The Digerati Life

Do you want to improve your shopping habits? Find out how to get over a huge impulse buy.

Ed: I am pleased to present this guest article by Jonathan, from Master Your Card, a blog that focuses on one of the most ubiquitous yet misunderstood financial tools we own: the credit card. If you like his guest post please check out his website and consider subscribing to his rss feed. Thank you Jonathan!

Photo by Brave New Films

How many times have you been suddenly compelled to make a purchase you didn’t plan? If you’re like me, the answer makes you shudder. It’s not that we’re weak willed, it’s just that the entire system has been set up to make us constantly consume. Whenever you walk through a department store, for example, you can be pretty sure that everything you see has been placed where it is with the sole intention of getting you to want to buy it. Signs are intriguing and persuasive. Registers are inviting. Merchandise is appealing.

In other words, nothing is where it is by mistake. Someone was paid very well to figure out where everything should go and how things should be presented just to make sure that you open your wallet. Do you know the old saying that every time a bell rings, an angel gets its wings? In a similar fashion, every time you make a huge impulse buy, a marketing executive does a silly little happy dance.

Impulse buys happen. One day you suddenly decide that it’s time to trade in your old car and get a new one. While walking through the mall, you come to the conclusion that a new home theater system is a great idea. You’re shopping for a rug when you get talked into signing up for a complete redecoration project for your kitchen. C’est la vie. These things happen, and although it’s best to avoid situations like these altogether, here are the things you should do to take stock of a sudden unplanned purchase:

Tactics To Recover From A Huge Impulse Buy

#1 Take it back.

While there are some items that you won’t have much luck returning, some things can indeed go back. Even some car dealerships allow buyers a couple of days to change their minds and return their newly purchased cars. If you find yourself really suffering from buyer’s remorse, check the paperwork that came along with your item and see if you can undo the purchase.

#2 Pay it off ASAP.

If your impulse purchase was made with instant credit, there is a good chance that you will pay a really high interest rate unless there was a promotional interest rate attached to the buy. What’s worse than buying an expensive item on impulse? Paying 23% interest on the impulse buy for the next few years. Pay off the purchase as soon as possible, or transfer the balance to a more forgiving credit card.

#3 Sell the item.

If you find that the item you purchase on impulse puts you into a financial bind, then you may want to consider selling it to relieve the burden. Ebay or Craigslist may be your salvation, though you might have to take a loss on the sale. Depending on how thinly stretched your budget is, this might be the only option. Consider yourself lucky if you’re able to recover your full purchase price for the item when you sell it.

#4 Learn from your mistake.

Whether you wind up keeping the item or getting rid of it, consider the whole situation as a learning experience. Figure out what prompted you to make the purchase in the first place and then avoid situations like that in the future. The fact that you eventually recognized that the buy was on impulse and probably not a good idea is a great sign that you might be able to avoid similar mistakes in the future.

If you wind up keeping the item because you can afford to, then enjoy it. Don’t let the new stereo or car or whatever it is become an annoyance because it reminds you of a weak shopping moment — even the best of us get suckered in once in a while. Ultimately, however, you should never forget that you were manipulated into making that purchase, and use the whole snafu as an important lesson. Don’t get fooled again! Next time, you may not be able to forgive yourself so easily!

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Why lots of online shoppers think Amazon Prime rocks.

Photo by DeWitt Clinton

You may have seen Amazon Prime being touted around various sites, and for good reason. I think it’s a pretty good deal. We’ve been big Amazon customers for a really long time now (then again, who isn’t?) but have always been fussy about the shipping fees, taking the time and effort to organize our purchases so that we can “bulk up our orders” and take advantage of the free shipping for orders $25 and over. Well, we ended up giving in to the Amazon Prime option so as to avoid these concerns once and for all — we figured that the flat $79 annual fee was a reasonable value. We also get our packages much more quickly (although I’m one of those people willing to wait for shipments if it means cheaper fees).

At any rate, if you’re a heavy online shopper and especially one who purchases from Amazon, you may want to consider checking out Amazon Prime if you haven’t signed up for it already. Here are a few justifications I’ve seen around the web as to why it’s such a great deal. As someone who uses this option, I’d have to agree with all these points:

Why You Should Try Amazon Prime

First of all, the Amazon Prime program costs $79 a year. Is this service really worth $79 a year? Let’s see…

#1 For now, you can get it free for a whole month.

