Keeping Up With The Bulls

A personal finance blog focused on making more money, saving money and smart spending.

Is Amazon Prime Really Worth $119? For Me, Not Anymore

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Amazon Prime Not Worth It Anymore, is amazon prime worth it anymore

I cancelled Amazon Prime a year ago and haven’t missed it. After being a loyal Amazon Prime shopper for over 6 years why’d I do it? $119 per year isn’t that much money to pay for convenience. But, it’s still money that can be saved or spent on other things. Like many people I was stuck at home for months starting in March of 2020. I moved most of my shopping including groceries to online. And, while scouring every corner of the internet for masks and Lysol wipes I realized Amazon wasn’t the only player in town anymore. No company could deliver in 2 days anymore given the circumstances. I was just happy to receive what I ordered even if it took two weeks. I decided to cancel Amazon Prime but always figured I’d rejoin. A year later and I’m still off Amazon Prime. Is Amazon Prime worth it anymore and how am I surviving without a service once deemed inelastic?

My Amazon Prime Financials

When I first joined Amazon Prime I was a student (so I had a student discount). It cost $39 / year. How much does Amazon Prime cost in 2021? $119 if you aren’t a student, which was a huge price increase for me. In March of 2020 I looked over my expenses and started thinking about if I should cancel Amazon Prime. I started reviewing how many times I used Amazon Prime in 2019. In 2019 it turned out that I ordered from Amazon Prime 30 times. 9 of these orders were over $35 so I would have received free shipping anyways.

I never used any of the other Amazon Prime features so that was worth $0 to me. I also don’t shop at Whole Foods so those added discounts didn’t do anything for me either.

At the end of the day I paid $4 each order to get the 2 day shipping. Or, if I didn’t need the 2 day shipping I paid $5.66 each order to get the “free” shipping for the times I didn’t hit the threshold. Sometimes I ordered from Amazon to avoid paying $5 shipping at other places. Yet, here I was actually paying over $5 for shipping from Amazon. I just didn’t realize it because I was paying $119 flat once a year.

What is Amazon Prime really costing you? Look over all of your purchases in the past year and the times you’ve used other Prime features like watching a video for free. Deduct all the times you spent more than $35 from the total number of purchases and add in the number of times you used other Prime benefits. Then, take the $119 and divide by that total count. That’s how much you paid for Prime every time you used a benefit.

My Buying Needs Changed

When I first joined Amazon Prime I was moving into my first condo while also working full time and going to school at night. Living in the city without a car I had to ship things most people could drive and pickup themselves. I didn’t need everything in 2 days, but I did have items that cost less than $35. And, there were certain things around the house I realized I did need pretty immediately. Starting from scratch, my condo was pretty empty. When I went to make a new recipe I would find out I didn’t have the kitchen items I needed to actually make the recipe. I couldn’t wait until I had enough to put me over a $35 threshold for free shipping and being in school I couldn’t afford to buy things well in advance to get over the $35.

Now that over 6 years have passed I have most of the stuff I need. I’m not in situations where I want to cook something like salmon and realize I don’t own a baking sheet. And, if there are things such as a frosting set I’m in a better financial place than I was as a student. I know at some point I’ll have to order k-cups so if I’ll add those to the order to get free shipping.

I Became Better At Planning Purchases In Advance

When I was in school and working full time I was often focused on surviving all the things due that week. I didn’t have enough time or energy to remember in 2 weeks a birthday was coming up. If there was a holiday coming up, it was something I’d start thinking about a few days before. This led to needing 2 day shipping for gifts and other items to arrive in time.

Looking back at what I ordered in 2019 below $35 sometimes the order was as simple as k-cups or another grocery item. We ordered these on Amazon for price reasons and there was no reason to not plan ahead. I don’t have to wait until we’re out to place the order.

Amazon Competitors Like Target and Walmart Have Come Out With Good Alternatives to Amazon Prime

In years past, only Amazon Prime offered free shipping and the ability to get most orders in 2 days. Several companies had been building up their capabilities and by Summer 2020 everyone living in the United States has other reliable companies that offer 2 day shipping for free.

Walmart.com offers free 2 day shipping on orders over $35. If you want to avoid the $35 minimum and/or get free shipping next day you do need to sign up for Walmart+.

Target offers free shipping on orders over $35 as well. But, if it’s less than $35 or if you need it same day you can order same day delivery through Shipt or pick up curbside. Not only is curbside free sometimes you’re even offered extra discounts on items if you select curbside pickup. It’s not a surprise that Target sales jumped 23% in their fiscal first quarter.

