21 Things You Should Never Waste Your Money On

Tae Kim - Financial Tortoise

4 Dec 202311:56

Summary

TLDRThis video script outlines 21 common financial pitfalls to avoid for smarter money management. It advises against unused gym memberships, high expense ratios on investments, fast fashion, late fees, bank account fees, lottery tickets, extended warranties, daily coffee and lunch purchases, excess food waste, bottled water, subscription services, physical magazines, cable TV, expedited shipping, ATM fees, foreign transaction fees, hotel stays, airline fees, and private mortgage insurance. The speaker emphasizes the importance of planning, utilizing tax deductions, and leveraging credit card benefits to save money and make informed financial decisions.

Takeaways

🏋️‍♂️ Cancel unused gym memberships and consider free home workouts or bodyweight exercises.
💰 Avoid high expense ratios on investments; opt for low-cost index funds like Vanguard's VTSAX or VTI for minimal fees.
👗 Ditch fast fashion for its low quality and environmental impact; invest in quality clothing instead.
⏰ Set up automatic payments to avoid late fees and protect your credit score.
🏦 Look for bank accounts without monthly fees or meet requirements to waive them, and consider online banking options.
🎟 Avoid lottery tickets due to poor odds and the potential curse of sudden wealth leading to bankruptcy.
📱 Skip extended warranties as they often cost more than the repair or replacement of items.
☕ Cut back on daily coffee purchases by investing in a latte machine for homemade coffee.
🍱 Save money by meal prepping and bringing lunch to work instead of eating out daily.
🛒 Reduce food waste and save money by planning meals and sticking to a grocery list.
💧 Use a reusable water bottle to avoid the expense and environmental impact of buying bottled water.
🔄 Regularly review and cancel unused subscriptions to prevent wasting money.
📰 Access magazines and newspapers digitally instead of in print to save money and reduce waste.
📺 Consider cutting cable and using streaming services for more cost-effective entertainment.
🛒 Avoid expedited shipping fees by planning ahead and not rushing purchases.
🏧 Keep an eye out for ATM fees and use in-network ATMs or credit cards to avoid them.
💳 Find credit cards without foreign transaction fees for international purchases.
🏨 Use credit card points and travel hacking to avoid paying for hotel rooms.
✈️ Utilize travel rewards credit cards to dodge airline fees for checked bags and priority boarding.
🏡 Wait until you can afford a 20% down payment on a home to avoid paying private mortgage insurance (PMI).
💼 Maximize tax deductions and credits to keep more of your hard-earned money.

