10 times being cheap will cost you more

When you’re trying to cut costs, it can be tempting to trim your budget to the bone by always opting for the cheapest choice available. Unfortunately, there are times when being cheap can actually cost you more in the long run. Here are 10 examples of when frugal mistakes can end in financial folly, and how to avoid them without breaking the bank.

1. Airport-Hopping

Several travel-specific search engines now give consumers the option to compare flights between nearby airports. However, bargain hunters should weigh whether the savings is worth the time and added travel costs it will take to get to an airport that might be hours away by car.

“Furthermore, it adds a much bigger element of risk [around] being able to make the flight on time, since a lot more delays can happen in a two- to three-hour drive than in a 30- to 45-minute drive to the local airport,” said Kathleen Campbell, founder of Campbell Financial Partners.

Rather than risk missing a flight to save money or spending hours driving to an airport outside your city, try travel hacks like taking the first flight of the day, which often offers lower fares than later flights, and avoiding the busiest holiday travel days.

2. Buying in Bulk

Savvy shoppers can snag some great deals by buying in bulk, but bigger isn’t always better, especially when it comes to perishable food. Respondents to a recent survey conducted by market research firm TNS Global estimated wasting $640 in household food each year, and government figures estimate Americans waste closer to $900 annually.

Before buying in bulk, ask yourself if you can and will use what you’re purchasing before it spoils or expires. Also check the unit price on bulk items to ensure they really are less expensive than smaller-sized equivalents at other stores.

3. Hitting the Outlet Mall

Outlet stores can offer deep discounts compared with their pricier parents. The downside is that bargain buys might fall apart after a wash or two, especially if they are manufactured specifically for outlets.

“Whereas outlet stores used to carry overstocks or past-season clothes, now many of them have lines manufactured specifically for the outlets,” Campbell said. “These outlet-specific clothes are often much lower quality, which can lead to a much shorter wear life.”

If you’re buying pieces you plan to wear a while, patience pays off. “If it’s a seasonal piece or a new fashion trend, then a short life may be fine,” Campbell said. ”But for clothing you want to keep for the long-term, it usually makes more sense to pay for the higher quality or to shop sale racks at the full-price stores.”

4. Ignoring Insurance

Drivers should have auto insurance, unless they are prepared to face hefty fines and out-of-pocket costs in the event of an accident. Going without health insurance can be a cheap mistake if it means skipping preventative care.

Under the Affordable Care Act, those who can afford health insurance but choose not to purchase a policy must also pay a fee when they file federal taxes. In 2016, that fee is assessed at 2.5 percent of household income or per person, with the tab being whichever total is higher. The per-person fee for an adult is $695.

Young families should also make room in their tight budgets for life insurance, said Lesley A. Kilcullin, a certified financial planner with Kilcullin Financial Life Planning.

“With student loan debt and child care, life insurance doesn’t seem to be an important item to purchase,” she said. ”However, if something would happen, the financial burden for the surviving spouse would be so significant.”

5. Obsessing Over Interest Rates

Whether they’re looking to buy a home or refinance an existing mortgage, many consumers tend to focus on the loan’s interest rate rather than considering costs overall. But fees in the fine print can add up, said Campbell.

“A 4.5 percent rate at a lender, with little or no added fees, can be a much better deal than a 4 percent or 4.25 percent rate with a lender that piles on underwriting fees, administrative fees and various other inflated fees.”

One alternative for those looking for lower rates is “paying points” on their mortgage. Each mortgage discount point costs 1 percent of the total amount mortgaged, according to Investopedia, and generally lowers the interest rate by 0.25 percent. Those costs are tax deductible because they are essentially prepaid interest.

“Often those buying or refinancing don’t want to pay the point, as they view it as a ‘bad deal,’” Campbell said. “But if that money is used to ‘buy down’ the rate, then 30 years of a lower rate can easily make 1 percent upfront be a very smart move.”

6. Making Frugal Food Mistakes

Dining from the dollar menu or eating ramen three days a week might save money in the short run, but it’s a prime example of how being cheap can cost you more later in life. The direct and indirect costs of cardiovascular diseases and stroke total more than $320.1 billion, including health expenditures and lost productivity, according to the American Heart Association.

