Penny Pinching Pitfalls
You’re looking at a total penny pinching pro. I’m the master of cheap!
If you have time for a long conversation, I can probably convince you that I’m frugal, rather than cheap. But for the sake of brevity, I usually just admit to being cheap.
How ironic that I’m writing about the perils of penny pinching!
It doesn’t always pay to spend less, though, as counter-intuitive as that may sound. Being cheap may cut your upfront costs, but cost you money in the long run. And that is the absolute opposite of frugality.
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Here are a few instances where penny pinching can totally backfire:
1. 50% off is not always a great deal
I love hitting up the clearance racks at department stores. It feels awesome to score a great deal!
That’s why bargain hunting is addictive. Unfortunately, if you don’t use the items you purchase, you’ve just wasted the money you spent.
A friend of mine got really into couponing, and was so proud to show me a huge stockpile of stuff she’d gotten for really great prices. She then freely admitted that should wouldn’t use half of what she’d purchased, but planned to donate her unused items to charity.
While donating to charity is wonderful, I wonder if she ever added up how much she spent (both in time and money) on all the items she knew she’d never use. I have to admit, though, that I’ve made the same mistake.
Several years ago Groupon had a 50% off sale on their already discounted deals. I was so excited about it that I bought a bunch of them. I’m usually really organized and keep track of expiration dates and terms, so I totally thought I’d use them all.
I didn’t. What lame penny pinching! I was so sad to have to throw away those expired Groupons for pizza and the arcade and ice skating and the aquarium. Instead of saving over 50% on all of those admissions, I wasted that money. Now, I only purchase one Groupon at a time, and I actually plan a date to use it and I add it to my calendar.
2. Trading valuable time for meager savings
In your ongoing quest to pinch pennies, you consistently make your own bread, cook from scratch, hang your laundry outside to dry, make your own laundry detergent, clip coupons, sew and mend and build and fix. It’s like a full time job!
But does it pay you like a full-time job would?
That doesn’t mean you shouldn’t do these things if you enjoy them or if there are additional benefits, like better nutrition. But if you’re doing them just to save money, there are better ways you could use your time.
As a master of frugality, I know all about this. We married while still in college and started our family right away. We had two kids in two years and lived as a family of four on under $10k a year, while paying tuition!
If I’d gotten a job, I would have made less than childcare cost, plus I wanted to be the one to raise my children, so I raised penny-pinching to an art form. I did all of the above and more, and it paid off. I was able to be a SAHM in an almost impossible situation.
But now that there’s a little wiggle room in our budget, I have the luxury of determining which penny pinching habits actually pay off. I still cook from scratch for the health benefits as well as the savings.
But I don’t sew much clothing. When I can find a beautiful dress for my daughter’s concert on Amazon for $25, and fabric and notions would cost me $23, plus my time, I’m all about buying that dress!
The choice is yours, but I suggest you conduct a cost-benefit analysis to determine whether the hours spent on all of your penny pinching habits are worth the savings. Figure out how much the work you put in saves in dollars and divide that by the number of hours you spend. Then compare that amount to what you could earn elsewhere.
Be sure to take into consideration the side benefits of each of the activities (food made from scratch is more nutritious, but does homemade laundry detergent actually clean better?) and whether or not you enjoy them.
3. Skimping on insurance
I understand wanting to keep premiums as low as possible, but if something catastrophic happens, not having enough insurance can absolutely bury you in debt. If you decide to carry the bare minimum level of auto insurance your state allows, and you get in an accident, you could end up paying out-of-pocket for your new vehicle and the other driver’s new vehicle, plus all of the associated medical costs, which could be astronomical.
Can you afford that? Is it worth saving a few bucks?
Cheaper health insurance plans come with a high deductible, too, so you end up paying for doctor visits and prescriptions out of pocket. You may actually end up spending more on a cheaper health insurance plan than you would have spent purchasing the pricier plan in the first place.
If you decide to increase your deductibles, make sure you have enough money in your emergency fund to cover the costs before insurance kicks in.
Our main floor powder room had toilet issues about two years ago. Every once in a while the flapper wouldn’t close all the way and the toilet water would run and run until you opened the tank and manually adjusted the flapper.
