The Psychology of Deals

August 31, 2012 1 comment

Ever found yourself spending a little more than you needed to, just because you saw a good “deal”? We all have. It ranges from the enticing little red stickers to the 80% off tag to the last chance sale, so on and so forth. But do these always add up to savings? Are we really saving sometimes, when the store swears by it?

There’s a certain store that I used to shop heavily at, primarily for clothes. On the receipt is a layout of your expenses and what you’ve saved. Routinely, I’ve saved more than what I’ve spent. Or so it claims. I’ve honestly thought that the “savings” portion of a purchase has become a marketing ploy… and it works. It’s even worked on me. I’m ashamed to say, I’ve fallen for the “OMG, it’s 80% off, so it must be cheap!” And in my own personal defense, I’ve gotten a great deal out of it more times than not, but I’d be remiss to admit that I’ve fallen for it a few times and have made the unnecessary purchase out of being compulsive.

How does a store thrive when they are routinely saving you more money than what the purchase price is? Mark ups? Fake percentages? Make believe marketing campaigns? Call it whatever you want, but I’ve noticed that some of these sales were fake. If a shirt is on a 40% discount all year, doesn’t that just make the real price… 40% of whatever they are claiming? But the psychology works weirdly on us. We’ll focus on the 40 part and lock onto it and use it as a justification for the purchase, “It might not be 40% off the next time I come back!” So you try to save yourself a little money with all of these extra savings! And then later realize, you weren’t really going to buy that in the first place, so in fact, you didn’t save a single penny.

When it comes to electronics, I’m not terribly impulsive. I’ll do my homework and compare prices, as well as look up reviews on them. But send me into a clothing store or something similarly small, and I’ll buckle under the pressure of a clearance section or a “Everything must go NOW!” section. It’s ridiculous, because even though I know what’s being done to me psychologically by these stores, I’ve caved in sometimes.

It never ceases to amaze me how the mind works. Even if I made somewhat of a bad purchase, I always seem able to justify it with what I’ve saved, even if I know I really didn’t save anything. I know I make these stores sound devious, but I can’t really blame them for what seems to be quite the clever strategy. I believe it’s within our hands to truly judge what comprises a good deal and discipline ourselves on how to avoid certain impulses when shopping. I get a bigger kick out of bigger savings on items that I actually sought out to buy than pretend savings on a receipt for something I really didn’t need. Ultimately, we have the power to decide whether our purchases are worth saving a few extra bucks over and the ensuing buyer’s remorse (or non-remorse) afterwards.

Has this ever happened to you? Ever thought you had a really good deal only to find out you were duped or spent on something impulsively? Let me know in the comment section below!

Categories: Personal Experiences

Don’t Call it a Comeback!

 

Yes, yes, yes, it’s been a few weeks, but the reasons for my absence have been valid. I just recently finished a class and dedicated some time to that, as well as a side project I’ve been working on for the last few weeks that took my time away from this. But I’m back, and I appreciate the support over the last few months.

But, I did manage to pump out a quick guest spot at someone else’s blog recently, and I just thought I’d make that the newest entry for the Frugal Rican.

So please, do wander over there and check out the rest of her website while you are at it.

The website is titled the “Life of Ikkins” and is hosted by a friend of mine, Nikki, and her current experiences in life. She was gracious enough to allow me to write down a guest post on her blog, so I urge you readers and fellow frugal fellows to click on the link and give it a whirl! Stay frugal, my friends.

http://www.lifeofikkins.com/2012/05/welcome-frugal-rican.html?spref=fb

Categories: Personal Experiences

Bring out your… credit?!

I’m pretty much a rookie when it comes to credit, but in the short amount of time I have spent learning about it, I’ve collected and stored a massive amount of knowledge when it comes to how to sail the choppy waters on that vast credit sea.

Boy, was that a rough sail at first. I didn’t know what was on a credit report, where to get one, and what to do with the information on it once I had even pulled one. Fortunately, I was at least pointed in the right direction (Thanks mom!) and was able to get a free credit report from annualcreditreport.com.

