Spending
|
Of all the dangers you'll face in your teenage years (and beyond), spending is the least dangerous. It won't kill you, make you sick, break your heart, or make you miserable. Spending is just a bad habit and it's difficult to escape, almost like an addiction. The two most important rules for spending (and speaking) are:
- Think before you spend
- Spend wisely
Choose the Best Product
Buying GuidesHow to Take Good Pictures
Questions to Ask Before Buying Something
- Is this something I need or something I want?
- Can I afford it?
- Would I be willing to go to the bank and take out money and pay for this with cash instead of credit?
- Have I been thinking of buying this for a long time? (3 months is good, 6 months is better)
- Is this the best price I've see for this item, since I've been watching? (3 to 6 months)
- Will the price fall in the future? (If it's something electronic, the answer is probably "yes")
- Is this the best one I can get? (Have you checked Consumer Reports Magazine?)
- In one more year, will I be as interested in it as I am today?
- Am I buying it for myself, or to impress others?
Not Bargains
An Escape
Spending can be an escape like eating. Depressed? Eat chocolate or go shopping. Good News? Go shopping. Trying to escape your troubles? Go Shopping.Needs vs. Wants
How can you save the most money? A 20% off or a 50% off sale?
Neither! The best way to save money is by not purchasing it. That saves you 100%
Platform Shoes. Bell Bottom jeans. Disco. Miniskirts. Hot pants. Tube tops. Fads come and fads go. Once distinctive, everyone wants to look the same. Then a new fad comes along and you have to throw away all your clothes. Be unique go to a thrift store. Your money will go a lot further and you can be creative.
"You could grow broke saving money" That was one of my father's favorite admonitions, which I'd hear after bringing home a bagful of bargains I found at a sale. [Elizabeth Razzi in Washington Post]
Jewelry is a waste of your money. But if you can learn how to make your own, it becomes a wonderful conversation piece. Some stones when polished can become very attractive and distinctive. Then you can cement them into a special chain.
Credit Cards
The advantage, as well as the disadvantage, of credit cards is that you can by things even if you don't have enough money to pay for them.
Once you start getting mail, such as teen magazines, you'll be bombarded with credit card offers. At this stage in your life, before you've established a good credit history, most of the offers will want a cash advance or an annual fee. Don't bother with those. Toss them. Look for offers that don't require a payment or annual fee.
Rule #1 for using credit cards: Don't charge anything if you can't pay for it. A credit card should be used only for convenience, not as a way to go into debt -- although credit cards do provide a very convenient way to get into debt.
Rule #2: Pay your balance in full each month. A debt on a credit card is very difficult to get out of -- just ask your mother!
Rule #3: Use a credit card like a debit card or a check -- if you don't have enough money in your account to pay for it, don't buy it.
Clipping Coupons
Once you have a full-time job, it's not worth your time to clip coupons. But if your a student, maybe. As long as you only clip things you want to buy, if the coupons make you buy something you wouldn't normally buy, then you are not saving money!
Sale! or Going Out of Business
Sales, just because a sign says "sale" doesn't mean something is selling at a good price. If you want something, watch it's price over the next few days, search the internet, then you'll know if the price is good.Bargaining
Bargaining happens mostly in 3rd world countries, so unless your dealing with the owner, or the person who sets the price, you're unlikely to haggle - used cars, and new cars yes. CChristmas trees - even then some people have their limits, in 2007, scraggly trees for $25. You want it free? "No I just want a fair price on your ugly dwarf tree.
Choose the Cheapest
When you have a choice to be something, choose the cheapest first. For example, when choosing a phone plan, skip all the add ons, and ask for the cheapest plan. After you'll get it, and you find out you want more, upgrade. I just joined Netflix (May 26, 2008) and chose the cheapest plan, two movies a month for $3.99. If after a few months I realize I'd like to watch more movies, I'll upgrade the plan.Works for grocery shopping too. Buy the generic first, and buy a more expensive one, at the same time. Do a taste test. Is there a difference? Is it worth the extra money? Cheapest goods are on the bottom shelf.
