Everyone loves saving money, cutting back, and reducing expenses. However, sometimes there is a tendency to focus on the wrong things. While you’re busy feeling good about reducing little costs here and there, every once in a while you neglect the larger picture. Here are some examples:
1. Saving money by not going to the doctor for regular check-ups (those $20 copayments can add up!) or taking the bare minimum health insurance plan, but having to pay a large sum in an emergency. (This goes for any necessary insurance, not just health.)
2. Saving money by taking advantage of tens of thousands of dollars in 0% credit card balance transfer offers to gain a few hundred dollars, but being offered a higher mortgage percentage rate because of the temporary decrease in your credit score, costing thousands.
3. Receiving the 15% discount for opening a store credit card, but paying the balance off slowly, adding interest fees (and possibly late fees).
4. Locating the gas station with the lowest gas prices, but driving 20 minutes out of the way to save $0.05 per gallon, or, looking for the lowest gas prices but buying a vehicle with poor gas-mileage.
5. Saving several hundred dollars by not hiring a tax accountant to review complicated situations, but later owing the IRS thousands in fees and penalties.
6. Downloading music illegally to save $15 per CD, but being sued by the RIAA for up to $150,000 per song and settling out of court for an undiscolsed sum.
7. Buying the least expensive clothing and shoes, but having to replace the wardrobe frequently because of poor quality.
8. Parking and “just running in” without feeding the meter a quarter, but returning to find a parking ticket attached to your windshield.
9. Spending hours completing online surveys or writing pay-per-posts for a few bucks each, while your time could be better spent improving skills to land a better job or developing a winning business plan.
10. Haggling for lower prices at a garage sale, but buying a new car to put in your own garage.
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How about driving around the JFK airport terminals while you wait to pick up someone instead of paying the parking fee and then getting your car towed when you have to make a quick pit stop :-)
Good one — sounds like you know about this from personal experience.
Some good points. I like #9 because we lose focus at times how we can improve ourselves and increase our income yet spend time worrying about finding the best 50 cent coupon. Also, #1 about not having health insurance (same goes possibly with life insurance or disability insurance – once you know you need it, it is too late).
How about some bigger items:
1) Not taking your spouse out for an occasional night out only to pay for the divorce lawyers because the romance is dead.
2) Saying you do not have the money to hire a financial adviser (or to read a good book on budgeting) to help you with your money issues until you are out of debt.
3) Spend time on the job tracking the stock market to ensure a comfortable retirement, just to be laid off years before retiring due to slacking off
4) Going to the pub for their $1 drafts, yet buying 50 cent wings and a taxi cab ride home because you can’t drive.
5) Not taking your car in for an proper maintance (including tires), then having a car wreck due to poor tires or brakes.
6) Going to a grocery store to get 10 cent gas rebate, yet spending 10% more in higher prices than shopping at the discount grocery store.
Almost forgot the big mistake ….
Deciding not to go into debt to get a college education, only to end up in a $8 retail job asking if they want fries with that.
“3) Spend time on the job tracking the stock market to ensure a comfortable retirement, just to be laid off years before retiring due to slacking off”
Ouch! It’s like you’re right there looking over my shoulder.
I couldn’t agree more about the new car. I have to keep reminding my wife that the new car smell is NOT worth $10,000.
Spending a dollar a day on a lottery ticket hoping to win big, instead saving that dollar and getting the guaranteed reward.
I’m not so sure I agree on the “health insurance” question, at least if you have a well-funded efund. HSA-based insurance with high deductibles can be vastly cheaper than more traditional insurance, and if you are relatively healthy, you can save big bux and have more tax-sheltered money to save for retirement.
With insurance, there are generally two approaches you can take: cash-flow preservation or wealth preservation. Cash-flow preservation is making sure you have few unexpected out-of-pocket expenses, while wealth preservation is making sure you have no massive unexpected bills. These two goals conflict unless you are willing to spend a lot on insurance.
If you don’t have a lot of savings, cash-flow preservation, ie low health insurance deductibles, “comprehensive” car insurance, etc makes sense. If you have more savings, wealth preservation, ie insurance with higher deductibles but no “open-ended” upside costs, and higher liability insurance with less “damage” insurance makes more sense.
* Not buying fruits and vegetables because they spoil quickly and may go to waste.
* Buying such cheap toilet paper than you end up using more than you would otherwise
* Joining and then not using an expensive gym while paying someone else to mow your lawn, weed your flower beds and prune your trees.
* Getting a fancy rewards credit card for the cash back and then spending more than you would otherwise to earn extra rebates.
P.S. This is a great post. Thanks for sharing these important reminders.
I think I would have gone with “an ounce of prevention is worth of cure” for my cliche. Almost all of these are calculated risks people take.
For instance, my inexpensive clothing doesn’t have to be replaced very often due to poor quality.
I don’t have anything to add but I had to LOL @ #9. I spend time doing online surveys (not hours) and I’m very happy with my career. Thank you very much! :-)
I don’t know if you intended it to be but that was an entertaining post. I like the illegal download one. People are funny.
I love it! You nailed it on all of these!
I have to tattle on my dad for this one: not replacing the 20 year old stove that only has one eye working because it costs too much, but having to buy take out every night because my mom hates to cook on it!
And this one is me: Buying the cheapest vacuum cleaner instead of a good one with a HEPA filter and suffering with the misery and expense of a year-round allergy to dust mites.
These are wonderful reminders — comments as well. All important reminders about focus and priorities! Thanks.
I dont quite agree with #2. especially if you talk about financially responsible people who know how to use these offers to make money AND get the best rates possible when applying for a mortgage. See mymoneyblog.com for an example.
The post wasn’t directed to financially responsible people… I would think that would be obvious from the other examples. :-) And #2 can certainly happen to financially responsible people if timing is off…
Anyway, don’t take it too seriously. People who successfully pull off any of the above would disagree with their particular point based on their own success, despite considerable failure and mistakes by most other people.
Interesting. Your advice is much different than others on your own moneyblog network web pages so I find the divergence very interesting as it is nice to a seperation of opinions as it relates to item number 2. Do have a top ten of most valuable things to do to save money? That would be a great list to review too. Thanks for sharing.
Well, I wasn’t giving advice here, but my philosophy isn’t that much different than others. 0% balance transfers can be helpful, but #2 just says not to forget about the bigger picture as you go off in search of these deals.
Having a garage full of “stuff” you bought, can’t find when you need it (thus don’t use), and no room for your $50,000 car left out in the elements 24/7.
Let me sum it up. “Haste makes waste.” ;-)
How about buying office equipment at ridiculously low prices, only to find out that the salesman’s claims about functionality were greatly inflated….