10 Examples of How You Can Be Penny Wise, Pound Foolish
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:
Banking Deal: Earn 1.85% APY on an FDIC-insured money market account at CIT Bank.
- 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.)
- 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.
- Receiving the 15% discount for opening a store credit card, but paying the balance off slowly, adding interest fees (and possibly late fees).
- 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.
- Saving several hundred dollars by not hiring a tax accountant to review complicated situations, but later owing the IRS thousands in fees and penalties.
- 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 undisclosed sum.
- Buying the least expensive clothing and shoes, but having to replace the wardrobe frequently because of poor quality.
- Parking and “just running in” without feeding the meter a quarter, but returning to find a parking ticket attached to your windshield.
- 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.
- Haggling for lower prices at a garage sale, but buying a new car to put in your own garage.