Afraid to Negotiate? Check out our step-by-step guide.

Most of us have been raised to look at what’s being offered and then either take it or leave it. Well, that is easiest route for sure.   But let’s say that you feel that you’re being treated unfairly by your insurance company or by someone that you’ve contracted services with.  Perhaps simple acceptance of the situation may not be the best way to go.

Step I.   Realize that the best resolutions are the ones where both parties win.  So,  whenever possible make this the focus of your negotiations.

Step II.  Do your homework ahead of time.   Research the organization that you are researching.  Understand their lingo and what your rights are.  If  you are planning to sign or have signed a contact, make sure to read over it at least three times carefully.

Step III. Be aware that most front line staff are NOT empowered to negotiate with you and if they are their decision making power will probably be really limited.

Step IV. Be prepared to receive at least one or more NO answers before you will reach that win-win sweet spot.  Don’t assume that they will give you the keys to the castle without some back and forth negotiation.  Structures  are put in place to make you work for better deal than their typical customers receive.

Step V. Remember, it all about the dollars when it comes to negotiating with for-profit businesses.  So, try to put yourself in their shoes and think about at what point holding out on the customer will cost more than just giving the customer a break.  Remember, an organization’s reputation is highly valued because of  it’s ability to attract future customers and income.

Step VI. Be polite, but persistent.   The calmer you are as you escalate your negotiations up the line, the more seriously you will be taken.  Remember, think about what the view looks like on the other side of the desk and figure a way to a win-win solution.

Today’s Fly and Dive Economy. Where will the next random walk take us?

Today’s Fly and Dive Economy.  Where will the next random walk take us?

Let us first take a moment to reflect on the recent  journey that our stock market has taken (over the last 5 years).

Click HERE to view a chart of the S & P 500 for the last 5 years.

The phrase that keeps rattling around in my brain is a phrase that a Finance Professor once shared with the class.
“The market shall take a random walk”.  I try to keep that in the back of my mind whenever I make financial
decisions.

As a typical middle class family, we probably have some of the concerns that your family does.  So,  here is the short list of what we’ve been pondering lately.

• I have a 401K or a 403B retirement account at work, but what if I know little or nothing about the stock market. Whom shall I trust?
  • Our opinion is that nobody is going to watch our money like we will.  So we started spending time studying what we could on our own.  We found tons of free tools on the internet to help us figure out what to do. One of the web sites that started with was finance.yahoo.com.  As we began to educate ourselves, we tried to stick to web sites that weren’t trying to sell us financial products or services.
  • We also took time to seek out a flat fee certified financial planner.  We typically visit a planner once a year to review our investments and only pay him or her a flat per visit fee.  Fair warning, it’s not going to
    easy to find a good financial planner that is will to go this route.  In our experience most of financial planners we spoke with preferred to be paid a commission on the funds they recommend or be paid a percentage of the value of  the portfolio.  After quite a bit of searching, we financially located the
    planner that we had been looking for.
• What’s going to happen next in the stock market and what can I do to protect myself and my family?
  • We try to stay away from any financial expert that claims to know what’s going to happen in the next few months (or years).  It’s that random walk thing that will never be out guessed.  So, we try to plan as if we don’t know either.
  • We figure that it all comes down to a few basic considerations:
    • How much risk are we really willing to take?
    • How many years do we have until retirement (assuming that anyone will be able to afford retirement)?
    • Do we have our money spread around in enough different types of solid investments to protect us from an all or nothing financial scenario?
    • How often should we monitor the performance of our investments?
    • Should we set an exit strategy (how much of a market drop in a specified period of time are we willing to stomach before we liquidate our investment)?
    • If we liquidate, how much of an opportunity loss are we willing to endure because we’re unable to figure out when the right time to get back in is?
    • If we liquidate, are we willing to pay capital gains on our taxable accounts?
• Can we count on the federal government to get us out of this mess?
  • We figure that the best the government can do is to delay what is going to happen.
  • We believe that fundamental life principals never change. Here are a few that we could identify:
    • Greed and a myopic view of money will always end badly (for people, the market, countries and the world).
    • If we (people, companies, governments, etc) keep spending more money than we have or can afford, this too will lead us into a crushing realization of what’s really important in life.
    • If we care more about money than we do about others, we’ve already failed.
    • The problem with buying more stuff than we need is that non of that stuff ends up give us the long lasting happiness that most people are looking for.

