A Practical Guide to Smart Spending
A Practical Guide to Smart Spending
Yes, you are right. Finally, a booklet purposely was written to help buyers make the most of their hard-earned cash.
This booklet will help you:
- Learn who you are up against
- Understand their trick of the trades
- Be aware of your buying habits
- Develop the instinct to sniff bad deals
- Establish the right buying criteria
- Make the most bang for your buck and;
Most importantly – Understand the real meaning of SAVE
About the Author
Sharudin Jamal is a professional salesman. Though he carries many titles throughout his career, Sharudin purposely chose this line of vocation because he truly believes sales is the noblest work a simple man can do – helping and serving the others at a profit. A marketing graduate from The University of North Texas, Sharudin had vast experience in corporate sales collaborating with IBM, HP, Fujitsu, Hitachi and Ingenico. He is also a successful business coach and currently a retiree with the aspiration of a professional blog writer.
A naturalist at heart, his ultimate joy is his weekend trail runs in Bukit Kiara forest reserve. As a runner who writes, apart from books; Sharudin’s most prized possession is the medal he earned for completing the 13th KL International Marathon at the age of 40, a project he passionately dubbed as 42K@40. He lives in Bandar Utama, Petaling Jaya.
Confession of a Professional Salesman
Ever since I can recall, I never had a problem with making money. When I was in college while my friends were squirming because there were more months at the end of the scholarship, I chose to wait table, deliver pizza and do some odd jobs here and there. Upon graduation, when many of them chose to come back home and accept demeaning salaries due to the mid-eighties global recession, I was having a ball driving a Fiat Bertone 1.3 Spider while working as a market research apprentice in the 5th largest market and research company in the USA. Even while most took the conservative approach to save for their wedding, I sort out my king-of-the-day expenses by over achieving my sales quota in the first year followed by a Paris honeymoon because I was a Hundred Percent Club qualifier.
However, financial mastery is both an offensive as well as a defensive game. Like most super salesmen who are good in earning, I am lousy in keeping. Though top-performing salesmen can possibly earn between RM250K – RM500K per year, they spend way too much. During the good times we tend to party. It was during the bad times we ponder on our mistakes and vouch never to make them again.
During the 1996-1999 Asian Financial Meltdown, I was one of those caught with their pants down. Forgive me for these were my sins:
- I was guilty of buying a designer car even though my car then was in perfect order and relatively new because I like to have Pinnin Farina’s signature at the side doors.
- I was guilty of upgrading to a 900cc superbike even though all I required was a nice down-to-earth 650cc single piston commuter bike.
- I was guilty for over patronizing brand names like Giorgio Armani, Rolex, Mont Blanc, Timberland, Nike, Charles Jourdan, Polo and whole others even after realizing these highly priced items did not deliver the true value of their worth.
- I was guilty of not paying detail attention to the financial expenses of my household and my company.
- I was guilty of paying too much insurance thinking that alone will solve all my future financial problems.
- I was guilty of taking three annual oversea vacations before settling my obligation to the taxman.
- I was guilty of not saving thinking that I am always healthy and able to make money all the time.
- I was guilty of buying time-sharing membership thinking by doing so I own a piece of real estate that appreciates in value.
- I was guilty of blowing away RM20K overnight in the stock based purely on rumors and greed.
- I was guilty of using credit cards when I should pay in cash.
Do Not Pass Go. Do Not Collect $200.
Phewh! I am glad all that were purged out of my [belief] system! Now that I had listed down my spending errors, it is obvious as daylight robbery these errors can be avoided. Unfortunately, like all financial errors, when I was doing them I did not realize they were errors! OK, to be fair to the skeptics, I thought I CAN AFFORD to have double vision on money matters. NO WAY JOSE! When it comes to money, being blurry is very costly. To make a long story short, the poor spending habits nearly cost me the very shirt on my back. Well, I could’a or should’a but in reality what was done cannot be undone. Consider past boo-boos as the cost of education. Expensive as it may be, provided we learn from our past, no experience is a bad experience.
Now I am sure most of you are not half as bad but even of if you are equal or worse:
“As long as there are rain and sunshine there is always hope for a better tomorrow.”
Though these are bitter pills to swallow, within 2 years of dedication and REAL CONSCIOUS EFFORT, I managed to sort my life back again. Humbled by the experience, I offer you the same path to financial recovery.
