You're Quietly Depleting Your Funds With These 7 Recurring Buys
There are too many money traps to count, but some can drain your savings account faster than others. And it’s not always the big, fancy purchases. According to financial guru Dave Ramsey, even some common everyday expenditures are wasteful.
Below are eight everyday ways you’re wasting money, according to Ramsey.
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1. No Money Down Financing
A no-money-down financing offer may look like a great deal on paper, but Ramsey Solutions noted it’s just another way to lock you into a long-term payment for something you need. The only way it could make sense is if it also has an introductory 0% APR and you can pay it off before the interest kicks in.
However, the Ramsey Solutions website recommended avoiding these deals altogether, and instead saving up the cash to pay in full.
2. Car Leases
A car lease lets you trade in your car every few years. It often appeals to those who prefer to drive newer vehicles, but Ramsey Solutions pointed out that leasing is also the most expensive way to drive a car.
Instead of leasing or financing, Ramsey has always recommended saving up the money and buying your own car.
3. Whole Life Insurance
Life insurance can help your family in the event of your death by allowing your beneficiaries to claim a payout. Ramsey is in favor of life insurance, but specifically term life insurance. It also has an “evil cousin,” George Kamel, author and personal finance expert, wrote in an article for Ramsey Solutions. And it’s called whole life insurance.
According to Kamel, life insurance should replace your income when you die, but whole life policies are much more expensive and don’t do a good job of replacing it.
4. The Lottery
Playing the lottery may seem harmless, but the odds are against you. According to the Powerball website, the odds of winning the jackpot are just one in 292 million, while the odds of winning any prize are one in 25. Ramsey Solutions recommended saving that money instead and following the Baby Steps to becoming a millionaire the right way.
5. Payday Loans
When you don’t have an emergency fund, a payday loan can help cover unexpected emergencies, like a hospital visit or car repair. But Ramsey Solutions claimed it’s a financial trap. Instead, start an emergency fund now and fund it by working an extra job or side hustle.
6. Buy Now, Pay Later
Buy now, pay later (BNPL) loans are short-term loans that allow shoppers to pay for items in installments over a set period of time. There’s typically no interest, but they do charge fees. The best way to avoid this trap is to only pay for something when you have the money to afford it.
7. Mindless Spending
In a post on X, Ramsey wrote you can “waste $5,000 a year” by spending “$13.70 each day on something you don't need.” That’s $96 per week and $411 every month. The point he’s making is that you need to be more intentional about your spending. Small daily purchases can add up, so taking a look at your spending habit may help you find money to put toward other financial goals instead.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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