Day 5: Shop with Caution

This post is part of a series on Dave Ramsey’s Financial Peace University (FPU). The following is my impression of small pieces of the class. For more, I highly recommend taking the class for yourself.

During the 5th class session, Ramsey again takes a step back from the Baby Steps and covers more foundational material: buying with confidence. Even though the content of the class – how marketing affects our shopping habits – isn’t really part of the Baby Step process, it is still an important and practical part of keeping to your budget and getting out of debt.

Working Hard for Your Money

Its no secret that companies are working very hard to get you to spend your money at their store or on their products. Ramsey goes through several techniques that salespeople and marketers use to influence your shopping. By being aware of these techniques, you can both control your impulsive urges to buy as well as score a better deal when shopping. There are several ways that companies get themselves into your psyche. When you think of State Farm, you think of a good neighbor, when you think of Allstate, you think you’re in good hands, when you think of GEICO, you think of how you can save 15% with 15 minutes – and that’s just the insurance industry! Remember this ad from the 1990s:

This was when no one was using Apple products and the company was on the verge of bankruptcy. Apple got the entire entire world to “Think different” so much that now everyone is thinking the same:

While Ramsey does mention the things marketers of everyday products do to influence your spending, such as putting kids’ stuff on lower shelves or impulse items in the checkout lanes, he spends more time talking about bigger purchases: cars and furniture, for example.

Tools for Getting a Good Deal

Ramsey points out that the best way to influence you to make a big purchase is to make the purchase seem cheaper (through financing options) or more convenient. By being aware of these tactics, you can more easily catch them when they are influencing your spending. He gives a lot of practical advice for making larger purchases, such as waiting a day or two to keep yourself from making an impulse purchase or talking bigger purchases over with a spouse, friend, or accountability partner. There are several more principles that he gives in his class, but many of them are pretty broad in their application. If you are considering a bigger purchase, like a bedroom set or car, there are plenty of bloggers and articles that give more specific advice to that particular purchase. You just have to do a little digging online.

Good, But Old, Advice

Ramsey’s class on marketing is shorter than many of the other classes. In some ways, there’s only so much one can cover about how marketers influence your shopping. Much of it is pretty obvious. However, in other ways, you could go quite deep into this topic, especially in the Age of the Smartphone. Privacy issues abound in today’s world, from Google’s liberal use of information to Target knowing you’re pregnant before your closest relatives. I see all kinds of ads in my web browser for specific things I’ve searched for days after I search for it (you can control this with your cookies settings). This adds a whole new element to marketing. The “Out of Milk” app that I use gives me alerts to deals at stores as I drive up to them. There are positive and negative aspects of all of this data usage – tons of convenient services (Google gives me traffic updates on my specific commute route because it ‘knows’ where I’m going) at the cost of sometimes getting the willies (Google can also recognize my face in pictures that are posted online).

Ramsey could stand to update this class session. While the broad and overarching principles for understanding marketing and its affect on our spending habits are helpful, it would be even more helpful to update this short lesson with more specific and practical information on today’s privacy concerns and how to control your personal information. There is a spectrum of opinion when it comes to online data usage: from people that have ditched their smartphones and try to remain completely anonymous online to people that embrace or even pursue all the online services that use personal data.

-N&$

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