How Cash Back is Changing the Way I Shop

and the internet needs more cute dog pictures

One year at Christmas,  we cashed in a whopping $700 in rewards, and it has changed the way I shop ever since. You see, every year for Christmas, we use all the cash back rewards we have earned that year. It supplies almost all of our holiday shopping budget. I love feeling like Christmas is free. When we need to make a big purchase, I happily think about how many gifts that will buy come Christmas. Which is why we bought our mini van with a credit card. =)

I was in TJ Max buying clothes for my mom’s dogs. Every year she buys tons of gifts for my kids. So at Christmas I buy her dogs a new outfit. They are cute, white, fluffy little dogs who love to dress up. (Don’t they look adorable in the Santa sweaters I bought them?!) We had just cashed out our biggest rewards yet due to all the renovations on our rental properties that year.

I was trying to decide between two outfits. A $12 or $9 sweater. They looked about equally nice. Now I’m not very good at buying clothes for myself. So trying to pick something for someone else’s dog is a tough call for me. I just stood there for a few minutes staring at the options. Then it hit me.

Why am I so excited for 1-5% cash back, but think so little of saving 1-5% on an item?



I like getting 1% cash back. But for this $12 sweater, that’s only 12 cents. I am really excited about 5% rotating categories. That would be 60 cents. Right now Mr. Mt has the Discover card that will double all his rewards for year so his 5% categories become 10%! That makes me a little giddy truth be told. But 10% is only $1.20 on the $12 sweater.

Why am I not excited about saving 1%, 5% or 10%  on everything?

The problem is I have contempt for those little savings.

The $9 dog sweater would have been like getting 25% cash back. I would have been thrilled about 25% cash back. But when I looked at the 2 dog outfits, that seemed equally nice, I wasn’t excited at all about finding an item $3 less expensive.

It made me wonder. What if I could pay 1% less for everything? Or 5% less. I know somethings are a rather fixed price, but it could average out.


Maybe I could adjust the temperature in our home to save 1%? Maybe I could try different generics at the store and lower our bill by 1%. On a $100 shopping trip, I really only have to find a way to save $1. Or $5 to match the 5% cash back my credit cards sometimes offer.

The problem is this: I think of that $1 as stupid and unimportant.

Yet I am really excited about my yearly cash back.

I think we struggle to see how little changes can add up to anything significant. Saving a $1 seems useless. But when we have $700 cash back, well, then we are excited. We can’t see how our little savings are piling up. We find a new affordable breakfast option to eat 3 times a week. We might save $12 a month per person.

I am trying not to despise the small savings. If items or experiences are equally good choices, I am getting better about going with the less expensive option. Even when it’s only $1 less.

How cute is he? I’ve never known dogs who love to dress up so much!


Ideas for discussion:

Is saving or cash back more exciting?

How cute are these dogs?! Now my mom is thrilled that her adorable dogs are being featured on my blog today. Thrilled. Beings, I haven’t shared my blog address with her, I assured her I would let her know every wonderful thing people commented about her dogs. So feel free to let loose. She has more pictures of her dogs on her phone than my kids. Priorities.

Have you ever tried to save 1 or 5% on a category? It gets fuzzy when the time vs ROI comes into play. What is the threshold to make it worth it?

And my new PDF guild to 6 Easy Steps to Taking a Year Off Every Decade is going to be sent out this Friday! Make sure you are on the mailing list if you want a free copy! (Right hand side of the screen, red button)

Please note: I reserve the right to delete comments that are offensive or off-topic.

27 thoughts on “How Cash Back is Changing the Way I Shop

  1. I personally optimize my cash back because it’s a fun hobby, but i’m much more excited by the savings side! I can save a lot more money by just not buying stuff, buying less expensive equivalents, or by looking for deals on the products I know I want to buy.

    I mean….I saved $50 a month by cutting the TV subscription. I’d need to spend $1000/month on a 5% cashback card to achieve the same earnings via cashback.

    • This is so true! There is no way to spend your way to riches. =) Earning it or cut costs. I have made a lot of progress since this happened. I am starting to get a tiny bit more excited about small saving. Now $50 a month in an awesome savings! I started buying our staple food items in bulk when they go on sale.

  2. I think the cash back feels more exciting just because it is paid out in a lump sum rather than in little bits at a time like savings. When you’re saving a dollar it just feels like a dollar. When you’re getting $500 for spending on gifts, it feels like $500. At the same time, I don’t think it is a harmful mindset for me because I don’t actually change any of my spending habits to try to get more cash back.

    • I don’t think it’s harmful at all, because I also don’t really like to part with my cash in the first place. =) It’s just harder to imagine that $1 adding up in my checking account and being like the $500 lump sum. =)

  3. I think the problem with saving 1-5% on a normal budget category is that it can be difficult to capture those savings. With the cash back, the rewards are kept separate until you cash them out. I think the most rewarding small savings are when you can achieve them on your fixed expenses – insurance, phone, etc. If it is a monthly bill it is easier to capture the savings and you decrease your fixed expenses.

    My favorite cash back story is when I cashed them out on Sears gift cards to pay for the majority of a new washer & dryer when we bought our house. I loved it because we got a bonus by turning them into gift cards, so it increased the value of the cashback and we didn’t have to spend cash during an expensive time. I would imagine the salesperson didn’t enjoy entering the long codes for each of the gift cards though. 🙂

    • That is so awesome! Thanks for sharing, Angela. Our dryer has broken TWICE this year. So that has been on my mind a lot. =) I have thought about doing the gift card thing to. You get and extra $10 for every hundred. Which is kind of awesome. But you are right, it’s hard to track those small savings. Although I am happy when at the end of the month there is a little more cushion there.

