Guest Post: Using Coupons Can Cost You Money!

This is a guest post written by The Happy Rock. The Happy Rock is a personal finance community that is dedicated to eliminating debt and improving themselves so that they are freed to focus on the things that are much more important than money. Please consider subscribing to The Happy Rock’s RSS feed or getting email updates.

What you say, how can saving $0.50 on a box of dish detergent cost me money? Well, sometimes in our eagerness to save money we can often lose site of the big picture. Not only can focusing too much on saving an extra $0.25 cents take your attention away from bigger goals like enjoying the moment, slashing debt, or increasing your salary, just using the coupon can cost money that you didn’t think about. Here are 11 ways that using a coupon or buying on sale can actually cost you more money than you save.

photo credit: ninjapoodles

Buying something you don’t need - Companies create coupons to get customers to spend more money. If they were losing money consumers most likely wouldn’t see coupons. With that said anytime coupons can compel us to buy items that we don’t need or wouldn’t have bought otherwise, we lost. Saving $2.00 off a $20 item is good, but not spending the $20 in the first place is much much better.

Coupons to a store you do normally frequent - Anytime you go to a store because of a coupon it is often a losing situation for you. The tendency is to buy the new and interesting offerings or to add a new store that you ‘have’ to shop at.

10% of $50 - Coupons that require you to spend a certain amount in order to get the percentage off are often not that good. Sometimes when the percentage or the price tag is high the math works, but often we end up buying frivolous items just to take advantage of a dollar or two off.

Feeling like you have to spend the coupon - We often feel like we are losing free money when we don’t spend a coupon, but the truth is you don’t have to use the coupon. The moment you start feeling like you have to use something, it is a warning sign that some deeper psychological tactics are at work.

Sales or coupons that aren’t a deal - Stores can slap a 2 for $2.00 sticker on an item that costs a dollar and there sales on that item go up. You might think you wouldn’t fall for that trap, but statistically you most likely have. It is especially prevalent for consumers or items that you don’t have a clear price memory. Displays at the end of the isle work the same way too. The positioning of items on the shelves and in the store are critically important to moving goods regardless of price. Often the least expensive items are high or low on shelves and the highest profit items are at eye level or in direct line of sight.

Buying a higher priced items or more quantity - Often because we know we are saving money we figure we can buy a more expensive item for the same price. That is fine and often desirable, but when you could have managed with a $30 blender instead of a $60, you lost. The same often goes for buying more of something.

Buying items that expire - The three bags of carrots you got a great price on that sit in the fridge and rot weren’t a good deal. Often times we buy stuff that can’t be used in a reasonable amount of time just because it is a deal.

Buy one get one free (BOGO) - Often the lure of a BOGO is too hard to resist. We feel compelled to buy it just because we get two for one. Often we don’t even need the item, but the BOGO sucks us in. Very related to buying something you don’t need. Just because you are getting a good deal, doesn’t mean you have to buy it.

Increased Blind Loyalty - One of the goals of coupon or sale is to increase loyalty to a particular store or brand. Loyalty is fine, but if it comes at the cost of not taking advantage of better stores or better prices than you lost. Generic brands are often, but not always, the same ingredients and quality as name brands. The store down the road might have better prices, but you might not know because your store sends you or special VIP coupons.

Anything that involves credit - If a store gives you a deal if you just charge their card, BEWARE. Why would they do that?…Because they are going to make much more money off interest and fees than they give out in coupons. Plus statistically you will probably buy more. Almost every store gives you 10% or 20% off your first purchase when you sign up for their credit card, just to suck you in. I know, I know, you aren’t one of those people that is bad with credit, but someone is. You need to be honest about your habits.

Gas involved - Now a days this is a huge issue. That $0.50 off at local ice cream shop isn’t such a good deal when you factor in the gallon of gas at that it took you to get there. Unless you are savings multiple dollars, trips to out of the way establishments are almost never worth it now.

Here is a story that illuminates how easy it is to lose sight of the big picture. My local grocery store sent my $5 off $40 every week. I was ecstatic. I do my normal shopping there, so I was excited every time I used the coupon. Every one loves free money, right? After a while though I started to realize that I had lost focus on the big picture. I started to feel like I had to spend the money. Even on weeks when we didn’t need much, I would struggle to get to the store just to spend $25 on the things we needed and having to make $15 in impulse purchases to use the coupon. Then there was the sickening feeling when you did your shopping and forgot the coupon!

Then a new grocery store opened up by us, but I was so loyal to other store that I automatically didn’t like the new store because they didn’t have coupons. I knew my other store and the other store was designed by a 5th grader(or so I told myself). I eventually let go of my loyalty and realized the other store was cheaper, nicer, and had better selection, so I started going to both stores just to keep using the coupon. After a year or so I finally gave up the old store completely because it wasn’t worth the time and energy. The coupons stopped coming. What I relief…plus I was saving more the $5 coupon and getting a better selection of food.