Amazon would like you to try out Amazon Prime for free for a limited period of time. I’d take free shipping for a month, why not? The benefits are simple: no minimum purchase required and no need to consolidate items to save on shipping. Plus your entire household can share in these benefits.

#2 It may help you spend less.

How is that? Well, if you’re like me, trying to qualify for the free super-saver shipping can become a consuming goal and exercise. Without Amazon Prime, you may be compelled to purchase more items to reach the super-saver level. Foolish as it sounds, I’d find myself buying more stuff to qualify for the free shipping. You may argue that without Amazon Prime, you can afford to spend the extra $79 on extraneous stuff you can use, but if it becomes a long-term shopping habit, you may actually end up spending more than the cost of the Amazon Prime program.

#3 It saves you time.

With the program, you’re guaranteed two day shipping. No more having to swing by the store so often. If you don’t need something immediately, and can afford to wait two days, then buying through Amazon is a breeze. And for many people who live by an Amazon distribution center, they’re actually in luck as they receive their shipments within a day or so.

#4 You’re buying convenience.

It’s easy to get spoiled on this program as what you’re buying for the $79 a year is a service providing unlimited deliveries.

#5 Amazon Prime may actually pay for itself.

Depending on how big an online shopper you are, you may find out that you’re able to recoup the cost of the service when you consider several factors. Many consumers mention that Amazon and their Amazon Prime program “changed the way they shop”. Paying for unlimited delivery will propel you to shift more of your shopping online, as you’ll want to get the most out of your money. By doing so, you’ll develop new shopping habits and may find it easier to comparison shop and get discounts. Also, a side benefit for most Amazon shoppers is that they probably don’t spend on sales tax.

If you’re willing to move more of your shopping online (or have already done so), then upgrading to Amazon Prime makes sense. I’ve seen some folks claim that you’ll “break even” with 11 Amazon shipments a year — that is, with this number of shipments, your regular shipping fees will amount to what you’d otherwise spend on Amazon Prime. This takes into account an average of $7 of S & H fees you’d spend per shipment. If you need additional thoughts on the subject, you can take a look at what others are saying about it.

If all of this sounds good, then here’s where you can sign up for it. Oh, and don’t forget to recycle all your boxes!

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Are you thinking of installing a pool or buying a home with one? Why not save yourself many thousands of dollars and cool off with some water fun activities and the best toys of summer instead?

In many places, a swimming pool is still considered some kind of status symbol. But unless you live in the desert somewhere, or decide that money is no object for you, a swimming pool is likely more pain than its worth. A while ago, I questioned the effect a pool has on one’s home valuation and offered reasons why it just isn’t worth the cost. I’m all for following this up with some cheaper alternatives, especially if you’re eager to get wet this summer.

Swimming Pools: Water Holes Or Money Pits?

But first, here’s a look at the dollar amounts you’ll face when you decide to own a concrete watering hole (from MSN Money):

• In-ground pools add 7.7% to a home’s value, according to the National Association of Realtors, but it really depends on where you live. They’re much more popular in desert states, while not as desirable by the coasts.
• Above-ground pools take away 1.9% from a home’s selling price.
• Typical cost of installing a pool: between $25,000 to $50,000.
• Hiring a pool service may cost between $1,500 to $2,000 annually to cover maintenance, water, regular repairs.
• Heating your pool may easily add another $500 annually to your utility bills.
• Running a pool filter may add $600 annually to your electric bill.
• Liability insurance, pool fences, warning signs, a pool cover and other maintenance tools may take away several hundred to thousands of dollars from your budget.

Verdict: I added up at least $3,000 in annual costs alone to maintain a swimming pool. What more the enormous installation costs and potential hit to your home’s value?

Cheap Summer Options: Water Fun Activities and Toys

But all is not lost as there are always cheaper alternatives for everything. So if you’re hot and bothered, here are some guaranteed ways to save yourself upwards of $50,000:

Where To Go To Have Fun in the Water

1. Visit someone who already owns a pool.
2. Visit amusement parks with water rides.
3. Go to the nearest local water hole or beach (if you live near one).
4. Become a member at a sports club or YMCA or any place with the facilities you are looking for.
5. Make your own water toys. Have you tried to make a DIY slip and slide or water slide?
6. Have a ball with your garden tools: a lawn sprinkler or hose will do.

