Get richer, quicker: 10 tips for the Wealthy Idiot
June 12th, 2021 by D.C. Poc
Personal finance is dynamic, and as a result, the ways to save (and waste) money are ever-changing. In no way do we advocate for ‘get rich quick’ schemes, but we absolutely want people to 'get richer, quicker’. Below, we’ll talk about some of the most common places people waste money without even knowing it.
1. Limit Eating out for Lunch
This is probably the easiest savings right out of the gate. People always say you should eliminate eating out in general, but that’s not nearly as practical or important as the lunch meals. The typical person works five days a week, and by limiting your eating out to one or two of those days, you’ll save approximately $30-40 per week depending on locality, which comes out to approximately $150 per month! Look at those easy savings!
2. DON’T Pay Credit Card Interest
If you carry a balance on your credit card, you’re likely paying an egregious amount in interest each month. According to wallethub, the average interest rate on a newly opened credit card is 18.24%, and according to creditcards.com, only 34% of card carriers pay their monthly statement in its entirety. Just think of the interest that the other 66% of borrowers are paying. Stop doing this, NOW!
3. Shop Around, Always!
Have you quoted your car insurance lately? Homeowners insurance? What about your internet or cable bill? Can you save money by switching to streaming? What about changing cell phone carriers? In this category, the list goes on and on. You should always be shopping for better deals than you are currently getting.
This also applies to other services including home cleaning, construction, auto purchases, etc. If you are remodeling a bathroom, get three quotes. Looking for a new car, visit several dealerships and websites. As a rule of thumb, you should always try to gather three quotes before making a major purchase as you’ll be more likely to understand the market and get a better price.
4. Maximize Credit Card Rewards
I know, we talked about credit card interest above, but there is a second side to this coin that is very good. If you use your credit cards to pay all of your bills you can capitalize on rewards programs. In 2019, my wife and I took a completely free vacation to Las Vegas using rewards only. This year, we have a flight scheduled for October which will also be covered in its entirety. Some cards even offer ‘Sign-up Bonuses’ that can amount to thousands of dollars. These offers have become harder to find, however, as more borrowers are exploiting them. The key point in this strategy is ensuring that you DON’T PAY INTEREST. Read number 2 again if you need this reiterated.
5. Learn to Conquer Taxes
Most American’s hate taxes, even if they advocate for higher taxes (ironically, really). Some of the reasons they hate taxes can be attributed to their own lack of knowledge. Heck, I’ve talked to several people that clearly have no idea what a credit or deduction is. If you take some time to learn the tax code you can better plan throughout the year, ensuring that you aren’t giving Uncle Sam extra money. Who wants to pay extra taxes? Not me.
6. Cancel Unused Services
Do you still have that monthly box subscription you ordered a couple of years ago that you barely use? What about a streaming service that you have moved on from? These tiny little things can lurk in the background for years virtually unnoticed. I have a friend that didn’t realize he was still paying for Netflix until they tried to charge his expired credit card. Can you imagine paying for something and not even knowing it?
7. Stop Paying Fees
This category is expansive and expensive. These fees can be monthly billing fees due to not being paper-free, credit card transaction fees, investment fees, banking fees for X, Y, or Z, and the list goes on. Everything you do in life has a fee attached, it seems. You could easily save hundreds of dollars annually by changing banks, brokerage providers, etc. As an example, several brokerages have funds with expense ratios upwards of 1%, while firms like Fidelity and Vanguard have expense ratios of less than .03% for index funds. Start paying attention to your statements and eliminate this expense. Additionally, several banks and credit unions offer checking and savings accounts with no minimum balance and no monthly fees. You can save money by simply changing your bank!
8. Don’t Carry Excessive or Unnecessary Insurance
Have you purchased whole or universal life insurance? If you have, you are probably paying WAY too much for WAY too little coverage. These products are horribly designed, and mostly just provide nice commissions to the selling agent. If you need life insurance, check out Term4Sale.com, where you can shop from reputable term life insurance companies. Not to mention, your family will be better protected due to the increased insurance amount.
You could also be over-insuring on your car policy. If you drive a 2001 Honda Civic, do you still need that full coverage? Probably not. Consider cutting your monthly costs by dropping to liability. Keep in mind you should still maintain high liability limits that will help protect your assets in the event of an accident.
9. Budget Like a Wealthy Idiot
Ignoring this step is generally a good way to cost yourself a lot of money over a 50 year period. How do you really know where your money goes if you don’t budget? This doesn’t have to be a super-complicated thing. You can use a napkin if you’d like. As long as you have some method of tracking monthly income and expenses, you’ll have a basis for future decision making. If you get really serious, there are even some apps that help you accomplish this!
The lack of knowledge here is pretty crazy at times. I know a mortgage broker who told me that she has clients who can’t provide their monthly income as part of the mortgage process… BECAUSE THEY DON’T KNOW WHAT IT IS. I mean, come on, at a very minimum you should know roughly how much you make and spend each month. Pretty straightforward.
10. Don’t be Financially Ignorant
The number one thing you can do to save money each month is educate yourself. By studying up on investing, taxes, real estate, budgeting, etc., you can continually improve your own financial picture. Honestly, reading is pretty easy for most of us, so why not spend a few minutes each day checking out your favorite site (Wealthy Idiots) and learning something new. Who knows, maybe you can retire 5 years earlier as a result. Either way, the only person who can really change your financial path is YOU!
D.C. joined the Marine Corps right out of high school. When he left active duty, after 5 years of service, he quickly earned a bachelors degree and an MBA. He got his first private sector job at a modest salary and quickly worked his way up through promotions. Once he started making decent money ($38k at the time) he quickly realized he needed to learn how to save to secure his future. After nearly ten years of research, he wants to share his knowledge and financial best practices so more people can become Wealthy Idiots!