Saving Money - $100 Per Hour
To Swim In Your Own Pool?

Is saving money on the things you buy important to you? Then start by being honest about what things really cost you. To understand how difficult (and crucial) this can be, consider the following example.

Saving Money - The Swimming Pool Story

Marty and his wife June loved the idea of having a built-in swimming pool in the back yard/patio area. It would improve the house and be a great way to relax on hot summer evenings. As it was, they were going to the sports complex almost every week, to use the pool there for $7 each. They figured they would be saving money on that with their own pool.

The pool they wanted would cost $50,000 according to the first quote they got. This included all the tile work around it and the finishing touches - everything. Fortunately they knew enough to get two more quotes, and finally found a company that would charge just $40,000 for the whole job.

Soon they refinanced their house, to pull out $40,000 in equity. The pool was done on schedule and on budget, although they did spend another $2,000 for the extras they wanted. Over all they were very happy with their new swimming pool.

They used the pool almost every night for the first summer. But the second year they used it less often, and even grew a little bit tired of the work required. Chlorine monitoring was necessary, filters needed to be changed, leaves needed to be cleaned out, and more.

Marty did most of this work himself to save money. But it still cost over $800 per year for heating, treating and caring for the pool. By the fourth year, the thrill was gone, and they realized they had used the pool just eight times that year. Saving money on it became more of a priority, so they stopped heating it when they weren't using it. Of course this meant it was difficult to use the pool spontaneously (it took a long time to warm it up).

What if you knew ways to spend less on almost everything? What would you do with the money you saved? Travel? Buy something nice for someone you love? Cut your hours at work and relax a little more? The possibilities are endless.

There are more than 400 ways to save money listed in Part Two of the book, including ways too get free dental x-rays and tire repairs.

The real value in the book, however, is in Part One. This is the part that will really change your thinking. You'll see how to get more for your money - more of what really matters to you. You'll learn about the studies in "behavioral economics," how that research is being used to manipulate you, and what you can do about it. You'll learn the "7 Keys" as well

Jeff got a new job in year five, and they had to move. They had to clean and repair the pool cost, which cost about $1,000. It was necessary to get the house ready to sell. This, with the $4,000 in annual costs over the years, added up to $5,000. They also paid $14,000 in interest over the five years, for the money they borrowed to put the pool in (7% annual interest). June was shocked when Marty showed her on paper that it had cost them $19,000 to use of the pool for the five years they had it.

Even worse, the pool didn't add as much to the value of the home as they hoped it would. Swimming pools have value, but a $40,000 pool won't necessarily make people pay $40,000 more for a home. The real estate agent figured the swimming pool added $20,000 to the market value of the house. As it turned out, their home sold for about $20,000 more than a similar one - without a pool - down the street.

Thinking about their "dream pool" Jeff took out a pen and a piece of paper, and started to add up the times they and their friends had used it. It was used for a total of just 400 hours during the five years they had it. Then he added up the costs to maintain the pool ($4,000), repair costs ($1,000), interest costs ($14,000), the capital loss ($20,000), and the extras they bought ($2,000). He arrived at a figure of $41,000, and divided this by the 400 hours of use.

He told to his wife, "The pool costs us $102 per hour." They had been saving money by not paying $7 each to use the health club pool, of course, but they could have paid that every week and taken a week-long vacation to Hawaii every year and still spent less. This was depressing, especially when Marty thought about the time cleaning and caring for that swimming pool.

You can see that saving money on what you buy involves more than good shopping skills. You also have to look at the true cost of the things you buy and do, and make an honest assessment of whether they're worth it. Often there are cheaper alternatives that are just as satisfying (or perhaps more so, in the case of pools that you don't have to clean and vacations in Hawaii).

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Save Money By Knowing The Games Stores Play

Who wouldn't like to save money when shopping? But looking for sales is just a start. You also need to be aware of the games that retailers play, starting with the two common ones explained here.

Reference Price Advertising

You have seen advertising like, "Was $119. now only $89!" Similar signs will confront you once you get to the store. Interestingly, regardless of whether the retailer ever sold a single unit at the $119 price, you feel like you are getting a deal, and that is the point of this game.

States often have laws requiring that these be honest advertisements, meaning the store must have the item for sale at the stated price for a certain amount of time before they can claim that it was the "normal" or "regular" price. Of course, not surprisingly, many have it at that price for the absolute minimum time required by law. They may not actually expect to sell any at the "regular" price, since it is solely there to make you feel good about the new "sale price."