Have you caught yourself falling trap to any of these situations? Are there other situations were coupons and sales have cost a lot more than your first thought?

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September 23, 2008 · Filed Under Commentary, Coupon Codes, guest post, tips

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Guest Post: Tithing Enough?

This is a guest post by James over at CapitalCouplesFinance.com. He blogs about personal finance as it relates to relationships and life, and is high on my list of recommended reads! If you enjoy his writing you can subscribe to his feed here.

I’m a relatively new Christian and have only begun tithing a full %10 of my gross income since the beginning of the year. This has been one of the best things that I’ve ever done and if you’re interested in the story of how I came around, read it here. But just the other day, I had a profound thought (at least for me): I have other streams of income that I’d never really even thought of. These include the employer match on my 401k, savings account interest, growth on retirement accounts, dividends from mutual funds, gifts, home value increase, and on and on and on…

As a Christian who wants to give the right amount, this is a troubling issue. Some of this income is difficult to even keep track of. For instance, how do you “know” the value of your home until you sell it? Is that when you should tithe on it? The same question arises around savings bonds. When should you give on investments, since they can always go down? So what should a Christian do to arrive at the “right” amount?

Read the Bible

The Bible has a lot to say about finances. In fact it is mentioned more than many other subjects that we, as Christians, devote a lot more of our time to thinking about (e.g. abortion, gay marriage, evolution, etc). Now decide what you believe is required for Christians. Some believe that 10% is mandated, while others consider that to be an Old Testament anachronism. My reading of the New Testament is that it does require that we give and that we do it happily. I don’t see a specific requirement for giving 10%. Now…do I give 10%? Absolutely, but it has more to do with wanting to have a giving heart (more on this later) than anything else.

Seek Wise Counsel

I think the first person I would talk to would be my pastor. He or she is a trusted resource and I’m sure they’ll have an opinion on the matter. This is a spiritually important subject so take the time to search around for those people that can help you figure it out. Maybe there are other people in your church that you could ask questions, such as elders, deacons, or just people whose opinion you respect. Seek them out and find out how they handle this issue. Maybe they can point you to other resources as well. The point is that you should take the time to do a little research before you come to a decision.

Compare what you hear from your pastor or the other people you consulted with to what you read in the Bible. Remember, that while they’re important spiritual guides, they are still just human, no matter what their position. You’re the one who will have to live with you decision and deal with it’s spiritual consequences. Now, I’m not trying to scare you or anything, and I don’t think you need to be scared. But tithing does matter and it’s an important decision. You want to get it right and be at peace about it.

Pray

Ask for God’s help. It’s such a complicated matter that you’ll never arrive at a decision you can be 100% sure about without his help. I listed a couple examples of just how complex it can become so I won’t get into a bunch more here, but whenever you have issues that you need to work out spiritually, praying is always the best option. Do so often.

Examine Your Heart

To me, this is what’s most important. Don’t give begrudgingly or because you expect to be rewarded. Give because it’s God’s money and we wouldn’t have any of it if he didn’t give it to us. Give because God says to and because it helps you to become less attached to material goods. Give because it helps others and makes a difference in peoples’ lives.

I don’t believe that God expects us to hire an accountant so that we can keep track of exactly how much we need to tithe. Do you remember the Pharisees that Jesus criticized because they were giving tithes of all their spices but neglecting their families? This is just one example, but over and over He points out how they’re missing the point because they’re interpreting the law in terms of technical requirements rather than seeking God’s intention.

So what is God’s intention?

All I can tell you is what I believe, and I’m sorry if that’s not very satisfying, but who am I to tell you how to live your life as a Christian? Anyways, here it goes:

I believe that God intends for us to give back a significant portion of our income
I believe it needs to be an amount that we’ll miss, not just a few bucks here and there.
I believe we need to do it cheerfully.

That pretty much sums it up for me. Here are some other resources that seek to answer this tremendously difficult question. These ought to give you a start on figuring out what you believe is right. God bless.

September 22, 2008 · Filed Under Commentary, bible, christianity, guest post, tithe

5 Comments

Guest Post: Wanna Save the Planet? - Buy a used Mercedes!

The following is a guest post by David Porter over at boomerinthepew.com. Check out his blog - he’s got a lot of great stuff over there! If you love this post, and want more - you can subscribe to his blog here.

Keep reading…there really is a financial lesson here!

I have noticed that the herd affect is at work again. Not too long ago, it was this: buy a house you can’t afford, in a resort area, re-sell it in just a few months, and voile’, retire on a Caribbean island somewhere fabulously rich and maybe even famous!

Wrong!

