Today we have a guest post from the Car Negotiation Coach who takes a break from discussing car negotiation strategies and reveals how to combat common sales ploys.
 

Whether you’re buying a car,  jewelry, mattresses, or a big screen TV, you’ll most certainly be going head to head with a professional salesman.  Unfortunately for you, these folks practice selling every day.  In order to get a good deal it helps to understand the tricks they use to separate you from your money.   Let’s breakdown are a few of the more common sales tactics and how to defend against them. 
 
1.       Sales Tactic: Teaser Ads.  Before you arrive at the store the dance has already begun!  Many times you’ll find a teaser ad that’s too good to be true.  Stores advertise an incredible offer, but when you arrive it’s out of stock.  That’s because they only stocked a limited number of that amazing item in the first place.  Once you’re in the door, the salesman tells you they just happen to have a similar model with a faster processor, more memory, etc. for only $200 more.

Defense:  Realize this may be the case before you leave the house and don’t get your heart set on the item.  When you arrive at the store, maintain your objectivity and look for the best value even if your target purchase is not there.

2.       Sales Tactic: Assuming the Sale.  One of the first tricks salesman are taught is to make subtle, forward looking statements to help buyers subconsciously accept the terms of the deal.  For example, “Your wife will love this when you get home”, or “let’s try on some ties to go with your new suit”.  Mechanics are great at this technique.  You go in for an oil change and they’ll tell you they need to replace the filters and brakes…..and it’s not phrased as a question! Pay close attention the next time you buy something and you’ll notice these types of statements.   People naturally don’t like conflict.  Subconsciously it’s easier to go with the flow then to openly contradict the salesman and back out of a purchase.

Defense:  Don’t let a salesman convince you that you’ve bought something until you’ve made up your own mind.  Take your time and make a purchase on your own schedule, not someone else’s.

 
3.       Sales Tactic: Limited Offer.  The idea is to create a sense of urgency and prevent you from shopping around for a better price.  For example, a salesman tells you “If you buy this TV today, we’ll give you a free extended warranty, but the offer is good for today only.” 

Defense:  Take the time to evaluate the offer.  Do you have a cell phone or pda?  Excuse yourself for a minute and see if you can find any similar deals online.  Don’t be pressured to buy immediately unless it really happens to be a great deal.

 
4.       Sales Tactic: The Rebate.  Retailers budget for extremely low rebate redemption rates, sometimes even 20% according to Wikipedia.  They expect that the general public is too lazy to take the time to complete a rebate.  Doesn’t that sound crazy?  But think about how easy it is to procrastinate getting an original receipt, filling out the rebate card, addressing an envelope, etc.

Defense:  Read the fine print and understand what hoops you will have to jump through.  If you do decide to buy, make sure that you actually mail that rebate in! 

 
5.       Sales Tactic: Breaking down payments.  To overcome the “I can’t afford it” objection, a salesman may break down a figure into daily amounts to minimize the appearance of the overall cost.  You’ll notice this tactic used for big items like financing a car or a home mortgage.  They may say something like, “you can afford an extra $100 a month…it  comes to only $3 a day, same as a Starbucks coffee.” But that same $3 a day adds up to $1100 a year pretty quickly!

Defense:  Never be conned into thinking about price in terms of payments.  Always negotiate the total purchase price, payments are secondary.

 
6.       Sales Tactic: One-of-a-kind products.  Do you know why it’s so hard to comparison shop for mattresses?  It’s because you’ll never find the same brand and model of mattress at a competing store.  The mattress companies do this on purpose to confuse buyers.  Ever notice how hard it is to compare jewelry from one place to another?  They don’t want you to be able to compare apples to apples and shop around for the best price.

Defense:  Compare the key factors that make up the quality of the item you’re buying.   If it’s a mattress, compare coil counts and coil gauge…  If it’s a ring, compare the cut and number of karats, etc.

 
7.       Sales Tactic: “I bought this model myself”.   Whether or not this statement is actually true, the intent is to give you the impression that the item must be the best if the salesman owns one himself.  What they neglect to mention is that if they did in fact buy it, they probably got it at cost or used their employee discount to make it worthwhile. 

Defense:   Ask them how much they paid.  And are they willing to share that employee discount with you? Not likely…
 

When buying big ticket items, the key to getting a good price is to take a step back and evaluate the deal.  Realize that almost everything the salesman says is calculated and on purpose.   They are playing a game to get you to you to spend more money.  If you are aware this is happening, it’s much easier to keep your perspective and get a good deal.
 
