Ever hear this piece of investment advice, "You've got to spend money to make money"?
It's usually said by someone trying to sell you something.
I have, and it goes against my every tight-fisted instinct. How can I be sure that I will make back the initial outlay?
This is exactly how you need to evaluate one common household money-saving strategy: couponing.
I'm really not talking about the "clip what comes in my Sunday paper" kind of couponing. That's the basic idea but it's too small a scale to make much difference in your annual household spending.
I'm talking about strategic shopping, which can involve couponing on an industrial scale.
Think of shopping as if your household goods are commodities, and you will buy at the bottom of the price cycle, meaning when it's cheapest, and sit on your hands when the price just isn't good enough.
This can reduce long-term costs if implemented properly. Instead of getting a great deal on 1 gallon of detergent, multiply it by 10. Now you've got that same great price on a year's worth of detergent.
But to make this work you need two things:
1. A good understanding of the market, so you know when prices are right.
2. The ability to take advantage of that price with flexibility in your budget.
That's where spending money to make money applies. If you can afford to buy a lot of something, you might save in the long run. But you might have to sink capital in up front.
How to maximizing the deal
Serious couponers maximize these deals with multiple coupons and by timing their purchases just right, says Katie Fleck, an Ohio couponer who writes the blog "Kroger Krazy," which specializes in sussing out incredible deals at the grocery chain.
"Most people that use coupons casually get coupon inserts or print online, go to the store and buy the product. What sets apart the serious couponers is when you use them and how many you get," Fleck said.
For example, Fleck doesn't use a coupon as soon as it arrives. She knows better.
"You want to pair it with a sale, and you want to wait until the coupon is almost expired, so you gotta hold out," Fleck said, "so you're getting the lowest price you can possibly get."
These deals are often cyclical, she said, so hang on until that magic moment when the sale and the coupon align.
The deal gets even better if there is a bonus like a "Catalina" involved.
(For the uninitiated, a Catalina is a kind of paper coupon that sometimes prints out with your receipt when you check out; it's named for the machine that prints it out. It might be a coupon but often it's money off a future purchase of any kind. Usually items that will generate these are marked in the store something like "buy three and get $2 off future purchase.")
With a Catalina, as long as you follow the rules, you might actually cover an item's cost or even make money, Fleck said.
For a super deal like that, "you don't want just one coupon. You want several," Fleck said.
You can get coupons free if you want to go through newspaper recycling bins and take your chances. Another option is setting up a coupon swap with friends. Maybe one of you likes only Charmin toilet paper, the other Cottonelle. Or cultivate your non-couponing neighbors to give you their stash.
But often the easiest way to get multiple coupons is to buy them.
You can buy multiple copies of the Sunday paper, which might be your only option if you don't have regular computer access or a credit card.
Sometimes it's cheaper to order just the coupons through a third-party seller, such as a coupon clipping service like Klip2Save or The Coupon Clippers (among many others), set up a standing order with an insert seller like SundayCouponInserts.com, or buy a batch on eBay.
Each of these has advantages and disadvantages:
■ Ordering specific coupons is most efficient — but really great deals might sell out. Also, you have to be sure you will get them before the sale ends, so factor in shipping time.
■ A standing order for whole inserts guarantees you lots of everything, including perhaps coupons from other regions, in a timely fashion — but there will be a lot you just don't want.
■ Buying coupons on eBay can be as risky and price-prohibitive as buying scalped tickets — but sometimes that's the only place you can find a really juicy coupon.
(A caveat: There are counterfeit coupons out there, and you should always be wary of buying from an unfamiliar source. If someone is offering a coupon nobody else seems to have, ask yourself why. Coupon fraud is a crime, and stores will prosecute you for trying to use fakes.)
Another alternative is to print coupons at home, from sites like Coupons.com or Redplum.com. But there are things to consider here as well such as the cost of a printer, recurring costs of paper and ink, and Internet access.
Plus, coupon printing sites are notorious for gumming up laptops, according to computer technicians. If you use a coupon site, practice good download hygiene to avoid costly repair bills.
Also, keep in mind you can usually print a coupon only twice, so you may still need another source if you want to buy a lot.
Stockpiling is good, hoarding is bad
Strategic shopping is most effective with non-perishable goods but it can work on a smaller scale with pantry items as long as you are vigilant about using things before they go bad.
If this sounds like a recipe for stockpiling, that's because it is.
Stockpiling has gotten a bad name, particularly from TV shows like Extreme Couponing, that show people with garages and basements stuffed full of "bargains."
You have to know the difference between stockpiling and hoarding, knowing when not to buy.
That can be surprisingly difficult.
Once you get into this style of buying, it is easy to look up one day and realize you have enough cereal to get through a zombie apocalypse.
When you come home from the store and don't have any place to put the stuff you just bought, you've got a problem.
Consider this: Companies all over the world now maintain very low inventories, switching to "just in time" systems that ship goods to stores only to replace what was just bought. Wal-Mart pioneered this concept, which saves on overhead.
Why turn your dining room into Wal-Mart's or Kroger's warehouse?
You risk tying up your working capital in long-term investments and reducing your flexibility for more short-term deals. In other words, if you spend $100 on toilet paper, detergent and paper towels, that's $100 you won't have for the next great bargain.
But there can be an upside to stockpiling.
Fleck said that recently she noticed Brawny paper towels on sale for $1, "and there was a coupon for $2 off two, ... so I ordered them on eBay. I ordered 20, and got 40 packages of paper towels. ... So that's cut out of my weekly budget. You stockpile, and then you don't have to spend until it's on sale."
What is her weekly budget for her family, which includes one child?
"I buy a lot of organic items so my personal budget is higher than others. I try to spend $100 a week," she said. "Some of my readers have a $30-a-week grocery budget. That's talent."
Some of her tips for successful strategic shopping:
■ Have a dollar amount in your week of what you're going to spend on the stockpiling part of your budget, and the rest on your groceries.
■ Start small and don't do every single deal. "You're wasting your money, especially if you have to pay tax," she said.
■ Keep your storage in mind. If you're having to buy shelving units, you need to factor that in. "I'm looking at 10 cans of air freshener. We don't use it, but it was free," she said.
Think about what you're buying: Will you save enough in the long run to justify the expense and effort (because it is work) of monitoring the prices, gathering the coupons and buying a dozen of something?
If — once you factor in all the costs — you think it is worth it, go for it. If not, save your money for the next deal; there will be one.
This month's homework
Here's some recommended reading. How to Shop for Free by Kathy Spencer (Da Capo Lifelong Books, $14.95) is a useful primer on couponing at a variety of stores. It's available at the Lexington Public Library, most booksellers and Spencer's website, Howtoshopforfree.net, which is updated with daily deals.
Katie Fleck's website, Krogerkrazy.com, also has lots of useful tips on what's on sale at Kroger and how to maximize the deal with coupons. She includes links to print out coupons, if you have a personal computer and printer, and to electronic ones.