Target and Walmart Prices Are Similar to Amazon Prime

There are times when Amazon is cheaper by a lot and I will continue buying those items on Amazon and wait for 5-7 days to receive it. However, after consistently looking at Walmart, Target and Amazon when buying stuff online I’ve learned that the price is either the same or only $1-2 difference for most items I buy. This is cheaper than the $4-5 per order I ended up paying for Amazon Prime.

Recently our Keurig started breaking. A replacement was $169 at Target and we could pickup curbside within 2 hours or shipped free. Amazon was $129 and free 5-7 day shipping. Walmart.com was $129 and free 2 day shipping. Plus, Walmart.com had extra credit card points from shopping through our credit card portal. We went with Walmart.

What About Amazon Prime Day? Turns Out That’s Taken Care of Too

What if you like the deals on Amazon Prime Day? First, ask yourself do you really need those items. Secondly, Walmart and Target have that taken care of too. This year both Walmart and Target are launching June sales events coinciding with Prime Day. Target All Deals Day purchases qualify for same day delivery, curbside and in store pickup. You can actually get your purchases faster than you can ordering on Amazon Prime.

Summary

I thought I would never be able to live without Amazon Prime and here I am about a year later not missing it at all. After consistently looking at Walmart, Target and Amazon when buying stuff online I’ve learned that the price may be slightly cheaper on Amazon ($1-2) but it now takes 5-7 days to get it without Amazon Prime. I never used all of the other Prime offers, so I only paid the subscription fee for the free and expedited shipping.

$119 doesn’t seem like much for the extra convenience when Amazon was the only option in town. Now that you have other options from Walmart.com, Target.com and Target same day pickup among others do the quick math to see if it’s still worth paying for Prime. Especially if you only use it for the free shipping it may not be worth it anymore. Do the quick math, ask yourself is Amazon Prime worth it and possibly save yourself $119 / year.

Can You Really Afford That House? It Depends

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Just when you think housing can’t get more expensive buying a home literally goes parabolic. In Denver, 65% of homes are selling for over asking price at an average of over $30,000 but many are going for even more. There are countless stories of people bidding over asking and still not coming in the highest. It’s gotten so crazy recently you may wonder how do people afford houses. You want to own a home but now you don’t know if you can afford to buy a home. How do you know if you can afford that house or not? Is renting now cheaper than buying a house? Here are a few things to consider when figuring out how much house can you afford. Know the rule of thumb for home spending but also how much should you expect to pay to maintain that home every year? How much does it cost to furnish a house? How will this home impact your other spending?

Rule of Thumb for How Much To Spend on A Home

A rule of thumb is that housing costs should be no more than 30% of your gross income (pre-tax income). What does housing costs actually encompass though? It includes your mortgage, taxes, bills like electricity, water and wifi and any repairs you may have to make. Make sure you factor in these other expenses when looking at properties. It’s easy to look at just the mortgage and tax payment and forget about the monthly and ongoing expenses.

Understand The True Cost of Home Ownership Per Year

How much does it really cost to maintain a house every year? Million Acres suggests a few different ways to estimate this. One rule of thumb is to estimate between 1% and 4% per year of the original purchase price. Another rule of thumb is to estimate $1 per square foot per year for general wear and tear and upkeep.

On top of this, you’ll encounter major repairs at some point during home ownership. This can include replacing major appliances like water heaters, renovations, adding onto the house such as a patio, deck or addition. When buying a home know how many major repairs are likely in the next 3-5 years. Ask how old the appliances are and know the average lifetime of those appliances. Don’t waive the home inspection so that you know if there are major home repairs required. If you’ll want to renovate all or part of the house factor that into your budget.

Understand What Else You Need to Buy For Your New House

You’ve bought the house, now you need to furnish it. If you’re moving from another house, the initial set up fees will be way less. When I first moved into my condo it was my first time living by myself. I had all these ideas on small improvements like painting, curtains and decoration ideas. When I went to Home Depot I was shocked that it would cost over $1,000 just for basic blinds for windows for just one room. I couldn’t believe it, I thought these costs were only to be seen for high end custom work! The bigger the house, the larger this bill will be even for the basics.

Luckily, there are a lot of financial tips to save money on furniture, decorations and other household items.

How Your New Home Will Impact Your Other Spending

When buying a house, it’s easy to only look at how much you were approved for your mortgage and the amount you’ll be paying for your mortgage and taxes every month. But, it’s not good to look at housing costs in a silo.