Q & A

Why should you avoid unused gym memberships?
-Unused gym memberships are a waste of money because they don't provide any value if you're not utilizing the gym facilities. It's better to cancel the membership and opt for free exercises at home, such as following YouTube videos or doing bodyweight exercises.
What is an expense ratio and why is it important in investing?
-An expense ratio is the fee that investment firms charge to operate mutual funds or ETFs. It's important because it directly cuts into investment returns, and high expense ratios can significantly reduce your returns over time. Investing in low-cost index funds with low expense ratios can save you a substantial amount of money in the long run.
Why is fast fashion considered a bad investment?
-Fast fashion is a bad investment because it uses low-quality materials that wear out quickly, requiring frequent replacements. Additionally, the rapid production cycle and reliance on cheap materials contribute to environmental issues such as waste and depletion of natural resources.
How can I avoid late fees on my bills?
-To avoid late fees, set up automatic payments online for your bills such as credit cards, internet, and other recurring expenses. If automatic payments are not an option, consider finding a new supplier or service provider that offers this feature.
What are some ways to avoid bank account fees?
-Bank account fees can often be avoided by understanding the account requirements. Many banks waive fees if you maintain a certain minimum balance, make a specific number of transactions each month, or set up direct deposits. Alternatively, consider switching to an online bank that offers no account fees.
What are the odds of winning the Mega Millions lottery?
-The odds of winning the Mega Millions lottery are approximately 1 in 176 million, making it highly unlikely to win the jackpot.
Why should you avoid extended warranties for electronics?
-Extended warranties for electronics often don't add up financially. They can be more expensive than simply buying a refurbished replacement, and they may not provide better coverage or value than what's already included with the product's standard warranty.
How much money can be saved by making coffee at home instead of buying it out?
-By making coffee at home, you can save a significant amount of money. For example, if you spend $5 per day on coffee, over a year, this amounts to nearly $2,000. Investing in a good latte machine can provide better coffee and save you money.
What is a simple way to save money on lunch expenses?
-Meal planning and packing your lunch for work can save you a considerable amount of money. Instead of spending around $15 per day, which adds up to $3,900 per year, preparing your lunch at home is more cost-effective and healthier.
Why is it recommended to avoid buying too much food at once?
-Buying too much food at once can lead to food waste, which is both a financial loss and an environmental concern. According to the Natural Resources Defense Council, up to 40% of food in the U.S. is never eaten. Planning meals and sticking to a grocery list can help reduce waste and save money.
How can I avoid paying for bottled water?
-To avoid paying for bottled water, invest in a reusable water bottle. This not only saves you money in the long run but also helps to reduce environmental waste from plastic bottles.
What is the issue with unused subscriptions?
-Unused subscriptions can be a waste of money as they represent a recurring expense for services that are not being utilized. Regularly reviewing your subscriptions and canceling those that are not providing value can save you money.
Why should you avoid physical magazines and newspapers?
-Physical magazines and newspapers are an unnecessary expense in the digital age. They can easily be replaced with digital versions accessed through apps, which are cheaper and better for the environment.
What are some alternatives to cable TV to save money?
-Instead of paying for cable TV, consider streaming services like Netflix, Hulu, and HBO. These platforms offer a wide range of content and are often more cost-effective than traditional cable subscriptions.
Why should you avoid expedited shipping fees?
-Expedited shipping fees are often unnecessary and represent a premium cost for immediate delivery that you may not need. Planning ahead and avoiding last-minute purchases can help you save money on these fees.
How can I avoid paying ATM fees?
-To avoid ATM fees, use your bank's ATM or ensure that any ATM you use is within your bank's network. Additionally, carrying a small amount of cash for emergencies can help you avoid the need for out-of-network ATM withdrawals.
What is a foreign transaction fee and how can it be avoided?
-A foreign transaction fee is an additional charge on your credit card bill when you make a purchase in a foreign currency or through a foreign bank. This fee can typically be avoided by using a credit card that waives such fees, like the Chase Sapphire Reserve.
How can I save money on hotels?
-By using travel credit cards strategically, you can accumulate points that can be redeemed for free hotel stays. This can help you avoid paying for hotel rooms and save a significant amount of money.
What are airline fees and how can they be avoided?
-Airline fees can include charges for checked bags, food, and priority boarding. These fees can be avoided by using a credit card that offers perks like free checked bags and priority boarding, such as the Delta SkyMiles Gold American Express card.
Why is it recommended to avoid private mortgage insurance (PMI)?
-Private mortgage insurance (PMI) is required for home buyers who put down less than 20% and can cost up to 1% of the loan annually. To avoid PMI, it's recommended to save for a 20% down payment, which will allow you to purchase a home without this additional expense.
Why is it important to take advantage of tax deductions and credits?
-Tax deductions and credits can significantly reduce your taxable income and the amount of tax you owe. By being aware of and taking advantage of all available deductions and credits, such as the student loan interest deduction or energy-efficient home improvement credit, you can save a considerable amount of money.

Outlines

00:00

💸 Avoiding Unnecessary Gym Memberships

The script emphasizes the financial waste of unused gym memberships. It suggests that if one doesn't utilize the gym regularly, it's time to cancel the membership. As alternatives, it recommends free home workouts through YouTube or bodyweight exercises. For those who prefer equipment, it proposes getting a squat rack for home use, which eliminates the need to visit a gym.

05:01

📈 Minimizing Investment Costs with Low Expense Ratios

The paragraph discusses the importance of avoiding high expense ratios on mutual funds and ETFs, which can significantly reduce investment returns. It advises investing in low-cost broad market index funds, such as the Vanguard Total Stock Market Index Fund (VTSAX) with a 0.04% expense ratio and its ETF version (VTI) with a 0.03% ratio. The script provides a clear example of how these low ratios can save an investor thousands over a lifetime, highlighting the impact of a mere $4 to $3 in expenses for every $10,000 invested.

10:02

👗 Steering Clear of Fast Fashion

This section of the script warns against spending money on fast fashion due to its low quality and environmental impact. It points out that cheap clothing wears out quickly, necessitating frequent replacements, and contributes to waste and depletion of natural resources. The advice is to invest in quality clothing that lasts longer, which is better for both the individual's wallet and the environment.

