Posted on January 13, 2012 by David Laidlaw
Extreme Couponing on the TLC network documents shoppers using coupons and store promotions to get groceries and household items, sometimes more than a thousand dollars worth, for little more than the tax. The shoppers use coupons, “buy 1, get 1 free” promotions, double coupons and price matching to get huge discounts. For example, a box of granola bars is normally $3, but under a “buy 1, get 1 free” promotion and a coupon for $1 off (which doubles), the shopper pays $1 for 2 boxes of granola bars ($6 before discounts).
The show depicts experts using techniques to pile up savings. In one episode, the shopper spends 20 hours a week looking for deals in circulars and online, meticulously cutting and printing coupons and organizing the coupons into a binder. In another, the shopper drove 30 miles to get a circular showing a box of cereal costing $1.50 when her store sells it for $5. The store matches prices, combined with her $2 off coupon meant the store owed her money for the cereal.
The savings really add up when the shopper buys large quantities of a nearly free item. The end result is lots of food and supplies for nearly free. However, it’s debatable whether or not this extreme couponing is practical.
In addition to the time it took to assemble the coupons, the shopper is limited in what he or she can buy. Stores only give coupons for certain items. Shoppers can end up with large quantities of a few items. Shoppers also must store these large quantities. Their basements start looking like grocery stores with shelves of pasta and toothpaste. The endless shelves of free toothpaste look nice, but if the toothpaste is never used, it’s a waste. In one episode, a shopper accumulated 80 sticks of male deodorant. The shoppers can end up with such large stores of items they give them to charity. This is a noble thing to do but is not a tangible benefit to the shopper. In other words, saving $1,000 on groceries is great, but if you have to eat pasta and drink only orange Gatorade for a month, you may have wished you spent a little something on some chicken or Coke. The bottom line is that free stuff can be pretty worthless if it sits in your basement untouched.
Do the lessons from Extreme Couponing transfer to investing? Just because a stock is cheap, it doesn’t mean it’s worth buying. It may just end up sitting in your portfolio doing nothing.