Home Budget 102: The Little Things that Save You Big
A while back, I wrote Home Budget 101: The Little Things That Cost You Big. This time, I'd like to introduce you to a few tips and tricks that you may not be aware of to help you save.
Pay In Cash
We’ve all heard that saying, “Cash Is King”, but there are more reasons for this than you may know.
First, if you pay for something with a credit card, you’re likely going to pay interest on it. Compounding interest is a dangerous beast (which I plan to write an entire entry on at a later date), but it really boils down to this: many people end up paying interest on the interest, and can never dig themselves out of the hole. If you buy something on credit, and then only pay the minimums, you’re going to be paying for that item for a really long time and will likely pay far more than you would have if you had just paid cash in the first place.
Another reason to use cash is that some places offer discounts for doing so, which they typically don’t advertise. Many doctor’s offices will give you a discount for paying cash at the time of your appointment, but they won’t tell you about it unless you ask. According to bankrate.com, asking for cash discounts can also be effective at Gas Stations, Restaurants, Jewelers and Computer Repair shops. A lot of small business owners consider cash-in-hand now to be more valuable than the promise of payment later.
The Bottom Line: Cash discounts aren’t typically advertised, but a lot of places have them. If you have cash-in-hand, ask if you can get a discount for using it. I don't mean debit instead of credit, I mean bills instead of plastic.
We’ve all heard the old adage that you shouldn’t buy a new car because it will be worth half of what you paid for it as soon as you drive off the lot. Many people see the value and savings that can come from purchasing a gently used car instead of a new one.
However, most people don’t employ the same money saving philosophy when they make other purchases. There are a ton of things you can buy used at substantially less than the price of the same product brand new.
One of my favorite stores in town is Tradesmart, where you can buy and trade used media. Their selection of both new and used merchandise is huge, and they frequently run sales like “Buy One Get One for $1” on used movies or “5 Used Books for $20”. I’ve only had one incident where a used movie I purchased there wouldn’t play properly, and they exchanged it for me without any problems. As long as that place is around, I will likely never buy a new book or movie again.
If you are looking for something specific, and you know what you want, check out websites such as craigslist and ebay for those items before going to the store to buy them new. These websites are basically huge online garage sales, and you can find everything from tools, cars, instruments, furniture and basically anything else you might be looking for. Often times these items are priced well below retail (or even free) because people just want someone to come pick the stuff up so they can be rid of it. People buy too much tile for their remodeling project, or just don’t play their guitar anymore, or don’t like those huge planter pots in their yard anymore, and you can reap the benefits.
However, use caution and your best judgement when you’re buying from these places. Buyer beware doesn’t really cover it, in my opinion. Make sure you know what you’re buying. I stay away from items like upholstered furniture or mattresses through these sites (bugs are gross). Also, for items like tools or instruments, make sure the seller is alright with you inspecting the item before you purchase it to make sure it works properly.
Finally, be really careful when and where you meet up with strangers to buy their stuff. One helpful suggestion is to arrange to meet the seller in a police department parking lot for the exchange. That location is going to be safer than just about anywhere else, plus if the person is trying to scam you by selling you something that is stolen or doesn’t work, it seems unlikely to me that they would be willing to conduct the transaction right in front of the PD.
The Bottom Line: You can save a lot of money by buying used, but be careful and exercise good judgement. Your safety is more important than any bargain.
Buy Off Season
If you can strategically time when you buy things, you can save HUGE. This takes planning ahead, because you likely need to purchase things long before you need them or wait until the most opportune time.
For cars, there are a couple of things to keep in mind. First, as the new model year starts to roll out, many dealerships will be looking to get rid of their excess inventory on the previous year’s models, so they mark them down or are more willing to negotiate on the price. Also, there are certain times that salesmen are going to be hungrier for your business than others. If you’re looking at a car on the last day of the month or fiscal quarter, your salesman (and potentially his manager) is going to be a lot more eager to get you into a car because their sales goals are in the forefront of their minds.
For other items, think about when everyone else is going to be buying them vs. when almost nobody is going to be buying them, and try to make your purchases in alignment with the latter. Buy summer items such as new patio furniture, BBQs, lawn mowers and swimsuits in the fall when all the stores are putting these items on clearance to make room for the new seasonal items. Christmas decorations are typically 75-80% off on December 26th. Fitness memberships and equipment can be quite the bargain around March and April because many of the New Year’s Resolutions have worn off. Check out the prices on TVs the week after the Super Bowl.
The Bottom Line: Purchasing something the week or month after everyone else does can save you substantial money.
You can bargain and negotiate on more things that you think. I recently purchased a new accent chair, which was already on sale, and was able to negotiate an extra 20% because I was purchasing the floor model. There was absolutely nothing wrong with the chair, but I knew that the manager had the discretion to issue me the discount, so I asked for it.
Bargaining is not just for garage sales. You can get discounts for buying floor models or purchasing items with damaged packing, even when there is nothing wrong with the actual product. Lots of places will price match their competitors, which include online retailers, with some places going as far as offering 10% lower than their competition. Some places will give you a discount if you seem super interested, but imply that the item you're considering is a bit more than you were thinking to spend.
Alternatively, sometimes instead of bargaining for a discount it can be more effective to bargain for add-ons and upgrades. For example, car dealers will sometimes throw in an extended warranty or maintenance agreement if it seems like you’re on the fence about purchasing a vehicle.
The Bottom Line: There are a lot of deals out there for which you need to explicitly ask.
Seriously. Being nice will get you really far. I have worked in a number of customer service positions, and when a customer was really pleasant to work with, I would usually look for ways to make their experience more enjoyable. In general, people like to reciprocate kindness.
Often we don’t know the power that customer service reps have within their organization, but they are more likely to use any authority they have to help someone they like rather than someone that has made them hate their job. If you’re nice to the sales clerk, she might magically find a coupon behind the register that applies to your purchase. If you’re nice to the ticket seller, he might suddenly find a better seat and upgrade you.
This can be particularly challenging in situations where you’re talking to a customer service representative because you’ve already had a bad experience, however it’s often these situations where you stand to gain the most from being cordial. Sometimes we want to take out our frustrations with a company on their customer service representatives, even when the experience we are having is not their fault. In my experience, it’s beneficial to be mindful of the fact that they likely had no hand in your current frustration and that they hate taking calls from dissatisfied customers just as much you hate being a dissatisfied customer. Since so many of the customers they talk to are ticked-off and being jerks about it, they are quick to notice when someone is cool, calm and easy to deal with.
I recently had a less than desirable auto repair experience at a dealership. Eventually, I paid $20 for $150 worth of auto parts because I was nice to the dealership service representative for the entire 3 days that it took to iron out the issue. It required a lot of patience on my part, but being patient is worth $130 in my book. Plus, I never like to be the person that ruins someone else’s day.
The Bottom Line: Treat everyone like they are your friend, and you’ll find many of them reciprocating.
Keep in mind, you’re not entitled to a discount. Just because you ask for a discount doesn’t mean that you are going to get it. However, there are many discounts that you’re never going to get if you don’t ask. When you do ask, make sure you ask nicely.