⏰ Avoiding Late Fees for Financial Health

The script advises against wasting money on late fees, which not only are unnecessary expenses but also harm one's credit report. It suggests setting up automatic payments for bills such as credit cards and internet services to avoid late payments. If automatic payments are not an option, it recommends finding a new supplier or service that offers this convenience.

🏦 Dodging Bank Account Fees

The paragraph addresses the issue of bank account fees, which can accumulate to significant amounts over time. It suggests checking account requirements to find ways to waive these fees, such as maintaining a minimum balance or arranging direct deposits. The script also promotes online banking options like SOFI checking and high-yield savings accounts, which offer no account fees and sign-up bonuses.

🎟 Lottery Tickets: A Losing Bet

The script strongly advises against spending money on lottery tickets, citing the extremely low odds of winning and the potential curse of sudden wealth. It mentions that 70% of lottery winners go bankrupt within a few years due to poor financial habits. The message is clear: lottery tickets are a financial waste with unfavorable odds.

📱 Skirting Extended Warranties

The paragraph argues against the purchase of extended warranties for electronics, as they often do not provide good value for the money spent. It uses the example of a smartphone insurance policy, which would cost more in premiums and deductibles than simply buying a refurbished phone. The script encourages ignoring extended warranties, which benefit the sellers but not the consumers.

☕ Cutting Costs on Daily Coffee

The script points out that the daily habit of buying coffee can lead to significant expenses over time. It suggests investing in a latte machine to make coffee at home, which not only saves money but also impresses guests. The key is to treat coffee outings as occasional treats rather than daily routines.

🍱 Packing Lunch to Save Money

This section advises against the daily habit of buying lunch out, which can lead to substantial yearly expenses. It recommends meal planning and packing lunch to work as a cost-effective and healthier alternative. The script shares personal experience, stating that this practice has saved thousands of dollars and made occasional dining out more enjoyable.

🍉 Reducing Food Waste for Savings

The script highlights the issue of food waste, which is both a financial and environmental concern. It suggests creating a grocery list and sticking to it, as well as not shopping when hungry to avoid over-purchasing. The goal is to minimize waste and save money by being intentional with food purchases.

💧 Ditch Bottled Water for Sustainability and Savings

The paragraph advises against buying bottled water regularly, which is bad for the environment and a waste of money. It recommends using a reusable water bottle, which can save money and encourage better hydration throughout the day.

🔄 Canceling Unused Subscriptions

The script warns against the financial drain of unused subscriptions, which can accumulate unnoticed. It suggests reviewing credit card statements to identify and cancel subscriptions that are not being used, ensuring that recurring payments provide value.

📰 Embracing Digital Over Print Media

This section advises against spending money on physical magazines and newspapers, promoting digital alternatives as cheaper and more environmentally friendly. It emphasizes the ease of access to favorite publications through apps on devices like iPads.

📺 Cutting the Cord on Cable TV

The script encourages cutting cable TV subscriptions, suggesting that most Americans do not get full value from them and that there are ample entertainment options available through streaming services. It promotes the idea of not wasting money on cable and exploring modern alternatives.

🛒 Avoiding Expedited Shipping Fees

The paragraph advises against the unnecessary expense of expedited shipping, which often results from a lack of planning. It recommends planning ahead to avoid paying a premium for immediate delivery and to save money.

🏧 Eliminating ATM Fees

The script advises against paying ATM fees, which are avoidable with proper planning and use of in-network ATMs or credit cards. It emphasizes the importance of avoiding out-of-network ATMs and the associated fees.

💳 Avoiding Foreign Transaction Fees with the Right Credit Cards

This section warns against the additional fees associated with foreign transaction fees on credit cards when making purchases abroad. It suggests checking with the credit card company for options that waive these fees, such as the Chase Sapphire Reserve, which offers perks that can offset its annual fee.

🛌 Leveraging Credit Card Points for Free Hotel Stays

The script encourages using travel credit cards strategically to accumulate points for free hotel stays, effectively eliminating the need to pay for accommodations. It shares personal experience of not having paid for a hotel room in over five years through travel hacking.

✈️ Avoiding Airline Fees with the Right Credit Cards

The paragraph advises against paying airline fees for services like checked bags and priority boarding by using the right credit cards that offer these benefits. It mentions the Delta Sky Miles Gold American Express card as an example of a card that provides such perks.

