Is there a wrong way to save money? Maybe not, but there is a wise way to save.
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.)
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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.
Got more?
Updated March 8, 2018 and originally published October 13, 2006.
{ 46 comments… read them below or add one }
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.
Love this!
Hey, *someone* has to get my fries after I spend 20 minutes in the *fast* food line burning gas, rather than taking a 5 minute trip into the grovery store to grab a deli sandwhich for half the price. ;-)
Saying you aren’t going into debt for college is *not* the same thing as *not getting* a college education. There is a thing called work and pay as you go. There’s also such thing as analyzing the cost of a college degree vs. the benefit. If you get spend $50,000+ to get a degree in a niche field that pays $20,000 a year, you would have been better off not getting the degree in the first place (since I make $30,000 a year *without* a degree). Also some women get over $100,000 in student loans to become a doctor, lawyer, etc., only to decide later they want to be a stay-at-home mother.
Really..? How about going into student loans for a college degree only to find out its worthless and you have to work the $8/hour jobs just to make the minimum payment that you can’t legally default on.
“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.
How true! As for the new car smell, they sell it in a bottle for a couple bucks at walmart.
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.
They’re not “calculated risks” , they’re just being foolish, hence the theme of the article.
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….
How about a very general one, thinking small instead of big. Concentrating on pennies instead of dollars. Like in chess, thinking of gaining individual pieces (pennies) instead of concentrating on check mating the king and protecting your own (dollar) at all cost.
Saving meal and expense costs eating out with potential clients… but losing out on their business.
The great thing about idioms is that they are so broad reaching, as shown in the above examples.
However, it goes further than just monetory ideas but also touching many other aspects of life.
This idiom suggest that wisdom is required when considering multiple principles. Saving pennies is important (watch the pennies and the pounds look after themselves) but this principle takes second place to the other priciple of saving pounds.
For example,
Someone who likes to do good in society, looks out for stray cats and cares for them but overlooks the homes where people are in poverty, need and abuse. I.e. Animals having more resourses than humans. Or, a couple in a marriage, anger in one partner that the other isn’t on time instead of managing the event with a peaceful and constructive process. I.e. bieng on time is a secondary issue to living in an environment that uses peaceful and constructive processes to manage any issue.
Some of these are retarded – i have downloaded millions of tracks and movies (more than i can even listen to) and noone bothered me. And if it’s so smart to insure yourself, how come insurance companies profit? In the long run, you should not insure and hope for the best, you have the odds to do it.
Most of these bits of advice just scare people who are not competent in the “scary” topics of money, health, jail, etc…. bollocks
Seriously? insurance companies profit because they charge just enough. And some insurance companies don’t profit, and like any other business that doesn’t profit they get bought, or go away. Call me in 20 years Kieron.
How about underpaying employees then scrambling to handle their work when they leave for better jobs with your competitors?
How about squabbling with the maid when she asks for a raise and when she actually leaves the next one comes at 30% higher cost, not to mention training time and risk (don’t know whether she is actually up to accepting and doing the required jobs well).
How about saving the money and getting a little exercise by cleaning your own house?
Saving $200/year on oil changes and routine car maintenance but paying 10 times that in repair costs down the line, OR saving $40 on a car wash & wax but losing thousands in resale value.
“A poor man can only afford a rich mans’s coat.” Basic principle of buy your last one first. I’ve had many Cheap $10 shirts from discount big box stores last maybe a few months before they would shrink, fade in color, or just start falling apart. On the other hand, I have Poli brand or Eddie Bauer shirts I paid $40 or $50 for 10 years ago that still fit, still hold their color, and have little sign of wear.
I used to work in a camera shop. It was always amusing to me when people would buy a $1000 camera and the. Heap out with $30 plastic tripod only to have the tripod fall over or break, damaging their camera. Another $100 would prevent such disasters.
Oh yeah … How about saving $25 on shipping because that’s just too much for 2nd day delivery, and ending up getting the thing you needed too late so you can’t use it for the thing you needed it for?
Not buying the prezzels on sale because you hope to stop eating munchies while you study, (Great, Saved my self a dollar and change, right?), but getting serious munchies during exam sutdy time and rushing out to pay full price for the bag anyway (I kinda knew that would happen, but I thought my willpower would stop me.) and tripping over the sidewalk and breaking your arm because you are rushing! There went the extra money to be made working over the holidays, allong with the good will, and references. No clearing out the storage or even getting out what is needed without help. And then there are co-pays, for a long time afterward when you consider physical therapy and all. if ounly I bought that bag of prezzels the first time.
Saving money buying an older used car , and then spending twice the cost in parts and the repair costs.
Spending $1,000 on a new computer but paying for the cheapest and slowest shipping possible where it gets kicked around and broken. Now you need to RMA it back, pay double shipping, and be another 2 weeks without it.
When a bum sees me smoking a whole cigarette, and asks me for an extra. If I say ‘no,’ he cusses me out a blue streak. If I break the cigarette in half first, and he asks me for an extra, I offer him the short piece I’m smoking, and he just goes away.
Isn’t it worth the 25 cents to NOT get cussed out? NO!
Buying cheap gas to save 10 cents a gallon, then paying $1500 for a valve job.
Fighting your wife in divorce court for half your assets, when you could just give her the half and stay married.
Spending money on cheap fixes that don’t work, then going with the expensive fix, ON TOP of the cheap fixes.
Cheap clothes shrink, wrinkle, fade in the sun, and BLEED DYE IN THE WASH. $50 T-shirts look new for years.
Stabbing your co-worker in the back so he gets laid off, too.
Graduating from college and still needing ‘two years experience’ to get hired for your first job.
Holding out for better wages, and sitting at home on your ass all day, drinking.
Buying a $700 phone with theft-tracking GPS, instead of a $15 phone and buying another one if you lose it.
Buying a status car that gets ripped-off every week, instead of a hoop-de that nobody pays any attention to.
Which is better? Good health, or good health INSURANCE?
Starving yourself to leave your kids a trust fund that goes right up their lazy noses.
How about quit smoking? THat would save you thousands of dollars, not to mention medical costs.
Not buying permanent life insurance in adequate amounts, but either buying term that gives no long-term benefit (and in the long run is much more expensive) or not buying insurance at all is one of the greatest examples.
United Airlines forcibly removes a passenger to make room for a crew member. All passengers must deplane while hazmat crew removes blood from aircraft left by forcibly removed passenger. Flight is three hours late to destination. Videos of incident go viral globally. In 24 hours, the value of United Airlines free-falls 700 million dollars in market value; it also loses 250 million in operations in one day. United should/could have offered each of the the four passengers 2K to 4K to get bumped off the flight and it would never have made the news. The most offered was $800.
Landlords: putting a Bandaid on a bullet hole.☠