It’s pothole season and good friend and regular reader, “Bowmanifesto”, commented about the “financial potholes” that prevent people from reaching FIRE (financial independence & retiring early).

Just like the potholes in the road, there are hundreds of financial hazards that we all need to dodge each year. Just like the holes in the road, financial potholes aren’t catastrophic, they are just annoying costs that add up and delay our journey to early retirement.

I found a few interesting forum posts on managing the annoying everyday costs that can add up over time. Here are some of the most commonly mentioned ones that when combined, can truly delay your retirement:

“Luxury” Car Loans – It’s one thing to take out a loan for basic transportation, it’s another to borrow money to buy a luxury or sports car. Cars lose money very quickly – even more for “luxury” cars. We are fortunate to have several nice cars now, but when we couldn’t afford it, just stuck to the basics: Hondas & Toyotas.

Credit Card Lifestyle – Similarly, while credit cards are terrific conveniences, if you are carrying a balance and paying interest, you are greatly delaying your retirement. We had way too much credit card debt when we first got married. We were very aggressive in getting balances paid out in a few years, even when we weren’t making much money.

“Investing” in Insurance – I’m a big proponent of being well-insured for the big financial calamities that can come your way, but insurance isn’t an investment. Whole life insurance – in particular – is typically a very bad investment. I had a couple friends who started their career selling insurance and they often get their start convincing other young friends to start investing in whole life.

Spend Entertainment – I can’t believe how much entertainment costs relative to what it did 30 years ago. Concerts, games, and shows are amazing productions to see, but the cost of tickets seems to have far outgrown the cost of inflation. If you can’t easily cashflow an event, just stay home and watch a movie on Netflix.

Travel Troubles – I recently saw that Southwest Airlines will let you buy flight tickets on an installment plan. Their “Book Now, Pay Later” service allows travelers to spread the cost of your purchase over fixed monthly payments.” I can’t think of a worse idea. I guess there could be a argument for people that need to travel unexpectedly, but the great majority of personal travel is discretionary.

Super Subscribing – From streaming services to monthly subscription boxes, it’s easy to sign up for things you don’t need or use regularly. Many subscriptions crank up their pricing the longer you are with them – you might not even notice. I recently was shocked to see that Ancestry – the online genealogy service – charged me $169 for just the first 6 months of 2023. It used to be $69 for a full year. When I saw the charge come through, I immediately cancelled.

Eating Out Too Often – I love to go out to eat, but I can also afford it. Early in my career, I was a brown-bag guy who often brought peanut butter sandwiches to work. Whether it’s grabbing coffee on the way to work, or going out to dinner with friends, eating out can quickly become a costly habit.

Gym Memberships – In Minnesota, the big gyms are starting to position themselves as “luxury country clubs” with enormous facilities designed for working out – and working professionally with office spaces. These giant gyms also come with giant price tags. The initiation fees and long-term commitments maximize the tendency for people to sign up with the best intentions, but quickly stop using them.

Fashion Financials – Keeping up with the latest fashion trends is an expensive hobby. I’m not sure who is really buying the high-priced fashion brands that you see in magazines, but it certainly isn’t me. For nice clothes, I’m good with the sales at Macy’s or Nordstrom’s.

Storage Fees – I have a friend who owns a storage garage facility and I’m amazed at how big it is. His garage is in a small town, yet hundreds of people have hundreds of garages full of stuff. When they don’t pay, he notes that most of the abandoned stuff is just junk. He rarely finds anything of value inside – most of leave-behinds just go to the junkyard.

What other financial potholes would you add to this list?

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