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Tuesday, July 27

How to Make a Lot of Money Mystery Shopping

Is it possible to earn a full-time living by mystery shopping? How do I make a lot of money mystery shopping?

These are the questions I am asked most often. Let's take a look at my earnings for the first half of the year and then discuss:

2010 YTD Mystery Shopping Earnings
  • January: $926
  • February: $1,510
  • March: $3,294
  • April: $3,632
  • May: $2,136
  • June: $2,090
Total over 6 months: $13,588

I would have made more in January and February but I was also working a full-time job. Something else to consider is that this represents the fees I was paid. I track reimbursements separately. These reimbursements can be valuable. Free gas, groceries, office supplies and restaurant meals are a nice bonus on top of the fee I am paid.

So how do I do it?

  1. If I can justify the fee, I take the shop. I don't discriminate. Sure, there are shops I like more than others. For example, I'm not really crazy about fast food shops. I'm already battling a weight problem, but I also don't like the amount of time they require. I can earn the same amount of money shopping a gas station, which takes 10 minutes, as I can a fast food establishment, which may take 30 minutes to complete.
  2. I set standards and hold myself accountable. My goal is to earn $20 per hour of shopping. This includes travel time. I will take less as needed. If there aren't many shops available or if the reimbursed purchase has value, I will go lower. I keep a daily log to track my activity. It keeps me focused and also helps me spot outstanding payment issues.
  3. I sign up for any company that may have shops in my area. I didn't do this all at once: over time I have discovered new companies to shop. Sure, I have my trusty few that have several national clients. But I also have some that I may only do 1 or 2 shops a month.
  4. I'm not afraid to ask for more. Fee, that is. This works especially well at the end of the month when mystery shopping companies are trying to make their deadlines. I regularly am paid $25-$30 for fast food shops that start at under $10.
Chances are that I will earn around $30,000 in mystery shopping fees this year. This is more like $40,000 in wage income due to the favorable tax treatment of shopping (deductions mean I pay little to no taxes on the income). Add to this the fact that I only pay at fraction of what other people pay for gas, food and household supplies. So yes, you can make a decent income by mystery shopping. You probably won't get rich, but you can certainly do okay.

Monday, July 26

A Week in the Life of a Mystery Shopper

July 18th - July 24th...

Last week I made $594 in fees and $641 in reimbursements.

  • I ran out of gas stations to shop and had to pay for gas. That was disappointing. There might be some this week that I can pick up if the bonuses look attractive.
  • I shopped another nice hotel. It included three meal periods, two bar visits and a coffee shop. Nice change of pace from running around all day.
  • I did several one-off jobs: a "product retrieval" job (I purchased $844 of merchandise that a manufacturer wanted returned - they Paypal-ed the funds upfront), a payday advance loan, three bookstores and several other odd jobs.
I've already been paid for the bus terminal shop I was worried about. That was a nice surprise. This week is somewhat unpredictable. The last week of the month I always pick up bonused shops with end of month deadlines. There's less structure to that.

Friday, July 23

Cutting the Electric Bill - the July Electric Bill

I'm mad as hell. But I knew this was coming. Last month I set a goal of reducing my electric usage by 20% over the next 6 months. I just received my July bill, and am disappointed. I knew I would be disappointed because I've taken a reading from my meter just about every day. I've logged my meter readings in a spreadsheet (yeah, I know I'm a nerd). It was obvious pretty much all month that I wasn't reducing usage.

My July 2010 usage was basically the same as in July 2009. So what happened? I know it was warmer than normal this month versus last, so I did keep my cooling costs in check. What did I do differently? Last year the thermostat usually was set around 78, maybe lower. This year I've set it to 80, and when I'm not home it's turned off. We usually try to wait until 7 PM or so before we turn it on just to eke out every last bit of savings. I also unplugged a few things: we no longer use an alarm clock, and computers are unplugged every night before bed.

For my July power bill, I used 428 kWh of electricity, and my bill was $61.04. In July, 2009 I used 431 kWh and my bill was $65.34. It gets harder in August. Last year I used just 314 kWh, so I can only use about 250 kWh this year, or about 8 kWh per day.

Thursday, July 22

Selling One of the Rental Properties, Part 2

I've never sold a house, so when I decided to do so I figured I would need to invest a little sweat equity into getting it ready to sell. When I turn over a tenant I always fix everything that's broken, clean the carpets, touch up the paint and make it look presentable. But to sell a house, I'm finding there's much more to do.