I may not be Mr. Flavor of the Month anymore but I can attest;
Welcome to the Age of Consumerism
There was a joke, “when a woman says bye-bye to her husband upon leaving for the shopping mall, what she really meant was buy! Buy!” Ask any decent lady on the street about shopping and their face started to light up. Some proudly declared that they were born to shop while others pledged that shopping is their number one hobby.
While these remarks may be gender stereotyping, the harsh reality is the whole nation had caught up in this hypnotic trend known as consumerism.
I can say this with full authority since I am one of the odd few that have their backyards directly facing one of the most popular shopping mall in Malaysia. Not unlike Jane Goodall and her life-long passion for studying chimpanzees, I too had successfully converted my house rear end to be an observation post to conduct close proximity research on the human species peculiar spending habits.
A Latin phrase which if translated into English literally means LET THE BUYER BEWARE.
In the olden days when two parties decided to do business. It was the responsibility of the buyer to ensure the item he bought was in its best possible condition and deliver what it promised before money exchanged hands. Unless there was a written contract that warrants the seller to deliver the value after the buyer had made payment, the burden of proof lies on the buyer. Imagine…in the medieval days the buyers are at the mercy of the sellers!
That is why during those times reputable merchants ingrain unique symbols on the products to identify them as the responsible craftsmen that stand by their merchandise. These symbols eventually evolve into brand names as we know today.
As present day buyers we are more fortunate because there are laws and bureaus that protect us from fraudulent purchases. Buyers Beware! is not about teaching you consumer laws. That is best addressed by the lawyers and the legislative bodies. In addition, we also have Federation of Malaysian Consumer Association (FOMCA) who will stand by your rights as a general consumer.
My purpose is to increase your intelligence in making smart buys in order for you to get the best value for your money. Therefore if ever you feel that you were cheated or misled into buying something that you don’t want or not getting the promised value; feel free to contact those respective parties.
However be mindful that while the lawyers and FOMCA will fight for your cause if you had been wronged, nobody will empathize with you for buying thing out of impulse or overcharging your credit card on worthless junks.
The next time you happen to be in a bookstore or intent to go into one in the near future, do me a favor. Count the number of self-help books available on the topic of selling. Next, add to that the amount of books written about marketing, advertising, presentation skills, communication skills, psychology, motivation, leadership, and self-management.
Then do yourself a BIG favor. Look around for books written to help you becoming a smart spender. You will be fortunate if you can find one!
My message is simple – as a buyer, you are absolutely defenseless against the hordes of efficient and organized predators!
While these leading edge hunters are well-prepared and well-equipped to separate you from your money, as a buyer you stand alone. That’s right, no matter how you slice or dice your buying experience, as a buyer YOU STAND ALONE.
Consider this; the very moment you open your eyes in the morning until you go to bed at night - you will be bombarded with thousands of buying suggestions consciously or unconsciously. The label on your toothpaste, the milk carton in your fridge, the cars you pass, the radio advertisements, the billboards, the jingles, the products in your pocket, the food outlets etc. etc. etc. are constantly reminding you that you have to spend.
While Sheep in Wolves Land is a metaphor, the truth is like the real sheep, most buyers are unaware that they had been systematically herded to be slaughtered. Worst of all, they take pride in making these totally no brainer decisions because that’s what is expected out of them.
Consequently like the life of the real wolves and sheep, this is neither a good nor a bad situation but rather a question of choice. Just as there will always be prey so there will always be predators.
Buyers Beware! is offering the sheep a choice to be better informed in order to increase their rate of survival or better still to transform into predators in their own rights. That is the best about being human – freedom to choose the roles we play in our life. No single role is permanent and necessary. There is a good possibility that we all have a hybrid of roles we adapt to suit the most appropriate situation.
Choose well and you will live well! AWOOOO!!!
Beware of the Naked Man Who Offers You His Shirt
A pretty obvious thing isn’t it?
IF THE DEAL SOUNDS TOO GOOD, RUN AS FAST AS YOU CAN!!!
That is heading the opposite direction, of course. Sadly many people do not have the courage or the discipline to do so and while many were spared by the luck of the draw, they will keep repeating the same mistakes over and over again until they reach the point of no return – death or the financial black hole. Between the two, many had secretly opted for the first over the latter.
“Why the lemmings keep running over the cliff?” you may ask. The answer is; turning you back against the crowd is very very uncomfortable. To conform is to survive. There is safety in numbers. This is the herd mentality.
The key to breaking this mindset is not found at the logical level but rather the basic primordial level. The never ending battle of pain and pleasure, good and evil, greed and fear, carrot and stick, reward and reprimand can only be found in the courage to change.