The Cheapskate Family Vacation

The Cheapskate Family Vacation

How did we do?

Our family was planning a special vacation for our child’s 7^th birthday.  So, we thought that this would make a great story for our LeapToCheap.com site. To us cheap actually means “smart savings”.  The smart part should imply that you don’t need to pitch a tent to save on a hotel room

This chart shows how much money we saved on our 4-day 3-night San Diego family vacation (2 adults and 1 child).  Check out how much we saved.

** Check with your child’s school as well as your local public library about summer reading programs that may offer discounts to attractions such as Legoland California.

*** San Diego Zoo – Kids (ages 3-11) enjoy FREE admission to the San Diego Zoo ! Through October 31, 2009

Here’s how we plotted our little savings adventure………

When to go?

Considerations

• We don’t like crowds very much. If for no other reason than waiting in long lines eats away at your vacation time with your family.
• We prefer cooler weather.
• Of course we never want to pay more than we need to.

Conclusion:

• Flight, hotel and attraction prices proved to be lower off season. So, since our child had a Thursday and Friday off from school, we opted for late September / early October travel dates.

Airline tickets – Flying high on lower prices

Considerations:

• We started checking out airfare prices about one month ahead of time (and monitored fares daily). We wanted to stay over on a Saturday night which has saved us money in the past. However, this was not the case this time around. So, we switched to a Wednesday evening departure and a Saturday night return. That little day of week switch saved us over 50% off each roundtrip ticket.

Conclusion:

• Airfare savings assumptions don’t always apply.
• Airlines are constantly changing the way that they price tickets. So, start early and try different departure and return days to see if they will can save money.
• Remember, Southwest Airlines ticket prices can ONLY be found on Southwest.com. They’re not included in results on Expedia, Orbitz, Travelocity, etc. Since Southwest sort of started the whole flying cheap thing, its always a good idea to check them first. Also, be sure to factor in the baggage fees when comparing airline ticket prices.

Hotel costs

Considerations:

• We were looking for a hotel with highly rated visitor reviews.
• A smoke free room was a must.
• Accommodations for two adults and one child were needed (at least two full beds).
• We wanted a microwave and refrigerator in the room.
• We wanted a really good free breakfast for the family.
• We wanted a hotel in a safe area and close to either Legoland or the San Diego Zoo.
• We always insist on a really clean room in good repair.
• It would be nice to find a hotel that matched up with our frequent stay programs.

Conclusion:

• Hotels.com is one of the best sources of hotel reviews. We checked there and found a 4.5 of 5 user rated suite hotel near Legoland for less than $100 a night (taxes included). The hotel had the best breakfast buffet that we had ever seen. The hotel was nothing fancy, but it was in excellent repair, super clean, great customer service and a pool. On top of all that, they offered Legoland and San Diego Zoo tickets at the awesome prices. We ended up booking through Hotels.com so that we could snag their welcome rewards points. If you’re curious, the hotel was the Ramada in Carlsbad, CA.

What lessons did we learned on this trip?

• Planning paid off big.
• The food and drink at both Legoland and the San Diego are anything but cheap.
• Packing your own soda, water and snacks in your backpack saved us quite a bit of money.

Ways to save on services….

When it comes to monthly services charges, the name of the game from the merchants point of view is to establish a long term relationship with you where they can count on you to keep paying them each billing cycle.   This predictable revenue stream is  what merchants want most.   While this may sound bad for the consumer, the good news is that it can actually be very good for the consumer if they use this as leverage to ensure that they are getting the best deal.

