We all like the idea of saving money. Unfortunately, it doesn’t always work that way. Sometimes, the strategy that you think is saving you money actually isn’t.
Before you congratulate yourself for a bargain, be realistic about how you got to that point. Did you use these false savings strategies?
1. Buyback Programs
Do you like buying the latest electronic toys? If so, you might be tempted to sign up for a buyback program. It seems like a slam dunk: You buy something now, and the store promises to buy it back later and give you credit toward a new item down the road.
The problem, though, is that you might not get what you bargained for. First of all, you usually have to pay a fee to join the buyback program. Next, the payouts can be very small. In some cases, once you pass the six-month mark, the payout dwindles to almost nothing. Then, you have to buy your new gadget at a designated store, and what happens if the store doesn’t have just what you want? You’re stuck.
Finally, anytime you use a buyback program on a device that comes with a wireless contract, you end up paying the early termination fee when you get the new gadget. Ouch.
2. Buy Something Because It’s a Bargain
Were you planning on buying that? If not, you aren’t saving money, no matter how good of a deal it looks like. If you are purchasing something just because it’s a bargain, you’re spending extra money that wasn’t in your budget. Before you go crazy buying things that are “good deals,” ask yourself whether you would have bought it anyway. If you can’t honestly answer, “yes,” don’t buy it. It’s not really saving you money.
3. Buy on Sale
Sales are great! They are designed to get you in the door. You see items that are marked down from $50 to $40. However, just shopping mindlessly at a sale might not save you money. In some cases, you can find what you’re looking for online, for less than the brick and mortar sale price. Perhaps it’s $35 online. You’ll save even more if you check the Internet first. In some cases, the offline store will honor an online price. It doesn’t hurt to call and ask. Before you buy online, check the shipping cost, though. Your $35 find might actually cost $42 after tacking on $7 for shipping. Be sure to include that in your calculation.
Another problem with sales is the impulse buying. You might get a great deal on one item, but impulse buy something else at full price. If you do shop sales, stick to your list, and avoid the temptation to spend on non-sale items.
4. Redeem Airline Miles for Merchandise
Airline miles are notoriously worthless when redeemed for merchandise. It takes a lot of miles to “buy” clothes, jewelry, sports equipment, and small appliances. It seems like you are getting something for “free,” since you aren’t actually spending money (unless there is a redemption fee). However, you aren’t getting the best value for your miles. If you want the best value, use airline miles for air travel.
5. Cheapest Item You Can Find
It’s not always about the short-term bottom line. If you buy the cheapest item, you get what you pay for, and it could easily fall apart before you expect. You are better off spending a little more up front for a high quality item that lasts longer. Otherwise, you keep spending and spending to replace something. Over the long run, that means you spend more.
Tom Drake writes for Financial Highway and MapleMoney. Whenever he’s not working on his online endeavors, he’s either doing his “real job” as a financial analyst or spending time with his two boys.