Posts Tagged ‘Personal Finance and Saving’

After giving up my life in Tokyo and moving to the tropical island of Miyakojima, I have had a whole new household of items. Since I may be planning to move again after a year, Keeping everything to a minimum budget has been the main goal. Below are two of the methods that I have used to get better prices and save money. Using these methods I was able to buy a brand new car (2006 ford focus) and then sell it at $1000 under the blue book price a year later and still make $2000 on the sale.

One very easy way to save money is to NOT pay the marked price for products. Of course it is always best to purchase items that are on sale whenever possible. However, there are many items you have to purchase that may never go on sale. After working higher end sales for over 7 years (scuba diving store selling expensive equipment) and through my own purchasing, I have found that people who ask for discounts and better deals usually get a better price. But the thing that surprised me the most, is that it was usually the people who had a lot of money who would want a better deal. There are a number of ways to negotiate price, but two that I have found work very well, the sympathy method and the direct method.

The Sympathy Method

In order to make the sympathy method work you must spend a little more time with the salesperson and try and create a bond or relationship. Try to get all the information about the product and seem interested, but hesitant to purchase. Try to make your hesitation obvious by looking at the price, sighing, and by being silent for long periods of time. Let the salesperson know that you are interested, but that you hadn’t planned to spend that much money. At the same time try to be friendly and kind so the salesperson wants to help you.

The ideal situation is for the salesperson to offer you a better price. If he doesn’t, then ask if he can give you a better deal. Let him/her know you want to buy. Lastly, be willing to walk away. The ability to walk away gives you a lot of bargaining power. Especially if you have spent a lot of time with the salesperson, they will be more likely to offer you a better deal rather than lose the time they have spent.

The Direct Method

The direct method is a way to try and get the best deal while at the same time saving your time. The direct method works well for places that sell in high volume and especially where the salespeople are paid on commission. There are certain types of businesses (automobiles, furniture, etc) that plan on the customer bargaining for a better price. They may mark there products at full price or sometimes higher, but generally have a set percentage or price they are allowed to drop the price to. The trick is to find that mark. I generally recommend that you do the research to find out what other people are paying for the same or similar product.

Once you know the price you would like to pay (and that they can sell for), let the salesperson know. Say that you would like to save both of your time and help them make a quick sale. Ask them directly what’s the best price they are willing to give you. Always do this first since they may give you a better price than you will ask for. If they give you a higher price, then make an offer lower than what you had planned to achieve (you may get it). If you don’t, then it gives you some negotiating room to get your price. And the same as before, be willing to walk away. You can always go to their competitor and ask them to beat the price you were offered.

Additional tips

1. Look at overall value- If it’s a product that requires service or someplace where you shop often, then consider the knowledge and quality of service.

2. Do your research- A few hours of research on the internet can save you thousands of dollars and hours of time. This is especially true for cars.

3. Practice on small things to improve your skills and work your way up to large things

4. Buy before you need it- This makes it much easier to walk away and find a better deal

5. Set your budget- Salespeople are pros and getting you to upgrade. Setting your budget helps keep you from purchasing something you can’t afford. Either get a lower price or a better product at the same price.

6. Ask for things not for sell or display units. They will often go for cheap. I was able to purchase a brand new sofa for $50 by using this method.

7. Know when the sales and seasons are- why buy a swim outfit at the end of spring when it will be 60% off at the end of summer. Think ahead as much as possible.

I was recently reading Men With Pens, a great site for blogging tips and other online resources. They also do various blog reviews which they call “Drive by Shootings“. They visit a blog and point out the good and the bad about the design, layout, and the content (They will be reviewing Simplistic Thoughts on October 26). Their latest review was a website called The Enhance Life. After reading Men With Pens’ review of the site, I decided to visit it to take a better look and see what they were talking about.

While doing so I came across an interesting article titled “Over Spending & Impulse Buying: 8 Reasons Why You’re Not To Blame“. As the title describes, the author talks about 8 ways people are influenced to overspend and buy things they don’t need and how it isn’t entirely their fault. While I agree with the fact that companies try desperately hard to get consumers to buy their products, I believe the final responsibility lies with the consumer. Not taking personal responsibility is one of the reasons that so many people are in debt.

Marketers will constantly be coming up with better and more cunning ways to try and convince you to buy something. Most of us are also raised to believe that the more we buy the better we will feel and media keeps this constantly installed in our minds. But it is you who gets to make the final decision whether or not to buy, and it will always be you who has to pay for the debt.

In order to make a smart decision, you must first realize that you are in control to make the decision. You have the power to control whether or not you spend money. A buy one get one free sale might be a good deal, but if you are struggling to pay rent then it isn’t something that you actually need then it probably is a bad decision. It’s true that marketing is becoming more sophisticated and better at influencing us to buy things. I am certainly guilty of this myself and have purchased things I don’t need. However, to put the blame on the marketing, advertisements, product dsiplays, or anything else besides yourself is very similar to blaming the kids who told dared you after you got in trouble.

But putting the blame somewhere else is the reason why so many people are in debt. Putting the blame elsewhere means you have no control over the situation and therefore can’t change it. As Steve Pavlina of Self Development for Smart People discusses in his new book, you must realize that you have the power to control your life. Once you realize that the responsibility is yours alone, you can take steps to change it.

So how can you stop yourself from being influenced and stop your spending?

1. Education- The more you understand about finance the better you will be able to improve your situation and the less likely you will be to spend. Also, learning about marketing and advertising will help you understand how you are being sold to.
2. Cut out the temptations- Stop window shopping. it’s just another excuse to get yourself to the store. Through away ads before looking at them.
3. Create a spending Budget and Stick to it- Creating a budget is a great way to limit the amount of money you spend. You have to stick with it to make it work.
4. Cut something out cold turkey- Do you spend a lot of money on DVDs, electronics, clothes, etc. Completely cut it out for a month. It will seem difficult at the beginning, but it gets much easier after a while and you will be much less likely to spend your hard saved money.
5. Stop watching so much TV and reading so many magazines- The media is constantly trying to influence us to purchase something. Cutting out the TV and magazines helps take away some of those temptations.