It’s hard to resist seemingly good deals when we see them, whether it’s a sweet deal on home in a pricey neighborhood, a tempting cable company promotion or a $10 T-shirt.
But sometimes deals that seem too good to be true actually are. Although the initial investment might be low, it could end up costing you in the long term, whether through maintenance costs or missed opportunities to put your money toward a more worthwhile purchase.
Purchasing a Home That Needs a Complete Renovation
You might be able to find a great deal on a fixer-upper compared to a move-in-ready home that could come at a hefty price. With the median home value in the U.S. recently hitting about $436,800, it might seem like a smart move to save money upfront by buying a cheaper home and fixing it up. But that’s not always the case.
Martin Eiden, a licensed associate real estate broker with Compass Real Estate, uses the example of a property selling for $700,000 when neighboring, finished homes sell for $1 million.
“A newbie buyer would look only at the cosmetic work and say, ‘I can put $100,000 into the property to bring it up to the $1 million (value) and save $200,000.’ However, it is not as easy as it seems,” Eiden said.
“You often need an architect to create and file plans — which can take months — and get city approval, which can also take months. In other words, it often takes six months of design and approval before work can begin. Construction can take another six to 12 months. During that time, you cannot live there since it’s a construction site, but you still have to pay for heat, water, taxes and a mortgage. Meanwhile, you have to rent an apartment for a year. As such, there are double housing costs.”
Leasing a car is often “more affordable” than buying a car, but it could ultimately be a worse financial decision.
“Commercials tout lower monthly payments than purchasing the vehicle, so it seems like a good deal,” said Todd Christensen, a real estate agent and the education manager at the nonprofit Money Fit by DRS Inc.
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How This Might Cost You More
“For many reasons, leasing makes no financial sense for individuals,” said Christensen. “First, in small print near the monthly payment, you might find a large security deposit and the payment due at signing. Additionally, at the end of the lease, if you have driven more than the miles allowed per year, you will be hit with what are essentially penalty [charges] that could equate to thousands of dollars. After all those payments, the vehicle still does not belong to you.”
Buying is better than leasing, but there are still “deals” that aren’t worth it when it comes to car shopping.
“Some (used cars) might seem like a bargain for a luxury vehicle, but there’s a reason for that,” said, Jacob Dayan, a partner with Consumer Law Group LLC.
Be prepared to invest a lot of money into your “well-priced” luxury car over the years.
“Maintenance and repairs on luxury cars cost an arm and a leg, and they continue to lose value as time passes,” Dayan said.
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Shopping For Fast Fashion
When it comes to buying clothes, it’s better to invest in a few high-quality items than to buy a bunch of lower quality and cheaper items just to score shopping deals.
“Cheap clothing can seem like a good deal at the time, but the true cost can be difficult to grasp,” said Christian Barnes, President and CEO at Better Homes and Gardens Real Estate in Kansas City.
“One of the biggest downfalls is the need for constant replacement from wear and tear,” said Barnes. “A $5 shirt seems great when you buy it, but not so great when it has a hole only a few months later. Cheap materials also wear faster, resulting in things like pilling and fading. Higher-quality and higher-priced clothing tends to last longer and generally fits better over time. It doesn’t mean you need to drop $500 on a shirt, but something in the $30 to $50 range will serve you much better than the disposable clothing that has become popular. If you want high quality with a more reasonable price tag, shopping sales and off-season are great options.”
Like fast fashion, fast food is something that’s cheap but just isn’t worth it.
“The drive-thru is a tempting option when you only have a few dollars and a few minutes, but the cost in terms of health can be astronomical,” Barnes said.
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How This Might Cost You More
With the cost of healthcare on the rise, making poor choices now that negatively affect your health can end up costing you big time down the line.
“The short-term hits can be lethargy, oily skin and gastrointestinal distress,” Barnes said. “The long-term effects can include all sorts of chronic issues, like diabetes, heart disease and high blood pressure.”
Even if you give up fast food, that doesn’t mean you have to spend hours preparing meals in the kitchen.
“Instead, try focusing on simple homemade meals that are easy to prepare, store and freeze,” said Barnes. “Another great option is using a slow cooker. You can set it when you leave for work and come home to a fresh-cooked meal.”
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Buying Perishable Items in Bulk
Stocking up on groceries at Costco might seem like a good deal, but these bulk food deals could end up being a waste of money.
“Bulk buying to save money seems like a great idea in theory, but more often than not items purchased go to waste,” said Rebecca Gramuglia, public relations manager at Benjamin Moore.
You might not even realize how much of the bulk foods you buy go to waste, which in essence means you’re throwing money away.
