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Money Mistakes Frugal People Make

by Emily Guy Birken

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.

Money mistakes people makeExcept 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


Published or updated October 7, 2011.
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{ 6 comments… read them below or add one }

1 Mike Illenberger

I’m frugal by nature and I learned over the years that in this world, you do get what you pay for. Although I’ve gotten some really great deals haggling and searching for bargains, I always fell in the Craigslist trap buying used items from strangers. I got some used things on Craigslist at really deep discounts just to find that they break after a few weeks so I’ll end up buying the same item brand new at the store anyway. A good example is a complete bathroom sink kit that I purchased on Craigslist for a $100.00 (retails for about $500.00), 3 months after, the pipe blew when I was at work and caused a major flood in the house. Cost to repair the damage, $5600.00. A good lesson I learned from that experience is that when it comes to some things, paying a little bit more for an item could be the best savings you can get.

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2 Krantcents

Although I use frugal and cheap, I see myself as value conscious. I go for the best I can afford and then try to get it cheaper.

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3 Daisy

Great points! 3 & 4 resonate with me the most. I used to think that getting the cheapest, best deal out there would always be worth my while. But for some items, spending hours researching and looking for a cheaper product only to save a few bucks became counterproductive. Sometimes it’s better to just shell out a little more to save the time and effort and to relish in the “peace of mind” some new items can give you.

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4 20's Finances

Great advice. I know I am guilty of bulk food purchases every now and then. I have been able to pay off my credit card every month though. Great reminder that we have to weigh all the costs and not just focus on the rewards or cash back.

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5 Mr. Frugal

Krantcents hit the nail on the head. Value is the key. While I certainly agree that some people take frugal too far, they’re being conscious and intentional about where they spend their money. In the long run, I think this is far better than the other end of the spectrum, especially when taken to the extreme.

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6 Smartarse

I actually can’t afford to buy cheap. I’d rather not buy it at all. There is a difference between down right cheap and real value for money. In the long run its always better to pay the right price for something you need, even if it is used and bought on eBay, than to buy just because it is cheap. You will never be truly happy with it and did you really need it in the first place?

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