One way some retailers use this tactic is by having many similar models of a product. A furniture store might have several mattresses that are very similar, for example. Which one is on sale is rotated, so there's always one that looks cheaper than the others. If you notice this, certainly don't pay the regular price, but wait until the one you want has its turn on sale.

You can also save money in this situation by buying one of the "sale" items. Alternately, since they never expect to sell the items at that price anyhow, the store manager may give you a similar discount if you ask (or insist) for it on the one you really want.
Price Matching Scams

Stores find that it costs nothing to guarantee the lowest price in town. It may be true that they'll match any competitor's price, but then again, they will only match the price on the exact same item - and they may not carry the same models as other stores do. They're also very aware that we rarely check the prices in other stores before buying - and almost never after buying.

Consumer research shows that when a store advertises that it will match competitors advertised prices, we generally think they have lower prices than other stores. Interestingly, this impression is there even when they are one of the higher-priced stores. This is because we often just don't check the prices at other stores.

There are some customers who actually compare prices and demand a reduction. This doesn't cost the store much, and meanwhile, they can sell for more than other stores to all the "average" consumers who don't check other stores.

You might wonder if comparison shopping worth the trouble and time. A study done by the Consumer Literacy Consortium in 2002 found that buyers who spent 16 minutes comparing prices online save an average of $100 on a television. Does that sound worthwhile?

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Pricing Secrets That Can
Save You Money

Want to save money on that next purchase? It can help to know the pricing secrets of retailers, like the two covered here.

The Secret Of The Minimum Advertised Price

Sometimes pricing doesn't seem to make much sense. For example, why does whole wheat pasta cost three times as much as regular pasta? Doesn't regular white-flour pasta require the extra trouble and expense of removing parts of the wheat? Economist will tell you that price is determined by what the market will bear. This is certainly an important principle to understand, but does it always apply in real life? Well, yes, in a way - but it is complicated.

Consider the "manufacturers suggested retail price," or "MSRP." Also called the "list price," it is the price a manufacturer suggests to the store - at least in theory. But in practice it is generally the maximum price a retailer can charge us. After all, who really wants to buy something that is priced higher than the manufacturers suggested retail price? So in this case, "what the market will bear" has been limited by the manufacturer.

Another price that manufacturers suggest to retailers is the MAP, or "minimum advertised price." This is one we don't hear about. It's not an absolute minimum that retailers can sell for, and they certainly want to sell for more if they can. But if they sell for less than this they risk upsetting manufacturers and suppliers. Why? Because they can't convince new retailers to carry a product if competing retailers are selling it so cheap that it is difficult to make a profit. The new retailer could sell it for more, but who would buy it when it is advertised cheaper somewhere else?

Of course, you want to buy at the MAP, so to determine (approximately) what it is for a particular product, check several stores. If all are advertising the product on sale around the same price, it is usually close to the MAP. The "big box" stores stick to the MAP in their sale advertisements, as often as not.

What if you want it even cheaper? Look at small stores. They can get away with sales that price the product below the manufacturers minimum advertised price, because they have less to risk by angering suppliers.

Be careful, though. Some stores sell below the MAP because they're selling incomplete products. For example, if it is a computer, you might have to buy a keyboard and speakers as separate items. When other stores are selling a complete product, compare the total cost of everything you need to get a product that is functional.

Why Prices End In 99

$29.99 might as well be $30, and we know this, so why do retailers play this game? Simple explanation: Because this pricing secret works. You may automatically round up a price like this, but you may not have looked at it in the first place if it said $30 instead of $29.99. We process information from left to right, so you see the "2" before anything else, and this is more appealing than a "3" when you want a lower price.

You see, even if only unconsciously, your mind is probably thinking "20-something dollars" versus "30-something." Your next thought might be "Oh, it's $30," but you are already looking at the product, right? It makes you more likely to buy it than if you never stopped to look at it in the first place.

In any case, retailers get caught in this game whether they like it or not. After gasoline retailers started pricing a gallon using ".9" cents, for example, how could any of them stop doing it that way? Just imagine if all the other gas stations had gas at $2.99 and 9/10 and one at $3.00. Ten gallons would be just a penny more there- not worth driving on. However, drivers just see the sign and immediately think they are the most expensive gas station (they are - it just isn't enough difference to matter).

How do you put this knowledge to work for you? Be aware that the 9/10 caught your eye at the gas station, but a penny or a tenth of a penny savings won't justify going out of your way. Save more money by just stopping at the first reasonable station - at todays prices you can't afford the gas to drive around looking for a penny savings.

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