  4. I love aviator dog! too cute.

    I think the cash back excites more because you’re getting it (or at least using it) all in one go. Because it’s the result of so many little drips over time, it seems like a much bigger deal. If you were putting the results of every time you saved a bit on groceries or other things in a jar, it would probably add up to be much bigger but if you’re like me you look at how much you’re spending not at how much you’re saving on those categories. Big savings, though, like switching from expensive to cheap phone service or cutting cable, still probably feel big.

    • It would be way more! I am barley organized enough to enter the expenses, so figuring out the saving and actually putting it in a jar is probably a stretch for me! =) I do get really excited about lowering a monthly bill! Even if I can get my internet down $8 a month, I am thrilled. Love the low monthly nut!

    • Oh that dog is so cute. =) I have really been loving tracking our expenses. I want to do a few posts with all the cool charts and graphs when we hit a year. =) Multiplying those costs over a year and it is easy to see how things add up.

  5. Okay, confession…I live for ebates. I get such a thrill each time I get an email saying “you earned 2% back!” on something I would’ve bought anyways. Plus, I always check gift card granny to see if there are discounted GCs out there, so then the savings stack up! It’s embarrassing how much fun I have trying to pile as many cost saving techniques onto each purchase, really 🙂

    • Sometimes it is fun. Like combining the 20% I save on diapers with Amazon subscribe and save with the discover 5% back (which will be doubled to make it 10%), oh and there is a coupon for $3 off that size. I can see how people can get pulled into overspending. But as long as it’s diapers, I think I am safe. =) Especially when I forgot to order soon enough this month and we ran out! So I had to go to walmart to pick up a mini bag, which was 2x as much per diaper than I normally pay; for the generic!

  6. Aside from not having the patience, I suspect subconsciously these programs, like cash back and travel hacking by opening credit cards, get you to spend more. So for me, saving is more exciting. But I can see how cash back would feel like getting free money, and how a lump sum can feel more rewarding than saving a buck. Oh, the little mind games we play with ourselves. We’re darn lucky we even get to talk about this.

    • Truth! In my comment to Britt, I talked about the price of diapers. Because I have internet, Amazon prime, and a credit card, I pay half what the generic bag at Walmart costs. Plus they will ship it to my house for free. So I don’t have to walk there after a long day at work, or pay to ride a bus, or even use gas for my car. It’s not something I take for granted.

      • So true – such a reminder of our privilege to have these options. I love all the buzz about privilege that’s been happening in the PF space recently.

  7. I am using my cash back rewards for Christmas too. I haven’t totaled it yet – but I’m guesstimating it’s around $200 ($700 is amazing!). We used the majority of our rewards on travel this year – $2100!

    If I had the discipline to put the money I “save” into an account when I buy something on sale or get a discount, it would add up. But I don’t do this. That’s the beauty of cash back rewards – they do it for you. I use Digit for savings because its a similar deal (only it is your money) – small amounts are moved to savings without any effort or affect on cash flow. And those small amounts really add up over time.

    • $2100 for travel is huge! I actually have never if tried to do travel rewards. I suppose it seemed complicated. But I am starting to consider it more. I think we are set for another $700 year, plus our Costco cash back, which pays for our membership plus a little more.

  8. We treat our cash back as mad money. It pays for the rare times we do something like get a coffee from Dunkin Donuts/Wawa and also for much of our yearly travel budget. We shop for the deal beyond the percent back, trying to consider both in the equation. Our problem is sometimes we spend more time searching for the deal then the deal is worth to us. It’s a fine line.

  9. NO cash back cards in Belgium, at least not for mainstream shopping and groceris shopping.

    I do take advantage of these great discounts in store on things that do not go bad. Like a 33pct discount when you buy 3 tubes of toothpaste… that sounds like a free lunch to me.

    And 2 weeks back, I reduced out teleco/internet/TV bill with 10 a month. Probably beats all the cash backs I encounter till now.

    • I love it when I can lower our fixed expenses! And 33% discount is huge. I really need to shop for our car-home insurance again. Because we insure 3 homes and 3 cars, even a small savings could add up!

  10. I switched cards just for a better cash back system. Like most have pointed out, it’s having the cash back lump summed and waiting for you that makes it seem great! 🙂 My company offers a points program by doing health checkups and being active and all that jazz. For the 2nd yr in a row now, I’ve got over $250 in free cash for nothing. I love using it for Christmas presents – it’s like they’re free!

    Just saving every day on something isn’t nearly as exciting even though the payout is WAY higher. Plus, you don’t really see the benefits of “saving” 1-5% on something unless you’re really super detailed tracking everything and can see the extra money in your account. But again, who’s going to notice $0.60 adding up here and there – not this guy…

  11. I am excited for my cash back rewards for Christmas, this year! After I got out of debt, I got the Chase cash rewards card – sounds like that may be what you have. I use it for absolutely everything and I pay it twice a month when I get paid. There was a nice sigh up bonus and every time I look at it I am glad to have that little buffer growing. Should be about $500. That won’t cover most or even half the holiday expenses but it will definitely help.

    • We have 3 main cards we use, plus the new Costco one. 2 have rotating categories and one is a straight 2% back. It looks like our might be in the $600-$700 range this year. =) That will totally cover our gift budget. But we only buy for a few people outside of family. Other than our family members in their 20’s, everyone else is in that “We already have too much stuff” phase in life.

  12. Oh dear. I am so late to the game. I don’t know what you are talking about with the cash back scenario. I have an Amazon credit card and earn 1% cash back on it, which I use to purchase goods on Amazon. Other than that, I am at a total loss of how this system works.

    Maybe you could do a “Cash Back Rewards For Dummies” article sometime.

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