Personal Finance 
6
comments

Photoretouching the Joneses

Keeping up with the Joneses… for the longest time that seemed like the American past-time. See your neighbor get a 50″-inch flat-screen television, you had to spring for the 72″-incher. See your neighbor roll up in a BMW 3-series, you had to get yourself a lease on a 5-series. See your neighbor install a hot-tub? You had to dig your own in-ground pool. For years, consumerism dominated America and so many people went in the hole to one-up their neighbors, friends, and family.

Fortunately that little game seems to be waning along with the economy but I find that this unhealthy competition looks a lot like photo-retouching… something a recent Dove commercial railed against.

What’s my point?

(Click to continue reading…)


 Reviews 
1
comments

Review: Gotcha Capitalism by Bob Sullivan

Gotcha Capitalism by Bob SullivanIf The Consumerist were a religion, Gotcha Capitalism would be its Bible.

I think that every consumer in America needs to read Gotcha Capitalism by Bob Sullivan (he also writes for Red Tape Chronicles). Go to the library, head to the bookstore, jump on Amazon.com, but get yourself a copy. This isn’t a book about investing that appeals only to those with some extra income to invest in the stock market. This isn’t a book about relationships and money. Gotcha Capitalism will teach you how to identify how you’re being cheated by major corporations and what you can do about it. If you spend money, you need to read this book. (I’ve never given a stronger endorsement to a book) Heck, just get it and scan it, you’ll end up savvier than when you started. I bet that once you start reading, you won’t want to stop.

The book has three major sections. Section one describes Gotcha Capitalism, how ten industries are bilking you and every other American out nearly a thousand bucks a year ($946 on average, they calculated, and that on only ten specific industries), and how they get away with it. Section two describes exactly what they’re doing and how to defend yourself against it (and get your money back!). The third and final section is like a tool-kit of consumer tools – a collection of sample letters, emails, scripts, etc. for dealing with companies. In summary, section three is the hammer, section two tells you where to hit them, and section one charges you up with the fury you’ll need to drive that nail home in one shot.

The crux of section one is that the world is separated into myopes and sophisticates. Myopes are the folks who happily overpay for things and don’t comparison shop. Sophisticates are those who are savvier consumers, who read more of the fine print and comparison shop products so that you get a good, if not the best, deal available. I’d say all of you are sophisticates (no I’m not buttering you up, a myope wouldn’t be reading blogs about personal finance, they’d simply trust the first financial planner they met) and we’re the enemy to corporations. The solution to the busting the comparison shopper is to confuse them. While we do have savviness in abundance, we only have so much time. So they force arbitration clauses on us, and hidden fees, and ridiculous early termination charges. They hide where the true cost is (for printers, it’s in the ink, not the printer) so that you can’t accurately comparison shop. They deliberately plan to confuse and befuddle you to the point that you become a myope. Your brain can only process so much! Myopes are awesomely profitable, sophisticates are not… and so the game begins.

Section two goes into every one of the ten industries, and more, they identified (Credit Cards, Banks, Retirement/401(k)s, Mortgages and Rentals, Cell Phones, Home Phones, Pay TV, Internet Access, Travel, Groceries, Gift Cards, Rebates, Student Loans, Everything Else) and talks about all the fees and ‘gotchas’ they employ. A great one they discuss deals with retirement plans and 401(k)s. The ‘K’ in 401(k) stands for kickback. :) Your HR contacts a third-party administrator to handle the fund options for your 401(k). Your company gets a great deal on the administration of the plan from the third party administrator because the third party gets a huge “revenue-sharing payment” (*cough* kickback *cough*) for including certain funds. They state that 90% of mutual funds use revenue sharing. 90%. Look to the person to your right and then the person to your left, chances are you’re all getting screwed. This section is nearly 200 pages long.

The last section is the toolkit section with sample phone scripts and form letters you can use to battle the fees described in section two. The sample scripts are great because they outline exactly what you need to do and they can help keep your emotions in check. If you’re listening and reacting, there’s a pretty good chance you’ll get angry, flip out, and start screaming at the poor CSR on the other end. By having a script to follow, you can go through it like an emotionless killing machine to get the job done. Plus, yelling never helps.

