Declare Your Independence From These 5 Bad Spending Habits

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If you're struggling to keep yourself financially afloat, it probably isn't because you made a couple of big splurges. Rather, you're probably making a bunch of small spending mistakes on a regular basis, and these bad habits are adding up in a big way.

And as is the case with many bad habits, you probably won't even realize it's a problem until you come home one night to find that your friends are staging an intervention. So, consider this an intervention: You're doing a lot of stupid things with your money, and it's time to make some changes before you completely drain your bank account.

This being the week of July Fourth, let's compose a new declaration of independence: You're going break free from whichever spending habits are killing your wallet. While everyone's has their own unique catalog of transgressions, here are a few common money blunders that you might be making on a regular basis.

Getting Delivery or Dining Out Too Often

You eat at least three meals a day, which adds up to about a hundred opportunities a month to overspend. Too many people seize those opportunities by going out to eat or ordering delivery.

Take lunch, for instance. No, really -- take lunch. Because if you're going to Au Bon Pain or Cosi or another sandwich chain instead of packing your own sandwich, you're likely paying around $8 instead of the $3 or so it would cost to make own in your own kitchen. If you're getting food delivered to the office, you're paying even more -- most of the restaurants on have a delivery minimum of $10 to $15, plus the tip you should be giving the guy delivering it.

Going out to dinner is even worse. Entrees will run you at least $15 each, appetizers and alcohol will jack up the price even further, and then you've got a tip of around 20 percent.

Even breakfast is a budget-killer. Buy a box of cereal at the beginning of the week, and each bowl will cost less than a dollar. Go out for a croissant or breakfast sandwich every morning, and you're easily spending twice that.

Liberate yourself from high dining costs: Do more of your own cooking.

Deceiving Yourself with Daily Deals

There are a lot of ways daily deal sites can eat into your finances. You might buy a bad deal that turns out not to offer the savings it promised. Maybe you've purchased a deal and forgotten to redeem it. Or perhaps you bought a bunch of Groupon stock after the IPO and then watched in dismay as it tanked.

But there's another way that daily deals can cost you -- simply by enticing you to buy a bunch of deals you don't need.

Retailers have always lured shoppers by promising discounts that will disappear if you don't act soon. Daily-deal sites take that technique up a notch by pumping up the discounts (most Groupon ads promise something in the vicinity of 50 percent off) while constraining most of the deals to last 24 hours or less.

If you're using these sites to save on something you were already going to buy, don't worry about it. But if you find yourself constantly buying restaurant coupons and teeth-whitening services, you're probably spending too much.

Seeing Movies in Theaters

There was a time when going to the movies was defensible. Back then, movies tickets were relatively cheap, and if you wanted to watch a movie at home, you were paying to rent a VHS and watch it on a standard-definition TV.

But now ticket prices have run amok, while at-home entertainment options have improved by leaps and bounds. Prices for HD TVs are better than ever now that demand has bottomed out, and you can instantly access thousands of movies by subscribing to Netflix, Amazon or another streaming service. For the cost of one movie ticket, you can get two months of Netflix and watch a new movie every night.

It's not always easy to skip the theater when there's a new release out that you really want to see. But if you can wait for it to show up in Redbox, you can save more than 90% over the ticket price (and skip the concession mark-up, too).

Chasing Rewards points

If your credit is good enough to qualify for a no-fee rewards card, and you're not using one for your purchases, you're leaving money on the table.

But it's also possible to go too far in the opposite direction, and get completely out-of-control in the pursuit of credit card rewards points. If one of your 5 percent bonus categories is restaurants, that doesn't mean you need to run out and max out the category with $1,500 in restaurant in spending just to get $75 back. You wouldn't spend hundreds of dollars at a department store just to get a 5 percent discount; why would you do it to get rewards points?

That's not to say that you should never change your spending habits to chase rewards points. If you can get a really significant sign-up bonus for spending a lot of money in the first few months -- say, $400 cash-back for spending $3,000 in the first three months -- then it makes sense to shift your spending onto that card and maybe even loosen the purse strings a bit to get to that threshold.

And you can also max out your categories through creative spending. Let's say you go to Starbucks a lot, and it's a 5 percent category this quarter. If you don't expect you're going to reach your limit over the course of a quarter, you can use that rewards card to buy a Starbucks gift card, get the points, and then use the gift card to buy your coffee once the bonus expires.