But you need to be careful, "You get what you pay for" some stuff is cheaply made and breaks down soon, then you have to buy another one. That won't save money. So subscribe to "Consumer Reports" or check out the latest copy from the library.
The First Two Numbers
Pay attention to only the first 2 numbersDon't drive all over town trying to save a few pennies
On a $20,000 car, don't worry about $10, unless they are extra fees tacked on that you can tell the dealer to get rid of. H2>Investing
Good Debt
When should you go into debt? Good debt is debt that will increase your ability to make money. And you don't use credit cards for that kind of debt.Education
The most important good debt is for your education. You can borrow money for college from the government at a low interest rate, and pay it back after you graduate. Many students get college loans to pay for their education. That's good debt, because a college education will allow you to have a higher paying job, that will easily allow you to pay it back.
Car
The purchase of a car may also be a wise debt to undertake. Again, don't use your credit card for that. A car loan from a bank or credit union will offer better interest rates. And don't take a car loan from the person selling you the car. If they say, they won't sell you the car without giving you the loan, say "See you later." You'll be surprised how quickly you can change their minds.
Home
Almost no one can afford to buy a house without going into debt, called a mortgage). Again, mortgage rates are much lower than credit card rates and you can take up to 30 years to pay them off.
Bad Debt
Using your credit card to purchase short-term happiness creates a bad debt. A credit card should be used for convenience, and not to buy something you don't have the money for. If you can't pay your credit card bill off at the end of the month, you've spent too much.Here are some examples of bad debt:
- New clothes
- Eating out
- Vacations
- Electronics
- Christmas and birthday presents
- Music, Concerts
There. Have I made life boring enough?
-
Con Games to Avoid
There is a never-ending variety of con artists and games they play. Although it is impossible to name every con game, the list below may help you avoid becoming a victim.
Bank Examiner: A “bank official” asks you to withdraw money for him or her to lure an embezzler. To prevent your money from disappearing, contact the bank to verify whether the official is legitimate or not.
Carpet Cleaner: An ad offers carpet cleaning for carpet in one or more rooms. The cleaner says the carpet is too worn or soiled for this offer and charges more for the service. Report this to consumer authorities and the Better Business Bureau. [Also known as "Bait and Switch"]
Charity/Religious Group: An unknown group solicits funds from you. Ask for a verified financial statement. Before making a donation, check out the organization to see what percent of donated money is used for intended purposes. The group may not even exist.
City Inspector: An “inspector” says he needs to check plumbing, wiring, furnace, trees, or other items. He finds a “serious” problem that requires disconnecting services, but offers to have a friend do the repair work immediately. To prevent shoddy work and unnecessary costs, call the city department the “inspector” claims to represent. Be sure to use your phone book rather than his business card.
Contest Winner: To win the prize, you must send money for postage, taxes, registration, or call for details. Do not send any money. Never pay for a “free” prize. Usually you get nothing, a worthless item, or a catalog for overpriced or nonexistent merchandise.
Credit/Phone Scam: A person asks for your credit card or phone card number to check unauthorized charges, verify insurance, or send a product. NEVER give your credit or phone card numbers to anyone.
Government Service: An official-sounding firm offers a “required” Social Security service “critically needed” or useful. The services offered are probably not from the government, not required, not needed, and may be free from the Social Security Administration. Always verify services with the Social Security Administration.
Home Repair/Inspection: A “contractor” offers to inspect, repair, or remodel your home. There may be an “offer too good to refuse” to provide a service with materials left over from another job. Check with previous customers and the Better Business Bureau before agreeing to any service.
Land Sale: The promise is inexpensive land or a sunny, gorgeous site with retirement and recreational facilities. Be sure to visit and investigate the area before agreeing to any land purchase. Beware—the development of the land may not have started. Deal only with reputable firms.
