It’s true that sometimes you’ve got to spend money to make money.
But there are plenty of things that people spend money on that give them absolutely no return. Some of these are obvious (lottery tickets and ponzi schemes), but others are subtle parts of our lifestyle. Here are three money black holes that you should avoid at all costs!
Nothing feels better than driving off the lot with a new set of wheels. Until, that is, you realize that your car’s value has already started plummeting.
The most important rule to remember is that cars are practical tools, not long-term investments. Blowing a huge stack of cash might feel cool, but it’s a huge misallocation of money if you don’t have any to spend. Try to find a used model of the same car that’s five years old or more. Chances are you’ll get many of the same features for a fraction of the cost.
It seems like phones are improving every day and in every way. But is your high-end, name brand personal assistant really worth the steep price tag? Phones always decline in value after you buy them—around -16.70% for iPhones and -33.62%.¹ Unless your mobile device is a tool of your trade (i.e., you’re a TikTok influencer), dodge the hype and choose a cheaper or refurbished alternative.
New threads are awesome. You’ll never feel more like a hero than when you first hit the town in a freshly fitted suit or a designer t-shirt.
They’re also insanely expensive. Sure, they might not all cost $1,195 like a Tom Ford long sleeve henley T-Shirt. But regularly buying top-of-the-line clothes can burn huge holes in your wallet.
Fortunately, you have some fun alternatives at your fingertips. Off-price retailers might sometimes carry your favorite brands at a fraction of the cost. And thrift stores can be goldmines of high quality finds if you’re adventurous enough to explore them with a friend!
Remember, it’s okay to spend money on cool gadgets and gear if you’ve saved up for them or you’re already financially independent. But if you’re just setting out on your journey, it’s best to practice some discipline and seek out cheaper alternatives to these potentially dangerous money black holes.
¹ “2020-2021’s Phone Depreciation Report Best Vs. Worst: Devices, Brands & Operating Systems,” Ash Turner, BankMyCell, https://www.bankmycell.com/blog/cell-phone-depreciation-report-2020-2021/