But as a general rule, you want to be very careful that the promise of cash-back doesn't make you cash-poor.

Getting Lazy About Recurring Bills

Many American joined gyms back in January as part of their New Year's resolutions to get healthy. And if you were one of them, there's a pretty good chance your visits to the gym probably dwindled until you're hardly going at all. You may even have stopped going altogether.

But unless you went ahead and canceled your membership, your gym is probably continuing to charge your card every month for a service you no longer you use. Maybe you'd forgotten about this recurring charge, or maybe you just convinced yourself that you should leave it be, so as not to resign yourself to the fact that you've ditched your New Year's Resolution.

This is the worst kind of spending habit: the kind that persists through inaction and inertia. And it's not limited to gym memberships: subscription services like Netflix likewise use automatic billing, because they know you're more likely to cancel your membership if you have to sit down and assess things every month when it comes time to re-up.

Our tip: Go through your budget and give serious thought to whether each recurring charge is something you really need. You might even find yourself canceling big charges like your cable if you realize you've stopped watching.

Matt Brownell is the consumer and retail reporter for DailyFinance. You can reach him at, and follow him on Twitter at @Brownellorama.

Declare Your Independence From Your Bills
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Declare Your Independence From These 5 Bad Spending Habits

Mobile-network companies do everything they can to pull you in the door, with smartphone offerings that often come with no upfront cost. Even the most popular models are available at big discounts, with most providers offering large subsidies in order to lock you into two-year contracts.

Once you're locked in, though, costs for monthly data, text and voice plans can run well over $100 a month.

That's fine if you actually use everything you're paying for, but many people don't. One Illinois consumer advocacy group found that state residents wasted as much as $1.4 billion by signing up for more-inclusive plans than they actually needed. Threats of overage fees lure subscribers into paying for more than they use. But look at your actual usage and then see if a cheaper plan would serve you just as well.

Speaking of phone service ...

Cellphone use has become nearly universal in the U.S., with a Pew Internet study finding that 91 percent of American adults have a cell phone. With plans that include unlimited or large amounts of minutes for use either locally or for long-distance calls, cellphones increasingly serve all the telephone needs people have.

In that light, paying for a landline is of limited use. The main advantage is that landline phone service often continues to work during power outages when cellphone use fails, but an average landline bill of around $30 a month is a fairly hefty price to pay for that security.

Like cellphone providers, cable companies have pushed customers into larger packages than many people want. Without a-la-carte options to pick and choose channels, many customers have to buy expensive tiered packages to get the channels they actually want.

With the rise of streaming alternatives like Netflix (NFLX) and Hulu, some former cable customers have successfully cut the cord, replacing monthly cable bills of $100 or more with much lower subscription payments. Also, look into cheaper package options that cable operators must provide. They're often not advertised, but they can be much less expensive than typical standard cable packages.

As summer heats up, cooling costs are on the rise, but one solution that covers both heating bills in winter and air-conditioning in summer is a programmable thermostat. By letting you tailor your energy use to times when you're actually at home, you can cut your total bills by 10 percent a year or more, according to figures from the U.S. Department of Energy.

One downside of programmable thermostats in the past was that they didn't handle unexpected changes in plans very well. But advances in technology make it even easier to use programmable thermostats, with some devices linked to the Internet and controllable using a smartphone. That way, if you're going to be home an hour early, you can reset your thermostat remotely in advance.

Mortgage rates have been on the rise recently, but some homeowners might still benefit from refinancing their home loans. Even with 30-year mortgages having gone up by more than a full percentage point in just a couple of months, rates of around 4.5 percent are still well below historical average levels.

Refinancing comes with upfront costs, so it's important not just to look at monthly savings but also at how long you plan to live in your home and whether you can avoid or reduce costs associated with refinancing. Given how big a part of your overall budget your mortgage payment is, though, even small percentage savings can add up to a nice boost for your finances.

Monthly bills can put a big weight on your shoulders. But by taking these simple steps and looking at other ways to trim your budget, you can go a long way toward escaping the bonds of paycheck-to-paycheck living and declaring your own financial independence from your bills.
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