My daughter was amused, but not impressed. "You mean, I have to buy eight sodas to get the free one," she asked. "That's not a good deal."
I was proud that she had grasped the dangers of Buy-One/Get-One (BOGO) free purchases. It's a lesson that stumps many little kids and adults. At some point in our shopping careers, we've all stumbled over the buy-a-lot/get-a-little-free pitch. For instance, one salon offers promises a free manicure after the 10th session. Additionally, one area coffee shop has a similar buy 10 (coffee cups) and get one free. Perhaps those offers are valid if you are really a frequent customer. But what if you feel compelled to spend a lot just to get the so-called freebie?
The lure of free stuff is hard to ignore, even when we know better. This past week, for example, I seriously considered traveling quite a distance from my home to collect a free $10 gift certificate from an area store. Fortunately, I began to calculate the cost of that free gift, including the value of my traveling time. What's more, very few items at that store cost $10 and it's very likely that my free gift would have cost an additional $30-$50 out of my pocket.
Bankrate.com has a great list of money traps to avoid, including the BOGO Trap: 7 'psycho' money traps and how to beat them. Here's how to elude the BOGO spending bait:
"Whenever you see the term 'free,' consider it a warning to slow down and consider your choice very carefully," says Ariely. Do the math and always consider what you are giving up when you choose the item attached to something "free." Usually -- but not always -- there is a real cost to something touted as "free." -- Dan Ariely, the James B. Duke Professor of Behavioral Economics at Duke University and author of "Predictably Irrational: The Hidden Forces That Shape Our Decisions" as quoted in Bankrate.com
"7 'psycho' money traps from Bankrate.com
1.The lure of 'free'
2.The 'anchor-price' persuasion
3.The instant-gratification attraction
4.The dollars-to-donuts decoy
5.The separate-buckets blunder
6. The 'sacred-fund' slip-up
7.The lost-money fallacy"
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Here's how to buy my new book:
6 comments:
Safeway is notorious for doing the BOGO on various groceries. But they inflate the regular price of the first one you have to buy so it really isn't much of a deal. Plus you end up having to get 2 when you only wanted 1.
Hi there
Great blog.
I live in the UK and have pledged not to pay any new clothes for a year. Next week I will reach the 100th day - just 265 to go!
www.workthatwardrobe.blogspot.com
Yes, yes and yes. I think we've all fallen into these traps. I think buy 1 get 1 free is not a bad deal, but buy 10 is debateable. You might consider how collecting stamps for a local coffee shop to get your 11th cup free might help you budget because it help you fight the urge to buy coffee elsewhere. The BOGO logic reminds me of when you buy meals instead of just the burger - you don't need fries and a soda but you're conviced it's cheaper, somehow, than only buying the burger.
Dear Sharon:
My name is Judith Aquino and I am researching an article on how to avoid wasteful spending practices in regard to credit cards, banking programs, and "get out of debt free" scams. The title of my article is "How Not to Save Money: Spending Practices That Will Cost You in the Long Run".
The article will appear in PAYTECH magazine, which is published by the American Payroll Association. I enjoy reading your blog and I would be grateful if you could provide some additional insight on money-saving plans that are actually wasteful.
Here are my questions:
1. How do you spot the scams in ads for debt consolidation or settlements? What would be a genuinely useful plan?
2. How do you determine whether or not checking accounts that bear interest, such ING and E*Trade are worthwhile?
3. Are store credit cards ever useful?
4. What wasteful spending practices would you warn against?
My deadline is Monday, November 3. Any information you can provide will be greatly appreciated. Please let me know if you would prefer to do the interview over the phone or via email.
Thank you for your attention and I look forward to your response.
Sincerely,
Judith Aquino
It's unfortunate that many individuals actually fall for the BOGO marketing. It's insane if you really think about how much money you spend just to get some freebie.
Where I live, every November Starbucks has this like stamping coupon out. The objective is to fill out the coupon with stamps. Per purchase made, you get a corresponding stamp. And once you fill up the coupon, you get a free Starbucks planner/organizer!
If you compute the cost of the free Starbucks planner/organizer, it costs 10-12x less than how much you spent completing the stamp coupon.
And people seriously fall for this thing. It's whack!
We really have to wise spenders, to save us some dough. :)
Actually I love BOGO offers at drugstores and grocery stores beacuse most of them will let you use a coupon for each item, therefore making both items very cheap. For example, last week my grocery store had cereal BOGO, $2.50 for 2 boxes. I had 2 $1.00 coupons, therefore making 2 boxes for $0.50. That sounds very frugal to me!
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