Cable,  DSL and  Satellite TV/Internet  providers

You may have noticed the never ending ads trying to encourage you to sign up for the specials from TV and Internet service providers.  You know, the ones that offer free installation and a great monthly rates.  From time to time, you might have thought “hey, those prices are less than I’m paying and I’ve been a loyal customer for quite a while”.

The fact is that unless you call them and ask  for a lower monthly rate, they probably won’t be calling you.
Before you call them, make sure that you know what the competition is offering.  While on the phone with your service provider,  be sure to not only point out what the competition’s sign up specials are but also your current  provider’s new customer sign up offers are as well.  Point out to them how long you have been a customer.  If the  person on the phone brushes you off,  be sure to ask to speak with a supervisor before moving on to the competition.

Secret tricks used to convince you to pay too much.

When you look at TV, radio and print ads,  there are several little understood marketing tricks that are used to get people to pay more than they need to.  Here are just a few of the popular tricks:

1. Advertising products as FREE or at  ridiculously low priced and making good money by:
   • Charging  jacked up Shipping and Handling (or Processing) charges to customers.
   • Offering a return policy with required jacked up return shipping and handling charges.
2. The old “Priced as Low As” trick:
   • When you think hard about this, it becomes crystal clear what they are really saying. We translate it as something like “We may sell you item(s) no cheaper than this price”.  Hey, what does that really mean anyway?  Most folks don’t think to hard about it and assume that they are selling stuff at fantastic prices. As you can image, this is often not the case.   Maybe we should ask them to advertise using this phrase “Priced as HIGH as…”.  Hmm, that probably would not sell as good.
3. The old, if it’s sold at auction, it must be cheaper trick:
   • In reality auctions can bring out the competitive nature in people.  Some people need to win at any cost. Since most auctions have a fixed minimum price set before the auction start, the seller is protected and may make more profit in less time using this approach.
   • So, you really need to do your homework before putting that bid out there on ebay.  Make sure you know what the item is really worth before you bid.
4. The “If we call it a Factory Outlet store, people will assume that the prices are less than the mall” trick:
   • In reality, you may actually pay less at the mall if you catch a good sale.  Also, don’t be surprised if you end up paying the same prices than you can find at the mall.
   • When you think about it, it is brilliant to setup factory outlet stores (that have less overhead cost than being in expensive mall space) and pricing them at the same or higher prices.  Also, many outlet shops are closer to upscale residential neighborhoods.  Someone really thought this one out.
   • Of course you may be able to find lower prices at the outlet stores at times.  Our point is, don’t assume that outlet store prices are cheaper before doing your homework first.

Can Extended Warranties extend your current bank balance?

Generally, we’re not big fans of paying  for extended warranties.  However there are times that they can make good economic sense.  So, here are a few things to consider before purchasing an extended warranty.

• Does it make dollar good sense?
  Take the purchased  price of item and divide it by the number of years that you expect to own it. Next determine the difference between the price that you pay for each extended warranty year you would pay for the warranty and multiply it by the number of years that you expect to own it.   Finally, do some number crunching using the information below:
  • Determine the length and coverage of the free warranty that came with the purchased item
  • Will this warranty fit your needs?  If not
    • Subtract  the number of years of coverage you have  under the free warranty to determine how many years of extended coverage you will want to buy to arrive at [A].
    • Take the annual dollar price for each year of extended warranty coverage and multiply that by the number of years of coverage you want (See A)  to arrive at [B].
    • Take the purchase price of the item and divide it by the years that you expect to own it past the free warranty coverage period  that came with the item (see A) to arrive at [C].
    • Determine the difference between B and C (above) and this will reveal if the extra coverage  makes sense.
    • If the difference between the above two calculated numbers reveals an annual warranty cost that is unacceptable to you, then you may want to consider skipping the extended warranty.
• You may already have free extended warranty coverage and not even know it!
  • Many credit cards automatically cover items purchased with that credit card.  Call up your credit card company and as if  you card is already equipped with this coverage.  If so for the details (preferably in writing).  Read the fine print to know how to jump through the hoops.
• Your automotive insurance company may offer you very reasonable prices on your automotive extended warranty (if you choose to purchase one).  That being said they have vehicle age and mileage requirements to qualify.  So, it couldn’t hurt to give your insurance company a ring.

