In our society, there is an aversion to negotiating. For some reason, we feel as though it is rude to haggle and ask for a better price. However, it turns out that maybe we should be negotiating more. Two weeks ago, my husband and I got a 15% discount for an already-on-sale griddle for offering to take the display model. Of course, the item was out of stock. I doubt the display model trick would have worked as well if there were more griddles sitting on the shelf. And when we bought our dryer (and a couch later), we managed to successfully get free delivery and set-up (normally $50) on top of a discount of $75. Just for asking.

But it appears that I am in the minority. Consumer Reports has a graphic in the August 2009 issue that shows that only about a quarter of consumers try to negotiate. However, those who do negotiate tend to have a pretty good success rate:

Consumer Reports also offers these tips on how you can increase the chances that your haggling will prove successful:

1. Know store policy about discounts and matching deals, and research prices for similar items online and off.
2. Time your visit so that you arrive later in the month. Additionally, avoid times of the day that are busy. You want your salesperson to be thinking of his or her quota. And you want him or her to have the time to negotiate with you.
3. Show fixable flaws to the salesperson (or take the display model).
4. Avoid asking for a discount in front of others. Salespeople don’t want to have to give a discount to everyone who sees your successful negotiation.
5. Ask for a manager if the salesperson can’t deal.
6. Offer cash. In some cases, you can get a cash discount by asking. It means the business doesn’t have to pay a transaction fee for accepting your credit card.
7. Walk if you don’t get the deal. Part of negotiating is being able to walk away if you know you can get the same deal elsewhere. At the very least, when you walk you know you can get the same item for the same price someplace else.

For an interesting personal story about negotiating, Man Vs. Debt has a pretty cool story — and some good tips for beginning negotiators.

Do you haggle?

Back in the day, when big banks had balance sheets that made them appear flush with cash and full of value, banks offered some of the best dividends. However, between the financial meltdown and TARP, financial institutions found it necessary to cut dividends. For many investors, though, the fact that some banks have made arrangements to repay TARP and move forward, hope has been rekindled for an increase in dividends. But it is probably not likely. Financial institutions probably won’t be able to offer the same kind of dividends for quite some time. Some of the factors that may make banks reluctant to raise their dividends include:

• Losses are still expected to mount for some financial institutions. Credit card charge-offs are increasing, and commercial real estate continues to fall in value. And foreclosures could still continue to cause problems.
• More regulation may be coming. Even with TARP and its requirements behind big banks, the President has proposed regulatory overhaul, and banks are wary of what it will entail, and concerned about how it might limit profitability.

However, it is possible — even likely — that, in the future, financial institutions will raise their dividends to some degree. But I doubt they will return to previous levels anytime that could be considered soon. It will take years before banks feel good enough about economic recovery to boost their dividends.

Image source: sxc.hu

I really liked this world resources map post on the Mint.com blog. I’ve noticed that Mint.com offers a variety of interesting visuals on its blog. I know that there are plenty of people who manage their money through Mint, and it does appear to be a very valuable resource.

At any rate, here is the map. What do you notice about where the resources are?

Clearly, there is a reason that we are in the financial position we are in. We are primarily focused on consuming. While exporting industry and raw materials may not be something feasible going forward, we do have the innovative potential to export ideas, technology and highly educated workers to other countries. It would be interesting to see what a map of knowledge resources looks like.

And it would be even more interesting to see where the U.S. placed on that map.

One of the biggest changes to financial system regulation presented in President Barack Obama’s regulatory reform proposal calls for the creation of an agency devoted to protecting consumers. This new agency could demand any number of reforms from banks and other financial institutions. It could require greater transparency, simpler financial products and even set caps on interest rates that could be charged for certain kinds of loans.

The new standards could also be applied to mortgage lenders, forcing them to provide the option of mortgages with simple terms, and requiring mortgage lenders to offer the best available mortgages. It might even mean that mortgage lenders have to (gasp!) make sure that borrowers can actually afford the home loans that they are getting.

In addition to protecting the run-of-the-mill consumer, Obama also wants to protect investors. His regulatory reform would require that hedge funds engage in greater disclosure and would institute the regulation of derivatives and credit default swaps.

Regulatory reform: What is needed? Or does it go too far?

While some are applauding the consumer protection measures, others are concerned that they go too far. What happens when the government sticks its fingers too much into the regulatory pie? As expected, reactions to the proposed consumer protections pretty much fall along the following lines:

1. Consumer advocates call them a good balance.
2. The banking industry insists they go too far and will ruin business.

I’m inclined to call them a good balance. Consumer protection is badly needed right now. While over-regulation is a stifling influence, prudent regulation can be something that eventually helps everyone. No, the economy won’t boom like it did during the era of de-regulation. But what did a massively growing (and artificially stimulated) economy get us anyway? A massive recession to balance the growth, that’s what.

What do you think of the new consumer protection agency proposed by President Obama?

Image source: Wikimedia Commons

My brother just graduated from college, but he’s not looking for a new job. Instead, he’s working at the furniture store he’s been at for the past couple of years. It’s a little difficult right now for college grads (which is why so many of them are going to grad school, or taking on internships). The unemployment rate is at a more than 25 year high of 9.4%.

