4 Major Money Traps to Avoid
The Solution: It used to be that plan sponsors (i.e. employers) were not obligated to disclose the rate at which employees were charged for contributing to their 401(k) accounts. That has all changed as a result of new Department of Labor regulations that went into effect July 1, 2012. The amount that you pay in fees must be made plain on your statement, just like your bank lets you know when they've charged a fee to your account. It may be in the fine print on page 7 of 8 in an attempt to dissuade you from looking for it, but it's definitely there. The next time you receive a statement, take a look and figure out what kind of fee you're being charged. If you're concerned by it, dig out that HR packet and see if your company offers plans with different fees. Then, if it does, make a note to remind yourself to change funds during the opt-in period that usually happens at the end of the year. (If your company doesn't offer reputable funds with low fees, you might want to talk to your HR department to see if they will be including one for the next opt-in period.)
The Solution: For one month, pay for each class you go to individually. If you end up going to 10 classes, then you'll know for sure that the class card is a good deal going forward. If you have a fabulous time at yoga...but only go twice, you might stick to paying on a per-class basis.
The Solution: If you're an Android user, Murph suggests taking advantage of the trial period provided by the app store, which lets you download an app for a certain amount of time before you either pay for it or let it lapse. If you use the new app every day, great! If not, poof! It disappears at the end of the trial.
Windows or iPhone users can take an inventory of most-used apps. Then, pick one app category on which you're willing to spend money, and as for the rest, promise yourself that you'll look for free alternatives. For example, if you really like having Mint on your phone so that you can get text messages about spending, or if you're deeply attached to Evernote because it syncs notes that you make on your phone and your computer, then you'll want to spend on utility apps. So reserve your splurges for the next great one that comes out—and stick to the free version of Angry Birds.
The Solution: Try Sethi's two-pronged saving strategy. Here's how it works: Looking at your bank and credit card statements, categorize everything you've spent money on in the last month. Then, pick your two biggest discretionary expenses, for example, eating out and buying beauty products. Make a promise to yourself to reduce just those two by 25 to 30 percent over the next few months. Eventually, your new budget will feel normal, and you can move on to cutting another set of expenses without getting overwhelmed.
Next: 6 money lies we tell ourselves