Shopping entries
We’ve done a pretty good job of cutting back on unnecessary expenses during this period of reduced income. ‘Magazine subscriptions’ seems like an obvious category to eliminate, right? Yet I kept mine. Here’s why: they save me way more money than they cost.
Consumer Reports
My first-ever magazine subscription, when I was 19 years old, was to Consumer Reports. Other ones have come and gone, but I’ve been a loyal nonstop CR subscriber for twenty years now, and I read every issue cover-to-cover. (The complete lack of advertising makes this a remarkably pleasant experience). I also pay extra for full access to their web site, because the search function is darn handy, and keeps me from having to store and sort through years of back issues.
A lot of what they report on is not of immediate use to me, of course — for example, we buy one car every decade or so. But every time we are ready to make a major purchase, I check CR. About 80% of the time they have a ratings list including feature and price data, plus a detailed explanation of how to assess quality of models not listed. In the past four years I’ve used CR to choose an oven, two televisions, a washer and dryer, a computer printer, a digital camera, and a gas grill — all of which have performed beautifully. That’s not even counting the small stuff, like comparisons of laundry detergent effectiveness, or — in the most recent issue — condoms! Plus they have frequent articles alerting readers to issues like credit card traps and health insurance pitfalls.
Cost: $42 per year ($23 print, $19 web).
Savings: several hundred dollars per year.
(If you want to be extra-frugal, get the web-only CR for $26 per year. I happen to enjoy the print magazine enough to warrant the extra $16, but the important information is all available online.)
Consumers’ Checkbook
A little over a year ago I added Consumers’ Checkbook to my arsenal. They’re sort of like a regional, service-focused version of Consumer Reports, offering both ratings and in-depth reports on various services. They’re only available in seven metro areas, but fortunately for us, one is Puget Sound.
So far this year I’ve used their ratings to select a veterinarian, a dermatologist, and a car repair shop. Checkbook doesn’t have a full report on doctors, so the dermatologist didn’t come with a price comparison or savings. But their feature on ‘doctors rated highly by other doctors’ did help me get someone good. I don’t know anyone locally who visits a dermatologist, so without Checkbook it would have been a crap shoot.
The vet and auto repair ratings, however, have arguably saved us hundreds of dollars this year alone.
Veterinarian:
I know plenty of people with pets, so finding a good vet has never been a problem. What’s harder is finding one that’s both good and cheap, relatively speaking. Here Checkbook’s price comparison between veterinarians was stunningly useful. It would have taken me many hours to do that research on my own. And look at the range!
There are big vet-to-vet price differences. For example, for spaying a 25-pound, seven-month-old dog, charges we found at local vets ranged from $90 to $532. Many of the lowest priced vets rated very high on our customer survey. It is possible to save money and also get top-quality care for your pet.
The vet I selected with Checkbook’s info turned out to be not just great but also very reasonable in cost. When our cat developed alarming symptoms earlier this year, it was worth a lot to know that I wasn’t going to be hemorrhaging money in tests and treatments.
Auto Repair:
Over the last couple of weeks, our trusty little 1999 Honda Civic has been exhibiting some alarming behaviors, such as a sudden loss of electrical function while going 60 mph on the interstate.
Car repairs scare me, because I know very little about automobiles, so it’s very easy to take me for a ride, so to speak. Fortunately, we have a car mechanic in the family — too far away to fix our problem, but at least he could make a long-distance guess at the cause and give me a rough idea of a reasonable charge for repairs.
His assessment: either the ignition switch (~$125 retail part) or the distributor ($450-$500 retail part). Either one would take, he guessed, about one to one-and-a-half hours of labor. (His shop charges $80/hour for labor, for comparison.)
Again, Checkbook reports wild variation in local costs:
There are dramatic price differences. For example, to replace the water pump and timing belt on a 1999 Ford Contour, we found prices ranging from $393 to $950. Hourly labor rates range from $60 to $140. There are many top-quality, low-priced shops. Indeed, we found no relationship between the prices shops charge and the quality of their work.
(Are you seeing a pattern here?)
Checkbook listed ten repair shops within five miles that earned their top recommendation for both price and quality. (Hourly labor charges in our immediate area ranged from $73 to $110.) Jak picked one on a direct bus route that had a $75 rate and customer comments extolling their ‘honesty and service’.
