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10 ways being frugal can actually cost you money

It doesn't always pay to go for the lowest possible price on purchases and other expenditures. Here's why.

By MSN Money Partner Apr 21, 2014 1:17PM

This post comes from Allison Martin at partner site Money Talks News.


Money Talks News on MSN MoneyIt pays to spend less whenever you can, right? Well, not necessarily. There are some cases where the "less is more" principle doesn't work.


Money into toilet © RubberBall/SuperStockBeing cheap cuts costs for the moment, but may cause you to incur additional expenses in the long run. That ends up being the antithesis of frugality.


Here are a few instances where thriftiness can backfire:


1. Couponing

As an ex-couponer, I know all about this firsthand. I remember sitting at the dining room table every Sunday afternoon cutting away at the weekly circulars and matching the coupons from my ridiculously large collection to the sale items.


I saved a ton of money, but I also ended up with a massive stockpile of items I had no real use for.


The moment of truth came when I headed to my stockpile, only to realize I had accumulated six jars of mayonnaise and 18 sticks of deodorant, which I likely wouldn't use before the best-by date. That's not to mention the hours of my life spent clipping away that I could have used to generate additional income.


The choice is yours, but I suggest you conduct a cost-benefit analysis to determine whether the hours spent on couponing are worth it. Here's a perfect example from LearnVest that really helps put things into perspective.


2. Adopting a deprivation budget

When you decide to create a budget in an effort to curb spending and reach financial goals, it may be tempting to jot down the leanest figures imaginable. But what will you accomplish if you severely underestimate your expenditures?


I totally understand cutting costs, but being unrealistic means your spending plan will fail. For example, if you typically spend $600 at the grocery store for a family of four, what sense does it make to shave that number all the way down to $200? The answer is simple: None at all.


3. Cutting corners on insurance

Are you riding the wave of luck when it comes to your insurance policies? Do you carry the bare minimum level of coverage that’s required in your respective state on your vehicle? Or perhaps you've signed up for mediocre health, dental, homeowners or life insurance policies.


While you may have done so in an effort to keep premiums low, if an emergency arises, your wallet and bank account could be turned upside down by out-of-pocket costs and exorbitant deductibles.


4. Ignoring routine medical visits

Ever heard the phrase "an ounce of prevention is worth a pound of cure"? You definitely want to keep it in mind the next time you're tempted to skip a visit to the doctor or dentist. Even if you dread doling out cash for co-pays or meeting deductibles, it's worth it to stay on top of things.


Just think about those individuals with debilitating medical conditions who could have detected them earlier with routine blood work, or those who ignored dental visits for so long that they now must live with gum disease and costly deep cleanings for the rest of their lives.


5. Buying inferior big-ticket items

If frugality is deeply embedded in your genetic makeup, it's no surprise that big-ticket items with low sticker prices may be enticing. However, cheaper is not always better, especially in this situation.


A perfect example is the purchase of a cheap car. It may look good, smell great and be priced at an incredible point, but snagging it for the good deal could leave you with a clunker.


Car leases can work the same way. You cut costs for the life of the agreement, but end up where you started when it's all said and done.


6. Avoiding car maintenance

It's imperative that you have the routine maintenance done on your car to keep it running.

Says Bankrate.com:

Postponing maintenance is the No. 1 car maintenance mistake, according to research by CarMD.com, which polled certified master technicians. Of the top 10 maintenance mistakes in the firm's study, four of them were related directly to regularly scheduled car maintenance and could be avoided.

Besides, avoiding the mechanic may shelter your wallet, but you could be putting your life at risk.


7. Cutting back on nutritious food

With the rising cost of some foods, like orange juice and beef, you may be tempted to reduce the presence of healthy foods like fresh produce in your family meals. Replacing nutritious food with less expensive fillers or processed foods can be bad for both waistlines and health.