  • Even though the house is just 4 years old, the last tenants ruined the carpet. I pulled up the old carpet and will have Lowe's install new. Installing carpet isn't a task I'm ready to tackle.
  • Lowe's was able to match the paint on the walls closely so I am touching up rather than repainting.
  • Me and a friend spent a Saturday detail cleaning. By "detail" I mean we scrubbed the oven, baseboards, tile grout, the ceiling fans and everything else that didn't look new.
  • My partner chipped in and did a little landscaping.
My goal is to have the house listed for sale before August 15th. It's been vacant since June 21st, so I'll easily have three months of carrying costs. Fortunately I am keeping the entire $1,100 deposit from the tenants which will go a long way towards new carpet.

I know it's a little unconventional, but my top priority is selling this house fast rather than waiting for the best offer. I won't tell my agent that (!), but I need to move on and focus on my profitable properties. If that means selling it for $10,000 less than I'd like but doing so in 60 days or less, well, so be it. It's time to move on.

By the way, this is off topic, but I'm so proud of my latest feat: I installed my first kitchen faucet. As usual, nothing is ever as easy as it should be when I do it myself, but I saved a lot of cash by not hiring a plumber. This represents a big "x" on my to-do list as I'd been procrastinating on this for almost 6 weeks and my tenant was a little upset about the problems he was having. I spent about 3 hours on this project - much longer than it should take, but a plumber would have charged $100 so my time was valued at $33 per hour. I'm good with that.

Wednesday, July 21

Selling One of the Rental Properties, Part 1

Sometimes you have to come up for air!

That's the way I've felt the last few weeks. July has turned out to be a decent month for mystery shopping, so most of my time has been spent hustling for shops. That's not the only thing I've been up to though.

My big project right now has been getting one of my properties ready to sell. My investing philosophy, one which I so strongly believe in, is "buy and hold". That's why deciding to sell one of my rental properties has been a tough decision. I love the house (I used to live there). It's in a super convenient location, but the schools suck. Where I really messed up is in trying to rent a higher end property. I just can't earn enough rent on it. Consider:
  • I bought a townhouse for about $35,000 that rents for $625 per month. I bought another for around $45,000 that rents for the same.
  • I bought this house for $154,000 and can charge $1,100 per month.
I get more rent for the house, but not the same percentage as I do on my lower end properties. That, and the property taxes and insurance are much higher, making this my only money-losing property out of the 7 rentals I own. My rule of thumb is that I need to earn 1% of the home's cost each month. For that $35,000 home, I need $350 per month. I would need more than $1,500 per month for the house I am selling.

I'm losing $400 per month, so the house has to go.

Tuesday, July 20

A Week in the Life of a Mystery Shopper

July 11th - July 17th...

Last week picked up some - if every week was like that, I'd be a happy camper. Last week I made $747 in fees and $350 in reimbursements.

  • About half my income was from mystery shopping or auditing gas stations. One positive is that here we are, 20 days into the month, and I've basically spent zero on gas. Later this week I will probably run out of my supply though and have to purchase some.
  • Most of the balance was from a merchandising project. These were my regular stores but it involved a "change-out" which meant I spent more time per store and was paid more.
  • One shop I'm a little worried about was a bus terminal. The ticket, which is supposed to be reimbursable, was $101. Unfortunately, due to poor service I ended up having to deviate from my scenario slightly. I will be really upset if I have to eat that cost (I didn't go for a ride so it would be a complete loss if I do). By poor service I mean the wait in line was so long that the original ticket I was going to purchase could not be purchased so I had to change my purchase.
This week will be a little slow because I am doing a hotel mystery shop Thursday night. Most of my time Thursday and Friday will be committed to it. The fee is okay but less than I could make if I was shopping gas stations both days. It's a trade off since I really enjoy these nice hotels, which include meals and drinks.

Thursday, July 15

Mystery Shopping for Free Alcohol

Can I really get free alcoholic drinks by mystery shopping? You bet. But it won't last if you aren't careful. What I mean is, we all know how alcohol affects our alertness, attention to detail and recollection. Imagine having a few too many drinks at a restaurant and then going home to write a detailed narrative about your meal? It's not fun, and even worse if you wait until the next morning when you are hung over.

It's quite common to be required to order alcohol for mystery shopping higher end restaurants, and still fairly regular to have to order at least one drink in casual dining restaurants. One shop I do all the time requires me to order a beer to see if a frosted mug is offered. Others want you to see if the bartender or server asks for ID. Below are the four types of mystery shops I regularly see which require you to consume alcoholic beverages:

Alcohol Compliance Shops
These shops are built around testing the bartender or your server to see if they ask for the identification for anyone under a certain age. Often if you are too old to meet this requirement you are allowed to bring someone with you who does. Usually you have to submit a scanned copy of that persons ID as proof of their age. These shops tend to be the easiest. You get free drinks, free food (sometimes), and the report asks for little more than "pass" or "fail".

