Credit & Money Management
10 Expenses You Don't Need
Skip paying for these everyday costs and save a fortune.
By Jeffrey R. Kosnett, Senior Editor, Kiplinger's Personal Finance
July 29, 2010
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Confession: I hate to pay for parking. Unless it’s as hot as Iraq or raining cats and dogs, I will do whatever it takes to find a legal space on the street, preferably free. And I’m good at it. It mainly takes faith, patience and experience. Recently, I found a spot on Chicago’s North Avenue next to the famous Second City comedy club on a Saturday night, saving the $17 the building’s garage demanded -- and the half-hour wait to climb the ramp after the show. I’ve done these kinds of things for years.
In the spirit of trading personal convenience for cold cash that remains in your wallet, here are nine other everyday expenses you don’t need:
Banking fees of all sorts
Banking fees are generally small -- a couple dollars here, a couple dollars there -- but they can add up to hundreds throughout the year if you’re not careful. Don’t pay money just to manage your money. You can take easy steps to avoid these fees:
• Overdraft fees. Sign up for low-balance alerts via e-mail, and link your checking account to your savings account to move money as necessary to avoid $35 fees for insufficient funds.
• Checks and postage. Pay your bills electronically instead. You’ll also avoid any late fees and black marks on your record if the postal service loses your payment.
• ATM fees. Know where your own bank’s ATMs are located, even in other states, so you can save $3 every time you get cash out of the wall. Or consider switching to a bank that offers free ATM usage regardless of which bank’s ATM you tap.
• Coin-counting commissions. Save the 5% it can cost you to cash in your nickels and quarters at the supermarket. Coin counting is gratis at hundreds of TD Bank branches in the Northeast, Mid-Atlantic and Florida, whether or not you have an account. (Just pray the machine, called Penny Arcade, isn’t down for service. That seems to happen a lot.)
Basic investing advice
There are plenty of wise reasons to engage a financial planner or adviser -- but there are also pointless ones. If all you want is help choosing mutual funds, especially if your choices are basic index funds inside a retirement plan, it’s silly to fork over as much as 1.5% of your savings each year for someone to run a common software program to do this for you. You can arrange your money among different investments yourself or build a simple portfolio with little effort. Then rebalance every quarter or six months to restore your weightings.
By all means, get an excellent estate planner or an accountant when it’s time to think about taxes and bequests. But you don’t need help for everything.
Help applying for financial aid
Commercial sites like FAFSA.com will help you complete and submit the important application for student aid for $79.99. But at the U.S. Department of Education’s site, www.fafsa.ed.gov, you can fill out the application for free -- with all sorts of guidance on how to assemble the proper personal information. (For more advice, see our Paying for College special report.)
Pet care
Pet-sitting is big business these days, with brand names, franchises, uniforms, logos, and even lobbyists and consultants. But if your little guys are healthy, you can save the $50-a-day boarding fee while you’re on vacation by asking a responsible neighbor, friend or family member to feed, walk (if needed) and hang out for a bit with your cats and dogs -- provided you volunteer to do the same when they’re away. Make sure your helper knows who your vet is, and, obviously, don’t be so informal if your animals have health problems that mean you should board them with the doctor. (See Keep Pet Costs on a Tight Leash for other pet-friendly saving tips.)
Insurance on rental cars
The rental-car clerk will offer you a collision-damage waiver (sometimes called a loss-damage waiver), which can cost $10 to $20 per day. The CDW shields you if the rental car is damaged or stolen. But as long as the rental is for personal use and you have collision coverage in your own auto-insurance policy, you’re covered without the CDW (with the same deductibles that apply to your own car).
Your credit-card benefits supplement your auto coverage. Most cards will pick up your deductible, and premium cards offer beefier coverage. (Keep in mind that credit-card protection doesn't include liability. And if you've dropped comprehensive or collision coverage on your auto policy, the rental car will be covered by your credit card if it is stolen or damaged in an accident. Check out What You Need to Know About Renting a Car for more information.)
