Surprise! Your New Year’s Resolution Could Be Hurting Your Wallet

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It’s nearly the end of January and you know what that means. It’s the perfect opportunity to check-in with your 2014 progress: your health, your fitness, your finances…your “goals to give up.”

That last one might sound a bit disheartening but it’s not quite as negative as you might think. Since so many of us take off running at the start of each year, it’s important to take the pulse of your goals after a few weeks so that you can avoid burning out. But did you know checking-in also has the added benefit of saving you money?

A recent article by The Wall Street Journal listed some of the most common (and costly) things that people tend to shell out for when they set goals for the new year. Among them was the often cited gym membership. The list also mentioned a few others that aren’t always associated with January 1st expenses, including:

  • Dating websites
  • Language courses
  • and Cable TV

Some of these New Year expenses are centered on special products or tools that act as a means to an end. In other words, the costs that presumably help you to reach your goals. For instance, if you want to find love but have little free time, you can streamline your efforts via a paid website. Others – think along the lines of cable TV – tend to go along quite nicely with promotions from companies looking to bank on the New Year’s resolution trend.

For example, a cable company might offer a discounted sign-up rate at the beginning of the year in hopes of keeping you as a customer in the future months. If your goal is to cut back on expenses in the New Year, taking on a cable deal that has low upfront costs may be tempting. Unfortunately, these deals don’t last forever. Paying more per month after the introductory rate has expired probably isn’t going to end up saving you any money and could very well cost you more than you originally planned.

Punch the numbers to avoid costly resolutions…

To avoid this extra spending, you’ll want to consider the true expense of your goal. From there you’ll want to evaluate whether the actions you take to achieve it are ultimately worth the cost. If you’re paying $75 per month for a gym membership but end up going only once in that 4 week period you can see the immediate high cost problem. $75 dollars per session is a pretty steep price to pay!

… and to determine if you should jump ship

Just because you’ve taken out a gym membership doesn’t mean that you’re doomed to give up on your goal and therefore lose out on money. In fact, most people who utilize a gym’s loyalty rewards benefit by fronting membership costs and monthly fees. However, maybe you’re not a gym person. Maybe you enjoy riding your bike as a form of exercise or have enough self-discipline to do a little yoga in the comfort of your own home. In that case, you may not be the best candidate for a monthly membership fee to a gym.

In this case, you can see where cutting your losses earlier rather than later could benefit your bank account. Breaking a contract can be painful (both in terms of biting the bullet and also associated fees), but you ultimately lose more money if you stick with monthly payments if you’re not utilizing the services associated with the monthly cost. Paying $50 dollars now to break contract is worth the expense if you compare it to $75 x 11 months. You may also be able to negotiate the expense if you ask and explain the situation. A word of warning – if you do try to cancel any service expect to have some pushback from the representative. They’ll likely offer an opportunity to postpone the service or other alternatives that are aimed at keeping your name in their books. Stay firm and use direct language when closing an account!

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Focus on making a sustainable change

It’s not as if paid services have no place in your financial plan. Maybe you need a bit of extra help to keep yourself organized or on track. Or maybe the act of paying for something keeps you accountable in using it. If you use a service, then the cost shouldn’t be considered lost. For instance, You Need a Budget is a budgeting service that comes in at a cost but is also rightly touted as an invaluable option for those looking to manage their budget and cut out unnecessary spending. In that case, the cost is worth the long-term benefit. Again, punching numbers can help you to see the financial benefit of a service over the long term.

If you’re paying for something that supports your current whims without taking your future into account, you could be spending more than you need on your New Year’s goals. Ultimately, you want to create a goal that is bent on creating a positive change that lasts. That means following a road at a pace that won’t leave you exhausted (or feeling the financial pinch) in the months to come.

So where do you fall in the New Year’s spending category? Have any tips for those looking to make a change without blowing the bank?

Image credit: gekaskr

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