Cash Handling Procedures
Looking to get a little tipsy? Like to play detective? Usually these shops require you to drink a good bit, or at least act like you are drinking (I've seen guidelines suggesting you bring your drink to the restroom and pour it out if you don't want it). These are more difficult than the age compliance shops because you've been tasked with a serious job. Basically you are watching the bartender to see if they are stealing. There are different ways a bartender does this: giving free drinks to garner larger tips, overpouring alcohol, or the classic mishandling of cash. You have to be extremely careful - you are making accusations as to the integrity of the employee - accusations which could lead to them losing their job. Stealing cash can be as subtle as putting the money in a tip jar instead of a register, so you are watching to see how the drink was rung up in the first place.

Brand Ambassadors
Bet you didn't know that bars and sometimes even their employees receive incentives for recommending certain brands. That's a dirty little secret. I mean, a drink would lose it's premium appeal if you knew the only reason the bartender was recommending Brand X was not because they think it's better but rather because they get paid to say it's better. Beverage makers pay for product placement (front and center on the beverage wall is prime location) as well as bartenders' endorsement of the brand. To ensure compliance, the brands themselves hire shoppers to act like a regular customer. Last week I did a series of these shops. I had to see where the bottles were displayed, if any tent cards were on the counter advertising the brand, and whether the bartender would freely endorse the brand without being prompted. The shops were easy (I completed seven in one night). The only hard part was that I had to shop a particular bartender. If that bartender wasn't available, I still got paid a fee but my instructions were to abandon the shop.

Restaurant Shops with Alcohol
I saved this for last because these are the most common types of shop. Generally speaking you go to a restaurant and either order a drink at the bar before eating or you order drinks at your table. I'm not a huge fan of the former unless I know the restaurant is going to be crowded and will have a wait for seating. Then I can blend in - having a drink at the bar while waiting for your table is normal. Having a drink and then asking to be seated when there never was a wait is a little weird and might compromise my anonymity. These shops either involve seeing if a policy is being followed (for example, whether a frosted mug is offered with your beer), whether ID is checked when ordering, or it may just be that you are allowed to order an alcoholic beverage with your meal.

If you like to drink but your budget is tight, mystery shopping is a great way to contain your costs. My only advice is to be careful. Obviously you have to be careful if you will be driving from the establishment, but it's also important to take good notes and keep your mind focused on the task at hand. These are fun shops unless yours is rejected because you overlooked the required observations.

Wednesday, July 14

July Goals

One goal I need to set is to set my monthly goals earlier in the month. I do start thinking about what I'd like to achieve in advance, but it takes me some time to sit down and do the math.

I'm going to tread water in June: my expenses will be up markedly and my income will be down some. On the expense side, my annual property insurance is due in June. I pay for all 8 properties at the same time, and since I don't amortize a monthly expense (this would make more sense, but is more complicated than I want my personal finances to be), I'll be taking a $4,000+ hit in June just for this one line item. Second, my tenant for the vacant townhouse backed out on me at the last minute so I had to re-market it. Another property is also becoming vacant later in the month. This is my most expensive property so the loss of income will be significant (more than $1,000/month).

July Goals:
  • earn $3,000 from mystery shopping (last month I earned $2,090)
  • reduce credit card debt and car loan to $38,000 (6/30/2010: $42,291)
  • finish rehabbing one of my properties and list for sale
It was difficult to finally decide to sell one of my properties. I believe in a "buy and hold" investment philosophy, a marriage without the option to divorce. Alas, sometimes change must happen to keep moving forward... more details to come. In July I will clean and repair the house and list it with a realtor.

Tuesday, July 13

Reviewing my June Goals

June wasn't a good month.

June Goals:
  • I earned $2,090 from mystery shopping. My goal was to earn $3,000.
  • I ended the month with my credit card debt and car loan balance at $42,291. My goal was $42,000.
  • I set a goal to start the process of acquiring my next rental property. I made a small amount of progress here... maybe I'll explain in another post.
I achieved 1 of my 3 goals and consider this a failure. I made no meaningful progress in June.

Monday, July 12

A Week in the Life of a Mystery Shopper

July 4th - July 10th...

Things picked up a little last week, but I decided to take a few reimbursement-only jobs in Atlanta so I did not earn as much as I could have. No worries - it was an inexpensive way to get out of town for a couple days. Last week I made $556 in fees and $548 in reimbursements.

