I was thinking of some of the ways we as Americans waste money. The post got a bit long so I divided into two parts. This is Part 2.
Unused Gym Memberships – I’ve read that gyms sell memberships with the expectation that only 1 in 5 of members will use their membership on a consistent basis. When was the last time you used your gym membership?
Coffee – Americans spend on average almost $1100 on coffee annually. Great if you own stock in Starbucks or McDonalds I guess.
Designer Clothing for Kids – Kids outgrow their clothes and shoes quickly. Buying designer clothes for children is a waste. You can purchase gently used clothes at consignment stores for pennies on the dollar if you were to buy the items new.
Gambling – The average American loses $400 per year in gambling. Casinos earned a gross revenue of $125 billion in 2010. Of note in one study about one fourth of Americans spend over 5% of their gross monthly income on gambling while also report experiencing serious problems due to a gambling habit, accounts with high debt balances, and financial distress.
Lottery Tickets – I know of people who spend $5-50 a paycheck on Lottery Tickets. That translates to wasting $60 to $600 a year. Actual odds of winning the lottery depend on where you play. About one third of Americans think that the only way to become financially secure in life is by winning the lottery. Single state lotteries usually have about a 1 to 18 million odds of winning. Multiple state lotteries have closer odds of winning of 1 to 120 million. The National Safety Council says that about 100 people get struck with lightening every year. Let’s say that the U.S. has a population of about 300 million. So the chances of being struck by lightning in the U.S. is about 1 to 3 million. That means you are 6 to 40 times more likely to die of a lightning strike than you are to win the lottery. The probability is incredibly low so stop wasting money. Instead put the money into a retirement account or mutual fund.
Credit Card and Student Loan Interest – Average consumer credit card debt in the U.S. in 2014 is about $15,250. Average student loan debt in the U.S. in 2014 is about $32,985. Consider cutting expenses, getting an additional temporary part-time job, and using a debt reduction method to tackle your debt. One of a person’s greatest asset is their income. If your income is going towards other people particularly in the form of interest you aren’t being able to build your net value.
Vehicle Leasing or Purchasing New with Interest – Typically a lease will have strict mileage limitations of say 12,000 to 15,000 miles a year. Many people who find it most beneficial to lease are those who can claim a vehicle as a business expense. Unlike when purchasing a vehicle, when leasing a vehicle at the end of the lease there is nothing to show for it. Generally once a person signs a lease they are stuck with it until the end of the length in the agreement. There’s also the possibility of additional charges at the end of the lease. New vehicles often come with significant payments with interest. New vehicles also devalue significantly in the first 2-5 years. Consider instead buying a vehicle for a couple thousand dollars and saving up to buy cash for a better vehicle say 4-5 thousand in a few years.
What ways do you think Americans blow or waste money? What areas are you trying to improve in your own financial life? Leave a comment!