See folks, when comes to spending money there are many who will volunteer to give their advice, even for free. But when comes to accepting the consequences of you buying decision – you stand alone, warts and all.
That is why when comes to the moment of truth in spending, no one besides you will be responsible:
“Spending your money is ultimately your responsibility.”
Before the money leaves your hands, decide carefully because as easy as a stroke of a needle for it to go, it will take blood, sweat and tears for it to come back. Even that still doesn’t guarantee that you will see your money again after you made a bad buying decision.
No I am not talking about money politics. As a buyer you don’t have to wait every four years to vote. You are casting your vote every time you spend your money. When you spend you are actually voting which product is better, which is not. You are setting the standard who are better, who are not. You are selecting which store to continue doing business and which should go bust.
Just like the ants and the bees, as a group of buyers you are very powerful, but due to your ignorance of your individual capabilities in adding to the collective strength you were isolated and reduce to mere gnat.
Your Rights as a Buyer
So very importantly:
“Know thyself and the knowledge will set you free!”
- Right to be there
- Right to ask for information
- Right to say what you want, think and feel
- Right to disagree
- Right to change your mind
- Right to be listened to
- Right to think before reacting
Let me caution you, though these are your rights as a buyer, they are not your carte blanc to abuse the sellers or to mistreat anybody. Consider these as your operative parameters to be respected as a buyer. As much as possible, avoid the undesirable situation which requires legal intervention in doing business.
Swim with the sharks without being eaten alive…duh?
For a long time I never quite really catch the meaning of Harvey MacKay’s first best-seller; after all sharks lurk at the topmost of their food chain and anything less is sushi to these super predators. It was not until recently had it dawned upon me that there are small fishes called the Pilotfish (Naucrates ductor) that actually swim with sharks. True enough, they are not eaten but better still they benefited from the sharks feeding frenzy!
Tips to be a Pilotfish:
- Take advantage of loss leaders – they are really cheap to the point the store is willing to accept a loss in profit by using these cheap items they advertise in the weekly flyers to attract buyers to their store with the hope that they spend on other more profitable things.
- Be loyal to none – welcome to the global economy and the world of contract manufacturing – also known as outsourcing the production to the cheapest bidder. That is not the end of the story. The reason the cheapest bidder can be the cheapest is because they can produce large volume and achieve optimum economic of scale. Even that is still not the end of the story. They can achieve economic of scale because these giant factories from Timbuktu (or any other third world countries) produce the same items (especially apparels and accessories) for a dozen other designer brands which vary their prices based on the prominence of their brand names rather than the real value of the finished products.
- Avoid warehouse sales – Those who attend warehouse sales are mainly compulsive buyers and bargain hunters who purchase on impulse. This is not a place for a smart buyer. To set them apart, rarely do the majority that goes to warehouse sales have a definite goal of what to buy and how much to spend. In the wave of excitement they simply grab and gobble as if everything is free. No matter how cheap an item at warehouse sales you must always remember that THEY STILL COST MONEY. It doesn’t justify that because something is cheap, you should buy more. This is the same as saying that since slot machines take only coins, therefore, it is ok to gamble. Money spent is still money spend in whatever denominator. As the dust settles, the magnitude of the damage is still the same. Unless you are a much-disciplined person, I can bet my bottom dollar that the moment crowd mentality sets in, you too will become like the rest of the herd – BUY! BUY! And Goodbye!
- Avoid One Day Only sales – many booby traps, old/low-value stocks. To put it crudely One Day Only sale is the day the store is throwing away their remnants and instead of paying cleaners to do it, they get shmucks that are happily paying them to do the cleaning. What can be more intriguing than one day to find your garbage collector eagerly pays you to get rid of your garbage? I rest my case.
- Avoid bulk purchase – tendency to over consume and over waste.
- Avoid stockpiling more than one week – Why do large companies come up with innovative management concepts like Service-On-Demand, Pay-per-use, and Just-In-Time? For one very simple reason – cash flow management. Today a company that can sell the smallest divisional unit of offerings at the cheapest price is the biggest winner. As a smart buyer you too must think like the corporate giants – buy the smallest divisional unit at the cheapest price! Stock-piling not only straps your cash, it also consumes valuable space and your fresh produce lose nutritional values.
I hope you can see from the fish metaphor, as a small fry your best strategy to survive is to nibble and run as often as possible. The moment you join the foray to gorge on a big feast you will get hooked or worst - hauled into a hydraulic powered fishing net.
