Credit & Debt, Credit Cards, Investing, Mortgages, Peer-to-peer Lending, Real Estate, Stocks

6 Things That Will Make Your Hard-Earned Money Vanish

Just about any person with a job will tell you they work hard for their money. And if you’re like just about everyone on the planet, you probably want to hold on to the money you’ve earned. But there are a number of things that could cause your hard earned money to vanish. Here are 6 things that could make your money go poof!

Poor Spending Habits

One of the most common things that will make your money vanish is wasting it on things you don’t need and can’t afford. Expensive coffee, cigarettes, alcohol, brand-name fashion items, the latest technology, restaurants, gym memberships, and expensive cars are all things people waste money on.

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When it comes to spending, always cover your basics, then set aside money for retirement and emergency (and kid’s college funds), and THEN treat yourself to things in moderation.

High credit card interest rates

The average American household with at least one credit card has nearly $16,000 in credit card debt. With interest rates in the high-teens, you could flush a lot of money down the toilet every month on credit card interest payments. However, it’s possible to save hundreds of dollars a year by reducing your credit card interest rate through debt consolidation.

One website called Prosper Marketplace let’s you borrow between $2,000 and $35,000 towards debt consolidation or other personal expenses. Your interest rate could be as low as 6.73% with payback terms of 3 or 5 years. You can get a free loan rate-quote here. Consolidating your high interest credit card debt into a lower rate could save you quite a bit in the long run.

Overpriced insurance

Everyone knows that having car insurance is required by law. But there’s nothing in the law about having overpriced car insurance! Many people are over-paying for their car insurance every month and don’t even know it. Have you shopped around for rates recently? If not, you could be wasting money every month.

Websites like eSurance.com make it easy to compare multiple car insurance quotes in just a few minutes so you can compare rates and save.

Of course, not having the right insurance is even worse than overpaying for insurance. Make sure you know what your insurance covers. For example, many people have home insurance but don’t realize it does not cover certain types of flood damage. Next thing they know they’re out tens of thousand of dollars in damages.

Bad investments or not enough diversification

One way to lose a lot of money fast is by making poor investment decisions. While there may always be a correlation between risk and reward, you should never make an investment that you can’t afford to lose entirely.

But more importantly, you should never have all of your eggs in one basket. You should always diversify your investments so if one goes south, you do not lose everything. Here are a few platforms you can use to diversify your investments and increase your returns:

An easy way to diversify stocks and reduce trading fees
The stock market is obviously a top choice for many investors. But picking the right stocks can be challenging. Even if you can spot trends in the market and economy, finding all of the companies that will be impacted by those trends is exceedingly difficult.

Enter Motif Investing. Motif is a new service that aggregates portfolios of 20-30 stocks based around an idea, belief, or trend. So instead of worrying about finding the right companies, you can focus on investing in the ideas you believe in and let Motif do the rest. And whereas most stock trading platforms charge you anywhere from $5-$10 per stock trade, Motif only charges $9.99 for trading an entire motif of stocks.

A new high-return alternative to stocks
Since its inception just a few years ago, the popularity of peer-2-peer lending platforms continues to skyrocket. These platforms work by allowing investors to fund consumer notes. Prosper Marketplace has proven to be great investment and diversification tools for investors over the past few years, with season returns averaging as high as 11.35%. In fact, every investor who has invested in at least 100 notes on Prosper has experienced positive returns! You can invest as little as $25 per note

High interest home mortgage payments

While it may not always make sense to refinance, there are a few good reasons to consider doing it, such as shortening the term of your loan, getting out of an ARM (Adjustable Rate Mortgage), consolidating debt or taking out home equity, or a general interest savings of at least 2% (some experts say 1%).

Websites like LendingTree.com all you to compare refinancing rates for your home or car loan so you can see if you can get a better rate than the one you have now. The service is free and there are no obligations to any specific lenders.

Hidden 401k Fees

Many people think they’re all set once they start setting aside money for retirement. But what many people don’t know is that hidden fees in their retirement accounts could be costing them tens of thousands of dollars over the life of the investment.

Be sure to review your retirement plan statement in detail to see what fees you’re being charged. You may even want to consult an expert or search on the internet to see if certain fees are normal. (If you see a fee, Google it).

Conclusion

You work hard for your money and you deserve to keep it. Don’t make these common mistakes that have caused so many to see their funds vanish before their very eyes.

If you need some extra help planning your finances, check out LearnVest.com.They have a free service that helps regular people take control of their finances.

