Total Money Makeover, Week 8

Week 5 in Financial Peace University was called “Buyer Beware” and discussed the power of marketing and advertising, which are common saboteurs of a healthy budget! Companies want you to buy their product – and they go to great lengths to get your business!

Companies market via…

  • Personal selling
  • Financing and convenient payment methods (store loyalty cards, store credit cards, mobile payment, 90 days same as cash)
  • TV, radio, Internet, and other media outlets (did you know a 30 second TV commercial costs $300,000 to produce?)
  • Product positioning in stores (companies pay to have their product stocked in a particular area of a store)

An important note about the 90 days same as cash scheme – 88% of those are not paid off in 90 days and are slammed with 24% interest dating back to the date of purchase.  Don’t do it.  Save up your money and pay cash.  Nothing is so important that you have to buy it right now, brand new, on credit.

We go through physiological changes when we spend money.  That’s why Dave is such a proponent of using cash instead of cards – so you FEEL the money you are spending.  It’s the same even when we save up and buy significant purchases.  Significant purchases can mean different things depending on your budget, but Dave suggests $300 is considered a significant purchase.

When I was married, we did a budget. For one month. Because it didn’t work and I never wanted to try again. We decided that each of us could spend $100 without asking the other one, that was our fun money fund.  He financed a $1,000 laptop and justified it because “the payments were only $100 per month.”

I can’t even begin to wonder what that marriage would have been if I had discovered Dave Ramsey sooner in my life.  Just as well that I didn’t, though, because I now have happiness, self-esteem, and self-respect.  Can’t buy those.  Can’t finance them either.  #do-over
Dave’s suggestions for purchases include:
  • Sleep on it – wait overnight before making a purchase
  • Weigh your motives and intentions – do not purchase something to make you happy; no amount of “stuff” is going to fill a void
  • Know what you are buying – don’t buy things you don’t understand
  • Consider the “opportunity cost” of your money – you have to give every dollar a place to go; make sure it’s a good place
  • Seek the counsel of your spouse – when you are single, you only have to answer to yourself; when you’re married, every decision you make with money has the potential to impact your spouse.  Always talk about where every dollar will go.

My favorite part of the lesson was the discussion about negotiating.  I really can’t wait until the next time I need to buy something!  Some important tips:

  • Use cash
  • Walk away – they will follow you and make a deal
  • Learn to shut up – they will talk themselves into a lower price
  • Say, “That’s not good enough.”  Also see: Walk away
  • Identify the good guy/bad guy technique – a car salesman goes to “talk to the manager” and regrettably reports that the mean ol’ manager just won’t go for a deal.  Know when to walk away from this.
  • Master the “If I take away” technique – A salesman offers you a TV with a DVD player and surround speakers for $X.00.  Say, “Okay, but I don’t need the speakers or DVD player, if I take those away, what is the new price?” (also useful for car purchases where they want to sell you luxury options).

Confession time

I have a confession – I spent some money on a luxury this month.  I have a Facebook friend who is a coach for BeachBody, and I signed up for an exercise program and nutritional shakes.  There were three outcomes from this purchase:

  1. Best case: I love the DVDs and shakes, I get closer to achieving my fitness goals, and I like the purchase.
  2. Neutral: I don’t love the DVDs or shakes, I return them for a refund.
  3. Worst case: I don’t love them, but I forget to return them in time and I do not get a refund.  I learn a lesson to not buy things like this.

One week after the kit arrived, I’m going with case #1.  I only lost 1.4 pounds in the first week, but I did lose FOURTEEN INCHES over my entire body (measuring bust, chest, biceps, thighs, calves, waist, and hips).  It has definitely been a good purchase, in my case and in my opinion.  It’s easier for me to do the workout at home than to go to the gym.  This is not an endorsement that everyone should go sign up for BeachBody, but it’s my personal experience and I found that it was worth my money in this moment.  We’ll evaluate as time goes on.

7 thoughts on “Total Money Makeover, Week 8

  1. Drop that Debt says:

    14 inches!! Way to go Cait, that is pretty spectacular! I appreciate these financial university posts– its neat to learn more about what Ramsay’s course teaches. And those buy now pay later things are way too scary for me to ever touch them.

    • Caitlin says:

      Yeah, I never did anything like that, but I can see why it’s tempting… and then see why they make so much money on it😦

      Worst I did was buy a car with practically 0 down with a stupid interest rate. Meh.

  2. livingsimplyfree says:

    I don’t see your investment in Beachbodies to be a bad choice, you are investing in your health and overall well-being, plus it did come with a money back guarantee.

    I learned the art of walking away and sleeping on it many years ago. There was only one time I regretted it. There was this lovely antique business in town run by a couple I had gotten to know very well through our children. Anyway, they had this lovely Dutch art in the store. It wasn’t very expensive, $40 but I told myself to walk away. I convinced myself the $40 should stay in savings, everything I could hold on to raising children went into savings. This went on for almost a year, I would go in and admire it, usually with the $40 in hand, but talk myself out of it.

    Then one day I came into some money and decided that this piece of art was mine. I had admired it for close to a year, that meant it held real meaning to me. I drove to the store, and was so excited. I announced to the owner, my friend, that I was finally buying that piece of art. I wouldn’t leave without it. She then informed me she had sold it just that morning. I still think about that painting, and wish I had bought it, but I lived and now it’s just a memory that I think about from time to time and I didn’t have to spend any money to have that.

    • Caitlin says:

      Wow. I’m sorry you weren’t able to get the artwork!

      My mom has coveted a piece of art that she’s seen reprinted over and over at estate sales, antique malls, etc. but it was always expensive. She finally found a print for $6 (in a $50+ frame!) and immediately bought it. The woman is an expert bargain hunter.

      I also talk myself out of buying things. It’s much easier with the budget now, with my big looming goal of paying off the car by Christmas. November is going to be rough, with car insurance, quarterly taxes, and new tires, but I’ll still manage. I still want stuff, but sometimes we have to just put the $40 away again – and it sounds like the universe helped you make that call in your story about the artwork!! I do wish you had been able to get it though, it would have been a good example of sleeping on things before you make the decision.

      • livingsimplyfree says:

        I have to meet you and your mother one of these days.🙂

        I did learn a lesson from waiting. I enjoyed visiting the picture, I enjoyed planning on exactly where I would have hung it, and I enjoyed knowing I could have bought it at any time. But the biggest lesson was that the world didn’t come to an end because there was something I wanted, (very badly) but never owned. I was never pressured to buy it by the owners of the store even though they were friends and knew how much I loved it. Ownership isn’t everything.🙂

        Good luck staying on budget through November and Christmas.

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