5 Ways You’re Wasting Money by Trying to Save It

September 14, 2016

In its purest form, “saving money” means you actually take money that you’ve received or not spent, and you set it toward one of your goals. But sometimes when we try to save money by spending less, it can lead to over-spending. Here are five situations where our best intentions often backfire. Make sure you’re not falling prey!

1. BOGO: Buy one item, get the second half off – it’s so tempting, especially when it come to things like shoes and accessories! But chances are that you’ll end up talking yourself into something that you’re not crazy about just to take advantage of the deal. Plus the store is betting that you will pick a more expensive second item than you originally came to shop for, driving your bill even higher. Suddenly, a $40 purchase turns into $80, and you’re not even sure you like the bonus purchase. BOGO only works when you’re getting something free from buying something that you were planning to purchase anyway, like microwave popcorn or my favorite treat, ice cream.

2. Cheaping out at the parking meter: I know how annoying it is to feed the meter just to pop in for a cup of coffee. But those meter maids are omnipresent, and they are trained to ignore your pleas once they’ve spotted your car at an expired meter, even if you’re standing there with your keys in hand. (Don’t ask me how I know this.) Saving a dollar is NOT worth the $35 or more parking ticket that you’ll end up with when your good parking karma runs out. Feed the meter every time and for enough time.

3. Signing up for retail credit cards for the discount and then not paying them off: It’s one thing if you open the store credit card to get the discount and then pay the balance due in full. That’s smart. But only paying the minimum can negate any money saved due to the high interest rates charged. Whenever I use a store card for the discount, I either get back in line and pay off my balance right there (a lot of stores even accept debit cards for payment!) or I go home and do it online right away.

4. Carrying the wrong cell phone plan. When was the last time you checked your phone plan to make sure you’re using the best one? Carriers are constantly changing their offerings, so double check that you’re still on the plan that’s best for your usage. The last time I checked, I was able to add a gig of data for $5 less than my old plan!

5. Justifying impulse purchases because they’re on sale. Check your closet. How many items are you hanging onto because you haven’t worn them, but feel bad getting rid of them since you spent the money? I’d guess that most of those items were things you picked up and thought, “What the heck? It’s only $12!”

The next time you find yourself cruising the clearance racks, think twice. Is this actually something you need or want? How else could that money be used? Plug it into the Daily Savings calculator and see. Just $5 a day could add six figures to your long-term savings.

Finally, here’s a simple way to save a little extra money that my mom taught me: keep every five dollar bill that comes your way instead of spending it. It’s easier to stay disciplined with this if you have a plan for the savings. My mom uses hers for fun money when my parents travel. That way when she does find a good deal while cruising her favorite Ross store, it’s guilt-free!

 

How Costco Is Like An R-rated Movie

March 11, 2015

Recently, my teenage daughter wanted to go with some friends to see an R-rated movie but she’s not 17 yet.  I had to inform her that the rules are the rules and that she couldn’t go to that movie without an adult. That’s when my wife chimed in and asked if she could apply that adult supervision rule to me when I go to Costco!

Being a good financial planner, I use Costco to save money on items that my family uses frequently and buys in bulk. I admit, however, that one of my challenges is that the TVs are right by the door. Even though I come in with a list of things to buy, I almost always stop and check out the latest and greatest TVs and start thinking about which ones would be the best for sports, which would work better for movies, etc.

That 3 or 4 minutes of distraction sometimes lowers my vigilance and while I haven’t walked out with a new 70 inch TV, I have made a couple of small impulse purchases. Personal finance is just as much or more about our behavior as it is about math.  So what are some things that I – or you – can do to avoid the need for adult supervision?

  1. Make a shopping list and stick to it. Remember that if a product is as good and useful as it appears to you at that moment, the supplier will continue to make it.  You will be able to calmly and rationally decide at home whether that purchase really would make sense the next time you go or if it was just an impulse buy.
  2. Understand what your triggers are. In my case, I love to watch sports and am always looking for the “perfect TV” to watch a game. Since a large TV is a major purchase, I have avoided the temptation to unnecessarily buy a TV but I have learned that the TV dreaming at Costco triggers my desire to want things that aren’t necessary. Now I make a conscious effort to move past the TVs as fast as possible so that I can avoid my trigger. What is your trigger?
  3. Set a budget for your shopping trip and keep tab of what you’re spending. If you know what you’re shopping for, you should have a good idea of what it will cost. Set a limit – say $200 – and use the calculator app on your phone to keep track of how much you’ve spent so far. That way if you get up to $180 and you still have items on your list, it’s much easier to see that no matter how tasty that free sample was, it isn’t affordable today.

Use these tips to save yourself a substantial amount in impulse purchases, and if you know of any good deals on TVs – let me know.

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