Money Listens

a:  A dividend reinvestment plan

b:  The West Virginia Smart529 college plan

c:  ING Direct Online Savings Account

d:  The grocery store

All of these are good choices, but the grocery store might provide the greatest return on your investment.  Every time I go grocery shopping the prices are higher.  We’ve all read the newspaper– with energy and corn prices skyrocketing, producers are passing on these costs in the form of higher prices.  Bread, eggs, milk, and chicken are some of the items I’ve noticed.  Wal-mart and other retailers have been absorbing some of the increases, but that won’t last long.  Stocking up on non perishables, especially if you can find a sale, will pay off as prices rise.

Last week I found canned tomato sauce on sale for 25% off.  You won’t get that return out of the stock market this year!  Whenever you find a good buy on stuff you regularly use, buy about a 3 month supply.  Think of the items you like to have in your pantry.  Tuna, peanut butter, rice, chicken broth, flour, pasta.  Oreos.  (Ok, I don’t have space for a 3 month supply of those).  And don’t forget paper goods and trash bags.

If you don’t have a good idea of prices, start jotting them down on your shopping list.  After you go shopping a few times, you’ll have a list of the majority of items you use.  I bet you’ll see some price increases over the course of a month.  Then you can get out your shopping list with prices and compare the sale flyers.  You’ll know if something is a good buy or not.

But don’t overbuy; just because it’s non perishable doesn’t mean it lasts forever.  And it should be an item you use regularly.  Don’t buy only because it’s on sale.  It has to be something you will use.  Big Lots has Ocean Spray Cranberry Sauce on sale for 33 cents a can this week.  2 cans is a 3 month supply for me, so even though it’s a great sale price, I’m not going to get a whole case.

Dollar stores and other “non-grocery” stores sometimes have good sales on food items.  Check the expiration dates; they don’t seem to do as good a job on stock rotating as the grocery stores.

I’m a fan of Big Lots.  There’s one about a mile from my house, and it can get dangerous sometimes.  It’s a great place for pet food, cleaning products, shampoo, toothpaste, and the occasional can of Cranberry Sauce.  I’m a member of their Buzz Club.  You can join online and get email specials and coupons.  Every few months they have a 20% off everything in the store for Buzz Club members.

You probably don’t think of tomato sauce and paper towels as an investment.  But if you’re getting a good sale price, it beats the stock market.  Pull the grocery store ads out of the newspaper today and see what your investment choices are this week.

I usually have 3 or 4 books around the house that I’m reading. I pick up whatever I feel like at the time. It works best if the books aren’t too similar. Otherwise, I get confused. Last week I read 2 books that seemed about as far apart as 2 books could be, even though they were both “personal finance” books.

Amazon.com has a “Better Together” section. When you’re looking at a book, they offer you a deal on another book along with it.  Sure, it’s a marketing ploy to get you to buy more books, but usually the books work well with one another.  It’s a case of “if you like this book, you’ll also want to read. . .”  I happened to get both these books from the New Books section of the library.  I went to Amazon to read a bit more about one, because I was actually thinking about buying it.  I was surprised to find the two together.

Better Together

It’s not about the money by Brent Kessel

Buy this book with Living Rich by Spending Smart: How to Get More of What You Really Want
by Gregory Karp
today!

Buy Together Today: $28.70

It’s not about the money uses eastern spiritual teachings to explain financial freedom.  (the Dalai Lama meets Dave Ramsey).  The author, Brent Kessel, looks at the relationship between the Buddhist concept of a “wanting mind” and the 61% of Americans who are always thinking about something to buy.  It’s human nature to want, and to want more.  We think “If only I had X, then I would be happy.”  But we don’t use our money on what is really important to us.  We don’t have a plan for how to use our money, so we spend impulsively, and make quick decisions.  Kessel explains the tremendous costs of unconscious financial behaviors and what to do about them.  (Although he’s not too practical on the what-to-do-to-change).

Here’s one example of how costly our spending can be:

You’re saving for college for your kids.  Say your spending is now $3,000 per month and you increase that spending by 3 percent per year (the historical rate of inflation).  But your neighbor, who is more caught by wanting “enough,” upscales her lifestyle to the tune of a 6 percent annual increase in spending.  You will have $457,000 more in 18 years to put toward your child’s education than your neighbor will (assuming you can earn 7 percent in your college savings account).

He warns against making sweeping changes in your finances.  Most people either do too much all at once, or feel paralyzed and do too little.  Balance is important.  Now, here’s the Buddhist part:  Realize that you are, at your deepest core, just fine, even if you never change.

You might be fine, but you’ll still be broke.

