Money To Live

February 18, 2013

Santa or the Grinch?

Filed under: defining moments,negotiation — by moneyconsciously @ 11:53 am

Shortly before Christmas I listed an item on an online sales board. I priced it reasonably, albeit near the top of the market range because I thought that this amount more accurately reflected its value (I don’t believe in ultra-disposable consumerism).

Most of the responses I received were for offers less than half the asking price. I was unwilling to sell at those prices, so I declined those offers and waited.

On Christmas Eve one person, J, asked: What was the lowest price with which I would be happy? I thought this was a great, fair question because she would get a lower price than listed and I would still be happy. I answered honestly; J accepted my price gladly and with appreciation.

However J could only pick it up on Christmas Day. This was a risk for us both: a) if this stranger didn’t show up, then I would lose a chance to sell before Christmas and would then be in a saturated market; b) if I didn’t honour my word, then J would not have a Christmas present to give. Yet I agreed to hold it for her.

Later that day, I received another offer. Although it was again too low, this person was willing to pick it up on the same day. Although I explained that I was holding the item for someone else for Christmas, this second person tried many times to convince me to change my mind. I could have had cash in hand with no risk to myself.

I waited. I chose to honour my agreement; and I trusted that J was equally honorable.

The result: J got the Christmas present she wanted at a price she was happy with. I received an amount that I was happy with. We were both thrilled with the positive interaction. We both wanted, successfully negotiated, and behaved according to our values to have more money to live.


July 8, 2009

Ask for a no

Filed under: negotiation,spending — by moneytolive @ 5:00 am
Tags: ,

A friend told me about the idea of “asking for a no,” which means asking for something you do not think you will get when you have nothing to lose. It is great practice for negotiating when the stakes actually matter.

Some people do not like negotiating because it seems manipulating or mean – but it doesn’t have to be either of those. At its best, two people negotiate to find a mutually beneficial solution. It is possible (and usually advisable) to be polite, respectful, and honest throughout a negotiation.

Recently, I “asked for a no” at The Gap. A jacket I had been eying finally came down in price from $78 to $30. I particularly liked the green jacket but noticed that the yellow and blue jackets were marked down to $25.

  • I took the green and yellow jackets to the cashier to confirm I would only pay $25 for the green jacket. She said “no,” they have different prices.
  • I asked if she could match the lower price, and she said “no.”
  • I asked if there was any other discount she could give. She paused and then sold me the green jacket for $25.

The $5 at stake is not a huge amount, and I would have bought the jacket for $30.  By asking for a lower price, I practiced staying calm in a low-stakes negotiation.

Have you “asked for a no” before? I encourage you to “ask for a no” this week and write about your experience in the comments, or email me privately.

September 15, 2008

I bought a new car

Filed under: cars,negotiation — by moneytolive @ 5:00 am
Tags: ,

Despite the rain from Hurricane Hanna, I went to a Honda dealer and bought a Honda Fit — for most of the 4 hours that I was there, I was the only customer in sight. Here are some of my experiences and thoughts about the car buying experience.

Test drives in extreme weather

Earlier in the week I test drove the Fit at another dealer in 90F weather. It was hot, which is the perfect time to test the A/C. On the day of purchase, I test drove in the rain, a great chance to test the wipers. The car handled well, and I felt confident driving home.

Being much lower to the ground, I hear a lot more road noise than when I was in a Ford Escape. I kept expecting water to seep in through the floor, but of course the water never did.

Paper and a calculator

Admittedly, I am very comfortable with numbers, and much more so than the average person in the population. This is an advantage whenever numbers are being thrown around — I can approximate tax and discounts quickly.

While sitting down with the salesman, I kept my own running tally of numbers. When we agreed on a number, the salesman took it to his manager. He came back with a big smile to tell me his manager approved it. But, all of a sudden my numbers did not match his with a difference of almost $200. When I said this, he did not believe me. I walked him through my numbers, and there were only three relevant numbers: O.T.D. price – trade in value – negotiated discount. (O.T.D. = out the door) He was confused and re-did the math himself. More confused, he went back to the manager and agreed to my numbers because he had made a mistake with the first O.T.D. number.

At one point, the amount of tax did not seem right. It was about 2.5% of the price, but the tax rate on a new car is 3.2%. I brought this to the guy’s attention, and he became very confused because he simply reads numbers off the computer.

Notice a theme? Lots of confusion over numbers. I felt better knowing exactly what numbers were on the table, and I kept a very neat list on my pad of paper.

Ask a lot of questions

When I get going, I can ask a ton of questions. At the dealer, I read every document I signed, and when I did not understand a term, I asked for the definition. Surprisingly (or maybe it should not have surprised me), the salesman could not answer many of my questions. At one point, another salesman brought over a brochure to answer my questions, but the brochure just raised new questions, which the salesman had trouble answering. In the finance office, the guy could not answer some of my questions about the language of the contracts.

I had a small balance to pay (less than $2,500), and I wanted to pay with a credit card. Before signing papers, I wanted a guarantee that I could pay the entire balance by credit card with no fee or penalty. Since the salesman got frustrated and did not want me to write this condition into the contract, I pulled out a piece of paper and wrote a statement that I could pay the balance with a credit card with no penalty. He took me to his manager, who had to approve the statement. The manager then explained the policy: the maximum credit card charge allowed is $2,500. The salesman acted offended that I did not trust him, and I said, “It is business” (and I thought about telling him that he should have just told me the policy, but telling him that would not have accomplished anything, so I kept quiet). His manager agreed with me and signed my statement.