Credit reports
Don't fall for sites that offer "free" credit reports, which often end up enrolling you in expensive credit-monitoring programs that you usually don't need. You can get a free copy of your credit report from each of the three credit bureaus (Experian, Equifax and TransUnion) once every 12 months at www.annualcreditreport.com. It's a good idea to stagger your reports -- getting a free one from each bureau every four months -- to keep an eye on the status of your credit and spot potential ID theft throughout the year.
Warranties
The other day I bought the snazziest new Samsung smart phone from T-Mobile at the fair price of $249. The sales rep couldn’t let me go, however, without asking me to pay $125 more for insurance against me dropping the unit or otherwise ruining it. The cheaper electronics get, the less these warranties make sense. Same’s true with appliances. Now, if I could insure the suits I take to the dry cleaners -- or the luggage the airlines throw around -- we might have something to talk about.
Shipping for online shopping
At www.FreeShipping.org, you can find coupons and codes to secure free (or deeply discounted) mailing or delivery from hundreds of retailers. Some of these are constant offers as long as you make a minimum order. Others are occasional deals with a limited life. And if there’s no cost for mailing, you can’t get hit with that mysterious charge for “handling,” right?
Water
There are times you’ll pay anything for a cold bottle of premium H2O. If you’re driving through the desert, riding your bicycle on a hot day or dealing with grimy yellow stuff in your pipes, price is no object. Once while on vacation in Florida, a construction crew accidentally cut the water lines to our residence. Off to Wal-Mart it was -- or we would’ve been unable to cook, wash or even make coffee for 12 hours. But why pay for bottled water all the time? Is it actually safer? Bottled-water makers aren’t required to test their water or make their test results public. And few brands reveal important details about the source of their water and what it contains. Heck, about 25% of bottled water actually comes from the same municipal sources that deliver water to your home.
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Reader Comments (16)
Posted by: WC at 08/03/2010 04:06:31 AM
For that warranty on luggage check out Hartmann or Tumi. Yes, they are expensive up front but given the quality repair services and the occasional loaner bag, the road warrior will save in the long run.
Posted by: E2 at 08/04/2010 09:05:18 AM
That $249 you paid for your snazzy new phone. Did you sign a contract to get that phone? If so, that phone was discounted. If you lose it, break it, etc. your next phone is likely to not be discounted.
Posted by: Virgil at 08/04/2010 10:12:45 AM
On the paragraph about you paying $249 for a Tmobile phone makes no sense and is WAY WRONG to the people reading it. Purchasing a cellphone is NOT like purchasing an appliance. When you went to purchase your phone, you were either becoming a Tmobile subscriber or upgrading ( it doesnt matter who the carrier is ). Your warranty DOES NOT cover you if lost, stolen or water damage or customer neglect ( like if a dog chewed on it, etc.). If you did get it wet, and you went back to repurchase the same phone without insurance and not being eligible for an upgrade, you were probably looking at paying probably around $400 or so. Wireless phones are expensives, your actually recieving a discount for becoming a subscriber or upgrading ( meaning your renewing for another 2 years and thats only after you already 22 months into your current contract). If you don't beieve try and purchase that same smartphone without a contract and se how much it really is.
Posted by: Paul G. Witwer, CFP at 08/04/2010 12:05:55 PM
Jeffrey, I agree that many folks have the ability to construct and rebalance a simple mutual fund portfolio, but most don't have the discipline. I've seen loads of 401(k) rollovers that are 100 percent money market and have been that way for decades.
Posted by: Elaine at 08/04/2010 03:10:19 PM
You failed to mention that the freeshpping.com cost 12.97 a month. That is a great way to save money. :(
Posted by: Doug at 08/05/2010 01:06:23 AM
A word on appliance warranties: To justify getting one depends on how much the appliance will be used. Say, for instance, you do laundry once a week (like me). You probably don't need the extended warranty. But if you're planning on doing laundry every or every other day, it might be a good idea. Most appliance companies have a 1 year manufacturer's warranty, which most machines will hold up to even with excessive use. Extending that to 5 years for $100 is a good investment if there is going to be excessive wear and tear on the machine. tl;dr - Extended warranties aren't always bad.