🏡 Skipping Private Mortgage Insurance (PMI)

The script advises homebuyers to avoid PMI by saving for a 20% down payment on a home purchase. It explains that PMI can cost up to 1% of the loan annually, using a $400,000 loan as an example where PMI would amount to $4,000 per year.

💼 Maximizing Tax Deductions and Credits

This section emphasizes the importance of taking full advantage of available tax deductions and credits to save money. It suggests consulting with an accountant or researching deductions and credits, such as the student loan interest tax deduction and the energy-efficient home improvement credit.

Mindmap

Keywords

💡Gym Memberships

Gym memberships refer to the subscription fees paid to access a gym's facilities and equipment. The video emphasizes not wasting money on unused gym memberships, suggesting alternative ways to exercise at home for those who do not frequently visit the gym.

💡Expense Ratios

Expense ratios are the fees that investment firms charge to operate mutual funds or ETFs. The video advises against high expense ratios as they reduce investment returns, recommending low-cost index funds like the Vanguard Total Stock Market Index Fund (VTSAX) with very low expense ratios.

💡Fast Fashion

Fast fashion refers to the rapid production of inexpensive clothing to meet current trends. The video criticizes fast fashion for its poor quality and environmental impact, advocating for investing in higher-quality clothing that lasts longer.

💡Late Fees

Late fees are charges incurred when payments are not made on time. The video suggests avoiding late fees by setting up automatic payments to ensure bills are always paid on time, thus preventing unnecessary financial penalties and negative impacts on credit reports.

💡Bank Account Fees

Bank account fees are monthly charges for maintaining checking or savings accounts. The video highlights how these fees can add up and suggests ways to avoid them, such as meeting certain account requirements or switching to banks that do not charge these fees.

💡Lottery Tickets

Lottery tickets are purchased for a chance to win large sums of money through random draws. The video argues against buying lottery tickets due to the extremely low odds of winning and the financial mismanagement that often follows winning large amounts.

💡Extended Warranties

Extended warranties are additional service agreements that cover repairs or replacements beyond the standard warranty period. The video advises against purchasing extended warranties for electronics, suggesting that they often cost more than the benefits they provide.

💡ATM Fees

ATM fees are charges for using an ATM outside of your bank's network. The video recommends avoiding these fees by using in-network ATMs or carrying some cash for emergencies, thus preventing unnecessary expenses.

💡Subscriptions

Subscriptions are recurring payments for services like streaming, music, or magazines. The video warns against unused subscriptions, advising viewers to regularly review and cancel subscriptions they do not fully utilize to save money.

💡Foreign Transaction Fees

Foreign transaction fees are charges on credit card purchases made in foreign currencies or through foreign banks. The video suggests using credit cards that waive these fees, like the Chase Sapphire Reserve, to avoid unnecessary costs while traveling.

Highlights

Avoid unused gym memberships to save money; consider free home exercises or bodyweight resistance training.

Reduce investment costs with low expense ratio index funds like Vanguard Total Stock Market Index Fund (VTIAX).

Avoid fast fashion due to its low quality and environmental impact; opt for quality clothing investments.

Eliminate late fees by setting up automatic payments for bills to avoid unnecessary financial and credit score damage.

Avoid bank account fees by understanding account requirements or switching to fee-free online banking options.

Lottery tickets have poor odds and can lead to financial mismanagement; consider saving or investing instead.

Extended warranties often don't pay off; consider the cost-effectiveness before purchasing.

Daily coffee purchases add up; invest in a latte machine for cost savings and better taste.

Daily lunch expenses can be reduced by meal planning and packing lunches to work.

Food waste is costly; plan grocery shopping and stick to a list to avoid buying excess food.

Bottled water is an environmental and financial waste; use a reusable water bottle instead.

Review and cancel unused subscriptions to save money and only keep those that provide value.

Physical magazines and newspapers are outdated; switch to digital versions for cost and environmental benefits.

Cable TV is often overpriced; consider cutting the cable and using streaming services for better value.

Avoid expedited shipping fees by planning ahead and not paying a premium for immediate delivery.

ATM fees are avoidable; use credit cards or bank ATMs to prevent unnecessary charges.

Foreign transaction fees on credit cards can be avoided with the right card or by planning purchases.

Utilize credit card points to avoid paying for hotel rooms and airline fees.

Avoid private mortgage insurance by saving for a 20% down payment on a home.

Maximize tax deductions and credits to save money and reduce taxable income.