photo credit: The Passive Dad
Today I was fortunate to have the grandparents come along for my Costco trip and assist with the kids while I did some shopping. I had my list, but also enjoyed having some guy time with grandpa and drooling over the new blue-ray dvd players. Prices are coming down and Costco had a Samsung, Sony, and Phillips blue-ray all for around $380. Still no reason to purchase one as the expense is not in the blue ray, but in the discs. I can imagine all of a sudden having the desire to watch Disney movies in blue ray. Not a real good use of savings right now.
I bought the usual boring items like milk, cereal, bread, and some batteries. My son loves the Costco hot dogs, so we decided to order some pizza and hot dogs and have lunch inside with grandma and grandpa. Since I’m usually knee deep in ketchup trying to catch falling hot dogs and wiping messy faces, I had some time to look around for a change. This must be what Costco wants to happen. In fact, they should offer to have employees feed your kids because I’m sure this would increase sales. I actually had time to look around and see what people had bought. Some guys had the boxes ripped open for some new cell phone or itouch and was reading the manual. Another lady was looking at her brand new purse that she just bought. When I looked at the purse, I also caught a glimpse of her watch. My light bulb went off and I remembered that my wife wanted a new watch as her last one was broken. The a-ha moment!
Since the kids were content with ketchup drenched hot dogs, I had time to go over to the jewelry case. Typically this case is never seen by myself or my wife as we are headed quickly to the back of the store. Today, I could look at all the ladies watches and find one that would fit her style and price range. Unbelievable how many gorgeous watches they have at Costco. I mean, my typical purchase is dog food and milk. Now I’m looking at Tag Heuer, a Bulova, and a Movado that range from $500 to $3,000. Wow! Further down they had some everyday practical watches that you wouldn’t feel bad about banging or having the dog scratch the glass. I settled on a pink Kenneth Cole watch that looked like something she would wear. If not, she can take it back and buy 30 hot dogs. Next time your eating your hot dog at Costco, be sure to just stare straight ahead and don’t look into another persons shopping basket. It could cost you $61.99 or more. Has this happened to you? I guess eating lunch or dinner in a mall could be just as dangerous.

Fortunately, the watch was a planned expense as my wife has been looking several weeks for a replacement and $61.99 was in our budget. This would have made a great Christmas present, but since she probably needs a watch before then she might get a nice surprise tonight. Do you have a category for watches or other personal items on your family budget?

The $61.99 hot dog could have cost a lot more if I had used a credit card with a balance. I would have broken my first rule of debt elimination if I had a card with any balance. In fact you could argue that I shouldn’t have had a hot dog in the first place if I had any type of CC balance.

Has the $1.50 Costco hot dog cost you $61.99 or more? I’d love to hear your story.

Also, check out these other great blog posts I found interesting about saving money at Costco and Costco discounts:

Money Saving Tip: Excellent Presents from Costco
I Figured Out A Way To Use ANY Credit Card At Costco (As They Only Accept AMEX Now)!
Shopping at Costco the Frugal Way
Buy Costco Gas Without Costco Membership
Wanna Save Money at Costco?
Another Way to Save Money At Costco
Is Costco Executive Membership Worth It?
Costco: Good Value for the Money, but Not Frugal
Does Your Costco Card Really Save You Money?
Retraction: Costco Doesn’t Save Me Money

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This is a simple credit card debt strategy that will be the equivalent of a high investment return of up to 30%+. We have all probably asked or heard the following question, “What’s a hot stock right now or how can I earn more than my banks savings account rate?” Great question, we all want to know what the next Microsoft or Google will be, right?

When my wife and I were first married, we had accumulated college loan debt and unsecured credit card debt. Most of the debt was from the purchase of a new computer and printer and for living expenses in our San Francisco apartment. Like most apartments, we had to pay a security and cleaning deposit as well as the first months rent. I was working at a brokerage company at the time and wanted to put every nickel and dime into the best stocks of the day. I remember spending $50 a month on two companies called At Home Corp (ATHM) and Exodus Communications (EXDS). But, our credit card debt was over $2,500 and the interest rate was 15%. Was this the best use of our families resources? Exodus and At Home were high flying stocks, but this was not a short term investment for our family. Now, if I could have timed my sale of both of these stocks, we could have made a few hundred dollars. Instead, one went bankrupt, and the other has a huge sell-off.

I would have been better off applying the money spent on At Home and Exodus towards our Visa debt. Here is an example of how we could have payed our debt off faster.

We owed $2,500 @ 15% interest and paid $50 per month. It would take us 78 months and $3,900.

If we applied the extra $50 to our payment, it would take us 31 months and only $3100 to pay off the debt. A savings of $800.

In this example, paying off credit card debt resulted in a 15% investment annual return for our family. You might have a credit card at an introductory period of 5-10%, but wouldn’t it be better to payoff that amount and start paying yourself and not the credit card companies? When someones asks you, “what is the best stock tip?” Ask your friend if they have credit card debt. Tell them to buy Visa (V), not the stock, the personal debt. Your friend may have never thought to treat credit card debt as an investment opportunity.

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