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A Non-Negotiable Guide to Smart Purchases

Like most of you, I try to be frugal whenever possible. For some us it just comes natural and for others it’s hard work. I see myself moving away from frivolous spending towards frugal spending daily. I’ve been trying really hard to take care of my personal finances so it’s becoming painful to pay full price for something! Last weekend I went shoe shopping, and I found a pair that I really liked. I thought they made me look professional and laid back (I’m not sure how that happens, but it did). They weren’t on sale, and the store refused to give me a discount. Even though I really wanted those darn shoes, I couldn’t pull the trigger. I was able to walk away from them because, to me, shoes aren’t important. It’s crucial that we all take a minute to think about what’s important to us. I’m not talking about friends, family, and pets. We all find those things important. I’m looking at this from a purchasing point of view (most of us don’t buy our loved ones). If we know which purchases are important to us then we will also know which aren’t.

 I’ve been thinking about this idea for a long time, and it’s really helped me save money while being satisfied with my purchasing choices. Every time we buy something there is usually a name brand and a generic/off brand. Which should we get? Really frugal people might always go for the cheapest products, but most of us, even if we care about our finances, won’t be content if we practice that type of shopping. The following is an example from my past that will help explain this. A couple years ago I lived with my friend Jimmy. Jimmy ended up getting the flu, and he wanted to borrow some NyQuil from me. At the time I had two huge bottles of some stuff I bought that were generic NyQuil. When I bought them I thought I was getting a great deal. They were 2 for the price of 1! When I handed them over to him he looked like a dear stuck in the headlights. He reluctantly took some. When I got home a few hours later he had a bottle of actual NyQuil sitting on the kitchen table. When I asked him about it he said, “That generic stuff doesn’t work. I had to go get the real thing.” I was shocked. Here I thought I got a good deal on some disgusting tasting off brand NyQuil, but it wasn’t good enough for him. To me medicine is medicine. The brand doesn’t matter. I’m not going to spend extra money to get an actual bottle of NyQuil. To Jimmy all cold medicines are different, and even though they have the same ingredients, some work better than others. He knows he is going to pay more for the “real” stuff, but he is willing to do so because it makes him feel better. He cares about his personal finances, but sometimes we have to go with what we trust (even if it costs extra).

How can you save money by knowing which purchases are important to you? Follow these 4 steps and you can get your answer:

1) Make a list with 3-5 non-negotiable items that you won’t go cheap on.

          a. EX: medicine, food, and electronics

2) Memorize your list or carry it around with you.

3) Every time you buy something check to see if it’s one of your non-negotiable items.

4) If it’s not on your list go for the cheapest thing you can find that still fits your needs, and if it is on your list go with whatever you think is best.

The whole point of this is to keep your list short. If you have a list with 100 items it won’t help your personal finances. If you only have a few non-negotiable it will save you money, make shopping easier, and you can be proud with your purchasing decisions. Jimmy’s list has medicine on it, but it doesn’t have clothes. When he goes shopping he knows he won’t be frugal when buying Nyquil, but he also knows he should shop for clothes off the clearance rack. It’s important to remember that budgeting doesn’t mean always buying cheap stuff. It means you’re taking care of your money in a way that suits you best and enables you to meet your goals. This is just another tool to stay on track. My question to you is: Do you know which purchases are important to you?

 
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Posted by on April 26, 2012 in Uncategorized

 

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Personal Finance Mistakes- Watch and Learn

When the markets crashed in 2008 it changed a lot of people’s lives. For most, money was tight. People that were once making $100,000 a year selling luxury items were now cleaning toilets at their local McDonalds. At that point a paradigm shift started to occur in our society, and families everywhere started to pull their purse strings closed. They needed to re-evaluate their personal finances and save money. Unfortunately for them, they didn’t know anything about personal finances or being frugal. The door was left wide open for them to make mistakes when they thought they were making sound financial decisions. Luckily for us, we can use their mistakes as examples so we don’t have to make them ourselves.

Mistake 1: Using coupons they didn’t need- When the recession started to occur it became apparent that most of us needed to save money. Companies also saw this so they flooded us with coupons. It became so big that we even have TV shows about (extreme) couponing. Using a coupon is wonderful if it’s used to purchase something you really need. One dollar off a loaf of bread, I’ll take it!  The problem occurs when we use coupons to purchase items that we don’t need. Spending $10 dollars on a 30 pound bag of pop rocks might sounds like a great deal, but what the heck are you going to do with a mountain of pop rocks? That example’s ridiculous, but it happens to me all the time. I’ll think about buying something because I have a coupon even though I don’t really need it. Just because I’m getting a good deal for that product doesn’t mean it’s helping my checkbook!

