When you start getting your finances in order, its exciting.

This makes it easy to become a personal finance devotee.

But eventhe best financial advicecan become counterproductive.

Sometimes we attempt to use these rules when they dont make much sense.

Here are a few instances when otherwise smart personal finance concepts become kind of silly.

When We Get Too Excited About Interest

Yes, the power of compound interest is mighty.

When you look at the numbers, it can be surprising just how powerful compounding is.

This is whyinterest matters more than most people think.

But dont let that detract from smarter financial moves.

For example, while some people celebrate when they get tax refunds, financially savvy people know better.

Its smarter toadjust your tax paperwork and only pay what you owe.

But people overestimatehow muchsmarter.

And thats how most people see it.

But we shouldnt get too excited about that interest.

Heres how financial expert Liz Weston responded to the idea in a recent Twitter chat:

Its true!

But lets look at a best-case scenario.

Lets also assume the amount you overpay is $250 a month.

Of course, when youre overpaying for five or ten years, compounding makes a bigger difference.

Im not suggesting you keep overpaying the IRS.

By all means, adjust your withholding and save every pennyit adds up!

But lets be realistic: this money move is the equivalent ofthe latte factor.

Its a small amount that makes a difference over time.

If youre into big wins, it might pay more to focus your energy elsewhere.

Compound interest is awesome, but it shouldnt cloud your judgment when it comes to making smarter financial moves.

When We Do Frugality Wrong

People often confuse frugality with being cheap.

Heres the difference: frugality is about being resourceful; being cheap is about saving money at all costs.

But because frugality is mostly about being resourceful with your money, it can often lead to being cheap.

Most commonly, we take it too far when we choose affordability over quality.

Asour own Alan Henry put it, we live in a culture of commodities.

Everything is cheap, disposable, and easily replaceable.

Over time, this backfires.

As a result, I replaced my junk frequently and often.

I thought I was being money smart, but I was actually being pretty wasteful.

Its usually more frugal to pay for quality.

On the other hand,thisadvice can be taken too far, too.

you’re free to use the quality over crap argument to justify a pricey but unnecessary purchase.

So while saving money can be taken too far, so can the argument for spending it.

The happy middle ground is to buy quality when it makes sense and when its in your budget.

Its all about beinga little more aware of your spending habitsso you dont buy crap you dont need.

Most of us buy a lot of crap we dont need.

But taken too far, this can lead to a lot of wasted time and effort.

Its important to give every purchase some thought.

I recently spent months deciding whether or not to pay my insurance premium in full.

Yes, it would be great to not worry about it each month and get a small discount.

But I let anothersmart-turned-stupidfinancial move get in the way: compound interest.

I asked myself:

Is this like giving my insurance company an interest-free loan?

How much could I earn saving this money instead?

Does the discount make it worthwhile?

When Im shopping, I do the same thing.

And if I spend more than 10 minutes thinking about it, it goes back on the shelf.

Its not fool-proof, but it helps me avoid overspending without wasting my time.

Problem is, we oftenconvince ourselves frivolous purchases are investments.

A fancy $1,000 suit is not an investment just because you wear it to job interviews.

And then theres rewards spending.

Specifically, credit card rewards.

But credit card rewards shouldnt dictate your financial habits.

A while back, I wrote about switching to a cash only strategy over at Get Rich Slowly.

A few readers pointed out I was missing out on lost credit card rewards.

I earn about 1.5% cash back, which is pretty average for a rewards card.

Theyre a bonus, not a budgeting tool.

Personal finance isnt black-and-white.

What works for some might not work as well for others.

Thats what makes itpersonal.