Lotteries: A person offers to sell a winning lottery ticket or a “law firm” says someone has left you a winning lottery ticket, but you must send money so a computer can verify your identity. The “winning” ticket may be counterfeit or not exist. Be suspicious—do NOT buy a ticket from an individual, and do NOT send money!
Magazine Subscriptions: A young person is selling “subscriptions” to earn money for school, camp, or a team. The money may never go beyond the pocket of the seller. Buy subscriptions only from people you know or directly from the magazine.
Mail-Order Health Care/Lab Tests: Promises of medical care or lab screening by mail can leave you with expensive, useless treatments. These results may be phony. Consult your doctor for all tests and treatments.
Medical Products: Health, beauty care, “cures,” or magic diets are offered by mail. Always check with your doctor first. Products ordered may be overpriced, harmful, useless, or never received.
Help Needed: A person showing lots of identification asks for $10 to $20. Her car was impounded, and due to an illness she does not have the needed money. She promises to repay you. The IDs are fake or stolen and no emergency exists. Do NOT lend money to someone you do not know.
900 Number: Even though 900 numbers are legitimate, the call may cost more than advertised, you may be put on hold to add to the bill, and many products are worthless. Avoid these calls.
Obituary: A COD box arrives for a product “your recently deceased spouse ordered.” Tell the person you will not accept the product. Most often the messenger is an imposter.
Pigeon Drop: A person says he found some money and offers to share it with you. In order to show he trusts you, he asks you to place the money in an envelope for safekeeping. But he asks you first to place some of your own money in the envelope as a measure of good faith. Then something occurs that distracts you and the envelope of money is switched. The next time you look, the envelope contains only paper.
Product Demonstration: A sales person wants you to sign a paper “for my boss” to prove a new product was described (not sold) to you. The paper signed may be a contract to order the item. Always read every word before signing any form. Sometimes the contract continues on the back of the page. Check the back of each page before signing a contract.
Travel Club: A bargain airfare and/or hotel package is offered at a glamorous site. The offer is only for one person; consequently, prices are very high to add additional accommodations, plus accomodations could be poor quality. Check with a travel agent and read all paperwork before signing anything.
Unknown Callers: A woman and child or two people come to your door asking to enter your house for a favor (restroom, drink, etc.). One person distracts you while the other person steals cash or jewelry. Do NOT let them in. Give the location of the nearest phone, public restroom, etc.
Internet ‘Phishing’ Scams: An e-mail or pop-up message is sent to you from a business, organization, or government agency asking you to update or validate information about your account. The message asks you to respond immediately. Do not open any attachment, reply, or click on links within the message. Be sure to keep anti-virus computer software up to date. You can file a complaint at www.consumer.gov/idtheft at the Federal Trade Commission’s identity theft web site or call toll free 1-877-FTC-HELP.
Nigerian Letter/e-mail: A letter or e-mail asks for help to transfer money out of Nigeria or another country through an overseas bank account. There is a promise of large sums of money if you help. The request may ask for your bank and account number or other personal information. Never reply or respond to such requests.
Summary
- Always take time to read contracts and verify the legitimacy of companies and individuals.
- Talk to a trusted friend or relative before you make a decision.
- Beware of an offer that is only good if you respond right away.
- Avoid impulses to donate, repair, or purchase items.
- Do not give Social Security, bank, or charge account numbers to others. Being asked for personal information does not mean you have to share it.
- Keep door-to-door salespersons or unknown callers outside of your home.
- Think before you respond. Protect yourself.
If you become a victim of a con game, report it. Do not be afraid or embarrassed, because you are not the first person to fall victim to a scam. The people carrying out scams are professionals at what they do and practice their schemes in all parts of the country. It can happen to you. Remember, if something sounds too good to be true, it probably is.
Source: http://ohioline.osu.edu/ss-fact/0154.html
Be sure to watch the Academy Award winning movie, "The Sting" for a great con game.