Where your home is located impacts your other spending. Say you’re moving from the city to the suburbs. In addition to the house you may now need to buy one, or two cars. With the cars comes insurance, gas, car maintenance, car taxes and other various fees. Do you have kids? What school district is the house located in? Will your kids go to public school or will you need to send them to private school? How much is childcare?

Of course, where you buy can impact smaller expenses like how much it costs to eat out and groceries. But, the big expenses like another car and childcare / school can make a huge difference in your financial situation. The difference between children attending public school and needing to pay for private school can run you tens of thousands of dollars a year. And, sometimes real estate taxes can vary wildly town to town, even for towns next to each other. It’s important to know what these expenses will be before you buy the house. It may result in a smaller budget for the house or even finding a different area to buy in.

Renting vs Buying a Home – Which is Better?

Ok, the above is costly but isn’t it cheaper than renting? It’s hard to put a blanket statement on which is better renting vs buying because so many factors can ultimately change that answer for individuals. It depends on where you buy, what the market is like in that location, housing appreciation / depreciation, how long you’ll stay, how much money you need to put into the house and more. Instead of guessing or making an assumption based on what you hear from someone use this data. Nerdwallet has a good renting vs buying calculator that enables you to enter in a few data points and it’ll spit out the answer whether renting or buying will be better for you.

Can I Afford A Home Calculator

Once you know if it’s cheaper to rent or buy, determine how much house can you afford. Nerdwallet has a good how much house can I afford calculator. Remember these calculators are based on the rule of thumb for how much to spend on housing. The calculator includes the mortgage, taxes, HOA and insurance. You personally need to figure out how much you’ll spend per year on home maintenance, renovations, furnishing the house and how it increases (or decreases) any other expenses. Those expenses are usually not included in these online calculators but are very important expenses to take into consideration.

Know Your Financial Goals And How A House Impacts Them

Yes, the rule of thumb for housing costs is that you should spend no more than 30% of your gross income. But, what if you only spend 20% of your gross income? How does that change what you can afford to save or what other things you can buy? Because housing is such a big expense, spending less than you can afford here can make a huge impact to how much you can save, the vacations you can afford and more. It will go much farther than skipping a $5 latte or clipping coupons for groceries. This difference can easily add up to thousands of dollars more a month in your pocket.

Additionally, spending less on housing enables you to be more flexible with major income changes. When income changes unexpectedly, or when you’re considering a career shift / retirement it’s very easy to cut back on discretionary expenses if needed. It is much harder to cut back on housing expenses. You’re pretty much limited to looking at holding off housing projects, trying to cut utility costs, and refinance if interest rates are better.

On the other hand, if you don’t travel, don’t spend much on hobbies a nicer house may align exactly to your goals. You’re going to spend most of your time at your house and want to enjoy that time.

What factors did you consider for whether or not you could afford your house when house shopping?

The Roaring 20s are Coming Back – Plan Your Spending Before It Gets Out of Control

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Every day we’re getting more and more good news. Vaccine production is ramping. More shots are getting into arms. We hear that everyone that will want a vaccine in the United States can get it starting May 1st. We’re still a little bit away from that but there is a chance we could actually have a normalish Fourth of July. Summer 2021 could kick off our Roaring 20s.

All of those things you’ve wanted to do the last year – see your family, see your friends, go out to eat, go on trips and more can get pretty expensive pretty quickly. So, how do you celebrate the roaring 20s and plan your spending before it gets out of control? Prioritize what’s most important to you, look for the best deals and make sure you spend within your meals.

Know What Your Means Are

It’s important to live within your means. What your means are may be different than before the pandemic due to job changes or being able to save up extra over the past year. Whatever it may be, know how much money you’ll have available to spend over the next 6 months – 1 year. Then, know how much money you’re willing to spend over that same time period. These two numbers may be different. You may have more money available to spend, but you may want to now have a bigger emergency fund, pay down your student loans or increase your investments. Alternatively, you may have other life changes on the horizon (starting a family, starting a career) and have plans that are now or never opportunities and it’s worth it to save less than usual.

Prioritize What Is Most Important

You’ve given up a lot over the past year. Once things are safe again, where do you start? It’s not just about money, it’s also about how you’ll prioritize your time. Prioritize the most important things to you and then spend money on doing those things first. We’ve also been reminded over the past year that some of the most important things are really free. Being able to hug your parents, or go to a playground without worry for example.

