Hidden Costs

"It is an unfortunate human failing that a full pocketbook often groans more loudly than an empty stomach".
~President Franklin Delano Roosevelt

10 Hidden Costs That Hurt Your Wallet from WiseBread.com

1. Over-Insuring Yourself
If you and your spouse both work, are you double covered for medical and life insurance? Are you buying personal life insurance and are also covered by insurance through your employer?

2. Hanging Around People Who Are Materialistic
It's hard to save money if you hang out with friends who are big spenders or eager shoppers. My wife shops with a friend who is always saying, "You have to try this," and so there is frequently an unplanned item or two purchased.

3. Buying in Bulk
First check the price - bigger doess not always give a cheaper unit cost. Second ask yourself if you can use or consume the bigger quantity before it goes bad. Warehouses sell giant cans of tuna which have a great price but is way too much food for my wife and I. We'd be wasting money if we toss out the uneaten tuna after a few days.

4. Eating Everything on Your Plate
Restaurants prices may be high but you get value with huge portions, right? Wrong. Few of us can resist eating more than we should which impacts our heath (and future medical bills.) And I'm amazed at how few people take leftovers homes. There's a lot of wasted food left behind.

5. Getting the Plan That Covers The Worst Case Scenario
Did you buy a cellphone plan with a huge number of minutes that you never use so you'll never go over the limit? You'ld be better off with a cheaper plan and pay the extra fee for the rare times that you go over limit.

6. Being Unreasonably Loyal
Don't let brand warranty trick you into paying too much. It could be cost-effective using newer, better, and cheaper alternatives.

7. Thinking that Limited Spending Will Help Stop the Urge to Spend More
Shopping can be addictive - it's hard to stop with just the one item you actually need versus the many items that you want. Distiguish your needs from your wants. 

8. Trying to Maximize Your Opportunities
Have you even seen a good deal but held back waiting for it to get even better? And then missing any deal at all when prices suddenly change?
"Sometimes it's better to take advantage as soon as a deal is worth the effort. ... it's not a question of whether you got the best deal, but how often you can find deals that benefit you."

9. Being Cheap

"There is a fine line between being cheap and living frugally. It's one thing to take advantage of corporations by using coupons for example, but it's completely different if you take advantage of your friends."

Cheap also has a hidden cost; cheap goods are lower quality and break sooner. You may pay more in the end by replacing cheap items multiple times.
.
10. Valuing Your Time Too Much
What is your time worth? Are you using your time effectively? Is it worth hiring a house painter so you have more time to watch TV?

Bottom Line

Living frugally is not simple. Many of the ideas above look good on the surface but have hidden costs or hidden wastage built end. You have to look at the big picture and your personal behaviors and lifestyle.

Common Sense applied to saving cents

“Waste neither time nor money, but make the best use of both. Without industry and frugality, nothing will do, and with them everything.” - Benjamin Franklin

I saw two articles today that described situations where a person loses money while trying to be thrifty and save.

In the blog post, Jeep Incapable Of Selling To Man With $24,000 In Cash, a car salesman tries to convince a buyer with loads of cash to finance the car instead to get $1,500 back. Trouble is the loan will cost $31,732, an extra $7,132 over the cash price. Would you spend $7,132 to save $1,500? No Deal!

In another blog post, Shopping For Low Gas Prices Is A Losing Proposition, the author, Len Penzo, points out that driving to the next town to buy cheaper gas will actually cost you money. Here are the numbers. You drive 5 miles out of town to save 4 cents per gallon. You buy 12 gallons of gas, so you save .04 * 12 = 48 cents.
BUT you drove a total of 10 wasted miles to get the gas. At $4 a gallon and a car with 20 mpg this means 10/20 * 4 = $2.00 for the cost of the trip.
So if this case study describes you, you just spent $2 to save 48 cents.

Even at $2.00 a gallon, the cost of the trip is $1; still more than you save. My recommendation: buy cheap but only along routes you normally travel. Don't make a special side trip just for gas.

Bottom Line

You have to use common sense and consider the total cost when trying to save money. You might get a great deal on something at 75%-off but the money is wasted if you don’t use what you bought.