Personal Finance Exam 2 morgages end I Spending A Secret to getting rich B If you really really want something what are you willing to give up to get it If you enjoy it and do it and cut back somewhere else C Notice it is what is important to YOU it depends person to person but you have to take into account opportunity costs of what you could have spent that money on D SAVE more than you SPEND 1 She used 2 examples in class 2 Ex 1 was the richest man in the world and one of the richest men in the world Warren Buffet these guys both live in the same house drive a prius etc Very very frugal remember being frugal doesn t mean cheap means smart 3 Ex 2 was lottery winners several of them basically they get this lump sum of money don t know how to save it and go out and spend on cars and houses one lady even got a loan for her lottery sum because she wasn t getting paid in lump sum and she wanted her money now ended up being in debt and the financial company who loaned her money never saw a cent 4 Long story short just because you have it doesn t mean you have to spend it save and spend within your means or at very least spend a of it not all of it 2 CONSCIOUS SPENDING prioritize own life and realize what your willing to give up to get up would you rather have new jacket or retirement house little things ADD up look at what you like and 3 She talks about having on X amount of dollars and if you cant afford something change she said you will be amazed at how we can change when we have too a Where you living to expensive GET A CHEAPER ONE as simple as that b Example if you are paying a car payment of 300 dollars and now your loan is paid off down go blow the 300 each month instead make the loan payments to YOURSELF save it c Same thing with raises gift certificates tax refunds etc Its money you didn t have before save it d e Tax Refunds it is your money try and manipulate play the figure IRS has to take out of paycheck more dependents hold less if you are getting back huge tax return giving government free use of your up the of deductibles get to keep a little more of paycheck f Just because you have cash doesn t have to burn a whole in your pocket save it for a rainy day you will really want something 4 Being rigid DOES NOT work long term you can treat yourself take a LITTLE bit of what you want etc BUT don t do it with 100 of the money 5 You can have multiple accounts divide money up into different accounts you can have a clothing account and a emergency fund and a eating out account etc whatever categories that you need if it helps you E Save all your change JUST DO IT ADDS UP F Don t buy things pay for things not reading 1 Example Having a DVR with 8 different shows once there are not 8 good shows at once downgrade package 2 Example Magazine subscriptions send something 3 months free and cancel at anytime they bet your lazy and wont cancel usually right cancel them if you don t read 3 Example Gyms I am going to workout every Monday morning NAAA you are going to just sleep cancel it 4 Bundle Services ask as see what you are paying she used example of comcast bill just simply call be very friendly and ask for latest deal they will lower rate she was paying for mega channel package she didn t even watch all you gotta do is make a dang phone call dooo itttt 5 O thats only a couple of cents NOOOOOOOOO IT ADDS UP Not being cheap just being NOT stupid 6 Spend Wisely a Go less expensive not without b Consider the total cost printers are super cheap now but they get you with the ink c Don t throw away money utilities turn off lights don t turn sink on hot every time it doesn t get hot in time anyways Cell phone plans just get the unlimited or down size to your needs 7 Concentrate on 2 areas spending the most those are where you most likely need to cut back Instead 5 or 6 beers have 3 or 4 and saveeee rest 8 watch out for peer pressure G GOT TO PUT MONEY AWAY FOR EMERGENCY 1 4 2 Write down everything you spend and you can see where you are really spending DONT CUT OUT REDUCE 3 Set your own priorities not what your neighbors are doing If you got some serious debt issues still get your money for that month and get into cash and put into different envelops eating out spending mandatory saving and emergency a You may have too much house downsize for apt Or too much car get a reasonable ride II Advertising Games 1 Would you buy it if it wasn t on sale 2 Red tags DO NOT Sales 3 Pricing an additional 20 off of an already marked down 40 item DOES NOT mean you save 60 1 Example 100 jacket regular price it is marked at 40 off therefore the jacket is now 60 and you can take an additional 20 of you take the additional 20 off of the 60 therefore your item is now 48 if it was 60 of original price then the price would be 40 they trick you out of 8 4 Shrinkage Dimples the example she used is her favorite shampoo its is the same price but they put dimple in the bottom of the bottle 16 reduction in amount of shampoo you get watch out for that 5 End of Isles DOES NOT MEAN ON SALE 6 Larger Size does NOT always mean cheaper do it by oz 7 Music Smells Aisles wandering More you see the more you but why do you think the milk and meats are in the back of the store so your gotta walk around whole store 8 FINE PRINT GETS YOU DEVIL IN THE DETAILS HOME BUYING A life style decision Actual cost vs opportunity cost o House price closing cost commission o Maintenance cost Landscaping utilities repairs o Miscellaneous taxes fees insurance new stuff etc Benefits o Personal satiffaction o Potential appreciation real estate investment risk o Tax benefits for now What can you afford o Same as bank will lend BUYING A HOUSE o Know what you want o Pre qualify for loan o Credit score current ability to pay how much will you give up o Real estate agents o Who pays their commission What determines the amount o Can be very helpful Multiple listings Moving to a new location o Negotiations o Price o Conditions o Moving arrangements o While haggling o Earnest money …