Need tips to reduce spending at the grocery store? Check out "9 tips to cut your grocery bill by up to 50 percent." 


8. Frequenting deal websites

These are what I like to call the forbidden fruit. When websites like Groupon and LivingSocial burst onto the online scene, Americans were in a frenzy. Says Forbes:

Sure, Groupons can save you hundreds of a dollars a year if used right, but they also come with plenty of risks attached. You could risk the fear of double-booking yourself, as most of the Groupons run by dates. Then, you would be missing out and losing money, to boot.

I'm no exception. I got sucked in and vowed to myself that I'd buy just this one thing, but it turned into a lot of fine dining vouchers, spa treatments and weekend excursions, some of which I didn't even use.


9. Shopping at warehouse clubs

This is another area where, when used properly, can produce major savings. These businesses pride themselves on selling you massive quantities of a particular item at a discounted rate.


But what happens if you can't consume it all before the expiration date? And let's not forget about the membership fees and the storage space you will need at home. Plus, if you're not comparing the per-unit price, are you sure you're always getting a better deal?

Says Today.com, "Customers may believe they're paying for a chance to save money, but some experts think membership fees actually cause consumers to spend more."


10. Upping your deductibles

This one is also insurance-related. It's often said that you can reduce the cost of insurance by raising the deductibles.


But what's the point of raising your deductible so high that you don't have enough money in the bank to cover it if you need to? Will you have to borrow the money and pay interest? Don't set a deductible that's higher than you can afford to pay. You can always revisit the deductible after you have a healthy emergency fund in place.


Has being frugal ever backfired for you?


More from Money Talks News

250Comments
Apr 21, 2014 2:44PM
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Disagree with #1. You do not have to buy something just because you have a coupon. And while you can go past the Best by Date, I would not go too far. But we save a small fortune stocking up on things we use. I do not think coupons are a waste of time. You are simply affording more bang for your buck.
Apr 21, 2014 3:11PM
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I more than pay for the warehouse store membership in savings on milk alone each year.

It's a matter of reasonable expectations, planning ahead, and proper storage.

I know the 24 pack of 100% juice is going to be gone by the end of the month because there's one used every schoolday for daughter's lunch.  Same with the multigrain bread, save a dollar on two loafs, and throw one in the freezer until the first one is gone from the daily sandwiches.  She wants the same thing every day, so it's all getting used... the string cheese, the roast seaweed, and the bag of apples or mandarin oranges (but I never buy both together, because they'll go bad).  Paper towels and toilet paper never go bad, just need their own shelf space.  Same with laundry detergent and dishwasher detergent.

I'm honest, though, about the fact that I'm never going to make it through the ginormous 5lb thing of salad, or use all 12 tomatos in the plastic box.  Those things should be bought in more reasonable quantities at a regular grocery store.  If I see something that looks tasty and has the potential to be worth a bulk buy, I buy a small portion of it at a grocery store first to make sure the kids will actually eat it, plus I'm cross-checking price to see if I save (or if there's a cheaper store brand alternative).

