Thursday, June 11, 2015

Why I Am Not A Fan of Couponing

Is using coupons and reward programs a way to get ahead?   I am not sure it is worthwhile.

I keep harping on many things in this blog, and one of them is this:  You cannot spend your way to wealth.   You can go out and shop as hard as you can and you won't come home with more money than when you left.   It just doesn't work that way.   When you shop, you spend.   It is a given.   "Savings" at a store are just illusory price reductions.  Real Savings are what you put in the bank.

As I noted in another posting, people love to blog about couponing.  There are several television shows about it.  Newspapers and news stations love to put up stories about people who buy carts full of groceries for nothing, or nearly nothing.   A cart full of groceries, like gasoline, is a high Pavlovian-response thing for us plebes.  Free groceries?  Free Gas?  We'll bite on both of those - no matter how much we have to pay to get these "free" things.

But sadly, these coupon-cutters never seem to get ahead.   If they did, they'd all be cruising around in their yachts.  But few even have a boat.   Couponing, for most people, turns out to be an extraordinary time-waster, distractor, and a way of getting you to spend, not save.

A reader writes, in their blog:
Here is all that was a good deal or free I could find in my store......

2 x Dove men's body wash on sale=$8.00
2 x Reach toothbrushes on sale 50% off=$4.48

Coupons Used
1 x $2/1 Dove body wash Load2CardQ=$2.00
1 x $2/1 Dove body was ManuQ(last Sunday's RP insert)=$2.00
2 x .75¢/1 Reach toothbrush IPQ(coupons dotcom)=$1.50
Coupon Total.....$5.50

$12.48-$5.50=$6.98 + .27¢ tax=$7.25

I used 400 Plenti Pts($4)and paid $3.25 OOP.....well not really OOP since I used a Rite-Aid gift card I bought 15% off months earlier so that spending is already accounted for in my budget.

I earned 400 new Plenti Pts on this transaction(200 wyb2 Dove body wash, 200 wyb2 Reach toothbrushes)so my Pts. total stays the same at 600 Pts.
In addition I have a Savingstar account and had clipped a $2 off 1 Dove body wash from there so I'll get $2 cash back in that account at a later date which takes my "OOP spending" down to $1.25 for these 4 items.
Now, if you are like most people, you probably had trouble following all of that - with the rewards points, coupons and whatnot.   But what this person did, was, after chasing down lots of coupons, enrolling in rewards program (which require you spend to get points),  mailing in rebates (and waiting for a rebate check) was get what appears to be $12.48 worth of items for only $1.25.

Well, $1.25 if we don't count the cost of the stamp used to send in the rebate form.   And $1.25 if we don't count the countless hours spent trying to get this "bargain".

This is quite a deal, right?   You could go out and sell these items on a street corner and make money!  Oh, wait, no one will pay you much for a bottle of body wash and some toothbrushes.   What she did was spend $1.25 to get maybe $4 worth of items.

Instead of couponing, I shop at the Dollar Tree.   Body wash there is a dollar a bottle.  Two bottles is two dollars.  Not with a coupon, not with bonus points, not with rebates.  And this price is in effect every day, all day, all year long.  I don't have to spend minutes or hours perusing newspapers (which cost money) or chasing down coupons, or spending money at a store to get rewards points.

But what about the toothbrushes?  Certainly those are a good deal, right?   Well, maybe to you.  I have literally a drawer full of toothbrushes, from my dentist, from hotel rooms, from friends who scarf them from hotel rooms.   I use an Oral-B electric toothbrush and buy the heads in bulk at the wholesale club.   If those were on sale for pennies, I suppose that would be a real bargain.

But regular toothbrushes?   Why pay for something that is basically free?

And that brings up the question, did this person buy these things because they needed them, or because they were "on sale" and an apparent bargain?

In other words, did they spend money to try to save money?

I am not picking on my reader, just using this example to illustrate a point.   If you are buying things because "at this price, you can't afford not to buy!" then you are likely wasting money.   If it is not something you need or really want, then what is the point of buying it, even if it is "on sale"?

And if you have to jump through so many hoops, and put so much labor into "saving" money, is it really a bargain?

