My favorite one to hate is the perennial “The more you spend, the more you save!”. The truth is, the only way to save money is to put it in a savings account, or some investment. If you save 50% but buy 2 instead of one, you haven’t saved a dime.

Oh come on…..you need product X you can either buy it at store A for retail,$3 or you can get 10% off at store B with a $1 rebate, tell me why I would not want to buy at 10% discount and get $1 rebate when I needed the product anyway???

@Jacob, “Pricing something at $10 and immediately discounting it and selling it at $7 is an accounting gimmick. I understand that companies report a $10 revenue and a $3 cost of sales in this case while the customers report a cost of $7 with $3 in savings.”

Actually, marking something down to $7 from the (implied) original $10 it is not an *accounting gimmick* , although it is usually an effective *sales technique*. Companies use the actual cost (to them) of the goods sold, so if the item in question cost the company $5 to buy, in this case they would report a $7 revenue and a $5 Cost of Goods Sold (I am guessing on the COGS by just taking 50% of the original $10 list price–a reasonable, if perhaps overliberal, assumption that is roughly accurate in the traditional retailing).

“would it be more fair (or right) if stores advertized : “spend only half on product XXX” rathen than “save 50% on product XXX””

Honestly, I don’t know. There are various types of “Payless” stores– shoes, liquors, etc… It’s still spending. In fact, the whole point may again be to trick the consumer into feeling as though money has been used wisely, which is certainly not assured by the name of the store. A drunk spending all of his money at a payless store is still a drunk spending all of his money. Still, have we not all at one point or another internally patted ourselves on the backs for spending money “wisely” at some form of payless store?

Side Note to above post:

To be fair to JC Penney, I would like to say that I still have and wear a shirt I bought at Penney’s in 1971, that I wore to the hospital the day my daughter was born.

It’s not just them, it’s all retail stores.

Although I agree in principle, there are some important exceptions. When it comes to bathroom products like toothpaste, shampoo, shaving cream, razors, etc. I’ve found that it’s a good idea to take advantage of the weekly rebate/store credit offers at CVS, Walgreens, and/or Rite Aid.

Of course it’s important to ONLY buy the items that have a 100% rebate so that you only pay tax, and to “roll over” your credit every week by using the store credit coupons to buy more items that provide a 100% rebate. You will end up spending $1-3 a week (after the initial “start-up” purchase), but should quickly amass enough bathroom products to last for at least the next decade (I haven’t has to buy any drugstore items except toilet paper for over four years). If you already spend less than $6 a month on these items, or you don’t live within walking distance of one of these drug stores, this probably wouldn’t be worthwhile.

Also, by combining a coupon for buying 10 oatmeals for $10 and a manufacturers instant rebate for $10 off any 10 Quaker items, my wife and I were able to “buy” about 100 containers of oatmeal in the automated checkout line without being charged a penny.

At some point of course, the time spent finding such combinations becomes so great that you are losing money because you could be spending the time more productively elsewhere. However, it is a fun game to match sales+coupons+rebates for some, and I really do see the money we “receive” in the specific case of the 100% drug store rebates as savings…unless of course you use a majority of the store credit to purchase items that don’t continue to give you a 100% rebate – then, you’re a sucker and you aren’t really saving anything.

I like to use the phrase, “I can’t afford to save that much.”

I don’t necessarily think that you can’t call anything a savings until you deposit it in a savings/investment of some sort. Sometimes you can use your savings in one area to increase your spending in an area besides investing and saving.

However, I do agree that what a store says the savings are and what I say my savings are rarely match.

If I wasn’t going to buy another shirt until I saw one on sale for $10, then my “savings” might be -$10. (Or maybe this shirt saves wear and tear on my other shirts and lets me go longer before buying another shirt, so I may have a positive savings depending on my usual price for shirts, assuming I don’t change to a new size before the next shirt would have worn out.)

On the other hand, now that I buy Oak Farms milk (no growth hormones, but not organic because they do actually let sick cows get antibiotics and then don’t use their milk for a while) instead of organic milk, I am always saving $2/gallon. But when Oak Farms milk is on sale for $3 instead of $3.50, I am saving $2.50, not $0.50.

Frankly, companies telling me how much I supposedly saved is barely even a blip on my graph of annoying things that companies do. And that’s because I don’t have to trust them–I have my own data and can make my own calculations.

Yes, it’s all just head games. Get someone into the store or mall and we run around “saving money”. Get home only to realize how much we have spent. I’m sure the makers of the game have a good laugh at our expense.