As Jak was the one to take the car in, I didn’t interact with them directly, but the results were impressive. The diagnostic mechanic couldn’t quickly determine whether it was the ignition switch or a distributor problem, but rather than suggest we replace both — which would mean more money for him, and the tack many shops would take — he persevered.
Ultimately he was able to confirm the fault was in the ignition switch, which he replaced. He charged us for one hour labor and — based on the information I got from Bill — something that must have been very close to his own cost on the part. Total charge: $120. It could easily have been double that at another shop for the very same repair; a lazy or dishonest mechanic might have tried the distributor and charged us $600 or more.
Cost: $14 per year (print and web).
Savings: several hundred dollars per year.
(Note that Checkbook subscriptions are for 2-year periods, and cost varies slightly among locations.)
Even before I’d finished Ellen Ruppel Shell’s new book Cheap: The High Cost of Discount Culture, I decided I should review it on Pocketmint. I then spent two weeks artfully procrastinating on doing so.
Apparently I have a block on writing formal ‘book reviews’. I have no trouble discussing books, verbally and informally, but the moment I start trying to write about them I seize up over doing it properly.
So this is not a book review, it’s a brief casual monologue about a book I thought was worthwhile. Right? Okay then. (Er, maybe not so brief. Oops.)
• • •
The general premise of Cheap is neatly encapsulated in the title: the ‘discount culture’ that pervades America today has a number of costs, borne by both the naive consumer (in the form of shoddy goods and false bargains) and the world at large (in the form of environmental destruction and human rights violations).
Cheap is not a polemic; rather it is a measured, deeply researched examination of a cultural phenomenon — one I suspect most Americans today take for granted.
The first quarter or so of the book is devoted primarily to tracing the roots of the ‘discount store’ and related phenomena, all the way back to the first example of mass production two hundred years ago. (No, not cars — guns.)
If I have one criticism, it’s that I felt that the biographical details of discount-store pioneers occasionally dipped into tedium. Nevertheless, the broader historical perspective was illuminating. Have you ever imagined shopping in a store with no price tags? Yeah, neither have I. But before John Wanamaker came along, that’s just how things were done. Here’s another, more recent example of cultural shift:
President George W. Bush’s stirring call to spend after the fall of the Twin Towers in New York City on 9/11 seemed surreal to those Americans who recalled President Carter’s 1979 “sweater speech,” in which he donned a cardigan and asked Americans to turn down their thermostats to conserve energy for the sake of national prosperity and security.
(This sentence alone sent me scurrying off to learn more about Jimmy Carter, a president I barely remember. The man put solar panels on the White House! In 1979! And then Ronald Reagan came along and took them down again. /facepalm)
• • •
Having covered the history of America’s adoption of the discount mindset, Shell turns to the source of that mindset — the psychology of price.
Sadly, even when we know we’re being tricked, the tricks still work: people respond differently to a $9.99 price tag than to a $10 one. We’ll pay more for a sale sweater with a ‘regular’ price of $249 than one with a ‘regular’ price of $89, even if we are absolutely certain that the $249 is inflated.
And sometimes we’re oblivious to the stratagem in play. I always assumed outlet malls were rurally situated because of lower real estate costs. But no! It’s a ploy: once you’ve driven an hour or two you’re invested in the trip and therefore will buy more to justify the time and effort you’ve already spent.
In many cases, we’ve been conditioned to think something is a bargain when it really is nothing of the sort. You think Wal-Mart has ‘always low prices’, right? Chalk one up to the marketing team if so: Wal-Mart has higher than average prices on a third of its merchandise. And on those items for which prices are lower? A third of them offer savings of two cents or less.
Meanwhile, the rise of discount stores has lowered American wages; where department store staff salaries and benefits once totaled 18% of sales, today’s discounters spend a mere 6 or 7% of sales on their staff.
• • •
Later chapters move beyond the cost to the individual consumer and into the realm of the cost to people in foreign nations (who are intrinsic to the supply chain) and the cost to the health of the planet.
IKEA had begun to lose its luster for me even before I read this book, but the chapter in which Shell tours IKEA headquarters in Sweden was enough to finish the job. Artfully interspersed with the marketing-approved statements from the CEO and various employees is solid research that debunks IKEA’s claims of environmentalism and spotlights the devil’s bargain we’ve made by embracing mass-produced cheap furniture over careful craftsmanship.
