The Forever Stamp: Buy Or Not?

The United States Postal Service has just raised the price of first-class stamps from $0.39 to $0.41 - that’s two cents per stamp (or roughly 5%). This hike is just the most recent in a series of increases in recent years that seem to be coming with less and less time in-between.

Lame, yes, but there’s a slight catch: the USPS is also releasing what they’re calling a Forever Stamp. The Forever Stamp costs only $0.41 right now (though its price will increase with the base price in years to come), but it will always cover the first-class rate, no matter how high it climbs. Now, that’s pretty nice, especially if the price continues to increase at such a fast rate - buying a ton of Forever Stamps right now seems on the surface to be a worthwhile investment.

But is it really?

I’m no economist (and I don’t have time to figure out a fancy equation), so I won’t be able to calculate projected savings based on the current rate of increase, and adding in all those fancy controlling factors and stuff, but I did a little thought experiment of my own that I found rather illuminating.

Suppose you send exactly 100 letters a year (I send fewer than 10, but that’s another story - let’s assume you’re nice and send a lot of Christmas cards), and every three years the price of a stamp increases by 2 cents. This means that after 13 years of buying $41 worth of stamps, you will have saved just slightly more ($43) than the price of a single year. It also means that to do this, you’ll have had to purchase $533 worth of stamps at the original rate. Lots of money just to get “one year free!” if you ask me. But some of you might be so frugal and splurge this year.

But how long before you start “making” money? Or rather, at what point will your cumulative savings be more than the price you paid to begin with?

2132

If you spend $5166 on stamps in 2007, you will make your first “profit” ($32) in the year 2132.

So, here it is folks, my long-term advice for the Stamp Market: Hold on to those Forever Stamps until at least 2133. And then SELL, SELL, SELL!!!

Or, you might recognize that the United States Postal Service is well on its way to disappearing forever, and instead just purchase stamps as you need them. It’s not like your family is getting any bigger, after all (at least not if they’re following my advice). E-cards are just as nice, believe me.

Mail is dead. Don’t give in to the Forever Stamp.

(I will graciously accept math and logic corrections in the comments)