50 Ways to Save Your Loose Change
Paul Simon of Simon & Garfunkel wrote a hit song in 1976 entitled “Fifty Ways to Leave Your Lover”:
The problem is all inside your head, she said to me
The answer is easy if you take it logically
I'd like to help you in your struggle to be free
There must be fifty ways to leave your lover…
The answer is easy if you take it logically
I'd like to help you in your struggle to be free
There must be fifty ways to leave your lover…
Though the following 50 ways will never going to hit the Billboard top 10, rest assure they will help you keep the precious bills in your wallet.
In the bigger scale, loose change spending is also known as maverick purchase. Though no formal study was done in Malaysia on the amount of money consumers spend on impulse, studies of large US corporations indicated a whooping 30% of the expenditures comprised of unplanned, small items spending. As the saying goes, “a penny saved is a penny earned”.
Here are some quick reminders:
- Collect your balance – As small as the change may be, money in the pocket is an asset and money out of pocket is an expense. The less leakage the better.
- No tipping policy – Some make a habit of not collecting the extra cash especially when eating in a restaurant thinking they are doing the waiter a favor. Mark my word; it makes no difference to the waiter unless you are serious on tipping him. If that is the case write the amount as part of the receipt as recorded expense. Otherwise, the service fee covers for his tips.
- No impulse buying – There are plenty of “hooks” at the grocery check-out line. They are there for a purpose – last minute hikers into you grocery bag. Unlike real hitchhikers, these are not free riders.
- Always ask for discount – even on non-sales days, 20% discount is possible!
- Don’t make weekend mall loitering a religion – Get a life! What I mean is get alive! Rather than marching to the mall like zombies take the time to enjoy the park and recreational centers. Remember – the best thing in life is FREE.
- Stop the habit of buying trinkets – Some people make a habit of buying something no matter how small when they visit the mall. There is no law that says, “Thou must spend.” Buy what is necessary and most of the time trinkets are not.
- Say no to junk snacks – Fast food is bad enough, junk snacks is a total disaster.
- Subscribe to internet news – Almost all major local and international newspapers are free on the net. If need be subscribe to one newspaper for Saturday and Sunday for coupons and more worthy articles.
- Use toll road only when necessary – Yeap, you read it right. We are creatures of habit and when come to driving back and forth from office, we rather put our brain on cruise control. If there are three alternatives to your office, set the priority levels for all three and decide the best route for different priority. Often times high-cost high priority route can be avoided if we make a habit of leaving a bit early and coming back a bit earlier/later.
- Early-in-early out on Sunday shopping – Get in at 10.00am and zip out before 11.30am. You will have ample parking, the grocery store is virtually yours and enough time to get back to prepare nice home cooked lunch for the family. Either that or extend an extra hour to beat the hungry crowd and enjoy the bliss of eating in a less packed restaurant.
- Find free parking whenever possible – It is not as bad as you think. At most, you add another 15 minutes to the walking distance. Treat that as a light warm-up before entering the mallathon.
- Take your time – scout for the best deal then decide.
- Wash your own car. This may not be every one cup of tea. Even so if you need to visit the car wash; for every four times interval, only pay for internal vacuum once.
- Take charge of your children – Teach them early that money is a limited resource. Otherwise, they will never learn even until they are married and have kids.
- Use prepaid phone – Opt for the combined access and airtime package. That encourages you to keep your phone conversation short and you monthly bill less than RM100.
- If you have to, subscribe only basic pay TV package. Too much of good things are not good especially if they are of a similar nature. This is known as the law of diminishing return.
- Avoid Last Minute Festival Rush – more time, more fuel, more pressure, more money!
- Save 2 months ahead to slightly overspend for festival season – Buy what is necessary ahead of time and keep them away until the big day. Necessary here means not more than two of a kind albeit clothes, cookies and craps, oops!
- Rent your movies – Don’t even buy pirated CDs. Nowadays it is cheaper to rent and at the rate movies being produced, very unlikely you will see the same movies twice. Hey, remember the pay TV?
- Pay per use – health clubs and leisure resort. Even the prestigious Mandarin Oriental health club only cost RM50 per day. The principle behind this suggestion is to pay low-frequency novelty items as and when needed. If the frequency becomes higher then you may want to consider pay per month. For hotels, you may opt for discount card renewable on annual basis. You have wider choice compare to timesharing resorts and discount up to 70% all year round.
