If you’ve been reading my newest blog, No. Calories Needed, the you know that I recently joined a local gym.  (And if you haven’t been reading my newest blog, get to it!  You know you want to!  See if I can do with my fat what I did with my debt.  Get rid of it!)  The gym offers a discount if you sign up for a monthly “bank draft”.  The regular monthly fee is $35.  The discounted fee for a “bank draft” account is $31.  Over the course of a year, that’s a savings of $48, so I signed up for the monthly “bank draft”.  Today, however, while I was checking in at the counter, I noticed that there was an ADDITIONAL sign-up option.  If I prepaid for a year, I could get a monthly rate of $29.  Over the course of a year, that’s an additional savings of $24.  I’ve just run the numbers and I’ve decided to prepay for the year.  Here are the reasons:

1. The obvious reason is the $24 discount.
2. If I put $372 in a savings account ($31 x 12) at 5%, I could make $18.60 in interest in a year.  That amount is LESS than the $24 discount, so the discount is a good deal.  (Plus, the $372 would be reduced every month, and the actual interest earned would be less than $18.60)
3. I don’t particularly like to give access to my checking account.

Of course, if I prepay, I’m STUCK with a solid year of gym membership.  I’m actually using this to my advantage.  I’m so cheap, that I will probably continue to go to the gym for the entire year, if only to “get my money’s worth”.

If you are offered a discount for prepaying, consider the following:

1. Is the discount MORE or LESS than I could earn in interest?
2. Will I actually use the service for the ENTIRE time for which I am paying?
3. Can I get the discount even if I don’t prepay?  (In other words, ask the people offering the service if you can get a discount for using cash, etc.)

Oh yeah, for those of you who were wondering, I will be paying for this membership with money that I made this month from eBay sales.