Photo By: hahatango

Hello everyone.  I am away travelling on some very important business for a couple days and thought this would be a perfect opportunity to share a guest post from the National Endowment for Financial Education (NEFE).

While I tend to spend less time with basic financial concepts, (which is a real sweet spot for NEFE), I am a firm believer in Financial Education and want to share their message with you guys. 

Continuing my New Year’s theme of Goal Setting, this guest article offers practical resolutions for improving your financial footing in the new year.  Also included are links to NEFE tools, websites, and Twitter feeds.

Enjoy!

The National Endowment for Financial Education is a non-profit dedicated to improving the financial literacy of all Americans. NEFE operates the site Smart About Money and have developed a series of articles filled with tips to help you make 2010 the year of financial freedom.  You can also find Economic Survival Tips, worksheets and articles focused on financial education related to housing, spending, credit and job change. Follow NEFE on Twitter at @nefe_org

1. Control spending: If you spend less you’ll have more money available to pay down debt and save for the future. Write down your expenses for a month to see where your money is going. You might be surprised by how easy it is to find places to scale back.
2. Create a debt repayment plan: If you carry credit card debt, write down everything you owe and make a plan to pay it off. Start with small items you can act on right away–it will make tackling the bigger debt easier. Also, try buying with cash only. It’s a sure-fire way to prevent increases in your credit card debt.
3. Set up auto-savings plans: Arrange with your bank or another financial institution to have a set amount deducted from your checking account to a savings account each pay period. Of the Americans who have been able to contribute to emergency savings funds, automatic withdrawal is the most popular method, according to the Consumer Federation of America.
4. Boost retirement savings: If your employer offers a 401(k) plan, increase your contributions. If you don’t have an employer plan, open an Individual Retirement Account (IRA) and arrange for contributions to be made automatically from your checking or savings account.
5. Create a long-term plan: Write a list of your long-term goals, such as buying a home or saving for college or retirement. Visit the Life Events section of Smart About Money for concrete tips on accomplishing those goals.
6. Protect Yourself: Be prepared for the unexpected by making sure you, your family, your assets and investments are insured and fully covered. If you do not have a will, make 2010 the year you establish a life plan.
7. Find a financial buddy: Share your financial resolutions with a friend, colleague, or family member, and you’ll be more likely to keep them. Find someone else who wants to turn around their debt or cut their spending, and establish a mutual support system.

Thanks to NEFE for the tips and to you for reading along.  I hope you’ll take a moment to comment below – let me know what you think about the information provided, as well as, your thoughts on my having guest posts.  I typically don’t pursue guest posts but may considering allowing increased opportunities in the future.

Photo By: Photos8.com

The idea of social experiments is something I find interesting.  That we can engineer a setting and personal interactions to drive a particular result from others or even ourselves is compelling and a tool we should consider leveraging in our daily experiences.

I once read about a grad student studying psychology who decided to conduct her own social experiment on a tenant in an apartment unit she managed.  The renter was a small town handy man and her experiment was to see how he would react if she treated him cruelly.  After several months of this abuse, he bludgeoned her to death with a hammer.  Tragically, though no less ironic, she got exactly what she asked for even if not entirely what she wanted.

And that, I think, is what makes the idea of social experimentation so interesting.  You may be able to directionally ascertain the outcome but the specifics are impossible to predict.  In that you are dealing with real live people, the outcomes will vary and depending upon the nature of the testing, the results can be very real and impactful.

A few years ago during a particularly gloomy period in my career –a couple down months over the course of nearly a decade and a half is no exception – I concocted a sort of psychological experiment as it related to my job, or at least a job I would have welcomed in that moment.

At the time, I was travelling 4 days a week every week and had been doing so for many years.  I had spent too many nights alone in hotel rooms and cabs and airplanes.  During this particular stretch, there were too many mornings I simply wanted to stay in the hotel room rather than deal with another day of client interactions.

And thus was born my Twilight Zone-like scenario. 

Consider a job where your only responsibility is to show up.  You are in at 8am and out at 5pm.  Noon is lunch and there are scheduled 10 minute breaks at 10 and 3.  Your work site is a standard room in a nice but not opulent hotel.  It is a one year opportunity and pays twice your current income at bi-weekly intervals.  Your only responsibility is to show up.

