When You Shouldn't Be Cheap

12 Times When Being Cheap Will Cost You


Sometimes you can cross the line when trying to be more frugal. Business Insider shares several instances when pinching pennies will cost you.

Everyone loves a good deal, but going cheap at the expense of your health, home, or sanity is just plain stupid.
To get you on track, we've rounded up 12 of the most penny-smart and pound-foolish moves you can ever make with your money.

RELATED: The best and worst places to hide your emergency cash

Hitting the vending machine for cheap snacks

Cheap snacks aren't helping your wallet or waistline, says nutritionist Rania Batayneh of Essential Nutrition for You.

Bankrate.com found 72 million Americans could save on doctor's visits, health insurance premiums, and groceries if they simply ate better. They might even get a salary boost.

Bypass the vending machine and purchase high-quality snacks online, instead, says Batayneh.

"I subscribe and have Kind bars shipped to me monthly through Amazon," she says.

"I don't pay shipping, and it comes automatically out of my bank account. Grabbing a candy bar from the vending machine wastes money and calories."

Read on for more.

Going the poor man's divorce route to save $20,000

Skipping a $20,000 divorce sounds logical, but think twice before forgoing divorce, no matter how strapped you are.
From custody battles (who gets the kids?) to trouble remarrying and filing taxes, there's a buffet of issues to work through, like late car payments, foreclosed homes, and anything else your deadbeat spouse left kicking around that'll drag down your credit.

Gabrielle Clemens, an attorney at law in Boston and financial planner, says it best: "There's no good argument for staying married to someone who has no control of your life."

Upping your insurance deductible to save upfront

It sounds smart on the surface, but increased exposure makes this a very bad idea, says Money Crashers founder Andrew Schrage.

The $10 you save a month won't even begin to pay for that wrecked Camaro or your flooded house.

"An unexpected event can force you to pay hundreds or thousands more, depending on how much you agreed to increase your deductible," says Schrage.

Opting for layaway to feel like a saver

If you've got problems with managing money, then don't look to layaway to solve them.

Layaway isn't a debt-reduction plan; it's a marketing ploy that gets insecure shoppers to think they're saving upfront when they're really racking up late fees and interest.

Remember, stretching out payments isn't responsible if you can't afford the item in the first place.

Choosing a variable rate mortgage (ARM) for the lower monthly payment

Variable rate mortgages can be a trap for wary homeowners who think they're getting a great deal for nothing.

Starting with a low initial rate, they offer smaller monthly payments than fixed loans. But they pose the risk of rising rates in the future.

"A fixed-rate mortgage is typically more expensive, but you'll save more later on because you're not subject to an adjustment that's out of your control," says Clemens.

"The goal with an ARM should be 'I'm not going to keep this; I'm going to lock in a rate when I'm in a better financial position.'"

The safe—and cheaper—bet might be to opt for a 30-year mortgage and then refinance. If you're still unsure, then run the numbers to see if an ARM works for you.

Overpaying for extended warranties

"The cost-effectiveness of extended warranties is minimal and, simply put, they're generally a bad idea," says Schrage.

In fact, retailers typically enjoy a greater gross profit on the extended warranty than they do on the product they're selling.

Standard warranties should be just enough to get you by.

On the flipside, if your PC or laptop breaks down, then forgoing the extra $50 or $100 could cost you hundreds on wear and tear.

Overspending on bulk purchases to cut the grocery bill

"One of the biggest mistakes people make (buying in bulk) is that they think they'll use something up, but they end up throwing most of it away," Parker Hurlburt, vice president of research for Acosta, explains.

"The other mistake is that they don't compare sale prices to bulk prices."

Other cons include membership fees to bulk outlets, overspending, and finding a place for all that stuff.

Skipping the dentist (and other health visits) to pocket the co-pay

Skipped your date with the dentist because you couldn't bear the co-pay? Not smart.

A recent Consumer Reports survey found 43 percent of respondents did just that, exacerbating their health problems and leading to hefty medical bills.

To curb the pain in your mouth and wallet, shop around for a bargain, consider visiting free and low-cost clinics, or check out a local dental and hygienist school for free or discounted care.

Splurging on daily deals to feel thrifty

Daily deals don't last forever, and as Your Money reporter/reformed Groupon addict Mandi Woodruff attests, "After I dropped the ball on five of the suckers, I decided to wean myself off."

Yes, there are ways to salvage expired daily deals — read how eight Groupon die-hards did it here — but if they aren't time-sensitive enough for you to remember to use them, then you're basically flushing money down the drain.

Shirking your pet's health to beat the vet bill

Possibly the dumbest mistake petowners can make is not coughing up cash for their pet's preventative care.

Avoid the heartache — and cost — of an ER visit by brushing your pet's teeth, splurging on the healthier, vet-recommended food, and following up on routine checkups and exams.

Your pet's life depends on it.

Not getting a prenup to stave off attorneys' fees

Much like forgoing a divorce, not getting a prenup could turn your bailout plan into a chaotic mess, where the only one cashing the check is your lawyer.

"Any time you can set forth a framework for an outcome, it's more efficient and saves a lot of money if they have to engage in litigation and go to court," says Clemens, the divorce financial planner.

It could also spare you from having to flesh out things later at the expensive cost of an attorney.

If you haven't broached the subject with your spouse, then check out our guide to doing it without getting dumped here.

Leasing a car to avoid the mileage penalty

Lease terms typically run for three years, allowing for 36,000 miles of driving, or 12,000 miles per year.

Exceeding that annual limit will cost you per mile — the mileage penalty — so if you know you're going to drive over the limit, then it's better to just pay upfront, says Phil Reed, senior consumer advice editor at Edmunds.com.

Or go ahead and buy the car so you won't have to worry.

— Jill Krasny

Check out these Business Insider stories:

These New York Hotel Rooms Are Actually Cheap—They're Also Miniature

10 Things That Trick You Into Spending Too Much Money

Can You Actually Go to Jail For Downloading Pirated Movies?

Too Many Young People Are Going Uninsured For No Reason

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