That old saying that you get what you pay for isn’t always true. Sometimes there is such a thing as a free lunch. Here are 11 things you should never pay for.
All of the things on this list can be had for free. Not paying for some of them may require a little work on your part but that’s often the case when we want to save money. So as long as you aren’t too lazy or too busy, there are some things you should never pay for.
1. Your Credit Report And Score
You might see commercials or ads offering a free credit report. They’re all paid services, usually, they are actually credit monitoring services which charge a monthly fee. You can request a free report at annualcreditreport.com. Under the Fair Credit Reporting Act, you are entitled to one copy every twelve months from each of the three credit reporting bureaus, TransUnion, Equifax, and Experian.
Ideally, you would order one from a different company every four months, that way you can monitor your credit more closely. This is especially important if there has been fraud on one your accounts. It’s also helpful to order all three because they won’t all have the same information which increases the chance of mistakes.
Your credit report is not the same thing as your credit score, and the report may not include the score. There are a few places to get your score for free. Some American Express and Discover credit cards include scores on your statements. You can get a pretty good estimate of your score at sites like Credit Karma or Credit Sesame. Using these sites does not count as a hard pull and won’t affect your score at all.
2. Credit Repair
Okay, you ordered your report, and there are mistakes. Or you looked at your score, and it’s in the toilet. Is there anything you can do? There is! You can fork over money to a credit repair company. Don’t do this. This is one of the things you should never pay for as long as you don’t mind spending a little time to do it yourself.
There are plenty of companies out there offering this service that are outright scams who are doing illegal things like offering you file segregation or a CPN. File segregation means applying for an Employer Identification Number in your name and using that instead of your Social Security Number to open new credit accounts. A CPN is a credit profile number and is probably a stolen Social Security Number. Both of these practices are illegal.
Other companies offer to clean up mistakes on your credit report and while that is perfectly legal, provided the mistakes are legitimate mistakes, it’s nothing you can’t do yourself for free. If there is a mistake, gather the documentation confirming that and include it with a letter to the credit reporting agency. Mistakes are required to be investigated within thirty days of receiving a complaint.
3. Debt Consolidation And Debt Settlement
If your credit card debt has gotten out of control, you might consider working with a debt management company. What these companies offer can be valuable, having only one payment a month or negotiating to settle a debt for less than you owe. But much like their cousins, the credit repair companies, these companies don’t offer anything you can’t do for yourself.
Debt consolidation will take your various credit cards and combine all the payments into one, sometimes at an interest rate that has been negotiated down. You can call up your credit card companies at any time and ask them to lower your rates. You can consolidate by rolling balances over to a 0% APR card (but you must pay the full balance before the 0% rate offer expires), you can take out a home equity loan, or a personal loan through a bank or peer-to-peer lender like Prosper and use the money to pay off your cards.
Debt settlement is making an agreement with creditors to settle for less than the total amount owed. This will not be done through monthly payments but by paying a one-time lump sum. So if you use a service, you will send them money each month. But they won’t send it to your creditors until you have sent a certain amount of money. But that entire time, you may be paying them a monthly service fee.
There is no law that says you can’t call up your creditors yourself and negotiate a settlement on your own behalf. You can save up a chunk of money while not having to fork over a monthly fee. Don’t call and ask about a debt settlement until you have money to negotiate with, though. If your creditor makes an offer, you have to be ready to accept it and make the payment.
4. Apartment Broker
Trying to find a new apartment is high on life’s list of things that suck. So you might be tempted just to let someone else do it for you. And depending on where you live and how much time and money you have, this might be a great idea.
If you live in a city that has expensive housing and where the renter pays the broker, this is a terrible idea. In New York City, the renter pays the broker fee. Not the case in New Orleans, one of the many reasons I’m moving there.
A broker gets 10-15% of a year’s rent, up front. In a high-rent city, that is a big chunk of change. There are plenty of no fee apartments. The only reason to pay a broker is if you have no time to look for a place on your own and need a broker to do the legwork for you. But it’s going to be an expensive time saver.
5. Bank Fees
We are anti-fee at LMM whether it’s apartment broker fees, investment fees, or bank fees. Especially bank fees, they may not be the most expensive but they are the most galling.
Galling because while your money is sitting in their bank collecting the princely sum of less than 1% interest, some banks will charge you ATM fees, monthly maintenance fees, overdraft fees and probably some fees Jamie Dimon is making up at this very moment to cover his 35% raise. Jackal.
You can avoid ATM fees by only taking out cash at your own bank’s ATM. Not always convenient, though. Some on-line banks like Ally don’t charge ATM fees for any machine nationwide, and if another bank charges you, Ally will reimburse the charge. Some banks will reimburse the charges depending on the type of account you have. If you use out of network machines a lot, check with your bank to find out if they offer such an account.
Maintenance fees can be avoided by keeping a minimum balance, usually about $1500. But if you’re a student, you might not have that much money. Some banks, including Chase and Bank of America, waive fees for students. If you have your paycheck direct deposited, most banks will waive this fee.