Admittedly I have a large freezer, but that was purchased to store the harvest of the annual salmon dipnetting season, and more than pays for itself every year just in keeping our fish cold.  (In fact, I'm cutting down on warehouse frozen purchases right now in preparation of the upcoming season.)
Apr 21, 2014 4:50PM
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My parents were the biggest tight wads I ever knew. But, when my dad passed away in 2005, mom was well taken care of and is now in a very nice assisted care facility with dementia. I always heard him talk about saving money in case something were to happen to one of them and it paid off. They were very careful with spending and only went out to eat on occasions. Mom watched the papers for sales and used coupons for only the items she used. Toward the end of my dad's life he was able to enjoy the money he saved and was retired for almost 19 years when he passed away. I know my two siblings and myself and most of my friends will never be able to see a full retirement because of our economy and how high the cost of living is today. No matter how care one saves, something else always happens to offset that.
Apr 21, 2014 4:33PM
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I totally disagree with #1.  I coupon all the time and have saved over $350 so far this year between grocery store and department store coupons.  I don't use coupons to buy 20 of one item, I use coupons to buy what I can reasonably use in the next 90 days, unless the item is non perishable.  Then, I might stock up.  I don't buy something just because I have a coupon, but if I'm buying a product, and have a coupon for it, why would I chose to spend more for the same items.  Like anything else, you just have to be smart about what you're spending and where. I always watch for sales, and if I can combine a sale price with a coupon, I can and have saved a lot of money.
Apr 21, 2014 5:10PM
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This article is kind of misleading. Many of these categories come with the expectation that people don't have the mental capacity to follow through or that they waste money in the long run. A truly frugal person knows how to get the most out of things for the money. For example, buy a car and making it last a long time, buying and freezing foods and buying a lot of other non perishables, going to their annual (and often free) medical checkups, and buying crappy products from a lack of research. In my opinion, to truly be frugal, you have to find a balance and make educated decisions. Those who can do great and those who can't fail miserably.

The upping your deductibles one had me really scratching my head though. Sure, if you're someone who doesn't have $1000 in the bank as opposed to $500, knock yourself out and stick with the $500 deductible, but this article almost seems like it's trying to sell insurance as well as trying to discourage people from trying to live on less as opposed to buying, buying, and buying more. Remember, an insurance policy is basically they insurance betting you aren't going to get into an accident worth making a claim. I opted for a $1000 deductible instead of a $500. I have the money if needed. I've also been driving for 12 years with no accidents, so I've already made up twice the money as do most, so it's definitely worth it most of the time.

Apr 22, 2014 9:28AM
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The writer lost all credibility at point #1.  The writer apparently just doesn't know how to shop.  It doesn't take long to clip the relatively few coupons you will actually use (even less time to download them), and if you use coupons to buy stuff you will never use, or to overstock to the point of stupidity, then the blame is on you, not the coupons.
Apr 21, 2014 2:55PM
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Dumb Article and makes no sense.  I don't use coupons because they are mostly for expensive  fattening unhealthy food that you should not eat anyway.  I shop Aldi's regularly and then supplement with the other items at the grocery store purchasing healthy food. You save money by not eating out but once is a while as a treat.  My car is paid for and I have more than adequate insurance coverage (full ) on it as well as my small  home.   My car is also well maintained.   I am lucky  to have health insurance and go for yearly physicals and exams as needed.  I have no use for warehouse clubs due to the bulk of packaging because I don't need that much product anyway.  You can be frugal without being cheap and it does work or for me it does at least.
Apr 21, 2014 9:21PM
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""...And while you can go past the Best by Date, I would not go too far....""

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""...And while you can go past the Best by Date, I would not go too far....""

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NOT SO, at least NOT when it comes to canned foods. Case in point - during the Vietnam War we infantry grunts somehow managed to do O.K. “chowing-down” on surplus WWII C-rations. Yep, just about every case of C-rations flown out to our locations clearly indicated its contents was packaged in the year 1944 -- meaning that stuff I (we) ate was prepared well before I was even born. Note - I was 19 y/o back then.

 

Oh yea - I also did have a chance to consume a number of the "MRE's" served to today's military and -- oh good lord -- when compared to the C-rations of yesteryears -everyone of the MRE I ate was a "fine dinning" experience.

Apr 21, 2014 3:54PM
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Some good advice (both in the article and in the comments) and some bad (disregarding any political rants).

 

The one thing not mentioned is that most warehouse clubs have pharmacies.  As a warehouse club member, by bypassing my husband's insurance policy and filling his six daily prescriptions as a cash customer, we pay $45 every quarter for all of his drugs together.  Let's see ... six $30 co-pays per month, or one $45 co-pay every 3 months ... factor in the $50 annual membership fee and we're saving $1,930 per year.

