Ramit Sethi (that I guy I quote a lot), author of the website IWillTeachYouToBeRich.com, published a book by the same name about personal finance for twentysomethings.
Although I knew the book would not differ much from the content available on his website, it was pleasant to have Ramit's thoughts presented in close proximity to each other rather than spread out across the years I've been following his blog.
Most of his advice revolves around a single theme: stop loosing money by doing nothing. It occurred to me that while in the world of economics, such appeals to opportunity cost are customary, the world of twentysomethings would much rather feel guilty about doing nothing rather than actually figuring out what needs to be done and doing it. (Please pardon the gross oversimplifications; there are many responsible twenty year-olds, but few who think they can do anything about their finances.)
The blog contains much, if not all, of the advice in the book, but the book highlighted three things I had failed to implement (though I read them on the blog). First, I finally took Ramit's advice about negotiation, and negotiated a bill. I clearly have more work to do in that department, but it was good to have a plan of how to approach the conversation, and not feel weird about talking about money. To Ramit's credit, he portrays negotiation as asymmetric warfare: you, a novice in negotiation, are battling with experts who negotiate with people every day. However, you needn't become a Spartan to negotiate effectively. In fact, being pleasant (and smiling) makes it even easier. Negotiation is a fascinating phenomenon in the world of human interaction; it has elements of conflict, optimization and compromise. Each party seeks to optimize results that favor him or her, yet done right both parties can win. A critical part of Ramit's advise is to avoid yes-or-no questions when you really want to ask "how can we make this work?" That one question saved me $180 (over six months) for 2 minutes worth of effort.
The next piece of advise I had failed to implement was to synchronize your bills with your paycheck (to the extent possible). The idea is to have a more predictable and automated flow of money. While I've got much of the flow nailed down, I never thought to change the billing date to a common date; we'll see how this works out over the coming months and years.
Lastly, the book provided a clearer perspective on what it takes to buy a house. Again, this isn't anything that Ramit hadn't said previously about buying a house. It was just easier to focus on his points when I was reading a book (about finance!) rather than reading my daily blogs. The only change in behavior this created was creating a little "dashboard" for important goals. Previously the goals were general (house, travel, etc.); now they are very specific (20% down payment, trip to California, etc.). This small change forced me to also estimate the cost and, by extension, the date of fulfillment of each of the goals. Again, the payoff is mostly psychological, but it helps take down some psychological barriers.
Overall, I recommend this book to most people as an example of how to set up an automatic system that helps alleviate certain kinds of stress. It's an excellent short read and his good humored presentation doesn't hurt either.
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4 comments:
I read a great book on negotiation once (I'll find the title for you), and one of the main premises is that before you go into a negotiation you need to have two numbers firmly in mind: your maximum supportable offer, and your minimum acceptable offer.
The former is simply the highest amount you can reasonably ask for. If you can demonstrate that you can get the price you're asking elsewhere, or if you have a good reason for your offer (ie, the company would rather get some money than none, etc), that's the number to start with.
The latter is the lowest amount that you would be willing to accept before walking away from the table. In the case of a creditor, your only real advantage is that you could, in theory, walk away and never pay, despite the damage to your credit score. Then the creditor will never get their money. They would rather negotiate with you than risk losing their money to some crazy person who doesn't care about their credit.
At the same time, you have to make sure that you're negotiating with the person who has the authority to make these decisions. I once rented an SUV for the same price as a compact car because I was dealing with the regional manager instead of a regular sales person. If you're asking a creditor for something that's outside the scope of their general structure, it's usually a good idea to start off by asking for a manager :)
I agree with Matthew, however (although I do not have as much life experience as him) I have always been told to start off with "the little people", meaning start with the sales person, and if that is not possible then ask to speak with the manager. Metaist, do you think it is a blanket rule, or to be judged on a case by case basis?
@Jacob: I'd say that most of the time you want to go as high as appropriate, but more importantly, as Matthew said, you want to make sure that the person you're talking to is in a position to fulfill your request-- otherwise, you're just wasting everyone's time. So, for example, when you're calling to negotiate a bill, you want to immediately ask for "Customer Retention" if you think the conversation is going to require that level of authority (i.e. if there might be a point where you threaten to switch services).
"he portrays negotiation as asymmetric warfare: you, a novice in negotiation, are battling with experts who negotiate with people every day."
In the past, I've made this work to my advantage. Remember that most of the battles they hae are with irate customers who, unlike you, haven't figured out that "being pleasant (and smiling) makes it even easier." When they hear a customer who, despite being at a disagreement with them over a bill, is pleasant and respectful, it can be the highlight of their day.
One way to make it clear from the start that you want to be friendly is "I'm guessing you don't have an easy job. Spending your whole day dealing with unhappy customers..." Sometimes, I'm even more explicit: "You're not used to dealing with people this friendly, right?" which gives them the opportunity to let off some steam by telling an anecdote about a caller this morning who threatened to .
This has worked in negotiations over bank fees, drycleaning bills, and I highly recommend it as a tactic if you're ever pulled over by a cop ("I'm guessing most of the people you deal with are extremely frustrated and angry by the time you ask for the license and registration"--throw in a chuckle, and take a peek to see if you just got him to smile--"and it goes a long way when one of them actually smiles and says good morning"--which you already said with a smile as you rolled down the window--"and understands that you're just doing your job of enforcing the law").
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