Wednesday, July 15

By the numbers: Frugality means math

Photo by Jekert Gwapo

It's a basic fact: Frugality tends to require that you deal with numbers. Whether you're building a budget or shopping sales, you have to be number-savvy to really get the best deal.

Comparison shopping

Most frugal people don't just randomly buy big-ticket items. While the definition of "big ticket" may vary, the comparison shopping tends to be a constant throughout the frugal population.

Some people still prefer to go store to store. But the majority of us probably do the work online. I like it because it allows me to read up on the products, read consumer reviews, compare different models and compare prices. I can even use sites like Yahoo! Shopping to find which stores have low prices on the product.

Online shopping definitely involves some math. When you're perusing prices you have to take several things into account: basic price, cost of shipping, cash-back offers and sales tax. When I comparison shop, I take all of these into account in order to figure out what the end cost would be. (The sales tax is a particularly big issue, since in Seattle it's 9.5 percent.)

Grocery shopping

Groceries create a huge need for numbers know-how. Looking at the overall picture, you have to stay within budget, which requires an awareness of what you're spending and how much it will leave you.

It's also important when comparing deals. For example, I need to buy some new sunblock. Rite Aid is offering "Buy one, get one half-off." Walgreens is offering a $10 Register Reward when you buy 2 bottles of certain sunscreen. I needed to do the math to figure out which was the better deal. (Rite Aid. The initial outlay is less. Plus Tim and I don't buy anything that's $10 or more at Walgreen's, so the RR would go to waste.)

Finally, and perhaps most importantly, you need math to know when you're getting a good deal. Sales can be deceiving, especially as more stores take up the trend of offering discounts on purchases from specific lines. Albertson's is fond of the "Buy $X of these items, get $Y off."

Sure, it could be a good deal, but you won't know until you do the math. You might be surprised by just how minimal the savings turns out to be. I find this is particularly true when the prices are too high anyway -- at least, in my opinion. Things like Fiber One bars can be 50 cents to $1 off, and I might have a coupon that gets me another 40 cents off. But when the price starts around $4.99 for 5 bars, that's still a little steep for me.

So when I make up grocery lists, I do the math, then I go one step further. I note the sale price along with the final price, after discounts and coupons. This way, I know exactly what I'm paying and how good the deal is.

If nothing else, it can give you a sense of accomplishment or triumph, when you see just how little you'll be paying for each product. I certainly felt smug today when I walked out of Albertson's with 9 boxes of cereal for $12.

Rewards Programs

I love my rewards programs: Swagbucks, Memolink, MyPoints and Ebates. But when you're making an online purchase, it can be confusing to try and choose among them. Some offer cash back, others offer points. And each points site requires a different amount for redemption. No matter how you try to compare them, you're likely to get a headache.

I ran across this recently, when I was stocking up on a sale. The Body Shop was offering a buy-one-get-one-half-off sale on body butters. So two $20 butters would come to $30. Ebates offered me 5% back on my purchase. MyPoints offered me 3 points per dollar.

I realized that the best way to choose was the find a common denominator. I decided to use gift cards. After all, it's the only thing that MyPoints offers, and you can also use cash to buy GCs. Just for clarity's sake, I chose the $60 per order figure because that is how much you have to order to get free shipping.

MyPoints Ebates
Reward 3 pts/$1 5%
Order amt $60 $60
Rwd Rec'd 180 $3
$10 GC 1,450 $10
Percent 12% 30%
$25 GC 3,500 $25
Percent 5% 12%
$50 GC 6,350 $50
Percent 3% 6%

Looking at the table, it's pretty clear that Ebates is the hands-down winner. Even in MyPoints' best scenario ($50 GC), I'd still be getting only half of what Ebates offers me. And it's in cash, which is a good factor to consider.

I actually took this a step further. When I shop online, I spend $60+ to get free shipping. I also get cash back. When I shop in the store, I get rewards points: 1 point if you spend $20, 2 points if you spend $50. When you get to 4 points, you get $15 off any item; at 8 points, you get $25 off.

I wanted to compare the scenarios and see which way was cheaper. Was it cheaper to go online and spend $60+ but get cash back? Or was it more frugal to buy $50 of product in the store?

In these scenarios, I added Face Protectors to the order. Tim runs through them about as quickly as the body butters. It turned out that I saved $12 going online and came away with an extra item. It's amazing what you learn when you do the math!

What are some ways you use math to stay frugal?



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