Ashley Grimaldo is a stay-at-home mom from Texas with two kids and a third on the way. She began the month of March with a huge stack of gift cards, along with plans to make all of her family’s expenses—gas, restaurants, baby shower gifts, home improvement supplies, groceries, Starbucks—exclusively using gift cards. No cash, no credit or debit cards allowed. Why? For one reason, Grimaldo says gift cards help her control spending and keep a budget—and since she’s been able to buy the cards at less than face value, Grimaldo’s family has managed to save over $150 this month.
There’s also a blog involved, of course. By law, every wacky consumer challenge must include a blog, whether the challenge is a bachelor cutting his monthly spending by 75%, a group of women refusing to buy clothing for a year, or a couponing guru living on a $100 food budget for 100 days.
Grimaldo blogs about what’s being called the Gift Card Granny Challenge at GiftCardGranny, one of several sites—PlasticJungle and CardPool are others—where people can sell unwanted gift cards, and where folks like Grimaldo can scoop them up for less than the dollar value on the card. A $100 Sears card might cost $91, for example, while a $25 card for Bed Bath & Beyond could go for $23. By using cards sold on the secondary market, it’s common to save 8% (and sometimes a lot more) on purchases.
Grimaldo has been able to make all of her family’s purchases in March using gift cards, with a few exceptions including rent, utilities, and at least one trip to the ER. (Hospitals and insurers don’t accept gift cards, at least not yet.)
Here is a video of Grimaldo explaining more about the challenge, and further below, she answers my questions about what’s good, bad, and complicated when it comes to living exclusively on gift cards.
[youtube=http://www.youtube.com/watch?v=2y9RxN4ft7I&feature=related]
I see that you always get your gift cards for less than face value. What are some of the biggest and best discounts you’ve gotten?
Ashley Grimaldo: As far as savings goes, the biggest return on my investment has been Home Depot gift cards. Seemingly simple projects, like flowerbeds, look like a piece of financial cake, but quickly snowball into money pits. For a $400 job I saved $35 off the top, not including the deals I found on annuals and bushes. How I wish we’d had cards five months ago when we bought new appliances! I also scored an impressive 30% off 1800Flowers, which was perfect for this month since I needed additional decor for a baby shower I hosted. But my favorite discount was an Ann Taylor merchandise credit at a whopping 20% off! Since I’m cheap and only shop clearance I was able to buy two, count ’em, two more tops with my $24 savings.
What are the biggest headaches and hurdles you’ve encountered living exclusively off of gift cards?
AG: Finding out limitations on merchandise credits has been a big hassle. Some gift card resale sites don’t discriminate between gift cards and merchandise credits, which can amount to huge buying restrictions–plus expiration dates are different. A Gymboree merchandise credit I bought could not be redeemed online, but after using it in a bricks and mortar store (which had more expensive prices than the same clothes online) I couldn’t earn Gymbucks. Their rewards program was offering $25 off the next purchase of $50 or more and I had to pass it up using the MC. Plus, technically, I wasn’t supposed to use a credit at all unless I was the one who it was issued to.
Aside from encountering some restrictions with card types, using gift cards exclusively can be awkward situation in social settings. If I only have a gift card to Chili’s and Red Lobster, I need to play up Lobster Fest to get the gang on board. It’s much easier to be proactive and make the plans for friends and family rather than leaving it up to someone else.
What are the biggest upsides to spending only with gift cards?
AG: Immediate savings! What coupon queen can get $10 off the top with zero clipping, hunting or printing? Even if you are into uber frugal clipping (which I’m not), why not save any amount of money for no cost before playing The Grocery Game? There’s no question that I’m going to buy groceries, home improvement supplies, and diapers. For items that are marked expenditures I can easily work them into our expenses with a designated gift card. Plus, when the plastic runs out, I’m done. Gift cards are my version of a budget.
For occasional luxury items, like steak dinners, massages and movies, the savings are even more lucrative than on every day purchases. I can save 19% and 30% on movies. I tip my hat to those folks who can eat off $1 per day, but that’s just not me. We can maintain the type of lifestyle we enjoy and save money at the same time.
What has been your most creative use for a gift card this month?
AG: Recently I used my Walgreens gift card to purchase food, since we’re out of grocery gift cards. The funny thing was I paid less for the food there than I would have at Albertson’s due to several sale items and coupons I grabbed on the way in. I’d earmarked the Walgreens card for some hair product and nail polish, but I guess I’ll have to sacrifice beauty so my kids can eat. Tough choice.
It’s been shown that people tend to shop less carefully when they’re using gift cards. (Check out this link). What do you think? Do you think people are way more likely to pay full price when it’s a gift card vs. cash in their hands?
AG: I can definitely see how gift cards could encourage more spending, especially if the card was a birthday gift. They lump it in the same category as a hand-knitted sweater from Aunt Mildred. It’s not real money and they can shove it in a closet to rot with its predecessor, the tacky sweater. That’s why, to make the gift card game work and not be one of the 82% who leave a remaining balance, you have to mentally shift into budget mode. Assume your cards are all you have to spend for a certain time period and it becomes your form of cash. Or at least plan a purchase (clothing for Store X or appliances from Store Y) and then buy gift cards for those specific items.
You’ve said that you actually spend less with gift cards than you do when shopping with a regular credit card. Why is that? They’re both pieces of plastic, after all, without the tangibility of cash. Got any tips for shoppers who would like to do the same and shop more thriftily with gift cards?
AG: At the root of the spending problem is not the method of payment, it’s the mindset of the shopper. Some people can’t handle not writing down what they spend, and I’m afraid nothing will help them. But as opposed to credit cards, gift cards have a decreasing, not increasing balance. When money’s gone you have to wash dishes or get creative with some rice and beans.
If you’re considering taking the Gift Card Challenge:
• You better have a solid idea of what you spend or intend to spend. Try to be as precise as possible–buying too much card money will encourage more spending and not having enough will force you to forsake a heftier discount if you pay some in cash.
• Shop gift card sales as they change often. I prefer Gift Card Granny as it compares the going rate of several resale sites in one place. Rather than search at all I select which cards I want to keep an eye on and have Gift Card Granny send an alert when they pop up for sale.
• Write down remaining balances with a permanent marker, at the time of sale–no exceptions! Checking balances online is a total drag and your greedy brain assumes you have more left than you do. Experience talking here.
• Make sure you know of any limitations or restrictions about your cards. This will prevent you from selecting a perfect virtual shopping cart only to find out your card isn’t accepted online.
• Buy from reputable sellers. Ebay has the most lucrative returns, but isn’t guaranteed. The gamble is yours. Card resale sites guarantee their merchandise for up to 45 days from purchase, plus their cards never expire.
• Keep an open mind. You can score cards for airlines, iTunes, and jewelry stores. Browse every now and then just to see what is out there.
The Gift Card Challenge isn’t even hard, nor does it stand alone! Having gift cards earmarked for your purchases allows you to shop sales and coupons to save even more.
MORE:
Why Do People Insist on Giving Gift Cards Rather Than Cash?