Top 7 Money-Saving Hacks That Cost You
Dear Rich Lifer,
I read a story once about a “frugal” business traveler that disturbed me.
The traveler would take burned-out light bulbs from his home and swap them with working light bulbs in hotel rooms.
He would also steal towels from hotel pools and frequent free continental breakfasts at local hotels when he was back home.
He claimed that it was okay because there were no signs advertising the meals were “For Guests Only.”
People like this are not frugal… they’re cheap.
I love a good deal as much as the next guy, but there are some lines I’m not willing to cross to save.
But this story made me think about some of the ways people try to save money that can backfire.
Often, the time and energy you put into saving a few dollars is not worth your time or energy at all.
So, I made a list of these money-saving hacks that are costing you. Here’s my avoid-at-all-cost list of “money savers.”
1) Driving an Old Car
Owning your vehicle outright might seem like it’s saving you money, but it doesn’t mean there are no extra costs for upkeep. And if your car is old, count on upkeep costs being even higher.
According to Junkacar.com, the average annual maintenance cost of a vehicle 7 years old is $1,000. This number skyrockets to $2,000 when you reach the 12-15 year mark.
While you might think you’re saving money by driving your old car into the ground, the truth is you’re likely losing more money than you would if you traded up.
2) Trying to Find the Best Deal
I watched a friend last year plan a family vacation and he spent weeks searching for the best deal on a vacation property.
While he continued to search for better bargains, the deals on properties he had found got booked.
When it was all said and done, my friend ended up with a place a few hundred dollars more expensive than the others he’d passed on with less amenities.
Moral of the story… there are diminishing returns in everything you do. Think about this next time you’re searching for deals.
And ask yourself, how much is my time worth? If you’re retired and your answer is $0, then replace dollars with time making memories with grandkids and friends.
Make sure you’re not spending more time than is equal to the savings you’ll gain.
3) Clipping Coupons
This might surprise you because I’ve written about how I like using coupons when I shop.
But, I don’t advocate wasting your time clipping coupons or subscribing to multiple newspapers for the sake of couponing.
Instead, I recommend couponing the lazy way. Install the web browser extension Honey which adds coupon codes to most of your online orders automatically.
Next, I recommend subscribing to email newsletters for retailers you frequent. To avoid an inbox full of promotional emails, create a folder for “Coupons” and set up rules so that these retailers’ emails are removed from your inbox and saved in this designated folder.
Then when you’re out shopping, open the folder on your phone and search the retailer’s name. I can’t think of the last time I walked into a store without having at least a 10-15 percent off coupon.
4) Adding Products to Get Free Shipping
We’ve all done it. You have $42 in your shopping cart on a website, when $50 or more will give you free shipping. You figure, what the heck, I’ll find something I need for $8-10.
Really, it’s nothing more than a marketing trick to get you to spend more. This only works as a “savers hack” if shipping costs more than the amount required to tip the scales. If shipping is only a few bucks, why pay more than you need to?
You can also opt to wait until you have another item you actually need to bump up your order value. Don’t get lulled into the habit of finding things you think you need in the name of free shipping.
5) “Investing” in Extended Warranties
You think, “I’m spending over $X on this…what’s another $19/month?”
Convincing yourself that extended warranties are worth the money is fear-based marketing working against you. Almost universally, extended warranties aren’t worth the money, says Consumer Reports.
You’re better off putting aside the money you’d spend on an extended warranty to cover the cost of repair.
6) Keeping Old Appliances Running
They don’t make fridges like they used to, or so I’ve heard. But the trade off is you overpay in electricity every month by holding on to inefficient appliances.
The same goes for light bulbs and your thermostat. If you don’t have energy efficient lights installed in every room, begin changing your lights over as they start to die.
And I can’t stress this enough, invest in a programmable thermostat! You’ll save yourself 5 to 10 percent on your heating bill every year.
7) Not Actually Saving “Saved” Money
Finally, the last trap I see a lot is when people cut costs and then spend those savings elsewhere.
For example, you finally cut the cord on your cable TV package. Where does that $120/month go?
It’s tempting to pat yourself on the back and continue living how you would. Most likely, you’ll find other expenses worth $120/month to fill the void.
Instead, as soon as you cut out a recurring cost, set up an automatic transfer to a high-interest savings account or boost your monthly 401(k) contribution equal to the amount saved.
This way you actually start saving the money you “saved.”
These false hacks, and others like them, can end up costing you not just money, but also your most precious asset: time!
To a richer life,