Closing Out a Crazy Busy Month

I never guessed I would have so much mystery shopping work this month.  I have worked almost every day.  The pay has been mediocre so I haven't set any records for income this month, but I'm not complaining.  Tomorrow I am staffing an evening meeting, plus I am returning some auto parts (a purchase then return mystery shop), and possibly visiting some bank branches, depending on how much time I have.

February was the first month I have done vehicle negotiation shops.  These are different than the standard car dealership jobs where you go through the sales process.  I am not rating the salesperson; I am strictly there to negotiate the lowest possible price I can on a specific vehicle.   In a way it is nice - no test drive, no sales presentation - and most of the time is spent in the dealership going over numbers.  The pay is better, too, but it does require two visits, which limits my ability to shop out of the area.

In less than a month we leave for my Hawaii mystery shopping trip.

Towing My Chevy

Part 2 goes something like this:  I toss and turn all night while trying to sleep in the S-10.  At one point a police car is sitting in the entrance not far from me with his headlights pointed in my direction.  I thought for sure he would ask what I was doing, but after about an hour he left.  Go figure.

I woke up and, on a whim, cranked up the truck.  It purred.  Since there was a McDonald's not far away and I wanted to take a bird bath and change clothes, I went there.  Then I decided to just start my route and see what happened.

I completed the route with no problems at all.  There was roughly 275 miles from my last stop to the house.  With about 120 miles to go, the truck starts acting up.  I would be holding down the gas pedal, but all it would do it stop and go.  Believe it or not, I made it another 32 miles like this, with the last stretch spent driving in the shoulder at 10 mph.  I swallowed my pride and called AAA.  Hey, that's what they are for!  Two hours later the driver dropped me and the S-10 off at my mechanic's shop.  I walked the mile or so home.

Now, if only those 22 reports would magically enter themselves, all would be fine!

Sleeping in my Chevy

After a long 17 hours of work, I have resigned myself to resting in the S-10 for the night.  Today I completed 23 gas station audits and I have 22 remaining to complete this massive route.   A couple of times this afternoon the truck started hesitating when I would accelerate.  As I headed to my last stop of the day, the engine shut off when I started to accelerate from a red light.  There was some popping sound from beneath the hood, too.  Sounded scary.  I was able to start the vehicle back up and when I made it to my last stop I bought some fuel injection cleaner.  I have no idea if that will help, but I made it one mile further to the Chevrolet dealership.  It was closed, but I found a parking space in front of the service center and am camped here for the night.

I am debating whether I should try to finish my route tomorrow and try to drive home, or if I should have the mechanics evaluate the vehicle.  The safe thing to do would be the latter - I'm already in the parking lot so no risk of breaking down.  But I am sure they will charge a diagnostic fee of nearly $100 just to tell me what the problem is.  I could take my chances and hope the fuel injection cleaner did the trick.  My route is in a dense area spanning from West Palm Beach to just north of Fort Lauderdale.  That's good since help will always be near; not so good that I will be navigating traffic in a truck that is acting up.

Ever the frugal miser, I am sleeping in the truck tonight .  It isn't the perfect setup - I can't lie flat so I won't sleep very well.  But when I looked at hotels, the cost of one night was going to be almost as much as I earned today.  Truth be told, I was already debating sleeping in the truck before it started acting funny, which is why I did not book a hotel room.

My Frugal Miser - January Income: $7,773

All of my rental properties were occupied in January; however, the management company figured out a way to make sure I received no rent from the two townhouses that rented at the beginning of the month.  These properties have become a money pit ever since I turned them over to "professionals."

Mystery Shopping income would have been higher.  I deduct expenses from income.  I booked the two flights to Hawaii; $1,200 was deducted from income and likely won't be reimbursed by the company until April.

January Income $7,773

$1,229 Mystery Shopping
$6,528 Rental Income

$16 Other Sources

Notes:.  

