What is the True Cost of FREE?
And, How Good is that Deal, Really?
Whether you are working a rebate deal, doing a drugstore freebie, participating in a consignment event, or joining a warehouse discount club, you need to look at the true cost. Follow the dollar. Then, make an informed consumerist decision.
When I first started couponing and doing rebates, etc.., I made a few rookie mistakes. I didn't look at the overall big picture on what I was doing and spending to save a buck or even make a buck.
I saw a SC Johnson rebate offer and got super excited. It was buy any 3 SC Johnson items and get a $5 rebate check by mail. It was my first rebate. I realized that SHOUT! Wipes from the travel section are SC Johnson. I had 55c off one coupons (3) in my binder. AND, the wipes were only $1.09 ea. We use these all the time. I had picked up one set of those wipes for something else already. So, I found that receipt. I got so excited I grabbed my coupons and the kids and went to Target. Target is a 15+min drive. So, I bought two more sets of wipes and got a couple other items I hadn't really needed before next week's Target trip. I ended up spending $1.73 after tax on the SHOUT wipes for the rebate. But I was getting a $5 check back! What an awesome moneymaker, right?
No.
Here's why:
$5.00
-1.73 (cost of the items)
-$2.50 (gas to go there and come back since I ran out when I didn't need to go just to work the rebate.)
- 40c (stamps)
-5c (envelop)
___________
32c moneymaker
Yeah, I got the items free and got paid to own the items. But it was one of those aha moments. To get them free and to make 32c, I had to take an HOUR out of my day to run to the store, get the items, wait in line, and then come home. For 32c and 3 travel packs of SHOUT wipes.
That was not using my time or resources to the best of my abilities. It was a wake up call. Now, I look at the big picture and follow the money.
You can and need to take this philosophy to every deal you do and money you spend to get a better bargain. My husband takes it to extremes and says "That $1 you just spent on the candy bar could have been $16 in retirement money". He is right, to an extent. But I wont take it that far.
I will take it as far as evaluating our need for a discount warehouse membership. I have a family of five to cook and provide for. If I say we don't need a discount membership, chances are you are throwing your money away to have one too. One of my friends is like "BUT you SAVE 50c a week on milk ALONE!" Do you know how many gallons of milk you would have to buy to make, say, a $30 annual membership fee pay for itself? More than 60 gallons of milk. That's BEFORE you start to save on milk. And, you can coupon for milk (Kelloggs and others put out save $1 on milk WYB cereal, etc) You can use drugstore rewards on milk. But, you interrupt me, But they sell more than milk. I get that. That super cheap box of diapers you buy in bulk? That is about 3 packages worth right? So you just lost the chance to use up to 6 coupons on that box of diapers. Now, you have to take what the savings on that box of diapers is and subtract out the coupons you could have used. Then, you get a real savings. Take that real savings and put it towards the membership fee. I am telling you.. if you would only coupon, it would be more beneficial in most cases. If you pay $30 for a savings membership.. make sure you are saving MORE than that $30 annually AND more than coupons would have saved as well. Personally, I like to keep my $30 upfront in an interest bearing account at the bank than hand it over. **Disclaimer.. you will totally find me in a warehouse savings club from time to time. Our local one has Churros. Hot fresh yummy ones. AND, 87c huge fountain sodas. BUT, I did NOT pay for my membership. I got it for free. And I do think there are redeeming qualities to such a club. Like the $16 awesomely decorated, yummy cakes. And, the rotisserie chickens are larger and cheaper. Most of the items in such a club are not worth the membership fees. BUT if you are NOT going to coupon and you get such a membership for FREE.. well.. I will look the other way and munch my churro.
When looking into consignment events, or even having your own yard sale, consider the cost of it all. What are the fees? How much are the supplies to price your items? How much to rent a table for your own sale? Advertising? Signage? Etc. It all comes with a dollar mark. What are you hoping to make vs how much time you are going to put into getting it ready vs how much you will spend/be charged to make that money?
What about that pricey family membership to the zoo, waterpark, museum, etc.. even if they are having a sale... How many times would you have to go before it paid for itself? What is the true cost in terms of items you might purchase when there (souvenirs), food, gas, etc to go? Make sure it will be really worth it before you commit to the money for it.
Beware the FREE:
Once upon a time, my husband did freelance work in exchange for a year of free dance lessons for our child. We had never done dance before. We did not have the money for such a pricey extracurricular and would not have done dance had this opportunity for a trade out occur. So, we were like YAY free dance! By the end of the year, we paid more than $1000 for our naivete. Free dance did not mean Free dance class uniform, free tap shoes, free ballet shoes, two free costumes, free "cheapest" dance class photo package, free souvenir book from the recital, free venue fee, free tickets to the recital or even free teacher gift at the end of the year. Also, the gas, time and of course, fast food trips after class (I promise my kids love veggies). No, we paid for each of those things. It was more like we got the monthly tuition waived for the work my husband did. Had we realized the real cost up front, we would not have done that trade out that year. $1000 so a 3 yr old can have an extracurricular is too steep for my couponing heart. Now, if she had been older and begging for class.. that's one thing. And while she did have fun, she didn't become BFFs with anyone in class and doesn't remember a lick of dance now.
The main point here is to follow your money. Follow it and it might lead you down the magical path to moneymaking scenarios. But don't get hooked on what looks like a good deal upfront. And, calm down when you see a deal you are excited to work. Don't waste the gas and time. Work such things into your route. I have learned that rookie mistake. :) Work Smarter, Not Harder too!
