In Order To Succeed Financially, You Must Redefine The Word “Deal”

notadealAs the new year approached I thought about all of the things that changed in my life for 2009. The more I thought about it the more I realized that I could indeed be happy with my progress in many areas of my life. Since this is a financial blog, let’s talk about one of the things that I feel was the biggest breakthrough for me financially.

The funny thing is that I was introduced to this in early 2008 when I took Financial Peace University, but I guess it had to marinate for a bit first.

My breakthrough was redefining the word “deal” as I knew it. Yes, it was that simple. A concept that frugal people everywhere live by, but one that is mostly misunderstood amongst everyone else, myself included. That is until 2009, when I started to pay a little more attention to saving money. You could say that it started because we were in the final stages of paying off our debt, and saving everywhere we could was more of a necessity. We had already squeezed every possible penny out of our budget by cutting unnecessary spending, so it was time to look elsewhere for maximum results. Searching for deals was our strategy.

Now most of us think we understand what it means to shop for a deal, but thinking and knowing are two different things entirely.

The best example, or at least one of the most common ones is—buying a new car. I cannot even count the number of people that I have heard over the years brag about the deal they got at the dealership when purchasing their car. They lowered the price. Added an extended warranty. Worked out low monthly payments. (Blah, blah, blah!) Let me be the one to tell you, right here and right now—there’s no such thing as getting a deal when you buy a new car.

Worth noting: Cash For Clunkers WAS NOT A DEAL!

The biggest factor that kills any deal you thought you got is the fact that a new car can lose up to 60% of its value in the first four years—but what about the fact that it immediately loses value as soon as you drive it off the lot? That should be enough, but if you add in the initial mark-up, the finance charges, along with everything else, you’ll find that you DID NOT get a deal. You got ripped off, and you only have YOU to blame for it. It’s not the dealers fault, they are in the business of selling you cars.

The problem is that most of us do not save money to pay 100% down for a quality used car. We get payments, and by WE, I mean YOU, because I quit that bad habit in 2008. Imagine how many cars would be sold if they only took cash payments. I suspect that only a tiny number of people would own cars, much like the days of the early television, but I digress.

A deal is buying a used car from a private sale, or even from a used car lot if you’re good. I know, I know, “you need a car that is reliable, with a warranty.”

Sure the chances of you buying a lemon increase, but what if you did a little research before you even got serious about buying? If anyone has taught me that lesson it has been my father-in-law. He is good at buying used cars, but it’s because he does his research, instead of buying the first car he comes across. You can also arrange to have the car checked out by your mechanic to detect any possible issues. You can get a good used car that is reliable!

That is just used as an excuse to buy a new car, nothing less. It’s an excuse because it is NOT true at all.

A deal is getting the best possible price for a quality used car that has already taken the hit in depreciation. A deal is finding something that you were going to buy anyway for a discounted price. A deal is not putting your purchase on a credit card and avoiding interest charges. A deal is searching around to see if you are getting the best possible price. A DEAL IS NOT HAVING A CAR PAYMENT!

I thought I knew what a deal was until I really took a second to examine the truth. Here are some things we do to help us get the deals we deserve these days.

  • Take the emotion out of the purchase. (Sometimes hard to do but NECESSARY!)
  • Use the power of cash to negotiate real bargains.
  • Look for lightly used items instead of new.
  • Keep your walk away power.
  • Shop around to be sure you are getting a deal.
  • Avoid borrowing money. (Duh!) πŸ˜€
  • Save up for whatever you buy. (Try it.)
  • Avoid extended warranties. (The biggest waste of money.)
  • Do some research before you make the decision to buy. (Just because someone says it’s a deal, doesn’t mean it’s so.)
  • When bargaining, say as little as possible. (If a salesman knows you’re already sold, you WILL NOT get the bargain you were hoping for. Just like a salesman can talk himself out of a sale, you can talk your way out of a deal.)

Those are just a few of the many ways to get a real deal. I’m sure you could add some more to my list.

This post was inspired by a local car commercial claiming that they had the best deals in town—which every dealership claims by the way. I sat there and just listened to the claims and thought to myself, “If people only knew—oh wait, I have a blog!”

Make it your goal for 2010, NOT to buy a new car so you can get a real deal!

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About Brad Chaffee

18 Responses to “In Order To Succeed Financially, You Must Redefine The Word “Deal””

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  1. ChristianPF says:

    great article – the point you made about saying too much…

    “When bargaining, say as little as possible. (If a salesman knows you’re already sold, you WILL NOT get the bargain you were hoping for. Just like a salesman can talk himself out of a sale, you can talk your way out of a deal.)”

    oh, this is very valuable lesson, I have cost myself so much money in the past by not doing this! Learning how to negotiate is a very important life-skill to have…

    • Brad Chaffee says:

      I think so too ChristianPF! I learned when to shut up when working for Schwans in NM! I found out quickly how you can talk yourself out of a sale. Dave Ramsey reminded me that you can also talk yourself out of a deal. Thanks for stopping by! πŸ™‚

  2. Bucksome says:

    Why can I negotiate like crazy in Mexico for wind chimes (or something else trivial)but not here for big-ticket items? It’s something I have to learn!

  3. “Imagine how many cars would be sold if they only took cash payments. I suspect that only a tiny number of people would own cars, much like the days of the early television, but I digress.”

    Brad, I have to disagree with you on this point (the only one I disagree on!). If cars could only be bought for cash, everyone would still own a car, they’d just be a lot cheaper.