That’s right sports fans! Do not pass go, and do NOT collect $200!

Today a similar, though much smaller event, is happening in the automobile market.

My neighbor, before it was quite so fashionable and “green”, bought a Toyota Prius Hybrid. He mentioned to me the other day, that his salesman called him up, and offered him more than sticker price, for his used, one year old Prius!

Are you getting my drift? Now the herd is driving up the price of “green” cars to ridiculous levels.

Look, are you willing to take advice from someone who has every right in the world to give financial advice? Why you say? Go read my “about the Boomer” section.

Ok! Here’s my advice:

America, it is absolutely ridiculous how much you spend each month to drive automobiles!

I have personally peeked inside the finances of over 7,000 family’s financial statements. It is not uncommon to find a family with two cars, and two car payments nearing $800/month!

Holy money down the drain, Batman!

Please, for the sake of all that is sane….read on….

First of all, here are a few maxims to tuck under your hat:

A car is a depreciating asset. You buy it, and it immediately goes down in value. A LOT if you buy a new car.

Wealthy people buy assets. Poor people buy depreciating assets, thinking they are assets (cars, watches, snow mobiles, televisions, etc., etc.)

Let’s get serious. Of course you need a car. Perhaps two! But…what is the best way to do this? If you spent $800/month for 30 years, buying cars, do you realize how much money that is? Almost $300,000! Couldn’t that pay for your child’s college expenses instead?

I haven’t had a personal car payment in…well…let’s see….i’m not sure….18 years? Before you dismiss that statement by saying, “Well of course, your rich!”. No…my dear one…I too used to find it difficult to rub two nickels together in my pockets. Just listen for a minute.

That Mercedes, up there in the photograph, is a purchase I made about a year ago. Having just moved to Arizona, I decided that I would need an automobile to do the following things:

Be reliable and safe
Have a world class 4×4 system, so I can traipse the back roads of Arizona safely
Last at least 10 years
Be comfortable for long trips. We like to hike all over the Western states.
Have a bit of storage space to accommodate back packs, hiking shoes, etc.

After doing my homework, I bought a used 2001 Mercedes E320 with 80,000 miles on it and paid cash. This vehicle meets all my requirements, but cost me about $45,000 less than new. And you know what? It will do absolutely everything that a brand new one will do. So..what’s the difference? Oh…how about pride…or maybe lack of common sense…fiscal irresponsibility?

Look..you know as well as I do. The pride of the new car wears off REAL fast once you start making those car payments.

If you are just getting started in life, here’s what to do:

buy an inexpensive $2,000 car with the money you get from your wedding
start saving the $400/month that you might otherwise spend on a car payment.
In two years, you will have $10,000. Sell your $2,000 car for $500 and pay cash for a $10,000 used car. Don’t buy a new one. Too much depreciation. Besides, there are millions of folks throwing money away on two year leases. There are millions of beautiful, dependable used cars to buy.
This $10,000 car should, if you take care of it, last you 10 years, easy.
Keep saving the money each month and you will never have a car payment for as long as you live.
Oh..buy the way, you will find that your savings each month will grow to a fabulous sum after 20 years or so, pay for your children’s college education with this cash.

Let’s say you already have a car and subsequent car payment. Then here’s what you do:

When the lease ends, buy the car and keep driving it. If you got a loan on the car, then all the better, keep driving it. You don’t need a new car!
Now, start paying yourself car payments each month and refer above.

Folks! There is no reason on earth why you need a new car every two years, or even 4 or 5 years for that matter. Today’s automobiles will go, if you take care of them, hundreds of thousands of miles.

Of course there are a few rare exceptions to this program, but they are few and they are rare. Right?

The question is, are you going to willingly give away your hard earned wealth, or are you going to be a good steward of all the God has blessed you with and put a little mental energy and discipline into your financial decisions?

Don’t let yourself get stuck in all the “yeah, but what ifs”. Just do it!

In the meantime, my $45,000 savings will grow in the bank, and maybe I can help fund a school in Tanzania or something!

Honk if you see me bopping around the back roads of the West!

P.S. Here is another used car I own. I bought this about 5 years ago, used of course, and saved about $50,000 from new prices. It is now 10 years old, still beautiful, not a scratch, only 30,000 miles, and will likely last another 10 years, if I so choose.

You get the picture..right? Click the picture to see the Grand Canyon in the background. Beautiful creation of God!

September 18, 2008 · Filed Under Commentary, guest post, tips

5 Comments

Guest Post: Frugal Cooking!

The following is a guest post by Liv over at craftspoliticshiphop.com. Not only does Liv have an interesting blog, she also happens to be my cousin. Check out her site for all kinds of frugal recipes, fun crafts and other topics of the day! Subscribe here!

