Everyone who reads this website is likely very aware that I am a huge proponent of eliminating expenses so that additional cash can be devoted to student debt. And it is true that saving money is as integral part of any strategy to pay off student loans. However, based on my own personal experiences, sometimes being cheap can cost you money.
It might sound counter-intuitive that frugality can actually lead you to spend more money. Nevertheless, there are certain instances when cheaping out can actually force you to spend more cash in the long run. This website has already discussed debt fatigue, and this is one of the ways that individuals can hurt their repayment prospects by being frugal for an extended period of time. However, not spending money when you should, or buying cheaper items when a more expensive product is needed, can force you to shell out additional cash.
During my student loan repayment saga, I saw firsthand how being cheap can cost you money. As previously mentioned, whenever I decided to buy an item while paying off student loans, I did not simply envision the price of an item when making purchasing decisions. I also factored in the lost interest I would eliminate if I rather devoted the cash I would use to purchase an item to my student loans. As a result, I routinely decided not to spend money on certain items, and this sometimes cost me more cash than the money I saved by cheaping out in the short term.
For instance, during my student loan repayment saga, I bought my first smart phone (I know, I’m getting old). I waited for a while before buying a smart phone so that I could save money, but that’s beside the point. In any case, when I purchased the phone, the salesperson at the store advised me to buy a case and a screen protector to prevent my phone from being damaged. These items cost over a hundred dollars, and I reasoned that I could do without them and save this money instead.
Within two months of purchasing my phone, I dropped the device on some pavement, and the screen cracked. I tried using the phone for a few days even though it was broken, but I had a very difficult time making calls and writing emails from my device. I ended up spending over a hundred dollars to repair the screen, and learning from my mistakes, I decided to purchase a case and a screen protector. Of course, if I had simply shelled out this expense a few months earlier, I could have saved a significant amount of money repairing damage, and this shows how being cheap can cost you money.
There have also been times in my life when I bought a needed item, but the item I purchased was so cheap, I later had to shell out money I could have avoided spending if I bought a better item in the first place. During my student loan repayment saga, I desperately needed a new computer, since the laptop I used in law school was extremely slow. I wanted to save some money, so I ended up buying a computer that only cost a couple hundred dollars and did not have many or the “bells and whistles” of other models.
The computer was decent for a short while, but I ran into problems when I tried using the computer to pursue some of the side-hustles discussed on this website. The computer I bought could not run well with certain internet browsers, and one of my side-hustles used an online platform that was maximized for one particular browser not supported by the computer. In addition, it was extremely difficult to use word processor programs on this laptop, which was a problem when I conducted freelance work and other side-hustles.
Ultimately, I had to just pay for a better computer so that I could be more efficient with my side-hustles. I was able to use the original computer I bought when I traveled, since the laptop was smaller, but the ineffective computer was mostly a waste of money.
There have been other situations in my life when I saw firsthand how being cheap can cost you money. When I took the LSAT as an undergraduate, I asked my grandma to buy me pencils, since I was traveling home to take the test, and I needed pencils to fill in my answers. My grandma proudly told me that she purchased two boxes of pencils for me for a dollar at the dollar store. I didn’t think much of her purchasing decisions, until I was taking the LSAT, and was having serious issues with these pencils. I think those pencils definitely cost me a few points on the test, and maybe I would have gotten into a better school if I paid a few more dollars for good pencils!
All told, it might sound counter-intuitive, but being cheap can cost you money. Not purchasing essential items might cost you in the long term, since you will eventually have to purchase an item and could have saved cash if you bought it earlier. Furthermore, purchasing a cheaper item for less money can also require you to shell out additional funds in the future.
As a result, everyone saving money to pay off student debt should pick their battles and carefully evaluate whether it makes sense to be frugal in a given situation. As my own experiences demonstrate, this can save you money in the long run.