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5 (more) dumb deals and what to do instead

Think you're the world's best at making smart money moves? Find out by seeing if you've ever fallen for these dumb money moves.

By Stacy Johnson Feb 1, 2010 9:38AM

This post comes from Stacy Johnson at partner blog Money Talks News.


Do you waste cash by spending money on dumb things? There’s one way to find out: Take a look at this video and article and see if you’ve ever fallen for any of these dumb deals.


For about 20 years now, my focus in both books and TV news has been debt -- specifically, ways to find extra money in your budget to destroy debt (or build savings) without sacrificing your quality of life. In other words, financial gain without financial pain.


Whenever I suggest it's possible in most budgets to find extra money, it invariably leads some in the audience to say (or think) something like this: “There’s no way I can tighten my belt any more: I’m squeezing every penny till it screams.” 


Maybe. But there are definitely others out there who waste cash in countless ways by spending money on  things that are not just unnecessary but in many cases downright stupid.


I did a story a few weeks ago called “5 dumb deals and what to do instead.” If you missed it, check it out. Then come back to this one for five more.


Now watch the 90-second video below for my five latest dumb deals, then meet me on the other side for more detail.


Here’s another look at those dumb deals, along with a little more information. 

Low insurance deductibles. if you insure yourself so you’ll never lose a penny, you’ll never have a penny to lose. Deductibles of $250 are common on many car and home insurance policies. Why? Because insurance is normally sold, not bought. In other words, the companies that sell you insurance make more money if you pay more, and you pay more with low-deductible policies.



A better idea: Raise your deductibles from $500 to $1,000 (or even more, depending on what you can afford) on your home or car policy. That can save you 10% to 20% -- conceivably hundreds of dollars a year. 

Keep in mind that the purpose of insurance isn’t to prevent financial inconvenience. It’s to prevent financial catastrophe. Insure yourself accordingly.


Buying books. Books cost a ton of money and most of us read them exactly once. This is the height of insanity: Why are you doing that? Because your bookshelves need to have something on them?


A better idea: Borrow the books you already bought with your tax dollars: You’re storing them at the nearest public library. Like it so much you really do want to read it again? Buy it used at any number of Web sites.


(Important exception: Any book I’ve written. These should be purchased at the highest possible retail price -- multiple copies if you can afford them -- and kept next to your bed, reread until they fall apart, then immediately replaced!)


Paying for water. Only fools would pay big money for something they can get free, or at least virtually free. Which makes us a country full of fools.

A better idea: If you think your local water is unhealthy, odds are you’re wrong. But even if you’re right, or don’t like the way your local tap water tastes, buy a cheap filter, refill an empty expensive water bottle, carry it around and you’ll blend right in with all the fools paying soda prices for what is often just tap water anyway.


Paying for name brands when generics are IDENTICAL. How dumb is it to pay five bucks for a bottle of aspirin (or tons of other things) when right next to it sits the IDENTICAL THING for half the price?


A better idea: Wake up, smell the (generic) coffee and read a label or two. If the label says the ingredients are identical, buy the lower priced item. This applies to dozens of things, from aspirin to bleach to salt. What if they aren’t identical and the generic isn’t as good? Gee whiz, I guess in that case you should buy the name brand.


Never in human history have so many paid so much for so little (difference) based solely on advertising.


Paying 20% while you’re earning 0.2%. One of the dumbest, and most common, things I encounter is people with five grand in the bank earning nothing while they carry a $5,000 credit card balance at 20%.


A better idea: Use your savings to pay off your debt. I understand the need for an emergency fund. But if you’re paying 20% and earning 0.2%, you’re on the road to creating an emergency, not solving one.


Exception: if you’re unsure about your job security, you certainly want to marshal the maximum amount of cash possible. But if you’re about to celebrate the 20th anniversary of your secure government job, use low-earning savings to pay off high-cost debt.


And if you’re carrying that balance because you’re living beyond your means? Forget all the advice above and head to the nearest nonprofit credit counseling agency and get some help, before the hole you’re digging buries you alive.


Well, can you say you’ve never fallen into any of these spending traps? I’m curious, so let me know by leaving a comment. Even better, help me come up with my next list: What are some dumb things you’ve seen people do with cash?


Related reading at Money Talks News:

Feb 1, 2010 2:58PM
Rather than throw out that weekly "junk" circular you get in the mail, use all the coupons inside it! I saved $33 on my grocery bill last week. Many grocery stores double manufacturer coupons or will honor coupons from competetor grocers. I save a lot of money this way. Also, if you're not using the extras on your cell phone - like, say, the internet - call your cell company and have them disconnect just the internet from your phone. This saved me $15 a month off my bill. If you're student, a senior citizen, or a military member, ALWAYS ask if you get a discount. My husband is in the Air Force and he always asks. Even if places don't offer an official military discount, they end up giving us the senior or student discount. There's no harm in asking.
Feb 1, 2010 2:55PM
One money waster that I see a lot of is driving to work alone in the car every day, with the gas, parking fees, and wear and tear on the car.  Public transportation can often get you within blocks of your job.  Two more benefits, the short walk is good exercise and you don't have to be the driver in traffic.  We live in an area where buses run freqently and during off hours too.  Carpooling can also help with expenses.
Feb 1, 2010 2:53PM
Stacy - I agree with you on supporting our local merchants.  I use the internet, however, on some things I always buy local if I can.  I live in a small town and there are stores like our local paint store that need help.  I am willing to pay $2 more for a gallon of paint there because if I need advise he is there to help me.  Would Walmart be of any help????
Feb 1, 2010 2:47PM
Quit paying taxes,,, the government will just waste it anyhow so why not keep it and waste it yourself...
Feb 1, 2010 2:35PM
Department store cosmetics and grooming products.  The cosmetics sold in grocery stores and discount stores are made of the same stuff as the expensive brands; if you buy the department store brand you're just paying for marketing.  Anyone who thinks that a $100 moisturizer is going to make her look younger has been drinking the [non-generic] Kool Aid.
Feb 1, 2010 2:34PM
Any idiot that needs to be TAUGHT these things is hopeless.  Then there are those that wouldn't be "seen" buying or using generics.  Reality is that people will spend tons on stuff that they "think" makes them look good ie. cosmetics, anti-aging creams or formulas, but don't do the proper things like eat right and exercise.  Or buy things they "think" makes them look like they just aren't CHEAP.  It is way too much about superficiality in this country.  In some cases you do need to be aware and watch that you actually get what you pay for and across the board assuming that generics are the equal is WRONG but too many people will never get it. 
Feb 1, 2010 2:33PM

If you'd seen the condition of the books at my local library, you'd know why I buy my books.


Besides, someone really has to explain to me how we can all buy everything used.  Someone has to buy it new.

Feb 1, 2010 2:27PM
Please see state, local and federal government budgets for poster child for waste!! Doesn't matter who's in office-our government is too large and 2/3 of the budget will go to interest only in just 9 years-heard it this morning on ABC- Just when 1/4 of the population (boomers) spike healthcare, medicare, welfare, social security, etc!! We don't have any savings either-see the data if ya doubt! Cut government in half and start drilling for oil tommorrow or prepare for third world status and half in government will loose their jobs the hard way-including pensions!
Feb 1, 2010 2:21PM
It's true that libraries are a great resource, but I usually get reference/technical-type books. These types of books in libraries are usually years out of date. Searching for a book at Amazon usually leads you to used book deals as well.
Feb 1, 2010 2:20PM
yeah what about the $4 daily starbucks coffee?
Feb 1, 2010 2:20PM

I sure as hell agree about the bottled water.

I buy used books on Amazon or at used bookstores for  tenth the price, even with shipping costs its cheaper.

Those generic brands are made by the same companies that make the name brands. WalMarts Value stuff are made for them without all the advertising on them by the same companies.


Feb 1, 2010 2:19PM

WIth all due respect, I would recommend buying name brand aspirin due to the fact that a close look at the aspirin I recently bought at a "discount store" revealed that the generic brand was manufactured in China.


The recent drywall fiasco that we are experiencing, along with the "bargain" children's jewelry, should prove to anyone that not everything coming from China is quality.


So, please note:  drywall, aspirin, children's jewelry,  be sure to buy the highest quality that you can afford. 


Here are two things that I am willing to buy what I feel are the best:  coffee and laundry soap.   Good quality coffee starts the day out right, and quality laundry soap ensures that I am not re-washing items.  Time is a comodity, too; and water is a precious resource.  Buy good coffee and good laundry soap.

Feb 1, 2010 2:09PM

Not using the internet to purchase things. 


First, you can almost always find the lowest price on line. 


Second, you can often avoid paying any sales tax at all, and if you are in a state like Illinois where local governments can add to the sales tax, even if you have to pay sales tax on an internet purchase, it will be at the state's 6.25%, and not local rates that go as high as 10.75%.   


Third, shipping is still often free, or reduced, and you almost always can save even if you have to pay for shipping between the savings in obtaining the product, lower or no taxes, and not having to use gas.      


Feb 1, 2010 2:02PM
It only cost me $67 a year to lower my deductible on my homeowner's policy from $1,000 to $0.  You must ask.  Sometimes it does benefit to go lower because the difference is nominal. 
Feb 1, 2010 1:58PM
There is no gain so certain as by not spending.
Feb 1, 2010 1:41PM
Books? Of all the things people waste money on you mention books? What about junk food? What about clothes they never wear?
Feb 1, 2010 11:41AM
I ALWAYS buy generic products as opposed to paying twice as much for a name brand.  When we first got married, my husband wasn't sold on the whole idea of generics being just as good - that soon changed.  Granted, there are a few exceptions to this rule (toothpaste being one of them, and I have a favorite brand of dill pickles that must always be in my refrigerator), but 95% of the time it's strictly generics.  My parents always did this, so I learned early on how to save money.  Also, I bring an aluminum water bottle to work every day instead of buying bottled water. We have a filter pitcher that we keep in the refrigerator and the water tastes great!  Still working on my book buying habit, though.  At least I buy them at Half Price Books stores!
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