What I found made my jaw drop in disbelief. I had a collections account that was charged-off from 2008 from my former wireless phone company, CLARO (Formerly known as Verizon in Puerto Rico). I was in disbelief because this was an account I had thought to have cancelled in March of 2008. I had cancelled the account because I moved from Puerto Rico to New Jersey and knew that I no longer needed that phone nor the number anymore. Unfortunately, I must have caught a customer service rep on a terrible day, or maybe on a lazy day… and the phone was never cancelled. In fact, the phone kept racking up monthly charges until it went into collections.

I found out in 2011.

Yes, three years later. Shame on me!

Fortunately for me, my father had decided to take matters into his own hands, once a collections agency began hounding him about my wireless phone payment. He actually paid the account but the point was never really discussed, until I talked to him about it, in 2011. That’s right, had I not brought up the conversation casually, a few days after pulling my reports, I would have never found out about the fact that he had paid the account for me. I still appreciate the gesture, but it still maddens me that he had to even write a check for something that had no business even being charged in the first place.

So something didn’t add up. If this was paid off, why was it still showing as a negative account, one that was hurting my credit report and my credit score? I sought out advice from friends and family and called representatives from CLARO. Apparently, it was a mistake on their behalf and they removed the negative tradeline from my report. Problem solved. But for a lot of people, there are marks on their reports that they have no idea about for years after, like myself, and the process to fix their reports, might even be slightly more difficult than mine. That’s why now I advocate checking your reports, even if it is once a year. You never know what nasty little negative account might be hanging out on your report, trying to bring you down.

Ever since then, I’ve checked my reports at least once every three months to make sure everything is okay and that nothing evil pops up, rearing its ugly head on my report. Baddies be gone!

Working at a financial institution, I’ve heard horror stories of people who were vying for mortgages and auto loans and then, OOPS, something popped up on their reports that either wasn’t supposed to be there or they just never had pulled their reports before. Don’t be like them, don’t be like me. Don’t let “unwanteds” pop up on your reports like bed bugs in your… well… bed. I was lucky, but luck led me to learning more. And the knowledge within my reports could one day lead me to saving big bucks on a future mortgage and a future car loan. As well, remember that if you are going to cancel an account… any account… make SURE it’s cancelled, even if you have to call back 30 times. I did this with my T-Mobile account when I cancelled it last year and the peace and mental sanity that came with absolutely knowing I wouldn’t have to go through the same situation twice, was definitely priceless!

Living life can be frugal too.

April 11, 2012 2 comments

There is a general perception of frugality out there, a sort of stereotype that seems to resonate with the vast majority of Americans this day: Frugal = Shut-In.

Where did this math equation come from and why do so many people adhere to this belief?

Look, I admit to being frugal in almost as many things as I possibly can, but there is a point in life where living it must take a precedence to saving every single penny. I saw a TV commercial the other day that stated (and I’m paraphrasing): The more places we see, the richer we become. And I agree with this idea wholeheartedly. What’s the point of savings 35 cents on oatmeal if I’m not going to use it towards something that enhances my life?

Sometimes, you just have to spend money to see why life is worth living for, but it doesn’t mean that you can’t be frugal while doing so. There are those that would say that spending a night at a hotel in another state isn’t exactly frugal. But considering the fact that I used one night in a place where I don’t commonly go to as the grounds for a “cultural” trip, I’d definitely say that the money spent was well worth it. Even when you are spending an extra buck, you can still be frugal. I needed a weekend away and decided that I’d do my best to save money while doing so, and although there were several ways I helped maximize my dollar, I’ll just describe one:

The hotel room.

I knew that there was a certain area of Pennsylvania that I wanted to visit, but the amount of hotels that are in Pennsylvania are jaw-dropping. No matter where you look, there’s a hotel. But I just KNEW that I wanted to see New Hope, PA and Lambertville, NJ and I was doing to make it happen. So I looked up hotels… maybe not in the immediate area, but close enough that maybe if I stayed a few miles away, I could see something the next day.

The plan came to fruition. I was going to go see these two towns on Saturday and then stay at a hotel at King of Prussia, PA. Most of the hotels I saw where between $100 to $150. I knew I could do better. The hotel was an hour away from both towns, but I found something that I wanted to visit that was 10 minutes away from the hotel: Valley Forge Historic National Park. I knew the weather would be great for being outside and my girlfriend actually mentioned a place by New Hope that had a flower preserve and a historic tower.

