Beware of Sales Tactic #1 – Don’t Miss Out!


Have you ever bought something in haste simply because you were afraid it would be too late if you didn’t pull the trigger immediately? If so, then you’ve been bitten by the first tactic in the Sales Tactic Revealed series, “Don’t Miss Out”.  Sellers use this strategy to spring you into action by creating the illusion you’re in danger of missing out on a great deal.

Picture what you do when someone makes you an offer.  You take your time weighing the pros & cons and thinking it through before coming to a decision.  Now what if someone makes you an offer that is only available to 10 people; first come, first serve.  Or they need an answer in an hour?  You don’t want someone else to rush in and take the last spot.  You have to decide quickly or miss the chance! 

This tactic changes your whole decision making process.  Your adrenaline kicks in and fear of missing out overrides your normally practical thoughts.  Without time pressure we can think about a purchase.  We check out competitors, research our options, perhaps even decide not to buy it at all. We’ll come back later if we decide we’re interested. 

Of course, there is typically no shortage of time but if the seller can manufacture a shortage with a limited time sale or limited quantities, they usually win.  They know if they put the pressure on that we’ll make a hasty decision.

Warning Signs
• While Supplies Last              • Get it Before it’s Gone
• One Day Sale                     • 15 Hour Sale
• For a Limited Time Only         • Hurry In, Deals Won’t Last
• Don’t Miss It!                     • Low Price, Limited Quantities
• Time is Running Out!            • Now or Never Sale
• Biggest 1 Day Sale EVER       • Don’t Miss this Opportunity!
• Act Now, Limited Quantities  • Once in a Lifetime Deal

Tactic In Action
Each sales tactic we review will include an example of that strategy in action.  Here is one that left me shaking my head. One Saturday afternoon a local discount store announced over the intercom, “Surprise sale in Sporting Goods for a limited time!  Ask an associate for details”. 

As customers descended on the sports aisles in a shopping frenzy, I heard a salesperson explain selected items were 25% off for the next 15 minutes.  Wild-eyed people raced up and down the aisles grabbing items and piling them in their carts. 

I cringed as a frantic women said to her friend, “I’m not sure what this is but for 25% off it must be a good deal!”  I shook my head as nearby salespeople discussed how the “select” items were discounted to clear out unwanted products from the shelves.  

The “Don’t Miss Out” tactic proved that it really does work.  Damaged and dusty items that had sat on the shelf for months were swept away in a matter of minutes.  Put under time pressure and given a little incentive, people had filled their carts full of stuff they hadn’t planned on buying just because they didn’t want to miss a deal.

Protect Your Paycheck
Now that we’ve covered the details of the “Don’t Miss Out” tactic, let’s look at some mental countermeasures we can use to protect our paycheck against this marketing approach.

Last Minute Decision = REGRET
How many times have you driven home, trying to decide if your recent purchase made sense?  Trying to justify why the purchase was a good deal?

What is the outcome of many hasty decisions? REGRET!  Before you buy, think what would cause you to regret your action an hour, day, or week from now?  Think of all the last minute decisions you’ve made in your life.  How many of them have turned out for the better? 

What are the sellers trying to keep you from doing with this tactic?  Making a well-informed decision that is best for you.  If they succeed in selling to you who wins?  They get their money right away.  What do you get? Something you were rushed into buying and not 100% sure you want. 

Painful Returns
Even if they have a return policy, you just made your life more complicated.  You now have the additional stress of trying to decide if you keep it or take it back.  The seller forced this upon you with their urgency to sell.  They have your money and the responsibility is on you to get it back.  YOU have to keep your receipts, YOU have to return within their timeframe, YOU have to wait in the customer service line and fill out the paperwork to make the return.

Downside of Spending
We often think of the downside of missing the opportunity.  Instead, think of the downside of being tricked into buying something.  For example, a $100 item at 25% off.  If you pass it up, you may decide later on to buy it and pay an extra $25.  If you go ahead and buy it on sale and end up not using it, you’re out $75.  Which is worse?

Buddy System
Talk to a friend or family member about being a spending buddy.  Someone you can call when the seller puts the pressure on.  They can be your voice of reason when your fear of missing out on a deal kicks in!