Also consider, what did you used to spend money on that you should continue to not spend money on? For example, perhaps you used to spend a lot of money commuting. Can you go full time remote or hybrid so that you don’t have to spend as much money commuting as you did in 2019? This past year has taught us all how to spend more consciously and how easy it is to save money when we can’t travel, eat out and go to concerts. As life gets back to normal figure out what expenses shouldn’t come back. Similarly, don’t forget to budget new expenses you have that didn’t exist in 2019. About 33% of Americans considered getting pets in 2020 and according to CNBC dog owners spend an average of $1,200 a year on their dog.

Opening up safely may come gradually. That international trip you wanted to go on may have to wait a little longer. For anything that’s your top priority but can’t be done yet set aside some money for that so you don’t find yourself in a situation where you don’t have enough money to do the thing you really want to do.

Restart Your Life How You Want It

The pandemic didn’t just put our spending on hold, it put our lives on hold in other ways. Many parents had to juggle home schooling with working, and some had to put their own career plans on hold to survive the last year. Reassess your own goals, and what it will take to achieve them. These may look wildly different than what they were in 2019 and that’s ok. Where do you want to live? Where do you want to travel? Who is most important to spend time with? What do you want your career to look like? What do you want your usual weeks to look like? This may mean a promotion and more money, this could mean taking a step back and making less money. It’s something you’ll have to weigh as you reassess where your time and financial priorities lie in the post pandemic world.

Don’t Forget About Your Mental Health

The pandemic has been pretty traumatic and has affected everyone differently. In May 2020, the US Census Bureau found that about one-third of clinical anxiety or depression. If you run a marathon, do you immediately continue your pre-marathon training schedule the very next day? No, you take time to assess what you need for your physical recovery and do just that. We need to do the same as we emerge from the pandemic. There are plenty of resources to help with your mental health. Know what is covered under your insurance and make sure you take the time you need to heal your mental wellbeing.

Don’t Forget Sometimes The Most Important Things Are Free

You don’t have to spend a lot of money to make up for all of the things we lost over the past year. And while the year has been tough, we did gain a lot like appreciation for the simple things, the ability to slow down for a little, not having to spend a ton of time commuting and more. Hugging your parents or catching up with a friend doesn’t have to come with the expense of a $200 dinner. Remember, people are just happy to be with you in person again.

Find Deals On Housing

One of your largest, if not largest, expenses is housing. The less you can spend on housing the more money you have to spend on other fun activities or increasing your savings. If you rent, there is an opportunity to find a better deal on housing. Over the past year, what have you learned about where you want to live and what you want in your home? With many people moving back in with parents or leaving the city rents were in free fall in many cities in 2020. While rents have started to rebound there are still plenty of deals on renting in the city in 2021. In Boston, rents are down over 8% and in San Francisco rents are down over 12% for example according to the Home Buying Institute. As interest picks up landlords will have less incentive to offer these deals so signing a lease sooner than later will leave you more likely with a rent reduction or even a couple months of free rent. Waiting until later could cost you hundreds of dollars a month.

See Also: 10 Financial Tips For Living On Your Own

Find Travel Deals

Now that you’ve prioritized what’s most important, how do you still find good deals for vacations, seeing family and more? If you’re prioritizing seeing family or traveling book your travel ASAP. Many of the best deals were already 6 months ago when there was still a lot of uncertainty. Because there is still some uncertainty though your best bet is to start booking refundable flights and lodging now while the hospitality industry is still trying to lure people back. Make sure you know what the policies are to cancel or reschedule in case you do have to push it back.

See Also: 5 Tips To Save Money On Travel

Find Deals for Clothing And Other Physical Goods

Most people that have been able to work from home the past year have spent most of their time in the same loungewear outfits. With most people spending more time at home than usual many have taken the opportunity to organize their closets. They’re donating clothes and also selling them. This has led to a lot of great finds at thrift stores, Poshmark, The RealReal and local consignment stores already. For the best deals, buy secondhand or buy clothes when no one else is buying.

The Roaring 20s are Coming Back – Plan Your Spending Before It Gets Out of Control Summary

It has been a long year and we’re all excited for things to get closer normal. We’re excited to see friends and family, be able to travel again, pick up the hobbies we’ve had to put on hold and more. Before you spend all your money make sure you know what your financial limits are and what is most important to you. Prioritize your money, prioritize your time and remember, don’t feel guilty about spending money. We’ve sacrificed a lot over the past year, enjoy seeing the people you’ve missed, the places you’ve missed and completing your bucket list.