This post 10 Money Suckers Draining You of Cash Right Now appeared first on Daily Reckoning.
According to the U.S. Bureau of Labor Statistics, the 3 biggest annual expenses in retirement are:
Yes – you read that correctly — transportation came in second.
The average annual cost of transportation for households age 55-64: $9,321 and age 65-74: $8,338.
A lot of retirees think that because they own their car and are no longer commuting to work every day, it’s a negligible cost. I promise you, it’s not.
Every year, you still have to pay for gas, insurance, repairs and maintenance. Owning a vehicle is not cheap. Today I’m going to share with you some hidden money pits, let’s call them “money sucks,” that appear to be saving you money when in reality they’re not.
Money Suck #1: Driving an Old Car
As I said, just because you own a car, doesn’t mean there are no additional costs for upkeep. And if your car is old, count on your upkeep costs being even higher.
According to Junkacar.com, the average annual maintenance cost of a vehicle 7 years old is $1,000. This number skyrockets to $2,000 when you reach the 12-15 year mark.
While you might think you’re saving yourself some money by driving your old junker into the ground, the truth is you’re likely wasting a lot of money every year.
Money Suck #2: Trading In Your Car Before It’s Paid Off
This one is almost the opposite of number one.
If you decide to get a new car and you still haven’t paid off your old one, be careful rolling over what you owe.
A lot of times when you roll over what you owe, you end up paying more than what the new car is worth. Make sure you calculate the true cost of making the switch.
Money Suck #3: Doing Your Own Taxes
Tax software has come a long way in the last few years and if you’re dealing with some very basic tax preparation, it might be worth saving yourself the cost of hiring an accountant to do your taxes. However, for most people, doing their own taxes is not worth it.
Tax professionals live and breathe lengthy tax codes, and will find deductions and tax exemptions that you had no idea existed. While tax software may be able to take these into consideration, you still need to know what you can legally deduct before entering it.
Most tax accountants charge between $150-$250 for tax preparation. This is a small annual investment that will save you thousands over the years. Plus, tax preparation fees are tax deductible the following year!
Money Suck #4: Buying Cheap Clothes/Jewelry
Buy cheap, pay twice.
I like that saying. High-end designer brand clothing is pricey and I don’t recommend you waste your money on it. But you shouldn’t buy cheap, fast fashion either.
Buy clothing that’s moderate-to-expensive. Clothing in this category costs a bit more because of the quality of materials and manufacturing but you won’t have to replace it as often. While it may cost a bit more …read more
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