After my son was born, I decided that I wanted to start running to get back into shape. I knew that the best jogging strollers were expensive, but I also knew they were like any other fitness equipment: people used them once or twice and then let them collect dust. I went on Craig’s List, found a jogging stroller in nearby Indianapolis, and happily handed over cash, feeling smugly superior to those retail-paying saps out there.
Except this purchase was a big mistake. The stroller was badly worn, missing a cup holder (a necessity for runners) and seemed to want to pitch my son on the ground anytime I went faster than a trot. I later found out I could have gotten the same stroller new for only about $40 more than I spent. I fell into one of the classic frugal blunders—thinking that getting something used equals getting a deal.
Despite their money know-how, frugal people can make money mistakes. Have you ever fallen victim to any of these money traps?
1. Using credit for the rewards. While there are many great credit cards that offer cash back and other rewards, sometimes it’s easy to forget that you’re using a credit card that will charge you interest. It can be tempting to look at the percentage you get back for each purchase and whip out the card for everyday and extraordinary expenses. That’s why the credit companies offer these rewards. But if you’re not able to pay off the card each month, it doesn’t matter what perks are offered: you’re paying interest. Only use credit if you have a plan to pay it off each month.
2. Overplanning. I’m a big believer in planning ahead as a method for keeping control of my finances. However, there is such a thing as too much planning. When I purchased pounds of organic carrots on sale to make into baby food and freeze, I thought I was being savvy. Unfortunately, my son refused to touch carrots leaving me with a lot of frozen orange mush. Always plan for a little uncertainty. Too rigid a budget, monthly menu plan or grocery list might end up costing you in the long run.
3. Spending a dollar to save a nickel. This is a common problem among the frugal types. You may be able to get cheaper groceries 20 miles down the road, but is it worth the gas to get there? What about talking yourself into buying a house because you will be able to claim the mortgage interest deduction in your taxes? Don’t let your frugal mindset make you forget the big picture.
4. Forgetting what your time is worth. I used to bake bread weekly—it was cheaper and tasty. But as my time becomes more and more crunched, it’s worth it to me to buy store bought. For anything DIY, from cooking to home improvement, take the time to weigh how long it will take you versus how much it will cost you to contract it out. Sometimes it’s worth your money to have more free time.
Photo credit. http://taxbrackets.org