Frugal Move: Mind the Marginalia

In 2012, I fired my local Target store. Don’t get me wrong, I love Target. I worked there one summer collecting abandoned carts and sweeping aisles. I liked the job and met lots of nice people. For years, I was a loyal customer.

My problem with the local Target has nothing to do with the store itself. It has everything to do with governmental surcharges that railroad customers directly into the land of excess taxation.

Here are the sordid details. When I bought $71.24 worth of merchandise, my Target receipt reported a new 1.4% “Public Improvement Transaction Fee” (PITF) which totaled $1.00. That charge was for the latest shopping mall improvements. The receipt’s next line reported a state and local sales tax of 7.5%, which totaled $5.42. But the store hadn’t just charged this tax on my purchase alone, it had charged it on both my purchase and the PITF—in other words, it had charged me a tax upon a tax. This sleight of hand raised the effective surcharges on my purchase to a whopping 9.12%. That’s the most I’ve ever paid in my home state of Colorado and that’s what put me so off Target.

Meanwhile, another discount store located away from the malls and even closer to home charged a total tax rate of only 4.6%—and shopping there put fewer miles on my car. Needless to say, I switched my allegiance from Target to its competitor. Amount saved since 2012? About $100 or so in fees, taxes, gas, and vehicle wear.

Am I doing a victory dance about saving $100 over the past two years? Not at all. I mean, I’m not that crazy about the frugality thing. The point isn’t that I saved a little by dumping Target, the point is that I routinely pay attention to the details that surround every transaction. Whenever I spend, price obviously is the most important part of the deal. But it’s not the only part. Any purchase involves collateral components—extras such as governmental fees, sales taxes, credit card rewards, and so on. Mainstream consumers treat these details as mere sideshows not worthy of thought or effort. The frugal few, on the other hand, sweat these details because they know that over the long run the savings inevitably add up.

So I invite you to acquire the habit of considering the peripheral particulars each time you buy—not because of the small savings on any given purchase, but because the routine of sweating a little over the small stuff pays off big as the years and decades pass. To help you get into this habit, here’s a list of material minutiae that tend to present themselves whenever you buy products.

  Sales Taxes and Fees
In many metro areas, sales taxes and fees vary by as much as 5%. If you spend $2,000 per year at restaurants in cheaper tax districts, you save $100. If you spend $1,000 at retail stores, you save $50 more. If you buy big ticket items like $6,000 in furniture, five percent saves an additional $300. Not only can you save with your choice of tax districts, you can also save on sales taxes if you shop around for the lowest prices on the products themselves, buy from secondhand vendors, shop during tax holidays, repair stuff instead of replacing it, and so on.

  Transportation Costs
Most people consider shipping costs for online purchases. Amazon provides free shipping for purchases of $35 and over. You can view deals from other retailers at FreeShipping.org. But don’t forget that you also incur transportation costs when you shop at brick and mortar stores. By planning trips ahead of time and staying close to home, you save on gasoline, oil changes, tire wear, and vehicle depreciation.

  Card Rewards
Many cards provide greater kickbacks for selected expenses. My MasterCard rewards 1.25% back on all purchases, but I use American Express for gas, travel, and restaurants because on these expenses I receive 2 – 3%. These benefits add up: last year I earned $572. Important: use credit cards only if you pay them off in full each month (if you don’t pay them off in full, the interest costs inevitably wipe out any rewards).

  Store Rewards
Many stores reward their most devoted customers with special deals and coupons. If you like a given store well enough to shop there regularly, sign up for its loyalty program.

  Card Policies
The average cardholder carries 3.7 credit cards. If you’re buying a big ticket item, it pays to determine ahead of time which card provides the best terms for extended warranties or post-purchase price matching.

  Store Policies
Some stores provide better terms than others on extended warranties, post-purchase price matching, return policies, and customer service. Favor these stores if they offer competitive prices.

  Income Tax Effects
Some purchases trigger tax credits or tax deductions. If you run a small business, you can buy equipment and supplies with pre-tax dollars. If you buy an energy efficient furnace to heat your house, you may be eligible for a federal tax credit.

  Discounted Gift Cards
Several websites sell unused gift cards to national chain stores for slightly below face value. Buy these cards and you can save 5 – 20% on your next purchase. Leading sites: GiftCardGranny.com, PlasticJungle.com, and GiftCardRescue.com.

  Time Costs
When it comes to purchase minutiae don’t get carried away. It never makes sense to spend four hours finessing $1.50 in sales tax. But if it takes just an extra minute to secure the buck-and-a-half in savings, you earn a wage of $90 per hour—and that’s completely tax-free.

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Of course, all these purchase peripherals appear as part of the checklist program in Spend Less Now! The routine use of checklists is the best way I know for anyone to quickly shed the curse of over-spending. You can score yourself a Kindle copy of Spend Less Now! for less than a buck by clicking here. When you buy, be sure to use whichever credit card gives you the most rewards!

Note: I updated this post on March 7, 2014. The original version reported that the “Public Improvement Transaction Fee” helped pay for the region’s light rail system. This was erroneous (I was, you might say, completely “off-track”). I apologize for the mistake. Thanks to reader Zut for pointing it out so that I could get it fixed.

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2 Responses to Frugal Move: Mind the Marginalia

  1. zut March 7, 2014 at 10:52 AM #

    I think you could be misinterpreting your “fee”. That fee most likely has nothing to do with the light rail and instead probably has to do with the public improvements made to support the shopping center and public facilities surrounding the area.

    Try googling the title of that fee.

    • A Noonan Moose March 7, 2014 at 11:30 AM #

      zut: I’ve done some preliminary research on the fee as you suggested and it looks like you’re right. I really appreciate the correction.

      I’ll review a couple more sources from the public improvement district and if what you say checks out (and it certainly looks like it will), I’ll revise the post to correct my mistaken assumption about the rail being the cause of the fee. Thanks again.

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