However, it’s not just the economy that can make a job search difficult. My first job after I got my B.A. was as a cashier in a farm and ranch store. Not a lot of jobs for communications majors in the small Southern Utah town where I completed my undergraduate studies. My husband worked as a telemarketer.

But we’re not the only ones with jobs right out of college that didn’t pay well or have anything to do with our majors. Some of today’s most successful people had surprising jobs right after college. CNN Money offers this information on first jobs right out of college:

• Carol Bartz, CEO of Yahoo: Sold banking software
• Sumner Redstone, CEO of Viacom: Spy (okay, this is a cool job to have anytime)
• Steve Ballmer, CEO of Microsoft: Dessert maker
• Jeff Zucker, CEO of NBC: Researcher at NBC (great example of moving up through the ranks)
• Tim Armstrong, CEO of AOL: Teacher

What was your first job out of college?

Image source: Wikipedia

Radio personality Mark Kaye had rapper Flo Rida on his show not to long ago. To welcome him, Kaye put together a rap song, “Floconomy.” It’s an amusing look at how “difficult” it has been during this recession for the wealthy and the famous.

Happy Friday!

While I agree with some of the economic stimulus measures that President Barack Obama is trying to implement, I do not agree with all of them. More specifically, I am not happy with the continued focus on credit as the engine of our economy. I have written several posts about the disconnect between what’s good for the economy (consumer debt) and what’s good for our individual finances.

The policies adopted beginning in the years of Reagonomics, on up through Bush, Clinton, Bush II and now, Obama, are aimed at explosive economic growth that is unstable and unsustainable. Not to mention the “economic stimulus” designed to put off the natural down cycles, lest they happen during a specific president’s term. So it is no real surprise that I agree with a lot of what Peter Schiff said last night on The Daily Show. Do you?

Some of you might be aware that I have a Major Client. This Major Client accounts for about 1/3 of my monthly income from my freelance writing business. However, what I’ve been suspecting might be coming for a couple months has finally arrived. My Major Client is cutting back rather dramatically. Although it’s better than I thought it would be; I thought I’d get dumped altogether. However, instead of doing that, they’re cutting me down to 45% of my current load. That’s a pretty substantial cut, though, from this Major Client.

I am fortunate in that this client pays a month ahead of time (due to the fact that the amounts of money involved are reasonably significant). I’ve been paid for this month’s work already, and the new contract takes effect July 1. So I have a little time to prepare for what I consider a freelance layoff. Here is what I have in terms of financial support during this time:

• Some savings to help cover costs, if necessary.
• We don’t spend all of our income each month, so there is a financial buffer.
• We have close to 6 months of food storage if it becomes necessary to economize by cutting back dramatically on the grocery bill.
• My parents are usually willing to provide a loan, and since their jobs are secure, it would be a last ditch effort. But better than using credit. My parents don’t charge interest.

What I plan to do in order to replace the lost income (or at least not add additional strain to our budget):

• Reduce the amount of sod for our yard. We’ll sod only the front and seed the back yard to save money. (Happily, the yard has already been budgeted in and is mostly paid for.)
• Look for new writing gigs.
• Write for a few paid content sites until things firm up. (I don’t particularly enjoy doing this — it’s like when I first graduated from college to be a…cashier. But you do what you have to do.)

I feel blessed, though. A lot of people do not have the luxury of nearly 22 days to prepare for a dramatic drop in income.

What would you do if you were faced with a drop in income?

image source: Esther_G via Flickr

Sometimes it can feel like all of the information on finances can be too much. Information overload is when you have access to so much information that you become paralyzed. The video below is a funny look at information overload in a business setting. However, it is possible to experience information overload in nearly any setting. Enjoy the video.

Happy Friday!

A lot of space in the blogosphere has been given over to the recent passage of the Credit CARD Act of 2009. And for good reason. This is one of the most sweeping changes to The Way Things Are to come along for quite some time. But here are 3 surprising things in the Credit CARD Act. 3 things you might not have heard about.

1. Concealed weapons ban lifted for national parks. This is the biggest surprise in the Credit CARD Act because it has absolutely nothing to do with credit or credit cards. It was just sort of slipped in there. So, if you have a concealed weapon and permit, you are allowed to bring it into the national parks.
2. Gift card expiration date rule. It is terribly annoying to get gift cards, and find out that they have expired in 6 or 12 months. Congress now requires gift cards to last at least 5 years before they expire, and for expiration policies to be placed, in all caps and 10-point font, on the card.
3. Credit card payoff information. This is my favorite provision in the Credit CARD Act that no one seems to be talking about. Credit card issuers now have to print, on your statement, where you can see it, how long it will take you to pay off your credit card if you only pay the minimum balance. This is great. Many people simply look at the minimum and pay it without considering. Actually seeing how long it will take to pay off the credit card may spur some to take more immediate and drastic action.

Have you found anything else in the Credit CARD Act that isn’t being much talked of?

image source: Junglecat via Wikimedia Commons