- Buy regular petrol – We are not F1 racers. At best the additives reduce the temporary knocking sound in the morning.
- Buy the toys but not the happy meals – extra packaging cost money and set meals encourage overeating.
- Share and share alike – I do this. Whenever we eat at fast food outlet, I will order one large set and my family buy ala carte. We then share the drink and fries. It's not that I am such a cheapskate. I do this to avoid eating too much junk. While we love the soda and fries, we keep the unhealthy intake at a bare minimum. Bring your own bottled water is also a superb idea.
- Do play, don’t pay – Certain toy store encourages kids to sample their toys. My kids had been conditioned that the particular toy store is a big super playground and the toys are always available the next time they come around. In addition, my neighborhood mall also has nice play areas for kids. So you got it. Sometimes we go to the mall because the kids want to play!
- No donating policy – That’s so mean! Well, appealing to you basic humanity is the best weapon to run away with your money. Having said that I encourage those philanthropists to only donate in exchange for useful product or service. We cannot keep on giving and expect nothing. This will garner helplessness and subsidy mentality. One classic example is The Girl Scout of America cookie sales. They are good tasting and of excellence value. No wonder Girl Scout of America is one of the most profitable non-profit organizations in the world!
- Valet parking is only for show-offs and emergencies – If you are not sinfully rich or really desperate, stick to the sewing bro.
- Avoid speeding at all cost – this is money for nothing.
- Use hands-free kit – it’s worth the trouble
- Use handphone for voice & chat only. Anything up and above is unnecessary unless you have a wifi.
- Keep handphone conversation short – Limit to important and urgent matters only. Otherwise use fixed line.
- Eat moderately – Anything in excess is bad for your health especially food.
- Minimize indulgence – We all have our little sins. While expensive coffee and cigars will ever justify the means, not all the most expensive indulgences are the best. Many times there are always the midway alternatives that are equally good or better.
- Don’t bother to keep up with the Joneses – it’s a zero sum game. In the end, the true winners are the sellers or worst, THE CREDITORS.
- Opt for non-renewal fee credit card – you save at least RM150 per year.
- Always pay cash – Cash is present. If today you can’t afford it then don’t shortchange your future.
- Maximum one credit card – just in case.
- Become a member of AAM – Man’s best friend when stranded on a lonely highway.
- Do not insure your windshield – why bother on low cost low probability coverage?
- Be objective – know what you want and how much you will spend before going to the mall. Fail to plan is plan to fail.
- Window shoppers are serious debtors – There’s always something to buy if you look for the reason to buy. On the average avid shoppers are down by RM10,000 in consumer debts.
- Buy one to remove one – every time you buy say a shirt, remove one from your closet. If you cannot find a like item to remove then you don’t need the new addition.
- Redeem loyalty points for cash voucher – that way you can use the voucher to reduce the price of things you really need to buy.
- Avoid the practice of redeeming loyalty point on big ticket items – high markup on the actual value. Some the items are not needed and even so are cheaper if you buy on your own using the cash voucher.
- Pay your credit card full and on time – Discipline, discipline, discipline.
- Buy real quality not perceived value – Forget about the advertising hype. The advertiser is there to create excitement to what is logically a painful experience; trading you honest sweat with something diminishable.
- Never shop on autopilot – be alert of your buying habits. Some were preconditioned since your childhood.
- Set aside monthly disposable petty cash – the key word is petty not hefty. You don’t need not finish but never exceed.
- Anything that cost more than a week’s grocery need cooling off period – come back next week and that is only after you had scouted for alternatives.
- Say no often!!! – that’s right. As negative as it sounds, makes it difficult for people to take away your money. They must truly deserve your most valuable resource. Let them prove their worthiness and earn their keep.
- Finally – before spending your money, sincerely ask, “DO I NEED IT?”
Writing a booklet is very similar to running a marathon. In the beginning there was this jittery feeling signifies that you are not totally ready. Then after a few small steps and your mind is completely tuned to the rhythm, finishing is no longer the question but rather how well you cross the finish line.
With that I like to end the journey by sharing with you the pearl of wisdom I uncovered after completing my first marathon, a poem entitled:
Life is a choice
I had chosen wealth and discarded health,
I had chosen ambiguity and forfeited sanity,
I had chosen profanity and undermined morality,
I had chosen doom and denied my destiny.
But after all been said and done,
In the twilight of my youth do I understand;
Providence comes to those who choose;
To savor life and to be alive!!!