If you could easily save $200 per year, with very little effort, what would you spend it on? “$200 per year?” “Little Effort?” I know, I know… The only place you’d usually see those two words in the same sentence is on a late-night infomercial. But seriously, what if you could have an extra $200 in savings for retirement, by spending just a few minutes a month looking at your bank statements, and then a few more minutes on the phone? It would totally be worth it, right? Well, if you want to know what the magical formula is, I’m referring to eliminating “black hole” charges (or “FGA Charges”) that hit your account directly, without any benefit to you!
Let’s look at it this way: FGA Charges are “Forgotten, Guilty or Automatic” charges that are withdrawn right from your account without requiring your authorization each time!
They usually hit your wallet because of three main reasons! And these are reasons, by the way, not excuses!
1. You forgot you signed on for the membership/service
2. You pay them because you feel guilty
3. They are automatic renewal charges
Let’s discuss the “Forgotten” ones… For example, you were applying for a store credit card, decided to get the free copy of your credit report and so you checked that box that asked you if you wanted to sign up for a credit score membership. Of course, you intended to cancel the membership as soon as you got your free credit report, but life got in the way and you just forgot about it, so voila, $30 was magically withdrawn from your account. Or maybe you were on a Napa weekend getaway, and signed up for a wine club to receive monthly bottles of wine. And of course, you intended to cancel that too, after trying some wine, but then forgot about it, and found yourself with a brand new, non refundable, wine membership for a year!
The “Guilty” charges are even worse! For example, you know you need to go to the gym to be healthy, and so you sign up for a gym membership. After the first few weeks of intense exercise, you kind of skip a day, and then two days, and then a few weeks… Then you realize that it’s been two months since you went for a workout… But yet you still pay your membership. You just refuse to cancel because you feel guilty since cancelling will mean that you admitted defeat and that you accept the fact that you won’t go to the gym! And so you keep being charged every month without any benefit to you at all, but you don’t want to feel guilty so you keep the membership around.
Now, let’s discuss automatic renewals that have a tendency to stick around for years! You sign on for a new membership somewhere, like Netflix, Amazon, Fruits to your door, a new line of hair care products all because there’s a free trial, and all you have to do is unsubscribe. But you never do… Why? Not because you forgot, and not because you feel guilty, but because the monthly charge just isn’t big enough to notice. So you don’t feel so bad, and you might even use the service once in a blue moon – just to say you’re not wasting money. But at the end of the day, you don’t really get much of a benefit from it. However, you never cancel because you just don’t want to take the time to find all the account information and unsubscribe. So you figure you’ll do it next week, or the week after that – all the while these charges just keep compiling and hitting your bank account, and after months and months, they really add up!
All these charges are adding up to billions of dollars every year in wasted money! Americans are basically throwing away $14 billion a year on stuff they don’t actually want, and probably completely forgot they’re paying for. Just think, consumers just like you and I can forgive a few dollars here, maybe $10 there, or maybe even $15 once in a while and many people don’t take the time to review account statements carefully or dispute unwanted charges, because it doesn’t seem like a large enough amount of money to stop and deal with! It’s your decision to let someone take your money without getting anything that’s useful to YOU in return. Instead of that money going toward something you want, or toward your retirement savings, it just goes in the trash.
There’s a reason I tell my clients to keep track of all their bills in the Money Diary, or at least in a notebook or excel sheet. I mean every single charge that hits your account, because that way you’re actually going through every single charge and making sure you’re not spending on things you’ve completely forgotten about! We cannot change our habits unless we know what it is that we are doing wrong! Human nature is such that unless there’s pain, we won’t make changes for the better. And seeing a poor $10 bill being ripped from your account statement regularly can be painful. But it only works if you sit down and review your statements carefully!