Avoid Ruining Your Finances With These 6 Tips

Personal finance is an everyday endeavor.  It is present in nearly every decision you make from the time you get up; to the time you go to bed.  Ironically, because finances are so ingrained into our daily living it actually becomes harder to do well by your budget.  Imagine having to whip out an Excel spreadsheet every time you wanted Starbucks over making coffee at home.  Seems ridiculous doesn’t it?

However, just because it’s impractical doesn’t mean we should ignore our finances until the end of the month.  Finding the right balance between thrift and fun is just part of the struggle.  That said, there are a few “constants” in personal finance.  A budget is by far the most important, but you may be surprised at some others.  That’s why I wanted to share this article with you all.  It’s the six ways you’re ruining your finances without even knowing it!

CFC Guide to Not Ruining Your Finances

  1. Paying Unnecessary Fees – These drive me up the wall when I see them. They’re just pointless as a consumer.  A major one is the overdraft fee.  When you pay an overdraft you have told your bank that you don’t know how to manage cash flows.  The less money you make, the more often you should check your bank accounts.  If you’re constantly living paycheck to paycheck, try to increase your income.  You should also never pay to use a checking account.  Most banks waive checking fees if you have direct deposit over a certain amount – usually $400-750 per month.  Employers are increasingly requiring you to have direct deposit, so it’s a match made in Heaven.  Other fees that are killing your finances are out-of-network fees for ATM’s, surcharge ATM’s, and late fees.  All of the fees here will usually run you between $5-35 EACH TIME IT HAPPENS!  Just don’t let it happen, because they are all completely avoidable.
  2. Nickel and Diming Your Budget – This is another issue with abiding by your budget. Buying many small purchases over the course of the month with the rationale of “oh, it’s just $3.”  Like a Starbucks coffee that ends up eating $60 out of your monthly budget.  Nickel and diming is why I place my entertainment in my “splurge” budget.  That way I stay conscious of the issue.  Every time we buy a “insert your small vice here”, it reduces how much we can spend on experiences.  If your Starbucks ends up eating $60 a month in your entertainment budget, that’s $60 less that you can spend on going out with friends or going to that concert you wanted to see.
  3. Saving What’s Left, rather than Living on What’s Left – This is more budgetary management than anything. What this means is just pay yourself first.  If you save 20% a month, set that money aside BEFORE you get your paycheck.  Use a direct deposit to have it go straight to savings, or just be diligent and transfer the funds.  I see many people try to hit their savings goals, but they do it by managing cash flow through the month and just saving what they didn’t spend.  That’s inefficient and counter-intuitive to human nature.  Don’t fight yourself!  Humans are remarkable creatures.  We are great on living on what we have, but we want to live on everything we have. Thus, set aside your savings first, then live on what’s left.  You’ll find that it’s incredibly easy to adapt to your new budget.
  4. The Boots Theory – From “Men at Arms” by Terry Pratchett we receive the Boots Theory. Some have also called this the Theory of Economic Unfairness.  In the book the main character is describing a paradox of consumption, specifically of boots.  Check it out: “But the thing was that good boots lasted for years and years. A man who could afford fifty dollars had a pair of boots that’d still be keeping his feet dry in ten years’ time, while the poor man who could only afford cheap boots would have spent a hundred dollars on boots in the same time and would still have wet feet.”  Here, he’s describing the inability to buy quality, long-lasting goods which have lower costs over the long-run.  Not everything should be purchased from the clearance rack of your local Wal-mart just because it’s cheap.  There are many items out there that are worth going the extra mile for quality.  Furniture, suits, cars, and yes, even shoes, are usually worth spending the extra dollars now so you don’t have to spend those dollars later on repairs or replacements.  For more on this topic, I’ll defer to Jodi Beggs of “Economists Do It With Models” and her 2009 article on how she can’t afford to save money at Costco.
  5. Not Tracking Recurring Fees – There is a reason companies love subscriptions. Like the Ronco Rotisserie Oven, consumers will set it and foooorget it!  Amazon Prime is a particularly devious one I’ve found.  Their subscription actually encourages you to spend more on their site so you “get your money’s worth” in subscription fees.  I’ve bought things on Amazon that were a dollar more expensive because it was free shipping and I was lazy.  Ultimately though, check your memberships and make sure you use them.  Not using a gym, but paying a monthly fee still?  Get rid of it!  Just make sure you’re within your contractual ability to do see without a fee (see point number 1).  You made your money by spending your time.  Make sure you value your time by not wasting your money.  This also extends to bills and utilities.  Things like phone bills, cable bills, and insurance rates can, and should be, re-negotiated every year.  For phones, you probably won’t find cheaper than Republic Wireless, so be sure to check them out.  For cable bills, don’t be afraid to see if they can match a promotion from a competitor.  They want your business, make them earn it.  Insurance rates can also be vetted by an insurance broker.  Let a licensed professional shop out your information yearly.  It costs you nothing and could potentially save you hundreds of dollars a year.
  6. Not Utilizing Credit – I left this one for last because it’s more of an over-arching theme. Credit can be a boon or bane depending how you manage it.  However, effectively managing open credit lines will boost your credit score.  This in turn can lead to tens of thousands of dollars saved when securing a mortgage due to lower interest rates.  The problem with credit cards is that people like to spend more than they can pay down each month.  This is where it becomes an issue.  Anytime you have credit card debt, you are foregoing future consumption at the rate of 18-22%.  That’s just silly.  Use credit cards to manage your cash flow and accrue rewards.  I get back 2% of all the money I spend in a year by putting it on credit and paying it off each month.  For me, this is a few hundred dollars at the end of the year.