  • I visited 29 gas stations! Seriously. Even with a trip to Atlanta, I still have a few 5 gallon gas cans in the garage waiting when I need some gas.
  • I visited 18 stores for my merchandising job. These visits were easy and will be followed up by a second, longer visit this week.
  • I shopped a few retail stores, a few mailing stores, 4 restaurants, and verified the legitimacy of a business.
  • I drank a lot of alcohol last week, and it was all paid for... I'm going to write a post about getting free alcohol by mystery shopping next week, so more on this topic to come.
This week looks to be solid. My merchandising project will keep me busy for the next two days and I also have several gas stations lined up.

Friday, July 9

My Frugal Miser - June Expenses: $4,513

June is the first month in a long time where I spent more than I made. Fortunately the difference wasn't too great. The reason this happened is I paid property insurance in June: I paid over $4,000 in June for insurance.

June Expenses

$659 Auto ($141 for service, $92 for fuel, $273 Depreciation, $153 for speeding ticket)
$14 Clothing
$128 Food (both groceries and eating out)
$65 Entertainment (movies, gambling, alcohol)
$0 Home Repair
$648 Household (pest control, fire dues, cleaning supplies, etc.)
$107 Health Insurance
$660 Homeowner's Insurance (annual expense)
$30 Medical
$0 Vacation
$294 Interest on Debt (not including Mortgage Interest)
$0 Miscellaneous
$444 Mortgage Interest (primary residence)
$830 Mortgage Interest (rental properties)
$0 Personal Care
$135 Taxes
$214 Utilities

Total June Expenses : $4,513


  • Thanks to mystery shopping, I only spent $92 for fuel.
  • I separate my mortgage interest by personal residence versus rental properties. I think this is an important distinction: the personal residence interest is an expense I should exercise control over moving forward when looking at ways to be frugal; the other is an expense that generates income.
  • The $153 for the traffic ticket represents court costs and driving school. The ticket was dismissed.
  • The household expense was higher than normal. I bought a couch at IKEA (no more sitting on the floor!), purchased some Free With WorkPlace Rewards products from Office Depot, and bought a few things I'd been putting off like belts for my vacuum cleaner.

Thursday, July 8

My Frugal Miser - June Income: $3,858

June was okay but not spectacular. Because I don't amortize periodic expenses (insurance, taxes, etc.), from time to time my income takes a big hit. In June I paid property insurance. I recognize the insurance on my residence as an expense but offset the cost of insurance for my rental properties against my rental income.

June Income
$1,972 Mystery Shopping*
$219 Rental Income
$1,667 Other Sources
$3,858 Total Income for June
*note that the mystery shopping income will always vary from the monthly summary amounts I post. Here I report actual payments received (cash basis accounting) whereas in my monthly mystery shopping update I report the amount I earned for that month.


  • My most expensive rental property is now vacant. The tenants paid the June rent late, so it will be reflected in my July income.
  • The category "Other Sources" includes non-recurring (or semi-recurring) income since I always seem to have a little something that doesn't fall into the other buckets.

Wednesday, July 7

A Week in the Life of a Mystery Shopper

June 27th - July 3rd...

June was a slow month, and this last week of the month did not improve. I guess it could be worse: last week I made $393 in fees and $292 in reimbursements.

  • Wednesday and Thursday were extremely slow: I did one business verification on Wednesday and one restaurant on Thursday.
  • I merchandised 7 stores including 3 where the company really screwed me. I was paid $8 per store for a project that was supposed to take 45-60 minutes. Instead of 3 hours at $8 per hour, I worked over 6 hours at less than $4 per hour. Lesson learned: unscrupulous merchandising companies can get away with this because their reps are independent contractors, not employees.
  • I shopped several gas stations, a few retailers and a couple restaurants - nothing exciting.
This week is busy so far - as expected. I'm doing several gas stations, mailing centers and a 20 store merchandising project. I'm optimistic that July will be a really solid month.

Tuesday, July 6

Vehicles and the True Cost of Ownership: How Much is My Car Really Costing Me?

In May I started tracking vehicle depreciation in my monthly expenses. At the end of May my odometer showed 23,120 miles. I ended June with 26,277 miles.

Each mile costs $.0867 in depreciation, and I drove 3,148 miles. For June, my vehicle depreciation expense was $272.93.

I made a special effort this month to reduce the miles I put on the G5. I would have driven more miles but instead I swapped cars with my partner and drove the Corolla during the last 10 days of the month. The reason I did this was to defer servicing the G5 in June. I've already written off much of the value of the Corolla in Quicken so I do not take a depreciation charge on its miles each month. Instead I deduct a certain amount every six months from its value.

