ICFE eNEWS #09-05 - March 12th 2009
People no longer hearing spend, spend, spend
when their money talks.
Now it's save, save, save.
A list 15 things people still are paying too much for
San Diego, CA. - It used to be, not that long ago, the majority
Americans were hooked on spending and many were borrowing and spending.
When Americans used to hear their money talk, it screamed spend, spend,
What a turn around after six months of economic downturn and
uncertainty. Now, when people hear their money talk the urgent new
message they are hearing is save, save, save.
American consumers have dramatically cut their spending as they worry
about losing their jobs and earning less in a deteriorating economy. The
personal saving rate in the last three months of 2008 rose to its
highest level in six years, according to Vengroff, Williams & Associates
Inc, an Orange County, CA receivables consulting firm. The personal
saving rate of 2.9% in the fourth quarter of 2008 was the highest since
early 2002 when the country was recovering from the dot-com recession
and the shock of the attacks on Sept. 11, 2001. The savings rate rose to
3.6% in December, from 2.8% in November. VWA expects this significant
increase to continue longer term, at least thru the tax season, as
consumers typically use refunds to pay down debt.
There are still many signs observed by financial educators and credit
counselors that consumers are over-spending because many are still
paying too much for things. Over-extending was the number one form of
BillShrink.com has developed the following list of 15 things consumers
commonly overpay for in today's economy. This list includes costs that
can easily be avoided, or reduced if customers are willing to shop
around or plan ahead.
- Pseudo Health Products - Like the "protein bars" that are presented
as "low fat" or "all natural" even though can end up just as unhealthy
as candy bars (the sugar!), while costing up to five times as much.
- Brand New Technology - It is well documented that technology prices
come down considerably once new products have been on the market for
several months to a year. Additionally, waiting allows time for other
companies to release competitive technology, presumably leading to
better overall products becoming available in the marketplace.
- Bottled Water - This is probably the most overpriced of all
regularly consumed products. Over 2/3 of the world is covered in water,
and filters to covert 'tap water' into filtered water are readily
available for under twenty dollars. However, millions of people choose
to spend $1-$2 on this convenience item each day.
- Individual Coffee Cups - Individual cups of coffee purchased
anywhere, whether from restaurants, gas stations, or coffee shops, are
invariably priced high. Especially when compared to what one could buy
and prepare coffee for in bulk at home.
- Prepackaged Food - Buying prepackaged food items such as sandwiches,
sliced apples, or desert cups is one way of overspending on products
that are relatively easy to make, and less expensive then when you buy
the ingredients which can also give you more servings.
- Brand Accessories for computers - Computer manufacturers have
built a cult-following over the past decade, and they are able to demand
premium prices for many of their aftermarket accessories. There are,
however, a number of manufacturers that make products that are
compatible with mp3 players and other products, available for a fraction
of the cost.
- Sending a Fax from a Business Center - There are a number of free
web-based fax services, for which you only need an email address and a
scanner. Sending faxes from places such as Kinkos can cost $1 per page
for local, and $2 per page for long-distance faxes.
- Car Maintenance from the Dealership - Unless a car is under
warranty, going to a dealership for a repair is one sure way to
overspend. Car dealerships often promise that certain work can only be
done by authorized dealerships, and are less-inclined to negotiate
prices, something that should be done with any type of auto
- Music - There is no longer the need to purchase an entire album,
now music fans can compartmentalize music purchases to the individual
song level with sites like iTunes or
- Additional Warrantees on Electronics - The typical lifespan of
electronics products are 3-5 years. So if you think you will upgrade
the item within 5 years, or before you will repair it, is the cost (can
be up to 50% of the purchase price) worth it?
- Late Fees/Overdraft Fees - Paying late fees on credit cards and
bills, and overdraft fees on bank accounts can be a disheartening use of
one's hard-earned money. Especially when a minimum payment on a credit
card of $15 is missed, resulting in a late fee that can be as high as
$39 (and perhaps result in an APR% increase). Overdraft fees add up,
especially when they are made in quick succession, resulting in fees for
each transaction made while an account is overdrawn.
- Non Bank ATM Fees - ATM Fees can add up. They can also be slightly
misleading; it's not unusual for ATM convenience fees to cost $2.00, and
for the card-issuing bank to charge up to an additional $2.50 as a
non-bank ATM Fee. As a result, it may cost up $4.50 to withdraw
- Gambling - Most people gamble with a vague sense that they may one
day strike it rich. Others, play for entertainment. It cannot be denied
that - especially at a casino - the odds are stacked against most
gamblers. In any case, gambling is often the source of grief and
frustration - presumably, at the thought that any money lost could have
better been used by depositing it into one's money market account.
- DVDs - Now there are many alternatives for individuals to watch
movies without having to purchase them - Netflix offers unlimited
monthly rentals, and websites such as Hulu.com, enable users to watch
thousands of its titles for free.
- Flowers from a Florist - Flowers are often overpriced, especially at
florists, and always around the holidays, so your best bet is go to your
grocery store, they are often a fraction of the price.
Remember please, everyday spending decisions, especially credit based
ones, will do far more harm to your financial future than any investment
decision you will likely ever make.
The biggest culprit for many consumers is impulse spending and the
convenience effect. Sighting convenience as a main reason, people say
it prompts more spending without much forethought and research on
whether or not the purchase is a good value, whether or not the purchase
is even necessary and whether or not the purchase takes money away from
debt payments which may become due and/or eliminates any money being put
aside to accumulate.
Improving spending techniques enables most consumers to get a better
value for their dollar. One of the easiest steps is to comparison shop
before spending. The question when people are out spending should ask
themselves "Is the price right?"
Sharpening spending skills and transforming bad money handling habits
and practices is relatively easy especially compared to dieting and
quitting some other things like nail biting or smoking. It begins with
some simple planning. Some folks refer to it as budgeting, a somewhat
negative term that implies one has to do without. The ICFE, along with
lot of other people, including financial planning professionals prefer
to call it a spending-plan. Get yours developed and implemented today
or help someone else to the same.
President - Executive Director
Institute of Consumer Financial Education
ICFE - Institute of
Consumer Financial Education -
customer.service@ICFE.info - 619.239.1401