When we purchased this 20-year-old home, we learned that it had multiple issues (I’m talking MULTIPLE in all caps!) and we were getting to them one by one. The powder room toilet was something like #96 on the list.
So we hadn’t yet gotten around to it yet when one night, right before bedtime one of the kids flushed something they shouldn’t have at the same time the flapper stuck open. We woke up the next morning to a flood of toilet water all through the main floor.
Toilet water! Complete with bits of soggy toilet paper and other floaties!
Luckily, we have fantastic homeowner’s insurance, and they took care of the whole thing, from cleanup to restoration! But, gah! We immediately replaced all of the upstairs toilets that also seemed to have sticky flappers.
Whether we’re talking about health insurance, auto insurance, homeowners insurance, or any other kind of insurance, make sure that you’re not trying to save a couple of bucks now just to get stuck with hundreds of thousands of dollars in bills later.
4. Buying cheap products
When we were young, newlywed college students living on under $10k a year, we had no choice but to purchase cheap furniture. Our biggest splurge was the cheap $100 mattress we bought at a discount mattress store.
We sat on plastic lawn chairs and ate at a glass patio table for years. Our bookcase was literally made of glued-up sawdust with a cardboard back. We made do and it worked.
But when we moved into our first house, we had nothing, because three years of daily use completely did that mattress in, the plastic lawn chairs had long since cracked into pieces, and let’s not even talk about that bookcase. So we had to start over.
That’s what buying cheap will get you! Cheap products are not only not durable, but they also look terrible while they’re falling apart. In the long run, you save money by spending more to purchase better quality.
5. Spending dollars to save pennies
Just yesterday I had this conversation with my children. On the way to an orchestra rehearsal, I stopped to buy gas and paid slightly more than I would have at a gas station a couple of miles away. My kids demanded an explanation. (I’ve converted them to my frugal ways!)
So we had a long conversation, complete with phone calculators, about how it would have cost more money and time to drive to the other gas station than we would have saved. It would not have been a good deal in the long run.
This is just one example of how going out of your way for a deal can cost you money. It’s the antithesis of penny pinching, even though it might not look that way at first.
Maybe kids eat free at a restaurant in the city, but a closer restaurant has free parking and will cost you less in gas. Maybe IKEA has great prices in their food court, but you can never seem to get out of there without spending $ on stuff you don’t need.
When you’re looking for a bargain, calculate the total cost. Along with the item’s price, include the shipping cost if you’re buying online or the cost of gas and parking if you have to drive.
6. Neglecting routine maintenance
An ounce of prevention is worth a pound of cure. Likewise, a few pennies in maintenance can save you lots of dollars in repairs.
Remember the toilet flood I talked about earlier? How I wish we had just replaced that toilet flapper when we first realized it was sticking open.
At ~$50 per oil change, three times a year, you’ll spend about $150 each year on engine maintenance. Or you can skip oil changes and replace your engine every few years to the tune of about $5k.
The same goes for biannual dental checkups, yearly physicals, replacing window and door seals, and fixing clogged or leaking pipes. Taking care of yourself and your possessions is one penny pinching activity you can’t live without!
7. Thinking DIY will always save you money
Hey, I’m always up for some DIY! Not only do I love saving money by doing things myself, I love actually enjoy doing them! But I’ll be the first to admit that penny pinching DIY’s won’t always save you money.
Since we’ve completely remodeled our last three homes, we have all the tools. From the table saw to the tile saw, tools are a huge expense that you have to pay upfront. We definitely get our money’s worth out of our tools in the long run, but you might not unless you DIY frequently. You could just rent tools, but then you’d have to factor those rentals into the cost of your project.
Another way DIYing can cost you a ton is when you do something wrong. I wanted to remove a good portion of a load bearing wall in my basement, and I knew I needed to redistribute the load, but I wasn’t sure exactly what size header I should use, nor how many trimmer and king studs I needed to sandwich to carry the header.
Luckily, my dad knew. And he also helped me to lift that beefy new header into place once we had pulled back the drywall, moved the electrical and hvac, and temporarily supported the load. Imagine if I had tried something like that without any previous construction experience, knowledge or skills? The entire house could have fall in and repairs would have been very expensive.
