Stating the Obvious and the Unclear

It’s obvious that if you don’t pay it off each month, every time you use your credit card, you’re going to spend more money for that item than the price you were charged. The additional amount you pay is interest. What’s not so clear is that…using cash wisely will actually save you money. I know you’re what you’re thinking, “you just said the same thing flip flopped”. Yes that is true, but let me ask you this: how many people actually look at it that way?

Not many.




Using a credit card is like throwing money out the window!

So, let’s ask the obvious question. Why do people use credit cards? Well that’s easy…because they don’t have the cash on hand. Here’s something not so obvious. If you don’t have the cash on hand and you’re tempted to use your credit card, have you ever thought…do I really need this? I mean really need it? Not “do I want it” or “is there a strong temptation”, the question is do I need it? Most of the time, the answer is NO!

So what’s my point? Establish a cash-based budget that is very disciplined and specific. In your plan specify how much will go towards required monthly expenses (bills, mortgage, groceries, gasoline for vehicles) and how much will go to discretionary spending (clothes, entertainment, snacks). For anything outside of that budget, or if you end up in a situation where you feel you must use your card. Think really hard about if you can live without it. (Please re-read that last sentence- it’s a doozy). If you can live without it, then DON’T buy it.

Spend Spends tip: The more purchases you pass up, the more money you save. In the end, you’ll end up with less junk and more cash.

Impulse Buying

Ever heard the term? Maybe. Have you ever done it before? Probably. Here’s an example scenario: you’ve just finished grocery shopping. You have all the food and home supplies you need and you get in line at the cash register. There are a few people in front of you and you have to wait. You look to your right and you see your favorite magazine, so you pick it up. Then you move closer as one person has finished and the next shopper proceeds to ring up their stuff. What do you see next, and ice cold pop (or soda if you’re in the south). Hmm looks good. So you get one. You move a little closer to the front of the line, and what do you see? Your favorite candy bar or snack, and you grab a few for the road.

The items in check-out line are what grocers call, “Impulse products”. They are low-cost, high margin products that they can sell at a relatively cheap price. They’re compact and easy to grab. Which means, they’re great for tempting people to grab them “last-minute” and “on-the-go”? Just think about it, when’s the last time you saw a single Twix candy bar on sale in the grocery aisles. Most times you won’t…Why? Because, it’s during that time, most shoppers are taking their time. You’re more likely to see a bulk pack of Twix in the grocery aisle and a single Twix in the check-out line.

The best is when they sell candy “2 for $1”, you really feel like you’re getting a deal then. But the catch is, you really don’t need it. When’s the last time you drove on the way to grocery with “candy bar” on your grocery list? You probably never have. You go in, with the intentions of buying groceries and get suckered into buying snacks while waiting in the check-out line because they’re cheap, fast and easy.

FIGHT THE URGE AND DON’T SUCCUMB TO IMPULSE PRODUCTS!

NEW Electronics – Worth It? REALLY??

NEW Electronics – Worth It? REALLY??

Everyone rushes out to Sprint to buy the new phone, Best Buy to buy the newest TV, the Apple Store to buy the newest Apple Gadget. WHY????

Because, it’s the newest thing out and they must have the latest technology. It doesn’t make sense to me. The product is not proved out. The price is the highest, and it’s the “original” version, which means…..UPGRADES are on the way!

So here’s my perspective NEVER BUY ELECTRONICS WHEN THEY FIRST COME OUT!

Here’s an example: WINDOWS VISTA! When it came out, everybody ran to the stores because it was Bill Gates’ new thing and “anything Gates touches must be incredible”. Yeah right, everybody HATED it! So much that even after the “upgrades” Vista was unable to lose that bad image they had in the marketplace. What did Bill do? He scrapped Vista and came out with Windows 7.

How about Motorola DROID? Everyone ran to get Droid. When it came out it, it only came with the original Android software. You don’t hear much about problems people had with the Droid, but Droid 2 is a faster, more updated, and more versatile phone…and guess what? The price didn’t increase, it stayed the same. If you did like me, wait until the Verizon promotion, you could’ve gotten it free!

Smart Spends’ Tip: Don’t rush out to buy electronics when they first come out. Let them get proven and prices lowered. You will be happy you waited.

Discounts NOW! - Macy's / Dillards

The discount season has begun. Just two weeks ago, I went to Dillard’s and Macy's just to check out the deals so I could tell you about them. Guess what? The 75%off plus 50% off sales haven't begun yet, however, there were racks upon racks of clothes on sale for 70% off.

