A porch pirate is someone that steals your UPS and FedEx packages before you get home, especially in the Christmas shopping season. Yes, Virginia, there are financial porch pirates that steal from you all year long. So, what does the porch pirate steal from you when you're not looking?
How To Prevent Real-Life Porch Pirates
To stop real-life porch pirates, you have several options:
- Never have a packaged delivered to your house
- Always meet the delivery man on delivery days
- Install a home security system with exterior cameras and (hopefully) the thief will be scared away
- Have a ferocious guard dog that only bites porch pirates
While all four of these options are possible, are they realistic?
Some yes and others no.
Unfortunately, thieves have been around since the beginning of time and they do more than steal Christmas goodies off your porch.
Despite the title of this video, real-life porch pirates aren't funny.
What's Your Financial Porch Pirate?
Porch pirates can steal your wealth in other ways too, online and in-person.
Remember, “theft” can take many shapes and forms.
Here are a few examples of financial porch pirates:
- Bank and Credit Card Fees
- Unused Subscriptions
- Frivolous Spending
- Consumer Debt
- Being Upsold Useless Services from Crafty Marketers
Financial porch pirates take many different appearances. Simply put, anytime we make a poor money decision, you could say it's a porch pirate. We don't realize until afterward when there isn't as much money in our account as there should be and that we made a poor financial decision.
Maybe that's too broad of a definition, I'm open to comments about what exactly is a porch pirate.
How To Stop Financial Porch Pirates
How do you stop a financial porch pirate attack?
Why follow these simple steps of course.
Know How You Spend Your Money
Once a week, my wife and I look at our bank account and credit card activity. It takes ten minutes at the most. On the weeks we feel lazy, we just wait for the weekly spending summary from Personal Capital.
At the end of each month, we print out our credit card statement and write a brief one or two description next to each purchase so we remember what it's about. On the piece of paper, I write our net monthly income (minus mortgage payment and savings) and subtract our monthly expenses from it to make sure we don't spend more than we made.
Bonus Tip: Take the lazy man's way of cutting your expenses, Trim Financial Manager is a free service that will list every subscription service you pay for, cancel them for free (even your gym membership), and even renegotiate your cable tv subscription to get the best deal.
Automate Your Bill Payments
We have automated our utility bills, cellphone bill, mortgage payment, insurance payments, charity contributions. These either come directly out of our checking accounts or get billed to the credit card. All we have to do is schedule which day of the month we have our credit card bill payment withdrawn from our checking account.
I could automate this as well, but I like paying the credit card bill as soon as possible. Our bank sends us a reminder 10 days before the due date if we haven't paid it yet. We have yet to miss a credit card payment.
Save For Large Purchases
Another easy way to give money away without realizing it is borrowing money for large purchases.
If you need to borrow money for a large purchase you might face one of the following pirates:
- Interest Charges
- Buying More Than You Can Afford
Before you borrow money, ask yourself these questions:
- Do I really need it?
- Can I buy a cheaper item for less that'll do the job?
- Can I wait until another year and buy it with cash?
Avoid Monthly Payments
I'm not a big fan of monthly payments because you almost always end up spending more than if you saved up for the lump sum. Sometimes, monthly payments are the only affordable financing option (like buying a house), but if you've ever bought a car from a dealership, one of the first phrases the salesman will say besides how good you look in that car is the estimated monthly payment.
Always compare the lump sum price (paying all at once) to the monthly payment.
Anytime you have to pay interest on the monthly payment, you'll save money by going with the lump sum.
If it's an interest-free loan, it will cost the same either way. But, the salesman still makes their money because they know you are more likely to buy a more expensive sofa, car, or exercise machine if you know you don't have to pay interest. Most of us go on onto the sales floor knowing we are going to spend $XX and we don't think, “Ok, if they offer zero-interest I only have to spend $X instead.”
Avoid Credit Cards
Don't use a credit card for purchases.
But, don't you use credit cards, Josh?
Yes, I do and I'm fully aware that studies show we spend 12-15% more with a credit card. Credit cards are my porch pirate because I spend more than I do when I solely use cash.
Here's how I control my credit card spending:
- Use cash for all purchases smaller than $20
- Pay the bill in full each month
- Don't make purchases thinking, “I'll get $5 back because I spent $250 so I can actually spend $255.”
- Credit card rewards are a bonus, not a coupon to subsidize unnecessary spending
We own two credit cards that give us cash back and travel rewards. If you pay your balance each month, the points can be awesome as it's more rewarding than just paying with cash. But, make sure you don't spend more than you would with cash.
You always need to be on the lookout for the literal porch pirates and the financial porch pirates. They aren't fun like the Pirates of the Caribbean ride at Disney. Remain vigilant! Just say no to financial porch pirates.
Your turn! What's the financial porch pirate in your life?
Josh founded Money Buffalo in 2015 to help people get out of debt and make smart financial decisions. He is currently a full-time personal finance writer with work featured in Forbes Advisor, Fox Business, and Credible.