And then there’s the chapter on the dangers of cheap food. I gave up meat twenty years ago, so the description of what the pork industry calls “PSE” (for “pale soft exudative”) left me shuddering but secure in my moral stance. Unfortunately for me, however, most of the chapter is devoted to the environmental deterioration and human degradation resulting from the explosion of Asian shrimp farms. Shrimp is a significant component of my diet, in part precisely because it’s become so cheap. This presents a dilemma I have yet to resolve.
• • •
Shell is not advocating that we all spend profligately in service of craftsmanship and social or environmental responsibility. On the contrary, she admonishes Whole Foods for contributing to the false dichotomy of value vs. quality. “What is missing here,” she says, “is what we used to take for granted — the happy medium. Consumers are left to choose between discount retailers whose practices they find questionable and high-end stores whose prices they cannot afford.”
Who gets it right? According to Shell’s book: Wegmans, a small chain of grocery stores in the Northeastern U.S. I’ve never been to one, but I read the description hungrily. (If any Wegmans shoppers read this blog, I’d love to know what you think of it.)
The cost of change, in fact, may not be nearly as prohibitive as we think. A University of Massachusetts economist calculates that, for example, increasing the wages of Mexican apparel workers by 30% would raise the price of a shirt in the United States by just 1.2%. Would you pay an extra quarter on your $20 shirt to make that kind of difference in the life of a Mexican sweatshop workers? I would, if I could trust that my quarter was actually going to Mexican workers and not to some corporate CEO.
• • •
Cheap is hot off the presses with a publication date of July 2009 and statistics as recent as 2008. Shell talks frankly about the recession we’re experiencing right now, and shows some of the ways in which America’s fascination with ‘cheap’ has contributed to our current problems. Hard though it may be in a time of rising prices and falling wages, I believe it’s good to be mindful of hidden costs, and this book is a great way to start.
(Photos by Kenneth Hynek, Stef Noble, and marissaorton.)
It was a brief segment on NPR’s Marketplace last month that alerted me to the newest scary thing about credit cards: banks have begun to curtail or withdraw credit based on where you shop and what you buy.
Here’s one example: consumer Kevin Johnson had his credit line slashed by two-thirds despite a stellar credit score (764) and a flawless history of on-time payments. Why? Because “… other customers who have used their card at establishments where you recently shopped have a poor repayment history with American Express.”
Excuse me?
Analyzing his recent purchase history, Kevin came to suspect that Wal-Mart was the ‘establishment’ in question, but couldn’t get anyone at American Express to confirm, deny, or elaborate on their message.
A May article in the New York Times entitled “What Does Your Credit-Card Company Know About You?” shows just how absurd this has become (emphasis mine):
Most of the major credit-card companies have set up systems to comb through cardholders’ data for signs that someone is going to stop making payments. Are cardholders suddenly logging in at 1 in the morning? It might signal sleeplessness due to anxiety. Are they using their cards for groceries? It might mean they are trying to conserve their cash. Have they started using their cards for therapy sessions? Do they call the card company in the middle of the day, when they should be at work? What do they say when a customer-service representative asks how they’re feeling? Are their sighs long or short?
Information about exactly what businesses and purchases count against you is a closely guarded secret. The only specific data I have been able to find was in a single lawsuit filed by the Federal Trade Commission last year which cites one Visa card issuer for “an undisclosed ‘behavioral’ scoring model that penalized consumers for … cash advances and transactions with the following types of merchants”:
- Direct marketing merchants
- Marriage counselors
- Personal counselors
- Automobile tire retreading and repair shops
- Bars and night clubs
- Pool and billiard establishments
- Pawn shops
- Massage parlors
According to Marketplace, “splurging looks bad, and … scrimping looks bad”:
“Say Mr. Good Credit rewards himself with a rare trip to the spa? His card company might think he’s trying to relax because he’s stressed about money. And what if he decides to go bargain hunting? ‘Oh my gosh, maybe you’re about to lose your job. You’re starting to downscale to lower-cost stores.’”
Yes, even frugality can be considered a warning sign; one analysis found that “people who bought cheap, generic automotive oil were much more likely to miss a credit-card payment than someone who got the expensive, name-brand stuff.”*
What can you do? Not much. You can avoid or pay cash for suspected red-flag items like alcohol or therapy. But we are playing a game where the rules are not just secret but constantly shifting, and a behavior that’s innocuous today may be blacklisted tomorrow. “Many people don’t understand how almost every transaction they make today could trigger a readjustment in bank analytics,” says credit-card expert and consumer advocate Dr. Robert Manning.