Friday, July 2

My Frugal Miser's Best Advice I've Received - Go With Your Gut and Selective Procrastination

This advice is something I've learned from listening to mentors like Buffett but not necessarily something I've heard them come out and say.

One of the traits my friends are always surprised by is how quickly I make decisions. I'll never forget when I went into the D.R. Horton design center to choose the customization options for my house. The design consultant told me I was the fastest appointment she ever had. It's not that I didn't care about what color my walls were or the design of my cabinet handles. It's just that I learned to go with my gut.

95% of the time, when you go with the first decision that comes to mind, you'll be making the best decision. I've spent too much time - agonizing time, mind you - watching acquaintances, business associates and family fill out spreadsheets, seek expert advice, etc. to make a decision about something.

The question I ask myself when making a decision is "What's the worst that will happen if this decision isn't the best one?" Often, the consequences are minimal. If I have to choose between six neutral paint colors for the walls in my house, why spend half an hour debating the merits of one versus the other - that's 30 minutes of my life I don't get back. Instead, my gut tells me what to pick. Go with it and don't look back.

Now, there is a time and place for procrastination. This is especially true with large purchases where I need to do something but don't have to rush. In this case, I want to get a great deal and I want to buy a quality product. For example, one of my rental properties has a dishwasher with a very small leak. The door gasket is bad. First, I found out how much it would cost to simply replace the gasket. Since the dishwasher is several years old, I had to consider how long it would last if all I did was replace the gasket. And, since the tenant is okay with it in its current condition, I can take my time. Instead of running to Lowe's and buying a replacement, I first found out how much it would cost to replace the gasket. Then, once I decided it was not worth replacing just that part, I decided to start looking at replacements. I have a base price for what it will cost, but now I can take my time to find a better deal, whether it be a cheaper dishwasher, a special discount on delivery, or an energy-efficient rebate.

In the case of the dishwasher, I am deferring a purchase where the cost of deferral is zero - the existing unit isn't damaging my property and isn't causing too much pain to my tenant. But in the case where there is a cost to procrastinating - wasted time, effort or risk of higher costs - I will go with my gut and do what comes to me first.

Thursday, July 1

My Frugal Miser's Best Advice I've Received - Pragmatism

The best way to define pragmatism is to be practical. When you find something that works, keep doing it. If it ain't broke, don't fix it!

I have a theory that CEO's often try to justify their extravagant compensation by thinking up the next "new and improved" idea. At my J-O-B, one of the few complaints I had was that as soon as we got good at something, one of the team leaders, usually the CEO or VP of Marketing, would decide we needed to change things. Don't get me wrong - I am always looking for ways to improve. What I mean here is, you should find what you are passionate about and become an expert at that. Keep doing it, over and over again, until you are the absolute best at whatever it is you do. In other words, don't strive for being adequate and then move on to the next challenge. FOCUS. Be the absolute best you can be.

One of the goals I set for 2010 was to reduce the amount of stock trades I placed. Warren Buffett talks about having "20 punches" - look at every investment as though you can only make 20 investments over the course of your lifetime. By thinking this way, you spend more time making sure the investment you are about to make is the right one.

This is such an important trait, one that is lacking everywhere. Remember New Coke? Coca-Cola made the fatal decision to replace its classic formula with a new and improved one, only to drop the new formula after many consumers protested. Manufacturers of disposable razors invest hundreds of millions of dollars in rolling out new razors with more and more blades. Does a five blade razor with a special soothing moisturizer strip and hydro-power really make that much of a difference? Is it that much better than its four blade, or three blade, or TWO blade predecessor?

For me, I want to constantly improve on something I know works. For example, I know I can earn a living by mystery shopping. Instead of searching for other forms of income, I am working on ways to make more money by shopping. I am creating data entry templates for shops I do in quantity to cut down on paperwork time, and I am networking with my schedulers to make sure they think of me when deadline shops are being bonused. Similarly, instead of searching for my next brilliant stock investment, I study the stocks I already own and allocate my money to the companies I feel best about.

I think we as consumers are often trained to think "new and improved" is always better than "old and works". In fact, this emphasis on change is often brought about by companies looking to one-up their competition on a vicious cycle of mediocre improvement, or worse, is a quality encouraged by the companies that are compensated by change. E*Trade only makes money off me when I place a trade, so naturally they would love for me to be a day trader. Fortunately, I know this is a get-poor-quick scheme, something I can live without.