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What other expenditures r preventing Americans from achieving financial freedom?

Started by Sam, October 05, 2018, 08:06:37 AM

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Sam

What are other large expenditures average Americans pay that prevent them from achieving financial security?

I've covered cars, engagement rings, weddings, houses, and private education so far. What else do you think the average American is spending too much money on?

Sam
Regards,

Sam

Leigh

 ;D ;D ;D

Where to even start!

In my work,  I have my finger on the 'financial pulse' of the average American monthly budget. There have been times I have struggled keeping a straight face when I hear where folks spend their monthly income. Expensive manicures pedicures add up and families who can't pay the rent are sporting some of the fanciest talons I've ever seen.

Nails are a six billion dollar industry, according to some estimates. I guarantee some of that should be paying rent, car notes and credit card bills.

Another thing I see is what I call 'child indulgence'. Expensive summer camps, horses, cars...at the expense of the parents' retirement funds.

It goes on...house keepers four times a week, fox and hound hunting (when the bills aren't being paid), multiple new cars.

I guess you can categorize these as self-indulgent 'stuff'. 

It adds up. I used to teach folks that if they for-go ordering drinks at dinners out for a family of four, you would save enough to get car tires each year. We used to add sugar to lemon water and sure, that's a bit extreme, but we saved small amounts in order to always pay cash for cars.

It adds up.




Hayden

I think people eat away their retirement/future. I work in a corporate environment where 7/10 members of my team eat out for lunch every single day. My boss told me he spends on average $600-$750 per month on eating out lunch Monday-Friday. This does not include eating out for dinner which he said is at least 2-3 times a week with his family of 6.

I work in the food distribution business, and I can tell you that the meal you pay $30 for at your local Bistro is the same meat and potatoes you can buy at Costco for 1/7 the cost. Eating out is something that should be enjoyed, but it should not steal your future financial goals.

I would also say vacations can sometimes get out of hand. Especially when you start having a family and finding every excuse to go to Disney World or the Bahamas. Vacations should be enjoyed, but the average working American over indulges on their annual trips.
Very Respectfully,
Hayden

Money Ronin

I have a handle on all my financial expenditures except healthcare.  Most expenditures are within my control to some extent: I can eat better or worse, I can vacation more or less, I can spend more or less on my kids.  I'm a deal hunter by nature; I'm pretty good at getting more with less.

However, with regard to healthcare, even though there are different tiers offered by Obamacare, it feels like a big gamble.  I've casually priced it out for my healthy family of 4 and it's expensive no matter the tier.  It costs substantially more than what my wife pays for her employer subsidized plan.  Even if I resign myself to whatever it costs today, what should I budget for 5 or 20 years from now?  What will it cost once we become seniors or if one of us develops a serious medical condition?

I consider myself a risk taker and financially savvy.  My wife, as it happens, works for a major health insurance company, so together we understand healthcare costs as well as any expert.  Although we can probably weather any healthcare cost at this point, healthcare premiums are a big reason why wife continues to be an employee.  Even if I find the best deal I can on healthcare, it still feels like a bad deal.

By the way, I grew up in the United States and didn't have health insurance until I got a real job at 22.  Then again, I also didn't wear seat belts, sit in a car seat, wear helmets, visit the dentist until I was rolling in pain, etc.  I had immigrant parents and we were comfortable rolling the dice.  I guess expectations have changed.

hyperobjeckt

Hobbies!

Moog recently announced a new (admittedly awesome-looking) $8,000 synthesizer, and I'd be willing to bet that most people who have put down preorder money aren't exactly hitting aggressive savings targets...

I used to wonder how so many amateur musicians were able to afford new gear all the time, until I realized that a lot of it is financed thru music stores and credit cards. Same deal with some guys I know who are really into hunting & fishing, they end up making monthly payments with interest on a garage full of hobby stuff. My hunch is that if they paid themselves first & then bought used (or rented) with the leftover money, they would be just as happy.

Hayden

Quote from: hyperobjeckt on October 09, 2018, 11:26:16 AM
Hobbies!

