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Financial Peace University Lesson 8 – That’s Not Good Enough!
How to Buy Only Big, Big Bargains
This week’s lesson centered around making purchases, especially bigger ones, and getting really good deals on those purchases. The main way to accomplish this, and what Dave spent most of the lesson discussing, was through negotiation.
Negotiate everything
First he pointed out the difference between the US and most other cultures of the world. In the US for some reason, most people are very reluctant to ask for bargains. Of course this is quite the opposite in numerous other countries where haggling takes place over just about every purchase.
So, the first thing you need to do is change your mindset – it is ok to haggle and get a good deal. Negotiate everything and don’t be afraid to ask for a good deal. What’s the worst thing that could happen – they say “no?” If that happens, you’re no worse off than if you hadn’t asked at all, so who cares? If you ask, you might get a great deal, if you don’t ask, you definitely will not get that deal.
Dave’s Seven Basic Rules of Negotiating
- Always tell the truth
- Use the power of cash – it is emotional, visual, and has immediacy. Ramsey likes to tell stories of how when he is looking for a really good deal, he walks into stores with hundred dollar bills. He claims that he can usually get a really good deal when he starts peeling off and counting those $100 bills in front of the salesperson. He also seems to have a ton of fun doing it – I think I need to try this for our next significant purchase.
- Use your “walk-away power” – it is critically important that you keep an emotional distance from the item. If the salesperson knows that you have already bought the item emotionally, then there is no need to negotiate with you, is there?
- Shut up – ask questions, gather information, and just listen. If you let the other person do most of the talking, you might just be surprised what you end up hearing!
- “That’s not good enough.” – This is Ramsey’s favorite phrase during a negotiation. He suggests saying it and seeing what happens.
- Good guy, bad guy – when someone is using this technique on you, the way to neutralize it is to get to the bad guy and directly negotiate with him/her.
- Use the “If I” take away technique – in other negotiating classes I’ve taken this was referred to as “nibbling.” When you are closing in on a deal, use this technique to take a few final nibbles and get a deal with which you are really happy. An example might be, “If I purchase this widget at that price, I need you to throw in free widget washing for a year.”
Have patience
Having patience is a usually necessary for getting a great deal. As mentioned, maintaining that walk away power is very important. So, maintain it, and use it when you need to.
Remember, it’s your money, no one can force you to buy a product at a price with which you are not happy. When I was negotiating one of our cars a few years back, I remember telling myself this over and over. You get into a car dealership and they try to make you feel bad about not giving them their price and all this and that…so remember this tip.
Give it a try
As I mentioned previously, you don’t really have anything to lose by asking for a better deal. I admit that I don’t negotiate often. Usually, I’ll sit through a session like this and get all fired up about negotiating. I’ll then go out and try it and almost always have success…but over time I just stop trying it.
The last major thing I negotiated took place a few years ago when we needed to get a liner put into our chimney. The quote I had was $2400. So, I exercised some patience and waited about 5 months until March, which is typically a time that chimney companies don’t have a lot of work. I simply called up the company and asked them if they’d be willing to do the work for $2000 if I paid cash. The receptionist put me on hold for about two minutes, and came back and said, “sure, when would you like us to come to do the work?” It was a pretty simple thing to do to save $400!
My advice to you is to try negotiating some stuff – get over your fear and your concern that you are ripping the other party off. If you are being honest with them, there’s no need to feel guilt or shame over it. Remember that no one can force you to buy a product and, on the flip side, you can’t force anyone to sell you something. If they are not comfortable with your offer, they can always say “no.” So try it – you just might be pleasantly surprised by the result!
Check out my previous FPU posts:
- Introduction
- Lesson 1 – Super Saving
- Lesson 2 – Relating with Money
- Lesson 3 – Cash Flow Planning
- Lesson 4 – Dumping Debt
- Lesson 5 – Credit Sharks in Suits
- Lesson 6 – Buyer Beware
- Lesson 7 – Clause and Effect
- Financial Peace University Lesson 6 – Buyer Beware...
- Financial Peace University Lesson 5 – Credit Sharks in Suits...
- Financial Peace University Lesson 1 – Super Saving...
- Financial Peace University Lesson 7 – Clause and Effect...
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I think that a good negotiator is always honest in their dealings with another party, this builds trust and may lead to a better deal than you would have received if you had lied.