Zombie Economics: When Saving Doesn't Pay
We all love a good bargain, but it doesn't always pay to be stingy. Rick Emerson, author of "Zombie Economics," stopped by to tell more about when penny-pinching is a bad idea.
When to Skimp...and When Not To:
Homeowner’s Insurance can seem like an easy expense to cut, and it is. What’s not easy is replacing your house if it’s damaged or destroyed by fire, or a flood, or anything else that’s out of your control. Paying one mortgage is hard enough – imagine also paying the mortgage on a house that no longer exists.
For those who rent, insurance is just as important. Renter’s Insurance is dirt cheap (as low as twelve dollars a month), and provides an almost unbelievable benefit if disaster strikes: the replacement of nearly everything you own.
Bottom line: when trying to save a few dollars, don’t cut your insurance coverage. Consider raising your deductible instead: this can sometimes save you up to 15% on your premiums.
The same goes for lodging: yes, a hotel ten miles from the Vegas Strip will cost far less, but if you end up spending the difference on cabs and sunstroke treatments, what are you really saving? There’s almost always a middle-ground between first-class and no-frills…you just need to know how to look.
3) Tools and other home “hardware”
When it comes to home tools and hardware, the goal is to buy once, and then forget about it…for years, if possible. Flashlights, hammers, scissors, kitchen knives (especially kitchen knives), cookware, and, yes, lightbulbs…are available in a range of styles and prices, and “cheap” is often the enemy of “inexpensive”. Buy quality tools at a reasonable price, and save yourself time (and money) down the road.
A good place to start: TheSweethome.com, a site which attempts to recommend the single-best version of certain products.
4) Your retirement plan
5) Dental work
But remember this: there is no dental problem which gets better on its own. Ever. At all. Dental issues only get worse…until they’re addressed. By that time, a simple filling may have gotten worse, and you may be looking at multiple sessions in the chair and a $5000 bill.
Minor pain in your wallet (and mouth) is better than major pain later on. Everyone pays the dentist…the question is how much.