When Good Personal Finance Practices Go Too Far

If a little is good, then it follows that more must be better. Well, okay, maybe not all the time.

For example, this extreme couponing craze has really got my goat. (And up until recently I didn’t even know I had a goat.)

Don’t get me wrong. I use coupons whenever the opportunity presents itself. After all, it often makes good financial sense to clip coupons to save money on groceries. But extreme couponing takes this otherwise good personal finance practice and throws it completely over the top.

Never mind that, oftentimes, those seemingly ubiquitous examples of people getting a thousand bucks worth of groceries for pennies on the dollar, are the arguably the result of coupon fraud. The reality is that folks who are spending more than an hour or so a week clipping coupons are at risk of wasting valuable time that, all things considered, could be used much more cost-effectively doing something else.

People who take coupon clipping to the extreme, whether they want to admit it or not, also often end up buying products they may not want or need. Okay, so you bought 20 bags of frozen lima beans for $2.36; but how many, if any, of those yucky beans will get eaten before they finally become freezer burned? And how much additional money is required to store them?

Coupon cutting is probably the best — but not the only — example of a typically good personal finance practice that often gets abused by taking it to the extreme. Here are a few others:

Saving for Retirement

Is it possible to save too much for retirement? Absolutely. I began asking this question when I reached the annual pre-tax contribution limit for my 401(k) a few years back, which is currently $16,500. After running the numbers, and years of sacrifice by devoting a good chunk of my annual salary increases to bolster my retirement savings contributions, I decided that I had finally reached a point in my life where it was time to start spending more of the fruits of my labor on the present, as opposed to the future. I mean, what’s the point of living a financially responsible life only to end up dying with a million bucks or more in the bank?

Reality Check: The truth is, most people tend to be overly conservative when it comes to estimating how much money they’ll really need in retirement, especially if you consider data from the US Department of Labor that shows most people actually spend less money as they get older – not more — despite higher healthcare expenditures. As a result, a lot of folks end up retiring later than necessary, and/or leaving large inheritances for their heirs.

Making Product Comparisons

More often than not, perfect is the enemy of good — even when it comes to matters of personal finance. This is often displayed when it comes to evaluating products. Many folks are simply not content to investigate a handful of options, instead wanting to vet every possible choice for fear of missing out on the best possible available price. For most people, however, too many choices can be too much of a good thing; the end result is often a type of cerebral overload that leads to wasted time, unnecessary stress, and paralysis by analysis.

Reality Check: Trying to find the optimal solution can often be counterproductive simply because many decisions don’t require extensive research. Typically, a modest survey of three to five samples is all that’s necessary before enough information is available to make an enlightened decision.

Negotiating For Goods and Services

Many years ago I took a hard-line negotiating position with an irrigation contractor. Eventually, despite his protestations, I got the contractor to agree to some extremely favorable terms on my part. I have to admit at the time I was quite pleased with myself. However, that negotiation ended up being one of the biggest money mistakes of my life. Yes, I got a great price, but I paid dearly for it in the end. In fact, for many years after I was reminded of the perils of over-negotiating with every burst sprinkler pipe, a result of the shoddy material that contractor used to cut corners.

Reality Check: Trust me, taking a hard-line negotiation approach that exploits others is absolutely counterproductive because one of two things usually happens, both of them bad: 1) you’ll kill the negotiations, or 2) you’ll unwittingly end up with an inferior product or service that costs you more in the long run.

Pinching Vacation Pennies

There are lots of examples of how to be penny-wise and pound foolish. My own favorite example of this was the first time I took the Honeybee and our kids on a cross-country road trip to see her family on the East Coast. But in order to save a few bucks, we stayed in cramped budget motels and I tried to rush across the country as quickly as possible in order to minimize the days we had to pay for lodging. In retrospect, the start of our vacation ended up being more like a Marine boot camp. The kids were miserable, which made the Honeybee miserable — and when the Honeybee is miserable, the laws of the universe naturally ensured that I was miserable too.

Reality Check: Sometimes it really does make more sense to throw a little caution to the wind and splurge — especially when it comes to vacations. I know that may sound a bit extreme, but you’ll just have to trust me on this one.

Photo Credit: jjconfidential

52 comments to When Good Personal Finance Practices Go Too Far

  • I have to agree that nothing in extremes is good – not even the best personal finance practices. That extreme couponing craze is just crazy. If these couponers factored in their hourly wage rate they spend searching and clipping and shopping, they’d most likely find that they aren’t saving as much money as they think.

    • Len Penzo

      Let me tell you, Jen, although I can’t prove it, I think if you remove potential fraudulent redemptions from the equation, the savings would be greatly reduced. I also suspect a thorough and rigorous cost analysis (taking into account storage costs, transportation costs of driving to multiple stores, time to clip the coupons, etc.) would take even more luster off the entire craze.