Total cost for the hotel: $80 (including tax) at a DoubleTree by Hilton.

We got a great location, a great hotel, with a very comfortable bed, incredibly nice shower, and a room with one of the loveliest views of the setting sun I’ve seen stateside in a long time. I had looked up several hotel sites which led me to a lower rate. Routinely, I’ll check a hotel’s own website and see that they have listed even lower rates if you pre-pay the room. The room that could have cost me $100+ was costing me a lot less for laying down the cash earlier. Although there is a risk if plans go sour, I knew that they most likely wouldn’t and booked it. For good measure, before I booked it, I made sure to call first to see if they could give me a better deal. The hotel only went as low as the best rate that I had seen on the internet but that WASN’T being shown to me on sites like Orbitz or Hotels.com. So sometimes, it pays (literally) to actually check the hotel website or even call in. Remember, these places are looking to fill every single room, every single night, so there is no shame in trying to haggle for a room.

And although the night might have cost us $80, the memory of us sharing this weekend together through different landscapes and beautiful ones is definitely priceless. I don’t regret at all making this expense as just being able to witness a breath-taking sunset with my girlfriend was more than worth it. So I advise you, frugal readers, to sometimes step out of your comfort zone and discover new places and experience new sights. I do feel richer for experiencing last weekend, but I can rest easy because I did so frugally.

And I have to say, I will leave a shameless plug for this amazing blog I’ve been reading lately from someone I know. This person’s last entry was part of the inspiration for writing mine, because it also deals with enjoying life in the now. Give this person’s blog a read and comment/follow it. I find myself waiting for each next entry just to see the deep inner workings of this blogger’s mind.

http://southinkuknowme.wordpress.com/

Stay frugal, my friends!

PS: Enjoy what I saw last Saturday night:

Categories: Personal Experiences

Water .vs. Soda, 2012

April 2, 2012 1 comment

Now I could begin to list the reasons why soda is the first thing I dropped when I wanted to lose weight. Between the “empty calories”, the carbs, the high fructose corn syrup, the caffeine, or that soda is created entirely in a lab, well, let’s just say, I stopped looking for any type of soda as my go to drink. But this blog is not titled the “Frugal Dr. Rican” so I’m going to cast most health cons aside in my debate to compare drinking soda versus drinking water.

One of the side advantages of dropping soda was realizing how much soda could actually cost in the long-term versus just drinking water. True, we live in a time where water can be free but we opt to pay for it in bottled form, but even then, water is by far cheaper than soda. So as I saw my weight drop, I also saw my budget not be as tight.

So for the sake of this blog entry, I am going to compare buying 24 cans of coke to 24 bottles of water. I figured, this would be easy enough to translate the cost benefits of eliminating soda. Unfortunately for me, I have to buy bottles, since I don’t trust the water in Jersey and because my faucet has a nozzle I can’t attach a filter to.

As of this week, my local Shoprite has two specific sales for bottled water and cans of Coke on the front page:

  • Coke 12-Pack (4 for $12) 12 oz cans
  • Poland Spring 24-Pack Water (2 for $8) 16.9 oz

Right off the bat, I can tell you that the Coke is worth more. You are getting the same amount of Coke (48 cans) than the same amount of bottles (48), but for $4 more and for less quantity. Each bottle of water has 4.9 ounces more than a can of Coke, definitely giving you even more bang for your buck. For the sake of argument as well, let’s assume these offers last you one month each. Trust me, I know a bunch of Coke fiends that would easily drink at least two cans of Coke a day. And have you ever seen people toting Big Gulps? I’ve never figured out how they’re bladder doesn’t explode on the spot.

So over the course of a year, you are spending $144 just on all those cans of Coke. How much do you spend on the bottles of water? $96. Just on that comparison alone, you are saving $48 per year. Just THAT alone. Remember all those times you went out to eat at a restaurant and that soda cost you $2.89? Oh, but they tell you that you get free refills, you know, so that you meet your new friend Diabetes a lot sooner in life? You can easily get a glass of water with a lemon wedge, for free. Assume you go out to eat four times a month and ordered soda. Over the course of a year, you just spent $138.72. Water? $0.

So by now, you’ve pretty much spend almost $200 more just because you had soda, while water, for the most part, has the option to be free.