Mistake 2: Making decisions based on emotions- We can all get emotional when it comes to our finances, and that’s why it’s important to keep an open mind. When the economy was collapsing everyone was trying to protect themselves in any way they could. People were selling all their investments and personal belongings. Others were taking money out of their retirement funds to try and save belongings they really couldn’t afford. Whichever way they were going, a lot of those decisions were rushed. Since 2008 I’ve talked to quite a few people that made rushed decisions and almost all of them regret their actions. Take the investments for example; a lot of them would have rebounded to where they were in 2007, but when people sold them on a whim they sealed their fate of a net loss. I know hindsight is 20/20, but I remember wishing I had money to invest when the markets were crashing. I would have bought B of A. If only…

Mistake 3: Not discussing financial goals- As I mentioned above, after the financial collapse families started to cut back on their spending. From what I’ve seen, most families have one person that deals with most of their finances. That can be a very effective method for money management. If someone is more knowledgeable in personal finance it’s good to let them take the reins. The problem occurs when this person leads their family in a direction that everyone hasn’t agreed on. Having common financial goals is the key to household success, and if you never take the time to set-up these goals you’ll run into trouble. Say, hypothetically, I thought it was important to save money for a family vacation. I mean this whole recession talk has really got me down, and I just want to lie on a beach sipping margaritas. My girlfriend, on the other hand, thinks it’s really important to save money so she can be a stay at home mom. To her, nothing’s more important than spending time with our future children. If I’m the one in charge of our checkbook, but I don’t have a clear understanding of what we both want, I am more likely to take our family in the wrong direction. Once she figures out what’s going on (they always do) we will have major issues. This was a silly example, but when you plug vacation in with keeping your house and trade staying home with the children with paying off student loans it becomes very serious.

 I think most of us read blogs so we can learn a thing or two. The mistakes above were just a few things I’ve noticed since the financial turmoil in 2008. Please share any mistakes you’ve noticed people making since then. If we can all share our observations we might actually be able to help someone!

        

   

 
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Posted by on April 20, 2012 in Uncategorized

 

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Make Budgeting Easier- Use Financial Software

I’m a late starter when it comes to using personal finance software. I’ve always viewed it as a boring spreadsheet that I could make myself in Excel if I really wanted to. Boy was I wrong! I was lucky enough to receive Quicken as gift yesterday. I had heard great things about it from family members so I was eager to get it installed. After starting the registration process, I realized that it was able to link directly to my bank account. I was very happy with this because I really didn’t want to enter everything manually. Once everything was in sync (not the boy band), I received a ton of information. It was definitely an eye opener! I don’t understand why there are so many blogs written about how to keep track of your personal finances when software like Quicken exists. Those blogs should all be titled “Buy Personal Finance Budgeting Software if You Want to Make Your Life Easier”. I suppose there is a lot to be said for someone that can do it by hand, but who has time for that nowadays?

I’ve only had the program for a day, but here are some good/bad things I’ve noticed so far:

Good:

            It syncs to your bank account which saves time: I was blown away by this. It gives you an automatic starting point. If you did this by hand you would either have to wait a month to get the new information, or you would have to dig through all your old bank records.

            It automatically sorts your expenses: My expenses showed up in a nice, color coded pie chart.

            If you set spending goals for yourself they are easy to follow: They just show up on the front page. Apparently I’m already ¾ the way to my monthly goal on food.

            It seems to be user friendly: So far I haven’t had any issues with it. It only took me 15 minutes to set up.

Bad:

          Some of the expense sorting is inaccurate: When I bought food at Wal-Mart it went into the shopping category instead of the food category. I guess you can’t expect it to know everything right off the bat.

          You can’t pay bills from it (that I know of): Quicken has you list all your expenses, but it didn’t offer me an option to pay them. It seems like that would be a huge time saver.

          I don’t know how to sync other billing information to it: For example, when I entered my Charter monthly billing expense I had to mark that it changed monthly. I think it would be helpful if Quicken could sync to my Charter account to know what my bill will be. This might be possible, but it wasn’t apparent to me.

What software like Quicken shows is that budgeting doesn’t have to be difficult. The information it has given me is so valuable. I’m pretty sure my copy was purchased from Ebay for $30, which is a great deal. I’m sure there are other useful things Quicken 2011 can do. If you know of any, please share!

 
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Posted by on April 19, 2012 in Uncategorized

 

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The Easiest Way to Save Money- Just Ask

Recently I’ve been seeing a lot of examples of the power of asking for something. My girlfriend’s father loves the quote, “The answer is always no unless you ask.” I can admit that I’m very introverted when it comes to this topic. For whatever reason, I don’t like to ask people I don’t know questions, and I frequently assume the answer will be no, and I know I’m not alone in this. I would even go as far to say that most people hold themselves back by assuming the answer will be no. This is such a huge mistake! There is a lot of power in asking people for something. I think this is true because the majority of people won’t ask. If 100 people want something, but only 10 ask for it, the 10 that asked will receive whatever they wanted before the other 90.

