A few years back I was working as a project manager in a logistics environment. We had one area of the warehouse that did not seem to fit the rest. It was a clunky means of storage and terribly inefficient to use. When I asked about replacing it I even heard that half the cost of a new one would be the earth quake testing to install such a device. So I asked why we had storage that even a blind man could see was inefficient. My coworker at the time replied simply, “Sometimes Free isn’t Free”.
You see, the site I worked at had received this free storage device by dumpster diving off another company. Essentially rather than go to the junk yard they took on and installed the device. They spent little to no time analyzing how inefficient the operation would be as a result. They also didn’t look into the costs of installation and replacement. The device required an earth quake analysis that cost a small fortune to install. As such the cost of this device wasn’t free. Moreover, it’s design was incredibly inefficient. It was like a boat anchor on the organization that took over a decade to get rid of.
Sometimes Free isn’t Free in the Personal Finance World
This blog is a big proponent of getting things for free within reason. I love a good deal or a free sample within limits. We’ve talked about some of the limits on free already. These include:
- Not going overboard on time in exchange for a better deal.
- Taxes on Winnings
These are some obvious examples where free isn’t free, but they are by no means a comprehensive list.
Other Examples where Free isn’t Free
Below are just some of the situations I’ve encountered over time where it’s less than obvious that Sometimes Free isn’t free:
- Free Advice: Sometimes free advice is good. Sometimes it’s average. Sometimes it’s bad. But often whether it truly is free depends on the source. It could come with an unspoken expectation of repayment whether directly from you or another. Worse still, the individual could be delivering the free advice with an ulterior motive. Say perhaps the individual is being compensated for their advice in some way or ultimately attempting to steer you towards something they sell. In this case their advice might not be the best for you. You should be especially cautious of Financial Advisors Free Advice.
- Online Surveys and Clubs: There is an oft overlooked cost to these. You’re giving away your personal data and privacy in exchange for their free items. That might be an ok trade off as usually the data is used in aggregate. However some less scrupulous organizations use the data to target you relentlessly with spam. Either way you’ve made a purchase using your data.
- Free Items, Gifts and Hand me downs: Say a friend or relative gives you something. If you don’t find that item useful then free isn’t really free. You’re paying for the storage space to house the item. You’re also paying to keep it clean. This one the FTF family struggles with a lot. Grandparents sometimes provide too many gifts to grandchildren during a holiday or birthday, which results in mountains of toys. I may not have purchased those toys, but they are not costless. An additional cost to free gifts and hand me downs is often they come with an unwritten expectation that you reciprocate. This is why so many people do no gifting agreements, because that expectation can rapidly escalate.
- Devices with high maintenance: So back to our winnings example from above. We won a water filtration system. Even ignoring taxes, the item itself required a $100 dollar filter replacements every few months. Given we had no use for such a device it wasn’t really free unless we planned on tossing it after a month. Even had we needed such a device there were likely options with cheaper maintenance plans we’d rather purchase. Sometimes a consumable or service to maintain a device can cost you more in the long run then the free device saves you.
- Home Repairs Help from friends, neighbors, and sometimes yourself: If you don’t know what you’re doing or they don’t, ultimately the repair isn’t free. Sure YouTube might correct for minor things, but if you’re looking at something major like installing a new roof you’re probably better off calling the professionals and paying for it. This is before we even get into that concept of strings attached where you feel like you need to return the favor.
- Free Swag for Sitting through a marketing pitch: The obvious example here is the timeshare pitch. Trade X hours of your time being hard sold in exchange for Y. The reality is you’re paying for your time and the chance that you might cave to the sales person. Perhaps you won’t and you can milk the situation, but it still really isn’t free. There are less obvious examples of this however. Have you ever been invited over to a friend’s house for a party or out to lunch only for that friend to attempt to sell you something? I’ve personally seen this done for everything from tupperware to financial advice. You’re essentially going to a free party in exchange for sitting through the sales pitch. Frankly I hate when friends try to pitch me things, but that’s a story for another day.
My best advice is when something is provided for free, think twice about what that means. Are there hidden costs, expectations, future costs, or some other reason you might not want to have that free item? If so, just be sure you get enough value from what you receive to outweigh the costs. Do you have other examples where something might appear to be free on the surface but in reality free isn’t free?
TANSTAAFL (There ain’t no such thing as a free lunch). I used to do online surveys until I realzied the Return on Investment is horrible unless you are a college student with nothing better to do except play videogames.
Craigslist & eBay have also become our friend for discretely getting rid of excess gifts that we receive from loved ones.
Great examples Josh. I remember doing a lot of surveys back before I was married with kids. I can’t be bothered now to trade thirty minutes for a penny.
Free home evaluation. This is a trick that realtor claim to provide for free, but in reality, they are gathering leads and try to land a new listing. Yes, you may find out the current market price in your area, but you might be persuaded by the realtor to sell your house at a time that you may not be ready. FYI, I am a realtor.