“A survey analysis by TopCashback.com found 85% percent [of people said] the main reason for bulk buying is to save money,” Gramuglia said. “Yet, consumers are spending an average of $50 a week buying items in large volumes and typically see 57% of that go to waste. With food that has an expiration date, consumers must really be careful about how much they think they’ll actually use. Any food that ends up getting thrown away because it’s gone bad is money being wasted.”
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Taking Advantage of ‘Free’ Shipping
How many times have you added items to your online shopping cart to make it to the free shipping minimum? Think about how much extra money you’ve spent doing this when you could have just sucked up the $3.95 shipping fee.
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How This Might Cost You More
“While it might seem like you’re saving money, most consumers waste money by purchasing items they don’t need,” said Gramuglia. “To save money, select the ‘pick up in-store’ option. Not only will you limit yourself to only buying what you need, but you won’t be tempted to buy more just for the convenience of free delivery.”
With the rise of online direct-to-consumer mattress companies, you can now buy mattresses for less than ever before. You might be inclined to buy a mattress that costs a couple of hundred bucks rather than shell out $600 or more, but that can be an unwise move financially.
“You can get a mattress on Amazon these days for less than $200 sometimes. However, as someone who tests mattresses for a living, I would caution consumers against purchasing these ultra-budget mattresses,” said Matthew Ross, a contributor to mattress review website The Slumber Yard. “The truth is that a lot of these budget beds are just made up of two or three layers of cheap polyfoam. Accordingly, these mattresses break down and form body impressions very quickly.”
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How This Might Cost You More
Ross said that with some cheap mattresses, you’ll start to notice body indentations forming after only six months of use.
“That leaves you no option but to purchase a new mattress shortly thereafter,” he said. “In the long run, it just ends up costing you more money — not to mention sleeping on a cheap bed that sags can lead to back pain and other health issues.”
Ross recommends paying more upfront for a more premium mattress.
“After all, you spend around a third of your life sleeping,” he said. “It’s worth the money to purchase a bed that is durable and supportive. Plus, the good news is there are a plethora of beds out there under $1,000 that fit this description. You just can’t become mesmerized by the $200 to $300 price tags you see on Amazon.”
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Buying Cheaper, Shorter-Term Life Insurance
If you’re considering an inexpensive life insurance policy because you think it saves money, you might be in for a surprise.
“I have seen families who have decided to go with cheaper, shorter-term life insurance,” said Christian Sees, owner and advisor at Integrus Financial. “It’s great in the beginning because the price is very inexpensive. However, as time goes on, the need for life insurance may still exist but the premium gets very expensive.”
Sees explained how buying cheaper insurance now can end up costing more down the line.
“For example, a 10-year-term life insurance policy has level premiums for 10 years; a 20-year-term life insurance policy has level premiums for 20 years,” he said. “The 10-year product is less expensive, but if you have to renew for another 10 years it can end up costing a ton more. You will probably have to prove insurability again to get a new 10-year product. If there have been any health issues, the increase is exponential.”
Furniture is another item you shouldn’t be frugal about.
“When you first move, it’s tempting to want to fill your house with cheap, low-cost items,” said Brittany Waters, a financial coach and the CEO of Ready Set Life. “Especially if you’re living in a long-term space — i.e. you bought a house and aren’t living in a student dorm — you should be opting to fill your house with well-built furniture.”
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How This Might Cost You More
Waters noted that cheap furniture often breaks quickly and will end up having to be replaced every couple of years.
“Take the time and use hand-me-downs or live without until you can actually afford to build out those larger items,” she said. “A great bed frame, couch or kitchen table will take you through years of wear and tear, (so it’s a better option) than buying something that will break in two years.”
When you buy an item that’s off-brand or heavily discounted, you might feel like you’re getting a really good deal. There’s a certain satisfaction that comes with knowing how much you’ve saved off the original price, but you should ask yourself if you’re buying the item because you actually wanted it or simply because you know it’s a “deal.”
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How This Might Cost You More
Waters gives the example of buying an off-brand eye shadow palette that ends up just sitting unused in your makeup drawer.
“The palette might sit in a drawer because the shadows are too powdery to blend. They were cheaper, but it may have been better to actually save for buying a quality palette you’d enjoy using to the last drop,” she said.
Another example is buying a cheaper food brand than you usually buy just for the savings.
“If the taste makes you recoil and you end up wasting half the package, it might have been better to save for one of the on-brand packages instead,” Waters said.
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Neglecting To Service Your Car
When that little “change oil” alert pops up on your car’s dashboard, it’s tempting to turn off the alert and keep on driving. Not only do oil changes set you back some money, but they also end up taking a chunk of time out of your day. However, saving money right now by ignoring the oil change you’re due for could turn out to be a major money mistake.
