Tuesday, February 28, 2012

Shopping for a Living

Question (a simple question):

If chasing after discounts, coupons, cash-back bonuses, frequent flyer miles and all that other junk was such a good deal, why not quit your job?

Think about it.  If you get 10% off on a purchase, then it would make sense to purchase $100,000 of goods, sell it for $95,000 (a discount off market value) and then pocket $5000.   You'd be rich in no time!  Do this once a week, and you'd make $250,000 a year.

If this were true, we'd all quit our jobs and then shop for a living, living off our bonus coupon discounts and such.

The Answer?

Well, the goods are not worth $100,000.   They were only worth $90,000 - which is their actual market value.  You could not re-sell them for even a 5% profit.

The price you pay, with Bogos, rebates, coupons, and all that other crap is just the market price.  You only think you are saving money by comparing your "discounted" price to some fake "retail price" that no one pays.


However, the psychological inducement of the "bargain" does encourage you to spend more and also make purchases you might not otherwise make - which negates any real savings.

Don't let the carnival distract you.

Pay the lowest possible price, of course.   But don't think for a minute that these gimmicks are anything but gimmicks. 

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