personal finance chapter 4

timing purchases

save money by: -buying seasonal clothing midway through season -shopping at back-to-school sales, spring sales, and other special sales -taking advantage of clearance sales

comparison shopping

useful when: -buying complex or expensive items -buying items purchased often -using the internet, print advertisements, or mail-order catalogs -different sellers offering different prices and services -product quality or price varies greatly

four phases to researching consumer purchases

1. before you shop 2. weighing alternatives 3. making the purchase 4. after the purchase

small claims court

-a court that deals with legal disputes that involve amounts below a certain limit -settles minor disagreements -less than $5000 in missouri -submit own evidence

open dating

-a labeling method indicating the freshness, or shelf life, of a perishable product such as milk or bread -helps consumers determine freshness of foods -manufacturers print dates on labels -ex: "use before may 25", "not to be sold after may 20"

class-action suits

-a legal action on behalf of all the people who have suffered the same injustice -used when many people have same complaints -ex: group injured by defective product, overcharged by utility company, etc. -all parties must be notified of suit -money awarded may be divided among claimants, put into public funds

legal aid society

-a network of community law offices that provide free or low-cost legal assistance -income must fall below specific amount

rebate

-a partial refund of the price of a product

down payment

-a portion of the total cost of an item that must be paid at the time of the purchase

arbitration

-a process whereby a conflict between a customer and a business is resolved by an impartial third party whose decision is legally binding

service contract

-a separately purchased agreement by the manufacturer or distributor to cover the costs of repairing the item -cost extra (extended)

warranty

-a written guarantee from the manufacturer or distributor that states the conditions under which the product can be returned, replaced, or repaired two types: -implied: unwritten guarantees that cover certain aspects of a product or its use -express: full or limited written warranties

comparing prices

-buy highest-quality item if you can afford all options -consider buying item that gives you best value per dollar if you cannot afford all choices -price does not always equal quality

fraud

-dishonest business practices that are meant to deceive, trick, or gain an unfair advantage common types: -free prizes -travel packages -work-at-home schemes -investment opportunities

resolving differences between buyers and sellers

-document process by keeping a file of receipts, names of people you talk to, dates of attempted repairs, copies of letters you write, any fees paid 1. return to the place of purchase -resolve most complaints at original place of purchase -bring sales receipts and other relevant information 2. contact company headquarters -complaint letter 3. consumer agency assistance -consumer organizations -better business bureau 4. dispute resolution -mediation/arbitration -quicker, less expensive, less stressful than court 5. lawyer/legal aid society

label information research

-federal laws require labels to present factual information food labels must indicate: -common name of product -name and address of manufacturer or distributor -net weight of product -list of ingredients in decreasing order of weight -nutritional information

phase 1: before you shop

-identify needs -gather information (costs, options, consequences) -become aware of marketplace

guidelines for price comparison

-more convenience usually means higher prices -large packages are usually the best buy -ready-to-use products usually have higher prices -buying items "on sale" may not always mean that you save money

phase 3: making the purchase

-negotiate the price (real estate and cars) -decide whether to use credit or cash -determine the real price of the product

cooperative

-nonprofit organization owned and operated by its members for the purpose of saving money on the purchase of goods and services

impulse buying

-purchasing items on the spur of the moment

information sources

-recommendations by people you know -product advertising and labeling -media sources -consumer publications -government agencies -the internet

mediation

-the attempt by a neutral third party to resolve a conflict between a customer and a business through discussion and negotiation

alternatives for store shopping

-the cooperative -direct selling (mail order, tv home shopping, online shopping) -advantage is convenience of not having to leave home -disadvantages are paying for shipping and handling and difficulty in returning purchases

unit pricing

-the use of a standard unit of measurement to compare the prices of packages that are different sizes -displayed by grocery stores and drugstores for products they sell -find by dividing the price of the item by the unit of measurement

brand comparison

consider price and quality when: -comparing brands -choosing between national-brand and store-brand/generic products avoid impulse buying by: -planning what you are going to buy before you shop -taking a list of what you need

phase 2: weighing alternatives

consider: -personal values -available time for research -amount of money you have to spend -convenience of buying item immediately -pros and cons of particular brand

deciding on cash or credit

costs of credit differ depending on: -source of the loan -type of credit account -payment period -amount of down payment

store selection

decision to shop at a store influenced by: -quality and variety of goods -price -hours -location -reputation -policies -services such as parking and delivery

smart buying strategies

get the most value for your dollar by evaluating -timing of purchases -store selection -brand comparison -label information research -price comparison -warranty evaluation

becoming aware of the marketplace

identify: -brands and features to choose from -average prices for an item -where you can obtain reliable information about similar products

sources of consumer complaints

most customer dissatisfaction results from products that are: -defective -of poor quality consumers also complain about: -unexpected costs -deceptive pricing -unsatisfactory repair service -fraud

price comparison

save money by taking advantage of: -discount coupons -manufacturers' rebates

phase 4: after the purchase

when buying a car you have other costs: -additional maintenance -ownership costs (gasoline and insurance) -repair service