Compare her deal to the one below, that I could get every day of the week:
Dollar Tree body wash: $2
Dollar Tree Toothbrush: $2
Total:  $4
The "savings" for all of his work isn't $12.48- $1.25=$11.25.   It certainly looks that way on paper.  But that is only because the "retail price" of brand-name goods is horribly over-inflated and no one pays retail most of the time anyway.

I bought a truck for $25,000 including tax.  It "retails" for $32,000.  Did I "save" $7,000?   Funny thing, when I drove it off the lot, I was $25,000 poorer, not $7,000 richer.

A better way to look at the purchase is by how much you SPENT, not artificial "discounts" from placeholder prices that mean nothing.   Shampoo and body wash is horrifically overpriced in supermarkets and drugstores.  $4 for a bottle of soap?   Who are they kidding?

So the real savings are this:  $4 (the actual worth of these items) - $1.25 = $2.75 in savings.   This still seems like a lot, right?    I mean, you'd stoop down to pick that up off the floor.  But subtract the 49 cents for first class postage to mail in a rebate of $2, as well as the cost of newspapers these days (to get the coupons) and maybe we are closer to breaking even.

Then factor in your time and effort to assemble such a deal, and maybe you are way behind.

Then factor in how much is SPENT to get "reward points" for such discounts - and maybe we are really far behind.

It is like airline miles.  If you fly for your job, take the miles and use them for upgrades (you will find it very hard to cash in miles for a trip for a family of four, due to blackout periods and the limited number of seats for miles passengers - unless you book two years in advance).   But if you don't fly for a job, you can't make money by buying airplane tickets to get the miles.   It is a promotional gag, nothing more.

If you find clipping coupons to be a rewarding hobby or a game to play, I guess there is some "fun factor" to be had in it.  And to be sure, sometimes there are real bargains to be had, if you look hard enough or if they leave a loophole in the game.  The pudding guy is one example.   And just like the Casinos like to tout their winners (so the rest of the plebes will play and lose their money) Couponers will cite the rare instances where someone walks away with a lot of "free stuff" for nothing or nearly nothing.  But those cases are the exception to the rule, not the rule.  And even the pudding guy had to pay cash money for those "miles" - they were not "free".   And airline miles are worth less and less, every day.

But I think a lot of coupon clippers are misleading themselves, by comparing retail prices (which are made-up numbers) with their discounts, and convincing themselves they are saving huge amounts of money.   

But the reality is, getting $4 of merchandise for $1.25 is fine and all, but it is not a screaming bargain, considering the amount of labor involved.   And no, our reader didn't "save" $11.23.   She walked out of the store with four bucks of stuff in a bag, but not $11.23 in her pocket.

Simple as that!


A reader writes:
"A couple of weeks ago my wife and I actually witnessed our Publix cashier hand over $7 to the customer in front of us. She bought a cart full of soda, makeup and baby wipes(!) all with, we guess, a combination of manufacturer coupons and Publix coupons. Apparently Publix and Wal-Mart permit this. The cashier told us that this customer is a regular and that she sells the stuff at a local flea market. Hard to believe people get their jollies selling soda at the flea market but there you go. Interestingly, this 60-something female customer was covered in tattoos, some of them relatively new looking. Couponing and tattooing seem paradoxical, but maybe there's more similarity in the mindset than meets the eye?"
So, it is possible to sell these items bought at a discount at a flea market or elsewhere.   But since flea market shoppers are looking for "bargains" they are not going to pay full retail price for these goods.   So you have to sell them at a discount, which means your margins are pretty thin, plus you have to pay for the flea market booth, the gas to get there, and of course, your tattoos.
Speaking of which, while tattoos have gone mainstream it would seem (actually, media celebrities get them so their target audience - the lower classes - identify with them, the very wealthy are rarely covered with tats) they still remain the provence of the poor.  How people can afford them is a good question.  I guess all that money they save couponing.

As I noted in another posting, I saw a young girl, pierced and tatted, driving a clapped out Hyundai with a cracked windshield, sporting a bumper sticker that said, "Tattooed and Employed" - which sort of says it all, doesn't it.

No one ever got rich on couponing.  Otherwise the rich would be doing it.   One other odd aspect of couponing is that on some videos I have seen, people buy lots of things using coupons and then just hoard them.  One lady had shelving in her garage full of rows and rows of products.   Like her own little store.   I guess it made her feel wealthy.   But I failed to see the point.   The cost of the shelving negated any savings from couponing.