Are you too clever with your cash? You might be over-thinking how to save money – and costing yourself more of it.
I remember the day not too long ago when I was at the gas station and watched a soccer mom topping off the tank of her bright yellow Hummer.
And when I say “topping off,” I mean really topping it off. She must’ve squeezed that hose handle a dozen times. Each time she did, the gas pump reacted with one of those obnoxious attention-getting retorts warning her that the tank was full…
Thunk. Thunk, thunk, thunk. Thunk. Thunk, thunk.
Maybe I’m being snooty, but I find that annoying, not to mention just a wee bit ignorant. Don’t you?
I mean, come on, people. How much extra fuel did that happy housewife think she was putting in the neck of her gas tank? I’m not a car mechanic, but I’m guessing it was less than a quarter gallon.
I bet she thinks all that extra fuel she stubbornly coaxed into her tank will allow her to go an extra day or two before having to come back to the service station for another fill-up of premium gasoline.
In reality, all of that commotion will probably get her little more than a measly mile or two of extended driving range, assuming she runs her tank bone dry.
Now, a couple miles might prove critical if she were traversing the breadth of the Sahara Desert, but I’m fairly certain this lady lives in Southern California, where there’s a gas station on every corner.
The truth is, a lot of folks unwittingly – and repeatedly – make misguided decisions based upon well-intentioned beliefs. Here are a few examples of common money mistakes people often make in the name of saving a few bucks…
1. Going to a restaurant and ordering the “daily special.” When a waiter comes up to your table and tells you all about the chef’s special, don’t ever assume that just because it’s a “special” it comes with a special low price too. Quite often, it’s the exact opposite – the chef’s special comes with a price that would ruin the appetite of even the most famished of diners.
2. Blindly sacrificing quality in favor of lower prices. Sometimes it makes absolutely no sense to pay extra for quality – like paying $300 or more for ultra-luxurious 1,500-thread-count bed sheets when good quality sheets can be had for $50 or less. Then again, sometimes it does. For example, it’s reasonable to pay extra for high-quality clothing that can be worn many times over several years, as opposed to buying cheaper alternatives that will fall apart after a couple of washings.
3. Buying items in bulk that should be bought in smaller quantities. Buying things in bulk can often result in significant savings, but the truth is, there are also plenty of items that are usually better off being bought in smaller quantities. For example, brown rice has a short shelf life due its oil content. Mayonnaise too. If an item you purchased in bulk goes bad before you can use all of it, the odds are you probably could have saved more money by buying it in a smaller quantity.
4. Always assuming larger-sized packages are cheaper. Nowadays, it’s no longer a given that products in bigger packages are always the best buy. When trying to choose between getting the smaller- or larger-sized item, be sure to check out the unit price of both packages first.
5. Thinking in terms of monthly payments when getting a car loan. Car dealers love to steer price negotiations toward how much money you can afford to pay on a monthly basis. After all, when it comes to negotiating the price of a new or used car, dealers can usually work out the financing such that you can afford just about any vehicle your heart desires. By increasing the loan repayment period, dealers can offer a monthly payment to fit most any budget. Of course, that means you’ll pay more interest over the life of the loan.
6. Driving out of your way to save a few cents on the price of gasoline. Awhile back, I did a complete gas mileage analysis that conclusively shows why driving even a couple miles out of your way to save a few cents per gallon can be a losing proposition. In fact, unless the price differential is significant, you’ll actually save money by buying your gasoline at a nearby station with the higher price – regardless of whether you’re the type that likes to top off your tank. Thunk.