If you are trying to lead a frugal life, then you probably cut coupons. I know that my wife and I are always on the lookout for good coupons ourselves. In fact, each year we are mailed a calendar that has coupons bordering each calendar month. The coupons are for places like Nicolitalia (our favorite pizza place), Sensuous Sandwiches (our favorite sub place), Coldstone Creamery, massage parlors, etc. We look forward to it arriving each Fall.

There is a problem though with coupons that easily leads to spending more money – coupons are a marketing tool or sales gimmick! Meaning, stores don’t send out coupons because they love us. They send coupons because they know that we are more likely to spend money. For example, I love Kohl’s. We receive a 20% off coupon about once a month. As soon as it arrives, I start thinking, “Oh, we could go buy some new towels for the kitchen. Or I want some new socks or let’s just browse and see what we come across.” That response is exactly what the marketing department at Kohl’s wants. I know people in Kohl’s marketing department and I really like them. But don’t be fooled – they want your money.

Marketers not only are aware of this phenomenon but spend time researching how coupons affect your buying habits and then share that information with each other. Don’t believe me? Here’s a research report just published on MediaPost, which is a news portal for marketing and media professionals.

Receiving a discount is NOT saving money. You save money by putting money in the bank. However, corporations have spent millions and millions of dollars over decades teaching us that buying something on sale is the same thing as “saving money.” Spent money is never money saved. So let’s be clear that coupons help you spend less but don’t cause you to save money. Each time that my grandmother told my grandfather that she had just saved him “tons of money” by purchasing $100s in clothes on sale, he always responded, “I’d like to see that savings account one day.”

Now, you might completely disagree with me right now. But here’s the point that I’m driving at – coupons are great when you intend to make the purchase anyways. If you cut and collect coupons to use on purchases that you would not have otherwise made, then the marketing departments have won and you have spent money, not saved money.

Let me give you an example. Within 48 hours of receiving our coupon calendar, we decided to use a coupon for a 12″ one topping pizza at Nicolitalia for only $3.99. My wife grabbed a table while I ordered. I know how much she loves the cookies ‘n cream cannolis. So I of course ordered two. The total came to about $10. Now $10 isn’t exactly breaking the bank, but we are on a budget and we had food at home that would have cost less. Had we not received that coupon in the mail, then we wouldn’t have made the purchase.

All I’m saying is, beware when cutting coupons. Don’t forget that the reason you received it in the mail or your inbox is because some marketer knows that you now feel enticed to spend money in order to “save money.” So don’t stop collecting coupons, just judiciously cut the ones for your regularly scheduled purchases that you were going to make anyways.

Do you agree/disagree? Let me know in the comments.

This is a guest post by One Advice at oneadvice.co.uk. One Advice is one of the longest established debt solutions practices in the UK. They offer a full range of financial solutions all under one roof offering ethical debt advice and allowing clients to find a financial management plan which best suits their needs.

Seeking debt advice is no longer uncommon in today’s society, and the number of people who are seeking debt advice is growing more and more. This problem is worldwide as well; the average amount of debt owed by every UK adult now stands at a staggering £30,480 (including mortgages).

There are a number of debt management companies out there which are designed to help you with your debt. But do you really need debt advice or can you get back on the financial track alone?

Is it time for debt advice?

The credit crunch means that more people are under pressure from creditor demands due to increasing levels of personal debt. This is why there has been an increase in those who are seeking debt advice.

0% balance transfers: If you have multiple debts which you can’t seem to get rid of because of the interest and charges which are being added, you may want to think about a 0% balance transfer. Keep your eye out for offers as these are becoming rarer since the onset of the credit crunch and you will have to have a decent credit rating to be accepted. Also remember that the 0% interest is usually only for a promotional term, so think about whether or not you could afford to pay off this debt in this time scale.

Budgeting: One of the key reasons that many of us end up with unaffordable levels of debt is because of a lack of budgeting and spending more than their income. Getting a budget in place is a great way of understanding your true outgoings against your income and working your way to becoming debt free. It will allow you to cut back in the places where you are spending too much and rework your budget to use this money to pay off your debt.

If you find that your finances are in a mess and your debt repayments mean that you cannot afford to maintain a reasonable standard of living, perhaps you really do need to seek professional debt advice…

I REALLY Need Debt Advice

If you find it a struggle to deal with your debts and you feel as though professional debt advice is the only way forward, then you need to ensure that you get the right sort of debt advice so that you can work towards getting your finances back in order.

The internet can be a great place to start looking for debt advice. There is a wealth of debt advice available online (please be aware of the difference between debt advice from other countries, as the policies can vary).

One of the financial solutions which you may come across includes a debt management plan. A debt management plan is a debt solution for those who are struggling to repay their unsecured debt. This type of debt management allows you to consolidate debt without getting any further loans. You make a reduced payment to the debt management company based on what is affordable to you.

