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Being Too Frugal Can End Up Costing You Money

Written by Hank Coleman - 26 Comments

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Being Too Frugal Can End Up Costing You Money

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?

Published on May 15th, 2012 - 26 Comments
Filed under: Frugality

About the author: is the founder and editor-in-chief of this site. He's a thirty-something family man who has been writing about personal finance since 2005, and guess what? He's on Twitter!

Comments (scroll down to add your own):

  1. Good points. I would love to cut my cable, but I can’t because of the live sporting events! I tivo every laker game and watch it in about 1 hour and I am always watching football, not to mention the various other sports. I already have a logitech revue with google tv so as soon as I can get access to live sporting events, I’ll be cutting my cable!

    Comment by Anonymous — May 15th 2012 @ 5:21 pm
  2. Not having internet for me would be counter productive – I MAKE money on the internet, albeit a small amount, from my blog. Plus, internet for me is like TV for you – I would spend a lot of money on entertainment if I didn’t have it!

    I’ve always wanted to shake people that drive for 20 minutes to get cheaper gas – not only does that burn up gas but it also puts on mileage!

    Comment by Anonymous — May 15th 2012 @ 9:05 pm
  3. I have internet and use it constantly. Cutting internet would be a bad decision for me. I cut cable about 4 years ago and have rarely missed it. I don’t watch sports and my internet is too slow to run netflix with reasonable quality. I do invest in a Blu-Ray movie every couple months.

    Comment by Anonymous — May 15th 2012 @ 9:50 pm
  4. This is a good example of “to each his own.” I haven’t had cable in about 10 years. When I stay in a hotel it’s a treat to find a show I like, but at home I watch very little TV. I do have a $20/mo DSL plan. It’s fast enough to let me stream my $9 Netflix movies and shows.

    I used to be that guy who would drive around town for cheaper gas, but now I know how foolish it is. Even if I could save a dime a gallon I would probably lose most or all the savings (not to mention the wasted time) trying to find cheaper gas. I know where the least expensive gas is on my side of town so I try to plan for fill-ups when I know I’ll be passing by that station.

    I try to be most frugal when I know I’m making a real impact. For example, the electric bill is most impacted by heating and cooling the house, so I let my body acclimate to temperatures most people would not like. It means I pay under $50/mo. for power – and there are 3 of us living in my house. What I don’t do is buy cheap, processed food at the supermarket. That’s stupid frugal. You’ll wind up paying more for medical care than you save on food.

    Comment by Anonymous — May 16th 2012 @ 9:49 am
  5. Yeah, I’d probably give up running water before I gave up at-home Internet access! I complain about the cost, but if my provider knew how much I’d really pay to keep it going, I’d be done for. Gouge city.

    Comment by Anonymous — May 16th 2012 @ 11:07 am
  6. I agree that you can be TOO frugal, but there are also many different lifestyles that have different value systems. For example, I would not have a very enjoyable life if I didn’t have internet. My sister doesn’t have internet, and I don’t know how she gets anything done or knows anything! But she makes it work.

    On the other hand, I don’t have cable – never have, and probably never will. I like watching movies or Netflix much more and I’m just so used to now having it, I wouldn’t even know what to do with myself if I did! That same sister, though, does have cable (the most basic cable, but still). She watches a lot more TV (probably because she doesn’t have internet) and it works for her.

    It just depends on what you are willing to pay for and not being afraid to spend a little money on something you really want.

    Comment by Anonymous — May 16th 2012 @ 12:37 pm
  7. On nights I have an evening of personal computer work planned I will stay late to use my office computer, Internet, and most important electricity. Either way I will be using the computer and from the kill-a-watt readings better elsewhere than at home.

    When I finally leave the office traffic in the evening will be much lighter than at rush hour. Does not really apply to me though; I take mass transit and leave the car at home. Work pays for my transit pass but not gas in the car or a parking permit.

    Comment by Anonymous — May 16th 2012 @ 2:33 pm
  8. @My Frugal Miser – with you there on DSL + Netflix. I grew up w/o cable, so OTA + DSL + Netflix is more tv than I can handle.

    @author Hank – does having cable really help your budget? Doesn’t that encourage sedentary activities that aren’t good for your health? For me, this is a huge reason I am considering cutting Netflix. Between my sit-down-for-12-hrs-a-day-job and 1 hour commute, ~7 hrs of sleep, the last thing I need to do is spend my remaining time left in the day sitting.. which is unfortunately how it works out, despite my insistence I’ll lift a weight or two, as I watch..
    I am not overweight, but being a short, I have to watch it.

    Comment by Anonymous — May 16th 2012 @ 3:49 pm
  9. My parents are the kings of taking frugality too far where they end up spending money they could have saved (or causing an issue that could have been avoided).

    I remember a time they put a bucket in the sink to collect grey water to save having to water the lemon tree and it blocked the plug and the water ended up overflowing and flooding one corner of the house.

    However, I think for 100 times they do something to save money, 1 time it bites them, so on average they are well ahead!

    Personally, I think the biggest form of being frugal costing you money is in travel. I saved money on a flight by flying from oakland instead of SFO … but ended up spending double the difference on a cab cause BART didnt run at 430am on a sunday morning!

    Comment by Anonymous — May 17th 2012 @ 3:24 pm
  10. I had a co-worker at a previous job that would stay late at night and be there on the weekends too. The reason wasn’t because of the work. It was because in the summer she didn’t use air conditioning and her house was too hot to stay at. In the winter, it was the opposite as she would keep the thermostat down low to avoid having to use the gas to heat her home.

    Comment by Anonymous — May 21st 2012 @ 12:48 pm
  11. I just found out about this box called “Roku” which is supposed to save you money by streaming channels through it so that you can get rid of your cable. I even heard Clark Howard comment on it on CNN. I ordered one this week but haven’t tried it yet so I’m not endorsing it. I just wanted to give you another option in reference to saving money with the cable bill 🙂

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  13. Good point about the gas expenses. Sometime yo spent a lot of gas just by going different places to try to get the best deals for instance with food that happens very often. Additionally, I can live without TV but I must have Internet.

    Comment by Anonymous — Oct 25th 2012 @ 7:55 pm
  14. I’d prefer to keep the cable and the internet since it helps me to be glued in the house and these help me save money from going out and spending more than I should.

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