Sometimes, a move that seems like a good idea ends up being a bad idea. Here's how that can apply to your finances.
I’m renovating a house, a project that started in January 2013 and will end — well, who knows when it will end? We have a lot of plans for this house.
Truly, the only reason we’re able to afford this project is because we’re doing the work ourselves. And the only reason that DIY is saving us money is because we have my dad on the job, who is a stonemason by trade but can do everything from laying tile to rewiring ceiling fixtures. Without him, we would either have had to hire a remodeling company, which we can’t really afford, or try to do everything ourselves.
Not that we’re completely inept, mind you. I’m pretty proud of my circular saw know-how and painting skills. But I know enough to know what I don’t know and that DIY-rookie mistakes can end up costing you quite a bit in the long run. For instance, one of the big things we did was to shorten the wall between the kitchen and the living room. No, it wasn’t load-bearing (everyone asks that), but can you imagine if it was and we tried to take it out?
Going DIY is one of many ways that people try to save money, but can end up paying more in the long run. Here are six more.
A great example of this scenario is Groupon or LivingSocial. The deals hit your inbox, and one piques your interest. Sure, you’ve never been stand-up paddleboarding in your life, but you’ve thought about doing it. And it looks cool in the picture. And it’s half-off your first lesson!
So you buy it, and then you forget about it. The expiration date comes and goes. This has happened to me a couple of times, so my new rule is to only buy Groupons for services that I’d use anyway or places that I already love. For instance, when I’ve bought Groupons to my favorite restaurant, I’ve always redeemed them. I don’t think I could forget I owned that coupon even if I tried!
A lot of online retailers will coax you into buying just a little bit more with their discount offers. For instance, if I just purchase $20 more, I can get 15 percent off or free shipping. I’d like to be immune to those offers, but the truth is, I hate paying for shipping and will do just about anything to avoid it, including scouring the ‘net for coupon codes and having items shipped to my local store for pickup. (I don’t claim that this is rational behavior on my part.)
But the problem is that you can spend more money than you would’ve spent without the coupon. For instance, if I need $20 more in my cart to get free shipping, and shipping costs $8, then I’m paying $20 to save $8, which is $12 more than I would’ve paid without the coupon. In fact, I didn’t save; I spent more.
Other times, though, it is a good deal. Last week I needed just $5 more to get free shipping on an order I was placing, and shipping was $6. So as long as I could find something I could really use for under $6, it was worthwhile to buy more.
More expensive doesn’t always mean higher quality.
For instance, I take my chef’s knife pretty seriously. I cook every day, and that thing is a workhorse. So it might make sense to buy a really nice one that will last for years and years. Maybe something pretty too, like this $200 beauty from Williams Sonoma.
But it turns out that one of the best knives out there costs only $30, and it outperformed the $100+ knives. From Cool Tools:
“A really great chef’s knife is insanely sharp, yet retains its edge easily and feels well-balanced and welcoming in your hand. These days, a decent high-grade chef’s knife can cost $100 to $200. Several cooking publications, including Cook’s Illustrated, recently tested a bargain $30 chef’s knife that rated just about as good as the $100-plus knives. It’s the Victorinox Chef’s Knife; the one we use.”
I actually bought that knife five years ago based off of Cook’s Illustrated’s recommendation, and I’m about to buy another because we need a second chef’s knife in our kitchen.
Expensive isn’t always better. Unless you do a bit of research, you might think you’re paying more to invest in quality, when really, you’re just paying more.
Sometimes it does make sense to pay more. If you’re trying to save money by going with the cheapest item, that can cost more in the long run.
For instance, when I started painting my house, I needed a lot of supplies, like brushes, rollers, and trays. The paint salesperson at Home Depot suggested a kit that contained all of these items and was a “good value.” Unfortunately, the brush lost its shape after a couple of uses and the roller didn’t roll so smoothly. It also made a loud squeaking noise. That might not be a big deal if I wasn’t painting every single room and ceiling in my house. I ended up replacing all of those items with better-quality (and more expensive) models.
Buying in bulk is a good way to save money, but only if you actually use it.
“A few months ago I went to Costco and bought a bunch of stuff in bulk to save money,” says Christina Collazo of Austin, Tex., “things like Annie’s Crackers and muffins.” When she got home, she realized there wasn’t enough pantry space to store everything. “So we stored all of it in the garage,” she says, “but because it was in the garage, we forgot about it and it expired.”
Costco has gotten me, too. The last time I was there, I bought a brick of cheese that went blue and moldy (and wasn’t supposed to be blue and moldy). If you do want to buy in bulk, consider splitting bulk buys with someone else, especially for perishable goods that you may not consume before the expiration date.
Sales and clearance racks can be deceptive.
“My husband loves to shop the clearance racks,” says Collazo. “He’ll even stock up on multiples if it’s a really good deal, like the three pairs of running shoes he bought.” The problem was that by the time he wore out the first pair, he needed a different kind of shoe. “It was $120 down the drain,” she says.
I can relate. Finding a designer item at Old Navy prices used to be pretty exciting to me. Actually, it still is; but there was a time when big-enough “savings” would make me overlook things like it’s not exactly my style, I have nothing else to wear with it, and it looks okay on me, from the right angle.
Even though I got a great discount, I wasn’t saving money. Those items would hang in my closet, unworn and unloved. Eventually, I ruthlessly cleaned out my closet and got rid of those sad reminders of how much I’d spent on those great “deals.”