    It’s the widespread availability of easy credit that’s caused car prices–and all other prices–to go as high as they have. $25,000 for a modest car? When I was a kid, that was the price of a modest HOUSE!

    Credit enables people to buy more of anything than they can afford, which provides room for people to “trade up”. Uniform trading up pushes prices higher, with credit filling the gap.

    So if we had to pay cash, we’d all still own cars, we just wouldn’t have (and wouldn’t need to have) the debt attached to it. Sounds like a better way all around to me!

    • Brad Chaffee says:

      You make a few very excellent points Kevin!!With the numbers of people out there that cannot cover a $500 emergency without borrowing money to do it and with them saving -2% of their income to boot, I have my doubts. I do agree with the fact that cars would be cheaper though if credit was not involved.

      I just remember hearing stories about how not everyone had a television back in the day, and that was before credit was around. It would be very interesting to see this play out unfortunately I don’t think that will ever happen. LOL (credit is around for good I’m afraid.)

      Thanks for the great comment!

      • I think credit is largely the reason people have no savings. Credit is the path of least resistance, so maybe most people went that way (a la “buy now, pay later”). Once you’ve built up enough debt, accumulating money for savings becomes so much more difficult, then presto–nobody has any money!

        • Brad Chaffee says:

          Another great point Kevin! I think what you have said can be proven by looking back in history. When credit didn’t exist, rainy day funds and savings in general were much more prevalent. I would also be willing to bet that back when televisions first came out it may have had more to do with the values of the day. Having a television probably wasn’t seen as a necessity, but savings was. Man, how times have changed. πŸ™‚

  4. KelsaLynn says:

    We will most likely need to buy a car in 2010 and it will not be new. We bought our very 1st brand new car the month before we found Dave Ramsey (don’t you hate how that happens?) and we owned it 5 months before it was totaled in a car accident. I didn’t love that car anymore than I loved my “used” cars before that. It’s just a car.

    Great post!

    • Brad Chaffee says:

      Thank you KelsaLynn!! You are right. It’s just a car. And one without a car payment makes for a great car provided you take the time to seek out the best deal. πŸ™‚

  5. Julie says:

    I recently bought a I bought a 1999 volvo in 2007 for $5500 – from my sister. Over the course of 2 yrs I put around $5000 in it, until just recently the head gasket blew. I feel ripped off and like I did not make a wise decision to buy a used car. I should have taken it to a mechanic. I had a need for a car right away. Couldn’t afford to fix it. So – went to a car lot – because I didn’t think ahead and save for a car. I also didn’t want to buy another lemon. So to make a long story short I bought a 2005 Vue for 10K. With monthly payments for $200 mo. Although I wish I would have bought a beater, I am glad I am not going to have to put more money into a junker. If it were me I would have bought a junker, but my husband was against it. We have 2 kids to transport in it. I just feel frustrated bc I need a nice reliable car, but the payments are NOT something I wanted. In the future I will save for incidents like this.

    • Brad Chaffee says:

      I feel your pain on buying the lemon Julie! I have bought a few myself and it almost caused me to give up on buying used. My father in law made me a believer again. Since I have known him he has taught me how to buy used cars with care, because like you said you need something reliable. Since I have known him I have seen him purchase about 8 cars, all used, and all lasted a great while.

      $5,000 is quite a lot to put into any car, much less a Volvo. Although from experience, since we have a 1993 Volvo 940, I can attest to the fact that they are very expensive cars to fix.

      Feeling like you got ripped of is definitely no fun. πŸ™‚

      Oh and your package was sent out today! πŸ˜€

  6. Tracy says:

    Excellent point Brad! I haven’t stopped kicking myself for selling my paid for truck, just to go into debt for a new one. The old one wasn’t broken or anything. I have two years to go paying off the newer truck, and it is holding it’s value pretty well after the first hit I took driving it onto the street the first time. The only saving grace is that it was a zero interest loan so every payment is at least going directly to the debt, but in future I will buy lightly used.

    • Brad Chaffee says:

      The good thing Tracy is that trucks do actually hold their value better than cars. 2 years to go huh? You planning on paying extra to get that sucker paid off even earlier? Either way it sounds like you appreciate the value that not having a car payment brings. With zero interest you should be motivated to kill it fast. I bet it will drive a lot better once that payment is gone. πŸ˜€

      Thanks for sharing your thoughts!

  7. Ken says:

    My Camry has 285,000 miles on it. I love it. I really love the payments. $0. Buying new is a deal breaker. I bought it with just over 100k miles and I have profitted big time!

    • Brad Chaffee says:

      Thanks for sharing Ken, that is a great testimonial to the fact that you can get a real deal on a used car without sacrificing reliability. Putting 185,000 on a car after it has already reached 100,000 is pretty remarkable! My Dad has a Camry as well and swears by them, as do others I know.

      The payments are AWESOME! Same as mine. $0 Guess what? I have way more money to spread around. Who would have thought? LOL πŸ˜‰

  8. Tina Fortune says:

    I agree, NO DEAL HERE! I couldn’t believe my ears one day when I was sitting and waiting for my cars oil change and a lady came in with a new car. The place is small so they immediately recognized the woman and asked where her car was. She proudly informed them that she decided to purchase a new car because the old one was giving her too many problems. The mechanic informed her the “problems” were a whopping $600! She thought that was too much and politely informed him that she spent $1000 on it the past 2 years in maintenance. So, with her chest out and head lifted up, her $25k purchase was justifiable. Yea right. I’m NEVER purchasing a new car again. NEVER!

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