A new car warranty

Before going to the dealer, I had not done done any research on a new car warranty. Since the finance people guaranteed I could cancel with no penalty, I went ahead and got it. Of course when I got home though, I did some research and decided against a dealer warranty. Consumer Reports says not to get a dealer warranty and has analysis backing this up: how many people lost money (the vast majority), how much was lost on average ($100-300), and how many people came out ahead by buying the warranty (not many).

The tire/rim warranty could make sense for a person who gets a lot of flats. When I first learned to drive, I had a ton of flats because I kept hitting curbs on right turns. It would have been a good deal for me to get this plan. But now I don’t hit corners so much.

To cancel the warranty, I had to drive back to the dealer and wait 15 minutes to sign some paperwork.

September 12, 2008

Earn More: Work Less

Filed under: earn more,negotiation — by moneytolive @ 5:00 am
Tags: , ,

This is a cool way to (effectively) earn more: Negotiate to work fewer hours and keep the same pay.

Emma did just this when, once again, she did not get a significant raise at her annual review. Emma works in a small office with a total of four employees. Her boss (the owner) said that though she deserved a raise and could make more money elsewhere, he just did not have the money to pay her more.

Emma was disappointed (again), but a few months later she thought to ask for shorter hours. Now she works 9:30 to 4 instead of 9 to 5. This leaves more time for enjoying life and time for part-time work.

This reminds me of advice I got when applying for jobs — negotiate the total compensation package, not the salary. benefits, and perks could make a so-so job Salary is not the bottom line of a job, things like extensive vacation, a flexible work schedule much more appealing. If the salary cannot budge (think small businesses and non-profits), think about what is more flexible.

August 19, 2008

Car shopping

Filed under: negotiation — by moneytolive @ 5:00 am
Tags: , ,

Time for a new car?

Your current car is dead or nearly dead.

Your current car is “more car than you need.”

I am moving to a congested area. When we visited with my SUV, I dreaded parking in narrow spaces. Also, I do not need to haul much, and I hardly use the capacity of an SUV.

You’ve been a one car family, and with a job change or a move, you need two cars.

New baby? or all the kids have left home?

Selecting a car

Strictly by the numbers, used is the way to go. I have had one new car and one family hand-me-down. I am buying my next car new. Not all decisions are based solely on the numbers.

Minimum Requirements List. What do you absolutely need? What would be nice to have? If you are buying the car with a partner, what is on his/her list?

My list: small and easy to park, has an MP3 connection, 4 doors, decent gas mileage

Safety. Will children be riding in the car? Check government crash tests.

Compare costs. Figure out what you can afford and what you can expect to pay or negotiate. This information is available at a number of websites, such as Consumer Reports and KBB.

Gas. Before trading in your car to get a Prius or another car with better gas mileage, figure out if it will really save you money and consider that everyone else is thinking the same thing.

Insurance premiums. That red convertible is going to cost more to insure than a Toyota Corolla.


Lease or Buy. To buy a car, you can pay the total amount in cash, or make a down payment and take out a car loan with a fixed amount each month for up to 5 years. To lease a car, you may or may not need a down payment and have a monthly payment typically lower than the payment on a car loan. The catch is that the leased car must be returned after a set time, typically 3 years. To keep the car, a balloon payment is due, which could be half the price of the car. Strictly by the numbers, it is better to buy.

For a small minority, it makes sense to lease. If you know you will only be in the country for a few years and want a new car, it might make sense to lease. Going back in time three years, for some people it would have made more sense to lease rather than buy a large SUV. Car dealerships are writing down huge losses of SUVs coming off leases because they are being sold at much lower prices than was anticipated.

Down payment. When buying a car, you can get the best financing deals by making a large down payment. This could be pain in cash or by trading in your old vehicle.

Loans. To help you buy a car, a dealership will be ready to offer you a loan. Since some dealers offer loans at high interest rates, research current rates before you go ( lists current interest rates). Banks and credit unions also offer car loans, for which you can be pre-approved before even picking out the exact car you want.

At the dealership

Shop around — pit dealerships against each other. This is easier with the internet because many dealers will give quotes through email.

Be prepared to walk away. This is not possible if you need the car yesterday, but if your current car runs fine, you can take your time negotiating.

If you are a woman, bring a man along. Sexist? Yes. Does it kill the feminist in me to say that? Yes. You do not need a husband or boyfriend (or even a father, though that is who I am taking) — any man will do.

My Car Shopping Experience

I am looking for a Honda Fit — it has four doors and is 1.5 feet shorter than most sedans (= easy to park). Most of the ’08 models are sold, and dealers that have some in stock are charging over MSRP. Since there is little room to negotiate on these few remaining ’08 models, I am waiting until the ’09 models come out because I expect to get a better deal on an ’09.

The vehicle I want to trade in (a low mileage 2006 Hybrid Ford Escape) is worth more than the vehicle I want to buy (2008/9 Honda Fit Sport). This is a funny situation because I expect the dealer to cut me a check. When shopping for an ’08 model, a salesman offered me $500 in cash for the trade. But going by KBB, I could get $2,000 back (before state taxes).

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