What’s Your Take?
Do you have any comments on or experiences with this marketing technique that you’d like to share?  If so, leave them below in the comments section below or send them to salestactics [at]

Sales Tactics Revealed – Win the War Over Your Paycheck

You can’t follow a budget!  You don’t have self control! You can’t manage your money!  You, you, you…… 

Money Foolish?
Is it really all about you?  Is it all your fault?  As we go through life, we don’t always do what we’re “supposed” to do with our money.  When things don’t go right financially, we tend to get discouraged and down on ourselves.  Where does all our money go?  Why can’t we manage our money? 

Did you ever stop to think maybe it’s not all your fault? What if the problem isn’t just your lack of self control or inability to stick with a budget?  It’s definitely possible to have a budget and decent self-control and still overspend.

Gimme Your Money!
Every dollar you spend is just one side of a transaction.  The party on the other side is taking the money you’re using and chances are they played a role in convincing you to spend that money.  As a matter of fact, we have people trying to sell us things all day long!  They come at us in magazines & newspapers, in radio ads, on the Web, and now with direct sales even at work and in our homes. And we wonder why it is so hard to hold onto our money!

Taking a Different View
One view you could take is that we overspend because we are weak consumers.  Another way to look at it is that companies are overcoming our self-control and better judgment with sneaky sales tactics. What do you think about that perspective? Does it put your focus on the companies selling to you and their ability to persuade you to buy something instead of wallowing in financial self-deprecation?

Forget Defense, Go on Offense
Which do you think is the more effective argument as you try and talk yourself out of spending money:

“I shouldn’t buy it because I don’t need it.”

“These people are tricking me into buying what they’re selling!”

It seems to me the first approach doesn’t motivate you not to buy, it is simply is a defensive attempt at trying to stick to your budget.  It reminds us we’re constrained by money and we feel disappointed that we can’t buy something we want. 

The second approach on the other hand gets my blood boiling!  It reminds me that I worked hard to earn my money and I’m not going to hand it over to someone just because they have a few good sales tactics up their sleeve!

The War Over Your Paycheck
The sellers are waging a full assault against our wallets. They have an array of sales consultants, market research, cutting edge technology, & advertising agencies working to convince us to spend our money. So what are we to do?

A) Keep spending away and blame it on the sellers
B) Refuse to buy anything because they’re out to get us
C) Be aware of their tricks and learn how to beat them

The Art of Distraction
As a father, I’ve learned a large part of keeping a child happy is the art of distraction.  If you can take their attention off the issue at hand, they forget why they are unhappy.  The sellers have learned the same thing about us.  If they can use their selling tactics to distract us from the fact we’re spending money, we’ll hand over the cash and leave happy customers!

The most insidious thing about these sneaky sales tactics is that we don’t realize the effect they’re having on us.  They’re not illegal; you won’t see them featured on the news because they actually are legitimate business practices.  There are many more businesses selling with these tactics than selling with scams.  So why call them sneaky?  They are so well accepted that we don’t realize the effect they are having on us!

Sales Tactics Revealed
So what are these tactics we’re so vulnerable to?  Stay tuned to the “Sales Tactics Revealed” series as we document the most effective & frequently used tricks and ways we can recognize and overcome them. 

Each installment of the series will use a similar format to study a sales tactic.  First the tactic will be described and the warning signs listed.  Then an example will be given of someone who has been caught in the trap and finally, we suggest different actions that you can take to protect your paycheck.

If this sounds like something you’d benefit from, sign up for daily updates to Money Smart Life in your feed reader or via email and get ready for the first tactic in the series!

Sales Tactics

Baby Expense Budgeting – Family Style

Who spends the money on kids your family, mom or dad?  If you’re like us, it’s the mom who buys the baby what they need.  If the mom’s spending the money, why does the dad often make the budget?

Baby Expense Planning
I have a friend who’s expecting a new baby next spring.  He has his finances planned down to the minute detail for the next 30 years so this baby has forced him to re-evaluate all his plans.  He’s so obsessed about it that we’ve gotten a chuckle at work over this wrench in his plans. However, unlike many worried fathers to be, myself included, he didn’t sit down and work out projected expenses for the new baby.

Instead he asked his wife to do some research and figure out the reoccurring expenses the child would introduce.  I like this idea because it gets both family members involved in the planning process and reveals the mother’s financial expectations for baby time.  My friend emailed me his wife’s findings:

First 4 months – $72 per month, then after that more like $48 per month.

First 4 months – $70 per month, then after that – $35 per month until they are potty trained so plan on this expense until they are 3 to be on the safe side.

Baby Cereal / Food
This starts at about 4 months- $75 per month.

