The Weekly 6 - The Plus Side of Buying Generic

Save  $5 a day, or $150 a month, for 30 years — earn 10 percent on it — and you'll end up with a nest egg of $342,000. Would that make a difference in your life? (By the way, if you're wondering how the heck you can make 10% on your savings, you can't — at least without risk.

The tricky part is saving that $5 without sacrificing your quality of life. And one of many ways of doing that is to pay for name brands only when name brands make a difference. Sound obvious? Take a quick stroll around any grocery store and you'll see that it must not be at all obvious, because the shelves are stuffed with products that cost extra — sometimes a whole lot extra — in exchange for nothing more than a name.


Check out this list — it's amazing that people will pay this much extra for substantially identical products, presumably simply because some commercial told them to.


1. Pain relievers and other over-the-counter medications

Acetaminophen — the active ingredient in Tylenol — is available in many generic products. Note that the generics aren't similar: they're identical. Why would you ever pay more for an identical product? This also applies to everything from cold medicine to eye drops — virtually every over-the-counter medication. The labels are right there — read them.


Name-Brand Acetaminophen: $10.99
Store-Brand Acetaminophen: $6.99
Difference: $4.00 (57 percent)


2. Water


The gallon jug from Crystal Springs is not noticeably better than the your local store brand.


Name-Brand Water: $1.25
Store-Brand Water: $.85
Difference: $.40 (48 percent)


3. Milk


I'm sure there are connoisseurs of moo-juice that could distinguish name-brand milk from store-brand


Name-Brand Milk: $5.45
Store-Brand Milk: $3.39
Difference: $2.06 (60 percent)


4. Margarine


It's already a substitute for butter. Is it really going to negatively impact your quality of life to substitute the substitute?


Name-Brand Margarine: $1.79
Store-Brand Margarine: $1.19
Difference: $.60 (50%)


5. Bleach


You're taking a cup of chlorine and adding it to gallons of water in your washing machine. How could any TV commercial possibly convince you that a brand name will make your clothes come out better?

Name-Brand Bleach: $2.25
Store-Brand Bleach: $1.67
Difference: $.58 (35 percent)


6. Cleaning Products


Is the name brand getting your counter that much cleaner?


Name-Brand Cleaner with Bleach: $3.29
Store-Brand Cleaner with Bleach: $2.39
Difference: $.90 (38 percent)


7. Spices


Can you tell your oregano from mine?

Name-Brand Oregano: $5.48/oz.
Store-Brand Oregano: $1.24/oz.
Difference: $4.24 (342 percent)


There are literally hundreds — if not thousands — of examples of people routinely swapping hard-earned cash for something virtually worthless: a name brand. It happens in the grocery store, it happens in the clothing store and it happens at the car dealer. It happens everywhere.


Am I saying that name-brands are never worth the money? Of course not. I can tell the difference between Dunkin Donuts coffee and store-brand — that's why I pay extra for it. But I certainly can't tell the difference between brands of oregano, bleach, orange juice, bananas, cheese, spaghetti, flour, sugar and a plethora of other products.


Paying extra for name brands that don't offer higher quality in return is nothing less than stupid. If you can use that money to instead build a $342,000 nest-egg, you absolutely should. Even if you don't need the money, maybe you should still refuse to do what the commercials tell you and donate the difference to charity. In either case, the world ends up a better place.


Excerpt: Stacy Johnson, MoneyTalksNews.com