15 November 2013
Skimp Now, Pay Later: Where NOT To Cut Corners

Just about everyone is trying to cut the cost of living these days: turn off the air conditioning, turn down the heat, buy gas at the cheap place across town, fewer dinners at favorite restaurants.

Smart consumers comparison-shop to save money. You work hard for your money, but there are lots of costs you don’t want to cut.  By cutting the wrong corners, you may expose yourself to greater financial risk down the road.

So look for ways to cut corners — just not here:

1. Insurance. Insurance is all about risk assessment, and protecting you and your family in case of an unforeseen disaster. You could save a few dollars a month by cutting coverage limits on car insurance, home coverage, health care, and other types of insurance, but when you limit insurance payouts or increase your deductible, you may be putting yourself at real financial risk.

A serious accident, a house fire, a long illness – any of these (and a million other things) may wipe out your savings, cost you your home, and leave you scratching for more to pay that growing stack of bills.

Ask your insurance provider to review your assets and to develop policies that help protect what you own.

2. Car maintenance. Some people skip an oil change, put off an expensive service milestone, or drive another season on those treadless tires. Skimp on care maintenance and it may cost you – big time.

Keeping your car in good shape is a good investment. It’s also safer for you and your family when your car is well-maintained. The owner’s manual tells you when, what needs to be done, and even provides suggestions for keeping your car on the road longer. Let your car owner’s manual help you protect this valuable asset.

3. Savings versus paying down debt. You may feel good setting aside $100 in your savings account, but that nest egg may not pay much interest, while your credit card may charge anywhere from 14% up to a whopping 29%. Sure, save when you can, but also pay down debt.

4. Eliminating contributions to retirement plans. You end up with a bigger paycheck now, but you may have a lot less to live on in retirement.  Save now. The longer your savings have to grow, the more they’ll be worth when you need them 40 or 50 years from now, thanks to compounded earnings – earnings that generate even more earnings.

Don’t cut corners on your future. Live on less now to enjoy a brighter retirement – and maybe even an earlier retirement.

5. Medical and dental care are not good areas to skimp on. Putting off medical and dental care now to save a few dollars may cost you a lot. Example? Your dentist discovers a loose filling, replaces it, sends you a bill. You pay it in 30 days. No big deal.  Or you eliminate dental care to save money now, the tooth gets worse, has to be extracted, and you now have a $3,000 bill for a tooth implant. Skipping preventive care like blood pressure checks and mammograms can cost you a lot more than money in the long run.

Don’t skimp on good medical and dental care. It’s probably easier to fix problems now before they get worse.

6. Gifts. You give your spouse a drugstore hair brush as an anniversary gift. You saved a few bucks, but your spouse might not be speaking to you. Giving a cheap, last-minute gift may backfire on you, but that doesn’t mean you should spend a bundle.

With gift giving, it really is the thought that counts. Take your spouse on a date to the place you first met, or take the family to a nearby park or museum.  Even a picnic takes some thought and planning, but it doesn’t have to cost a lot. Use your imagination to give a gift worth remembering.

7. The lifestyle you want to live.  Decide what’s most important to you and your family, and spend in those areas. If travel is how you enjoy life, use discretionary income on vacations, and skip buying the boat or motorcycle.  If you’re going to skimp, skimp in those areas that are less enjoyable to you, and use the savings to purchase those things that deliver more lifestyle value.

You want to save. It’s the prudent, mature, sensible thing to do, but cutting corners in the wrong places makes skimping a lot less fun. Know where to skimp, and help prevent a headache you just don’t need.


The information provided is presented for general informational purposes only and does not constitute tax, legal or business advice.


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