You must show up every day and be present all day because one day the phone will ring and your lone responsibility is to answer it on the second ring.

The call may come 10 minutes into day one or just as your contract is about to expire.  The call could come in April or October.

Fail to answer the call and you forfeit the gig and must repay all the income you’ve collected to that point.

Chew on that for a moment, it sounds easy… or impossible, once you finish the thought.

Now it would be dime-store to parallel this to our daily lives in terms of just showing up being half battle and being ready to answer the bell when it rings.  That is too easy.

We talked earlier about engineering situations to influence others or even ourselves.  Surely that works for mindsets as well, right?

Think this through, if this were your job you certainly would attend each day and look for ways to perform.  But you’d likely also be wary of how you spent the money.  Twice your regular income is compelling because it invites extravagant spending.  But if you feared the risk of having to return it, you’d likely be more thoughtful in your short term save vs. spend decisions.

Admittedly the parallel is not 1:1 but this is social experiment and not linear math.  In the experiment we can easily recognize the significance of delaying the pleasure promised by the enhanced income.  Then why is it so tough to grasp this same concept in our normal daily lives?  Twice the income is a compelling metric because the average person wastes roughly half their take home pay in monthly debt obligations and other reckless spending habits, most of which might be eliminated within 12 months given appropriate discipline.

Now that starts to sound interesting if you’re piecing it together correctly.  In the experiment you might earn twice your current salary (half of which is likely already obligated to debt or poor habits), for a defined timeframe.  However, in the real life facsimile the same year of discipline can set free half your disposable income in perpetuity.

As an added bonus, consider the game again and a successful outcome.  If, when you picked up the line, the voice on the other end asked a single question whose answer might allow you to double yet again your payout.  Given days and weeks, even months and countless hours to fill, how would you honestly answer the question – “what have you accomplished in this time?”

Photo By: partylikeits1985

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The Friday after Thanksgiving has long been called the single largest shopping day of the year.  It is a perfect storm of availability, as many American’s enjoy the day away from work, and transition into the Christmas season.

Retailers have hyped us into believing that today is itself a shopping holiday.  Early morning door busting openings and sales that once started at 7 or 8am are now launching at 4 or 5am.  The scene is surreal as sales carnivores are whipped into such a frenzy that one door greeter was actually trampled to death at a WalMart in Long Island, NY last season.  As inglorious a demise as I might venture to imagine.

But what message is actually being conveyed with our “Black Friday” branding?  For all the intrigue and mystery the name invokes, its roots are pretty boring and basic accounting.

In this nomenclature, black represents profit just as red represents loss.  Therefore, Black Friday suggests a day of great profitability in a sales season known to drive retailer profit/loss determinations for the entire calendar year.

And so think about that for a moment.  We’ve explored previously the idea that retailers have keen interests in separating you from your money.  How brazen then to so actively and collectively promote a day designed to their sustenance.  To be sure, I am certainly more scrooge than your average host when it comes to the commercialization of our more purposeful holidays, but I am not categorically opposed to retail.  Competitive retail is actually a principle tenant in my utopian vision, but so too are restraint and personal accountability.  Therefore, proceed with caution if you elect to participate.  Don’t let our merry retailers paint their books black while turning yours to red.

Photo By: Esther_G

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A couple months ago I wrote an article asking if your money likes you.  In a transitive way, I was really asking if you like your money.  Of course you may think that you like your money, but your actions are often the final arbiter.

I’ll let you have the morsel for free, because today I want to spend some time talking about a group that I know who does love your money – Retailers.

Of course the most obvious – and scientific – example of retailers plotting ways to separate you from your dollar is the product placement in the grocery store.  Loss leaders, aisle caps, eye level, store layout (milk in the back) are not at all arbitrary.  Rather, they are focused fields of study and even hotly contested amongst product manufacturers.  For example, did you know that some beer and soft drink distributers will actually pay retailers for prime shelf space or special displays?

Just the other night, my wife was picking up supplies for the weekend and was looking for a particular brand of chips.  A standard size bag was well stocked and easy to find at eye level and sported a price of roughly $3.29.  On the bottom shelf a larger bag was priced 20 cents more but offered a lower unit or per ounce price.  However, at the far end of the aisle (not an end cap), on the bottom shelf was a huge family size bag nearly twice the size and priced only another 20 cents more.  And these were all the very same brand of chips, which says nothing of the innumerable combination of brands and flavors and quality and the variances of their individual packaging and placements.   

