“Burning” Your Cash – An Invite to Financial Hell

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When you hear the phrase “he has money to burn”, what does that really mean to you? It is often said that when someone has money to burn, they have more money than they need or even know what to do with and so they spend it on completely silly and wasteful stuff. If it’s in reference to some multimillionaire you hear about on a gossip TV show you watch, it probably causes a chuckle or at least a scratch of the head in disbelief. Like whenever I hear or read about Jay Leno and his weird obsession of buying hundreds of cars and motorcycles and spending multimillions of dollars on collecting them for years and years.

Are you burning cash? Maybe you don't even realize it, but wasting away your money is just like burning it, and it will land you in financial hell.

People often use the phrase “money to burn” as their way of showing their disapproval of this kind of behavior. It may be that or perhaps a little bit of jealousy? But whichever it is, when it comes to those of us who have never hosted the “Tonight Show”, it’s definitely a type of activity we should avoid at all cost!

Is Burning Cash Actually a Crime?

Even though you may actually have money to burn, turning your cash into ashes is a no-no, according to the U.S. Bureau of Engraving and Printing, which makes all U.S. paper currency.

Specifically, it is a violation of Title 18, Section 333 of the United States Code, which says that “whoever mutilates, cuts, disfigures, perforates, unites or cements together, or does any other thing to any bank bill, draft, note, or other evidence of debt issued by any national banking association, Federal Reserve Bank, or Federal Reserve System, with intent to render such item(s) unfit to be reissued, shall be fined not more than $100 or imprisoned not more than six months, or both.” It’s enforced by the U.S. Secret Service.

To put it more simply, don’t do it unless you want trouble, even if you can actually afford to do it.

Burning Money Without Even Knowing That You Are?

Typically, the average person burns money every day and often doesn’t think twice about it, until—wait for it—the bills come at the end of the month. That’s usually when the first trace of fear, guilt, danger, and thoughts of entering into the “hell” of financial disaster shows its very ugly face. Call it a Lucifer, Beelzebub, Satan, or the old favorite, The Devil, burning your money and not even knowing it has happened before it’s too late is an invitation to financial hell by the “angel of the bottomless pit” himself!

Common Money Burning Habits

So, what are the most common money burning habits we have?

1. Your Credit Cards

One of the most common and tragically one of the easiest ways to “burn” money is by running up high balances on a high-interest credit cards. It’s pretty simple to get carried away with frivolous purchases and it’s the last thing your wallet ever needs. A thoughtless shopping spree with your credit cards is just like putting yourself on a hamster wheel and quickly heading in circles. That’s what happens to you when you are making minimum payments on your monthly balances and barely nibbling away at the big balance you are carrying.

There are times when using a credit card does make sense. I don’t carry wads of “unburned” cash around and sometimes there are some benefits and perks when a credit card is used. But, buying anything and everything we see that we like and want just makes no good common sense.

It’s tempting to spend money on impulse buys when you’re caught up in the passion of “sales galore”. But you wouldn’t want to come home from the supermarket with a 20-pound cheese wheel you bought on a whim, right? Even with basics like groceries, you need to sloooowww down and make a list of what you need at the store and stick to it.

Ok, as bad as making just minimal payments on your credit card bills is, there is something even worse that that: missing bill payments!

If you think that by not opening your mail regularly or keeping track of bill due dates they will go away somehow, do not kid yourself. It’s really easy to fall into the trap of playing catch-up when you do finally realize your bills are overdue.

Most companies will charge you a late fee, and some credit card companies might even cancel your promotional interest rate if you fail to pay on time. If you do this, the late payments will show up on your credit report and lower your credit score. That can have all kinds of long-term detrimental effects on you, like when you buy a home, car insurance, or even apply for a job!

Here it comes again…plan out your needs and do the homework you need to do to get the best deals and the best benefit from you cash and your credit card purchases. If not, say hello to your new friend the Devil himself.