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59 Comments

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      But…that IS my retirement plan!

      Not really, I did get A’s in math.

      A great idea to help prove the point. Encourage “Players” to get a stand alone bank or credit union account and deposit exactly what they spend each month on lottery or other gambling. $5 lotto ticket = $5 into the account. At the end of the year, the account will represent what they have spent. A modest $20/week will be $1040. Odds are slim they even come close and it puts the occasional small win into perspective.

      If you want to be mean about it, put the money into an account yourself (so both of you do so) and make a winner takes all bet the account (single) will exceed the winnings. It is like betting you WON’T be hit by lightning!

    • 3

      every year, a small handful of entrepreneurs get their start to potentially make 20-50 million dollars. you have a better chance of winning that amount in the lottery than becoming one of them and it takes a lot less effort.

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    Beat the System. Take a ride out to SouthHampton on Long Island, get cigarettes on Montauk Highway (Starting from street # 50) and get cheap cigarettes from Native American vendors.

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      Buy large amounts of cigarets or buying at places to avoid taxes is illegal. ATF (alcohol, tobacco, & firearms) watches these places closely. A trip there could get you a paid trip away.

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    The dirty secret is that most people are better off living below the poverty line. Two people with two kids get $7K in tax credits if they make a combined $12K or less. That’s $19K which doesn’t sound like a lot. Then factor in all the crap you pay for, a house, a car, insurance, junk. Just grow your own food, live on someone else’s land, and hunker down. Live the simple life and eliminate your lust for money and the stress of the modern life. You will see that you want nothing more than a glass of wine and an occasional smoke after awhile. And that’s the way it was for most people a hundred years ago. What has happened since then? We have filled the ocean with plastic, destroyed the clean air and the plentiful water, and we stand on the brink of total extinction. For what? Someone answer me. For what?

    • 10

      I agree with some of what you advise, but somewhere along the line we have to earn that small amount of money, to get the tax credit….. Who has time to grow enough food to eliminate ‘store bought’, I certainly don’t. Truth be told, I can’t grow anything anyway, so I will starve living as you describe. Guess that’s one less person destroying the planet…. might be a good plan after all.

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      You’re on to something Gardner proposing the virtues of the Simple Life. Thoreau was there one-hundred years ago. Trouble is, the public’s dumb as shit. And lacking virtue. It’s a worldwide failing. Two world wars and continuing countless wars of political destabilization and genocide are all the existential evidence I need that the balance of evil never changes.

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      You hit the spot. Though, sadly, many are better off living even below the poverty line, in the SLAMMER. That’s right. They’ll have full medical, a roof over their heads, 3 meals a day, friends (hopefully nice ones), and won’t have to worry about any bills or finances.

    • 15

      Try telling that to people who do live below the poverty line trying to make ends meet whilst raising a child or two. Until you have actually lived in poverty, it is easy to overlook all the ways companies will nickle and dime a poor person added hidden fees and higher interest rates until they are left with nothing at the end of each month.

    • 16

      I just traveled the Pacific Ocean from California to Hawaii and didn’t see one piece of plastic the thousands of miles. Sounds like you believe that giving up the American dream and living on the Welfare nightmare is the way to go. I will be here working every day to pay taxes to enable others to stay at home and complain that there aren’t any jobs while they smoke, drink and get high.

  6. 17

    Cigarettes
    Booze
    Drugs
    Betting, even small bets, and scratchers
    Scams – if you’re desperate and/or gullible

  7. 18

    For 2 years I needed new living room furniture but I procrastinated because I smoked and didn’t want to ‘contaminate’ new furniture. When I finally decided to quit it took all of two months to save the money to replace my couch, chair, rug and curtains, and I didn’t go to a discount furniture store.

  8. 19

    Add to your list the one you forgot:

    Buy a new automobile every three or four years and watch tens of thousands of dollars evaporate as you
    drive off the lot. A good question: What percent of autos on the street are brand new? Answer: None.
    They are all used when title is taken.

  9. 20

    They don’t list 2 of the most common causes: Uninsured medical bills (no insurance, high deductibles, high copays) and divorce!

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      skipping artery clogging fast food daily is a money saver. you can afford to eat healthy, feel good, and save big for example: sweet potato = 99 cents bag of broccoli = 99 cents 1/2 lb of chicken breast = 3 dollars banana = 50 cents

  11. 23

    Aaron’s right with that lottery as another means of going broke. Yet I have to admit that I have come close to winning the big one numerous times. I only miss the big one continuously by six numbers every drawing.

