I am sure it won’t be a surprise to hear that I tend to be a bit conservative when it comes to spending money. If you have read any of my other posts, you probably know by now that I put a lot of thought into purchases-especially those that will cost me a chunk of money. My brain can analyze the purchase to the point of insanity, and in many cases I talk myself out of buying things. Many times, this is a good thing. It decreases the number of times I have buyers regret. I rarely give in to impulse purchases. I save a lot of money by not buying things I ultimately didn’t need.

 

I have recently discovered the flip side of that coin. There is such thing as being too frugal when it comes to certain things in life. Sometimes saving money can cost you more in the long run. Have you ever bought the cheapest version of something, only to have it break or not work as soon as you got it home? Maybe you talked yourself out buying that tool set you have been thinking about, to have your dishwasher break two days later.

This past weekend, my wife and I thought we would have a nice day at the beach. We took the reliable car that gets the best gas mileage, and off we went. About 5 miles from the town, my car started beeping. It flashed a warning: Low Oil Pressure. We were in the middle of nowhere, on a country road with not another soul or business in sight.

I flashed back to that time a few months ago when I got my oil changed and the mechanic told me there was a small oil leak. They wanted $500 to diagnose the problem, and who knows how much to fix it. Being the skeptic of mechanics that I am, and the person who doesn’t like to spend money without knowing all my options, I declined. I thought I would have someone I knew check it out for me and verify that there was really something wrong before I got it fixed. Well, that person never checked the car out. Now, I was stuck.

I promptly called my roadside assistance company that I have had for over a decade. They are the cheap version of AAA. They cost a fraction of the price. On this day, I found out why. I was about 100 miles from home. The towing that was covered was $100. That probably translates to about 5 miles, after the hook-up fee. I was told I would have to pay the rest when the tow company arrived-a whopping $349! Also, because of COVID 19, the tow company would not allow us to ride in the tow truck, so we would have to find our own way home, with our 120lb dog, to boot. What choice did I have?

I then remembered that my friend happened to be camping in the town that I was now stranded. I gave her a call, and she and her husband came to the rescue. They offered to use their AAA membership, which covered up to 200 miles of towing, plus a rental car and hotel if needed. I asked her what she paid for that kind of coverage, and it turns out it is less than the $349 I was going to have to pay for towing. So, for a lot less than I would pay for one tow, she had peace of mind in knowing that in this type of event she was completely covered for towing and for her own accommodations and ride home. Suddenly, my discount roadside assistance service didn’t seem like such a bargain. My frugality would now cost me a lot more money, and stress.

Take Aways

This was a blatant example of how there can be times that being too frugal can bite you. If you save money, but then have to buy something more than once, or what you bought does not actually provide what you need, then you may not really be saving money at all. You might even create a lot off stress, or get yourself into a sticky situation. Sometimes paying a little more for something will actually be the better bargain. You need to really evaluate your purchase to know if it is something where the cheap version is really worth the initial savings. Although nowadays it isn’t always true because things just don’t seem to be made to last, when it comes to services and some items, sometimes, you get what you pay for.

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26 thoughts on “When Saving Money Can Cost You

  1. Thanks for your suggestions. One thing I’ve noticed is the fact that banks as well as financial institutions really know the spending routines of consumers as well as understand that many people max away their credit cards around the vacations. They sensibly take advantage of this particular fact and start flooding your own inbox as well as snail-mail box along with hundreds of 0 APR credit card offers soon after the holiday season ends. Knowing that if you are like 98% of the American public, you’ll jump at the chance to consolidate credit card debt and transfer balances to 0 APR credit cards.

    1. You are absolutely right. 0% APR credit cards and those with incentives like extra miles or cash back are strong marketing strategies that can lure unsuspecting consumers into more debt. Used wisely, it could save you money, such as if you transfer a balance to a lower percentage and then pay it off before the offer ends. However, one must be careful not to open more accounts than they need, because eventually the interest is charged, often all at once at the end of the introductory term.

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