Yearly Expenses
Insurance Co-Pays
$25 per visit – We will have to take the baby in at 1 week, 1 month, 2 months, 4 months, 6 months, 9 months and 1 year and for any issues, then once a year after that.  Figuring in a couple additional appointments, this is $250 for the first year.  We can put this amount plus some for ourselves into the Flexible Spending Account Plan so we don’t have to pay taxes on it.

$500, my friend said she buys clothes at the beginning of the season and after holidays (because relatives will get him/ her clothes).

What do you think?  Do the expenses sound accurate?  Did she miss anything? Knowing my friend, he’ll go through and validate each one but I think it was a good idea to get both parents involved in the budgeting process.

Personal Finance Review – I Have No Pension Edition

At a family gathering this weekend I discovered the employer of one relative offers a pension plan.  I thought pension plans were a thing of the past but I guess some companies still have them.  Not only that, they offer a 401k match and profit sharing.  Wow, I’m working at the wrong place : ) 

We supplement our 401k plan with Roth IRAs since I don’t have a pension and I’m not planning on any help from Social Security in retirement. As a teacher, my wife has contributed to a state employee retirement fund that should be solvent come retirement time so we can look forward to that; but no pension for us : (

Here are some money articles I enjoyed this week, kind of long review this time:

-Bank of America May Have Removed Balance Transfer Fee Cap @ Suns Financial Diary

-Percent Given, Not Amount, is Key to Generosity @ Free Money Finance

-Interest Rates For Dummies @ Money, Matter, & More

-Should You Take That 0% Financing Offer? @ Blueprint for Financial Prosperity

-Invest In The Stock Market Using These Investing Styles @ The Digerati Life

-A Few Good Reasons Why You Should Pay Your Taxes @ Generation X Finance

-Stopping My Prosper Contributions @ Lazy Man & Money

-Refilling a Toothpaste Tube for Fun and Convenience @ Five Cent Nickel

-September 2007 is eBay Month at MyPoints @ Mighty Bargain Hunter

-5 Romantic Outdoor Day Date Ideas Under $30 @ Consumerism

Discover your money values and financial demons @ Moolanomy

-How to Feed Yourself for $15 a Week @ Get Rich Slowly

What’s your tipping point? @ Paid Twice

-Getting Out Of A Cell Phone Contract By Giving It Away @ My Money Blog

-The One Hour Project: Build Your Own Net Worth Calculator @ The Simple Dollar

Last but not least, check out last week’s Carnival of Personal Finance at Advanced Personal Finance.

Do Your Routines Help Create Wealth & Happiness?

Is your life full of routines? Are they helping or hindering the creation of wealth and happiness for you?

Wealth Building Routine
Investing over a long period of time and leveraging compound growth is a great way to build wealth. You’ve probably heard the saying “pay yourself first”, well a saving and investing routine can enable you to do that.  Make putting away money something you don’t have to think about and it’s much more likely to happen.

Setting up an automatic investment routine when we first entered the job market 7 years ago has allowed us to start a nice nest egg; I would definitely recommend starting a saving or investing routine to anyone.

Routines Can Enable Happiness
The great thing about a routine is that you go through the steps enough times that you can become very efficient in their execution.  As your efficiency improves, your routine may take less time, which leaves more time to do the things that make you happy.

Another benefit of a routine is that you know the scope of the steps you need to take and what is expected of you.  This advanced knowledge of daily tasks can greatly reduce your stress level. Establishing a routine for our new son helped us adjust to the role of parenthood and meet his needs while still having some time for ourselves.

A Wealth Reducing Routine?
One negative thing about a routine is that it promotes the status quo.  You get used to doing things a certain way; a routine does not encourage innovation, research, or change.

Having a plan and sticking to it is good but every now and then you need to revisit that plan and see if it still meets your needs.  If you never rebalance your investment portfolio or make adjustments for lifestyle or risk sensitivity changes simply because you’re used to the routine of having it on auto-pilot your returns may suffer.

Routines Can Also Reduce Happiness
If you do something over and over again for years in the same way chances are you will get tired of it. The problem is often that it’s easier to keep doing the same thing than make a change or take a risk. You don’t necessarily enjoy the routine anymore but you’re “stuck in a rut”. You’d like something different but can’t seem to get yourself out of the old routine.

I’m experiencing this in my career right now. I’ve been in the same job for 7 years and although I’ve been advancing regularly I no longer feel interested in or challenged by our projects. I used to enjoy the work I did but it has now become a chore. Of course I’m used to the routine of the same tasks, same people, same commute and it’s easier to stay working there than seek out a new job but it doesn’t necessarily make me happy. I am working on a plan to get out of the rut but the “comfortableness” of the routine makes it mentally more difficult.