These placements were not random and I liken it to use-taxes.  If a consumer is lazy or in a rush and is willing to pay more, then we have a price point for that.  If the consumer is willing to bend at the knee to save, we have a price point for that, and if the consumer is willing to search the entire aisle for the best price, then we have a product to fit that need as well.

But what I find even more interesting is that the spectrum is really 2 dimensional.  Sure, as retailers we’ll offer like-kind products at differing prices for different price points – a bag of chips for every taste and budget – but we’ll also market goods ranging from indispensable to indefensible depending upon your eagerness to separate yourself from your dollar.

And so we arrive at my desired target.  The lead in to now was pure McGuffin to afford me the following opportunity.

Recently while on a flight, I perused the SkyMall magazine and found what must be the most asinine product known to mankind.  The underwater cell phone?!?

Now, for the record, I’m not a diver nor am I huge fan of the cell phone itself.  I was the last person in my circle of friends to take the plunge and I mostly consider myself a willful participant than full fledge advocate.  I consider it a necessary, if at times annoying, tether.

With that said, why in the name on of common sense would I ever want to make myself so helplessly available while enjoying the wonders of the world underwater?

Of course, I would not, but that others would is baffling to me and a boon to opportunistic marketers.  Mind boggling prices can be commanded not due to the complexities of the technology, but because the limited market that finds this a compelling product will have to have one, and at any price. 

 Photo By: Editor B

 Title lifted from Scott Van Pelt

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The title is a quote from Super Bowl winning coach Bill Parcells. The idea is that a team is as good or as bad as its record indicate.  Fans, commentators, and even players like to interpret – or rationalize – circumstances and game events so as to suggest that a team is better, or sometimes worse, than its record might suggest.  A lucky bounce here or a bad call there and those close losses are wins, see, ‘we’re better than our record suggests’.

Parcells on the other hand will have nothing of it.  His take is that a team’s record is its bottom line.  Explanations and rationalizations will not lead you to a championship season, only your results on the field of play.  So rather than tell me that you’re a good team, show me.

Life often parallels sports, or is it vice versa.

We have a bottom line metric that tells us without question or explanation how we are performing in the arena of our personal finances.  Too many assume this metric is our level of income.  But income alone is like the team who scores points in bunches only to watch their opponent do the same.  It (high income) can contribute to a win, but it is not the only ingredient in the winning process.

Rather, the key metric – the record indicating the relative success for our financial play – is our Net Worth.

For purposes of example, consider the wealthy business man living in the McMansion, funding newly leased German luxury sedans and Caribbean vacations rather than retirement or junior’s college education while sporting an array of $1000 suits.  The dude is loaded!  And doubly so when compared to the unassuming school teacher living in a quiet townhome and driving the 10 year Corolla raking perhaps a third the income.

But a funny thing happened on the way to a cozy retirement.  The schoolmarm contributes to her 401k (or equivalent) has steadily paid down her mortgager, and traded a monthly car payment for a positive monthly cash flow.  Meanwhile, the business man’s killer income has washed through his hands like so much water.  His kids are in private schools and travel soccer teams, his perpetually renewed leases provide a relentless and growing outflow, the leveraged dream home is upside down and retirement planning begins with the next raise or perhaps the one after that.

Hey, it sounds like fiction, but I’ve read enough Money mag “Real Life” segments and observed the bevy of Lexus’ in my office parking garage to know that too many folks are working away for the now rather than the future.  Sure they may be paying attention, but to net income and cash flow rather than to the bottom line – Net Worth.

So what is this Net Worth number?  Trent over at The Simple Dollar offers a great illustration of the mechanics, so I’ll send you here rather than recreate his efforts.  But suffice it to say that Net Worth sums the net value of your assets against the net value of your liabilities.

Simply stated:  Net Assets – Net Liabilities = Net Worth

In the example I provided, the business man with his leveraged home, car debts (a contracted lease obligation is the same as a debt… try breaking a lease if you doubt it), and limited savings may actually have a negative net worth.  For all his outward appearance he has nothing but debt to show for his efforts.  Whereas the teacher has learned the lesson taught by others – she has bulked up savings and equity in her home offset only by her mortgage balance.  According to her financial record, she is putting together a winning performance.

