How many people out there are getting rich by implementing the latest coupon strategies? (if you are, please let me know)
Yes, maybe you can save money by clipping coupons, but I would rather stick my hand in a blender while watching The Desperate Housewives of Orange County (and yes, I pay for cable).
Instead of spending hours couponing, let me share with you how the average person loses money EVERY SINGLE DAY.
A few ways NO ONE talks about.
If you can stop losing money in these areas of your life; then you can make your life much easier and have no need to coupon.
Below are four areas the average person loses money and action steps to help.
Not Using Credit Cards
Maybe you have been brainwashed by Dave Ramsey and believe they are the spawn of Satan, but I think they are little plastic gifts from God.
They are great because when you use them responsibly you get rewards!
It depends on the card you own. Personally, I have a few credit cards. One for personal, two for my own business, and one I use for work.
Last year alone, I earned over $1,500 in rewards. We used those rewards in the following ways:
- Paid for school supplies for our children
- Paid for gas when we went on vacation
- Stayed in numerous hotel rooms (thank you, Hilton:)
- Went out to eat
- Paid for Christmas gifts
How long would it take you to find $1,500 worth of coupons to use on things you enjoy? I’m not talking about twenty-five cents off coupons for meat flavored toothpaste either.
It took me about 15 minutes in total to pick out my rewards.
Action Step: Find a credit card that gives you the best rewards. Typically, you’ll get better rewards with a card that gives you miles for airline tickets. Check out these sites for the best rewards:
Most people don’t understand the impact fees have on their investment accounts. These fees compound for 30 or 35 years and can mean the difference between retiring at 60 rather than waiting until 70!
The majority of people invest in mutual funds because that is what “everyone” does. According to a Forbes article, the average mutual fund has total costs of 3.17%.
Instead of investing in mutual funds, consider investing your money with a service like Wealthfront. This service invests your money over 11 different asset classes. They charge a management fee of .25% and their ETFs average expense is .12%.
Doesn’t sound like much? Let’s take a look. We’ll use the following assumptions:
- $50,000 original investment
- Average cost of mutual fund = 2.25%
- A modest return of 7%
- 20, 25, and 30-year returns
- Compare to a Wealthfront Service with fees of .37%
|Mutual Fund||WealthFront||Difference||% Difference|
Action Plan: Consider moving old 401(k)s or IRAs that are heavy in fees to low-cost alternative.
A Bad or Mediocre Credit Score
Think your credit score doesn’t matter? Think again!
Having a bad or even mediocre credit score can cost you tens of thousands of dollars over your life. The problem is if you have a bad credit score then interest rates for your home or car loan are going to increase.
Although those interest rates may appear small (maybe only a one or two percent difference), they equate to tens of thousands of dollars over your life.
Credit scores range from 300-850 and the average credit score in the United States is 687.
If a person with an average 687 credit score were buying a $200,000 house today, they would get an interest rate of 3.519%. A person with excellent credit (760) would get a rate of 3.12%.
Doesnt’ seem like much, right?
The difference in the cost of the mortgage over 30 years would be $15,842.
That would be $528 worth of coupons per year!
Action Plan: Work on increasing your credit score. You can do this by paying your bills on time, keeping your credit cards open, and lowering your outstanding debt.
Being Comfortable in Your Career
It’s sad, but being comfortable and staying at the same job for 40 years isn’t going to help your financial situation. Remember: this isn’t your grand daddy’s economy.
If you are in a job that doesn’t have much room for advancement and you are only getting 3% (inflation) increases; then it’s time to start looking. The inflation raise can be the death of your earning power.
Many studies show a job change can increase your earning power 20-30%. According to this Forbes article, “staying employed at the same company for over two years, on average, is going to make you earn less over your lifetime by about 50% or more.”
I know what you’re saying, “but Travis, I don’t want to be a job hopper.” This is 2016, not 1982. Companies are much more inclined to look at the best person, not the most loyal.
In many cases, it is looked down upon to stay at the same company for too long. If you are nervous about switching jobs too often, then check out this great article by Lindsay Olson, Is Job Hopping Still Looked Down Upon.
Action Plan: Determine if it’s time for you to move on from your career and make more money. At least update your resume.
As you can see, most people are losing a ton of money every year. In one year, you could easily earn $15,000 more dollars by simply changing careers.
Over your lifetime, you could save/earn over $100,000 just by improving your credit, changing jobs, using credit cards, and lowering your investment fees.
Life isn’t about spending hours cutting coupons, it’s about taking care of the big wins. When you can conquer the big wins in your life, it makes life a little easier.