• I don't include transactions in my retirement accounts.  This includes rental income, dividends and capital gains and losses.
• I include merchandising and hospitality work in the mystery shopping category since the companies that I shop for provide this extra side work. 

My Frugal Miser - January Expenses $2,215

Starting this month I am going to entirely exclude rental property expenses from this report.  I have a goal in 2014 of spending less than $20,000 and I want to make tracking it nice and easy.  I plan to provide details about my rental property business in a separate posting.

I need to average $1,667/mo. in spending to meet my 2014 goal of spending $20,000.  In January I spent $2,215.  I spent too much in the Vacation category.  A large part of the $991 here was to settle a dispute I had with Fox Rent-a-Car.  Last year I rented from them and the car broke down.  The company said there was water in the fuel line.  Since the car was in my possession, I was held responsible for the damages (even though I have no idea how this occurred).  The balance in the Vacation category was for the non-reimbursed portion of our flight to Hawaii.  I am shopping two timeshares there; about 2/3 of the airfare will be paid by the mystery shopping company and I am responsible for the balance.

My insurance will be higher after January.  Due to mistakes my insurance company made associated with Obamacare, my health insurance was retroactively canceled and I was forced to select a new plan, which did not take effect until February 1st.  I am not receiving a subsidized plan; it's simply a mistake the insurance company made.  January was a stressful month as I was so worried about being without insurance.

Moving forward, business expenses will be reported in a later post.

January Expenses:  $2,215

$141 Auto (all for fuel)

$0 Bank Fees
$17 Clothing
$0 Computer
$60 Entertainment (movies, gambling, alcohol)
$186 Food
$0 Gifts Given

$655 Household/Housing/Home Repair
$24 Health and Dental Insurance
$0 Investment Expenses

$65 Medical/Dental
$0 Miscellaneous
$2 Personal Care

$0 Subscriptions
$0 Taxes

$74 Utilities
$991 Vacation and Recreation

Feeble Minded Mystery Shoppers Bring Everyone Down (Part 2)

Scale Used by the Pennhurst School in the early 1900's

Do you accurately value the cost of your time and the overhead of running your mystery shopping business?

Most shoppers do not.  On the whole we have little experience running a business, so we tend to compare the pay we are offered for a doing a shop to the hourly pay we would get at a regular job.

The problem with this is that 1099 (independent contractor) work is not an apples-to-apples comparison to the traditional W-2 employment arrangement.

Let's take a look at what one might expect as an employee for a convenience store.  I looked at Glassdoor.com to find out what an average store employee earns and then checked out the benefits section for a couple of different C-store brands:

Average Hourly Rate:  $8.23/hour (it's important to note that a revealed auditor would likely be equivalent to a more senior position than this "cashier" position.  For perspective, the average pay for an assistant store manager is $10.17).

Benefits:  Health, Dental, Vision, Life Insurance, Flexible Spending Account, Paid Vacation, Paid Holidays, 401(K) matching retirement plan.

As an employee, the company you are employed by also pays 6.2% of your pay in FICA (the employee pays 6.2% as well, so 12.4% of your compensation goes to this government program).  The employer pays for unemployment insurance, too.  The employee does not see this, but it is a real cost for a program that will compensate the employee if they lose their job through no fault of their own.  Additionally, most employers pay mileage if an employee is asked to work at a location different than their home store.

According to the Bureau of Labor Statistics (http://www.bls.gov/news.release/ecec.nr0.htm), in the private sector "Wages and Salaries" average 70.3% of total compensation; "Benefits" average 29.7%.  So, in reality, that clerk who is paid $8.23/hour is actually receiving close to $11.71/hour in real compensation including benefits.  The assistant manager earning $10.17 is receiving $14.47/hour.

