Check For Money Leaks

At one time, I had a home where I noticed some moisture by one of the windows.  At first, I thought it might have been some condensation, based on the recent weather.  Basically, I just looked the other way.  But then, after some heavy rain, I noticed that there was once again moisture by window – but more this time.

It was clear that there was a leak there, and it needed to be fixed.  Yet I delayed, or more accurately procrastinated dealing with it.  I suppose I just wanted the problem to go away, or maybe correct itself.  Obviously it didn’t, because the next time we had a heavy rain storm, there was water that came into the home.  I had to fix it, and very soon thereafter I did just that.  It felt good to know that my DIY efforts worked!

So, what does this have to do with personal finance?  Well, we can have money leaks too! 

What can a money leak be?  There are probably different ways one can define this, but to me it’s when you’re seeing money spent on things that you either A) clearly don’t need, and you know it; or B) don’t know you’re spending money on.

A good example from my past is one that I’m not fond of admitting.  The reason? There was no sense to it.  It made no sense for a person otherwise responsible with money to waste money every month like this.

So what did I do?  Well, I had a storage unit in which I kept a number of things after a move.  The unit cost over $110 per month, and realistically, I kept a bunch of things that I probably didn’t need to keep.  Some were definitely worth keeping, but certainly not everything.  The thing is, there was some heavy furniture as well as other items that I didn’t want to clutter my place with.  I could have done so, but somehow I though it would be okay to get a storage unit.

Now, sometimes a storage unit is needed for a short period of time.  There are ways to save on a storage unit that can help ease the costs.  However, you don’t want to make it a long-term solution.

So every month, I noticed $110 on the credit card statement.  It just blended in with the rest of the expenses, and after a few months it became an afterthought.  But after almost a year, I stopped and thought about the storage unit, and quickly did the calculations in my mind: I’d spent well over $1,000 on this storage unit.  Soon after, I also got a notice that they were raising the rates.

Anyway, it took my some time (too long), but I eventually got around to getting rid of the storage unit.  I actually had to bring some things home, and also get rid of others.  Basically, I just paid someone to come remove the stuff.  This added to the costs overall, but at least it helped put an end to the bleeding.  Overall, a decent sized money leak ended up draining me of a significant amount of money.  It was my fault. 

While money leaks can be easy to overlook and even miss, they don’t go away and can cause bigger overall problems down the line.  I recommend doing the following:

  • Track all your expenses
  • Review your credit card statements and bank statements
  • Account for each and every expense
  • Assess each expense and ask yourself if it’s necessary.
  • If it’s not necessary, eliminate it.

The more active you are with your finances, and more action-oriented you are, the better you can make sure that you don’t leak any money!

My Questions For You

How do you check for money leaks?

Have you ever had any money leaks, sort of like the one I mentioned above?

If so, what did it take for you to “plug” the leak?

Comments

  1. says

    The first step is to take a look at what you are spending, and make sure you are not just blending it into your monthly or annual expenses simply because you’ve paid that amount over time. Even bills you do have to pay, like utility bills, can be analyzed to make sure your usage isn’t creeping up over time, and if so, what can you do to reduce your usage. My thought is that while it gets harder and harder to find things to cut or reduce, those opportunities are always there. Your storage unit cost was low hanging fruit.

    • Squirrelers says

      MB – low hanging fruit has to go first, no doubt. I suspect that so many people have these expenses that are easy to cut but for some reason just don’t do it. Maybe it’s inertia, or perhaps even lack of awareness.

  2. says

    When I pay my bills, I do a quick review to see if I can do something to lower it. So when I pay my utility bills, I look for changes. For example, I noticed my gas (heating, cooking & hot water) went up a lot about a month ago. What changed? It was particularly cold, but I don’t remember seeing it that high. It turns out, I needed to replace the filters. Although it has warmed up a bit, the gas bill went down by half. I will never know if it was just the filters, but I have it on a schedule now. This works for me!

    • Squirrelers says

      krantcents – good idea to do a quick review. Changes are worth of investigation or different behavior, if variances from expectation are material.

  3. says

    We’ve certainly got some money leaks. The one that’s bugging me the most is our telecom bill, for cable/landline/internet combined. The rate goes up regularly and is now one of our biggest monthly bills. The problem is cable delivers 98.5% garbage imo; I think it’s just about the worst value of everything we buy. But I keep procrastinating on researching alternatives, which I know exist, and coming up with a plan to get rid of cable and replace it with some cool web-based alternatives or perhaps nothing at all! Meanwhile, the cash continues to leak…

    • Squirrelers says

      Kurt – well, if that’s the biggest money leak, you’re doing okay. I do know what you mean though, much of cable isn’t ever used – good point.

    • Amy says

      Go for Netflix! You may have to purchase a $100 Roku streaming player to hook to your tv but the cost for internet streaming per month is less than $9! You have access to TONS of movies and tv shows. No commercials plus the ability to watch on your mobile phone or tablet. I don’t miss cable at all!

  4. says

    I liked your example! I had a bad one too. I took over a cell phone contract from a relative when I needed a phone. There was an upgrade credit on the account so I got a free new phone and deactivated the old one. I never questioned the monthly bill which was always the same. Just before the contract ran out, I found out that “deactivating” the old phone was not the same as “cancelling” it and I had paid for both phones the entire time!

  5. Linn says

    My new money leak was a debit card. I originally got it for the ability to shop at the local ALDI store which does not accept cash. I do not like to carry cash as it just seems to float out of my purse dust bunnies and all. I started looking at my check book and found that I had more non normal expenses with the debit card than anything else. I also did not use it as often for ALDI’s as originally planned. Need less to say it has been shredded along with my paid off credit card. I can always get a new credit card but it takes time and by then I realize I do not need the item. If I want to make a purchase especially on line I contact the company. Most have the policy of printing out the order, total it for you, and give you the final cost. It also gives you time to think about the order. I usually print it out and then hand on to it for a few days, remove items, and then decide if it truly worth it. I have saved quit a bit these days with no debit card, credit card, and printing out orders to think about.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>