Many of my readers are young and have student debt.  As much as I dislike student debt, do not default on it.  Let me repeat, DO NOT DEFAULT!  A student loan is a loan for an experience, so it is unable to be secured (that is, attached to collateral like a house or car).  This means the government has instituted some extra penalties for defaulting.  Plus, the creditor is the government in this case, and we know how much the government hates to be short-changed their money. . . Here’s looking at you Mr. IRS Auditor.

In addition to the normal penalties for defaulting a loan – like going to collections, having the full loan amount due, credit score damage for 7 years and a host of others – the government also has the ability, and right, to garnish your wages and tax refunds (or any other government benefit you may receive, like food stamps, disability or Social Security retirement), they can effectively deny any professional licenses you may hold, and they prevent you from enlisting in the military.  So yeah, just don’t do it.  The Health Care and Education Reconciliation Act created more avenues for income based repayment.  They cost you more in the long-run, but at least you’ll be financially solvent until then.


Readers are you ruining your finances by doing any of these things?  What other things can you think of that derail your finances?  Continue the conversation below in the comments or on Facebook by liking Cash Flow Celt! Interested in switching to Republic Wireless, but still unsure?  Check out my review here.

Cash Flow Celt

I'm just a local business and finance nerd looking to help people get educated about small business, marketing, and personal finance! I write about anything and everything that I can tie into those themes. I'm also Central Florida's only Kilted Realtor, so I write about Real Estate too! Check out my About Me page to see the origins of Cash Flow Celt.

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3 Responses

  1. Cathy Colangelo says:

    Good article. I still caution against focusing on money to the exclusion of actually living. Some debts are worth “the experience” – which can be a necessity like a root canal or a car repair’ or a daughter’s wedding.

  2. Jack Catchem says:

    Quoting Sir Terry Pratchett in a blog article on economics? Don’t mind me, I’ll just be in the corner initiating a slow clap. Well done!

    • Cash Flow Celt says:

      To be fair, I’ve never read Men at Arms — though I was privy to the Boots Theory long before my research for this article; it’s a kind of paradox of thrift (though not to be confused with the ACTUAL paradox of thrift espoused by Keynes and relating to aggregate demand). Behavioral economics was by far my favorite topic during my economics degree. Sadly, it’s most a Master’s level topic so I didn’t see much of it outside of my own research.

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