4 Dumb Ways You Are Wasting Money Online

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It used to be that you had to leave the house to waste your money. Nowadays, with the Internet available on any gadget with a screen, you can lose money while barefoot in your pajamas — and without even touching your wallet. (See also: Ways Online Retailers Make It Easier to Spend Money)

The problem is that spending money online has become something you don't even have to think about, unlike traditional shopping that requires a number of decisions before you hand over your hard-earned cash. Even the most frugal of individuals may find himself losing money in dumb ways online.

Here are four of the most common ways you might stupidly lose money online — and how to combat them.

Dumb Mistake #1: The Free Shipping Trap

How often has this happened to you? You need something from Amazon that costs about $20. When you put it in your cart, Amazon helpfully informs you that if you spend just a little more, you will get free shipping for all of the items you purchase. Racking your brain, you remember that you were kind of interested in reading a book that your friend recommended. The additional book costs $12, saving you shipping but forcing you to spend $8 more than you would have if you had just paid for the shipping. (And if you're like me, you never get around to reading the book anyway). (See also: Amazon Deal Hacks You May Not Know)

Online retailers are a canny bunch. They recognize that we are suckers for the word free, and that our brains are wired to keep us chasing after something for nothing, even if it means we pay more overall. Even the most frugal of Internet shoppers has fallen for this trick, since we all convince ourselves that we will be able to get something for free (shipping) as long as we can find another item that we truly need to buy.

But it's rare that you really do need something else, so you just end up wasting money and cluttering up your home.

The Smart Move

There are several ways to keep from losing your mind when online retailers start waving free shipping in your face, although not all of these solutions are created equal. (See also: The Psychology of Free)

One option is to keep a robust wish list going on all of your favorite retail sites. Every time you make an order of something you need, you can scan over your wish list for something that costs about what you'd need to pay in order to reach the free shipping minimum. This will ensure that you only ever order things that you truly want or need, while still letting you take advantage of the free shipping.

Another possibility is upgrading your membership to your favorite retailers in order to get free shipping at all times. This is a potentially dangerous solution, since the cost of shipping is often a deterrent for making purchases. Without that deterrent, you might make purchases you otherwise wouldn't — meaning the retailer gets your membership fee and additional purchases from you. After all, Amazon wouldn't offer upgraded membership if they didn't make money on the deal. In fact, Amazon has been successful in using Prime — its free shipping plus free streaming video subscription service — to create a growing group of motivated and loyal customers who spend more than twice as much on Amazon as non-Prime customers do.

Finally, using a trick suggested by Dan Ariely in his book Predictably Irrational could be the most effective way for avoiding the free shipping trap. Ariely described how Amazon's free shipping program was originally different in France, where shipping was reduced to one franc (about 20 cents) for orders over a certain limit. Unlike free shipping, one franc shipping didn't entice the French to spend any more than they already were. But changing the program to free shipping resulted in a dramatic increase in sales.

This means that thinking of free shipping as costing you a nominal amount — like 50 cents — should be enough to help you remember that "free" shipping ends up costing you more.

Dumb Mistake #2: Daily Deals

Two years ago, my husband purchased an incredible Groupon deal for auto detailing at more than half off the regular price.

Unfortunately, the auto detailer was an hour away from where we lived and only open during bankers' hours Monday through Friday. My husband had to take a half-day off work in order to redeem his Groupon deal. In order to keep from "wasting" a trip into town, I drove my car down with him so that we could go to dinner and check out some sights. Otherwise, he would simply have been twiddling his thumbs in the detailer's waiting room.

Once we got back to the car, we realized that the Groupon deal was so good because the detailer wasn't. They had done a sub-par job — and we had spent half a vacation day, gas money, and money on dinner out in order to take advantage that great "deal." (See also: 4 Ways to Find a Reputable Mechanic)

While it is certainly possible to get a good deal online through Groupon and other deal-a-day offers, I have never met a Groupon fan who doesn't have at least one story like ours. When you get right down to it, purchasing a daily deal is usually a waste of your money.

