I recently came across a coworker who was burning the midnight oil. I thought that I was the only one who had to work late that night. When I asked him what he was doing, he told me that he did not have an internet connection at home, so he was using our work internet after hours.
Setting aside the ethical implications to this scenario, I decided to delve deeper into his life and frugality. Come to find out, he does without a lot of things to cut costs — cable television, internet, phone service, and he even drives across town for cheaper gas.
There’s difference between being frugal and simply being cheap. Which side of the line is he on?
Believe it or not, you can take frugality too far, to the point of being miserly, unethical, antisocial, etc. While frugality is perhaps more socially acceptable than in the recent past, it still has its limits.
Aside from the social implications, being overly-frugal can wind up costing you money, too. Let me give you a few examples of how frugality may hurt your wallet.
Ditching cable actually kills my budget
I love having 200 cable television channels at home on my TV. I enjoy having seven different channels from providers like CNN, MTV, and others that cover the exact same things. But I will let you in on a little secret. Having 200 channels on my television actually saves me money too.
For me, it is totally worth the money I spend on having so many channels. It keeps me at home on the couch instead of out on the town looking for something to do and spending money. This isn’t true of everyone, but I know that I personally get bored and distracted easily.
I would quickly find myself inside the movie theater every weekend or buying DVDs each week if I didn’t have a lot of TV channels to choose from at home. The cost of those activities would quickly outpace the savings of not having a large cable television packages if I am not careful.
You miss out by not having internet
Do you need an internet connection at home? No, but in today’s digital age, it makes life more efficient and enjoyable. It also makes it easier to forego having 200 cable TV channels if you disagree with point #1, above. An internet connection opens up a world of possibilities with streaming content from Netflix, Hulu, Amazon, and YouTube.
While most of the premium sources charge a monthly fee, that cost pales in comparison with the cost of a premium cable or satellite packages. The primary downside is limited access to live sporting events.
Driving around wasting your savings
Have you ever driven past a gas station with a higher price at the pump in hopes of saving money on gas? Many of us get sticker shock when the price of gasoline starts to creep up in the summer, but you shouldn’t drive too far to find your next tank of gas.
You can do a simple cost-benefit analysis and determine the breakeven point to make it worth driving further down the road. At some point, you’ll find yourself eating away at any potential savings — not to mention wasting your valuable time. Eventually, the search itself becomes uneconomical, and you should just pay the few extra pennies for the higher priced gasoline.
Wasting your frugal savings
Another way that being too frugal can wind up costing you money is what you do with the savings. What is the end result that you are shooting for by saving so much money through your daily spending decisions? Are you investing that money? Are you saving the money for another financial goal like paying for a home with cash? These are all great endeavors if that is actually what you use the money for.
There is, however, a range that your frugality will enable lifestyle creep in other areas. Or maybe you’ll deprive yourself so much in one area that you’ll rebel and overspend in other areas.
Is it possible to be too frugal? I personally think that there’s a point where frugality becomes counterproductive and can wind up costing you money in the long run.
Are there ways that you can spend your free time enjoying life without spending a dime? Of course there are. But there are also times when knowing ourselves, how we behave, and knowing when to say enough is enough can actually save us money even though it involves spending a bit of money.
Have you ever taken frugality too far?