  • Chupacabras

    I would still vote to max a Roth, even with a maxed 401(k). It’s one of the few tax shelters the middle class really has and it’s a good hedge against Uncle Sugar’s future retirement grabs.

    • Len Penzo

      You make a good point. I may still eventually end up contributing to a Roth, assuming I do not run into income restrictions. But for now, I’ve run the numbers and I am still comfortable holding off on increasing my retirement contributions. :-)

  • I’m with Chupacabras. Of course I’d love to retire early too which makes it much less likely that I’d be over saving ;)

  • One thing I’d like to add is the so called “hyper-milers.” During the last gas price run up, I was seeing these folks in the news all the time. I’m all for saving some gas, but when you parade the likes of people who shut their car off at each light or as they go down a hill, it gets a little bit silly. Plus, all that stoping and starting can’t be good for the engine. Not to mention coasting in with out power steering or power brakes on a car that was designed with those features could potentially be a safety issue.

    • I should say turning on and off the engine can’t be good for the internal components….

    • Len Penzo

      Ooo, good one! That whole practice is rather absurd isn’t it?

    • Andrew

      On most new cars turning on and off the engine will do no damage to the internal components. Many new cars, especially hybrids, but even others now are automatically tuning off the engine when stopped. It’s also a myth that turning off and on a modern car wastes more gas than leaving it idling at a stop.

      I wouldn’t do it going down a hill though, that’s quite unsafe.

  • I agree with Chupacabras, but I also think it’s an important point that you can go too far with maximizing your personal finance at the expense of living a good life.

  • I also think the extreme couponing craze is ridiculous. I’m a pretty frugal guy and buying 30 bottles of shampoo doesn’t seem practical, even at 10 cents each.

    • Len Penzo

      I read a comment from someone somewhere (can’t remember the article or website, sorry) who said they ended up with something like 450 rolls of toilet paper as a result of an extreme couponing campaign. Come on… I don’t care if it lasts forever. Now, if society does end up breaking down, perhaps that will be the buy of the century — but I’ll take my chances. ;-)

  • Len,

    All reality TV is over the top so people like me and you will write blog posts about it. The marketing people love all the hoopla.

    The good thing though is we don’t have to write another post about the emergency fund….

    I don’t like having all my money tied up in any account that the government makes the rules. Ask the folks in Venezuela how that’s going for them.

    I would rather have a portion of my wealth in a different place than 401k, or IRA’s-even without the tax advantages.

    • Len Penzo

      Dr. Dean, you and I are two peas in a pod! I too have often wondered what will stop the government from changing the rules down the road for something like a Roth IRA (e.g., by taxing future withdrawals) if they really want to. Actually, I already know the answer: nothing!

  • I take a slightly different approach. I want a quality solution to vacations, trips, products and services. I want the best I can afford at the lowest price. For me, savings is a priority and we live on what is left. Since we have no debt except for a small mortgage, we have extra money to do some of the interesting things like travel. Travel or vacations does not have to luxurious, but I am not willing to go cheap. We use miles to go to Europe (first or business class) and stay in 4 star hotels or go on cruises. The cruise is not the most expensive nor the cheapest. We will do this every other year. I look for the best deals I can get for what I can afford.

    • Len Penzo

      I can appreciate where you are coming from. Everyone is different. I read a piece from a lady who decided it was better to budget for and take a luxurious vacation every other year, rather than a budget-vacation every year, where she had to watch her pennies.

  • I too agree that extremes in either direction are never good. We need balance in our life including with our finances. We need to know it is ok to let loose sometimes since we are tight to the rules the rest of the time. Thanks for the great reminder Len.

  • DC

    You might find this link interesting (http://en.wikipedia.org/wiki/Hetty_Green) about Hetty Green, known as the “Witch of Wall Street” who was famous for being an extreme miser. She was worth millions, but refused to turn on the heat or use hot water. When her son broke his leg, she tried to have him admitted at a free clinic for the poor.

  • This guy is the only extreme couponer who’s not insane. And he’s from California. And he’s an engineer!


  • The extreme coupon craze is starting to drive me a little buggy. These rooms and rooms of stuff is nothing but hoarding by another name. And quite honestly, it makes those of us that use them simply as a way to reduce our grocery bill get more and more dirty looks in the check out line as now it seems that everyone that uses coupons is an “extreme couponer”. I spend less than an hour a week on couponing and it does pay off for me in my budget since I have reduced our grocery bill. However, I know a girl who is devoting so much time to it that she has now hired someone to cut her grass and clean her house…. at a cost of roughly $300 per month. That kind of defeats the whole purpose, doesn’t it? Plus she’s got all this STUFF bursting out of cabinets and closets. I just don’t get it.

