To Warehouse Club or Not? That IS the Question! (Part 1)

May 23

Image sourced by Omar Abascal @omarabascal

If you’ve been following Budget and Grow Rich®, you probably recall that I live alone most of the time and my children are living on their own.

So warehouse club membership didn’t seem to make much sense.

Although, I just met a great woman on Bumble. Fingers crossed.

But last year, Costco Wholesale Warehouse Club included a flyer in Val-Pak® mailer, offering a $40 coupon off a Costco Executive Membership or $20 off a Costco Gold Star Membership.

So I figured I’d tempt fate and become a Costco Executive Member. Why not.

The membership offered two cards so I gave one to my fave middle child Rita.

$120 minus $40 equals $80 net cost.

Plus 2% back on our purchases.

What’s more, there’s a Costco Wholesale warehouse ten minutes from my house.

Seemed enticing enough, at least at the time.

At the end of the year, I received a Costco rebate check for $14.54. Woo hoo.

Based on the math, my annual Costco rebate was far less than the cost of my Executive Membership.

To recover the cost of my membership, I would have had to spend $4,000 – that’s $80 divided by 2% (0.02).

In other words, given my purchasing habits, my Costco membership well just didn’t pay out.

This blog post focuses on Costco but the dynamics are the same for BJ’s Wholeseale Club and Sam’s Club.

And they recently raised the Costco warehouse club annual membership fee to $130 for the Costco Executive Membership, raising the breakeven spending requirement.

Although their prices are very attractive.

And I understand that the Costco Travel Agency offers great deals on vacations and travel.

And Costco’s pharmacy and eyeglasses department offer attractive savings too.

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Last month, I drove over to my local Costco to spend my Costco rebate check.

I strolled the aisles to pick up some food and supplies at warehouse prices.

Frankly, I find warehouse clubs to be overwhelming and very time-consuming. The checkout lines are long. And it’s kind of a zoo and the parking lot is insane, imho.

I don’t visit Costco often enough so find it difficult to find what I need. I seem to end up cruising the aisles, almost stumbling on what I need or want and stuff I don’t really need. Very inefficient and time-consuming.

That day I was looking for a household cleaner which would cut grease and grime from the kitchen countertop and the like – hence the selfie at the top of this blog post.

Alas, the caption ‘4X Grease Cutting Power®’ grabbed my eye; but Clearly, I missed the other label ‘Dishwashing Liquid’. Oh well.

Needless to say, when I got home I discovered the error in my ways.

I thought about giving the bottle to my neighbor, but figured I would return it to get a store credit. But that took time because I hadn’t planned on returning to the warehouse club right away. That line was a good 10-15 minutes long too.

After this experience, I switched (downsized) my Costco Membership from ‘Executive’ which costs $130 per year to the Costco Gold Star membership which costs $65 per year.

But with the Costco Gold Star membership, they don’t offer a rebate on your purchases.

So, to break even – recover your annual membership fee – you would have to save enough money on the items you purchase.

I’ll have to see how this year goes. . .

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The decision to join a warehouse club or not depends on your monthly spending, eating habits and the number of people in your household, especially growing, hungry children and young adults.

Under the right circumstances, a warehouse club membership can save you bank!

But you have to do the math and monitor your spending vs. savings.

Next week, we’ll evaluate the costs and benefits of joining a warehouse club. Stay tuned. In the meantime. . .

To Save More Money on Groceries Every Day – click here.

See you next week.

Arthur V.

Disclaimer: OH and Please Remember, we are Not financial advisors, financial planners, attorneys or accountants and are Not providing any specific financial, tax or legal advice here. Be sure to conduct your own due diligence and consult your own professional advisors to get sound professional advice that’s specific to your financial and personal circumstances, risk tolerance, time horizon and investment goals and objectives among other key factors!