Money Leaks

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Storage companies are clever too. They frequently offer the first month of storage for free, playing on your good intentions to sell or donate your extra stuff within the first thirty days. But then one month becomes three and then six and before you know it, it’s been a decade and you’ve paid $15,000 to “save” money by keeping the $700 dining set you put in storage.  This “first month free” approach is the same tactic drug dealers use to lure customers.

It’s a loser’s game. Don’t get hooked on storage! Get rid of that stuff! Have a yard sale, sell it on Ebay or consign it at a local shop.

Also, remember that you can donate furniture and gently used clothing to charity for a tax write-off. You’re frequently better off renting a dumpster for a one-time $300 fee than paying through the nose for years on end to hold onto stuff that you really don’t need.

Speaking of things you don’t need, put this in your pipe and smoke it: A pack of cigarettes costs up to $14.50 in Manhattan. Not only that, but smoking can significantly increase the cost of life and health insurance. And you’ll pay more for homeowners and auto insurance. In his book, a Duke University doctor estimates the true cost of smoking at $183,000 for a 24-year-old man over a lifetime. That’s not chump change. Ditch the bad habits and put that money toward your nest egg.

And I know I’ve said this a thousand times, but I can’t mention retirement and not say it again: If your employer matches your 401(k) contributions, do your very best to make the most of that match. It’s free money and it adds up to big money over time.

Any other tips?
This last one: Energy savings. Everyone knows to turn the T.V. off when you’re not watching it and to hit the lights when you leave a room. But what about all those gadgets and gizmos that consume standby power when they’re not in use? They’re called “vampire electronics” because they’re constantly sucking up energy and draining your wallet in the process. Electronics with a clock or that operate by remote are typical culprits. Of the total energy used to run home electronics, 75% is consumed when they are actually turned off, according to the EPA. That adds up to an extra $10 billion in energy costs. Claim your piece of that $10 billion. The obvious defense is to pull the plug. You could also buy a device to do it for you, such as a Smart Power Strip—it’s $26 to $54 at smarthomeusa.com—and given the savings you’ll see, it will pay for itself within a few months.

Mellody is President of Ariel Investments, a Chicago-based money management firm that serves individual investors and retirement plans through its no-load mutual funds and separate accounts.  Additionally, she is a regular financial contributor and analyst for CBS News.

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