Frugal Living 
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Spend to Save Trap

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If you ever want to learn about consumer behavior, walk through a grocery store. Look at all the labels, how things are positioned, how sales are organized, and you’ll get tremendous insight into how we consume. Ever wonder why grocery stores have sales where they limit the number of products you can buy? You can get five cases of Diet Coke for $10 but you are limited to five cases. If you really wanted ten, all you need to do is buy five, drop them off at your car, and then buy five more in another “trip” five minutes after the first. The reason they “limit” your order is because it creates a scarcity and you’ll end up buying more.

The same tactic is used whenever you talk about coupons and savings. In general, a generic product is cheaper than a brand named product after coupons. The only time that a brand named product is cheaper with a coupon is if it’s used in conjunction with coupon doubling or a sale. However, people buy brand named products using coupons, even though the generic is cheaper, because they’re getting a deal. If you’re buying based on price alone, then you’re making a mistake. It’s an example of the “spend to save” trap. You’re “saving” the 50 cents on the coupon on the brand name, but in reality you’re spending more than you would’ve without the coupon.

When I wrote about the “instant” savings we could get by buying a 2009 Entertainment Book, one of the points I was trying to be careful about was the idea that we were spending money to save money. The Entertainment Book is a good deal if your net spending goes down. It’s a great deal if your net spending goes down by a lot. It’s a terrible deal if you start spending in areas you wouldn’t have if you didn’t own the Entertainment Book. When you’re looking at “deals,” it’s important to recognize that a truly good deal is a discount off something you would’ve bought without a discount.

In the post about saving money with the Entertainment Book, I wrote about how we could buy the 2009 book for $15 and use an $18 off coupon from the book at a local restaurant. In the four years we’ve lived here, we’ve never once gone to that restaurant before last weekend. If we had an Entertainment Book offering 2-for-1 entrees, we probably would’ve tried it earlier and that’s where the “Spend to Save” idea breaks down. Without the book, we wouldn’t have gone to the restaurant and we would’ve spent it elsewhere. With the book, we “save,” but that’s only because we modified our original behavior and went to a restaurant we never went to.

Another great example is buying in bulk at warehouse stores like Costco. It’s a good deal if your family can eat food service sized can of string beans before it goes bad, it’s a horrible deal if you force yourself to eat string beans until you hate their very existence.

Have you ever fallen into this trap?

(Photo: doctorow)

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19 Responses to “Spend to Save Trap”

  1. I’m been teetering with a post entitled, “Just because it’s a good deal, doesn’t mean you should buy it.” I really haven’t been able to quantify what I wanted to say, but you really nailed it, right here.

    This certainly affects my wife more than I. She loves the process of finding deals, it’s the thrill of the hunt for her. Because of our nature, we often times do find great deals, however if we, were to act on all of them it would quickly derail a lot of our other goals.

    • Alison says:

      This certainly affects my wife more than ME.

      • financialfemme says:

        Alison,

        The point of communication is to communicate. While he was grammatically incorrect, his point was made. Maybe you should ask yourself if YOUR point was made and whether it was in fact, the point you intended to make…

  2. Chris Lempa says:

    I buy the entertainment books when they are fundraisers, generally for youth programs. For the reasons you mention, I usually give them away shortly thereafter.

    As for buying in bulk, I belong to a local buying club. I can buy all the food at the Whole Foods type stores at a discount. We have a large group so that a 50 lb bag of garbanzo beans can be split amongst 5, 10, 15, or so people. On the other hand, my partner and I tend to buy 25 lb bags of rice and lentils. We also buy Edenblend buy the case.

    • Jim says:

      I think buying in bulk is great, I try to do it whenever possible, but it’s tricky when the product is perishable (which makes your crowd buying solution absolutely wonderful).

  3. We did that once during the Y2K. Ate canned peas for months….

    Thanks,
    Nate

  4. Fairy Dust says:

    I really have to be careful of this trap. The comedian Gallagher shot the point home for me once in a bit he did about how his wife was so excited that she bought some hideous piece of clothing because “it was on sale!” but she never would’ve bought it otherwise and also never wore it because it was hideous. But, it was On Sale :)

    When I do the couponing thing, I do get sucked into the thrill of the deal hunt. So for a long time, I gave up on coupons and bought only store brand or bulk (non-perishable). But recently, I’ve been having so much fun with double couponing at the one store in town that still doubles $1 coupons, that I realize it’s become a form of entertainment that actually makes the drudgery of shopping fun. As long as I’m aware and careful, and truly am getting a deal that’s useful to us, I think it’s okay. Just having purchased two trips of $200 worth of food and sundries for $50 each trip, and having fun, and knowing we’ll actually eat the food and use the shampoo, it’s all good :) But yeah, it’s a slippery slope.

