I do my best to maximize credit card rewards, take advantage of reward and loyalty programs and generally stretch my dollars as far as possible without spending too much time doing so. So when I read Madison’s post about Envaulted, a cash-back program that gives you 1% back on credit card purchases plus bonuses on certain rotating retailers ON TOP OF your normal credit card rewards, I was pumped! Another favorite program of mine is the Starbucks Rewards program – among other things, they offer one free drink for every 15 purchased. While I limit my purchases to fewer than one per week, and mostly drink regular coffee or iced tea in an effort to save money, the cost of my Starbucks habit can really add up. So when Envaulted offered 20% cash back on purchases at Starbucks, I knew I would take advantage of the opportunity to stock up on gift cards and enjoy my coffee at essentially a 20% discount for as long as they lasted.
In the meantime, TLC brought back “Extreme Couponing” and sparked a firestorm around the internet. While I didn’t actually watch the show, it sounds like it was pretty intense! One of the things that has come up is whether these people are borderline hoarders – does anyone really need to buy and store 100 boxes of pasta? Couponing and buying things ahead of time to lock in a good deal is one thing – but taking up TWO FULL ROOMS of your house with your “stash” is quite another!
As evidenced with the Starbucks deal, I’m a fan of what I call “pre-buying” – spending money now on stuff you know you will use later. The key is to buy it now and NOT BUY IT AGAIN LATER! To that end, I developed some quick rules of thumb to help you know if you’re making a smart purchase or turning into a hoarder!
Rules for Successful Pre-Buying
- You would buy it anyway: This is the biggest key – if you wouldn’t buy it “off” sale, you shouldn’t buy it on sale. If you do, you’re not saving, you’re spending.
- You will use it: Pre-buying 25 outfits for your 3 month old to wear in the fall does not make any sense if he can only wear 10 of those outfits before he moves up a size!
- It’s in your budget, either now or in the very near future: Do not go into credit card debt or raid your savings to pre-buy! Of course most people wouldn’t do this at the grocery store, but the concept of pre-buying also applies to things like plane tickets. If you can get plane tickets that are usually $450 for $300 by locking them in 9 months before your trip (or by using the 100,000 mileage offer this week), that’s great…but not if you have to pay 15% interest on your credit card because you haven’t finished saving up the cash. Pre-buy only using money you have in hand right now. You can “borrow” from your savings only if the item you are pre-buying is already in your budget for the next few months. I let myself spend $20 a month on coffee – so when I bought $100 in gift cards this month I did it knowing I will have to use my coffee budget for the next 5 months to replenish my checking account!
- You won’t be able to get the same deal later: If you just flat out can’t get the deal at a later date, you should definitely buy the item now (as long as you have already moved past items one through three above).
- You’ll use it before you can get a similar price: As a correlary to item 3, you can pre-buy an item if you know the deal comes around frequently – just buy the amount you will use before the sale comes back around. Southern Savers reminds us that most grocery sales repeat every 6 -10 weeks, so there’s no need to build up a stash of any one item that will last beyond that.
- It doesn’t require storage space: If your pre-buying will not take up storage space, it’s a little easier to legitimize. Examples are my Starbucks gift card purchase, Groupon deals and Restaurants.com certificates. In all of these cases, you are locking in a good price without sacrificing part of your living space.
- It gives you a benefit you can use immediately: Back in December AirTran offered 1 A+ Rewards credit for every $100 in gift cards purchased. I was hoping to use a rewards flight for some upcoming travel but was a few credits short – buying some gift cards helped me earn those credits, which I turned around and used to book my rewards flight. I could then use the gift cards at a later date and earn additional credits for those flights. So while the flights weren’t any cheaper, they also weren’t more expensive – plus I earned an immediate benefit.
A quick note on charity: As a side note, if you will contribute much of your couponing haul to charity, have at it – that’s not pre-buying or anything bordering on hoarding, that’s just helpful! But be sure that you are making an active decision to make a charitable contribution equal to the total amount it costs you to procure the items, including your time, the cost of the coupons (if any) and gas.
There are certainly times when it makes sense to pre-buy. I’ve listed a few and am sure you’ll be able to come up with more! But remember that there is no need to beat yourself up over getting as much as you can as cheap as you can…nobody needs 100 boxes of pasta!