 I was recently reading a blog post (which I can no longer find) where the woman swears she gets discounts just by asking for them. What a neat thought. I would have never had the guts to just ask for a discount. I would just assume that if they wanted to give a discount they would have already attached a huge 10% off sticker to the item. I never ask about special discounts so I never receive them. There was another guy I saw on TV that tries to completely avoid spending money. Instead of using cash, he tries to barter with companies. Now I can’t see myself doing this very often, but he has great success with it! He’ll write you a poem for a doughnut, or pick up trash for a meal. Most of us won’t go out and do these things, but if companies are willing to trade a song and dance for their product I guarantee they’ll give a small discount.

 Why don’t most people (myself included) like to ask for things? I think it’s because it makes us uncomfortable. I personally feel dumb when I ask for something and the person tells me NO. We as a society don’t like to be told NO so we avoid it all together. Depending on the situation, there are different techniques you can try to change a NO into a YES:

1) The Power of Reciprocation- Do you get something for free? Give it away as a gift in the hopes that it will benefit you in the long run. When I worked in a restaurant, I would have definitely given a customer free drinks or an appetizer if they gave me a gift. The urge to reciprocate is very commanding.

 2) Talk Yourself Up- Companies are constantly giving influential people free things to help market their business. If you can persuade these people that you can help them they will most likely want to make you happy. I’m not saying go out and lie to people or scam them. All I’m saying is that if you’re at a book store, and you want a discount, you might be able to mention that it’s your turn to pick the book for your book club. You have 25 other people that would buy that book, but your book club rules state you can only spend $15 on a book and the one you want is $20. It’s worth a shot!

3) Don’t Ask for Too Much- Asking for a 10% discount might not be a big deal, but demanding 50% off is pushing it. If you asked your boss for a raise you would probably have more success asking for a $1/hr instead of $10/hr. Just keep it reasonable.

4) Give a Valid Explanation- Most people like to deal with reason. If something makes sense it’s hard to say no. If you want to purchase something that is a little damaged ask for a discount. I love the items that have exterior damage but work perfectly. They are always worth asking about.

 It’s time for me to get over my fear of the word NO. Please share any successes/failures you’ve had by asking a simple question. I think that hearing examples of how you saved money would help me with my fear.

 
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Posted by on April 13, 2012 in Uncategorized

 

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Secret Advantages to Living in an Apartment- Save Your Money

The housing crisis has forced a lot of people out of their homes and into rentals. I have friends that couldn’t even stay in a house, and had to move into an apartment. As I’ve mentioned before, we decided to stay in our apartment for another nine months instead of moving into a duplex. I dislike living in an apartment (noisy neighbors, no yard, drug dealers living next door). I would much rather stay in a house, but apartments do offer some ways to save money (besides cheaper rent).

1)      Money Saving Contests– Help your personal finances, and pay attention to contests! When we decided we wanted to re-sign our lease we were invited to a lease signing party. They had a raffle type contest that offered a bunch of different prizes (gift cards, free pet rent, free rent). Once I heard that we would be guaranteed to win something, I knew we had to show up. We ended up winning the grand prize, which was one month of free rent! The thing that bothered me about this situation was that we didn’t know about the party until two hours before it started. We could have easily missed it. They sent out a letter about the party, but we threw it away without reading it (then we’d be paying rent this month L). They also have another contest where you can be entered into a raffle to win $100 off your rent if you pay before the 1st of the month. Just by paying attention to what the front office offers we saved $650.

2)      Free Food– I’ve never been the type to read anything the front office leaves on my door. After learning about the free food, I read everything they give me! Apparently it’s common for apartment complexes to offer free dinners on certain nights of the week. At our complex we get free tacos on Thursdays and waffles on Sundays mornings.  By offering 2 meals a week, every resident could save $40-$60 a month. When we went to taco night I noticed that there were only a handful of people there. This was great because they give away free food, cook the meal, clean up after it’s over, and there aren’t any lines (we did have to bring our own plates. Ha)! It’s a great way to save money and meet the neighbors.

3)       Use the Amenities– Almost all apartment complexes offer some sort of amenities. They aren’t always the nicest, but they are free. I paid for a 24 hour fitness membership for months while living in my apartment. I know that if I was doing it, others must be doing it too. My reasoning was the gym at my apartment complex sucked (but the pool is great). I decided to suck it up and go with the free gym. I miss my old gym, but my savings is thanking me.

 Living in an apartment isn’t always the most pleasant experience, but if you are living in one you might as well make the best of it. You can do that by paying attention and saving money. The apartments want all of their residents to take advantage of these offers. They want to build a relationship with you so you live there longer. That’s the big secret behind all this free stuff. So keep your eyes open, and nourish your personal finances.

 Does anyone else have advice for saving money in apartments, or just a really good story about apartment living?

