A Bodey in Motion

Building momentum, one step at a time

FPU Lesson 5 – Buyer Beware

With the fifth lesson, we start putting up our shields and gaining power over our spending habits. Below are my notes from the lesson, including the key points that I highlight from the video when leading the class, and some supplemental material that I think could help the class go further on this topic.

Financial Peace Unversity

Lesson 5, Buyer Beware

Key Points

Learning the methods used to market products to you can put you back in control. Major corporations and organizations spend millions of dollars determining the best ways to convince you to buy their stuff. Color (Century 21 signs are an ugly shade of yellow for a reason), repetition (who deserves a break today?), perceived value, product placement, and on, and on. What they’re doing isn’t necessarily illegal, or even immoral, but it’s important for all of us to be aware of  it.

Always talk to your spouse before making any major purchase. Each family has to determine for itself how much constitutes a “major purchase.” (On average, it’s about $300.) When you get ready to buy something over that number, though, everyone has to agree to the reasons the money is being spent. No exceptions.

Wait 24 hours before making a major purchase. One of the biggest traps we fall into in our culture is the false sense of urgency that is applied to everything in our lives. We’re always being urged to “ACT NOW!” It causes to move on a purchase before we’ve completely thought it through. By taking the time to sleep before you spend the money, you give yourself the chance to feel the true weight of that purchase.

Challenge

End Immaturity. On its own, “I want it!” isn’t a legitimate reason to make a purchase. Tell your inner child to shut up by memorizing and implementing these five key strategies:

  1. Wait Overnight. (We’ve already covered this one.)
  2. Consider Your Buying Motives. (Consumption will never result in happiness.)
  3. Never Buy Anything You Don’t Understand. (If you can’t explain it, then you don’t understand it.)
  4. Consider the Opportunity Cost. (If you spend this money here, what are you unable to use it for later?)
  5. Seek Counsel. (Start with your spouse, but also have wise friends. Maybe even a financial coach is needed.)

Go Deeper

  • Affluenza: The All-Consuming Epidemic by John de Graaf, David Wann, and Thomas H Naylor
  • Stop Acting Rich: …And Start Living Like A Real Millionaire by Thomas J. Stanley

Next week:, lesson 6 – The Role of Insurance (Everyone say “Yay! Insurance!”)

April 3, 2013 Posted by | Marriage and Family, Past and Future, Work and Money | , , , , , , , , , , , | Comments Off on FPU Lesson 5 – Buyer Beware

Quick Hits of the Week

  • I touched on this briefly at the end of Monday’s post about paying stupid tax, but Seth Godin does a better and more succinct job of explaining why it’s so important to understand the opportunity costs. If we want to be more financially stable as a family, or in business, it will be vital for us to become more aware of the unseen costs of our financial decisions. If I say “yes” to that, what do I have to say “no” to?
  • Over 40 years ago, this country declared a War on Drugs. Over 10 years ago we declared a War on Terror. In both cases, our local law enforcement agencies are some of the primary combatants. It’s no wonder that they have, more and more, taken on a military posture and attitude. Even our small towns are being supplied with equipment that makes it hard to separate the policeman from the soldier. The problem is that, when the SWAT team comes knocking, it puts those of us who don’t wear the uniform into one of two categories: potential threat or acceptable loss. There are almost no hard numbers available to the public, but it’s estimated that a SWAT team raid occurs in the US every 12 minutes. This is a trend that needs to change, and soon.
  • Dan Miller posted a great image to his blog this week. It’s been asked, in manners both genuine and accusatory, why would a God that is loving and present ever allow his creation to suffer? If we had no history where we were broken by our suffering, then the gold of God’s redemption would have no place to go. Through our adversity we become more like him, and thus, more beautiful.

June 28, 2012 Posted by | Quick Hits and Links | , , , , , , , , , | Comments Off on Quick Hits of the Week

Paying the Stupid Tax

I was born before the dawn of the interwebs and the cell-o-phones. Life was more dangerous, then. Cars didn’t have airbags, infant car seats were rare, and seat belts were optional. I rode a bike for almost 13 years before I ever wore a helmet. Making a mistake had some serious consequences and taught us memorable lessons.

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Back when you could count my age in months instead of years, I crawled under the card table my parents were sitting at and chewed through the lamp cord I found there. There was a flicker, a pop, and a baby forcefully ejected back into the open, followed by some expected crying. I was lucky to have lived through that, but it taught me to never do it again. Even today, you won’t find me gnawing on any electrical cords, no matter how colorful or tasty they look.

We can argue whether our more child-safe society is an all-around improvement or not. One thing is true, though. It’s hard to learn valuable life lessons when we’re shielded from the consequences of our stupidity. Fortunately, there is still one area of our lives where we are generally free to do stupid things and potentially suffer for it.

Money.

There are just about as many ways to do stupid things with money as there are people to do them. If you’re over the age of fifteen, you’ve probably done three of them or more. Maybe you bought your first home mortgage on a trailer, and while it’s fine for shelter, it isn’t worth half of what you originally paid for it. Maybe you invested your emergency savings in a hyped up IPO, thinking it was a sure thing. Maybe you got sold on a timeshare pitch because you thought it would make a nice vacation option for your young and growing family, and now the maintenance fee just sets your teeth on edge.

We can talk ourselves into doing some irrational things. Our desire to have something now overrides our willingness to take the time to make sure we’re buying the right something. We let comfort or excitement guide us instead of wisdom and experience. We pay for it, and we all regret it.

Now, while it’s inevitable that we will occasionally pay some stupid tax, we don’t want to be doing it all the time. What can we do to avoid making money mistakes? How do we make sure the next big purchase is a good one?

First, never buy anything on impulse. It’s alright to take some time and think it through. Wait overnight, at least. You want to give your mind a chance to feel the regret of that purchase before you make it. And if the seller says they can’t wait, then your answer should be no.

Second, explain it to somebody and tell them exactly why you want to buy it. By doing this you make sure that you understand the product or service, and that’s huge. If you don’t understand it, you shouldn’t be buying it. You’ll also be clarifying your reasoning for yourself, and you can keep from being swept up in the hype of the purchase.

Finally, figure out three to five other things you could do with the money you would be spending on it. Things that you would want to do. If you spend that money now, it means you will have to put those things off, or not do them at all. The cost of your purchase needs to include the cost of what you’re having to say “no” to.

We’re human, and we’re going to make mistakes. Don’t beat yourself up too much for paying some stupid tax. We’ve all done it. Remember, though, that a lot of it can be avoided, and give yourself the opportunity to learn from other’s mistakes.

I’m still prying myself out from the decision to buy a timeshare. That’s my big stupid tax. What a waste of money. What stupid tax have you paid?

June 25, 2012 Posted by | Work and Money | , , , , , , , , , , , , , | 2 Comments