I know what you're thinking...Why buy something for 70% off when you can wait a few weeks and buy it for 75% plus an additional 50%? Well, I'm glad you asked.

The reason is: MORE OPTIONS. First off, I must say, I agree that it makes more sense to buy clothes for 75%off plus 50%off. As a matter of fact, I will probably go back to the stores at the end of the month (next week) to see if they have any better deals. The problem is, the better the deals, the quicker the clothes are sold (interesting phenomenon...right?) :)

Today's blog is to encourage you to go to the stores this weekend and get good deals on the clothes you want while they're still available.

Good Luck and Good Shopping!

More than 75% off Clothes

Every year Dillards has two huge sales to get rid of off-season inventory. All brands are sold 75% off plus up to an additional 50% off. That means you can buy a $75 Polo shirt for only $17.

Talk about Smart Spending: Knowing the time to buy makes a world of difference. Now I know what you may be thinking, “Why would I want to buy off-season clothing?” This is a great question, and the answers to it are even greater! The answers are based on two conditions:

1.) It really depends on where you live.
2.) Are you willing to invest in your future?

Let’s discuss the first condition. If you live in the Midwest or the Northern states (colder climates), based only on condition #1, this may not be a good idea to you. Those states will get cold soon and even colder 3-4 months down the road. But, if you live in Southern states or Gulf Coast states (warmer climates), it may not even begin to get cold until January. The bottom line is this: if you live in the warmer climates, the weather is still good enough to wear these clothes now. Even though the clothes are “off-season” due to the fact that they were intended to be sold in the Spring/Summer and it will soon be Fall, it’s still great warm weather outside and you can buy them at these discounted prices and wear them.

Now, the second condition basically refers to “buy it now and wear it later”. I know most people want to buy clothes now and wear them now, but why? Because the marketing and sales promotions trigger your instincts to want to have the “latest/greatest”, but let’s face it, clothes don’t change much year over year (fashion experts may disagree). They do change significantly over the course of several years, but take this for example, how long have the standard polo horse three button shirts been out and looked the same? SEVERAL YEARS. Look, just buy the clothes this year, stock them the away during the cold months (if you live in cold climates) and pull them out, “brand new” for the following Spring season. You will do two things: Save Money and Look Good.

Now for the good stuff. When will the sale take place……

Now these dates may not be exact, but they are very close:

The week of Sept 26, 2010. (for the summer clothes)
And
The week of Feb. 26, 2010. (for the winter clothes)

Start checking that week, and beat the crowds. (Call them or go to the store)

Free Fast Food

Freshly Brewed Coffee
Golden Fries
100% ground beef
Only 99cents
Value Menu


Hungry Yet! These word pictures are what get you HOOKED and craving fast food. Just think, commercial designers only have about ten seconds to capture your attention and their aim is to trigger cravings and desires. Using terms like, “mouth-watering”, “tasty”, “drizzle”, they reel you in immediately, but it doesn’t have to be that way.

They awe you with word pictures and the subconscious promise of an intense satisfaction. Many people fall for this every time. The #1 reason is they are not prepared for it. It’s like preying on the innocent. Even though you see and hear those commercials almost every day, most of us don’t turn on our defense mechanism and resist the temptations of instant gratification. Most fall victim to these intense desires.

In order to stop falling victim, you have to do three things:

1. Recognize
2. Resist
3. Reroute

Recognize that you will continuously be bombarded with these commercials on the radio and on television. Resist the temptations, establish mental discipline and don't fall into the rut of craving this food. It’s fattening and unhealthy. Reroute your thoughts, plans, and focus. Think about whatever task you initially had at hand, and focus your mind on completing that task. Good Luck Smart Spenders!

Budgeting Basics

Has anyone ever told you how much of your monthly paycheck should go to bills or mortgage? Do you have a firm understanding of how you should budget your money so that you stay on top financially rather than going under into deep debt?

Well, today I'm going to provide you the bare bones basics of budgeting. I encourage you to use this information as a guideline to measure your spending habits and establish a monthly budget for yourself if you don't already have one. This guidance is shared by many, but is only to be used as a reference. Please review your own financial situation and decide if this is a model you can transition to. If you have any questions or concerns, please seek expert advice. I disclaim any liability for any damages or loss which is incurred as a result of implementing these basics.

Now that the legal stuff is out of the way...Let's get on with it. Here's a standard suggestion of how you should balance your monthly income:

1. Housing - Mortgage, rent, utilities, insurance, taxes and home maintenance.

2. Transportation - Car payments, public transportation, auto insurance, maintenance, gas, parking, & license and registration fees.

