5 Expenses Destroying Your Budget More than the Latte

Turns out most American households are overspending by as much as $5,000. As inflation causes prices for nondiscretionary items like food, housing, and energy to rise, families need to reduce their expenses by any means. This will likely require a change in lifestyle too.

My wife and I started eating out less. On top of that, we also started to eat less meat.

Most don’t recognize that they are overspending, especially when a mild luxury outing is flanked by smaller ones. Debt by a thousand cuts. If you want to buck the trend of households living paycheck to debt or stress, take the road less traveled.

Consider cutting these 5 recurring expenses to keep your budget on track.

Table of Contents

1. Expensive Streaming Providers vs the Classic Cable Bill

There was a time when people complained about the $100 cable bill with over 200 channels to watch. To combat this, Netflix arrived on the scene with a Blockbuster killing idea. For less than $10 a month, you can watch what you want on demand.

Adaptation was slow at first however by 2020, the streaming wars were in full effect. If you’re subscribed to the basic, ad-free versions of Netflix, Spotify, and HBO Max, you’re likely spending nearly $500 on streaming services each year. That’s a 400% increase in your expenses.

Turns out you don’t need all those streaming channels. You can out to cancel some of the providers outright and only keep the ones you need. You can easily lower these expenses to something manageable.

In the game of money, every bit helps.

2. Food Delivery Memberships and Take-Out

To add to your in-home entertainment, comes the rise of home delivery expenses.

A seemingly inexpensive subscription to Amazon Prime for nearly $150 per year, ends up costing you as much as $5,000. According to Statista, in 2021, Amazon Logistics delivered around 4.75 billion packages in the United States. This is a growth of 13 percent compared with the previous year. In 2020, Amazon’s own logistics business generated over 80 billion U.S. dollars in revenue worldwide.

This doesn’t include the deliveries for special events such as 1-800-Flowers.com whose net revenues for 2022 was $2.1 billion with a capital B. The next best thing is to get all your groceries delivered. God forbid you go to the store. Urban millennials are paying premiums for groceries at home which is projected to reach $627.3 billion.

I’m not sure where all this money is coming from anymore. Takeout, meal delivery, and cooking at home started to heat with a projection of $1.02 trillion. All this to say, that it’s costing you more to be lazy. Cut the premium by going to the store, buying in bulk, and limiting eating out to maybe once a month. You can also be bold once every two months. The 28 percent tip should scare you enough to stay home.

3. Credit Card Interest Payments

Americans are losing move of their wealth through secret reoccurring expenses, also known as credit card interest. Spending more than you earn is one thing, getting taxed on that spending on credit is devastating.

The current average minimum APR for all new cards is over 20%. So the average American carries a balance of over $8,000 on their credit card(s) at an average interest rate of 19.78%. That’s over $1,500 annually just for the privilege of owing money to their creditors.

It’s definitely avoidable especially as the Feds raise interest rates. There is no point in buying luxury if it’s costing you triple the value of your future wealth.

Try to check out credit card reward points to save some coins. My wife and I received over 100k travel rewards through AMEX.

4. The Fancy Gym, Unused Memberships, and Trendy Exercise Classes

Gone are the classic Gold’s Gym predatory memberships of $59.99 per month with an annual cost of about $89.99; millennials want the luxury stuff. Off the bulked shoulder of CrossFit, new specialty gyms are charging per class instead.

For example, Orange Theory, which is popping up in every gentrified city, is taxing you $59.99 for four classes per month. One you can scale to unlimited classes for $159 per month.

SoulCycle doesn’t offer any monthly charges and opts for the pay-per-class model. Even virtual exercise classes are cranking out higher prices. A Peloton app membership costs about $156 per year, for example (not including taxes, the bike, the fancy gear, or the treadmill).

Try to cut back especially if you aren’t really using them.

7. Financial Fees, Commissions, Whole Life Insurance, and the Online Mentors

While most are desperate to get out of debt or their financial bind, beware of the financial opportunist.

Try to avoid falling for the social bias sales funnel. You really don’t need to pay $1,000 for a mentor. Nor do you need to pay $500 for a whole life insurance policy.

There are cheap if not free ways to learn and adapt personal finance philosophies. It will take time and is endlessly more beneficial than pouring your money down the drain.

Also, you really need to start reviewing the fees you’re paying to financial advisors, robo-advisors, cryptocurrency exchanges, brokerage firms, and other financial services.

Some services are well worth the nominal expense but fees can also add up quickly or go completely unnoticed if you’re not careful.

Living Beyond Expenses and Paycheck to Debt

Combined these five expenses can yield significant wealth-building opportunities for you and your family. Just $500 per month investing in an index ETF like $VOO for the historical average of 8% would net you over $280,000 in 20 years.

Keep investing for 40 years, you would have an investment portfolio of $1,600,000. Yep, millionaire status achieved. Your spending is likely keeping you away from living a life beyond stress, debts, and unlimited expenses.