Moog recently announced a new (admittedly awesome-looking) $8,000 synthesizer, and I'd be willing to bet that most people who have put down preorder money aren't exactly hitting aggressive savings targets...

I used to wonder how so many amateur musicians were able to afford new gear all the time, until I realized that a lot of it is financed thru music stores and credit cards. Same deal with some guys I know who are really into hunting & fishing, they end up making monthly payments with interest on a garage full of hobby stuff. My hunch is that if they paid themselves first & then bought used (or rented) with the leftover money, they would be just as happy.

Hobbies do sometimes drain money. However, sometimes hobbies can turn into profitable ventures. Those are the best kind of hobbies.
Very Respectfully,
Hayden

RageCage

Nails, Starbucks are good "death by papercut" items but Vacations are the big one I see people taking when I know they don't have a lot of money and I know they are not saving for retirement.  Sam:  much like the 1/10 rule for a car, maybe spend your free time devising a vacation rule since there are so many inexpensive options (ex. camping) rather than the all inclusive butler service or Euro vacation.

Orphan

Eating out on a constant basis will severely hinder a solid financial plan. Add up all those dinners and lunches and one would be shocked at how much is spent..

Hayden

Quote from: Orphan on October 10, 2018, 03:31:26 PM
Eating out on a constant basis will severely hinder a solid financial plan. Add up all those dinners and lunches and one would be shocked at how much is spent..

Agreed. I encourage my peers to take two weeks and not eat out at all and see how much money it really takes to survive without being too extreme at the grocery store. Usually is comes out to about the same as if you were to go out to eat for dinner 2-3 times. The difference is outrageous.
Very Respectfully,
Hayden

Orphan

Quote from: Hayden on October 10, 2018, 03:44:15 PM
Quote from: Orphan on October 10, 2018, 03:31:26 PM
Eating out on a constant basis will severely hinder a solid financial plan. Add up all those dinners and lunches and one would be shocked at how much is spent..

Agreed. I encourage my peers to take two weeks and not eat out at all and see how much money it really takes to survive without being too extreme at the grocery store. Usually is comes out to about the same as if you were to go out to eat for dinner 2-3 times. The difference is outrageous.

12 to 15 thousand a year is not a hard mark to hit. More in higher priced locales..

nycrite

To me, it's the suburban McMansion. It carries much more than a hefty price tag, which is a large debt repayment, in and of itself. It is positively correlated to more expenses such as:

Driving: usually, suburbs are more spread out from destinations
Furniture: bigger house = more rooms to furnish
Utilities: bigger house = more heating, cooling, etc.

I could keep going. Other things become more expensive like insurance, taxes, HOAs, ongoing maintenance, etc.

A house can be a gateway drug to higher spending in lots of areas.

Hayden

Quote from: nycrite on October 11, 2018, 01:17:32 PM
To me, it's the suburban McMansion. It carries much more than a hefty price tag, which is a large debt repayment, in and of itself. It is positively correlated to more expenses such as:

Driving: usually, suburbs are more spread out from destinations
Furniture: bigger house = more rooms to furnish
Utilities: bigger house = more heating, cooling, etc.

I could keep going. Other things become more expensive like insurance, taxes, HOAs, ongoing maintenance, etc.

A house can be a gateway drug to higher spending in lots of areas.

I totally agree here. Most people buy too much house than what they need. I loved Sam's post about this. See below.

https://www.financialsamurai.com/the-ideal-house-size-and-layout-to-raise-a-family/
Very Respectfully,
Hayden

Orphan

Quote from: Hayden on October 10, 2018, 03:44:15 PM
Quote from: Orphan on October 10, 2018, 03:31:26 PM
Eating out on a constant basis will severely hinder a solid financial plan. Add up all those dinners and lunches and one would be shocked at how much is spent..

Agreed. I encourage my peers to take two weeks and not eat out at all and see how much money it really takes to survive without being too extreme at the grocery store. Usually is comes out to about the same as if you were to go out to eat for dinner 2-3 times. The difference is outrageous.

Sorry Hayden, I accidentally hit the smite button instead of the applaud button. I guess my fingers are too fat.

