Little Expenses Can Add Up

In Pennies Add Up to Millions, Look After the Pennies and the Dollars Will Look After Themselves and How to Blow $10,000 in $30 Chunks, I've talked about how little fees, expenses, costs, spending,  etc. can add up to some pretty significant amounts of money. Well, there's now a book out on the subject. It's called Gotcha Capitalism: How Hidden Fees Rip You Off Every Day-and What You Can Do About It and here's a summary of the book from their website:

Coughing up $4 fees for ATM transactions. Iron-clad cell phone contracts you can’t get out of with a crowbar. Paying big bucks for insurance you don’t need on a rental car or forking over $20 a day for supposedly “free” wireless internet. Every day we use banks, cell phones, and credit cards. Every day we book hotels and airline tickets. And every day we get ripped off.

How? Here are just a few examples of how big business can get you:

• You didn’t fill up the rental car with gas? Gotcha! Gas costs $7 a gallon here.
• Your bank balance fell to $999.99 for one day? Gotcha! That’ll be $12.
• You miss one payment on that 18-month same-as-cash loan? Gotcha! That’ll be $512 extra.
• You’re one day late on that electric bill? Gotcha! All your credit cards now have a 29.99% interest rate.

But not for much longer. In Gotcha Capitalism, MSNBC.com’s “Red Tape Chronicles” columnist Bob Sullivan exposes the ways we’re all cheated by big business, and teaches us how to get our money back–proven strategies that can help you save more than $1,000 a year.

Basically, the book is about how we're being nickeled and dimed out of a good amount ($1,000 in this case) of money every year.

MSNBC lists 10 tips from the book on how to avoid small charges here and there. The list:

1. Eyeball your retirement “expense ratios.” How would you feel if you learned that fees ultimately were eating away nearly 30 percent of your retirement savings? Well, it turns out that fees are having just that effect on many diligent investors out there – so much so that they may have to continue working years longer than they expected.

2. Live your life without regrets. Have you gotten yourself locked into an auto loan, a gym membership or a satellite television contract that you didn’t fully comprehend?

3. Break free from cell-phone hell. Speaking of regrets, thousands of consumers are locked into long-term cell-phone contracts with draconian early-termination fees.

4. Pause before deciding to switch – or not switch – area codes. If you’ve moved to a new part of the country, you may have kept your old cell-phone number with its old area code for the sake of convenience. But guess what? Those taxes on your cell-phone bill are based on your area code regardless of where you live – and the differences in taxes can be somewhat staggering.

5. With mortgages, the interest rate isn’t all that matters. It’s also very important to compare the fees associated with different mortgages.

6. Beware of the so-called “courtesy” of courtesy overdraft protection. Unless you say no to this innocuous-sounding service, you could end up paying as much as $39 for each overdraft from your checking account.

7. Devise a plan of attack for withdrawing cash overseas. If you’ve used ATM machines to withdraw cash while traveling overseas in recent years, you may have been stunned by the sheer volume and enormity of the fees that appeared on your bank statement.

8. Rebates aren’t always worth the hassle. Rebate offers can be enticing, but be careful: Plenty of businesses are counting on you to be forgetful, unmotivated or not detail-oriented enough when it comes to following up on such offers. According to an estimate in “Gotcha Capitalism,” about 40 percent of rebates never get redeemed.

9. Follow this overriding principle: Just ask. It really is OK to ask for deals that aren’t widely promoted or that initially may not seem to apply to you.

10. Know where else you can turn. If you’re feeling run over by fees and you’re not getting any satisfaction after speaking up about the matter constructively with customer service representatives and their supervisors, then you have other options.

Here are my thoughts on this issue:

1. To me, this entire book boils down to one simple statement: know what you're getting yourself into and what it will cost when you make any financial transaction. If you do this, you won't waste any money by accident. Yes, you may choose to incur some fees for one reason or another (like time or convenience), but you're money won't be slipping out of your hands without you knowing about it.

2. I really like the "fees" suggestion regarding retirement accounts. Just another reason I love index funds.

3. I'm sooooooooo thankful that I get my cell phone through work.

4. Some of these ideas aren't mainstream. After all, what percent of people withdraw cash overseas? It has to be less than 10%, right?

5. Have I mentioned lately just how much I hate rebates?

6. The tip on asking for a discount is a GREAT one. Never hurts to ask.

7. One place you can turn if you're not getting satisfaction is the Consumerist. Lots of good stuff there to help people deal with unresponsive companies.

Comments

[dogatemyfinances]

I bet a huge percentage of people who read this blog (or read PF books) take out cash overseas.

That is actually one of the reasons I ditched Bank of America and went with a Wamu/HSBC combo. International fees can be truly mindboggling. Mine were at almost $50 from one trip with Bank of America. It made me really mad, but it was my fault for not investigating (the moral of the book).

[Mrs.W]

Of several rebate forms I've completed TO THE LETTER I've only actually received the rebate on two. Rebates are a total scam, unless they're instant rebates right at the store.

[Benjamin]

It never hurts to ask. For years I paid my bank $5.95 a month for "PC Banking", the ability to write checks and download transactions directly into Microsoft Money or Quicken. I just accepted it as par for course. Then money got a little tight and I called the bank up to wave the fee. Technically they couldn't, but they could credit my account $5.95 each month instead. If only I had done that years ago I would have saved $71.40 a year.

Ben

[Shorty]

Mrs. W: You must be very unlucky. I've probably redeemed 20-25 rebates of various kinds in the last several years, and have never had a problem. These range from contact lenses to various Costco rebates, TurboTax, Best Buy, and a few others.

FMF: I don't recall any recent blog entries here on the subject of rebates....maybe this would be a good material for the near future? (hint hint)

[FMF]

Shorty --

No, I haven't ranted about rebates for quite some time now. Maybe I need to do so again. ;-)