Poor diet is a big contributor to those conditions, and fewer than 1 percent of U.S. adults follow the AHA’s definition for “Ideal Healthy Diet.” AHA research also shows essentially no children meet the ideal diet mark.

If you are looking for ways to clean up your diet without breaking the bank, there are several grocery savings strategies. Consider buying conventional fruits and vegetables — except for those on the Environmental Working Group’s “Dirty Dozen” Shopper’s Guide to Pesticides in Produce — and stocking up on foods like grains and legumes, which are both inexpensive and healthy.

7. Neglecting Repairs and Maintenance

It cost drivers an average of $766.50 annually to maintain their car in 2015, about 10 percent of average driving costs, according to the most recent Your Driving Costs report from AAA. As for home maintenance and repairs, HGTV recommended homeowners save 1 percent to 3 percent of the home’s purchase price each year in a separate account specifically devoted to those costs.

Repair costs can add up, but budgeting for them in advance and making maintenance a priority can help save money. For example, getting a tune-up can improve your gas mileage by up to 4 percent. Inflating your tires to the proper pressure can boost gas mileage by more than 3.3 percent, according to FuelEconomy.gov. And using the manufacturer’s recommended grade of motor oil can maximize mileage by 1 to 2 percent.

For homes, industry experts say regular repairs are crucial when it comes to reselling your home for the best price possible. So even if you have to clip coupons to afford oil changes, or skip that vacation to have the roof replaced, make regular repairs and scheduled services a money must.

8. Skipping Savings

A recent survey by GOBankingRates found that 62 percent of Americans have less than $1,000 in savings. Although the idea of an emergency fund might seem like an unreachable goal to someone who can barely cover their bills, setting aside even $1,000 can help you avoid the cheap mistake of using high-interest credit cards to cover unexpected expenses.

Dave Ramsey’s Baby Steps strategy suggests people start by saving $1,000 as a starter emergency fund, then focus on paying off all their debts, besides their mortgage. Once they’ve done that, he said they should establish a mature emergency fund that will cover three to six months of expenses.

Simple ways to save include cutting non-essentials like cable and restaurant meals. However, if you feel like you don’t have any wiggle room in your budget to save $1,000, consider selling unused items online or taking on freelance projects or part-time work and devoting those earnings to an emergency fund.

9. Skimping on Exercise

Dropping your gym membership might seem smart until you consider all the potential costs. Nationally, the estimated annual healthcare cost of obesity-related illnesses weighs in at $190.2 billion. So staying fit can help you save major money in the long run.

“The monthly membership cost at Equinox is $150 per person,” said Anna Sergunina, a CFP with Main Street Financial Planning, who said she recently joined a gym to take advantage of its group classes. “For a family of four, that’s $600 per month. Pretty steep. However, the real question is, ‘compared to what?’”

“The way I rationalized about going: $150 per month is $5 per day,” she said. “What can you buy today for $5 that’s going to provide long-lasting benefits of saying young, healthy, active, energetic, fit? A cup of coffee at Starbucks. But the energy, or caffeine kick, only lasts for a few hours. At that point, I was sold, without question.”

If you can’t swing a pricey place, investigate community centers and other less-expensive options like exercise videos available online.

10. Suffering Through DIY Tasks

Whether it’s doing your own taxes to save money on an accountant, or repainting the living room yourself rather than finding someone with a great recommendation on Angie’s List, many people have tried to tackle projects that took them twice the time, or longer, than it would have taken a pro. Even worse are the projects that required expert TLC after you just couldn’t get the job done right.

We’ve all heard the axiom that time is money. So the next time you’re thinking about building your own backyard fence, it might be worth estimating exactly how much time the project will take and getting a few professional estimates. Once you compare costs, you might be surprised to find you are, in effect, saving money by devoting the time you would have spent in DIY purgatory to working a few extra hours at your day job.

From GoBankingRates.com: 10 times being cheap will cost you more

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