Yes, Amazon Prime can also be a tool to your Financial Independence

disclaimer: The article below contains affiliate links to Amazon. If you purchase through these links, you don’t pay anything extra but I get a small commission. Independently, the recommendation below is genuine, and I have been a satisfied Amazon Prime customer since 2012. I also intentionally did not publish this on amazon Prime day to be clear that the main intent is not to drive affiliate commissions here.

Interestingly, when MrMoneyMustache talks about how his Costco membership saves him 41% in groceries, nobody seems to question it. Try, however, to mention you’re a huge fan of your Amazon Prime membership, and see how mad people in the personal finance blogosphere can get. According to some, Amazon is here to get your hard earned cash and sell you “junk” you don’t need.

Yesterday was Amazon Prime Day, and the “Prime haters” were pretty verbose on finance sites. For me, I enjoyed Prime Day by buying two things that had been on my buying list for a very long time, specifically a recent PS4 video game (75% off) and a board game for us and the kids. It is likely I’ll be able to resell the game for a profit on either eBay or Amazon after I complete it. And yes, I have to admit I indulged into one unnecessary purchase: 112 Ounces of Haagen Dazs ice cream (8 buckets, 14 Oz each) for $10 on the Prime Now app. Total cost for me: $49 instead of $132. And I should be able to get half of that money back when I resell the video game.

Basically Prime Day actually had good deals for people who knew what they wanted and were able to restrain themselves on purchases they wouldn’t have done otherwise. The question I ask myself is simple: Would I buy that product at full price anyway? If the answer is yes, I jump in.

What I bought doesn’t really matter, and those things might sound like un-necessities to most of you. But my point is, if used correctly to buy the stuff you actually need (or really want), Amazon Prime is a tool that you can leverage at your advantage. But just like credit cards which lots of personal finance bloggers use for points or cash back, it’s a double-edged sword. If used incorrectly, it can be bad for you, but within your overall financial strategy, Amazon prime makes sense.

For our household, Prime Video alone makes Amazon Prime worth the cost: We cancelled our Netflix subscription in favor of Amazon Prime. If Amazon Prime did not offer video, we would have a Netflix subscription (we don’t have cablle). Other benefits are icing on the cake, but we use them aggressively to get as much as possible out of the subscription.

Of course Amazon Prime is designed in a way for Amazon to get more of your business. This doesn’t mean it can’t be a win-win situation. What it means is that Amazon is trying to take your business away from their competitors, not necessarily that you have to buy sh!t you don’t need. For example, our daughter needs diapers no matter where we buy those. We compare the prices diligently, and buy on Amazon when it makes sense to us from a cost perspective.

Memberships and repeat subscriptions are not “evil” per se, but they need to be closely monitored. After a few years, it’s easy to be in a “repeat” routine and renew the subscription even though you’re not using it that much anymore. To prevent that, I intentionally make my Prime subscription not-renewable with this simple “trick”: I email myself the “gift of prime” (a non-renewed one year subscription) per opposition to “subscribing to prime”. Technically it’s the same, but my prime membership is not tied to auto-renewal. I’ve gone as far as buying it with a gift code rather than my credit card to be sure it won’t be auto-billed. Another way is to make sure you disable the auto renewal in your Amazon prime settings.

This technique, by the way, also lets you squeeze even more value for your money: at the time of renewal,  you’ll only need to renew at the exact time you actually need the service again, which means you won’t have to pay for it for a few weeks when you’re not using it (e.g. if your prime subscription ends on July 4, and the next time you actually need something shipped is August 4th, you’re saving one month)

Again, what matters is to take into account all the benefits from Amazon prime and see which ones you’d use anyway (from them or a competitor), and if it all adds up for you. In our household, the video benefit makes it a no brainer compared to Netflix’s price ($99 for amazon prime vs $119 for Netflix). Events like Prime day and other benefits for Prime customers ensure we don’t only get “fair value” from the prime subscription, instead we completely abuse it and feel we’ve made a great deal. We like it, and Amazon likes to get our business: it’s win-win.

If you’re not one of the 50 million people who already have a Prime membership in the US, they have a 30 days free trial.

3 Comments
  1. The Green Swan
  2. Mr. Tako @ Mr. Tako Escapes
  3. Brian Lund at Measured Money

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