When Being Cheap Costs Money

Posted on by in Budgeting, Saving Money & Finances

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When Being Cheap Costs MoneyThis post was contributed by the NerdWallet.com team of financial bloggers, and experts in helping users find the best low APR credit cards.

When Being Cheap Costs Money

Everyone loves getting a good deal. But there are some things that may appear to be a bargain at first, only to cost us dearly later on. Companies know that nothing sells like the promise of a discount, and consumers are always looking to get bargains, so they exploit consumers’ instincts by getting them to purchase things that aren’t necessary.
So for many things in life, trying to save money actually ends up costing us more. One example would be buying food in bulk, then having it go bad before you can consume it all. Also, purchasing a new LCD television to earn a few extra bucks on your rewards credit card sounds like a deal, until you end up making huge interest payments.
There are some instances where ignoring the “deal” and spending more can help you to save. Here are some tips on how and when to be a frugal cheap-skate and when to pay up.
  • Pay attention to the little things. Too many people spend too much time looking for big-ticket products like home appliances and TV sets, but don’t know a bargain on everyday items if it hit them on the head. Yes, you could save a hundred bucks on a computer with a few hours of research, but if you’re spending too much on gas and groceries, you could end up giving that money back in a week. An extra $1 on cereal or 10 cents per gallon of gas may seem like chump change, but it adds up quick.
  • Stop stressing over good deals. Stick to purchases of items that you will actually use, no matter how good of a deal you find. How many things have you purchased over the years simply because they were on sale? How many of these items do you actually still use or ever have used? If you’re just going to let the items sit there, it’s just a waste of money.
  • Splurge, but only when it makes sense. When it comes to buying items like clothing, you shouldn’t splurge on things simply because they’re on sale. A lot of discount items are only good for a season or two, making it a much better idea to dish out your cash on a well-made pair of shoes or jacket that can last for years. It will cost you more now, but will save you money in the future.
  • Be good to your health and it will be good to you. Going to the doctor isn’t cheap, even when you have healthcare coverage. But if bite the bullet and cough up the money for your annual physical, you could potentially uncover health concerns before they become more serious (and more expensive). Too many people tend to wait to visit a doctor until the problem is at its worst, which can be more costly.
  • Time really is money. Think about what your time is worth. Some people like to hire cleaners for their home and mechanics for oil changes in order to save time. Gaining more time away from menial tasks frees you up to find ways to make more money.
  • No-interest offers are fool’s gold. Too many people are lured in by no interest financing and 0% introductory APR credit cards to buy things that they may not need. It may sound like free money, but you could end up saving yourself a headache by sticking with a typical no annual fee card. Because if you don’t pay off your full balance before the intro period is over, you’ll get jammed with interest rates of 15-20%. And be honest with yourself – are you going to pay the card off as soon as possible, or use the 0% interest period as an excuse to keep spending?
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15 Responses to “When Being Cheap Costs Money”

  1. Sustainable PF

    22. Feb, 2011

    Being cheap will cost you money when the product is inferior to a more expensive product and you will inevitably end up having to buy more of the cheap items than you would have the more expensive, higher quality product.
    Sustainable PF recently posted..Age Ain’t Nuthin’ But A Credit Card NumberMy Profile

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  2. Sydney at Yakezie

    22. Feb, 2011

    Hi Forest. Nice to meet you. I just started working for Sam at Yakezie.com and am glad to have you participating in the network. I agree that going for cheap things without doing enough research can be costly. I bought a pair of bargain rainboots once but didn’t pay attention to how they were made and the next year I already had to replace them b/c water started seeping in. I would have been better off paying more for a better quality pair in the beginning and saving myself the hassle and money of having to buy a new pair later.

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    • Forest

      22. Feb, 2011

      Hi Sydney, nice to meet you. That is awesome. I have been a little predisposed recently as had to get out of Egypt and am now facing some family related problems here in USA but should be back in full Yakezie swing soon.

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  3. krantcents

    22. Feb, 2011

    I agree being cheap or buying the cheap product can get into trouble. I usually pick the product I like and see if I can find that product cheaper.
    krantcents recently posted..2011 College Class- Bigger PaychecksMy Profile

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  4. Little House

    22. Feb, 2011

    I’m pretty good at sticking to my list of items and not being swayed to purchase things I don’t need just because they are on sale. As for those 0% APR cards, I use them only on large, necessary items like refrigerators and sofas. ;)
    Little House recently posted..H&R Block GiveawayMy Profile

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    • Forest

      26. Feb, 2011

      Hey Little House, that’s great that you can be so disciplined.

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  5. Rory

    23. Feb, 2011

    I think this is a huge one with some businesses… being cheap can really hurt growth. I think personal finance and business finance are similar in many ways… you need to be smart with what you spend money on. Great post!

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  6. karen@firepit reviews

    24. Feb, 2011

    Ditto! I use the high interest cards that for over 1 year you get no interest but I dutifully make sure that I make monthly payments prior to deadline as indeed it can be costly. And as for buying in bulk- can be costly in terms of waste especially if you are single- it makes sense for families though.
    karen@firepit reviews recently posted..Landmann USA Big Sky Fire Ring Review – Super Portable FunMy Profile

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    • Forest

      27. Feb, 2011

      Hey Karen, if you really never slip up then they may be worthwhile. If you slip up once though all your good work goes to waste!

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