In this economy we’re all trying to save a buck or two. That doesn’t mean we haven’t done stupid things to save money.
In fact some people repeatedly try to save money by doing things that end up costing them more money in the long run.
Here are three dumb things people do to save money. Have you done any of these?
Using a Credit Card for Points When in Debt
Last year extreme couponing was the fad. This year it’s churning credit cards for their reward points.
And, while getting free money or free travel from the credit card companies seems like a pretty sweet deal it may be costing you more than you think. For instance, many people have the tendency to buy more using credit rather than cash or debit.
And for those with existing credit card debt, using a card for the points is a big no-no. You’re paying far more in interest than you’re earning in points. Save yourself some money and swear of the credit cards.
Following a Finance Gurus Advice to the Letter
Many popular financial gurus have come under fire in recent years. Dave Ramsey for his overly optimistic advice on investing. Suze Orman for starting a prepaid, high fee debit card to “help the poor.” And, Robert Kiyosaki for filing bankruptcy for one of his companies.
While much of the advice these gurus dish out is in fact solid, some of it isn’t. When coming up with your financial roadmap take the expert’s advice in hand but also do what’s right for you.
For example, Dave Ramsey advises to use the cash envelope system for budgeting. I, for one, am terrible with cash. If I have it, it seems like it’s instantly gone. I spend it without thought. When I use a debit card I am much more careful with my money since I know that it will be deducted from my bank account balance.
Lowering Liability Insurance Coverage’s to Save Money
I’m always amazed when people declare that they knocked half the price of their insurance premium by switching companies.
While you can in fact save money by switching companies, extreme savings usually means your coverage’s have been cut.
It’s extremely important to have adequate liability coverage on your home and auto policy. You never know when something bad will happen, and you need to be prepared. A company isn’t really saving you money unless they are giving you an apples to apples quote. Many people are oblivious to the fact that their new insurance provides less coverage than their older, more expensive policy did.
The next time you’re looking to save money on insurance, have your policy in front of you before making the call. Slashing your coverage’s to save a couple bucks is just not worth it.
Those are three dumb things people do to save money though I’m sure many more could be added.
What is the dumbest thing you’ve ever done to save money?