I keep healthy and frugal, by sticking with water. Because there is another added benefit to drinking water that will cost me less in the long run. Soda has always been in the discussion when it comes to detrimental effects to one’s teeth. Guess where that could cost you? Visits to the dentist. Soda has been linked to several diseases and conditions as well. No matter which ones we are talking about, your insurance is still going to stick it to you with the co-pay. Extra expenses right there.

I could go on and on about other ways it definitely affects your pocket, but by now, it seems like the case is overwhelmingly in favor for the consumption of water. It’s healthy, it’s what your body is composed mostly of, and at least for now, it’s most definitely frugal. Here’s to H2O! Cheers!

No microwave, no cable. No problem!

March 27, 2012 2 comments

So I’ve heard it quite a few times. I’ve heard the comments from friends, co-workers, and even anonymous posters from all over the internet: You don’t have a microwave and you don’t have cable? That’s weird!

My first blog touched a bit upon this, but I’ve received various questions as to the “WHY”. So I figured I’d cover a whole blog post specifically as to why I don’t own either of these two very fascinating pieces of modern technology.

#1: The Microwave:

I don’t own a microwave because it is way too convenient. And sometimes you pay a higher price for convenience. I can make a better meal for less money than you could get for a Swanson TV dinner or even a Lean Cuisine. Not to mention, most of the food products that are microwaved, are pretty much garbage. Now, I won’t go spouting out health detriments to using a microwave oven, because quite simply, I’m not qualified to do so, but I will speak from personal experience.

When I did own a microwave, I was lazy. I bought Tombstone and Totino’s pizzas as if the world depended on it. I’d buy TV dinners because it was easier to spend 2 minutes and 30 seconds watching the plate go round and round inside that black box of evil radiation than it was to take a few more minutes to make a good home cooked meal. And those TV dinners were always so easy to just throw away, because who has time to do the dishes when I could do more important stuff, like browse countless videos about cats on YouTube, right?

I gave up using a microwave a few years ago, because I’d rather make my own meals, because I didn’t want frozen dinners or cardboard pizzas that not only dented my wallet, but bloated that three digit number on the scale, looking up at me with great disapproval and disappointment. I do just fine with a small indoor grill and a few stainless steel pots and pans that I have around. I can do without the microwave, but I do miss popcorn every once in a while.

Microwaves used to be my go-to gadgets for many of my home cooked meals, but I soon learned the secret from quite a few of my family members when it came to re-heating rice: A small pan and some olive oil can work wonders. So it’s been about 3 years, and I’ve never looked back, I don’t miss it, and I’ll probably never have one again. Since then, I haven’t purchased any pre-prepared meals that required cutting a slit into the plastic and waiting 5 to 6 minutes. Besides, who has ever eaten one of those and wasn’t hungry in 2 hours, anyway? I’m quite sure that just by not having a microwave, I get to save money by not buying those $3 to $5 meals that I see in the supermarkets every week. Every home cooked meal I make costs me about $1 to $2, and even though, I’m probably overstating the price. This adds up to instant savings even in a month’s time.

#2: The Cable:

Because simply, who watches all those channels? You’re paying anything between 40 and 100 dollars a month for a lot of TV you probably don’t even watch. Now, don’t get me wrong, I love me some shows, but paying that much can be avoided by using a service like Hulu Plus or Netflix or a few of the other services out there on the internet. Currently, I actually don’t have any of those, because I simply don’t have the time.

I actually found myself to be the least productive when I did have cable. I would procrastinate a lot easier before because I’d watch a 30 minute show and then another, and then the next one, and before I knew it, my whole night had flown by without realizing it. Not only that, but I was overpaying for it as well. Also, the one thing that always frustrated me about subscription service TV was that I could almost never find anything good on the weekends, which seemed to be when I had the most available time on my hands.

So a few years back, I decided to off the service and to just use the internet for anything I wanted to watch (legally, of course). I use the basic Hulu service, which costs me nothing and I just keep current on any of the shows I want to watch.

