Walmart junk 5 times when it falls apart.  I'm not advocating "cheap" necessarily.

The most important thing is just to THINK.

Oct 6, 2011 11:09AM
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Excessive personal vanity wastes money.  The best car, the nicest clothing, bling jewelery, rims, gold teefs, branded sports gear.

Truth is nobody cares.   Wanna be beautiful, have a good body.  Exercise is cheap, and you look good in just about any clothing.

Stop owning so much stuff!  I pass by neighbors houses and their garages are stacked to the CEILING with stuff.  Everything in there cost them a lot of money and its in the garage, mildewing and rotting out there.

Learn to cook!  Food is cheap, if you can cook.

Don't have so many babies, your wife's vagina is not a clown car.

Oct 6, 2011 1:38PM
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The Federal gov. and the administration is asking the american people to tighten their belts.

When is the President going to announce his self imposed paycut?  When is Congress going to announce their self imposed paycut?  When are all federal employees and elected officials that get paid over $90,000.00/ year going to step up and do their part and tighten their own belt?  The amount of money that we taxpayers give to these people is staggering.

Oct 6, 2011 2:03PM
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Sure am tired of all the people that make every article into some Obama thing. Get over it, don't like whats going on either, but I think more damage is being done by the division in the US society from political ideology than Obama, or Bush...ever did.

 

That people think we wouldn't be in this mess if Obama wasn't elected is just silly...we would be deep in it either way.

 

Tired of the blame game by people that have never had to make lose lose decisons in their lives or careers.

Oct 6, 2011 2:03PM
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Ways to fix our money problems:
#1-Impose a tax on every company that outsources and has factories overseas that is so high, companies are forced to hire WITHIN our own country! Also give a small incentive to companies that hire an extra amount of workers in our own country.
#2-Let the other countries start pulling some of their military weight, and get our soldiers, etc. back here. It's costing exorbitant amounts of money that us taxpayers will be paying off for the next couple of decades (soon centuries at the rate we're going). Indentured servants, anyone?

Oct 6, 2011 9:39AM
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Mister Manners-I agree that time is money. But as far as mowing, washing the car, cleaning house goes...MAKE YOUR KIDS HELP YOU! That is how you do it. Some of my best memories with my parents and siblings is doing yardwork/housework together, getting in clean laundry "fights", hosing each other unexpectedly while washing the car, etc.

That's why kids don't have any work ethic these days. Because people, trying to save money, do everything themselves-without including their kids in the action.

Just something to think about.

Oct 6, 2011 1:27PM
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Friend of mine just called me after going into a px on a military installation.

 

Everything he looked at was made in China.  He asked to so some American made products and was told that due to a price restructuring the px was not allowed to sell American made products.  DO YOU HEAR THAT SUCKING SOUND?

Oct 6, 2011 9:18AM
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You forgot sending tax dollars to Washington.What an extreme waste of money!
Oct 6, 2011 2:03PM
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Why is everyone criping about what the government is doing or not doing...this was about what YOU can do for yourself....I ditched the home phone for just a simple prepaid cell phone, Straight Talk, and kept $80 plus per month, and haven't missed the old phone one minute.  Buy used cars, many depreciate up to 30% when you drive them off the lot.  Haven't had a "new" car since 1988, saved a ton of money on interest. 

I also frequent a local thrift store, I have on many, many occasions walked out with over $100 worth of nice, some new, clothes for as little as 99 cents pre item...Leather jackets, shirts, pants, and such...

Oct 6, 2011 3:52PM
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One thing I have noticed a lot the last few years:......people sitting in cars in the parking lot waiting for someone in the grocery store.......motor on, air conditioning running,  wasting energy, polluting the air, wasting money .........Visiting friends with kids who have so many toys they overflow into the yard and every room in the house......a very negative message.  We seem to be outraged when

our tax dollars are wasted but we could all do a better job at being responsible people and raising kids to be responsible, caring adults. If you can't afford it and don't really need it then simply don't get it!!! No, you don't need the latest of everything, no, you don't have to have cable, no, you don't need to eat out at a restaurant 3-4 times a week, have your hair and nails done  etc.  It is just a sign of the times.

Life is sweeter,calmer, more rewarding, when you can look at the day and say, I did my best today...not only for me but for the greater good.

Oct 6, 2011 3:58PM
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The only waste of money I see now if buying products "made in China". You don't want to buy cheap stuff that have short life and buy another to replace it within a short time period. An old adage says that you'll get what you paid for.
Oct 6, 2011 7:52AM
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If you have an aversion to sitting on a someone else's used couch or wearing someone else's used clothing, buy them on clearance (not sale, clearance). Cheap and at least brand new.
Oct 3, 2011 7:45PM
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No I paid $500 for a 1998 Nissan Frontier,put $2,000 worth of sensors + a battery and alternator and body work that I did my self.. (yes,I priced the sensors on the market,they really are that expensive)and it gets me to where I want to go and hauls what I need it to haul.And it has a frame thats not rusted out..why buy new?
Oct 6, 2011 10:34AM
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To Mr. Manners, the first commenter............

 

Hard to spend time with the children when you're mowing the grass, washing the car, and fixing the plumbing?  Really?  Why not have them do it with you.  Then you have time together and you'll also be teaching them something.

Oct 6, 2011 1:43PM
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Giving illegal aliens and their children carte blanche while denying poor Americans the country they fought for.
Oct 6, 2011 10:19AM
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I see people running out and buying the newest phone, DVD, BlueRay, etc. when the item they have is working just fine and doing its job.  They buy because it's the 'newest thing' on the market.  I refuse to do that.  I will wait until there is a breakdown of the item and then purchase. By then, many items drop in price anyway because something newer has emerged.  Trying to 'keep up with the Jones's', or being the '1st to have one', is one of the biggest wastes of money I have seen. 
Oct 6, 2011 6:44AM
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I raised my deductible from 500 to 1000....guess how much a month that saved me ?   7 dollars.

Oct 6, 2011 9:06AM
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I already buy store brand products, but the thing I can really vouch for is buying things used. The textbook I needed for my history class was priced at about $250 new, but I'm super cheap so the first thing I did was log on to my Amazon.com account and I found the exact same book for a penny. So of course before I go to the bookstore for another text book, I will research online.
Oct 6, 2011 9:58AM
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A quick money saver is to not buy coffee from Starbucks or where ever before work, if your company has FREE coffee in the break room. My company has pretty decent stuff, so I save about $5 a day there.
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