Hayden

Quote from: Orphan on October 12, 2018, 10:35:15 AM
Quote from: Hayden on October 10, 2018, 03:44:15 PM
Quote from: Orphan on October 10, 2018, 03:31:26 PM
Eating out on a constant basis will severely hinder a solid financial plan. Add up all those dinners and lunches and one would be shocked at how much is spent..

Agreed. I encourage my peers to take two weeks and not eat out at all and see how much money it really takes to survive without being too extreme at the grocery store. Usually is comes out to about the same as if you were to go out to eat for dinner 2-3 times. The difference is outrageous.

Sorry Hayden, I accidentally hit the smite button instead of the applaud button. I guess my fingers are too fat.

No worries, Maybe you might fall into the category of eating out too much and stealing your financial future from yourself. Haha. Obviously kidding, it happens. :)
Very Respectfully,
Hayden

Orphan

Quote from: Hayden on October 12, 2018, 10:49:44 AM
Quote from: Orphan on October 12, 2018, 10:35:15 AM
Quote from: Hayden on October 10, 2018, 03:44:15 PM
Quote from: Orphan on October 10, 2018, 03:31:26 PM
Eating out on a constant basis will severely hinder a solid financial plan. Add up all those dinners and lunches and one would be shocked at how much is spent..

Agreed. I encourage my peers to take two weeks and not eat out at all and see how much money it really takes to survive without being too extreme at the grocery store. Usually is comes out to about the same as if you were to go out to eat for dinner 2-3 times. The difference is outrageous.

Sorry Hayden, I accidentally hit the smite button instead of the applaud button. I guess my fingers are too fat.

No worries, Maybe you might fall into the category of eating out too much and stealing your financial future from yourself. Haha. Obviously kidding, it happens. :)

I think you're spot on. It is the Saturday night steak dinner and beer at the local pub watching college football. It gets me every year..

hyperobjeckt

Quote from: nycrite on October 11, 2018, 01:17:32 PM
To me, it's the suburban McMansion. It carries much more than a hefty price tag, which is a large debt repayment, in and of itself. It is positively correlated to more expenses such as:

Driving: usually, suburbs are more spread out from destinations
Furniture: bigger house = more rooms to furnish
Utilities: bigger house = more heating, cooling, etc.

I could keep going. Other things become more expensive like insurance, taxes, HOAs, ongoing maintenance, etc.

A house can be a gateway drug to higher spending in lots of areas.
Oh, this is a good one. I see friends spending more money on remodeling because they prioritized square footage over everything else when choosing which house to buy, and now they have to change it into somewhere they actually want to live.

Kendall

Maybe this stretches "expenditure" but watching TV, sports especially, is a huge time sink. Time is money. I like watching american football and not being into sports is almost un-American, but it is easy to waste an entire weekend on the couch. And what does one get for being a superfan, buying expensive memorabilia, jerseys, season tickets...

I watch YouTube, but mainly I like the home DIY channels, so that I can do my own repairs and upgrades. Getting back to houses, paying someone to remodel or repair is a double whammy to the budget. If I pay someone to work, I have been taxed on my earned income, then I pay his income tax and workman's comp. If I do the work myself, no tax and no workman's comp. The economic value of my personal labor cannot be taxed (yet?)

Rdizzle

I've found its the nickel and dime expenditures of people who pay no attention. Overpriced cell plan, cell phone, cable, pointless car payment on unnecessary car, eating out, groceries which statistically mostly get thrown out. Impulse purchases and convenience purchases. It all adds up. The sad part being that most will refuse to give up anything in the erroneous idea that they "deserve it." An odd reversal of what would actually help them in the long run.

Harper

Designer handbags and heels. Each handbag would cost several thousand dollars and heels around $1k a pair. People have mini collections of these items and save up towards a higher-end one as a goal (e.g., maybe they start out with a LV bag for a couple of thousand and save up to their dream Chanel bag for over $5k). You should check out PurseForum.

rluks

One of my friends spends a lot on various gadgets, gaming consoles and similar hi-tech stuff. It feels like wasting money to me since this kind of items deprecates so fast. But I think it really brings him joy to play with those, so who am I to judge? It's not like he's on a FI track anyway.