You Can’t Save if You Don’t Try

By Linsey Knerl on 27 July 2008 (Updated 17 September 2009) 11 comments
Photo: Dean Shareski

There has been much discussion about whether certain money-saving strategies are worth your time. Our own Philip Brewer recently gave his two-cents on how much his time may be worth in relation to some of the more popular “free money” offers out there (great article). In a recent article in Parade Magazine, Tim Harford alerts us to “Bargains That Aren’t.” Here’s why I disagree, and how I’ve successfully cashed in where others have walked away.

The “Bargains That Aren’t” article is available online for anyone who wants the unabridged scoop. Basically, it gives six common ways people try to save money and how behavioral economists have deemed them to be more harm than good. While the article does bring up some valid points, there are always ways around the lure of spending more, and many disciplined shoppers (including myself) have found at least some of them to be great opportunities to stash some cash. Let’s take a look at the presumptive examples:

Anything you buy on credit – I don’t disagree with Mr. Harford’s stance that using a credit card can lead to higher spending habits. The sky-high consumer debt numbers confirm this fact. But to discount the value that a low-interest rate card in the right hands can have is irresponsible. When handled the right way, credit cards have provided many people with liquid funds when they need it. Small business owners, especially, find credit cards to be the tool they need to succeed and thrive. (I myself have been fortunate enough to have a variety of very good cards to help in my business purchases while waiting on client payments. Plus, I can’t even tell you how much I’ve earned in rewards!) By keeping my debt to available credit ratio extremely low, my credit score has increased dramatically over the past two years – from average to excellent with relatively little effort.

Mid-Ranged Products I’ll file this topic into my “Good to Know” folder. I hadn’t totally considered the effects that marketing certain high-end products could have on purchasing decisions at the mid-price level. (Although I doubt it affects me too much – I’m more of a “I got it on Craigslist” type of girl.)

Manufacturer’s Rebates – You don’t have to be a CVS fangirl or a couponaholic to understand how unfounded it is to claim that rebates are all-in-all a bad deal. The article claims that less than half of all rebates are successfully redeemed (and therefore leads readers to believe they should be avoided.) But why is this? While I admit that some companies have made it increasingly difficult to redeem rebates, it isn’t exactly rocket science. If you want that $25 back on a PC upgrade, make a copy and mail your stuff in on time. If you don’t want it, don’t do anything. But please don’t assume that it’s something most people can’t get a grasp on.

If you really want the money, you’ll follow through. And while rebates can “lure” many into buying something they don’t want or need, I am a living example of the opposite. I have waited months (even years) to find the right combination of sale price and rebate to get luxury items at almost no cost and not effort. My favorite purchases (including my iRobot Roomba) were examples of successful rebates. To date, I’ve had little to no trouble redeeming them through reputable companies when following their guidelines.

An Ebay Auction Deal – Here is another example of where consumers are presented as the “victims” in this article. The allure of auctions is made out to be so powerful that many don’t know when to stop bidding, thus paying more for their purchases than they would have otherwise. I equate this to gambling in some ways. The thrill of the bid is a sign of deeper problems, in my opinion. (And the article actually gives some good advice to pick a price and walk away if the auction goes any higher.)

Free Stuff – I’ll agree with the article on this point (kind of.) People tend to buy something overpriced or unnecessary because of the emotional reaction that getting another item “free” can give them. This is obviously not a good choice. The article went on, however, to compare buying a overpriced DVD player (with free DVD) to free entry into a museum or gallery (claiming that the time spent in line is most costly.) It is still up to each individual to decide what their time is worth – please don’t decide this for me.

Yearly Gym Memberships – This one is either a great deal or not. It’s up to you and your lifestyle entirely. The key is to know yourself well enough to know if you will really use that membership, and plan accordingly.

The Parade article has readers’ best interests in mind, I’m sure. But I try to avoid generalizing consumers’ spending habits by labeling any deal as a time-waster, a money-trap, or beyond the comprehension and abilities of all shoppers. Instead of crossing rebates, auctions, and the other “bargains” off the savings list, why not teach the steps to success and let buyers make the right choices for themselves? While these ideas aren’t for everyone, you might just be surprised at your own financial savvy – when you take the time to learn and try!

Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by any card issuer.

