Survey Sunday:  Are You Committing Financial Suicide by a Thousand Tiny Cuts?

Welcome back to Survey Sunday. Most Sundays I post one question and ask readers to answer; this week we’ll find out if you are committing financial suicide by a thousand tiny cuts.

We all bleed cash in one way or another, but hopefully after reading this post you’ll be able to find where you can stop some of the bleeding and start to heal your finances.

The Set Up

When I was in my dark financial period, I would evaluate a purchase based on whether I could afford the monthly payment. Each payment seemed minimal so over time I wracked them up…a loan on a couch, car, TV, another gym membership…and the list went on. Expensive clothes appeared affordable, too, because I bought them on my store credit card.

Each month writing the checks to pay those minimum payments took an emotional toll on me. The burden was great and the things I purchased brought only momentary joy. Now that I live debt free, including my mortgage, I never make financial decisions based on whether I can afford the monthly payment. In fact, I run screaming from anything that adds to my monthly outflow unless the value is so great that it makes sense.

Here is a very short list of financial spears that make small pricks in your financial strength. One or two don’t do too much damage; however, in combination these cuts can be deadly.

• The “low monthly payment” option. Honestly, if you can’t afford to buy it with cash, you probably don’t need it or can find a cheaper alternative.
• X months same as cash! Watch out for this doozie. Most of the time these “deals” come with hefty penalties if you miss a payment by just one day. I have used them to my advantage but you really have to understand the rules and make sure you play by them.
• Extended warranties. Most of the time we buy these because we’ve been scared into it. Salespeople are experts at presenting all the reasons you’ll be screwed if you don’t buy one. When you’re living paycheck-to-paycheck the “insurance” seems comforting. But when was the last time you ever got your money back from one? Remember, you have to count the interest charges on top of the cost of the warranty to be able to honestly answer this question. Have I ever fallen prey and bought them? Yes. Have I ever received full value from one? No, never.
• Membership fees. Ah, the membership fee. Each month the tiny little fee is quietly drained from your account or added to your credit card balance. You used the service a lot in the beginning and keep telling yourself that you’ll read that magazine, go back to the gym, or…whatever, so you don’t cancel. Or, maybe it’s just that you don’t take the time to cancel. Ask yourself if you are getting FULL VALUE from the membership. If not, maybe it’s time to stop the bleeding.
• Private school. I’m listing this not because I have anything against parents paying for private school for their children but because I think some parents make the choice for the wrong reasons. If you are in debt and not growing your wealth, you should take a close look at your reasons for paying the hefty private school fees. Maybe with a little investigation there are other options that would cost a lot less and still provide your child with a good education.
• Making the minimum credit card payment. Paying anything less than the full balance due each month is subjecting yourself to financial suicide by a thousand tiny cuts. Enough said.
• Storage units. I’ve ranted on this before, but it bears repeating. If you have “stuff” you aren’t using that sits in a storage unit, you are slowly bleeding wealth from your life. Do yourself a favor and plan a weekend to go through that unit and donate, sell or toss  as much as possible to get out from under that financial burden. (Hint: I own shares of Public Storage…they are doing really well by banking on the fact that you’ll ignore what you’ve jammed in your unit!)
• Carrying grown children on your cell phone plan. Good grief, they’re adults. Give them a six-month notice and then cut them off!
• Brokerage and mutual fund management fees. This is an easy cut to ignore, but it can be costing you a bundle. Here’s a picture to tell the story…

Don’t let expensive fees kill your future security. I’m a HUGE fan of the Vanguard funds. They are a low-cost leader and I’ve been with them for…well, it seems like forever. I’ve never been disappointed and I’m not getting paid to say that.

The Question:

Are You Committing Financial Suicide by a Thousand Tiny Cuts?

What’s Your Answer?

The list above is just to get the conversation started. What can you add to the list? How have you stopped the bleeding in your own life? What one thing can you commit to do today to patch up the holes and keep more of your hard-earned dollars? Please join the conversation by leaving your thoughts in the comments below!

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Image Credit: Ree Klein on Flickr

The post Are You Committing Financial Suicide by a Thousand Tiny Cuts? appeared first on Escaping Dodge.