The second book is Living Rich by Spending Smart.  When I first picked it up at the library it seemed like a hodgepodge of tips on stretching your dollars.  The first chapter is “Whacking the Worst Offenders,” saving on food, insurance, and telecommunications.  Greg Karp writes a newspaper column, and it shows.  The book reads like his columns on saving money on everything from pets to prescriptions.  But the subtitle is How to Get More of What You Really Want.  Intertwined with clothing and credit cards is his Allentown, Pennsylvania philosophy that you should spend less money on things you don’t care about so you can spend more on what you do care about.  If you get your spending under control, you might find money for something you really want, that you didn’t think you could ever afford.

Each book pleads with you to get the most from your spending.

Each book explains the various “money personalities” and how attitudes and behavior impact spending.

Each book challenges you to answer the question “How can I  use my money on what is really important to me?”

Each book is worth reading on its own, but they really are “Better Together.”

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If you’re like most people, you don’t like Mondays. But Monday is the best day for starting a new habit. Especially the first Monday of a month. There’s a branch of psychology that studies how we problem solve and change our behavior. You can use Mondays to change your old behavior and kick-start a new habit.

Isn’t that a coincidence, today is the first Monday in May. Decide to start a new habit. Pick one that will save you some money. What about cooking dinner at home in May? Not only will it save you money, but it probably will be healthier for you.

To break your old habit of eating out you have to overcome the dreaded path of least resistance (POLR). The POLR is to do what you’ve always done. Studies show that when the POLR is taken away, we become more creative in solving problems.

Imagine it’s dinner time. You’re looking in the fridge and muttering “there’s no food in here, only ingredients.” The POLR is to jump in the car and head out to dinner. Or call Pizza Pronto. But you can’t do this, because you’ve decided to cook at home. You may think “there’s nothing here to eat,” but forced to come up with dinner, you pull out some items, and create something to eat. You may think you can’t, but psychology shows that you can and will be creative and figure out how to get by on what you have. Decide not to take the POLR.

I have to comment on an article in Thursday’s The New York Times. Low Spending is Taking Toll on Economy was the headline. The writer called it “ominous” that Americans were cutting back on discretionary purchases to save their money for necessities. Consumer spending for cars, furniture, recreation and Starbucks has fallen, “reflecting a growing inclination toward thrift.” Since home prices have dropped, families are running up against their credit limits without being able to borrow more against their homes, “forcing many to live within their incomes. [T]he basic laws of arithmetic are now impinging on millions of households.”

Since when is thrift a bad thing? Why is living within your income ominous?

The basic law of arithmetic says that if you spend more than you make, you end up with a negative number. And that number is called broke.

Finally, it looks like some Americans are waking up and finding that saving is the new splurging. Why should you buy stuff you can live without with money you don’t have? Just to help the economy?

About those government rebate checks. Economists agree they won’t do much for the economy. So here’s some advice. That check can do a lot for you. Don’t spend your check. Pay off some debt, put some in your retirement fund, and save some for an emergency fund.

This might make you feel better– here’s another article (in the same Business section).

For Europe’s Middle-Class, Stagnant Wages Stunt Lifestyle

I guess the basic laws of arithmetic apply everywhere.

I am planning to buy some plants today, do some yardwork, and watch a movie. Here’s how I’m going to save $11.00 doing it, and maybe you can too.

If you have a Visa card, you can use it at Lowe’s with a coupon and get $10 off a $25 purchase. Here’s the link to print out the coupon. That’s a pretty good savings.

http://www.lifetakesvisa.com/?id=lawn_editorial2 The coupon is good until 07/30/08. I’m using my Visa branded Debit Card.

Try renting a DVD from one of those RedBox kiosks at McDonalds, here’s a link for a free one-day rental. Just give them your email, and they’ll send a promo code. I find them a bit difficult to use, so you might want to take a kid along with you. http://www.redbox.com/Help/Signup.aspx

Some Valero stations and WalMarts have RedBox rentals. You can check online for the locations. You can’t miss the kiosks because they are the color Red and are shaped like a Box. Get it? Red Box– it’s hard to beat the price, $1.00 for a one-day rental.

Even at Megastores, Hagglers Find No Price Is Set in Stone

This article in the New York Times business section caught my eye. I’ve always been uncomfortable bargaining for purchases, even at flea markets or antique fairs where it’s expected. It took years for me to muster up the courage to ask “Is that your best price?” Somehow, it seemed disingenuous on my part. If I could afford it, I paid the asking price, and if I couldn’t, I didn’t buy it. I would never think of going into Best Buy or Home Depot and negotiating a deal. Evidently, I’m not a very smart shopper. The slowdown in the economy has led to buyers having the upper hand.