“Postponing something as simple as an oil change can cost you a lot of money down the line as it can cause serious problems with your engine,” said Dylan Houlihan, and a financial writer and the creator of SwiftSalary.com. “I’d much rather pay $50 for an oil change vs. several thousand for a new engine.”
Houlihan also said it’s important to change your tires seasonally. “I’ve been tempted to keep my winter tires on all year for the sake of saving a couple of hundred dollars, but that’s not a good idea,” he said. “Winter tires degrade faster in hot weather and keeping them on all year will mean you’ll have to replace the entire set much sooner.”
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Driving From Grocery Store to Grocery Store for the Best Price
If you’re a true bargain hunter, you might go to great lengths to find the best deals — and this might entail driving far away from your home to purchase a sale item. However, you should think about the true cost of the trip before making the trek.
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How This Might Cost You More
“Someone who spends too much time driving around town to hunt down the best grocery bargains may be wasting more money on gas than what they are saving,” said consumer finance expert Andrea Woroch. “Consider the best way to use your time and how much it’s costing you to drive from store to store. Instead, strategize your grocery shopping at various stores based on errands, or take a different route home from work to pop by a favorite store for deals on produce.”
Woroch also suggests using the “pick up in-store” option when shopping online at Target and Walmart to save the time of searching for the item once you get to the store. You’ll also be less likely to make impulse buys if you’re not walking through the aisles, which will also save money.
Frugal travelers might believe that buying a timeshare is a much better use of funds than paying for vacations as you go, but this isn’t always the case when you actually crunch the numbers.
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How This Might Cost You More
“Buying a timeshare may seem like a more cost-effective way to vacation but in the long run, you spend more money,” said personal finance strategist Ro Allen. “For example, let’s look at the cost of vacationing for over 20 years with a timeshare that costs you $350 a month plus $1,000 per year for maintenance fees. Each year, you spend approximately $5,200 to use your timeshare for one week.Over 20 years, you will spend at least $104,000, not including airfare.”
“With all the deals on the internet for travel offers, you can spend much less, not have time restrictions and get your flight included for much less,” Allen added.
When you comparison shop for electronics, it’s easy to opt for the cheapest one you can find. However, this shopping strategy doesn’t take into account long-term costs, as some cheap products have expensive parts.
“This is quite a common problem when it comes to buying cheaper printers,” said Holly Andrews, a finance underwriter at KIS Finance. “You may find a printer for $50, which seems like an unbeatable price. However, a couple of months later, you go back to the shop when it has run out of ink and discover that the only ink cartridges made for this model of printer cost $25 each. After only changing the ink cartridges twice, you would have now paid double what you thought it originally cost.”
When it’s time to buy electrical products, Andrews advises “[doing] a comparison of how much it will cost in the long-run before you buy it. You may find that cheaper models have expensive ongoing costs, but the slightly more expensive models have no ongoing costs at all, making it the cheaper option overall.”
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Skipping the Dentist
(Almost) no one likes going to the dentist, and visits can be expensive depending on your insurance coverage and the work you end up needing to have done. But not popping in for your routine cleanings because you don’t want to pay for them can be a costly mistake.
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How This Might Cost You More
“There are way too many people whose care of their teeth ends with a toothbrush and whitening strips,” said Nick Galov, owner of WebTribunal.net. “By keeping up appearances [instead of going in for] regular check-ups and fixes, you’re jeopardizing your dental health. In the end, it can cost you much more to do the interventions than if you’d taken regular visits to the dentist to fix your teeth problems one by one.”
Making repairs to your roof or investing in weather-proof windows can be a major expense. Although you might save in the moment by not making these upgrades, you’ll likely regret it if you get hit by a big storm or other extreme weather.
Having a leaky roof or drafty windows means it will require more electricity to heat your home in cooler months, adding to your electric bill.
“You should double-check that your home is ready for extreme weather before the winter,” Galov said. “[You might] need to change some of the pipes for water drainage, as well as add insulation strips to your doors and windows. Avoiding these preparations or interventions can cost you much longer in the long run. The damage gets more significant with each day you’re not addressing it.”
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How To Spot a Bad Deal When Penny-Pinching
Many “good deals” are just bad deals in disguise. Before making any purchase, big or small, be sure to take the time to think about whether that purchase is something you really need, and whether it will serve you in the long term.
As Gramuglia said, research really is the key to saving money. Don’t just buy something on impulse because it seems inexpensive or you think it will save you money. Take the time to look into your options and do some quick math to compare upfront and long-term costs. At the same time, don’t neglect the small maintenance costs that could add up to larger costs down the line.