  • Sometimes to much of something is very bad. But as far as good personal finance practices go too far they shouldn’t. Having knowledge and knowing what is going on in your own personal finance world is very important. You can never get enough

  • These are prime examples of going from frugal to cheap. There’s a fine line, and many people cross it and try to justify their actions. I’m hoping to stay on the frugal side.

  • raineboe85

    In addition to the “extreme couponing”, does anybody realize all the most things that they buy are either processed and unhealthy. I agree with being frugal but you also have to be smart about it. If frugality means your dinner is coming out of a box, have you thought what is going to do with your health?

  • I totally committed the error of pinching vacation pennies, and had a significantly more stressful trip because of it. Had I just committed even an extra few hundred to the “whatever” fund, I would have had a much, much better time.

  • I totally agree on all of these. I was just on vacation this week and caught myself feeling guilty about an expensive mixed drink I ordered (and then got another one). Well, then I added up all our little splurges (Parking at the hotel instead of the cheaper lot down the street, getting drinks and desserts when we wanted, paying full price at CVS on some things we forgot). Anyway, all total it was maybe $100. It’s okay to loosen the purse strings once in a while.

  • I don’t know if people can still get 10000 tooth brushes and get them all for 1c each if they fixed the coupon fraud. Personally I can never find coupons for the groceries that I buy (I use coupons once a year to buy toothpast/brushes/shampoo, that carries me through the year). Most coupons I see are for processed food. If someone gives a coupon for a bag of fresh tomatoes I will be all over it.

  • I am a little confused, when you did your negotiations the contractor should have told you what kind of materials he was going to use. If he did not use them, you could have not paid for the job (or part of it), or if you found out later taken him to small claims court. Did he need tell you, in writing, what kind of materials he was using?

    • Len Penzo

      We never discussed the quality of the pipe he was using — only the job to be completed and the bottom line price. I was too ignorant at the time to recognize that there were different schedules (grades) of pipes. So I was outfoxed by a smarter fox! With age comes wisdom…

  • Great post! I always wonder how much richer those extreme coupon people would be if they spent all that time analyzing, sorting and cutting coupons every week on some side business instead.

  • You could take things even further and become a freegan – spend your evenings dumpster diving looking for food. No I’m serious! these people exist. To be honest I’d rather work an extra couple of hours than do that or even go without something like hot water t make ends meet. Not that I’d be too proud to do it if I needed to but it just seems like such hard work for very little return.

    • Len Penzo

      I know, Dave, I’ve done a couple articles on those lovable Freegans. That people willingly go dumpster diving and scavenging roadkill for dinner when they really don’t have to is absolutely unbelievable.

  • smurf_goddess

    I have to agree that extreme budget vacations can backfire. Last summer my boyfriend and I drove from Colorado to Ohio in my teeny car with no AC. While I will always remember our free camping spot as one of the best bargains we have ever had- so beautiful and isolated while being in easy driving distance of everything- the car ride was miserable! He was grumpy because of the leg pain of driving a car way to small for him for 10 days, and I was grumpy because the wind from the open window irked my allergies and made my hair a constant rats nest. Not to mention how boring it is to sit in a car across country with no radio. (That said, the free visit to the National Air force Museum was a huge highlight that I never would have picked, and will never forget.)

    This summer we did a shorter vacation and shared the expenses for a rental car and air conditioned hotel rooms for heat wave level Texas. I enjoyed the trip and left with good memories and a good mood. We still found good cheap ideas or freebies- such as the visit to the Alamo, mass in the oldest Cathedral in the US, or the Lyndon Johnson Ranch. This meant we could spend a little more on other things, such as the boat tour of the Riverwalk in San Antonio, and it all balanced out.

  • Doug

    Who’s the babe in the green/yellow photo?

  • I wonder how many of these extreme couponers will end up on the Hoarders show in a few years.
    Like you said, more than an hour a week is too much.

  • Hey Len,

    This is a really good realization you made. There’s definitely a line you can cross where you get too obsessed over saving money.
    Have you heard of the 80/20 rule? Applying it to something like this 80% of your savings will come from 20% of your time/effort, so if you just focus on the main coupons that you want/need you’ll still get most of your results.

  • Little Tex

    I agree with you on the extreme couponing. The people featured on the show spend upwards of 30 hours a week couponing. Seems like a lot of time and organization that could be spent oh, generating income or being productive. Don’t get me wrong, I clip coupons but I only clip coupons for things I buy anyway and save around $5-$15 weekly. Buying 500 bottles of mustard for pennies because you could seems wasteful and selfish.

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