Priya Raghubir, a marketing professor at the Haas School of Business at the University of California, Berkeley, said “In the past, when you tried to get yourself a deal and it was an embarrassing thing — the kind of thing you did if you couldn’t afford to pay,” she said. “Now it’s about being a smart shopper.”

A former Best Buy salesman said about one-fourth of the customers in his store tried to bargain. Often, he gave them a better price. He suggested checking the Internet and coming armed with information. If you can show another store with a lower price, the salesman probably has the leeway to match it.

Some shoppers admitted to lying to the salesman. I’m not in favor of being dishonest. Although there is gamesmanship involved, I draw the line at lying. It’s one thing to walk away from a purchase or say the price is more than you want to pay. It’s another to claim the item looks damaged or worn, when you know perfectly well it doesn’t. I want to be a smart shopper and an honest shopper. What about you? Leave a comment below if you have a story to share about bargaining at a Big Box Store.

This is the last post about elephants. Probably. I’ve been writing about Dave Ramsey’s tips for saving money on big purchases. You get to decide what’s “big.” In my mind, big is anything over $100.00. For you it might be more or less than that. In case you’ve forgotten, here they are:

1. Wait before making a purchase.
2. Consider your motive for buying.
3. Never buy anything you do not understand.
4. Consider the opportunity cost of your money.
5. Seek counsel before buying.

Today we finish up the list with number 5: seek counsel. If you’re married, this is very, very, very important. Ask your wife/hubby for an opinion. This list isn’t in a particular order. Asking your spouse might be the first or second thing you do. If you’re not married, and respect your parents’ opinion, you might seek their counsel. Maybe they never told you they had an elephant once, and it turned out to be a disaster. Or, if you’re older, and you did a good job raising level-headed children who are now grown, ask for their opinion. But be ready for the mid-life crisis lecture. “What! At your age! Why in the world do you want an elephant? Don’t you know how dangerous they are.”

Your wife/husband’s is the opinion that really matters, because they have to live with your purchase, too. “Honey, we just put in all that landscaping. And did you forget the kids are allergic to peanuts?” If your spouse wants to put on the brakes– slow down. If you ask for their opinion, be willing to listen and hear them out. Hopefully, what you’ll hear is, “That’s a great idea, I’ve always wanted an elephant. How about we get two?”

So, you want to buy an elephant. You’ve already followed the first two suggestions to make sure it’s a good decision. First, you’ve waited. You’ve been wanting an elephant for a really long time. Last month you visited all the elephant dealers in town and found just the one for you. You’ve also done research on the Internet and have a good idea of how much you should pay. You wrote down “Elephant” on your wish list, and dropped hints like crazy, but nobody bought one for your Birthday.

You also followed suggestion #2 and examined your motives for wanting an elephant. An elephant is unlike anything you now own, and you can’t borrow one. It is versatile, and useful. You’re not buying one because it’s the “in” thing, or because of the little logo on the front, or because the kids have been begging for one.

You think you’re ready to buy. You have the cash in your savings account.

But how much do you really know about elephants? Do you understand everything about them? Sure, you know the latest model numbers and accessories. Do you know what it takes to maintain one? How often do they need servicing? How long will it take to learn how to use it? Are you good with large mammals? Where will you put it? Do you have the time and energy to take care of another thing? Or will it just hang around the garage?

Don’t buy anything that you don’t fully understand. If you don’t know how to work all the bells and whistles, maybe you need something less elaborate (like a hedgehog.) If you don’t understand how it compares to other similar items, don’t buy it. This goes for complicated items like insurance policies, investments, and funeral plans, and for simple items, like elephants.

Why do you want to buy an elephant?

Because everyone has one. I’ll really be cool if I have one. Those families on TV riding together on an elephant look so happy. I know I’ll look good on one. Because my kids have always wanted one. I need it for working in the yard. It’s on sale today. My old one doesn’t have an iPod jack.

Are there any hidden motives behind your purchase? See if you’ve been influenced by an advertisement, or a desire to keep up with the Jones’. Will an elephant make you feel good?

Some questions to ask yourself before buying something new are:

1. Is my old one still working fine?
2. Do I own anything else that will do the job?
3. Can I borrow one?
4. I this something that I am going to use often?
5. Can I wait a little longer before buying this?

You’ve just saved yourself some money. And you’ve probably realized you have a hidden motive for wanting the new item. The one that always gets me is about the kids. I’m more likely to spend money if it’s for someone else. I want to make them happy. But I know more stuff isn’t the way to do it. Stuff (even elephants) won’t make me happy. And buying things for the wrong motive won’t get me to financial peace any quicker.