That's because these sorts of daily deals play on your psychology. For one thing, unless a certain number of people sign up for a Groupon deal, then the offer is invalid. As David Pogue of the New York Times puts it, that makes you more invested in the coupon: "That 'tipping point' business — the minimum number of takers an offer has to have before it becomes valid — is part of the psychology…the tipping point requirement adds a certain thrill to the proceedings."

In addition, Groupon's deal-a-day structure and tipping point requirement puts time pressure on you to buy in, and human beings are not great at thinking rationally about purchases while under the gun. That's how you end up making a Groupon purchase for something that really doesn't make sense — like auto detailing at a merchant an hour away from you.

The Smart Move

Don't ever buy something at half-price that you wouldn't buy for the full amount. (See also: Money-Saving Tips Retailers Don't Want You to Know)

A friend of mine follows this rule for free items, and it works just as well for Groupon-type deals. That's because you are much more likely to think through a purchase if you are ready and willing to pay full price for it, whereas knowing something is half-off is enough to turn off your critical thinking skills.

In our case, had my husband gone looking for a full-price auto detailing service, he would not have chosen a merchant that was so far away with inconvenient hours. He would have done some research into how satisfied customers were with the work, and he would have ultimately saved money by paying full price.

Dumb Mistake #3: Signing Up for Free Trials and Forgetting Them

Whether you decide to check out Hulu for a month, want a pizza at your doorstep sans delivery fee through Shoprunner, or would like to read your favorite newspaper online for a month for free, you can often try out any of these services with a short-term free trial.

Unfortunately, when you sign up for your free trial, the service will often ask for your credit card information — as a courtesy, they claim, to keep you from having to enter it in later when you decide you cannot live without this new service. (See also: Monthly Bills You Can Slash)

In actuality, that courtesy is only to the service-provider, who is counting on you to forget about the expiration of the free trial, at which point they will charge your card for something you don't really want. Because a truly free trial would simply lapse at the end, rather than require you to cancel it.

Anyone who has signed up for a free trial only to pay for several months of unneeded and unwanted service before remembering about it knows just how insidious this marketing ploy is.

The Smart Move

The easy answer is to never sign up for a free trial. And for anyone who has trouble with follow-through, this is definitely the smartest course of action for avoiding this particular Internet money drain.

But if you can trust yourself to cancel your free trial as long as you have a little reminder, then make a habit of sending yourself a calendar reminder on the date you need to cancel. This is particularly helpful if you use an online calendar that sends you email reminders, since you'll have no excuse for forgetting to cancel.

Dumb Mistake #4: Letting Retail Sites Remember Your Credit Card Information

When you're in the midst of an Internet shopping binge, it's a major bummer to have to get up and hunt down your wallet or purse to enter in your credit card information. That's why it's so lovely and helpful that retailers offer to remember your credit card for you. You don't even have to get up from your computer (or your bed, if you're shopping on your mobile device) in order to consume consume consume.

Of course, that "major bummer" of having to get up is the time that your better angel needs to remind you that you probably shouldn't be spending any more money. And having time for such a mental reminder is a necessary part of keeping your spending in check. After all, retailers wouldn't remember your information for you if it weren't in their best interest. (See also: Keep Your Credit Card Safe While Shopping Online)

The Smart Move

Beth Kobliner of Redbook advises Internet shoppers to simply avoid the "convenience" of having their card on file with their favorite sites: "Opt to enter your payment info each time, and use those extra minutes for an Is it really worth it? gut check."

Forcing yourself to look up your credit card information each and every time you make a purchase online will give you plenty of second thoughts about purchases — which is the opposite of what retailers want you to do.

An additional benefit to this strategy: it reduces the number of places you need to notify if your credit card number changes.

Saving Money Without Leaving Home

Being connected 24/7 is certainly convenient. But convenience is where frugality goes to die — so it is up to us to make wasting money online decidedly inconvenient for ourselves.

Have you been nickel and dimed online? How do you protect your pocket book from the Internet?