 

Also, like Zhi1, we have a deep freeze.  Buy items that can be frozen (especially meat) in bulk at the warehouse, break it down into meal-sized portions when you get home and freeze.  Then you are only thawing one meal's worth at a time and can rotate our purchases so that you always have a nice variety to pick from.  This works for fresh pasta, most cheeses, butter and bread as well.

 

Also, regarding #5, I have a neighbor who is Cheap-Cheap-CHEAP!  She inherited a nice bit of money and decided to use some of it to buy a new car (for cash).  She decided on the least expensive brand new car that she could find based only on the price.  It is totally inadequate for her needs, but she never looked beyond the price tag.  Not too smart IMHO, but then again, it's not my money or my decision.

Apr 22, 2014 1:10AM
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On a limited budget all my life, I learned how to buy and cook, on the cheap.  And eat pretty damn good?  I use coupons and shop sale items?  But I only buy what I can use, or will use in the future?


I have a small chest freezer.  Year round, I stock up on fresh foods.  Milk and bread can be frozen, then thawed, good as fresh? When the local store has 10 for $10 on TV dinners, I stock up?  Great for a quick lunch or dinner?  Same for ground beef or chicken.  Buy it on sale, freeze it.  Thaw it in a sink of cold water in the morning, or overnight in the refrigerator, and cook it the next evening.  I usually divide out bulk 'family packs' of chicken or pork chops in freezer bags for smaller portions.  Same with ground beef in family packs?  Split it up and freeze it...  I usually make hamburger patties, layer them on wax paper, then in freezer bags, and freeze them.  A 3# package of ground beef for $10 makes about 12 1/4# burgers? 


Careful shopping keeps my freezer filled and the cupboards filled with canned or dry foods that I will use.  I have a food processor and meat slicer.  A small ham sliced thin is deli ham?  Fresh potatoes can be sliced or shredded? 


Lots of ways to save money and eat good?


Frozen vegetables, when on sale, can be a great deal.  Stock up and put them in the freezer. 

Apr 21, 2014 3:23PM
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I always thought that there was a difference between Cheap, or Frugal, or Thrifty.

Cheap, you will pinch a nickel until the Buffalo Bellows.

Frugal, you keep an eye on the Dimes and Quarters

Thrifty, You get what you want or need but always try to get it at a good price.


There is nothing Democratic or Republican about when a person is trying to save a few bucks. I just so certain that a person is so worried what their Political Party is going to say about them saving a few bucks.


I bet that you Trolls are so tight that your butt crack squeaks when you walk. Moths fly from you wallet when you open it. You're still carrying that plastic wallet you had as a child.

Apr 22, 2014 1:09AM
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Stretching A Roll,

In the last four years I have basically re-written the book on 'being frugal'. In an effort to save money about the only remaining thing that has not yet been employed is using both sides of the damn bathroom tissue...and that's under consideration. Peace to all ~

