In his new book, Life or Debt 2010, Johnson advocates destroying debt by finding extra money within your current budget, not by deprivation. The first thing to do in your hunt for debt-destroying cash is to stop wasting money. Think youâ€™re innocent? Read on.
1. Not buying generics: While itâ€™s true that some generics donâ€™t measure up in quality to their higher-priced cousins, itâ€™s also true that other generics are literally identical. Generic buffered aspirin isnâ€™t almost like Bayer. Itâ€™s identical except for packaging and price. True of hundreds of items from patent medicines to bleach to spices. If you ever buy a name brand when thereâ€™s a cheaper and identical generic substitute available, youâ€™re wasting cash.
2. Overpaying for Insurance: You have a small fender bender, but rather than report the $1,000 damage to your insurance company and risk an expensive blemish on your record, you pay for it yourself. Fine. But why do you have a $500 deductible on your policy? Raising your car, home–even health insurance–deductibles can reduce premiums and save you 10 â€“ 20%, which can add up to hundreds of dollars a year. Hold onto that money and put it in a savings account to meet those higher deductibles should the need arise.
3. Buying water by the bottle: The dumbest thing Iâ€™ve seen in my 20 years as a consumer reporter is paying a buck for a bottle of water when you can get it home for virtually nothing. If youâ€™re concerned about taste or quality, buy a filter.
4. Buying Books: Borrow the books you already bought with your tax dollars. Theyâ€™re sitting at the nearest public library, along with magazines, DVDs and tons of other free entertainment. Buying books youâ€™ll likely only read once is a money-waster. (If you do want to own a copy, make sure to buy it used.)
5. Not using Internet coupons: Saving money used to mean scouring the newspapers and clipping and organizing paper coupons. Now itâ€™s all about typing what youâ€™re looking for into a deals search engine. Shopping without taking a few seconds to do that is silly.
6. Paying 20% while youâ€™re earning .2%: I understand the need for an emergency fund. But if youâ€™re paying 20% on a credit card while earning .2% on your savings, youâ€™re more likely to create an emergency than solve one. Not to mention that you’re wasting a ton of money. (Exception: If youâ€™re unsure about your job security, you want to marshal the maximum amount of cash possible.)