5 (more) dumb deals and what to do instead

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. 

• Compare car insurance rates

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.

• Bing:Bottled water vs. tap water

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:

• How do I get a free look at my credit score?
• 5 best free software programs
• Groceries 50% off