Remember that everyone’s financial circumstances differ, and even if you know someone who cleared debt through bankruptcy, this may not be the right solution to your debt problem. Always make sure that you get professional debt advice from a company who places its emphasis in giving ethical debt advice.

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So what do you think? Would you recommend debt counseling?

Nash from Nil2Million.com was gracious enough to invite me to be a guest blogger this week. My post, titled Budgeting For Your Financial Goal: That Illusive “Other” Category, is currently up and running. The post is based on an experience that I had last week with my wife that helped me realize the need to better plan for infrequent purchases that aren’t emergencies. Meaning, purchases I don’t want to use savings for but don’t happen on a monthly basis.

Please check it out and poke around Nil2Million while you’re at it. Thanks!

For my day job, I work at an aerospace firm. In order to receive all of my vacation time, I am required by my employer to continue educating myself through books, classes, seminars, training, etc. As a book lover, I generally fulfill this requirement through reading. Currently, I’m reading “All Marketers are Liars” by Seth Godin.

One of the main themes of the book is – you’re a liar. Don’t worry though, so am I. In fact, most people are liars. Satisfying some psychological need, we tell ourselves “stories” or lies about why a certain product or service will fulfill some deep rooted need. Unfortunately, we are generally meeting just a deep rooted want. For example, here’s a few excerpts from the book.

“Does it really matter that the $80,000 Porsche Cayenne and the $36,000 VW Touareg are virtually the same vehicle, made in the same factory? Or that your new laptop is not measurably faster in actual use than the one it replaced…Marketers profit because consumers buy what they want, not what they need. Needs are practical and objective, wants are irrational and subjective…

“Marketers aren’t liars. They are just storytellers. It’s the consumers who are liars. As consumers, we lie to ourselves every day. We lie to ourselves about what we wear, where we live, how we vote and what we do at work…This is a book about the psychology of satisfaction. I believe that people tell themselves stories and then work hard to make them true. I call a story that a consumer believes a lie.”

This habit of lying to ourselves threatens are financial stability. Instead of spending $5, we spend $20. Instead of recognizing that we want that new shirt, car, or fine dinner at a restaurant, we lie to ourselves until we are convinced that, for one reason or another, we need that new shirt, car, or fine dinner. The current credit crunch can partly be blamed on a nation full of liars who convinced themselves that a $500,000 home was necessary even though a $250,000 home was sufficient. We must learn to live within our income and that means, we must stop lying!

I’ve compiled a short list of ideas on how to stop lying to ourselves and face the truth when making purchase decisions.

1. Have and stick to a budget. Is this purchase in my budget? For example, my wife and I budget a certain amount each month to spend on clothing. We’ve both agreed that this amount is sufficient to meet our needs. We have set this amount before facing a purchase decision. If during the month we want to exceed the budget because Kohl’s is having a fantastic sale, then we are now lying to ourselves. We aren’t saving money by exceeding our budget during a sale. In fact, now I have to dip into savings to pay for my overspending.
2. Set a per purchase spending limit. A wise man said, “The four most caring words for those we love are ‘We can’t afford it.'” Take some time with your spouse to set what I call “What I can spend without having to ask my wife if it’s ok” spending limit. My wife and I have decided that neither one of us is allowed to spend more than $50 at any given time without calling and asking the other one if it’s okay (this does not apply to groceries). Let me tell you right now, my wife has stopped me from making a lot of unnecessary purchases by telling me, “We can’t afford it.” Even though we had a budget for the purchase, we still didn’t need it.
3. Replace bad habits with enjoyable, inexpensive activities. Shopping or overspending is a habit that we have likely formed over years. Since our brains are programmed to react in a certain way in specific situations, any change is met by resistance. The existing habit is simply more comfortable and natural. To help change your behavior, replace the bad habit with another activity. For example, instead of going to the mall to pass time, go to a local park with a soccer ball and spend some time with family or friends. Start or re-start a hobby. Your new hobby might even be a low cost home business where you make money! (For more ideas of this nature, visit The Digerati Life)
4. Make sure that the reason you tell yourself you are making the purchase and the reason you are making the purchase are the same. Ask yourself, “Why am I really making this purchase?” Am I buying this dress for my wife because I love her and want to show my appreciation, or am I trying to prove to her and the world that I am a good provider? We lie to ourselves to cover our true motives. If the real reason you are making a purchase isn’t in-line with your principles and budget, then don’t buy it.
5. Take stock of and enjoy everything that you already have. Develop gratitude for what you already have in your life. Purchasing new things is often a sign of ingratitude for what life has already afforded us or a sign that we feel deficient in some area.

Overcoming bad habits and addictions is a process that requires concerted effort. Face each day one at a time and stop lying to yourself! Don’t believe the story you’ve created in your mind that justifies unnecessary and financially harmful purchases.

(Also, I wrote a little while ago about two other principles that help put money into the right perspective)

This post was featured in the Carnival of Personal Finance #217 hosted by Almost Frugal.