But we can't stop here.  Before the mystery shopper can even consider his fee as compensation, he must first deduct his business expenses from the fee.  Remember, as an employee, your employer pays you when you are training.  Once you arrive at your job, your vehicle is no longer costing you anything to operate.  If paperwork has to be generated or computers and office equipment consumed, the employer is paying those expenses.  As contractors, we are paid by the job.  Training, getting there, supplies (for printing paperwork, entering reports, etc.), the risk of non-payment, time spent searching for new jobs, downtime, insurance, etc. are all our responsibility.

Real Life Example

I was recently offered a route of 70 gas station audits.  The mystery shopping company limits the work on these routes to 20 jobs per day.  The jobs were spread out, some as far as 170 miles from home.  I could either complete 20 jobs and return home, thus adding mileage to the route, or pay for a hotel for three nights (which assumes I completed the job over 4 days, the minimum required by the company).  Forget the hotel, let's go with mileage:  I estimated I would have driven 900 miles to complete the route.  At $.56 per mile, my vehicle would cost me $504.  This includes gas as well as a portion for future repairs, the wear and tear on my vehicle, and insurance.  Other expenses I would be responsible for include tolls and providing my personal camera, an SD card, a computer, Internet access, and electricity.  I am also required to wear business casual clothing.  I will assume I work 12.5 hours the first three days and 7.5 hours on day four (includes travel, time at store and time entering reports at the end of the day).  As if that weren't enough, the company requires me to make a purchase at each location (to generate a receipt) which would not be reimbursed.

My Overhead and Salary

$504 Vehicle Cost
$70 Unreimbursed but Required Purchases
$20 for Miscellaneous (a nominal figure for tolls and use of my personal equipment and utilities)
$527 Salary ($11.71/hour, 45 hours)

Total Overhead and Salary Cost:  $1,121 ($16 per location)

Actual Compensation:  $490 ($7 per location)

Were I to accept this route, I would undoubtedly lose money.  There were four routes offered in Central and South Florida; all were assigned within 24 hours of being offered.

Feeble Minded Mystery Shoppers Bring Everyone Down (Part 1)

Scale Used by the Pennhurst School in the early 1900's

Question:  Will higher pay deliver higher quality work?  If I offer $20/hour to fill positions at Home Depot, will I attract better employees than if I offered $8/hour?  Of course I will!

Recently I have been frustrated by the decrease in compensation for some mystery shopping projects.  This deflation in the fees offered for work is troubling for several reasons.

Most of the time I am an advocate for supply and demand, even when it doesn't benefit me.  If someone else is willing to accept work for a lower fee than I will, let them have the job.   The caveat to that is that normally, someone accepting a lower fee will provide lower-quality work.  Over time this causes clients to doubt the veracity of the work performed.  Inevitably, the value of mystery shopping declines, leading to even lower fees or in some cases, clients cancel their mystery shopping program altogether.

Last month a major gas station brand moved to a new mystery shopping company.  The brand has a revealed mystery shopping program.  This is where, after covertly evaluating the customer service that was provided, the shopper reveals her identity to the employee and proceeds to evaluate the location and take several photos of infractions.  Having completed over 10,000 gas station audits, I think I am qualified to speak to the level of difficulty these jobs entail and the potential for inaccurate reports.  For an average shopper, a well-run gas station which receives a perfect score might take 15-20 minutes onsite and 10 minutes to report.  A poor-performing location takes much longer, probably twice as long, to properly cite all the infractions.  The greatest downside to underpaying shoppers is the likelihood for positive bias.  In other words, if you pay a shopper $7 to do a $20 job, they will either quit after realizing they are doing a $20 job for $7, or they will adjust their efforts to make it a $7 job (if that's even possible).  The shopper will speed through the evaluation, overlooking those things that they can overlook.  The client misses opportunities to improve its operations.  What happens then?  Eventually, customers migrate to competitors who have cleaner, friendlier establishments.

I don't think most shoppers take these low-paying jobs realizing just how bad the compensation is.  They fail to understand the true cost of their overhead and don't place appropriate value on their time.  My next post will focus on the true cost of doing mystery shopping work.