Everyone has certain items that they love to spend money on. For me, I can't resist a good book on Amazon, even when I already have too many books in my backlog.
When I look at my monthly expenses, I see that a lot of my money is going to Amazon to get these books even though I don't necessarily need them. However, I budget and plan for these book purchases. I know exactly how much I am spending on books, and if the number gets out of hand, I can easily limit the number of purchases I make.
However, some money leaks can be much more insidious. Money, Matter, and More Musings wrote a great post on capping money leaks. What are some of the biggest leaks? Paying for cable when you don’t watch much TV, being addicted to specific foods, and not paying off credit card debt are at the top of the list.
Also, small things can lead to big problems. Forgetting to turn your library books in on time, for example, might only be a one or two dollar charge. But continuously being late can lead to much bigger fines.
What is the solution? As we’ve mentioned before on the Lending Club blog, there are several ways to see where your money is going. As a reminder, for one month, watch every dollar you spend. Make sure that you note every payment you make. You'll start to see where your money is going, and for what purposes. You might catch yourself spending a lot more on eating out than you thought, for example. To correct your spending habits, you must know them first. Once you plug up all of these leaks, you will have extra money to put toward your IRA and invest in mutual funds and P2P loans.
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