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Short Term Savings Equal Long Term Debt

Updated on March 14, 2014

Counting pennies now seems like it should save you dollars later, but this isn't always the case. "Penny wise" refers to saving small amounts of money, while "pound foolish" refers to losing larger amounts of cash; this is why we sometimes say we are being penny wise, and pound foolish. In other words, there are many instances where short-term savings add up to long-term debt.


Store Credit Cards

Opening a store credit card can be exciting. Who doesn't want to save 10%, 20%, 30%, or more at their favorite stores? While store cards offer a legitimate opportunity to save, chances are you may be spending much more over time. Interest rates on store cards are generally much higher than on regular credit cards. U.S. Rep. Anthony Weiner did a study that revealed the average interest rate to be at 24% when surveying 35 major retail stores. With many credit cards you have a grace period where you are not charged interest on your purchases, but many store cards do not offer a grace period; they begin adding on finance charges from day one. If you are late on your monthly payment you will also likely get hit with a steep fee.

Buying in Bulk

Buying 20 apples in bulk may cost the same as 18 apples individually, but this doesn't mean you'll save by buying bulk. The best intentions won't help when you find you have so many apples they are going rotten. Before making the leap to buying multiples, figure out how much product you realistically need. Do not buy more, or you will find that much of it ends up in the garbage. Save bulk buying to items with a long shelf life. Keep an eye out. Even perfume loses scent and expires!

While most items bought in bulk tend to be cheaper, sometimes there isn't any cost difference. Why pay the same amount for product that is just going to take up space and go bad? Many times you can find a better deal using coupons or following sales.


Medical Care

The cheap insurance plan may sound great in theory, but it won't sound nearly as good when your son breaks his arm. Be sure to carry adequate insurance to cover yourself in the event of illness or injury. Don't skip a doctor visit because of a $30 co-pay; preventative care can save you much more in the long run! According to, approximately 50% of personal bankruptcies are caused by medical debts.

Fast Food

It is inexpensive, and it is easy, but should it really be a significant portion of your diet? While it may be cheap initially, poor quality food can lead to health problems, which leads to high medical costs. According to the Annual Review of Public Health, financial hardship and obesity are very closely linked. Unhealthy food containing sugar, fat, and salt is generally cheaper, which enables poorer people to focus on these substances as their primary source of nourishment. While it may be fine to grab a burger every once in a while, you shouldn't be trying to save money by eating fast food. It isn't worth the money- or your health.

Are you guilty of being penny-wise, pound foolish?

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Automatic Renewals

Many services are subscription based, and they will automatically renew without your intervention. Before you let your subscription lapse, check competitor's prices. It is very likely prices are not the same as they were a year ago. Be sure to keep track of which programs have an auto-renewal feature; opt-out if possible to give yourself the chance to re-evaluate it before enrolling for another term.

Are you guilty of saving a little to spend a lot? Be observant- don't be penny wise and pound foolish.


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    • indraprasad v profile image

      Indra prasad v 3 years ago from India, Kerala, Thiruvanantha puram

      Nice hub which help for savings and to adjust family budget. Above all single language...