Monday, December 15, 2014

The Siren Song of False Economy

When the money is tight, the first impulse is to cut back on non-essential spending. However, sometimes things that don't look essential will turn out to be far more expensive in the long run.

Two of the most common false economies are skimping on health care and on vehicle maintenance. However, there are other false economies. For instance, people buy cheaper cuts of meat and end up wasting them because they don't know how to cook them properly. This situation can become even more complicated when buying for a family, because some family members may flatly refuse to eat unfamiliar foods. Food that will only end up scraped from plate to garbage can is no savings.

Unfortunately, false economies are not always obvious, and often we realize them only in retrospect. For instance, there are times that it may look financially prudent to repair a vehicle, but in fact it just traps you in a vicious cycle of nickle-and-dime repairs to the point you can't afford to get rid of it. Trying to get by with inadequate or inappropriate equipment can be another ugly false economy.

The best thing we can do is try to learn from other people's mistakes so we don't repeat them.

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