5. Carrying a Credit Card Balance
While there’s nothing wrong with responsible credit card use, if you can’t pay your entire bill on time (also known as carrying a balance), you’ll get penalized in the form of interest, which just adds to your debt.
“Getting out of credit card debt can be one of the most challenging financial things to do,” says Blaylock. “If you have several cards that carry balances, choose the one with the highest rate and attack that balance with every extra dollar you can find, using the ‘rack and stack’ principle, while paying the minimums on other cards.” And if you have good credit, look into lower-interest card offers that can reduce your rate temporarily when you transfer your balance — but remember to take into account any balance transfer fees before deciding to switch.
Feel that getting out of credit card debt is impossible? Blaylock recommends reaching out to the National Foundation for Credit Counseling, which can help you create a debt management plan.
How Much You Can Save: The average household carries a credit card balance of over $7,000. In December 2013, interest rates were about 15% for the average credit card account. Carrying that average balance, at that average rate for one year, will cost you $1,133 in interest charges.
6. Paying a Premium for Your Vacation
There’s a reason why it costs a fortune to visit the South of France in July — everyone wants to vacation there in the summer. But you can cut down on those peak season costs by planning a trip during a region’s “shoulder season,” or the months that fall just before and after peak visiting time. Another alternative: Go somewhere similar, but more affordable — like these budget-friendly alternatives for a number of iconic getaways.
“You can compare different locations if you know what general kind of trip you want, like a ‘nice beach vacation,’ ” says Katie Brewer, CFP with LearnVest Planning Services. She also recommends setting a budget for your trip ahead of time, and saving toward it monthly, “so you have the funds to actually pay for the vacation.” And she suggests using travel aggregator sites, such as Kayak and Orbitz, to compare the best day, week and month to travel to the given destination.
How Much You Can Save: Of course, your individual figure depends on a combination of the destination (Brewer herself saved $1,500 by taking an anniversary trip to Costa Rica instead of a pricier Caribbean island), airfare and lodging. Let’s revisit our South of France example: By traveling in May instead of June, you can save more than $50 per night at an upscale hotel in Nice, France. For seven nights, that’s an immediate savings of $350.