That’s Gotcha Capitalism in a nutshell. I don’t really want to talk it up any more than I had in the first paragraph so I’ll leave with this suggestion. Give the book a chance by getting it at the library. When you realize you can’t put it down and that it could be a handy reference for a long while, you’ll understand why I was so positive about it. :)


 Shopping 
8
comments

$19.95 Pricing Explained

There’s an interesting Scientific American article out regarding Why Things Cost $19.95 and it delves deeper into a concept most people understand and generally regard as true. I always had thought that the purpose of pricing something at $19.95 or $19.99 rather than $20.00 was because it seemed psychologically “much cheaper” despite an actual difference of a few cents. While that may still be true, the article in Scientific American seems to paint a picture in which the impact is more subtle. If the original price is in round numbers and we try to guess the wholesale cost, our guess will be far lower than if the item were originally priced a few cents off. The $20.00 price puts our “increments” in whole dollars whereas a $19.95 price puts our “increments” in cents. The mental anchor, whether it’s a round or not-round number, really set the stage for how we guess.

To be honest, I never bought the concept that $19.95 seemed psychologically cheaper than $20.00 but this explanation seems far more plausible. If your eyes see a $20.00 item and your brain unconsciously guesses it’s worth $18.00, you’re less likely to buy it (because you want a good deal). You’re more likely to buy it if your eyes first see $19.95 and then your brain is tricked into thinking it’s worth $19.45, you are paying less of a premium (despite you actually not knowing how much of a premium you’re paying). The trick is far more subtle!

To extend this further, and this is now based on my experience (or perhaps I read this somewhere a long time ago) and not the article, I find that the Wal-Mart pricing structure is intended to give shoppers a sense that they are getting a deal. Now that people are tuned into $19.99 being actually $20 (or more, given sales tax), they gone to weird pricing like $19.43 and $19.57, because I think people see odd numbers and think discount! $19.99 is regular price, but if it’s $18.76, it probably means it’s cheaper because another retailer would probably price it at $19.95. I don’t know if this is actually what happens but I bet that’s what they’re banking on.

What do you all think?


 Personal Finance 
33
comments

Linens ‘n Things May Declare Bankruptcy, Don’t Hold Gift Cards!

It took a while but LNT is liquidating its remaining stores as of October 14th, 2008.

Linen ‘n Things has filed for Chapter 11 bankruptcy, freezing $42M in gift cards.

We received many gift cards as wedding gifts (thanks!) and fortunately none of them were Linens ‘n Things cards because they’ll be filing for bankruptcy tomorrow ($15 million quarterly payment is due!). What does this mean for gift card holders? There is a possibility that Linens, as Sharper Image did, will suspend the acceptance of gift cards and anyone holding one will be left with nothing. Gift card holders are considered unsecured creditors during bankruptcy, which puts them after secured creditors and thus less likely to receive anything. You didn’t think you were lending a company money when you bought it, huh? :)

(Click to continue reading…)


 Shopping 
0
comments

Consumerist Kit – Becoming A More Savvy Customer

The Consumerist is a great site. I’m not saying that because they’ve linked to me a few (I think) times, I’m saying it because if you want to hear the miserable experiences of consumers like you… go there first. I read about the west coast Jiffy Lube scam there first. I read about the AOL Retention nightmare at the Consumerist first too. And that Comcast CSR who fell asleep and then started asking the customer out multiple times? Yeah, saw that at the Consumerist first too.

But, the Consumerist isn’t about enjoying the misery of others because if you look in their aptly titled Consumerist Kid category then you’ll see great articles like a HOWTO: Complain, HOWTO: Return Everything, and HOWTO: Become a Rebate Whore. These are useful tidbits that will make you a more savvy customer. Those companies collect “best practices” (if AOL doesn’t actually cancel an account when they say they will cancel you then you can’t actually cancel, see how great that strategy works? How are they losing customers?) so think of them as a best practices for the good guys. :)


Advertising Disclosure: Bargaineering may be compensated in exchange for featured placement of certain sponsored products and services, or your clicking on links posted on this website.
About | Contact Me | Privacy Policy/Your California Privacy Rights | Terms of Use | Press
Copyright © 2014 by www.Bargaineering.com. All rights reserved.