Now fast forward to the very end of our individual games.  Our net worth will represent our final estates.  It is the legacy we will or will not be able to leave behind to the ones about whom we care.  Dave Ramsey uses a line when talking to callers trying to settle an estate.  He is not meaning to be harsh, but reality is sometimes cold.  Depending upon the structure of the dialogue he’ll ask or comment (paraphrasing) “there is nothing left to show for the estate”.

When I hear this comment, I personally rephrase the question in my mind – rather harshly I might add – as motivation for myself:  “financially speaking, there is nothing to show for this person’s life work but debt”.

Now, the key is “financially speaking” because we’re all worth more than the money in our accounts, but this is how I repeat the question to myself and it forces me to consider how I’d want it answered upon my coda.

At a minimum, I don’t want my final possessions liquidated to pay my accrued debt.  Nor do I want creditors hounding my loved ones for payment when I’m gone.  So I find it important to keep score.

And, because one day I want to enjoy more of life’s finer things – including a dignified retirement – I actively keep score.  I monitor my net worth on a monthly basis and track my percentage change month over month.  I’ve written before about my net worth goals, and it is a winning score most anyone would be pleased to accomplish.  However, I’m now tracking my progress in a way that allows me to be intentional in my actions relative to those goals.  While that does not by itself ensure success, it sure crystallizes my game plan and directs the path for my execution.  One day I’ll look at my record and feel a touch of pride, because I’ll know both what it says and represents.

Photo By: AMERICANVIRUS

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I remember a day in the late 90’s.  More precisely, I remember a particular episode of self talk back in the summer of 1998.  At the time I was living in St. Louis and was only a couple short years out of grad school.  I don’t know exactly what prompted this specific contemplation but it was about money. 

It was often about money in those days.  I was learning about money but in a slow and passive sort of way.  I had a degree in Finance and an MBA.  And in a very tangible way, I was better equipped to dissect a corporate balance sheet that I was to balance my own budget.  Sure, it could be called a shortcoming of my education, or a degree of hubris in my thinking, but in reality it was case of too much personal in my personal finance management.

When I graduated school and took my first ‘real’ job, I was making more money than I had ever made in my life.  My previous feelings of having money came at the end of 50 hour weeks of landscaping during college summers for what now passes for little more than minimum wage.  This was different.  I was in my mid 20’s making in the mid 30’s and it was supposed to be a good set-up.

That is, until I quickly realized that more money than I’d ever made does not equate to more money that I knew what to do with.  No, there was an apartment to rent and then outfit, and new work clothes to purchase, and of course a new car.  The money went fast, it always did, and I often found myself thinking about it.

Had I only stopped in a bookstore and searched out a title to help me collect a perspective on my musings then perhaps today’s reality, which is not bad by any stretch, would be considerably different.  But that would have been proactive or reactive learning and I was still passive on the matter.

In those days when I thought about money, it was always wrapped in a feeling of helplessness.  Finances happened to me rather than me happening to my finances.  The only way for me to gain control, or so I was convinced, would be to earn my way out of my hole.  I did not believe (or want to believe) that my behaviors at that time could contribute, it was only my ability and luck in securing large raises.  No, I’d have to earn enough money to catch-up and pass my levels of consumption.

And so there I was, speeding south on I-270 and thinking about money.  I suppose it was a lottery sign or casino billboard or even a song lyric that spurred my thought train.  I started thinking about winning a huge sum of money.  But I paused, and thought not about a mega windfall, but a more modest amount.  I started to ponder how I’d define a “life altering” sum of money.  Sure, $100 million is life altering, but so too is a smaller amount.  Perhaps even a much smaller amount.  I started to calculate my debt – a frequent topic in my money musings – credit card, student loans, car… the usual suspects… and a few extra dollars in the bank just in case. 

Yep, $50,000 was all it would take.  That amount of money would have changed my life at that moment in time.

But a funny thing happened on my way to 50k.  I was both right and wrong about earning my way out of my hole.  Yes, in the ensuing years I’ve managed to grow my income by that $50,000 and even more.  Had my hole not grown proportionally with my income, I’d be years closer to basking on the beach by now.  But no, homes had to be purchased, and outfitted, vacations had to be taken, and Harley’s ridden. 

My spending grew at a rate that continued to exceed my enhanced income.  This was the pattern until the summer of 2007 when my life changing dollar amount swelled to well over $425,000.  An unbelievable number even as I triple check the figures. 