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In my article on best cash back credit cards, I had included the Discover More credit card as one option, for it stood out as having some of the highest cash back offers I’ve come across. I wanted to provide you an update on this card. If you’re in the market for a credit card and are interested in bonuses and rewards, Discover just sweetened their products further with the following details:

 
Their consumer card, the Discover More Card, has a new version out that has a cash back component. You can now get the More card with an additional $50 cash back bonus. Here’s a reminder why this card is such a popular choice:

• It provides a full 5% cash back bonus in spending categories like travel, gas, groceries, restaurants, etc.
• You’ll receive 5% to 20% cash back bonus once you become a member on ShopDiscover, Discover’s online shopping site. You’ll be linked to top retailers and be able to receive rewards by making your purchases through this site.
• You’ll get up to 1% cash back bonus on all your other purchases.
• 0% APR for 6 months, 0% balance transfer APR for 12 months.
• Over 150 card designs, for those who care about it .
• No annual fee.
• New: $50 cash back bonus when you spend at least $500 during the first 3 months.

I just recently discovered this card (pun intended), and from what I see, it’s definitely tops for the rewards and the designs . If you like what you read, you can sign up for the card here.

Moreover, Discover’s card for small business owners — the aptly named Discover Business Card — now comes with an additional $100 cash back bonus, given some terms. Their details:

• Receive 5% cash back bonus on office supplies and 2% on gas.
• Earn 5% to 20% cash back bonus by making purchases at top retailers through their ShopDiscover site.
• Up to 1% cash back bonus on all other card purchases.
• 0% intro APR for 12 months.
• No annual fee.
• New: $100 cash back bonus when you spend at least $1,000 during the first 3 months.

To sign up for the Business card, you can go here.

I didn’t note this before but you can also increase or double your rewards if you redeem them for gift cards from Discover’s retail partners. I explored it a bit and found that one of my favorite retailers, where I buy all my house-related materials (Bed Bath and Beyond), is on the list — so on top of those Bed Bath and Beyond coupons I already use, I’m thinking I could get the stuff I buy there further discounted.

This card sizes up better than the current cards I have right now, to be honest. I’m also currently researching gas cards at the moment, so I plan to compare Discover More to other rewards cards I’m reviewing to see which gives us the best savings based on our spending patterns.

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We wanted to drive our old car to the ground….but something happened.

Photo by Sneezl

We’ve got a couple of cars on the older side, both having logged over 100,000 miles each. They still have a lot of life in them and are very well maintained, and this 100K milestone would’ve normally been the time to trade them for new cars. But something about the story of a guy who only owned ONE car in his lifetime rang true to me, and with cash flow tight for us over the last couple of years (and the next few years ahead), we’ve decided to reevaluate our car buying habits recently based on the many voices around the blogosphere that I’ve heard on the subject.

Our car buying plan is now as follows:

• As much as possible, we plan to drive our cars “to death”, after reading about how much money you can save by doing this: $31,000, according to CNN Money!
• We’ll be turning to used cars to replace the vehicles we have when the time comes.

For the most part, our cars are in fairly good shape to last a couple more years. But very recently, something unexpected happened. With a relative of mine having just moved to Singapore at the end of July, we received first dibs at his family’s estate sale.

There was something in that estate sale we just couldn’t refuse: A 2006 Volvo V50 Sports Wagon for an awesome price (because we were family, the price was further discounted from the Blue Book value). We’re your typical Japanese auto fans, so a Volvo wasn’t even in our sights. But we know a good deal when we see it. With my spouse’s car beginning to show some wear, the opportunity to replace it for an almost brand-spanking new sports wagon was highly tempting.

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The true math behind choosing a fuel efficient car.

I’ve been preparing a few posts that touch on the new face of car buying, to shed some light and information on what it means to be a car owner during a time of escalating gas prices. I hope to help those of you who are shifting your buying patterns in the interest of putting a dent in the demand for gasoline. Just to show you how your choice of vehicle affects your bottom line, here’s a case study I’d like to share.

How much money can you save with a more fuel efficient car?