So, we all know there’s a definite economic crunch going on. But that doesn’t mean we should sacrifice the things we love, like eating. In fact, take this as an opportunity to try expanding your taste buds.

For example, eggplant is cheap and delicious, but I’d never tried it before I found one for 75 cents at the farmer’s market. Here’s my eggplant recipe I made up:

1 eggplant, cut into ½ inch rounds
2 c. cherry tomatoes, cut crosswise
6 oz. extra firm tofu, cut into strips
½ white onion, cut into small pieces
2 TB. garlic
½ c. El Pato brand tomato chili sauce
1 c. cheddar cheese, shredded
olive oil
salt

Preheat oven to 350. In a square glass baking dish, layer eggplant, then tofu, then garlic, tomatoes, and onion. Drizzle with tomato sauce. Drizzle with olive oil. Salt lightly. Cover with cheese. Bake for 30 minutes.

Or maybe you want to make a sandwich and want it to taste better than normal, try making your own mayonnaise. It’s cheaper than the usual, and tastes better. Plus it feels good to make your own sometimes:

one large egg yolk
2 tsp. vinegar (white wine or apple cider will work)
¼ tsp. mustard
½ tsp. salt
¾ c. oil

Whisk the egg, vinegar, salt and mustard together. Then slowly (about ¼ tsp or ½ tsp at a time) add the oil. Keep whisking until it’s all added (it’ll take about 10 minutes) and thick. Chill and enjoy.

So there you go. Enjoy!

For more ideas for keeping food cheap check out www.craftspoliticshiphop.com.

September 16, 2008 · Filed Under food, frugality, guest post, tips

2 Comments

Guest Post: A Biblical Look at Debt

This is a guest post written by Bob Brooks over at prudentmoney.com. Bob has a great website, blog and radio show weekdays from 3:30 to 4:00 pm on 91.7 FM KVTT (Dallas/Fort Worth, Texas). Check out his website and radio show podcast now! Subscribe to his feed here

There are many people who are faced with the daunting situation of being overloaded with credit card payments, mortgage payments, and car payments. Well, we know the financial downside from walking away from a mortgage. You lose your house. We also know the downside for not making a car payment. You lose your way around. What about the downside to walking away from credit card debt? Since there is nothing held in collateral, is there really a downside?

We can talk in terms of money, obligations, contracts and everything else that could go into that answer. I want to look at the answer to that question from a Biblical perspective.

Let’s first take a look at what the Bible says about debt. There is one verse in particular that I like to turn to that I feel sums it all up.

Proverbs 22:7 says:

Just as the rich rule the poor, so the borrower is servant to the lender.

This verse really illustrates the point that the Bible makes about debt. God wants 100% of us. To put it in context of the verse, it is tough to be a servant to God and be a servant to a lender at the same time. When you are able to handle your debt comfortably without problems, there is no servant relationship. When you have a debt problem, you are a slave to your debt.

God wants us to have the freedom to answer His call and follow His direction. Debt can limit your freedom. Debt can preoccupy your life. Managing debt can create worry. It can force a person to work long hours just to make the payments. Debt can occupy a great deal of our minds.

A great deal of debt limits your ability to freely give of your time and money to those who are in need. Remember, one of our primary responsibilities as a Christian is to serve. Living a debt-filled life will interfere with the freedom to go and do whatever God wants of you. To be the type of servant that God wants requires a lot of freedom that debt ultimately takes away.

So, let’s say you are in a spot where you finally got that message. What do you do now?

Ask God to change your life so that you never get in this situation again
Commit that you will do everything possible to get out of debt
Pray and ask for those answers – It might be that you are forced to work extra hours for a period of a few years. It might be that you need to downsize. Maybe your possessions have become bigger than God in your life.

So, back to the original question, should you just walk away from your credit cards if the obligation has become too big? You have one of two options in that case. First, you could walk away. The problem is that energy and freedom zapping debt problem just became a bigger monster as you deal with debt collectors, bad credit scores, potential lawsuits, etc. Incidentally, walking away will always haunt you. You always owe the debt.

Second, you can do everything possible from getting an extra job to downsizing to cutting back and get out of debt once and for all. Yes, in the short-run, you limit your freedom. If the motivation from doing all of that is to get into a relationship with God where you can give 100%, God will honor those decisions. Plus you are doing the right thing by getting out of debt.

Getting into debt was fun and easy. It is the process of getting out of debt where you grow as an individual and most importantly grow in your relationship with God to levels you never thought possible.

In short, the Bible talks about the dangers of debt and highly discourages its use. At the same time, it does not call debt a sin. Anything to where we put our time, commitment, and attention on that interferes and or limits our relationship with God can become a sin. That is when debt becomes the problem.

September 11, 2008 · Filed Under bible, bible verse, debt, guest post

4 Comments