It was during this summer than I finally became proactive.  I started listening to Dave Ramsey’s podcast and devoured his books.  I sold a rental property and sold out on getting out of debt.  My number today is still large at just over $200k but it is almost all mortgage, whereas my original calculation was all consumer debt.

I flipped the switch from passive to active, I happened to my finances rather than vice versa, I recognized and reduced risk, I enforced a written budget, and most importantly I shed my feelings of helplessness.  My beliefs and plans and actions empowered me.  Finally, after too many years, I felt control over my finances and my financial future and it was (and is) a fantastic realization.

Perhaps the phrase “if I can do it, so can you”, is the most over used expression when selling a product or service, but it’s the only one that truly fits this occasion.  I suppose since I’m not selling anything, that the words carry more weight, and I certainly hope so.

Instead of selling, I’m actually giving.  When I launched this site I prepared all of my personal budgets and spreadsheets as downloadable documents on this site.  I don’t reference them as much as I once did and I want to circle back to them more often.  I’m planning to start a series in which I step through each of those documents to breathe new life and recognition into those tools and to introduce them to my newer readers.

Here is a link to a summary of each of my budget tools - each is accessible from this page.  If you take a look at these and have any questions or need any assistance implementing them in your situation please let me know.  I welcome questions or requests for assistance.  I’d love to come back in a couple months and roll out a series of reader Q&A’s based on these resources.

Thanks for indulging my money minded recollections, and best of luck to you as you take charge of your financial futures.

Photo By: daretoaffirm

Your Turn – If you enjoyed this article, I would personally appreciate it if you would consider commenting below and/or subscribing to our Free Updates via email or RSS updates.  Thanks!

Hey everyone, I trust that today’s edition finds you well.  I’m a little compressed for time as my next deadline is quickly approaching and having just recently boasted as to my 6 month streak, I wanted to get something out even if I’m relying on others for all the heavy lifting.

One of the treats in maintaining a site like this is the chance to interact with folks with whom I’d likely never otherwise have the chance.  So below, as a small gesture of my appreciation, I’m sharing links from folks who have recently emailed or left comments on my articles.  I hope you’ll give them a look… there’s a lot of good stuff out there!

For example….

Steven at Hundred Goals always has an interesting take on things… and I love his perspective on “Going Green”.

Wizard Prang – you have to read his definition of what a ‘wizard prang” actually is - wrote  a nice piece on the end of the cash for clunkers program.  I personally wonder how the inevitable wave of repos will be reported… or if it will be…

Prime Targeting shares an interesting correlation between a CEO’s personal finance behaviors and the financial strength of the company he or she runs.  Very interesting and something I found equal parts surprising, and not so much.

Dustin from Engaged Marriage connected with me recently and I have to admit, that I’m looking forward to investing some time (when my schedule allows) catching up on his work.  I’ve written about the need to diversify our goal setting and improvement strategies.  Well, here’s a great resource for working on your marriage.  Two articles have captured my attention recently – the first speaks to investing time in your relationship and the second talks about investing time away from the relationship.  That’s a little word play on my part, but check them out and share what you think.

Bucksome Boomer asks if America is becoming more frugal?  It’s an interesting question and with savings and debt repayment trends moving the way they are, it’s hard to argue against it.  It will be this type of longer term fiscal responsibility that will repair our recent economic woes and help stave off the next one… if such habits stick.

Thanks to each of these fine sites and their contributions.  I hope you’ll check them out… and let’em know I sent you!

Photo by:  Roadsidepictures

Recently a reader commented on his grand plan to remove some uncertainly from his monthly budget process.  On the surface, and when introduced this way, it sounds like a good idea and something worthy of a second look.  However, that extra moment of review was at once comical and revolting, at least to my budgetary tastes.

Now this article is not intended to blast a reader.  Only on a couple rare instances have I been so motivated and never have I followed through.  Actually I enjoy comments regardless of their level of agreement or disagreement.  Provided the opinions are authentic and civil, I revel in you taking the time to react and will try to do my best to facilitate the dialogue.  So in that way, this article is more tribute and expansion on my comment response, even if I disagree with this reader’s specific way of thinking.

The original article was on a car my wife and I owned a couple months ago.  We had named the car “Green Bean” and it was our ‘get-out-of-debt-car’ and its looks and functionality were about what you’d expect given that introduction.

