Weird mindset

[calmloki]

When car salesmen (for example) say "what do you want to spend a month" I just don't get it. My normal answer is "nothing". I want to know total cost.

Latest example was yesterday - went in to city hall to discuss how best to minimize our water/sewer bill if we are gone for four months. I have the bill on autopay of $60/month, which is a few bucks more than the normal bill - between that and a few double payments getting autopay running we carry a couple hundred in credit with the city all the time. No problem - we are covered if there are any autopay screwups. Anyway, 4 months of autopay water/sewer is $240, and I thought maybe the city would have a no-use or vacation rate of $10-20/month to leave the account open. Nope. $55 minimum monthly charge.

Told them I wanted to minimize our expense and the lady looked at our records and said "Oh, there's no problem, you have a $200+ credit, you can just use that." Took a bit to get her to understand that 4 x $55 = $220, and whether it comes out of my credit or our checking account it's still my money. We'll be having the water turned off while we're gone, closing the account, and saving the $220. I will have to pay a $90 deposit when we acctivate the account - again, the lady acted like a "deposit" was the same as lighting $90 on fire - I checked and yes, a "deposit" is refundable if you pay your bill. City will have to mail us our existing credit.

Down south I returned some items to Home Depot - the gal said "Oh, it's only $6.50" as if that was a factor - excuse me Gracie - isn't that about what you make an hour after taxes?

Tenants often act like deposits are spent money rather than $$$ they can get back.

Just don't get it.

 

[brewer12345]

Lots of people live had to mouth and mentally do what amounts to cash-based accounting. I personally do not get it, but it is deeply embedded in human psychology which is why it is such an effective sales pitch to countless millions.

 

[FUEGO]

Along these lines, it bugs me when people pay their insurance (house, car, life, etc) monthly instead of lump sum for the six months or year. Many policies end up costing you $30-40 to stretch the payments out on a monthly basis. And if you are paying on a few policies that renew every 6-12 months, you would have a larger lump sum due roughly every 2-4 months on average (instead of monthly). But people prefer the convenience of having the same charge every month instead of having to save for a couple months then pay a lump sum. Even though this practice may cost them over a hundred dollars a year.

"I don't have $600 to pay this bill, I can only afford $55/month for 12 months" x3. Any suggestion that they maybe save up the $600 at some point over the next year or few years is met with derision and excuses. And more often, a statement to the effect that "what does a few bucks a month matter, it is nothing!". But multiply a few bucks times a whole bunch of different trivial things, and you have some real pocket change. These are also the same people that don't believe you when you tell them that losing $200/yr (what they are wasting on monthly payments instead of lump sums) from their take home pay will allow them to save $500/yr in their 401k with the employer match included.

 

[chinaco]

...

Told them I wanted to minimize our expense and the lady looked at our records and said "Oh, there's no problem, you have a $200+ credit, you can just use that." Took a bit to get her to understand that 4 x $55 = $220...

She probably would not look at it that way if it were her money.

 

[Meadbh]

Along these lines, it bugs me when people pay their insurance (house, car, life, etc) monthly instead of lump sum for the six months or year.

In general, I agree. However, I just paid my car insurance and signed up to pay it in monthly instalments. The reason is that I will be moving to another province several months from now and will need to insure my car there. I might use that as an excuse to buy a new car . Either way, I don't want to tie up my money this year in something I won't be able to use.

 

[FUEGO]

In general, I agree. However, I just paid my car insurance and signed up to pay it in monthly instalments. The reason is that I will be moving to another province several months from now and will need to insure my car there. I might use that as an excuse to buy a new car . Either way, I don't want to tie up my money this year in something I won't be able to use.

Do you get a refund for the unused portion of the insured period? Ie if you cancel the policy 2 months into a 12 month term, do you not get back 10/12ths?

I may be tempted to do what you are saying also though if it was just a couple months and I didn't want to have a lot of money tied up in insurance I knew I was going to cancel. And risk the insurance company holding my money hostage for some reason.

 

[73ss454]

As to the car salesman question from the OP. The salesman is trying to see if you are dumb enough to give a # so they know exactly which car to put you in if they can. If you're not paying attention you will get less for more.

 

[Westernskies]

Tenants often act like deposits are spent money rather than $$$ they can get back.

Just don't get it.

Calmloki, It's not real money, it's a deposit fer chrissakes... you can't spend it on anything because you already spent it on a deposit. Cash and cash flow are unrelated for many people.

 

[Meadbh]

Do you get a refund for the unused portion of the insured period? Ie if you cancel the policy 2 months into a 12 month term, do you not get back 10/12ths?

I may be tempted to do what you are saying also though if it was just a couple months and I didn't want to have a lot of money tied up in insurance I knew I was going to cancel. And risk the insurance company holding my money hostage for some reason.

It's public insurance. I asked, and you would get a refund but I believe it would take some time. Having money owing to you is not the best situation when you are in the middle of a move.

 

[Leonidas]

Former co-w*rker was like that. He had excellent credit, but everything he owned was bought on credit and his finances were computed on being able to make the monthly notes and to heck with how much he paid when everything was totaled up.

Some of the things he did as a result of his financial situation would make me laugh out loud (and piss him off). Like the fact that he had no emergency fund at all, but he paid a monthly bill for a home repair policy. When his water heater went out during the Christmas holiday season he had to wait days for the company office to open so he could make a claim, then wait until they managed to make an appraisal, and then wait until they could get their approved plumber in to make the repairs. His wife and kids were showering at a friend's house for a week.