    • My wife went a little crazy and bought 8 coupons off of restaurants.com. The problem is we’re moving in about a month and a half and hardly ever find the time to eat out. Now we need to eat out 8 times over the next 6 weeks! She said she just wasn’t thinking, and it’s fine, we’ll use the coupons now that we have them, and she only spent a total of about $20 (using coupon codes to make the certs cheaper), but this is a perfect example of spending to save – as the certificates require you to spend more than face value in order to use them.

  5. Salesman says:

    I ‘saved’ a fortune by bulk buying my breakfast oat flakes. The 25 kilo sack worked out at less than one third of the price per serving, compared to small bags of the stuff. Days later, still feeling satisfied with this smart buy, I go to get another bowl full. This is when I discover my cats have found an alternative use for oats. Now it’s not looking like such a bargain.

  6. Beth says:

    I almost fell into this trap. The brand name rice cakes were on special in the grocery store, so I was tempted to stock up. Then I noticed that the no-name brand ones (which are just as good!) were still cheaper even with the discount! No need to hoard — I’ll just buy a bag when I need it.

    That being said, I have a friend who loves garage sales but is always buying useless stuff because it’s so cheap. Now she refuses to take me along because I’m always asking “do you really need that?”

  7. Matt Fyffe says:

    It’s a tough debate here Jim.

    For instance, you might spend more if you use the coupon on the brand name versus the generic brand, BUT, if you enjoy the taste of the brand name better, you’ll be getting greater pleasure by buying it. Even if you are spending more than you normally would (since you would typically just buy the generic version), you might get greater pleasure out of it.

    Looking at the going out to a restaurant, maybe you wouldn’t have gone to that restaurant. BUT, if you were going to go out anyway, you’re still not spending more than you otherwise would, your just spending somewhere else.

    I understand the concept you’re getting towards, I just think it’s careful to recognize every situation. If you’re going to get something for cheaper that you normally wouldn’t get, but have always wanted, then go for it. Just don’t buy a deal simply because it’s a lot cheaper than normal.

    This is an issue I have with movies/games. I’ll buy movies/games when they go on sales… and then never open them. I don’t really know why i do it, I just get excited when they finally get cheaper.

  8. Andrew says:

    I do this all the time. My wife yelled at me for buying 16 boxes of my favorite cereal from Amazon because they were having a sale. It probably would have made more sense just to buy a box or two at Trader Joe’s and pay a dollar more a box rather than have to worry where to put it all. I’ll eat it before it goes bad, though.

    • Jim says:

      Well, it is cereal and not something more perishable. I think bulk purchasing makes sense as long as you don’t end up throwing a lot of it out.

  9. Angrywhiteman says:

    Yes, the #10 can of chili, I ate chili for what seemed like forever. I still like chili, but will freeze half the contents next time.

  10. Patrick says:

    I’ve fallen into this trap with bulk foods from costco. It’s so easy to buy something, but if you don’t eat it that often, then its not worth it. You can even find it’s cheaper to buy them with coupons in grocery stores. Clothing stores do this a lot as well when they announce huge sales on their already over priced merchandise. They seem like great deals at the time, but are not really much of a deal.

  11. jamspoon says:

    I like in the UK and we don’t have the coupon culture you have in the US. We do however get a lot of limited period discounts and buy one get one free (BOGOF) promotions in the supermarkets.

    I like to think that a use their offers to my advantage, but I suspect I fall into the promoters trap as often as I win.

    I visit a couple of supermarkets each week checking the end of aisle offers. I try to use them for 2 purposes –
    (1) things I can bulk buy that will keep (eg canned/frozen goods)
    (2) things I only buy on offer (eg biscuits and sweets)

    I must confess to having over bought on occasions and to getting hooked on a product after the offer period. So it worked for them those times. On balance I think I’m ahead, but they would want me to think that…

  12. Emily says:

    I was behind a couple at the grocery store the other day. They had a bag of potato chips for which they thought they had a coupon. The coupon was for a different brand. They ended up buying the potato chips anyway, without a coupon. The guy commented that they never would have tried these chips without a coupon in the first place. No money saved there!

    I avoid coupons unless they are for something I always buy. Most coupons are for the highly processed items that get our diets into trouble anyway.

    I also tried to buy toilet paper at Costco, thinking that was something that couldn’t go bad, but I happened to have the unit price info in my phone and it was actually higher than the no coupon price at my local grocery store. My philosophy is to buy only what I really need or want, then it’s worth whatever I pay. And I’m willing to try store brands but if I don’t like them then I’ll pay more.

    I don’t ever shop unless I am looking for something specific. Maybe I miss sales that way, but I also don’t come home with “good deals” I didn’t intend to get in the first place.

    I do buy coffee in bulk online. I did the math – 10 lb with shipping is just about $100, and that actually makes the unit price for my absolute favorite bean lower than any grocery store 12-14 oz package. I throw the beans in the freezer and have my favorite coffee for months.


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