At left: a six-minute segment on Good Morning America that aired this past January, profiling Kevin Johnson’s situation and the growing data-profiling problem.
Previously: credit cards part one and part two.
Next, in part four, I’ll cover the good news and the bad news about the recently passed CARD legislation. And finally, in part five: my personal response to the mess.
*(An aside: I buy a lot of generic groceries, and know that it only rarely makes a difference in quality, but I know very little about generic as applied to motor oil. I called my brother-in-law Bill, who owns and runs a car repair shop, to find out whether expensive name-brand oil is actually any better than cheap generic oil. His answer, in brief: it’s a gamble; 9 times out of 10 generic is the exact same oil, rebranded. That tenth time, though, you’re getting crap, and your car can suffer. Interestingly, in that brief conversation I learned enough for two whole posts on automobile frugality. Expect to see a lot more about cars on Pocketmint in the future as I tap this familial resource!)
(Photo by mjb84.)
The first of my two guest posts is up at Get Rich Slowly. GRS has long been my favorite personal finance blog, and was one of the main inspirations for Pocketmint. (Which is sort of a neat karmic circle, since JD credits my online personal journal of twelve years ago as the inspiration for his own web writing.)
“A visit to the Island of Misfit Foods” is today’s topic: how I set my food snobbery aside and learned to love Grocery Outlet. If you enjoy the post and would like to see more from me, let JD know in the GRS comments. (These articles are ‘audition’ pieces for a regular writing gig over there. There are six other very strong candidates however, so I’m trying not to hold my breath.)
For those of you coming from Get Rich Slowly, welcome! Feel free to poke around in the tags in the sidebar at right for other posts of interest here on Pocketmint, or subscribe to the RSS feed. I also post to Twitter and you’re welcome to follow me there, but it’s a personal account where I talk about everything, not just personal finance.
My fingers seem to be healing, so maybe the worst is over. I hope to return to ten-finger typing — and more Pocketmint posts — soon.
When we bought our house in December 2006, there was a surprise in the garage: the former owners had left us a huge old chest freezer.
Now, Jak and I had a chest freezer already, a smaller model we’d bought at Costco about five years earlier. So this one was a bit superfluous, more than our family of two-and-sometimes-four needed. In the course of the move, however, it was convenient to move our frozen food into the windfall freezer temporarily while our original freezer was in transit.
‘Temporarily’ lasted, as it so often does, almost two and a half years. Last month we finally got around to rearranging the garage and transferring everything to the smaller freezer. I assumed that doing so would save us money — older & bigger versus newer & smaller seemed a no-brainer — but had no actual evidence.
With the model numbers of the two freezers and the kWh cost of local electricity from our bill, today I was able to use the government’s EnergyStar calculator to determine the exact difference:
- 1988 Kenmore 15.8cf freezer: $59.10 per year
- 2001 GE 7.2cf freezer: $24.55 per year
Savings: $34.55 per year, or about $2.88 a month.
(We have some of the country’s cheapest electricity here in Seattle; if we lived in New York, where it’s most expensive, the annual cost difference would be about $80.) I prefer to think of this as $34 we’re going to save every year from now on, rather than $86 we spent needlessly by procrastinating this task since moving in. Ahem.
There’s one more factor, though, that’s not as easy to calculate: with twice the freezer room my tendency was to buy extra food to fill it, which I then often lost in the depths, buried under piles of other food, until it was freezer-burned beyond all palatability. Or I would buy a ginormous bag of frozen peas at Costco, only to excavate a prior unopened bag from the bottom. (I use fresh produce as much as possible, so it can take us half a year to go through a single large bag of frozen vegetables. Having two such bags is just a waste.)
In the month since making the switch, I’ve already seen improvements in frozen-food turnover efficiency. I still think I need a better record-keeping system for both fridge and freezer though; I’ll work on that!
The EnergyStar calculator also tells you how much you’d save in electricity by buying a new freezer that meets current EnergyStar specs. In our case, this is a mere $7 per year — not a patch on the cost of a replacement, not that we were considering one anyway.
I am going to resell the windfall freezer, once I have an afternoon to spend cleaning it out. For someone with no second freezer at all, it could be a real bargain — especially if they have a large family or are carnivores!
(Photos by jonner and Squiggle.)
