Saturday, January 2

Long-term savings, short-term spending

Little Miss Moneybags has purchased some laser hair removal services for $1,500. My first reaction was one of pure terror -- both because of the "laser" and the price tag.

Then I did a little research. The average price for regular waxing services -- at least, for these two areas -- $70. Let's not forget tips. I would say $10 is the least you'd want to leave. So that's $80 a session, with results lasting, in full, about 3 weeks. So monthly sessions would run you $960 a year.

Meanwhile, Miss Moneybags will pay $900 for her six sessions then $100 a year in touch-ups for 2-3 years. The other $300 presumably goes for tips. That translates to about $1250 for the first year, and under $150 for the next two years.

In other words, by June 2011, she'll have started to see savings. By the end of 2011, she'll have saved $570. By the end of 2012, total savings will be $1380. And, assuming that our world doesn't end ala Mayan predictions, her savings will increase by about $960 a year. More, really, when you count inflation.

Suddenly, that $1,500 price tag seems pretty reasonable, eh? (Though I still shudder at the though of lasers in certain areas.)

Of course, this, like waxing, is a luxury. If someone in severe credit card debt were considering this outlay, I'd hand her a razor and say God speed.

But Miss Moneybags has an emergency fund and has been putting aside money for this treatment. So I would consider this a pretty practical decision, especially for long-terms savings -- both in money and hassle.

It seems to me that there are all sorts of frugal measures that cost more in the short-term, while providing big savings in the future.

A small example of this would be stocking up on sales. You may go over your weekly budget, but grabbing up a particularly cheap item that you use regularly can be hugely frugal in the long-term.

Rebates are another way that we spend now to get savings in the future. It requires patience and careful monitoring (so that you know if you have failed to receive the check). But it can lead to significant savings in 1-3 months' time.

Or how about gift card deals? My mom took advantage of Albertson's tax special last year. If you bought $100 in gift cards you got an extra $20. Since that is my mom's main grocery store, she loaded up on them. She was going to spend the money eventually, anyway. But by chunking it all down at once, she got over $100 extra, if memory serves.

There are plenty more examples about taking advantage of sales. That's certainly the most common way to spend now and save later. But there are other routes, besides sales.

For example, many people pay for club memberships. It costs around $35-50 a year, but it can be well worth it. We only fill up at Sam's Club, which provides at least 20 cents/gallon savings. Since we use about 12 gallons every two weeks, that's $64 a year saved right there. We also save inside the warehouse, though we exercise caution: not all bulk deals are good ones.

On a more extreme level, there are clubs like Direct Buy. I don't know that we'll ever use this place -- the cost of joining is rather high. (Something along the lines of $3,000 for the first year and $2,000 for the next two? Then nothing again for 5 or 8 years. The details are hazy.) But, for that price, the company allows you to buy items at-cost. This includes everything from jewelry to appliances, furniture to home electronics and even renovation items like cabinets and tile. So there are a lot of chances to save, especially if you are refurnishing a house or doing renovations.

Finally, a concept we're all familiar with: extra payments. We make larger payments than are strictly necessary, so that we can pay less interest over time. That may mean anything from a few dollars extra on a mortgage to double or triple payments, from paying hundreds of dollars against current credit card debt to simply paying the balance in full each month. Whatever the case, we spend more now, so that we can save over time.

Are there other ways to spend now, save later? What's your favorite?


Blogger Erin said...

I like Costco, especially because my mom and I share a plan so it's only $25 each. I can get staples like organic milk and produce for much cheaper than the grocery store, and products I go through quickly like toilet paper. It's definitely a big savings.

January 2, 2010 at 2:10 PM

Blogger Meg said...

Just FYI, I think it's been shown rather conclusively that Direct Buy is a scam and not a real money saver. You can google "direct buy + scam" for all the gory details, but the big thing is that they don't allow you to comparison shop before signing up, they pressure you into signing up (like REALLY pressure you), and then when you see what they're selling and the prices it's not a good deal at all.

January 2, 2010 at 3:38 PM

Anonymous Abigail said...


It probably is. We were given a pretty hard sell. (It was a mystery shop, so we didn't have the money to even worry about it.)

They have those commercials where some folks are happy, but I suppose that's true of all scams. At any rate, I'm sure there are other expensive memberships that save over the long term.

January 2, 2010 at 5:06 PM

Anonymous John DeFlumeri Jr said...

Like you say, buy at wholesale prices and stock up when the discount is deep. Don't go out to dinner much. Eat chicken and turkey at home, they are worth the price per pound.

John DeFlumeri Jr

January 2, 2010 at 5:53 PM

Blogger Little Miss Moneybags said...

Thanks for the link!

Peanut and I are members of Costco and we stock up on everything from laundry detergent and toilet paper to hot sauce and veggies. We also get movie tickets there--a regular adult ticket here is $12.50, or we can get a pair for $15.49. We get a few pairs at a time since we know we'll use them, and we can run to a movie on spur of the moment.

Oh, and the hair removal isn't really lasers (at least what I'm getting--IPL is intense pulsed light.) It feels like getting snapped with a rubber band--not comfortable, but not as painful as a bikini wax!

January 2, 2010 at 6:27 PM

Blogger Shevy said...

Well, the consumer reporter on our local news did a story on Direct Buy maybe a year or 2 ago and it cost about $7,000 here in Canada! The thing with them is that you go and you have to sign up with them before you leave or you can *never* do it (according to their hard sell). I think you also have to pay it on the spot, so you better have a lot of room free on your credit card (and then have the money to pay the card off).

I think the only way it might pay was if you had just bought a house that you were planning on doing really extensive renos on (say you wanted a $70,000 kitchen reno, which is actually not an uncommon amount, as shocking as it might sound) or to redo every bathroom in the house. Or perhaps if you were building a house from scratch.

Then, 10% of the cost of your new kitchen might be a good investment if you would then get your appliances, cabinets, tile, granite counters, etc. etc. at a big discount.

I do not think it makes sense for the average person. And the fact that they keep who the participating companies are a secret until you meet with them kind of screams scam to me.

January 3, 2010 at 9:40 PM


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