Top 7 Tips for the Smart Shopper

Do you get your money’s worth when you shop? If you’re not pleased with the way your dollar stretches, you’re not alone. Perhaps all you need are some shopping guidelines, a little practice, and above all, a healthy dose of skepticism. I’d like to discuss some practices I’ve employed over the years that result in substantial savings.

1. Shop where an item is cheap. A lot of money can be saved if you know where to shop. Good-sized eggplants sell at Von’s Market for $2.39 each. A similar one is available at Farm to Market, just 300 yards away, for 99¢. It’s a matter of familiarizing yourself with what’s available and then shop accordingly. And if you need encouragement to make the effort, think of it as an adventure that you can boast about to your friends.
   
   
2. Put brands in their proper place. Whether your choice of lipstick is the $20 Chanel selection from Macy's, the $5.46 Max Factor brand from Osco Drug, or the 94¢ Wet 'n Wild tube from Target, be aware that the essential ingredients are the same. The difference is packaging, promotion, and mystique, which is what cosmetics is all about. Similarly, a 24-ounce bottle of mint-flavored Scope mouthwash can be purchased at one well-known chain for $3.99. On the shelf two feet to the right is a 24-ounce bottle of mint-flavored Value Wise at $1.99. Thanks to federal labeling laws we know the contents of the two bottles are identical. As to flavor, there’s no detectable difference. Possibly both are manufactured and bottled together in the same plant and from the same spigot. Keep this in mind as you shop.
   
   
3. Ignore high pressure promotion. A person's possessions speak volumes on what the individual considers important. The advertising industry, devoted to identifying what the citizen considers significant, manipulates the market to create those choices. With massive sums to be spent, the competition is as fierce as it is grotesque. And what is pushed? Magazine subscriptions, timeshare projects, $300 per ounce bottles of perfume, Las Vegas weekend getaways, $1,800 ballpoint pens, and the purchase of lottery tickets, to name just a few. As a rule of thumb, the more overpriced the merchandise, the more innovative its promotion. Don’t be a victim.
   
   
4. Resist the new vehicle lure. With the exception of hearth and home, the motor vehicle constitutes the average American's single most important fixation. Far more than transportation, it is for many the embodiment of beauty, pride, status, and individuality. There’s no product more forcefully promoted or representing such a substantial portion of disposable income than one's vehicle, and the potential for financial dilemma is real. The solution is simple: Don’t buy anything you cannot pay for in hard cash. Unfortunately, many of you will not conduct your lives in this Spartan fashion. You’re entitled then to a next-best alternative. If you badly want a new car you can’t afford, consider a late model used car. These past several years they all look alike anyway.
   
   
5. Never pay credit card interest. A credit card has a single purpose—a convenience when neither check nor cash is handy. Most importantly, when the monthly statement arrives, pay the full cash balance before the date that interest is charged. Follow this rule and you’ll stay out of trouble. If for any reason you cannot regulate your credit card use in this manner, destroy your cards, swear off cold turkey, and fashion your life accordingly.
   
   
6. Avoid inappropriate life insurance. The purpose of life insurance, as its title suggests, is to deliver a predesignated sum of money to a named beneficiary in the event of an insured’s death. Take note that there’s nothing about it to suggest it’s either a savings instrument or an investment program. So, if you or your family need a death benefit, purchase that and nothing else. What you want is known as term life insurance. Under no circumstances consider alternatives such as whole life, universal life, or endowment policies. Anything more than a simple death benefit is best avoided like the plague.
   
   
7. Reject unsolicited sales pitches. If the 21st century will be remembered for anything, it will be the perfection of technology to deliver low-cost advertising. With the proliferation of e-mail spam, together with rock-bottom telephone costs that facilitate high-pressure phone bank operations as well as prerecorded phone pitches and junk fax, the public will continue to be deluged with hype. In general, nothing of good comes from unsolicited offers. You’ll be well served by terminating any contact as quickly as possible.

AL JACOBS has been a professional investor for nearly four decades. His business experience ranges from property management and securities investment to appraisal, civil engineering, and the operation of a private trust company. He is the author of Nobodys Fool: A Skeptics Guide to Prosperity, available through Amazon and Barnes & Noble. His monthly financial column, On the Money Trail, can be found at www.onthemoneytrail.com.