The Top 5 Unnecessary Expenses

"Where did the money go?"

How many times have you had a conversation in your house that started with this sentence? I have to admit, my wife and I have that conversation on a few occasions, usually when one of us has spent some money and failed to notify the other person. When that happens, it's easy to lose track of your expenses, and then you wind up with unnecessary expenses which only drain your bank account and give you absolutely nothing in return. With a little communication and pre-planning, you can avoid these unnecessary expenses.

1. Overdraft charges. It's simple, really. Don't spend more than what is in your checking account, and you won't incur this unnecessary expense. At my bank, the fee per overdraft is $28. Rack up 5 or 6 of those, and that really adds up.

2. Late payment fees. Hey, stuff happens and sometime your late, right? C'mon....plan ahead and avoid paying more for your bills than you really need to. The late payment fee is a penalty. You aren't receiving anything from it, other than a lighter wallet. Repeat this mantra: pay all bills on time.

3. Credit card finance charges. If you must charge something to your credit card, only do so if you can pay off the balance at the end of the month. If not, you'll wind up paying finance charges, and some credit cards don't have very favorable rates. Once you get on the ten-year payment plan on those credit cards you could end up paying much more for the item you charged than what it was actually worth in the first place.

4. ATM fees. I will only use my debit card at machines where the transactions are free. Sometimes the fee is only a dollar, but make frequent transactions and that dollar starts to compound exponentially. Worse yet, some ATMs charge fees of up to $5 per transaction. What a waste of cash! If you really must get cash, try going to the teller at a bank (assuming your bank doesn't charge you for that service, too).

5. Extended warranties. Is it any secret that most extended warranties are just a way for businesses to get more cash out of the customer during a sale? Every time I buy a new appliance or TV, a salesman is always trying to sell me an "extended warranty." What does that say about the product? If the manufacturer's warranty is worthless, then you probably shouldn't buy that item in the first place. In the interest of full disclosure, I did purchase an extended "bumper to bumper" warranty on my then-new minivan. The cost of the warranty was minimal...a few dollars a month....and that warranty has more than paid for itself many times over. However, a vehicle is worth a lot more than a TV. Besides, a lot of appliance and electronics warranties have so many disclaimers that they are practically worthless.