3. Debt - Loans, credit cards, taxes and medical bills

4. Other - Everything else (incl food, clothing, childcare, etc.)

Here's the big question: How much are you saving each month? You should aim to save at least 10%.

On to the next one....Buying a house. Do you know how much is "affordable"? I don't mean how much the bank says you can borrow. While the half million dollar house may be beautiful and tempting, you don't want to find yourself in a foreclosure because you can keep up with the payments. Use this guideline: 28% of your gross monthly income (before taxes). So if your monthly income before taxes is $4000. Then you should only consider purchasing a house if your payments are 4000 * 0.28 or $1120/mth. So you're probably thinking, how much is that in regards to a house price. Well, I'm glad you asked:

At $1120/mth with a 6% fixed interest rate on a 30 year mortgage, total house cost equal $186,500. That means if you make $4000/mth gross income before taxes, you should only look at houses that are $186,500 and under.

MAXIMUM CAPACITY SYNDROME

MOST SHOPPERS COMPLETELY FILL THEIR SHOPPING CARTS

–Just as you want your Large Fries carton from McDonalds completely full, most people at the grocery store want their shopping cart completely full also… Even if it’s full of stuff they don’t need. Some stores have tried to help you out by offering mini-push shopping carts and baskets.

It’s psychological that people have the tendency to fill their cart. Strategist for grocery stores know this and take full advantage of it. In some cases, grocers have increased the size of the standard shopping carts, just to take advantage of what I’ve called “Maximum Capacity Syndrome”. As soon as the cart size increased, their monthly revenue increased. That's because people bought more due to their attempts to fill the cart. Most of those customers didn’t even realize the cart size increased.

Smart Spends tip: Create your shopping list at home and only buy what’s on your list. If you identify an item, while shopping, that you think you need, don’t buy. Create another list while shopping of “I think I need” items.

This will save you money, time and prevent you from buying unnecessary/un-needed items.

Books on Sale for a $1.99

Every single day, thousands of people purchase books from Barnes and Nobles. Ninety plus percent of them pay FULL PRICE for their books. Have you ever purchased a book online? Did you notice that fine print that says " X number of books from 1.99"? Probably Not. Why? Because you see the blaring red price for $12.20, and that's what you assume the best deal price is. Well, I'm here to tell you IT'S NOT.

For most books posted on http://www.bn.com/, there's a small print under "Add to Cart" that states "....used from $1.99". Do you know what this means??? Of course you do. So let me explain why you can get them so cheap: The used books are not sold by Barnes and Nobles, they are sold by smaller book stores/distributors. All used books available are rated. After clicking on the link, "...used from $1.99", a list is displayed of all available used books with the book's rating, plus the rating of the company offering it. In a lot of cases, if you buy a book rated "Very Good" or "Like New", chances are you will get a BRAND NEW BOOK FOR $1.99. Granted, this does take some risk, but come on, isn't it worth saving $10 or more for the potential to get a brand new book for under two bucks. I think so.






So, next time you're in the mood for a new book, consider checking on BN.COM. Find out if you can get that book for $1.99. If so, get it, and enjoy your "Smart Spend".

Walmart Shopping

Walmart seems more like a bill collector than a grocery store: $300, $400, and sometimes even $800 a month contributed to Walmart or otherwise known as "Wally World".

I went to Walmart to buy toliet paper. By the time I left, I had $150 worth of stuff. Some stuff I needed like milk and eggs, and mostly stuff I didn't need like: Little Debbie snacks, a case of coke, a bottle of wine, Nacho Cheese Doritos and a 10lb bag of potatoes.

Then what happens? I gained weight from the junk food, the whole bag of potatoes went bad, and I realized I already had milk and eggs at home.

Sound Like You?

This is just one example of the many situations we find ourselves in that cause us to reduce our wealth and waste our money. The reasons we purchase impulsively is not by coincidence, wer're tricked by strategic marketing tactics.

1. One reason this blog was created was to teach you those tactics so you can beat the system, stop wasting money, and not be taken advantage of anymore.

2. The second reason this blog was created was to inform you of the "REAL" sales and discounts. For example, twice a year, Dillards has a GRREAT sale: 75% off the already 50% discounted price. Another is Macy's has a sale where most all women's clothes are $4. I will tell you about these sales, so you can gain the MAXIMUM benefit from the REAL DEALS.