They say knowledge is power. When it comes to major purchases, knowledge is everything.
Too often it’s the merchant who has all the knowledge and thus all the power.
The result – we pay way too much and get way too little for our money.
STOP. Think about this. Saving on purchases is one of the easiest ways to recoup the cash needed to build wealth.
Between our spending on food, clothing, electronics, appliances, automobiles, and household items, we lose tens of thousands, if not hundreds of thousands of dollars over the course of our lifetimes.
Yet all it takes to get more for our money is a little knowledge. With this we become skilled surgeons wielding a well crafted scalpel, cutting out cancerous overspending.
To purchase everything for less, you must understand the three P’s – Product, Process, and Payment.
How many times have you made the decision to buy something on the spot, right in the store? That shiny iPod catches your eye and you have to have it.
Big mistake. When you buy on the spot you possess limited information about what you’re purchasing. This costs you dearly.
Every time you enter the automobile showroom or stroll into the big box electronics store, you’re walking straight into the lion’s den.
Every retailer implements a silent sales process that guarantees we’ll spend more than we need to.
It can be as simple as a supermarket placing staples like milk toward the back of the store so we’ll purchase more impulse items on the way, or as complex as a car dealer using the “four-square” sales tactic to obscure the true cost of an automobile.
Understand the merchant’s sales process and you’ll make out like a bandit. Go in like the majority of people without any awareness and you’re a sheep being led to slaughter.
We’re talking about the cost of credit here. Understanding your options prevents you from being railroaded into high interest, high fee loans that bleed you dry.
Yet, too often we rely on what we’re told. We take what we’re given and end up getting soaked with interest charges.
Paying attention to the Product, the Process, and the Payment turns you into a shopping pro. Never again will you fall prey to subtle store tactics that separate you from your money.
Let’s take a closer look at the first P – Product.
Know your product before you buy and you’ll laugh all the way to the bank.
“The single most dangerous threat to your pocket book is making a purchase decision inside the store.”
This occurs all too often in our “shopping as a form of entertainment” society. How many times have you been window shopping, only to find yourself coming home with a new camera, television, or hand bag?
When we purchase things while casually shopping, we go in naked, unarmed – without the necessary information.
We’re left dependent on the store flier, store display, or worse yet – the salesperson for information needed to make smart financial decisions. A recipe for disaster.
This is one of the reasons car salespeople try to get you to buy while you’re in the showroom. You lack the necessary information. The emotional pull of the car is calling your name. You’re a prime time catch, ready to be reeled in.
Rule of Thumb: Never purchase a costly item the first time you see it. Think televisions, electronic gear, appliances, and especially automobiles. You almost always lose money. Don’t put yourself at a costly information disadvantage.
Do your research first. Relax in the comfort of your own home. Squash the information disadvantage. With the internet by your side you’ll be a shopping pro in no time.
One of the greatest disadvantages you face while in the store is not having comparison pricing information.
Could you find that washing machine somewhere else for 10% less? Is the advertised “sale” really a sale? Is that DVD player available much cheaper on line?
In the comfort of your own home you can use the internet to compare prices at both online stores and brick and mortar establishments. This guarantees that you’ll find the lowest price possible. Simple but effective.
Determine Long Term Costs
This is perhaps the biggest mistake I see people making. We focus on the price. Yet, this tunnel vision can be our undoing.
While we scrutinize the cost of the initial purchase we often fail to take into the account the costs we’ll pay after the initial purchase.
- That iPhone may cost $199, but do we actually think about the $94 service charge that’s going to hit us month after month?
- The silk blouse is on sale for only $49, but have we factored in the $5 dry cleaning bill we’ll be facing for years to come?
- The laser printer is a steal at $125, but have we looked at the replacement toner cartridges that’ll set us back $69 two or three times a year?
Looking at the purchase price, as well as the long term costs, allows us to make better decisions.
Get an Honest Review
Who’s going to give you an honest review in the store? The salesperson who wants you to buy something?
How effective is that vacuum cleaner? To listen to the salesperson its the greatest invention on earth. Is that four door sedan safe? According to your saleslady it is. Again you’re at an information disadvantage and it could cost you.
You work hard for your money. Spend it on the best products available. The internet provides a wealth of product review sites. Get the real deal on anything you’re considering purchasing from people who’ve actually bought and used it.
Consumer Reports prints an annual automobile issue that is a must read if you’re looking for a new car. Websites like Cnet.com and ZDnet.com offer in depth professional and consumer reviews of consumer electronic devices.
Sites like Amazon.com, Epinions.com, and Buzzillions.com offer hundreds of thousands of reviews on everything from washing machines to space heaters. Almost anything you can imagine has a review written about it. And they’re all easily accessible online.
Determine Which Features Are Important to You
Too often we pay for features we never use, and pay too much money for products that don’t have the features we need.
- Do you really need that electric start motor for that lawn mower?
- Is the Blu-Ray player “PHL Reference Chroma Processor Plus” system really worth the extra money ?
- Do you really need the Crossover ignition system on that new grill you’re considering?
According to the salesperson you do. But the question is, does the added feature matter to you? Will you use it? Is it worth the extra money?
Use the power of professional and consumer reviews. Here again the internet is your best friend. You’ll never have to take the salesperson’s word for it ever again.
Online you’ll quickly find out what features are must haves and which ones are expensive gimmicks.
Watch Out For the “Accessory Trap”
This an area where retailers clean up. Think about it. It’s much easier for them to sell you a $50 computer case, $10 anti-glare screens, $125 back-up battery, and $20 surge protector once you’ve spent $1400 on a new computer. But truth be told you can usually purchase accessories online for a fraction of the cost.
Never fall prey to the “accessory trap” again. Do your research. Know how much your accessories should cost ahead of time. It’ll prevent you from paying exorbitant prices in the store.
Yes, researching your purchase on line before you buy may not be as fun as shopping in the store. You may not get the same rush as you do when you buy something on the spot.
But rest assured that you’ll pick the product that best serves your needs, at the best price…….. and you’ll smile as you think about the poor souls throwing their money away.
Years, even decades of intelligent shopping will literally save you tens of thousands of dollars. In the age of the internet there’s no reason not to have all the information you need before putting down your hard earned money.
- My name is Dr. Charles Alonzo Peters and I created Mocha Money because I was tired of watching people struggle to make ends meet, living and working just to pay bills, becoming swallowed up in the quicksand of spiraling debt.
You deserve more out of life. Your family deserves more.
My goal is simple – to help you live a more prosperous, financially sound life.