“Free” Money!!!?

There is a saying, “There’s no such thing as a free lunch.” There is [almost] always a catch. Sometimes the catch is just listening to something. Sometimes a contract may be involved. Sometimes you might have to pay later or get something, for which you weren’t planning. Sometimes you may be compromising your values. Sometimes you may even be enabling others’ bad behavior. Sometimes there may be missed opportunities. Sometimes you may be paying for something “free” that you may never get.

I’ve had some experiences recently with “free” things. And I have some thoughts on “free” things that I haven’t experienced, but I’ve heard about. I don’t mean to be preachy or to tell you what to do, but I want to share my thoughts. Hopefully you will consider them. There are different kinds of “free” that you may encounter out there in the world. I may not cover everything, but here are a few thoughts.

One kind of “free” is where you get something free for something else (time, buying something else, signing a contract, etc.). Sometimes you can come out ahead by listening to the sales pitch and sticking to your “no” answer (though that seems to be taking advantage of them), but hey, they tried (and failed). Other times you may find yourself getting burned.

Dave Ramsey talks about college students getting free pizza and getting sucked into signing up for credit cards. I’ll bet the interest they are paying could have bought many pizzas. Talk about getting burned just because of hunger. It reminds me of a Bible story, in which Esau sold his birthright (the rights he has by being the oldest) to his younger brother for some soup because he was famished.

Recently I was sucked into earning “free” bitcoins. Being a nerd (curious about bitcoins a they were new to me) and a financial nerd (and I probably had some greediness going on too), I wanted to get some free bitcoins and see if they would increase in value. I found a site that had links to various other sites which gave out free bitcoins. I watched several videos, entered tons of Captchas, and earned under a quarter of a dollar. Yay?!? My wife and I figured out (about the same time) that I was putting in a bunch of time for very little payback. Who wants a job earning $0.10/hour entering Captchas? All the while part of me wondered if some of the sites might have been “mining” Captcha results to build bots or something (hopefully not, but you have to wonder). Oh well, we’ll see what happens to my $0.25.

A similar, but different, kind of free is coupons and sales. Like “BOGO” (buy-one-get-one[-free]) sales. It can be easy to get sucked into those and then buy more that you were planning. On the other hand, when you were already planning on buying 2, it is a great deal. Use the deal, don’t let the deal use you (that sounds like a Dave-Ramsey-ism).

Another kind of free that I find interesting is scratch/lottery tickets. I think it may be possible to win big, but most don’t and you can sink a lot of money in the quest to win big. You may win little payments and even some biggish payments, but you will likely put more in that you get out. Sometimes I toy with it and want to buy the occasional ticket or two, but I haven’t yet. Dave Ramsey told about how people spend hundreds a month on lottery tickets and get nothing (or if they win big, it ruins their life). College educated people spend about half of that (on average) – that should tell you something. I just found some statistics and you are more likely to die by electric chair than win. However if you even just put the money in a savings account, you will for sure win there (just not as much).

I think gambling (such as at casinos) results in a similar situation. I’m not going to say you are evil for gambling or buying tickets, but I advise against it. It doesn’t make financial sense to me. I think it would be better to get your thrills in other ways.

One last bit along the lines of gambling. I’ve been hearing about micro auctions (I’m not sure the exact term), where basically you can get an iPad for $25 and the auctions start out at a penny. I did some research into one such site because I wanted to “get the cheap things” (I just made that up). Yes, sometimes you can win expensive things for very cheap, but most people don’t (or don’t understand how). Basically, the advice I read -and would follow if I ever try- is be prepared to pay full price. You may win big, but don’t quit too early. Be willing to go all the way.

The core thought here in all these situations is to consider carefully what you may be giving up in return for “free” and know how valuable the “free” is. It may cost you more that the “free” is worth. I’m a big fan of working hard. Sometimes you can get things for free or easy, but there are great risks involved. I probably swing too far on the minimize risk side of things (and am a bit of a control freak). You may be more adventurous than me and that’s fine. So take your risks, but know the possible consequences in addition to the possible rewards.

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