From credit cards to Tupperware, there are a million ways to lose your money today. Stay vigilant! Avoid these things to make sure you can hold on to as much as possible.

Loans and Financing

Some loans are okay. Really it’s carrying the balance of the loan for a long period of time, making minimum payments, and getting loans for things that people don’t need that’s the real scam here. Here are some common examples.

Credit Card Debt

Yes, if you have credit card debt, I think you’re getting ripped off. When you made that initial purchase, did you realize you’d be paying 118%, 150%, or more of the original price? Yuck. It’s really easy to see how bad of a deal this is because the interest rates on credit cards are so high.

Car Loans

Contrary to popular belief, you can own a car outright and you’re not required to buy a new one on a regular basis. This one falls into the “carrying the loan for a long period of time” and the “making minimum payments” categories.

Cash Advance Payday Loans

The cost of these things is outrageous. Please, please avoid doing this at all costs. Besides costing more than a credit card up front, if you decide not to pay back the loan immediately the APR starts to skyrocket.

Rent to Own

When you rent to own there are a lot of hidden costs and you’ll be paying an unreasonable price for your item because of them. Imagine a couch costs $500. You won’t be making 10 easy payments of $50, of course. The rent-to-own place you used has to cover the cost of replacing or maintaining the item if you change your mind and decide to return it. If you do decide to keep the item then you’re still paying finance charges. At the time of this writing, Aaron’s rent to own has all of the information you need on their website to know by exactly how much they are ripping you off. There is a living room set available for “$99.00 per month.” By the way, anything with “per month” at the end of it is not actually a price. It lists the actual price at $1,408.93, then in small print says the following.

Total Monthly Payment: $99.99 /month (plus tax) • Total Cost of Ownership: $99.99 x 24 Months = $2,399.76 (plus tax) • Cost of Lease Services: $990.83

So per their website you are paying $2,399.76 for this $1,408.93 item. That’s worse than a credit card!

Lending Money to Friends and Family

Family is great, but this is a bad idea. Give gifts to family members, not loans.

Gambling

There are lots of forms of gambling actually. There’s the normal, vegas-style, slot machine and poker type, and there are lottery tickets. Want to play the lottery? Try this simulator first to begin to grasp the odds of actually winning.

Bad Habits

Bad habits can cost lots of money. Eating out every day, smoking, and drinking are big ones. Anything that’s not done in moderation can be troublesome though. Collections (shoes, stamps, etc.) for example. If it makes you happy go ahead; if you’re trying to fill a void then try something else.

Life Insurance as an Investment

This is known as “permanent” or “whole” life insurance. It’s a classically bad investment for many reasons, like the fact that it’s always much more expensive than term life insurance and that the returns are incredibly low. Virtually everyone would be better off getting term life insurance and investing what they would have spent on “whole life insurance.” Investing is easy. Just use Betterment.

Needless Consumerism

I think most people living in any kind of slightly westernized society are guilty of this. Whether it’s looking good to fit in, buying things to feel “happier,“ or just plain buying expensive things that could have been found cheaper.

Did you know you could pay $215 for socks (Miu Miu knitted wool knee socks) if you wanted to? How about men’s socks with some kind of animal head on them for $90 (Gucci stretch cotton socks with panther)? If you really wanted to, you could even spend $990 for a woman’s t-shirt (Valentino Rockstud Untitled T-Shirt) or $1,150 for a sweater if you’re feeling chilly (Versace Sweaters).

Most people aren’t that bad, but there are usually some things that we “splurge” on where the return is not so good.

Multi-Level Marketing

Herbalife, Tupperware, Nu Skin, Amway, etc. They are all scams because the return on investment is negative for most people and extremely little for most others. They promise the opportunity to make extra money but people are rarely able to make that happen. All MLMs are inherently flawed by definition because the only way to make real money is by recruiting others to sell under you. Also, people tend to not think of this as a business and view it as something they can just do “in their free time,” or “on the side,” or “only on weekends.” Or maybe they think “parties with friends will be fun!” If your goal is to make money, however, all of these are false. If you only do it in your free time, “on the side,” or on weekends, then you will not make money. If you think parties are fun then please, for the love of all that is holy and good, please just go to someone else’s party instead of paying a bunch of money for a starter kit. Your friends can only buy so much of your crap.

Straight Scams

So, yes, some people still fall for these. The classic one is the Nigerian king scam, where you get an email from the king of Nigeria saying he only needs some money to be able to access his vast wealth of funds, and of course he’ll pay you back afterwards.

These are still around in many variations and are not limited to email. A few years ago I got a letter from a bank asking me to confirm my social security number and some other information. It had the bank’s logo, was well written with no obvious grammatical errors, and wanted me to return the form to an address with the bank’s name as the receiver. Why would the bank send me a letter like that when they already have that information though? Well, since I had never done business with that particular bank before, ever, it was obviously a phishing scam. Stay alert when giving out private information!

Conclusion

I wish you all the best of luck in avoiding all of the above! Did I miss anything? Where does your money go?