The philosophy in owning this car was to minimize our monthly car expenses.  The car was paid for and aside from normal auto expenses (gas, insurance, oil changes) we knew to expect a repair or two each year.  Therefore, we knew to (and how to) budget for those unplanned but expected expenses.

This approach to our car situation – rather than toting a monthly car note – allowed us to plow a couple hundred extra dollars into our debt snowball each month as we aspired and progressed towards our goal of financial freedom.

And here is about where our paths, my reader and I, began to diverge.  We both expressed agreement in wanting out of debt and we both attempted to progress this path by driving older paid-for cars.  We both experienced the associated repairs…. and we then went our separate ways.

I socked away a few extra dollars each month, was diligent (if not obsessive) in my preventive maintenance routines, and redirected my snowball payments if a repair was required.

My valued reader, on the other hand, leased a luxury automobile.

Suddenly his car was HOT and mine smoked due to a small oil leak.

But I believe there exists a leak in his logic.  Predictable expenses and budget balancing was one of his primary factors in assuming a $400 monthly multi-year obligation.  I suppose Kia’s lease payments are not as linear as BMW’s but even that is beside the point.

I felt his frustration when he lamented the expenses and inflated monthly cost of ownership.  I know of what he speaks.  But signing up for such a large payment solely for the sake of expense consistency is a losing proposition, and reeks of day old car fever.

Assume that lease-covered preventative maintenance balances the increased insurance costs and gas consumption remains the same – because who would want to drive more in the nicer car? – the prospect of returning to the dealer on a prescribed schedule is pure joy and driving a glorified rental is cool.  Even if all that is true, which I doubt….

The prospect of making years’ worth of monthly payments for a car you’ll then have to return or finance to purchase is no-brainer bad.  And having 20% of a new car’s value erode while driving off the lot is only mildly less debilitating, long term.

I speak strongly on this topic because my feelings (and frustrations) are of equal strength.  I once purchased a new car, I know of what I speak. 

So here’s my contemplated advice.

This reader, or that, would be better off ‘gaming’ their budget into a consistent flow rather than obligating thousands upon thousands of dollars in the name of balanced budget and predictable debt reduction schedules.  Rather than pay a leasing company $400 a month, simply auto-draft the same dollars into savings and drive the beater another few months.  The saved money could be used to service a repair, upgrade the beater, or payoff a debt if the “payments” were able to accrue. 

Face it, $400/month is $4800 per year.  If you’re spending that much money to maintain a $2000 car then your lug nuts are loose.  Spend a couple hundred bucks to keep it mobile and in a couple more months upgrade your hoop-dy.  Before you know it, you’ll be in a steady, even if not spectacular, car and you’ll be well on your way to debt freedom.  You’ll gain genuine confidence with each progressive step towards success and you’ll develop a keen ability to slice through the drama used to justify excessive spending by many folks today.

Photo By: pavanarsinol111

Your Turn, let me have it!  Heck, you may even inspire my next article!

It is easy to assume that you like your money but do you convey that affection through you actions and behaviors?  How does your money reciprocate?

Of course there are Biblical Principles at play here.  The parable of the talents comes straight to mind.  Principles of stewardship and thankfulness are, as well, quick at hand.

The precept here is that a relationship exists between you and your money.  And trust me; you want this to be a high quality and lasting relationship.

So stretch with me for a moment.  Clearly the parallels are not scientific but the lines are straight enough for license.

For best results with your money:

Treat your money as you would a spouse – with great respect

Treat your money as you would a best friend – enjoy its company

Treat your money as you would a baby – delicately

Treat your money as you would a teenager – know, at all times, where it is and where it is going

Treat your money as you would a father – learn from its patterns

Treat your money as you would a mother – feel its comfort

Treat your money as you would a neighbor – keep an eye out for it

Conversely, if you abuse money or consistently treat it frivolously it will abandon you, and when it goes it will take with it your freedom and security.

If you don’t establish a positive relationship with your money, it will become your master.  You will forever chase but never, for long, grasp.

I challenge you to consider your relationship with money.  As with all of our human relationships, there is likely room for improvement.  The advantage though with money is that it will respond to your affections almost immediately.

Photo By: whatadqr

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This article was featured in the Carnival of Pecuniary Delights: Sweet 16 Edition hosted by Wisebread