DIY can also be dangerous at times. A few years ago our neighbor fell off his roof while he was working on something up there. He was in the hospital for a couple of weeks and surely had a gigantic bill to pay. In the long run, it would have been much cheaper for him to hire the work out.
8. Buying in bulk at membership warehouses
99 granola bars for $13? Yes, please. Five pounds of Red Vines for $10? Sign me up!
While there are amazing deals at Costco, it’s easy to buy things you wouldn’t normally, and spend more than you realize. According to the Journal of Marketing Research, households that shop at club warehouses spend on average $11 more per month on packaged food than those that don’t.
We only had a Costco membership for 1 year, because I realized that I was spending more when I shopped there. All of those packaged goods were so tempting, and I had previously never purchased them. The only thing I’ve missed is the discounted gas.
Even when I shopped at Costco, I rarely bought produce there. We eat a lot as a family of ten, but even I knew we’d never manage the ten pound tub of strawberries before it went bad. I knew I’d be throwing out fuzzy strawberries all week.
Americans waste about a pound of food per day, with perishable items like dairy, breads, meats, fruits, and vegetables leading the way.
But you can’t waste what you don’t buy in the first place!
If you could see my basement food storage room, you’d laugh about me warning people about buying in bulk. I buy all of our legumes and grains in 50 lb bags, which we disperse into 6 gallon plastic buckets for longer storage.
We save a lot of money by purchasing those items in bulk, and I love that we have food stored away against an emergency. It also helps me to shop less often, which saves me money.
Grains and legumes have a long shelf life, though, so they make total sense to store that way. So do canned goods and nonperishable items like trash sacks, toilet paper, cleaning supplies, toothpaste and toilet paper. But that obviously isn’t the case for perishable food items.
Maybe you should think twice about renewing your membership when it rolls around.
9. Not looking for additional savings
In this day and age of technology, you have no excuse for paying full price. Coupon sites and rebate apps abound to help you find the very best price for pretty much every purchase you make.
I have a couple of favorites cash backs that I use regularly, so if one doesn’t offer cash back at a certain retailer, another will. These are terrific penny pinching tools!
One of my favorites is Ibotta a free app that allows users to easily earn cash back on purchases made both in-store and online. It’s the third most used shopping app, right behind Amazon and Ebay. Ibotta users receive cash back on products and services from both online and in-store retailers.
After you register, you select your favorite stores and retailers. These can be edited at any time. When you click on a store, you will see items that are currently eligible for cash back offers. Tap the offers you want to redeem, then take a picture of your receipt. The money is then added to your account. It’s that easy!
Ibotta almost always has ‘any brand’ offers on common items, so in most cases you will be able to find something you can earn cash back on, even when you don’t plan ahead. Usually you will have about a week to scan your receipt.
You’ll see your first $10 bonus after your first purchase. Next time you’re running errands, open the app and tap the items you will be purchasing. It’s so easy! Once you earn $20 or more, you can transfer the money to your bank account via PayPal or Venmo. It won’t take you long to get to $20 – I made over $40 my first month!
Ebates is another cashback website I love. It offers different products and partnerships from Ibotta. Between these two apps, you can save money on pretty much everything you buy, whether online or in a brick and mortar store!
My Final Thoughts on Penny Pinching
The bottom line is that when you’re trying to save money, you should look at the big picture. Consider not just how much you’ll spend right now, but how much you’ll spend, in both money and time, over the long term. Now that’s wise penny pinching!
There are also ways to save money on high-quality items that we haven’t talked about, like purchasing from estate sales or thrift stores. We purchased our first piano, an upright Yamaha, from Salvation Army for only $700. It’s been relegated to the basement, but I still love the sound and feel of that piano!
What a bargain, since that piano has been played multiple times daily for the last 15 years!
And it also beneficial to just buy less stuff. When you’re tempted to make a purchase, just walk away and mull it over for a day. If you still want or need the item after a day and are willing to go back for it — do it. But you’ll probably find that you don’t need all the stuff that you think you do.
Americans are drowning in debt because they’re drowning in stuff. If you don’t believe me, count up all the storage units in your city. It’s ridiculous!
How has penny pinching cost you money? I’d love to hear about your penny pinching experiences in the comments below!
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