Let’s take the case of a typical family who owns an SUV that consumes 18 MPG. If instead they decide to switch to a station wagon that consumes 25 MPG, here’s how much the family will save, assuming they drive 15,000 miles / year for 5 years, with fuel cost increases of 7% a year (a conservative estimate, since fuel costs have recently averaged 15% / year and don’t stay constant during the year):

 

Year	Fuel PPG	Current Vehicle Cost (18mpg)	Future Vehicle Cost (25mpg)	Approximate Savings
2008	$4.51	$3,758.33	$2,706.00	$1,052.33
2009	$4.83	$4,021.42	$2,895.42	$1,126.00
2010	$5.16	$4,302.92	$3,098.10	$1,204.82
2011	$5.52	$4,604.12	$3,314.97	$1,289.15
2012	$5.91	$4,926.41	$3,547.01	$1,379.39
5-year Totals		$21,613.19	$15,561.50	$6,051.69

Expect to see greater savings if gas costs increase more sharply or the family ends up driving more than 15,000 miles in a year. Check out this great web site to see historical fuel prices and to try out this fuel costs calculator for more visual examples like the one above.

Examples like this may inspire you to think about fuel efficiency the next time you go car shopping.

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Big toys for rich, spoiled kids: when a $10,000 kid’s birthday party isn’t enough.

There are few things that are more delightful to parents than to see their kids happy: such as the moment right after the kids receive their toy of choice — a doll house, firetruck or new novelty gadget of the season. And few things are more baffling to parents than to see that same toy discarded after a few hours of play, barely to be picked up again.

Can’t blame the kids really — these days, attention spans are shorter than ever and there’s just too much stimuli going around to keep one’s focus for too long. We grownups may not be helping either, when we’re so indulgent.

Yet the market out there for parents who love to splurge is bigger than ever, fueled by those of us who have a lot of disposable income to throw around. Imagine that you have all the money in the world, or maybe you can just plain afford a few more extras in your life — would you be buying some of these things for your child anyway?

Big Toys For The Kid Who Has Everything

Ferrari Go-Cart, Price: $50,000 at FAO Schwarz

This toy car may be a drop in the bucket if you’re a mega-millionaire, but in my estimation, this could very well represent the car budget for a two income family over a span of a decade.

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How tough is it getting out there these days? The general consensus is that it’s been getting economically tougher, with more reports surfacing and providing us newer metrics that prove we’re in the midst of a market decline.

And the latest proof that we’re in a slump? How about a marked increase in the sales of used goods? Apparently, more and more people are unloading their possessions, valuable or otherwise, at various second-hand markets and at a greater frequency than in the past.

And no, people aren’t selling stuff just because they want to declutter their home or have a desire to downsize. What the media is saying these days is that along with the arrival of recessionary forces and the frugality trend beginning to pick up, we’re also seeing this concerning new trend: people selling stuff to pay the bills. They’re actually selling off their goods — including their heirlooms and expensive possessions — in order to raise cash fast. I suppose that with the credit crisis coming to a head and sliding property prices preventing homeowners from using their home equity as a cash account, folks are simply running out of options.

This sounds a bit sensationalistic to me, but here are some points I culled from articles that are trumpeting a new kind of behavior among those who are trying to keep themselves financially afloat.

Selling Household Items For Cash: A Growing Movement

• Supposedly, desperation is driving people to unload their heirlooms just to pay off higher gas, medical and food expenses.
• Individuals with expensive tastes but who’ve lost their jobs are finding themselves in a bind: unloading high-priced, branded clothing like Hermes leather jackets, Versace jeans, silk shirts, handbags, and the like just to be able to pay basic grocery, utility and insurance bills.
• Collectors are unloading their highly prized collections at online auctions in order to pay for necessities. I guess it’s true: you can’t eat art.
• At Craigslist, for-sale listings are up 70% from 9 months ago and doubled from last year. Similar reports are coming from other online auctions and classified ad sites. The number of ads are much higher than normal.
• The ads submitted in online auction and “flea market” type sites are written in a more desperate tone.
• People are using online sites like they do traditional pawn shops.
• Hot items in the second-hand market are cars, clothing and furniture.
• Areas hit hard by high gas prices are seeing higher sales of vehicles in general but particularly those that are less gas efficient.
• Recreational vehicles like campers, trailers and boats are glutting the used goods market.
• Areas hit hard by the housing crisis are seeing more furniture on sale in used markets.
• Unfortunately, Goodwill and the Salvation Army have been negatively affected by the sales trends as donations are down 20% this last quarter.
• Prices of used items are going for 25% to 35% less than they did last year.

Though a lot of people have been affected due to job loss and dropping home prices, a lot of those severely affected have also been vigorous spenders in the past. From the aforementioned facts, it seems to me that a good number who are selling today are those who have a lot of extra things they can *possibly* get rid of; I wouldn’t actually consider recreational vehicles, electronic gadgets or branded merchandise as essential to living….

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