Tuesday, March 31, 2009

Frugality Is Popular On This Blog

I am writing a little early because my days off at Sam's Club was switched. I have been online for a while now. I have had roughly 700 visitors on this site. The traffic has slowed down a bit mainly because I have not been adding content on a daily basis. But I am actually okay with that for now because I mainly wanted to do this as a hobby and to have a fan base where I can educate people on this subject. I never knew that I was going to get such a positive response from my co-workers, friends, and net pals. I have also received positive response from people in Japan and France as well, so this thing is global. Most of my response though is a old hat trick called "word of mouth". I only prosper through you, the viewer. So I would like to thank, you the viewer for making this site into something that can inspire me to go on.

Frugal Shopping

This is mainly inspired by David Bach's new book on how not to get ripped off. I am all for not being taken to the cleaners and think the best way to avoid this is through reading and research. So you want some stuff that you saved your hard earned money for. Why should you really do without? People need certain things in their life that gives them meaning, but it does not mean go in debt over them.

If you are reading this understand one thing: you have to get your finances ship shape before you even think about shopping for yourself. The art of frugality means that you should have your finances a massing themselves like a army. They should be accumulating to the point that whatever you are about to go in on should be covered by your assets and then some. It might not hurt to make investments that give you passive income before you enter this phase of your life. Right now, I am not quite there mentally but honestly if I wanted to I could get any thing on the shelf at the store. A year ago, you could not possibly fathom what kind of pain I had to go through.

Now that pain is over and the lesson learning and mentoring must go on. Why do people have to go through a serious amount of self inflicting torment is beyond me. We have these sayings "Pain retains", but that is just not a wise way to learn. I find the best way is to learn through other people's mistakes. And today's topic, is about me learning from other people's advise and misfortunes.

Like I said before, you do need to be a rocket scientist to be frugal. It just takes good old fashioned W-O-R-K. Now that you have taken the steps to secure your future. It is time to do some living in the present chuckieblurbs style.

Despise What You Cannot Have

This bit of information comes from Robert Greene out of 48 Laws of Power. In other words, if the item you want is out of your price range: do not get it. I have always thought that the best way to take care of one's finances is to take care of YOUR SELF first. But, if you want something just to have it, make sure that is it only a fraction of what you earn or make. Do not fall for any "No Money Down" schemes. They really just accumulate interest while you for bare any costs.

Do not get an extended warranty on any item in the store unless it is at a reasonable price. I cannot believe how many warranties I sell per day. There are a lot of people who fall for this and make some 3rd party rich while they become poorer. It is certainly a shame that many of these people pay for an extra year when the product in the store might still be good until the year is up. People think this is just me being disgruntled with my profession, but in actuality I know the inner workings of the warranty. You are far better off with just getting an upgraded membership, that gives you an extra year in service warranty than to pay for another one. If you think paying 5% -15% to safe guard an item that you can just get back by going through membership or claims then I have sure hope you are balancing all of those bait and switch bills and deals that we salesmen give you. Trust me, I have made Wal-Mart thousands of dollars off of warranties and let me tell you, if you know how the system works then you will least likely be scammed.

What Will Give You The Best "Bang" For Your Buck?

It is by far the way of clearance. Warren Buffett says "You can put all of your eggs in one basket; just watch the basket". Meaning when buying something, you should watch the price like a hawk. If you want a HDTV for example (though I probably prefer a book over a TV), you see that it hits the sales floor at $1,300. Right now we will use the word "Hot" since it is used by different stores and I will not jeopardize my job at Sam's Club for not using another word. At $1,300 it is probably about 25%. You can honestly wait and see what happens with the item. Eventually it will enter a phase known in the retail industry as being cleared. The best deals comes to those who wait. Sure this tactic is not full proof and you might not get what you want every time. But if the item gets bought up, you can move on to a better item that you want and amass more money. Frugal people do NOT spend above their means I do not care how bad you want the item. If you cannot afford it, something in your head should tell you to let it sit on the shelf.

Careful when purchasing clearance items. Eventually they will get reduced to the point where they are no longer being sold at the store's location. I think that is the point you should probably try to get them. Look for red flags as in a drastic drop in price. On TVs and computers it is about $500-600, from the original. It means it is about to be "deleted" or liquidated. If this happens, you should go ahead and try to get the item as soon as possible. If you try to get it at a liquidation supplier, you have to find the company that the retailer uses and no one is going to tell you. Those are considered trade secrets. I will tell you that usually when the items are selling BELOW cost is when they will be sold to a liquidator.

Buyer Beware: The Red Tag Items Are Only As Good As The Last Owner

Take it from me, a professional salesman: Red tag items are usually buys that are worth their weight in gold. More than likely the item cannot be returned, but if you buy it at a good price you do not need to worry about the return policy because usually the prices there are below liquidation. More than likely, the last owner used the item and he thought it was too complicated to get it to work.. Meaning that he/she got fed up and got a refund. Those items are then slotted in the clearance aisle, where they are sold to the lowest bidder.

There are things you should look for when buying from there. The first thing that should trigger is whether or not it actually is a good buy. Second is for damage. Lastly, check for missing parts. Do not be pressured by pushy salesmen who just want to get rid of their junk. Make sure the item you are buying comes with a factory warranty or do not buy it. It is that simple. If it does not come with its paperwork, it stays on the shelf.

Do NOT Fall For Baits and Switches.

People will try to up sale you. It is my job to up sale people in order to get more money out of them. What I do is find out what type of person they are and figure out what warranty or credit card I can sign them up for. Frugal people never fall for any of these schemes and neither should you. More than likely, the cost is around 20-30% more before any of those special no money down deals. With it, it is around to 30-40% extra profit. There are great deals at Sam's Club without ever having to go for a credit card, so you should just avoid it outright. Frugal people do not use crutches such as a credit card to sustain them: they use their own cash in order to buy the item. That's right; it's all or nothing! I am serious when I say this. I do not use some plan in order to gain money off of the deal. That only works in investing, not buying something that loses its value.

While investing smart is good, buying smart is equally important to frugality. You should be doing this rarely. Only when you have earned the right to buy something should you do it. Remember the item loses its value as soon as you take it out of the store. If you do value based shopping, you will be A-OK. The best way to buy is to figure out if you are being up saled and what the actual cost is. You might not be able to get the item for your desired price so you might have to buy it at retail. If it is at a decent price, then there is no problem. Ask the staff what the margin on the item is. If they are good salesmen and not total scum, they will not lie to you about their margins. Honestly, I do not lie about this, but I do not give away the true margin. I just tell them that we (as in Sam's Club) might be selling the item at a gain or a loss. Those are trade secrets after all.