 
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Posted by on April 6, 2012 in Uncategorized

 

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Can Do-It-Yourself Videos Actually Save You Money?

I verified something this weekend that my friends have been doing for years. I went to visit my family in Sacramento, and when I got there my car started bogging down. Of course something like that would happen when I’m so far from home. Now, I love to drive, but I hate cars! It seems like something is always going wrong with them. As soon as one thing is fixed another thing needs to be replaced. It’s times like these I wish I had a mechanic as a role model growing up. I managed to get my car over to my mom’s house. I popped the hood and found one of my belts shredded (I wasn’t sure which one).

When something’s wrong, I do what most people do, I Google it. It didn’t take me long to figure out that I was dealing with the alternator/power steering belt. It didn’t look hard to get to, but I know nothing about engines. At this point, I started to think about what my friends (who are car guys) would do in this situation. Once again, they would Google it. I was successful in finding a five minute video showing how to replace that belt on the make and model of my car. A few years ago I would have called a mechanic, but being a little older and wiser I decided to try and tap into all my resources.

I was successful in replacing the belt, and nothing has gone wrong since. I guess I didn’t do a bad job. This experience has shown me the power of do-it-yourself videos online (which is what my friends have always used). There are tons of them! I’m sure some might not do things the right way, but for simple tasks they work great. At a mechanic I would have spent $150 getting this fixed. Instead it cost me 10 minutes of research, $20 for the belt, and 10 minutes to replace it.  

This gets me to my main point:

 1) If you have a problem, see if you can fix it yourself. You might not have any knowledge of the topic, but you’re never too old to learn.

 2) If it’s clear it’s something you won’t be able to do, call an expert. I’ve tried to fix major problems myself and I’ve always made things worse.

3) If you aren’t sure, Google it.   

Have you had good or bad experiances from doing projects yourself?

 
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Posted by on April 3, 2012 in Uncategorized

 

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Only Buy Stuff Online With a Picture? Maybe You Shouldn’t

Technology has completely changed the way we buy and sell items on the internet. The better technology gets the higher our expectations become. As I mentioned in my last post, I’ve been looking for a house to rent. I noticed that one of the main things I look at, before I even consider a post, is if it has a picture or not. As I look through the endless rental posts, such as Craigslist.com or Hotpads.com, I skip over everything without a picture. I just assume they are scams or too damaged to be worth my time. I mean, who doesn’t know how to post a picture online? Anyone that was serious about selling something should have a picture of it. My girlfriend found a post on Craigslist last night that sounded great but didn’t have a photo. I told her not to bother, but she e-mailed the “owner” anyways. To my surprise she received a response that seemed legitimate, and we are going to check the house out later today. This whole situation has made me re-evaluate my method for showing interest on items that are posted online. I might have been missing out on a ton of good deals because they didn’t have pictures, and I know I’m not the only one. I was discussing this issue with a co-worker of mine, and she admitted that she also only considers buying something online if the owner posts a picture. I still think it’s a good idea for sellers to post pictures of the goods they’re trying to sell, but I can think of 3 reasons why a legitimate seller wouldn’t post a picture.

1) The seller isn’t Tech Savvy: I’m 25 years old, and I often forget that some people aren’t comfortable with technology. I looked up the owner of the house we are going to look at today, and it turns out that he is 78 years old. He might not have a clue on how to post a picture online. Just because someone isn’t good with technology doesn’t mean their post isn’t sincere.

2) The seller doesn’t have proper equipment to post a photo: Nowadays, it seems like everything can take a picture and link to the internet. Pretty soon we’ll have shoes that have cameras on them! That being said, it is still possible that someone doesn’t have the proper equipment to post pictures online. It’s rare, but not everyone has a digital camera, computer with a camera, or smartphone. I’m constantly working with customer’s that don’t use these technologies. Also, they might own a digital camera but it’s broken. I used to go through tech gadgets like most people go through toilet paper. It seems like they’re always breaking.

3) The seller doesn’t think it’s necessary to post a picture: I have a friend that was trying to rent out their home a few years ago. It was a nice house, but no one ever responded to their rental adds. I looked at the post and realized there were no pictures. When I asked my friend about it they said, “I didn’t think I needed any pictures.” It may not seem reasonable but it happens.

I still feel more comfortable checking something out online if I can see a picture first, but I know I’ve missed out on some good deals because of this. Things are harder to sell online if there isn’t a picture, but just remember that it could present a golden opportunity to buy something cheap. Odds are if a seller doesn’t post a picture they will have a harder time selling. If they’ve been trying for a while it might give you the leverage you need to make a good deal. Remember, there are A LOT of scams online, but pictures shouldn’t make or break a deal. Have I missed any reasons a seller wouldn’t post a picture online?

 
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Posted by on March 15, 2012 in Uncategorized

 

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