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Guest's picture

Now a days they have monopoly (the board game) which uses credit cards instead of the original cash. This is a great concept but I am a little worried people will get too used to using credit cards. Like you said in this post, you spend more when you use credit cards

Guest's picture
Peter

As for the yearly gym membership, there is a better way to save on that completely. You don't need a gym membership to stay in top shape.

http://yinvsyang.com/7-ways-to-stay-incredibly-fit-without-joining-a-gym/170/

Linsey Knerl's picture

I will continue to use credit cards as long as it is profitable.  If the economy were to make it impossible for me to continue being responsible, I'll stop. 

And the gym is again a very personal choice (although I don't have access to one currently, so I improvise with several of the great options you have mentioned in your article.)  For some, it is also the social interaction, peer accountability, daycare or shower services, and the advice of expert trainers that make gym memberships a valid expense.  I have been on both sides of this coin, so I can understand either way.

Thanks so much for your feedback!

Guest's picture
Beth

I agree whole-heartedly with your point about not deciding for someone else whether or not things are worth your time -- especially when it comes to admission. I would like to know what information Harford is basing this part of his argument on (is it part of Ariely's book? Harford's own experiences? Statistics?).

First of all, there's a big difference between free admission events versus museums and galleries that are free (or nearly free) all of the time (like many of the galleries and museums in Britain). To lump them all together seems to show an ignorance of museums and galleries in general.

Second, many of these free events are in place so that the general public can have access to these programs and facilities -- regardless of their financial situation. Sure, it may not be worth it for a lone professional to wait in line for these events when they can afford to go anytime, but what about a family of five? To say to avoid these events is ridiculous -- art and culture isn't just for the elite who can afford it.

Third, waiting in line and dealing with crowds doesn't always have to do with whether or not something is free. I've waited in line and dealt with crowds to see popular exhibitions while the "free" part of the gallery was uncrowded and very pleasant. People wait in line for rides at amusement parks, and those certainly aren't free!

Thanks Linsey for another great article!

Guest's picture
mk

But then, I use it. I work out there pretty much every day, and without a fixed place to go and trigger the "ok, time to exercise" routine for me, I definitely don't exercise. Paying per visit, I'd spend as much in a week as I currently do per month.

Guest's picture
Suz

I think that Credit Cards can be a great bargain if you're a self-controlled person with attention to detail. For example one of my best friends (who is 30 and has paid off more than 1/2 of her 3 bdrm house's mortgage on a teacher's salary) dilligently records all her purchases with her miles card in her check book register. when the time comes to write the check, she's allready accounted for the cash it will cost her. And she racks up lots and lots of travel miles while she's at it. She even started paying off her mortgage every month with her miles card.

Me, on the other hand, is horrible about recording such purchases (something I'm working on) which gets me into trouble. So I don't get to have a credit card. There's one in my name in our family, yes, to build credit. But it's kept in the miserly hands of my husband (at my request!).

You need to know which kind of a person you are...

Guest's picture

I like looking through newspaper ads when I am also looking for rebates or coupons. Usually stores will have good deals. Unfortunately that also leads to purchasing things you don't need which I have a habit of doing.

Guest's picture
observer

Yes it is possible to save if you don't try. I have very simple tastes and there is nothing I want to run out and buy. Usually my monthly income is around $1200 and I live on that without credit. Briefly my income was up around $1700 and during that time I was able to save about $4000 without trying.

Guest's picture
Guest

I stash the new $10 bills that have red print on them. If I get one in change in a side pocket of my billfold it goes. Last year I saved over $600 for Christmas this way. This year I have had grandkids visit every 2-3 months so this has been our "fun" money. Might sound silly but it works for me. The other thing I do is auto deposit $50 a week from my paycheck - what you don't see you don't miss is my thought.

Carrie Kirby's picture

The childcare at my gym is the best bargain around. i try to get there every day, whether i work out or not. it helps that the ladies working there make it a place my kids actually want to go.

I pay $60 a month and use an average of 15 hours of babysitting two kids. So even if I NEVER used any other facilities there, I'd be getting my money's worth @ $4 an hour. 

Guest's picture
kevin

Very much associated to that article is this 1-800-411 SAVE which I just discovered.Its a lot saving really since I can now keep my hard earned money instead of use it to pay for information bill..Imagine getting the information you need in an anstant thru a live and friendly operator.
And you can also try other services that they offer such as movie times and listings, restuarant reservation and even directions..well, there's just this short advertisement that will play before the connection but I dont mind.It's free anyway..KUDOS to the people behind this offer.Hope it'll last forever.