Living Social & Groupons: New Ways to Save or Spend More?

Julie Ryan Evans

saving moneySites like Groupon and LivingSocial are all the rage right now, and in theory, they're a great way to save money.

If you're not familiar, here's how they work: After signing up, you receive a daily e-mail with savings at businesses in your city. The discounts can be big -- 50, 60, even 75 percent off at various restaurants, salons and attractions. Who wouldn't want to save like that, especially in this economy?

The problem is one can get so excited about saving, that you forget you're spending ... and not on things you necessarily need. It's not milk that's 75 percent off.

For example, I live in the Orlando area. My LivingSocial deal today is a spa package including a manicure, pedicure and facial for just $60 -- a 50 percent discount off the original  price of $120. What a deal, and my finger is itching to hit buy. But I wasn't really planning on getting any of those services, so am I really saving $60 or spending $60? I guess you can spin it either way.

At Groupon, I can get a 16'' x 20 '' gallery-wrapped canvas for $45 -- a 65 percent savings! I've never really thought of getting a photo gallery-wrapped, but one really might look great on that wall above my couch ...

Some are great. There was the Nordstrom Rack deal where you got a $50 gift certificate for $25 -- perfect for holiday shopping; and when you can eat at a restaurant you frequent often for half price, that's great. It's just all the other temptation against which you have to stand strong if you really want to save.

There's also a competitive element egging you on as the time left on the deal clicks menacingly on the screen, as do the number of people who have purchased it and the number of deals left. If all those people want it, surely I must too!

And clearly people want these deals as these companies are hot. recently led a $183 million investment in Living Social. Groupon recently turned down a $6 billion deal from Google. This is a booming business. Hopefully for consumers, it means bigger and better deals as the two companies battle it out for customers.

Do you use Groupon or LivingSocial? Do you feel like you save more or spend more?

Image via alancleaver_2000/Flickr

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