Posted by: redweather at 08/06/2010 11:52:38 AM
Note to poster Elaine: the site for free shipping codes that the author mentions is www.freeshipping.ORG not www.freeshipping.COM A quick glance at both sites and it looks like the .org site has lots of free shipping codes available to all site visitors for free while the .com site may be a membership type of thing.
Posted by: SB at 08/14/2010 10:34:06 AM
All your advice seems common sense, self evident and not deserving of an article.
Posted by: Kimberly Savino at 08/15/2010 05:47:56 PM
First, the car rental insurance LDW coverage is only partially accurate. Remember to read the "very fine print" on your card's policy, because not all are the same, and "special" conditions may exist. For example, say that you were in a car accident with your own car, and the other driver was at fault. The insurance company will pay for your rental for say, thirty days. You go to a car rental agency and they take your insurance info. They will still require you to secure it with your credit card, but they won't charge you rental fees. They then ask if you want LDW protection, and you decline, because your credit card rental insurance will cover it, right? Wrong! This happened to me before, and I learned after getting into a minor accident with the rental car that the credit card insurance only kicks in after one day of having rented the car with your credit card - Since the insurance co. was paying for my rental, I had no coverage, and was responsible for over $3,000 worth of damage. Even if you have the collision coverage on your personal auto insurance, always get the LDW. It's worth it, because it should protect you against other fees (such as, if the rental car is in an accident, you would have to pay while the car was in the repair shop and out of use - and your collision policy doesn't cover this.)
Posted by: Kimberly Savino at 08/15/2010 06:16:20 PM
Second, in regards to the pet-sitting/pet-care issue: I have owned a company here in MA that provides these services for over twelve years. While I agree that the fees that some companies charge are outrageous ($30-$50 per night for boarding, $25-$30 per visit for pet-sitting, all kinds of extra fees for holidays, extra pets, parking, tolls, etc.), not every company is off-the-map in terms of pricing. You just have to shop around a bit....ask vets, groomers, shelters, and other pet parents who they recommend. My company purposely keeps our rates realistic and afforable for working families, w/boarding at about $14/night (less for extended stays) and pet-sitting, for example, at around $12/visit. If you cannot afford or find a professional, established service, your best bet may be to hire an individual sitter that you carefully screen, check the credentials of, and train. While having a friend or family member watch your pet can seem like a great plan (and can work well in some situations), this is not the type of decision you want to make based on cost-cutting measures alone. I've seen countless times when pet parents using "cheaper" alternatives has created various problems that were never anticipated...often resulting in a much greater expense than would have been incurred by hiring an experienced, professional service. Professional caregivers are able to recognize and manage signs of illness or stress in pets. They have safe, dedicated quarters if caring for pets in their homes or facilities, and have providers locally so that travel during inclement weather is not a problem. Most have insurance, and all should have policies to protect the pet, client, and his/her property, if pet-sitting in the home. If a best friend, neighborhood kid, or sister-in-law is charged with watching Fluffy or Fido, will he or she respect all of your wishes, and take all necessary safety and health precautions? Do you feel comfortable being very specific with them about what you need done? Do they feel fully comfortable telling you if problems arise? If coming to your home, what if he or she breaks something, forgets to lock up, or loses the key? What if a storm or car problem prevents him or her from making a visit? If boarding the pet in his/her home, is there a room or area dedicated to pet care, free of unsafe substances, excessive noise or activity, etc? What if there is sudden illness in the household, an emergency arises out of town, or if someone forgets to close the door securely? What if your pet develops a GI bug, destroys something, or barks excessively? If the pet becomes ill or injured, who determines who is responsible, and who pays? (Most emergency centers charge $100-$300 minimum for very basic care.) What happens if, in the worst case scenario, the pet runs away, becomes seriously ill, or dies? These are all very realistic circumstances you must consider when leaving your pet with a layperson, who doesn't have the same resources and expertise that a professional company or individual should. A clear contract to protect all parties should also be in place. I'm not saying that it's impossible to use a friend or relative; In some cases, it can work fine - but choosing pet care, just like childcare, needs to be based on a lot more than finding the cheapest provider available. You can cut costs on items and other services, but pets are living beings, and deserve the best and safest care possible. Focusing on maintaining this goal will help to ensure not only that your pet's needs are cared for properly, but also, will help to assure that your finances and property are being protected as well.