2. Paying Full Price for Anything…Why?

With bargain sites such as Groupon and RetailMeNot, just two examples, it’s a wonder why people ever shop at stores and pay the manufacturer’s suggested retail price on anything. Or Rakuten (formerly Ebates) to get money back on your online purchases. Or Ibotta and SavingStar for groceries. Taking advantage of coupon and deal sites to keep more money in your wallet year-round is not only a good idea, it is a necessity to stop the arson of your dollars.

In addition to coupon sites and couponing in general, there are tons of other ways to avoid paying full price for anything. I have written about knowing the “sales cycles” when you go shopping and it applies to just about everything including groceries!

Besides sale cycles and coupon deals, many retailers and drugstores, including Target and Walgreens, have developed smartphone apps that help you find coupons and discounts on your purchases. Ignoring these adds extra dollars to your bill, so pull out the smartphone as you make the shopping rounds. It’s one of the real benefits of the 21st century, so use it! Even this old guy has figured it out!

Loyalty cards, coupons, discount offers like rebates, and just plain understanding and knowing the sales promotion cycles themselves helps you enormously!

3. Not Timing Your Spending

Think about it, have you ever purchased a winter coat when it wasn’t on sale? Do I need to tell you the best prices on items that are seasonal are at the end of the season? If you must have a coat before the weather becomes too harsh, at least buy during the biggest sale event of the year for them, Columbus Day sales!

The worst time to buy Halloween paraphernalia is the month before, and the worst time to buy winter gear is in the winter. So, why not buy your fall clothes for next year when they’re “so last season” and stores are eager to dump them to make room for high-priced items? Buying items one to three seasons behind their price peak guarantees you’ll get a bargain.

You don’t have to be Sherlock Holmes to figure this kind of thing out and the special deals for everything are predictable if you make some kind of real effort to find out the “secrets”.

4. Missing Out on Matching 401(k) Contributions

Talk about burning cash, a 2017 study from Alight Solutions estimates that 21% of American employees fail to contribute enough to their 401(k) plans to generate their employer-matching contributions. Don’t ever be one of these people.

I write about this all the time but I still run into people who just don’t get it. If someone wants to give you “free money” and all you have to do is sit on it until you retire while it multiplies umpteen percent along the way, why would you ever say no?

There is simply nothing better than “free” money and when it comes to your future self and retirement, you will never regret doing your 401(k) the right way. Take advantage of this free money and keep your future self outside the gates of hell!

5. Spending Too Much on Eating Out

Sure, you don’t know how to make Thai food and don’t feel like cooking dinner. But consider how that attitude drains your wallet and burns cash over time.

Say you eat out for lunch five times a week and spend $15 on each meal. That’s $3,900 a year that you spend. By eating out for lunch just two times a week instead of five, you save $2,340. Look, yes you are entitled to dine out occasionally, but we have to face some facts here. We all do it too often and we don’t have to do it that way. It’s a choice we make and all I am saying here is make better choices!

6. Saving Money by Burning Your Future Health

Ignoring your health by skipping on dental and doctor care will save you some money…now. But if you want to get closer to “burning” and meeting up at the gates of financial hell, try doing it and then later finding out you could have avoided costly medical treatment that could have extended your healthy active life if you had just seen a doctor. It’s one thing to be sick because that happens, but it’s completely another to avoid preventive care just to save a co-pay once in a while. You will more than likely live long enough to regret not doing that and just like “Hotel California” you may wind up checking in and never leaving if you do! Maybe they should have called it “Hotel Hell”?

Final Thoughts

Financial hell doesn’t sound like any fun and if you are not sure, just ask anyone who has lived through it and been lucky enough to return to tell about it.

Whether you’re just young and inexperienced with your cash or even older and just plain lazy or ignorant as to what can and will happen, it’s easy to take action in the budgeting process and avoid burning and blowing up your dough.

Try to understand this: a need is — food, housing, clothing, transportation — and most of the rest is a want. Here’s a hint: A need is not the newest designer handbag or luxury sports car (no matter what Jay Leno says).

Are you burning your money up? Do you think about a financial “hell” that can appear at your door step if you aren’t actively trying to keep it at bay? Everyone is a potential resident of financial hell, especially those who think it can’t even happen to them! Is that you?

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