Just don’t yell at the clerks when they tell you how much you saved today or ask if you’d like socks with that. They are forced to say these things and believe me, they hate it too. If you want to complain, write a letter to corporate.

amanohyo and healthymoms, I agree with you and I am a big fan of Carrie Rocha and her website http://www.pocketyourdollars.com/ (she does all the coupon/rebate/sale research for you at no cost and posts her findings daily). But I think Jacob’s point is that you need to look these sales and coupons with a critical eye, something we do but that most people don’t.

For example, I normally have zero interest in Black Friday for all the reasons Jacob lists. However, I was up in the wee hours of the morning today to purchase environmentally friendly concentrated laundry detergent at a 40% discount. This stuff NEVER goes on sale because it is so good that most people – including me – are willing to pay full price. I now have enough skin-gentle-non-polluting laundry detergent to last me a year for about $15. It was well worth the 5 minutes of sleep lost to get up and send the email order.

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If you wanted to spend $10 on something you need and you find it for $6, you must put put $4 in your savings account. That’s the best way to do it.

I allocated myself $100 for a pair of Nike Shoes, I bought it from ebay for $20 and then put $80 in my savings account.

Simple!

I like Debbie’s take: “I can’t afford to save that much.”

If it’s in the realm of tech and clothes, I only buy 2-3 times a year, if that much. Spring, Summer, and Fall sales. Then the price is close to what I believe it’s actually worth, or at least what the retailer bought it for.

This is great ’cause it gives me 4 months at a time (if I max my limit) to peruse my list and dwindle it down, after seeing if I really need it.

Other than that, everything I regularly buy undergoes optimal utility; toothpaste, bath soap (even a certain washing pattern), and so on, so I don’t care much about minuscule savings. I also love efficiency so it’s not all about money.

I also created this tactic to get myself interested in learning to do and doing utility maximization problems.

“MSRP” actually stands for “manufacturer suggested retail price”. For a manufacturer, it is actually good to make this higher – then can wholesell to retailer and say – hey, look what hefty margins I am giving you. Whether the retailer manages to sell the item to customers at MSRP, that is another story. Usually they can’t if they want to stay competitive.

Gift cards is another invention that retailers love love love. 80% of gift cards are never used before they expire – what’s not to love?

Rebates are a strategy to beat the demand curve and capture both price-sensitive and not sensitive customers (the latter ones do not cash in their rebate).

I think marketing is a fascinating subject.

I agree with Jacob’s broad point, obviously. But I’d like to pick a couple of nits if I may :

1. Savings is never positive-cash-flow. As someone pointed out above, Jacob saving 70% is actually the same as he spending 30%. It is earning that yields +ve CF. (Just a nitpick about the terminology. The point he makes is obviously valid.)

2. I remember Jacob himself talking elsewhere about yachting. He described two ways to do this, pay-as-you-go and get-recruited-as-volunteer. One required spending some large sums, I forget exactly how much, and the other required spending a far smaller sum on basic gear but did require commitment of time. And I remember thinking : not yachting at all means you save all of it, and save the time as well.

Isn’t that identical with the store offering a 30% rebate on widgets?

If you read that post on yachting, or see someone yachting, and decide to try it yourself, how is that different from being influenced by store advertising?

The point I’m making is : neither yachting, nor a store-bought widget, is inherently good or bad, neither is inherently useful or otherwise. It’s you, the individual, who makes that call every time.

So it’s basically a question of self-awareness, knowing what you want and what you don’t, and not being an easily-influenced sucker, .

What really gets me hopping mad is how profligacy is considered “cool “. Good your kids could see the point of your economy, CT, instead of simply thinking you cheap. Kids can be such blockheads. As can adults too, of course.

I remember my nephew once talking about his rich friend’s uber-rich father. Well, this gentleman once walked out of a restaurant because he found their prices exhorbitant. His kids found that cringe-makingly cheap, and so does my nephew.

I tried to “educate” this youngster how it is not cool to be fleeced, how it is great to know the worth of money, but I made no headway.

The sheer imbecility of this half-witted consumer culture! Workin one’s ass off to fund a crazy profligate lifestyle ; routinely spending absurd amounts on things like coffee and unhealthy food and flimsy shoes ; spending time and money on worthless things like cacophonic and tone-deaf “music” concerts and spectator sports : it’s all a pattern, Idiocracy actually brought to life.

In this half-witted world, Jacob’s rational and non-consumerist stance and ERE movement has done so much good by starting to make the sensible and the rational sound cool!

God bless ERE, and may its tribe increase!