It's not how I would want to live, but the man makes it work for him. He has a boat, camper, and truck (all on payments), and rather than worrying about being able to pay for places to go on vacation he made a monthly payment to some kind of campground timeshare that had a variety of campgrounds with boat ramps included.

He is a great guy, very good at his j*b, but trying to explain the cost of all that credit was a waste of time.

Edit: I just remembered a funny story about the boat. My boss found the boat and recognized that the price was a steal. He spread the word about a motivated seller wanting to unload a good boat for a small fraction of the value and this guy stepped up and grabbed it. Now the low price certainly helped keep the monthly payments low, but my boss was amazed and asked him; "Dude, do you realize how much you added to the price of the boat in interest payments?" The reply was, "I couldn't afford to pay cash for it even if it was half that price. If the credit union doesn't give out loans for it, then I can't afford to own it."

 

[FUEGO]

It's public insurance. I asked, and you would get a refund but I believe it would take some time. Having money owing to you is not the best situation when you are in the middle of a move.

Gotcha. Typically being owed money by a public entity is slightly worse than being owed money by an insurance company. Neither entity seems to be particularly quick at getting money refunded to you though in my experience.

 

[FinanceDude]

As to the car salesman question from the OP. The salesman is trying to see if you are dumb enough to give a # so they know exactly which car to put you in if they can. If you're not paying attention you will get less for more.

"If I could, wouldya"??

 

[Major Tom]

"Dude, do you realize how much you added to the price of the boat in interest payments?" The reply was, "I couldn't afford to pay cash for it even if it was half that price. If the credit union doesn't give out loans for it, then I can't afford to own it."

Many of the people I know think like this. They understand that it's not the financially smart way to live, but either cannot or will not change their behavior. One of my best friends always spend his entire paycheck and generally has to live on next to nothing for a few days at the end of each paycheck period. There's no point in me talking to him about it because it will not change his behavior and might even put stress on the friendship. Besides, he's a lovely person and he has consciously chosen to live this way.

I guess you could say that people who live like this are the ones who contribute to this consumer economy so that the thrifty investors like ourselves can live from our investments. The technique of spending less than you earn and saving and investing the difference is no secret, yet many people won't do it.

Aaah well, what can you do!

 

[pb4uski]

Yeah, I have a dear friend who is usually sensible about his money who traded his 3 year old truck in perfect condition with less than 25k miles for a new truck (same make/model/trim as the old truck). He was so excited that he was able to get a new truck and his monthly payments didn't go up. I asked him how much the term of his payments changed as a result of the trade. He had no idea what I was talking about. When I explained that even though his payments didn't change that he was now required to make more payments he started rationalizing that it was still a good trade. Whatever.

 

[kumquat]

"If I could, wouldya"??

Can ya?

 

[Westernskies]

Can ya?

Would he?

 

[Thingamajigger]

I suspect that most of you entering this discussion are suffering from different degrees of economic hyperopia --- it is not a terrible situation because the long-term effects on your well-being are minimal

one of the side effects is that you tend to be overly concerned about plight of others who live in the present --- because of our affliction, it is hard to ignore what they are doing wrong
we can clearly see their screw ups and they obviously can not

I always try to be aware of my own economic hyperopia --- the real danger is that I don't want to wake up one day having realized that I saved well but I have no time left to spend it

 

[travelover]

I suspect that most of you are suffering from different degrees of economic hyperopia

it is not a terrible situation because the long-term effects on your well-being are minimal

but one of the side effects is that you tend to be overly concerned about plight of others who live in the present

I always try to be aware of my own economic hyperopia ... the real danger is that I don't want to wake up one day and realized that I saved well ... but I have no time left to spend it

Thanks for clarifying that for us.

 

[traineeinvestor]

I think it's called the stupid tax.

I'm happy to pay monthly if it's interest free and I can't get a discount by paying in one lump sum.

 

[Thingamajigger]

Thanks for clarifying that for us.

you are very welcome

 

[Delawaredave5]

I work with a lot of young people in their 20's -- they view they cost of a capital purchase as "how much per month" additional to their CC balance.

I don't get it.

 

[Thingamajigger]

I work with a lot of young people in their 20's -- they view they cost of a capital purchase as "how much per month" additional to their CC balance.

I don't get it.

it might actually be a good end-of-life mindset

 

[Nords]

Yeah, I have a dear friend who is usually sensible about his money who traded his 3 year old truck in perfect condition with less than 25k miles for a new truck (same make/model/trim as the old truck).

I wonder if he realized that one of this board's posters would have paid him more for the "old" truck than he got on the trade-in.

 

[TomG]

Along these lines, it bugs me when people pay their insurance (house, car, life, etc) monthly instead of lump sum for the six months or year. Many policies end up costing you $30-40 to stretch the payments out on a monthly basis.

Why does that bug you? The more people who pay more in interest and such, generally the better the deals are for the people who aren't stupid

 

[Texas Proud]

My BIL was like that when we first met.... he would trade in a car and get a lower payment and think he was ahead of the game.... it took me many years to convince him that have 18 more months of payments that are $50 per month more is better than 60 months that are 'less'....


Car salesmen are the biggest culprits of this monthly mindset... and can use it to sale more car or at a higher price than someone wants... just spread it out over 72 months and PRESTO, you can afford this car at full price....