Five Personal Finance Pitfalls to Watch Out For
May 18, 2008 by
I've been doing some spring cleaning and as part of that I've been going through all of my old bills and whatnot, getting rid of the clutter so I don't have to move it with me. After looking over several years worth of records I was forced to reflect a bit on some of the personal finance
mistakes I've made. Here they are in a nice list form.
Loss of Vigilance - I don't care if you're fighting Islamic terrorists or balancing a checkbook, you let your guard down and the enemy will strike. Before I started grad school I was keeping track of my spending and doing a good job of living well below my means. I just sort of assumed that I would keep on living below my means and for some reason or another didn't keep up the momentum with regards to my finances. Slowly, insidiously the enemy struck.
Latte factor - Its no secret that I like coffee. I head to Caribou Coffee and get a large for about $2 at least once a day. Only problem is that those damn coffees cost me about $10 a week. That's $500 a year. Lets look at some other things that money could have bought me.
Apple iPhone (~$500)
Apple iPod (~$350)
Palm TX (~$300) I could have bought nearly two of those.
Nikon D40 digital camera (~$500)
Xbox360 (~$500) I'm not even really into video games but I could have bought one.
Lunch factor - I buy my lunch about 3-5 times per week depending on whether is some noontime seminar that I want to go to. I probably spend about $5-6 on lunch a day. $5 x 4 days a week x 50 weeks a year = $1000 per year! Holy crap! You know what I could buy with that?
Samsung 40 inch 1080p LCD TV
Product creep - The latte factor's evil cousin. It works like this. I go to Wal-Mart and buy groceries. One day I decide to pick up a DVD. The next week maybe I pick up another DVD. On my credit card bill I just see charges from Wal-Mart and assume they are groceries. I don't even think about the $20 DVD I just bought. Then next month maybe I buy two DVDs. The amount I'm spending keeps going up, but I still think its just groceries because I'm not keeping track.
Loss of Vigilance - I don't care if you're fighting Islamic terrorists or balancing a checkbook, you let your guard down and the enemy will strike. Before I started grad school I was keeping track of my spending and doing a good job of living well below my means. I just sort of assumed that I would keep on living below my means and for some reason or another didn't keep up the momentum with regards to my finances. Slowly, insidiously the enemy struck.
Latte factor - Its no secret that I like coffee. I head to Caribou Coffee and get a large for about $2 at least once a day. Only problem is that those damn coffees cost me about $10 a week. That's $500 a year. Lets look at some other things that money could have bought me.
Apple iPhone (~$500)
Apple iPod (~$350)
Palm TX (~$300) I could have bought nearly two of those.
Nikon D40 digital camera (~$500)
Xbox360 (~$500) I'm not even really into video games but I could have bought one.
Lunch factor - I buy my lunch about 3-5 times per week depending on whether is some noontime seminar that I want to go to. I probably spend about $5-6 on lunch a day. $5 x 4 days a week x 50 weeks a year = $1000 per year! Holy crap! You know what I could buy with that?
Samsung 40 inch 1080p LCD TV
Product creep - The latte factor's evil cousin. It works like this. I go to Wal-Mart and buy groceries. One day I decide to pick up a DVD. The next week maybe I pick up another DVD. On my credit card bill I just see charges from Wal-Mart and assume they are groceries. I don't even think about the $20 DVD I just bought. Then next month maybe I buy two DVDs. The amount I'm spending keeps going up, but I still think its just groceries because I'm not keeping track.
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