Routines, Good or Bad?
As I’ve shown, establishing routines can definitely help you along towards happiness and wealth but over time they can potentially become a drag on both. I think the key is to periodically review your routines and make plans to change any that are no longer beneficial to you.

The Best Credit Cards In Their Class

Aleksandra Todorova from Smart Money magazine put together a list of the top credit cards for students, rewards programs, cash or gas rebates, financial rewards, and low rates.  He provides a thorough comparison of the cards considered and explains the benefits of each card recommended. Here are the highlights:

Student Cards
The Citi mtvU Platinum Select Visa Card for College Students offers bonus points for a good GPA, staying current on your bill, staying within your credit limit, and money spent on textbooks.
Rewards Programs
American Express Membership Rewards – “the oldest and remains one of the most comprehensive programs around.”

Citi ThankYou Network – “offers innovative ways of accumulating points and nearly all of Citibank’s rewards cards are fee-free.”

Cash or Gas Rebates
American Express Blue Cash for aggressive spenders – “5% cash back on purchases at gas stations, supermarkets and drug stores and 1.5% on everything else, once you spend $6,500 in a given year”.  Am Ex Blue Cash is the card that we use for almost all our purchases.

The Platinum Discover Gas card is the runner-up, “a favorite among lighter spenders.”
Financial Rewards
Fidelity Investments 529 College Rewards card – “has the most generous rebate rate — 1.5% of all purchases will be deposited into a 529 Plan”.

There were two runners up, Fidelity Investment Rewards Card, which “converts MBNA’s rewards program points into investment dollars at a generous 1.5% rate” and One from American Express, “1% of your purchases are contributed to a high-yield savings account, which currently earns 5%. The drawback: The annual $35 fee.”
Low Rates
For those that carry a balance it makes sense to go with the lowest rate you can on a card.  The winner was Simmons First Visa Platinum “with a 7.25% fixed APR” and the runner-up the Capital One Platinum Prestige card, “7.89% APR, reserved for people with excellent credit”.

There you have it, a card for every need.  Of course, if you can’t be responsible with a credit card you probably shouldn’t own one but used correctly a credit card can be a great financial tool.

Happy National 401(k) Day!

Here are some tips from my HR department on using your 401k for retirement savings.

Start Now
Time is on your side. The sooner you start, the longer your money has to grow. It’s never too early to start saving for a secure retirement.

Take Control
Only you can ensure that you’ll have enough money saved for your retirement.

Know What You’ll Need
Experts estimate that you’ll need at least 70% of your pre-retirement income to maintain the same standard of living once you stop working.

Contribute to the Max
The more money you put in your 401(k) plan, the more you’ll get out – especially for companies that match dollar for dollar up to a certain percentage.

Invest Pre-Tax
Saving pre-tax gives you more money to invest. Because taxes take a large bite out of each dollar you earn, you have to save more after-tax dollars to get the same impact as pre-tax savings. PLUS, saving pre-tax lowers your taxable income, which means that you’ll pay less to the IRS on April 15.

Pay Yourself First
Out of sight, out of mind. You won’t miss the money you’re saving if it’s deposited straight into your 401(k) Plan account.

Keep Your Hands Off
Don’t touch your retirement savings. You’ll not only avoid tax penalties for using the money early, you’ll also give your investments more time to grow.

Look Long-Term
“Low-risk” investments usually mean low returns and may put your retirement finances in danger down the line. For successful saving, choose investments that will beat inflation over the long haul.

Be Flexible
As the years go by, life changes. So should your retirement savings strategy. Review it annually to ensure it still meets your needs as retirement approaches.

Save Money on Kids Books, Use the Internet

How many books can your kid go through in five minutes?  Never wanting to spend more than a few seconds on a page our little guy can speed through his pile of books in no time flat.  So what do you do, buy more books to make a bigger stack?  No way, use the Internet!


Flickr Adventure
As I checked my email the other night my son pointed to the screen from his perch on my knee and yelled his favorite word, Car!  Sure enough, he was eagerly pointing to an ad for the new Honda Accord.  His ever first interaction with a computer gave me an idea so I opened up the popular photo sharing site Flickr.

I typed in Honda Accord and was rewarded with another enthusiastic burst of pointing and yelling from my son.  I moved on to his favorite animal, he panted frantically and pointed excitedly as a list of puppy pictures popped up.  We were on a roll! He and I spent the next 15 minutes on Flickr cruising through all his favorite images with him either saying the name of the object or making its sign. 


