Debt Free

“How do you make a small fortune in racing? Start with a large fortune.” Unknown

In yesterday's post there were three things many people do that can cost them a fortune. Well, maybe not a fortune, but they could get pretty expensive. Here are some more behaviors that can contribute to your financial decline.

1. Excessive brand loyalty. Marketing mavens everywhere are cursing my name right now, but it's true. Despite scads of marketing dollars spent throughout the world to influence consumers to exhibit loyalty to a particular brand, in many cases it makes no sense. Are Del Monte stewed tomatoes really better than the store brand? Are they're canned peas any better than Bird's Eye's? Maybe, maybe not, but you should at least find out. Buy what's on sale.

   There are some cases where brand loyalty makes sense, but in most cases you should thoroughly research a product before you buy, and then buy according to the results of your research, at the best price. Many times, service will enter into the equation as well, with good reason. Service is valuable and important, especially if it keeps you from making a purchasing mistake. You may have other reasons for choosing a particular product too, such as support for a local merchant. Perhaps it's worth it to you to buy brand 'X' because that's what they recommend at your local, family owned establishment you're trying to support. You may have many reasons for making a particular purchase, just make sure the label isn't your primary reason.

2. Neglecting to make major purchases where there is a good return policy. Perhaps, despite your diligent research, the product sucks. It happens. Even top rated products can have lemons or be unsuitable for a particular application. You should be able to correct the mistake within a reasonable amount of time (this varies according to the product) buy receiving an in-store credit, refund or exchange. Better stores will facilitate this, requiring only a receipt, a smile, and the product in it's original packaging.

3. Related to #1 above, not researching your purchases. It happens thousands of times every day. People make impulse purchases on products they should have checked on first. Now, impulse purchases should be kept in check in any case, but this really holds true on larger purchases. Good sales people notwithstanding, there is little reason to walk into a store for five pounds of 6d nails, and leave with a new DeWalt 36 volt, lithium drill, even if it is on introductory special.

   You don't need to make this type of mistake too many times a year to end up with a shed full of really cool stuff, and a $5k balance on your credit card (at 12%). Even if you did need the particular item in question, you should check it out before you buy in order to ensure you're making the best purchase. Re; the drill: Was that the best price available on that drill? Is that the top rated drill in the category? Is it really the best item for the particular need? Does the store have a good return policy?

4. Related to #3 above, making any impulse purchases at all. Sit down for just a minute, my quick spending friend, and think about this for just a bit. All those P.O.P displays on the end cap of the check stand are designed for one purpose; to separate you from your money in exchange for something you didn't need when you entered the store. These additional purchases can add up in a huge way. For example, if you purchased a candy bar for $.79 and a magazine for $3.99 only once a week, that would be, including the tax you've got to shell out in many states, over $5.00 a week. That's $260.00 a year in little purchases you barely realized you were making. At 8%, compounded and invested over 30 years, that $260/yr is over $20,500! And you thought it didn't amount to anything. For the sake of argument, say you go to the store 4 times a week, earned 9% in your investments throughout your life, and made $3.00 in impulse purchases every time you went through the checkout line. In the same 30 years, you'd have potentially squandered $49,268!
   

May these few little things to watch for actually cause you to do just that. Next time before you do something, spend something or buy something, take a deep breath first. Now, let it out. Ok! Now you can pull out your wallet, just keep that Visa inside it.