Thanks for the inside scoop Leo.
Almost all ad campaigns and freebies are attempts to get you in the door. I see this across the web with various blogs and website. “Download our freebie here in exchange for your email!” – with the freebie, you get them in the door and then hopefully some of those people will convert to loyal followers and spend money on your product.
It’s the concept of the sales funnel. Get 1000 people in for free, have 10% of those buy a medium product, and have 10 of those people buy the large product.
Those marketing campaigns work well for the buyer as long as they are worth your time and they don’t result in you buying something you regret. Unfortunately, I suspect both conditions are not true on average. Did you have a specific type of campaign in mind Erik?
Nice article. One example I can think of are the free pianos that are always listed on Craigslist. They’re free, but that’s because they can’t move it out of their house themselves and don’t want to pay for movers. So they put it on Craigslist for free, with the caveat that you have to move it out of the house yourself.
I haven’t seen the free pianos but we see a lot of free pool tables here. Same concept, disassembling it and transporting it is a lot of work.
The financial advice is a good one to be cautious of. You always need to think about what the other person is getting out of the deal. Most financial advisers I’ve run into were pushing expensive insurance products and junky funds loaded with fees. They’re always making money somehow.
Too true. If you can’t outwardly see how a financial advisor is making money, then there almost has to be a commission in it.
Agree with all of these points. A lot of times people are solely focused on the dollar signs instead of reviewing the full picture. Your story at the beginning of the article is a perfect example of this.
Considering Time is also a huge component. I’ve started thinking about small side hustles in a dollar per hour sense. Surveys, chasing down a dollar, etc. may not be worth the time it takes that could be used commenting in the community and growing our blog’s reach.
Love the reference to financial advice. People love to hear themselves talk and will share any piece of advice they can give you about saving. By the way, I’m not referring to this community, im talking about family, friends, and others in the community. You have to know what advice to consider and what advice to let go of immediately so you aren’t sepnt using “free” advice that will cost you in the long run.
Thanks for the great read!
Bert
Thanks for the comment Bert. The trick is of course knowing what that is free has value. Your time versus side hustle situation is a great example of making that determination. What method do you use to value your time?
Well said. I’ve often found that if something is free monetarily, it more than makes up for it in the time it takes or some of the other things you mention. Minimalism paired with frugality is powerful. In that combination, you have free things but only what is essential. Your home and mind remain uncluttered.
Ultimately Someone is paying for it somehow.
I remember one time many years ago I spoke with my uncle’s neighbor (who is a handyman) about a project….just casually talking about it. A few days later he called me and said he went to lowes and found out how much materials and labor would be (but I never asked him for pricing). He said because of the trip to lowes and taking the time out to research I now owe him like $50! I was like what??!! Long story short, I never ended up using him for anything anymore.
SMM, ouch that’s some pricey free advice. I wouldn’t use him either.
I had to laugh because one of my buddies is building me “free” cornhole boards for the bean bag toss lawn game. I don’t really need this or ask for it really but he just said he was making them for me. However I have to order the bags myself which runs around $40. And plus I have to store them. Kind of comical.
That is kind of funny. I doubt your alone in having a friend or family member get it in their head you need something you do not.
Yep…free isn’t always free! I definitely would want to be pitched something for taking advantage of a freebie. I might feel guilty and be persuaded. And with the timeshare pitch, usually I’m on vacation. My time is limited and valuable. I don’t want to waste it listening to a marketing pitch.
There certainly is a heavy load of guilt with those pitchs. I generally stay away for the same reason you do. On vacations I’d rather spend my time well…. vacationing.
I had a family friend who was a lawyer write up our will. I thought he was going to charge me, but in the end he gave it for free. That’s about what it was worth – it was riddled with errors. He was a public defender, so totally the wrong type of lawyer, but all I could think about was the deal I was getting.
Ouch… Hopefully you had better luck paying a estate lawyer..
I’m a self-taught flipper, and I definitely have seen instances of people trying to DIY something they have no business taking on. Over the years, I’ve learned my limits. I have absolutely no problem hiring a professional when it’s outside my scope. This allows me to save time, save energy, and, ultimately, save money on my projects.
In our last house I use to come across the occasional repair that made me scratch my head and chock it up to the previous home owners do it yourself. How did you define your scope on houses when you first started?
Whenever I see those timeshares pitches that say free X if you listen to our 1 hour pitch. Which inevitably means it’s 2-3 hours after the pitch, hard sell and then trying to find whatever it is that they’re giving away for “free.” All that time wasted could have theoretically been used for something much more worthwhile.
So true. How much is our time worth to you?
Being originally from Canada, I hate it when people say “I love Canada! We have free healthcare!”
In the back of my mind I’m always thinking “it’s not free. It’s called taxes, and taxes are dam high in Canada”.
So true, Someone is always paying the bill. In the case of government services it’s the tax payer.