Apr 21, 2014 5:10PM
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"Tight" should mean being able to pull in the reins from that infamous "impulse" buying urge, rather than not buying something at all because "it costs too much."  These are opposite ends of the shopping and buying spectrum and we all need to find our happy median when it comes to shopping and buying anything.  Some products you buy often and so you can watch for sales and stock up.  Others, perhaps those "big-ticket" items will need some research.  Because your Maytag has lasted twenty years, doesn't mean a new Maytag will do the same.  Some of these products not only have changed how they are built, they may not even be built by the same manufacturer who made the last one you owned.  Products built expressly for Wal- Mart are not the same as those you might find at an Ace or TrueValue Hardware store.  Know what you are wiling to fudge on to get a good price and know what not to compromise on.  You be the judge, because you are the one who has to live with your decisions.  Its your money you are spending, spend it how you see fit.
Apr 22, 2014 8:22AM
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You formulate your budget , and you stick to it . You live within your means , and you stick to it . You revisit your budget and adjust it periodically . You save money in the good times , as well as the bad times . It's basic math , and it surely doesn't need all the ink that's been presented here .
Apr 21, 2014 2:13PM
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I'm always amazed by people who are crazy tight.  It is good to be frugal, but crazy tight is a whole other ball game.  May people who are crazy tight will jump through hoops to try and same a dime, but  yet have no clue about how much they are loosing by poor management of their investments.  They tend to worry about little things but let the big things get by them.  Their investment people are fleecing them all the way to the bank but they have no idea what they are loosing due to high administrative charges.  Many of these people who are crazy tight are not taking advantage of Roth IRA's.  Uncle Sam does not give us many gifts but one gift he has given us is the Roth IRA.  Yet many people who are crazy tight are not aware they are loosing major money by not participating in this program.  As Issac Newton once said that he cannot figure out people.  Many historians consider Newton to have possibly the most gifted mind of anyone who has ever lived.
Apr 21, 2014 10:57PM
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Disagree with a lot of this because of one point. Insurance premiums are very high and the avalanche of monthly, semi annual and yearly premiums are difficult in a recessionary economy where millions have taken pay cuts as they moved into new jobs.
Apr 22, 2014 9:05AM
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There are lots of ways to save, but the old fart guy, gave you all some pretty good tips...

We do about the same...

We don't use many coupons, but stock up for a few weeks on sale items, same as him.

And I go about every 3 months, to an Aldi's to stock up on storable staples...Save about 25-30%. 

There are other stores you can do the same with, particularly when stuff is on sale.

****We go on Senior discount day too.


We raise big garden and freeze veggies and store stuff like potatoes and onions, carrots, etc.

For the whole year or winter, like squirrels.

Biggest waste and expense I see are people that Make MULTIPLE trips to stores or other shopping.

Go everyplace in one day, ONCE a week or every couple weeks...Those trips are expensive if you make several and a very big waste of time and gas.

Double up with a friend and take turns....Kind of like carpooling..

Apr 22, 2014 1:24AM
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Being fugal has never backfired on me or my husband even once!  That is why we have a considerable nest egg.  You have to know how to save, but also how to spend.  Being a school administrator and a teacher before I retired, taught me a lot.  My husband was a teacher also and a school councilor.  Both of us retired.  House, car paid off and no credit card debt.  We go when we want and do what we want and say what we want. No minority groups whatsoever, tell us what we can and cannot do or say.  That is our right.  We don't owe anything to anybody.
Apr 22, 2014 5:29AM
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Why is it that articles like this always give bad advice that actually benefits the bottom line of some corporation?
Apr 22, 2014 11:57AM
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A friend of mine is a financial planner and she said the majority of people either spend too much or not at all.  Like with everything else, balance is the key.

I disagree with #1.  I shop with coupons.  I check the flyers and buy what I need and don't buy more because I have a coupon.  I make sure what I need is on sale and I used coupons.  I tracked my grocery spending for one year and found I saved $1200 per year for just me alone.  $100 a month!!!  I put that amount into savings.

I also brown bag my lunch Monday -Thursday.  Fridays are a treat.  Assuming I would spend $10 a day on lunch four days a week, that would average $2000 a year for 50 weeks (assuming I get two weeks vacation and eat at home).  $10 a day is very cheap considering where I live.  Lunch usually costs more.  Regardless, I save $2000 a year which I use to fund my yearly vacations. 

You can save and spend if you use your money wisely.  All these articles that say give up your gym membership or lattes to save money are ridiculous.  You need to learn to have a spending plan so you can save and spend accordingly and make adjustments as you go (job loss, medical issues, promotion, etc).  It's not rocket science, people just fear the word "budget" or don't know how to set one up and stuff their heads in the sand.  I had years when I lost my job and had no money coming in and then of course I went into survival mode (canceled non-essentials, no spending at all!).  But again--it's about having a plan and sticking to it.

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