Save Money on Kids Books
What a cool way to expose a little person to the world and its much cheaper than buying tons of baby books.  We have a cat book that’s filled with images of about 30 cats in different poses.  Why pay money for a boring book of the same 30 images you see over and over when you can surf the web to find new and interesting pictures every day for free! 

Kids aren’t always patient so I looked for a few ways to get the pictures he liked faster. To get better results search for a specific terms instead of generic words. If you look for Honda Accord instead of car or Golden Retriever instead of dog you’re likely to get relevant images.  Once you find a picture you’re looking for you can also click on the tags next to the picture, such as accord, that will take you to a grouping of pictures all on that topic.

Welcome to the digital age junior!

Retirement: It’s Like Being 18 Only With Money

Would that headline catch your eye on a piece of mail?  It’s a pleasant thought to be 18, footloose and fancy free again.  No big projects at work, no mortgage to worry about, and no sense of responsibility keeping you awake at night.  Plus to top it off you’re not even broke!

Back to Reality
As I opened the letter my thoughts of being young with money were rudely interrupted by a reminder that my next chance to shed these heavy burdens would likely come when I was old and grey.  Ameriprise Financial was inviting “me and my guests for an exclusive dining experience”, which also featured  “a private presentation of Retirement: Planning Beyond the Numbers”.

Exploring Retirement
The Ameriprise brochure notes the presentation will explore issues such as:

  • Defining your dreams for retirement.
  • Envisioning the life you hope to live in retirement.
  • Retiring TO something rather than retiring FROM something.

I think it is a good idea to define your financial goals early on in life and retirement is definitely one of them. The brochure says everyone who attends the event will get a copy of the Dream Book guide to help with their retirement planning.  A free meal, free book, and a presentation about money do pique my interest but I haven’t called to sign up yet.

Our Ameriprise Financial Experience
When we decided to create our first official financial plan about 5 years ago we had an initial consultation with someone from Ameriprise Financial.  He was a nice guy but we decided to go a different route.  Our main complaint was that he had no financial experience!  He was fresh out of college with just a general Business Administration degree and he wanted to be our financial advisor.

There was a more experienced person sitting in on the consultation but the rookie would be the one creating our plan.  I know everyone has to learn somehow but I didn’t want him learning with our money.  We ended up hiring a fee only financial planner who was both a CFP and a CPA, and for a cheaper price than Ameriprise!

Retirement Seminar Conundrum
Despite our initial experience with Ameriprise I’m still debating whether or not to sign up for the retirement seminar. As I mentioned, it’s hard for a cheap guy like me to pass up a free seafood dinner at a nice restaurant.  I do enjoy hearing and learning about ways to invest money so it might be an interesting presentation despite the emphasis I imagine will be placed on Ameriprise products.  What do you think, worthwhile educational dinner or a waste of time?

Forbes Mutual Fund Survey Turns Up Mairs & Power Growth

When Forbes recently published its annual mutual fund survey one of the funds on its Honor Roll (top 10 funds) caught my eye.  Since I pretty much stick to index funds for our portfolio I’m not invested in any of the top 10 but I’m going to take another look at #3, Mairs & Power Growth (MPGFX).

One thing I liked about the Honor Roll is that it highlighted performance in both up and down markets.  Although it has a C performance in up markets,


Mairs & Power Growth has an A rating in down markets.  It managed to stay mostly ahead of the S&P during the good markets of the last 5 years and beat it nicely during the last 10 which included some nasty market drops.

Since we have the largest percentage of our portfolio invested in an S&P 500 index fund, an investment in Mairs & Power Growth might help offset losses during rough times in the overall market.  A Smart Money article from a few years ago noted that “the Growth fund performs best during — and especially after — a fall in the market.” 

The combination of no load, low expenses, and low turnover make it seem attractive as a good buy and hold fund especially if it has historically done well when the market is down.  I’ll have to research the fund further but so far it seems like it could be a good fit.

The funds that made the Honor Roll in the Forbes 2007 mutual fund survey are listed below in order:

  • Bruce Fund
  • Keeley Small Cap Value
  • Mairs & Power Growth
  • Delafield Fund
  • Third Avenue Value
  • Muhlenkamp
  • Stratton Small-Cap Value
  • Osterweis
  • Perritt MicroCap Opportunities
  • Value Line Emerging Opportunities

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