Posted by: tiger at 08/15/2010 06:52:11 PM
Hmmm, I would say one expense you don't need was not mentioned - cable/satellite television. What a scam!
Posted by: Mark at 08/20/2010 08:20:48 AM
I disagree about the car rental insurance. I rented an rental truck and I scratched up the side of it. They will rent anyone a truck even if you have never driven one before. I bought the rental companies insurance, when I turned the truck in at my destination the guy said its scratched I said I bought the insurance and that was the end of it. Could you imagine had I not bought the insurance, I'd have to mess around with my insurance company and who knows how long that would take. With the rental companies insurance I dropped the truck off and walked away no problems. I did not hit someone else I scratched the truck on a tree at my house. So their might have been more involved if I had hit another persons property.
Posted by: John Smith at 09/09/2010 09:38:47 PM
So if the water comes from the same municipal sources that deliver water to my home then the water IS tested.
Posted by: Jonathan at 09/25/2010 05:23:57 PM
Um, if you paid $249 for the Samsung Vibrant, you seriously got ripped off. It's only $199 on T-Mobile's website and Amazon has it for $99. If it's been less than 30 days, you'd best return it and repurchase for less.
Posted by: John Adams at 09/25/2010 10:56:51 PM
Sales of bottled water in this country have exploded in recent years, largely as a result of a public perception of purity driven by advertisements and packaging labels featuring pristine glaciers and crystal-clear mountain springs. But bottled water sold in the United States is not necessarily cleaner or safer than most tap water, according to a four-year scientific study recently made public by NRDC (Natural Resources Defense Council). NRDC's study included testing of more than 1,000 bottles of 103 brands of bottled water. While most of the tested waters were found to be of high quality, some brands were contaminated: about one-third of the waters tested contained levels of contamination -- including synthetic organic chemicals, bacteria, and arsenic -- in at least one sample that exceeded allowable limits under either state or bottled water industry standards or guidelines. A key NRDC finding is that bottled water regulations are inadequate to assure consumers of either purity or safety, although both the federal government and the states have bottled water safety programs. At the national level, the Food and Drug Administration is responsible for bottled water safety, but the FDA's rules completely exempt waters that are packaged and sold within the same state, which account for between 60 and 70 percent of all bottled water sold in the United States (roughly one out of five states don't regulate these waters either). The FDA also exempts carbonated water and seltzer, and fewer than half of the states require carbonated waters to meet their own bottled water standards. Even when bottled waters are covered by the FDA's rules, they are subject to less rigorous testing and purity standards than those which apply to city tap water (see chart below). For example, bottled water is required to be tested less frequently than city tap water for bacteria and chemical contaminants. In addition, bottled water rules allow for some contamination by E. coli or fecal coliform (which indicate possible contamination with fecal matter), contrary to tap water rules, which prohibit any confirmed contamination with these bacteria. Similarly, there are no requirements for bottled water to be disinfected or tested for parasites such as cryptosporidium or giardia, unlike the rules for big city tap water systems that use surface water sources....
Posted by: MrCarRental at 09/29/2010 08:01:17 AM
The car rental thing isn't entirely accurate. What it fails to tell you that if you is the "regardless of fault" statement. Even if the accident is not your fault, most rental car companies do not file 3rd party claims. They will file on your insurance first and if it is proven that you are not at fault, you will be reimbursed. It also fails to tell you that if you do have collision that will transfer, you will be responsible for paying your deductible at the moment of reporting the accident. So if you don't have 250, 500, 1000 or whatever your deductible is, just laying around to be used at a moments notice get the coverage and save yourself the headaches, the time, and the possible rate hikes on your insurance.