Eventually, when I move in with my girlfriend, we’ll consider our options. I do have an XBox and could easily sign up with Hulu Plus for a $7.99 service that gives me access to many of the shows we’d watch if we had a packaged service, but with the freedom of not trying to follow their schedule or banging our heads against the wall because we forgot to DVR. Ah yes, DVR’s. DVR’s and HDTV boxes. Another reason to skip the service. A few years back, I was getting charged for both as well. The prices were ludicrous and even though things might have changed, I seriously don’t want to go back to that. I don’t want to go back to having a contract that I can’t really break, followed by a price hike at the end of the contract. Just by not having cable, I save myself at least $50 bucks a month. And by not watching a 22 minute program with 8 minutes chock full of commercial, I save myself a bunch of time that I could use on more productive activities… like this blog.

Whether I keep the Xbox with Hulu or Netflix or get a Roku Box or choose another option, time will tell, but one thing I know for sure, for the time being, I won’t be subscribing to any cable services and I definitely won’t be owning a microwave. And did I also mention I make coffee without a coffee-maker?

In Love and Finance

March 19, 2012 5 comments

In love and finance, communication is key.

A few years ago, I thought having good credit meant that you didn’t have debt. Well, a lot of debt at least. I had always bought used cars with cash, had no mortgages, and only had one credit card with a balance on it. I thought this was EXCELLENT credit, and surely everyone in the world would want to finance a car for me at the lowest interest rate. And as soon as I would walk into a bank and just begin to word out “mortga…” someone would just hand me over the keys to a brand new house, and even throw in a white picket fence.

It takes one good relationship to turn that fantasy perspective into a harsh reality.

I’ve finally grown, not only as a human being, but as a person within the financial world. I’m not as naive anymore, and it took a shock to my system to get there. I’ve finally begun to think about the possibility of owning a car that wasn’t made in the 1990’s, and to actually one day own a house with someone dear to me. This is when I began to learn that the communication part not only applied to the relationshipy aspects of a partnership, but to the financial side of it as well.

We eventually sat down after a year or so, and began to discuss our finances and our long-term plans. She is a home owner – I’ve always rented. She has bought a new car at some point in her life – I’ve never had a new car. She had a grasp on what her finances were and how to juggle more than one card – I just had one card. But I have always known how to budget, so I was never truly in the red, but I began to see red when I noticed that I wasn’t doing as well as I thought I had been all my life. I had one credit card and I only had it because there was a free t-shirt involved (college days). I’m just glad there was a t-shirt involved because that one card was the foundation which got me started.

It’s a little daunting to begin at 30.  To truly grasp the severity of knowing what Ineeded to do next. It was in my conversations with her that I realized I was far behind, and needed to catch up. But instead of feeling sorry for myself, Idecided to do something about it. I started reading up on credit – how to rebuild (or in my case “build”), and what to expect as I journey forward. Throughout this whole process, she’s been there supporting me, as well as learning herself about different things that we had both missed before. Our financial discussions have led to a better relationship as well. These are discussions I had previously avoided. I once thought that religion, politics, and finances were three things that should never be touched upon – but I was wrong.

To be quite honest, nothing can be more liberating in a relationship than to have the woman of your dreams scan through your credit report. I have to admit, I did this willingly with her as we showed each other our credit reports, and it felt like an intimate moment. It felt like I had just let someone into a very secret and private part of my life, and I’m happy about it. Now it definitely feels like she knows every aspect of who I am. We’re on the same page, and when we talk about financial goals, there are no skeletons in the closet. We know where the other stands which actually strengthens the “trust” component in our relationship.

Retirement, purchases, credit, cars, houses, etc… all became a part of our communication. We’ve yet to take the next step, but I hope that one day, when we do, we’ll both be ready not only mentally and emotionally, but financially as well. Two years ago, I would have never thought about looking up forums to devise strategies on how to improve my credit. Nor would I have thought of looking up fuel-efficient cars, or watch House Hunters to get a better grasp of how the house hunting might go. It’s a fun new reality now. One that I still have time to work on before the time comes when I can get a good car financed at a low interest rate, and before I walk into a bank and have the keys thrown at me with a cannon… although we’ll see about the free whitepicket fence.

P.S.: My most lovely significant other fulfilled the “editor” position on the rough draft to this blog entry. It’s wonderful. She’s the love of my life and my proofreader.

P.S.S.: I never gave proper love to the person who designed my logo, Jed, thank you for an amazing logo. It truly captured the essence of what I wanted. You da man now, dawg!

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