Personal Finances 101 Textbook: None. Course will be based on online essays and materials. Instructor: Mba Mbulu

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Class #7

Steps Toward Personal Financial Triumph

Sales Phrases to Watch Out For

In this class, we are going to mention a handful of the sales pitches/phrases that are used to sucker unsuspecting consumers. There are hundreds of such phrases. As an intelligent and dollar conscious person, you should think carefully before you make a purchasing decision. Using that as a guide, you should be able to avoid falling into many of the traps set by misleading marketers and business persons.

Review is a constant in this course. Always check your notes from earlier classes. It will enable you to blend in everything more easily.


(1) "The more you buy the more you save." That phrase is only true (a) if you need more and (b) if you can maintain your normal usage pattern without incurring spoilage or waste. Spoilage refers to items that can go bad over a period of time, items that are perishable. Waste refers to usage beyond that which has usually been found to be sufficient. For instance, if you use twice as much simply because it's there, then you are not saving by buying more.


(2) "On Sale." Most items are so overpriced that when they go on sale they are still a rip off. The quality of similar items nowadays varies very little; more than anything else, most of the differences are a consequence of the purchaser's perception. Therefore it is to your advantage to ignore brand name (higher priced) products and purchase lesser name (lower priced) products instead. Because of production processes and the nature of business nowadays, usually the only difference between similar products that cost different prices is the label. Qualitative differences are minimal because a multitude of similar products are made in the same plants using the same materials and basic ingredients. The purchaser's perception of brand names and off brand names leads them to sense a difference in the products even though they are essentially the same.

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(3) "Buy now and don't make a payment for X months." If interest is accumulating during this no pay period, you will pay a greater amount over the life of the bill. Make the largest initial payment as possible and continue paying as much as you can each month until the bill is eliminated.


(4) "You have earned a holiday period. No payment due this month." Same as above. During the holiday period, interest continues to accumulate, which means you pay more over the length of the bill. When you see a message like this, it's best to ignore it and make your regular payments.


(5) "Minimum Payment Due." You see this all of the time on credit card bills. If you only pay the minimum amount due, you will pay at 4 to 5 times the purchase price or loan amount. Banks make money on the interest you pay them. The longer it takes you to pay them off, the more interest they collect. You should pay at least double the minimum amount due for each account that charges you interest. If your budget can not tolerate you paying double the minimum amount due on each bill, you have probably overused that credit avenue and placed yourself in financial danger.

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