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Wednesday, January 18, 2012

Extreme couponing?

Due to a couple recent reality TV shows, 'extreme' couponing has gotten a lot of attention lately. For those of you who aren't familiar with the term, it is basically used to refer to the practice of using all the little tricks associated with coupons to get groceries for a fraction of their retail price, and sometimes even free.

The main methods are to get as many coupons as possible, combine store sales with coupons; combine store coupons with manufacturers coupons, etc. The TV shows depict people coming home with carts full of groceries for like ten bucks. On the surface it seems like an awesome way for the FI-minded people to save a bundle on their grocery budget. But is it really?

It depends, but there are a lot of things to consider:

1. Usually it simply isn't that extreme.

The most dramatic examples are cherry-picked for the tv shows. While it may be possible to get $200 worth of groceries for 5 bucks sometimes, this isn't going to be a normal occurrence. I have read that many of the most wild examples actually require concessions on the part of the store that the TV shows have negotiated. These concessions aren't available to the average customer.I haven't seen any actual figures, but I would suspect the average person attempting couponing doesn't get anywhere near a 50% savings on their grocery bill.

2. You don't get to choose what you eat.

It goes without saying that you have to buy the things that you have coupons for. So even if you are getting unheard of savings, if you have allergies, are picky, or simply want healthy food you may be out of luck. It is rare to find coupons for staples like rice, beans, meat, milk, eggs, vegetables, etc. You may be able to get a bunch of chips and soda almost free, but is that a good thing?

3. It requires quite a bit of time and resources

Most of us already being frugal and interested in FI are going to have relatively modest grocery bills as it is, in the $100 to $200 a month range. So even if I am incorrect on point #1, and you get an awesome 50% savings, that is saving you $50 to $100 a month. Sounds good, but how much effort is that taking? How much driving around to different stores is involved? Are you counting the cost of the 5 copies of the Sunday paper you just bought? Could you get more than $100 elsewhere with the same time investment?

One account I read of an extreme couponer said he spends 20 hours a week on his hobby! Obviously this is a prohibitive time cost, and even if it allows you to turn an obscene $800 grocery bill into a mediocre $200 (savings rates and amounts I doubt he regularly achieved), you would only be receiving a minimum wage return on your time. And it's much more likely that his bill without any coupons would still be under $500. And what about the gas driving around? Remember to calculate the real cost of your actions, and the opportunity cost. 

4. You may be getting 'deals' instead of 'savings'

I already wrote about the difference between savings and bargains, and that distinction applies here. I have not come across a single person who claims to be an extreme couponer without hearing about at least one item they bought a bunch of because it was so cheap, even though they didn't need it.

Yes, you may be getting those $2 jars of baby food for $0.25 each, but if you don't need baby food you aren't saving $1.75, you are spending .25.  Don't get so enamored with the thought of 'deals' that you forget the goal is to actually spend as little as possible.

Now you may have a situation where it does make more sense. If you have many stores close by that have great coupon double deals or whatever. If you have access to a bunch of free papers, you don't care what you eat, etc, then maybe try it out. Just make sure you do some calculations to find out what you really spent, and not just on the food (time, gas, etc).

- The Money Monk

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