  12. 24

    The worse is our taxation system on everything, especially on our income, and it gets worse every year! We are getting taxed for everything under the sun, STOP IT!

  13. 25

    The largest expense you can save on is your home. At 24 I bought a Duplex “fixer upper”. Single and working I Rehabbed (FHA low down plus repair money) the upper and rented it out. That covered the Mortgage. After re-habbing the lower, I got 2 roommates, and did Energy Conservation (EC got ROI of 70%/Annum). NO-Credit Card – I paid for my car w/ cash and self insured to a higher deductible on House and Car, using all savings to Pay Down the House. By32 I sold the Duplex and PAID CASH for a county home on 34 acres. The worst waste of money most people do is buy way too much house and pay triple the purchase price paying off Principle and interest.

  14. 26

    When it comes to investing in stocks, there are only two ways for the “average Joe” to succeed: (1) choose absolute blue-chip, large cap companies (Disney, Apple, Clorox, etc.), wait for the market to dip a bit, then buy and hold them. Of course, review them every quarter to make sure changes in the company or competition haven’t happened, but barring any economic calamities like 2008-2009, hold them, or (2) buy large cap or total market indexed funds from a reliable company like Vanguard, then hold unless the economy goes in the dumper.

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      I smoked then quit because it cost too much. I used the savings to buy flowers. Every time I wanted flowers and didn’t want to spend the money I justified it by not smoking. Every bum can afford cigarettes so I can afford a few bedding plants or potted plants. I quit over 30 years ago so have saved more than I ever wanted to spend on plants.

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    Most people learn these tips the hard way. It is great to see there are classes in high school now that teach kids about how to save money and where it tends to be wasted.

  19. 34

    The largest waste of money IMHO is the purchase of a new auto every 3 years! People would be amazed at the amount of money they waste attempting to impress the neighbors! Put your money into an auto and watch it quickly become worthless.

  20. 35

    Strange that most Investment SITES say one Can’t have Enough $$ for Retirement…Save save save, scrimp some more…for what? 50% DIVORCE RATE…think that $$$ stays SAFE?? Betting your HEALTH ’till 70 or so?? Good luck on that…My thoughts. A 401K while working. LIVE WITHIN MEANS ALL THOSE YRS!! PAY OFF YOUR HOUSE!! AND GET THOSE DANG 20-30-40 SOMETHING ”’KIDS”’ OUTTA YOUR WALLETS — FOOLS!! COLLEGE? YEP…BUT THEY PAY….SCHOLARSHIPS, GRANTS, J.O.B.S., taking 20 Credit hrs, graduate 3yrs.not 6!! Military, work jobs that give tuition help….so forth..THEIR PROBLEM NOT YOURS…BTW…. I DID ALLLL THOSE THINGS. THOSE ”’KIDS”’ = TURNED OUT FINE. GREAT; JOBS, HOUSES, FAMILIES, A-OK….ME??? ‘SITTIN’ BY THE DOCK IN THE BAY,,,,,,BWHAHAHA

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    This was “overall” a fine article. Id like to add yet another: The Scourge that is Gambling. They say it is becoming a national Pastime in our nation but what Gambling’s proliferation of Casinos seemingly everywhere is doing is NOT creating jobs as Gambling multinationals are declaring..but rather the “net” opposite…Gambling losses from one’s weekly paycheck causes MANY, many other business to lose income because the addicted or otherwise gambler no longer has the money to pay for other discretionary items. The baker, the hair stylist, the hardware store ..in the area of a new Casino often LOSE money and most definitely does OT increae profits just because a new CASINO OPENS UP NEARBY!
    iT GETS WORSE: SOON GAMBLING STARTS EATING INTO YOUR ABILITY TO PAY NECESSARY EXPENSES LIKE YOUR MONTHLY RENT OR MORTGAGE, YOUR FOOD, AUTO REPAIRS, TUITION SAVED FOR KIDS, YOUR PLANNED BUT NOW CANCELLED VACATION PLANS…AND ON AND ON AND ON! iF NOT CAREFUL AND GAMBLING BECOMES AN ADDICTION IT CAN and will LEADE TO BREAKUP OF ONES MARRIAGE OR OTHER RELATONSHIPS, THE ALIENATION OF FAMILY AND FRIENDS WHOM YOU FAILED TO PAY BACK LOANS TO AND WHOM YOU LIED , loss of apartment or home, loss of job, embezzlement from your company in serious caesw, homelessness, criminal charges and yes jail or prison. In short, gambling can LITERALLY destroy your savings, your job, your marriagfe or other special significant other relations, your family, your friendships, your credit, your LIFE as many DO commit suicide in the caes where dwespair at ALL the above losses becomes too great to bear.
    Suffice it to say that buying 1 gambling lottery ticket or so each YEAR, or ca monthly bingo or gambling friendly poker game with buddies no more than once a month or so…is A-OK..but NEVER, EVER, vvisit a Casino. In the long run no matter how smart you think you are you CANNOT beat the House. GAMBLING is an evil, insidious , addicting, reality and its “not an investment” that will “earn” you more money no matter how alluring or enticing: STAY CLEAR and NEVER, EVER, visit ANY Casino as it is the #1 way to see your hard earned money..VANISH. Case closed; TEK ,C) 2015.