• Automotive extended care warranties. Are they worth the cost?
  You really need to read and understand the fine print and limitations to these types of warranties.  Many sound good, but when you need it you could be very disappointed when you need to use it.  We would start by assuming that all auto warranties contain catches to them.  So, here are some of the question that you may want to ask before signing up:
  • What isn’t covered?
  • Are there any limits to coverage based on mileage and or age?
  • What do you have to do to file a claim?
  • On what basis can they deny your claim?
  • Will your rates go up in the future?
  • Is the warranty transferable to another owner?
  • Can you take your vehicle anywhere for the repair work (including the dealer)?
  • Are both parts and labor covered?
  • Is the drive train covered (engine and transmission)?
  • Are you able to stipulate factory replacement parts on your repair?
  • Are they highly rated by the Better Business Bureau and also from independent reviews that you can find on the internet?
• Some items that it may make since to purchase  extended warranties on:
  • Expensive electronics that can cost a bundle to repair (e.g.  laptop computers, hi-end televisions, hi-end printers, large appliances).   Home warranties can be handy to help you sell your home as well.

Cheap and smart ways to eat out for less…

These days if you work at it you can actually eat for substantially less that you thought.  We have identified several ideas to help you get started.

Coupons can be a great way to save on food at restaurants.  However, it is important that know which ones are really a good deal.  Here are some tips.

• Do the math first – Calculate your saving ahead of time.  For example, if the coupon is a buy one sandwich get one free deal when you purchase one fountain drink, make sure to check the price of the required fountain drink.  Add the regular price of the sandwich and the fountain drink price.  Next, subtract the price of the regular price of two sandwiches and there is your saving.  Some establishments have been cleverly raising prices and marketing coupons.
• The fine print – Make sure to check the expiration date and other requirements to redeem the coupon.
• Saving $ off of what? – Some establishments will jack up their prices and then offer awesome discounts off inflated prices.

Money saving strategies for dinning out for less

• Fast Food
  • Stick to the real deal -Lately they have been offering great deals (e.g. value meals).  Remember, that the restaurants are probably barely breaking even on their cheap deals.  So, they hope to make money on the higher priced extras like fries, soda and deserts. Lately McDonalds figured out that they can make a decent profit by selling fancy coffees similar to what the expensive coffee chains offer, but for less.
  • Home base for saving – Save big by skipping the fries and snagging the soda at home.
  • Double up on that 99 cent burger, sandwich, baked potatoe (wendy), salad, etc and make a meal out that.  Skip the fries and soda and your eating cheap.

• Sit down restaurants
  • Predictable prices – Stick with restaurants that have standard pricing any time of the day (as opposed to place that jack up their prices for dinner).  One example is Chili’s bar and grill.
  • Two meals for the price of one - Many restaurant serve larger portions that people could (or should) eat in one sitting.  Instead, eat half and take the doggie bag home or to work and enjoy another meal.
  • Adults eating childish - Some people suggest that you order off the lower priced kids menu to save money.  I might try that on a to go order, but I don’t think I would have the guts to order that kind of meal when dinning in the restaurant.
  • Being fair -  If you choose to eat inside a sit down restaurant, don’t skip the tip.  Waiters work hard and they should be treated fairly.  If you’re not into tipping, order take out instead.

• Take out at the buffet
  • Several restaurants will allow you to do take out from the buffet.
  • Typically, the rule is that you can take out what you can fit in their take out container (typically a decent size).
  • The price for this may not seem cheap, but don’t be surprised if you get at least two meals out that take out container if you packed it up to capacity
  • This allows you save on those expensive beverages by getting them at home or out the reasonably priced vending machine at the office.
  • Also, since a waiter is not involved, there is no need to tip.