Is there a shadow cast over your financial life? Maybe that’s because you’re stuck in a seemingly endless cycle of paying too much in taxes, fees, and penalties.
Many of us are like Bill Murray‘s weather forecaster in the movie Groundhog Day, when it comes to managing our own money. We’re searching for a way to break through repeating the same financial mistakes and reckless habits.
The good news is that greater self-awareness can help. Just as it enabled Murray’s arrogant forecaster to escape reliving the same day in Punxsutawney, Pa.
A useful first step is to track your spending.
Write down your spending for three months and keep receipts, even for the smallest of items. This will help you better understand what’s draining your wallet. And you’ll be able to spot potential problems, like unnecessarily exposing yourself to ID theft.
If you’re ready to liberate yourself, consider these commonly repeated financial mistakes, and some ways to kick the habit.
Paying too much in ATM fees
Tracking your spending will help with this. Too often people pay an ATM fee out of convenience but don’t keep tabs on how often they’re throwing away a few dollars.
Plus, ATM fees rise every year. Across the country they hit an average of $2.33 per transaction last year, Bankrate.com says.
If you regularly find you’re not near an ATM operated by your bank, consider taking out enough cash for a week. You can leave some at home so you’re not tempted to spend. This may also help you stick to a budget. Also take advantage of getting cash back from your debit card when you’re making a regular purchase like groceries. This removes the need for an ATM, but be sure to keep track of these withdrawals.
Carrying a balance on credit cards
A balance of a few thousand dollars may not cause undue anxiety, yet tack on an average interest rate of 14 percent or more and you’re talking about a burden that will last for years.
The economy is improving so you may be receiving more credit card offers. If you’re paying a significantly higher interest rate than what’s being offered, consider a balance transfer. But scrutinize when the introductory rate will lapse, and factor in the balance transfer fee. This calculator at CreditCards.com can help you determine your potential savings, http://tinyurl.com/4f8f38j.
Shopping online with a debit card
It’s important to choose your plastic wisely when shopping online. It’s smarter to use a credit card because it will offer additional consumer safeguards, such as return protections.
If you use a debit card, a thief can potentially start withdrawing money from your account right away. And this may only lead to escalating problems. For instance the zapped balance might not cover scheduled payments, and result in overdraft fees. So if you have the money in your account, make an online purchase with a credit card and immediately pay off the balance .
This potential hazard underscores the need for a separate emergency fund. If you are the victim of fraud it may take some time for the bank to sort out what happened. Maintaining a separate account will ensure you have access to funds to get by.
And check debit card account balances frequently to spot any irregularities as soon as possible.
Failing to be tax savvy
Cutting your tax bill requires year-round attention. For instance, a threshold question is whether to itemize your deductions and that requires some record-keeping.
If you’ve kept good records you may be able to save a sizable sum by itemizing significant expenses for medical care, mortgage interest and taxes, or charitable contributions.
Not getting ready for winter
Punxsutawney Phil tells us whether to expect six more weeks of winter, but it’s a mistake to wait until Feb. 2 to prepare. Conduct an energy audit to determine if additional insulation, new doors and windows can save you money.
It may be too late for this winter, but insulation also keeps cool air in during the summer, so think ahead.