    • 39

      Up until a week ago, I have not gambled for a very long time. Since we were going to a concert at a casino we decided to gamble for an hour. Just incredible how $200.00 went so quickly. I quit and can only blame myself for losing what I did. Point being it was a real eye opener and glad my instincts are still clicking to stop. However, the concert was great.

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    supporting 3 or 4 leeches on welfare through your taxes takes more of you money than anything else other than a mortgage.

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    Are you kidding with your Peer to Peer consumer notes. Yeah I want to take my hard earned money and make loans to people with terrible credit who are forced to pay super high interest rates. Why don’t I just flush my money down the toilet.

    • 46

      Thank you for your feedback. P2P sites like prosper underwrite every note and categorize the risk – and interest rate – based on a number of factors including borrower’s credit score, loan purpose, debt to income ratio, etc. So you can chose to only invest in notes for borrowers with great credit scores if you want. Of course, your interest rate will be lower. But the real reason why you can get good returns is because you can invest as little as $25 per note and diversify over many different notes. So if you invested $2,500, you could put that over 100 different notes, lowering the rate of default. P2P services give you data on the default rate for different categories so you can see your expected return after a given period.

      Also, banks make billions of dollars lending to the same types of people. P2P services give that same ability to regular investors and give borrowers the chance to borrow at more reasonable rates. You can research it more if you like.

  30. 47

    I have a friend in financial difficulty calling me asking for advice (I give her none). She and her husband both smoke ($275 per month); she smokes marijuana (don’t know, but I’d guess another $150 per month); she gets two mani-pedi’s a month ($200); she gets her hair done at about $100 per month, and they eat dinner at restaurants at least five times a month. There are other things, as well, but all together she could get out of debt in two years and be in good shape, but she simply won’t make the sacrifice.

  31. 49

    This is a good article; I always tell my husband to only buy what he needs, and not what he likes. There are just too many stories of people hording stuff and renting storage just to store their junks, and then ultimately going bankrupt and ruining their lives.

  32. 50

    Property Tax
    Income Tax
    Capitol gains Tax
    Purchase Tax
    Sales Tax
    Health Tax
    Electricity Tax
    Water Tax
    Auto Insurance Tax
    Home Insurance Tax
    State inspection Tax
    HOA Tax
    Benefits Tax
    Entertainment Tax

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      Women who support men who won’t work and raise children sired by criminals have it just as bad as a man who supports a worthless women. Picking a great partner who agrees with your finances can make life better but no partner is always better than a drain.

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    I agree that buying new car is big waste. Unless it is Mercedes, so sexy. I got mine from selling my food stamps. Its sooo easy I move from home land get welfare and then Mercedes im very happy now.

  35. 56

    For many people it’s not the mortgage,or overpriced insurance that’s taking all there money. To many people are carrying balances on credit cards,cause they are buying crap they don’t need. Only one that benefits here is the credit card companies, look at the interest rates they charge.I was reading my CC bill one day and i was looking at the interest rate it’s 19%. But since i don’t carry a balance on any of my cards it could be 119% for all i care.

  36. 57

    All good points but the best way to retire rich is to get out of debt and save wisely.
    For a free guide visit Dave Ramsey. He has a website that explains how to become debt free and save for things you want and need. The library has his book if you don’t want to buy one. The only way to do it is to start as soon as possible. If not right now, tonight, or tomorrow but don’t put it off your whole life and wonder where all your money has gone. Social security is better than nothing and is payback for paying in your whole life but to retire with nothing more than monthly bills and a big chunk of money is the golden.

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