Are you still a renter instead of owning a home because you think you can’t afford the down payment? Are you trying to buy your first house, a vacation home, or even invest in real estate but you can’t seem to put together the cash? Or do you own, but would love to try and pay extra towards your mortgage to pay it off much faster?
No matter what your financial circumstances, the thing that’s holding you back might not be that you don’t have ENOUGH money, but WHERE and HOW you’re spending it! In fact, most of us spend a jaw-dropping amount every year on things that we don’t need – or even really want.
For instance, last year, Americans spent $10.7 trillion shopping. To put that number in perspective, that’s enough cash to purchase 2,000 aircraft carriers, 300 private islands, and a couple of new iPhone 7’s!
So we’ve put this list together of what Americans spend on everyday goods and services – and how much cash we’re flushing down the drain. After reading this, go over your budget again, and you’ll probably be amazed at how much money you can save to buy a home, pay off debt, or have to invest in the things that really matter!
In part one, we’ll cover the basics – and then get to the fun, interesting, and totally frivolous things we waste money on in part two!
Renting instead of buying a home:
Rents are skyrocketing in most cities across the country, with more renters than every before are paying at least 30% – or even 40% or higher – of their total monthly income towards rent payments. With mounting housing costs but nothing to show for it, too many people are wasting money by not buying their own home.
Charging on plastic:
73% of all households now have at least one credit card, and 39% of all Americans are in credit card debt. The average card-holding household now has $15,270 in debt, which adds up to $ $953.3 billion for the nation. By paying only the minimum on the average credit card with an interest rate of 12.3%, the average household wastes $6,658 on interest only every year!
U.S consumers also blow about $18 billion every year unnecessarily on credit card late fees. That’s $18 billion just for forgetting in to mail in their payment on time. Consider also that consumers spend 12-18% more when using credit cards than if they were paying for things with cash or a debit card.
U.S. taxpayers sent in $3.25 trillion in federal taxes for 2015, with income taxes adding up to about half of that at $1.54 trillion. Payroll taxes and social security made up about $1.07 trillion of the total tax bill, along with $344 billion of corporate income taxes.
Cars and transportation:
Americans are still buying new cars at record numbers, with the average monthly payment for a new vehicle running up to $483 in 2015. We finance an average of $28,524 for our new car purchases, which commonly costs us high interest payments from 16-28% over terms of 73 to 84 months!
Compare that to the lower $18,671 we finance for a used car at a lower $361 monthly payment, and more people may consider a more cost effective form of transportation.
Car owners also drop an average of $2,223 on gasoline, insurance, and repairs each year per vehicle.
Health care and medical expenses:
There’s no denying that healthcare is too expensive, with the average American now paying more than $4,290 per year on medical – with $2,868 of that yearly sum going to insurance expenses.
Healthcare costs are rising yearly by double-digit percentages for many Americans, and employers are forced to raise premiums and deductible accordingly. Growing older is also become far more expensive, with the estimated cost of healthcare after retirement now reaching $245,000, a 29% increase since 2005.
Those pesky ATM and banking fees:
Banks are bringing in huge profits in the fees and charge, many of them frivolously exploiting consumers. In fact, the average fee to withdraw money from an ATM that doesn’t belong to your bank is $4.52, a 21% increase over just the last five years!
Banks are also charging an average overdraft fee of $33.07, which adds up to $1.14 billion profit for just for a small number of the largest banks. Even free checking is being phased out by banks, with only 37% of non-interest check accounts still free, compared to 76% of them in 2009.
Wasting energy at home:
Leave the lights on or setting the thermostat too high is costing us dearly, as it’s estimated that Americans spend $443 billion every year in wasted energy, with most people overpaying by a whole 1/3 of their energy bill!
Food we don’t need, want, or even eat!
The average American household now spends $6,759 on food every year, with $2,787 of that total for meals in restaurants, on the go, and outside of the home. In fact, we spend an average of $1,200 on fast food every year – or $117 billion!
Dining out comes with a hefty price tag, as 22% of restaurant patrons report going over budget, while 18% of us spend more than we planned when we go to the grocery store.
Additionally, Americans waste an average of $529 each every year just by throwing away perfectly good food, which adds up to $165 billion per year!
Look for part two of this blog with a list of fun, interesting, and totally frivolous things we waste money on!
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