When it comes to money, it’s easy to think that you’re making the right decision in the moment. But when you cut corners in the short run, it could end up costing you.
Shopping the sales rack
It can seem like buying things on sale is the right thing to do – it is a sale, after all! But stores can be sneaky. They know once they get you through the doors with that big “50% off” sign in the window, you’re more likely to throw a few extra items in your cart.
A survey by CreditCards.com found three out of four Americans make impulse purchases. “Of the impulse buyers, 16% said they spent $500 or more on the purchase and 10% spent $1,000 or more,” according to the survey.
Lauren Lyons Cole, contributor for TheStreet.com, suggests keeping a shopping list on your smart phone.
“Whenever you go into a store you know exactly what you need, so you’re less likely to impulse shop,” Cole says. “And you can still take advantage of the sales that the store is having.”
Buying a home with less than 20% down
Buying a home is one of the largest purchases you’ll make in your lifetime. Make sure you’re doing the right thing financially when it’s time to sign on that dotted line. “If you buy a home with less than 20% for a down payment, you’re going to end up paying private mortgage insurance,” Cole says. “That can be up to 1% of the total balance of your mortgage.”
If you have a $300,000 mortgage, you could end up paying as much as $250 a month for private mortgage insurance. However, if you put down 20% or more when you buy a home, you can avoid paying private mortgage insurance all together.
Transferring your credit card balance
A lot of people think they’re going to save on credit card debt by rolling over their balance to a 0% interest rate card. While some of the deals out there can be appealing, make sure to read the fine print.
Cole warns that many transfers come with a transaction fee. And in some cases, after that 0% APR expires your interest rate is going to jump and it might be higher than your previous card. According to Bankrate, the average balance transfer fee is 3% – so you’d owe $600 for a $20,000 transfer.
Bankrate also notes the average APR for fixed-rate credit cards is slightly more than 13%; and the average APR for variable-rate cards is less than 16%. Check your card to see where you stand before making a move. “If you do end up transferring the balance to a 0% APR card, make sure you keep the old card open,” says Cole. “You don’t want close it – that can have a negative impact on your credit score.”
Skipping renters insurance
Just because you don’t have a fancy 52-inch plasma-screen TV or the new iPad Air at home doesn’t mean you should cut corners on renters insurance. The average renters insurance will run you about $15 to $30 a month and can cover clothing, electronics and even liability for an accident at your property, according to the National Association of Insurance Commissioners.
Renters insurance policies can vary, so make sure to check with your company or insurance agent on specific coverage for your property. In most cases, you can get fully reimbursed if a leak damages your computer, if a thief steals your jewelry or if smoke from a fire ruins your furniture. In extreme cases where your property is totally destroyed, many renters insurance policies will even cover your living expenses while you find a new home. Spending those few bucks a month for a safety net could save you in the long run.
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