Prior to 2010, many banks would provide automatic overdraft protection when you opened a checking account. This sounds great! Your card won’t be declined when you charge that $5 coffee. Until you realize that allowing that $5 transaction to go through when you didn’t have $5 in your account might be as much as $35! I would rather be embarrassed in Starbucks, thanks.
You can avoid this by opting out of overdraft protection and by setting up a Mint account and creating an alert if your checking balance dips below a certain amount.
6. Extended Warranties
When you buy a big ticket item, an appliance or a computer, paying for an extended warranty might seem like a good financial decision. What if your brand new i-Phone craps out the 366th day you own it? Disaster!
But you don’t have to fork out for that extended warranty to have some extra protection. Nearly all credit cards offer an extra year of warranty when you charge a purchase. You have to file a claim and provide documentation like an original receipt and a copy of the original warranty, but credit card companies generally have better customer service than the store you bought something from. Depending on what happened to make the item stop working, your renter’s or home owner’s insurance may pay to replace it too.
I’ve had Amazon Prime for ten years, so I just order everything that way and never pay for shipping. But not everything can be had via Amazon but there is still no reason to pay for shipping.
Most on-line retailers will offer free shipping if you spend over a certain amount. This isn’t a reason to buy more of the Carine Roitfeld Collection from Uniqlo (I just did that) but if you’re buying things that you often use and don’t have a short shelf life, stock up. Fresh Direct has a $35 minimum for free delivery, so you don’t have to buy extra lobster tails to reach that but you could buy extra paper towels.
If you want to buy something from a brick and mortar store that is out of stock, they may order it for you and waive the shipping fee. If they won’t waive the fee, you may be able to order on-line and have the order sent to the store for pick up without charge.
Some coupon sites like Retail Me Not have free shipping codes, so it’s worth checking before you place your order.
8. Baby Clothes
Baby clothes are so cute! Cuter than the actual babies in some cases so I can see the appeal of buying them, lots of them. But babies grow fast, so those cute little outfits don’t get much use. Rather than spending a fortune on baby couture, get most of their little outfits for free and put the extra money into baby’s college fund instead.
Throw a baby shower (please don’t invite me) and get free baby clothes that way. Ask friends, family, and co-workers for baby sized hand me downs. Go to the thrift store to outfit your baby. Thrift stores have tons of baby clothes because the clothes are outgrown so quickly.
9. Moving Supplies
As we’ve established, moving sucks and it can be expensive. But you don’t have to pay for all your moving supplies. Two of the things you’ll need are boxes and cushioning materials to make sure your Star Wars drinking glasses don’t get broken. You can get both for free.
You can get free boxes lots of ways. I asked my super to save all the boxes that other people in my building throw away. Some people are clearly not as savvy as I am so I got actual moving boxes. Which are in no way different than the Fresh Direct boxes I know Andrew and Laura walked around Hoboken collecting on recycling day for their recent move.
You can also go to pretty much any retail store and ask for boxes. Liquor store boxes are especially good because they’re sturdy.
Rather than paying for expensive bubble wrap, you can use your casual clothes like t-shirts, bathroom and bedroom linens to pad your stuff. It’s cheaper, it’s better for the environment, it’s a few less boxes to move, and it’s less stuff to get rid of once you’ve unpacked. If you don’t have enough linens for that, look for newspapers on recycling day when you’re hunting for boxes.
10. Lottery Tickets
Busted, I don’t actually know a place to get lottery tickets for free unless you have a gun and a poor moral compass. The point of this is that you have about the same chance of winning the lottery whether you buy a ticket or not.
Had you bought a ticket for the big $1.5 billion lottery jackpot a few weeks ago, your odds of winning would have been 1 in 292 million. To put that into prospective for the optimists out there, you would be more likely to have an IQ over 190 (1 in 170 million), be killed by a meteor (1 in 700,000) or being struck by lightening WHILE drowning (1 in 183 million). Still like those odds? Knock yourself out, I have nothing further to convince you.
Well, depending on how you define it I guess. I don’t judge. Whether or not gifts and things equal love to some people is not so black and white as the old gold digger argument would suggest, though.
For a person who grew up without a lot of material things, gifts can seem like love because getting material things was not a common occurrence and when it happened, it was special and likely meant a sacrifice on the giver’s part. To these people, things can also equal security which is an important component of feeling loved.
For someone who grew up with lots of gifts but not a lot of love, extravagant gifts don’t feel like love. They might feel like a substitute for love. These people are unlikely to be impressed by fancy vacations and dinners at Per Se.
But one thing both types have in common is that time is a better indicator of love. It’s green where you water it as the saying goes. You can make either of these types feel loved for free if you’re willing to spend time rather than dollars.
Money Can’t Buy Everything It’s True
Money makes life easier, but it doesn’t always make it better. That’s what we teach at LMM; spend money on the things that matter but save money where you can so you have more to spend on the important stuff.