Creating a budget may not be at the top of your can’t-wait-to-do list, but it should be on your to-do list. The idea of a budget is to look at the money you have coming in and compare it with the money you have going out. It gives you a way to see where you are wasting money and how you can redirect it to smarter uses. One of the big things a budget can show you is money leaks, like fees you’re paying often even though they’re preventable.
Here are some fees you can cut from your life today to save money.
1. Overdraft Fees
Overdraft fees are one of the most common fees charged by your bank or credit union. They occur when you spend more money than you have in your account. If you do this once, you might not be too worried. But if you find yourself having this problem regularly, you may want to take action.
There are some ways to avoid the problem. The most obvious is to be more careful about your budget. It’s a good idea to know not only what money is coming in and what money is going out but also when. This will prevent you from having a charge that dips you below zero only a day before you get your paycheck. You can also opt to pay for overdraft protection, which can be less than the cost of multiple overdrafts. The best solution is to build a budget bubble so you can avoid the overdrafts all together.
2. Late Fees
This is one that is usually the result of user error. You may have to pay a late fee when you forget a deadline for a bill. Sometimes with a phone call you can plead your way out of the fee the first time. But if you frequently find yourself paying extra simply because you missed a due date, you need a better solution. Automatic bill pay can be a good option. This can make sure you never pay late — but make sure you time the payment so you don’t end up with the overdraft problem above. And paying late could cost you more than just fees — it can do major damage to your credit score. If you want to see how late payments are affecting your credit, you can see two of your credit scores for free on Credit.com, plus get a personalized action plan.
3. Convenience Fees
It may be easier to make a phone call than to write a check. It may also be an easy way to avoid a late fee (see above). But many companies charge you for that convenience.
A few dollars may not seem so bad but if you are paying those few dollars on several bills every month, it can add up. Again, automatic bill pay can help you avoid these fees.
4. Credit Card Fees
A credit card offer may be very tempting, but it’s important to look at the fees as well as the perks and interest rate. Credit card fees can include annual fees, transaction fees and balance transfer fees. Points, miles or cash back may not make up for a large annual fee to simply have the credit card. It’s important to work out how much you will be spending on the card, how much that will bring you in rewards and whether that is more than the annual fee.
Ultimately, avoiding fees often requires some planning. A solid budget and a calendar can help knock out many of these pesky, and costly, fees pretty quickly. Once you’ve done that, the money you were spending on fees can be redistributed throughout your budget for things like bulking up emergency savings, saving for a down payment on a home or building up your retirement nest egg.
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