DO THE MATH
Cutting costs here and there is a common way consumers try to save money. But many familiar tactics just aren't worthwhile, and some may end up costing more -- in more ways than one -- than the savings generated. Here are 11 seemingly tried-and-true ways to pare expenses that can easily backfire.
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Coupon clipping is an old-school approach to saving money. Some thrifty shoppers push the tradition to its limit, effectively turning coupon clipping into a sport (see TLC's "Extreme Couponing"). Sure, coupons provide discounts, but at high cost: hours searching for the very best, traveling to distant stores that accept coupons, even spending money on coupons through online clipping services. Then there's the siren call of coupon catalogues and feeling compelled to buy things just because they're a good deal. A more efficient way to save a few bucks is to join store loyalty programs.
JOINING A WAREHOUSE CLUB
More than 120 million people belong to warehouse clubs such as Sam's Club, Costco, and BJ's Wholesale Club. With annual membership fees of $45 to $55, do consumers really save money? The answer largely depends on family size. For families who spend hundreds of dollars at the supermarket every week, membership pays for itself in short order, but bulk buying probably isn't practical for singles living on their own. Money is wasted when excess food has to be thrown out, and walking the aisles can invite unnecessary purchases merely to justify the annual fee.
Related: 11 Types of People Who Shouldn't Set Foot in Costco
'THE LATTE FACTOR'
Although small-time savings can add up, too many consumers myopically focus on daily coffee runs. A more lucrative alternative is slashing large monthly payouts, such as cellphone and cable bills. Insurance premiums are another easy target for savings. Spending 15 minutes on the phone with an agent asking about discount opportunities on auto insurance, for example, can net rate cuts for factors such as being married, driving a particularly safe vehicle, and taking advantage of group discounts through organizations like AARP. Take a hard look at recurring budget items and go after the savings waiting to be scooped up.
WATCHING GAS PRICES
Say there's a service station on the other side of town with gas that's 10 cents cheaper than the station down the street. Is it worth the drive? Many people would argue "yes" without factoring in the amount of gas used to get there, vehicle depreciation, and driving time. To determine whether it's worth the schlepp, crunch the numbers using a tool from Bankrate.
Retailers use a variety of methods to subtly influence customers' buying preferences, and the easiest ones to spot usually involve promotional sales. Just because something is "on sale" doesn't mean it's a good deal. Some stores run sales constantly (is it really a sale?) and many display sale items in a way that encourages impulse buying -- by placing discounted products next to more expensive versions, for example. Avoid the sale conundrum by asking yourself whether the item is really necessary or whether it's desirable merely for the cheap price.
PAYING WITH CASH
Some people try to limit spending by relying on only cash for everyday purchases. The logic behind this philosophy seems sound at first, but has one major flaw: It makes identifying and tracking overspending very difficult. Consumers who use credit or debit cards can keep tabs on spending habits through online records or personal finance apps, such as Mint, without much effort. Moving to a cash-only routine also could be costly if your wallet disappears.
Related: 10 Situations Where Cash Beats Credit
MAXIMIZING CREDIT CARD REWARDS
Most credit card companies offer rewards for using their cards in the form of travel deals and/or cash back. But redeeming rewards often involves spending a minimum amount over a set period, and that floor can be high. So high, in fact, that consumers may spend money just to earn a discounted vacation package. The wiser strategy for covering the cost of a getaway is to save for it.
INSISTING ON FREE SHIPPING
Websites often run promotional deals that entitle shoppers to free shipping after spending a certain minimum amount on a single order. It's easy to see how this gambit encourages unnecessary purchases. If shipping costs for a particular item seem expensive, call up a local store and ask if the item is in stock (many retailers also show store availability online when shoppers enter a ZIP code). The price tag may be higher offline but still represent a saving over the added cost of shipping, and free shipping to a store may be an option.
BUYING LOW-COST PRODUCTS
It can be tempting to save money by purchasing low-quality goods selling at low prices. All too often, however, these so-called bargains break down or wear out within a short period and shelling out money for a replacement is the only solution. Buying the least expensive version of a product can become surprisingly expensive over the long run. Spend time researching brands and models to make sure your dollars are well spent.
FORAGING FOR DEALS
Finding a killer deal can be a blood-pumping high. But spending an hour searching for, say, a hotel room that's $5 less than comparable rooms is a waste of precious time. For common big-ticket purchases such as airfare and lodging, turn to price comparison tools such as Google Flights and Hipmunk to find the lowest rate. After doing so, check the airline or hotel site directly, where even better deals may await.
BUILDING UP A SAVINGS ACCOUNT
After building up enough savings for an emergency fund, avoid the temptation to sit on -- or spend -- the rest of that nest egg and start using the savings to build wealth. Set up automatic deposits into a 401(k), IRA, or some other type of investment portfolio. The saved money earns money through interest and dividend payments and unrealized capital gains, and provides an important foundation for future needs, from education to retirement to medical bills.
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