Know What You Are Getting Before You Pay

All too often do we hand money over to strangers and not know exactly what we are getting. As a result, we find that we paid for something that did not satisfy the reason we paid for it in the first place.

In other words, we bought something that we don’t understand. If it is confusing to the point where something doesn’t do anything for you, then it’s essentially buying garbage.

On Consumer Products
A few weeks ago, I was scouring Craigslist for some adjustable dumbbells to get my workout on. The Bowflex 52-pound dumbbells was my target and was able to find a listing for them at a great price (new – $220). At the same time Bowflex was having a sale for them at $260 after tax.

Immediately, I began wondering how this seller could possibly offer them at such a low price. Surely, he must be operating at a loss to give that price.

Caught up in the dopamine high of discovering such a great bargain, I set up a meeting with the seller. Admittedly, everything was done in haste with little forethought – primarily dismissing the universal advice that “if it’s too good to be true, it probably is”. Before the meeting, I covered my tracks by spending some time doing extensive research.

Apparently, there were two editions of these dumbbells and the older edition had complaints of a safety hazard where a possible faulty mechanism would drop the weights. Then, I came to the realization that this seller had the old model and that’s why the price sounded so enticing.

Needless to say, I backed out of the transaction. I should know exactly what I’m getting before I pay. Once I did learn what that entailed, I can be sure whether or not I want it.

… And With Our Money
The immense selection of financial vehicles available that can help us grow our money represents the overwhelming burden that many of us deal with.

Some of these financial products are touted as great ways to accumulate wealth but the way they bring about high returns remains a complex formula. Consumers who use these products rarely delve into the exact methods that they are able to make high returns – just as long as the account balance grows (think of the massive Ponzi scheme by Bernie Madoff).

For an investor, the ideal investment is one that is profitable and understandable. Index funds have grown increasingly popular due to the simplicity that they offer – especially in times when individual investors are looking to manage their own portfolios.

Too many nice people become vulnerable to the hard sell and fall for the trickery of commission-driven advisers. As a result, they get stuck with an account that never seems to grow because they just didn’t know what in the world they signed up for.

My parents opened a Roth IRA many years ago and did just this. The financial adviser told them to open a Roth IRA and “suggested” a particular fund (with insane expense ratios). Over a decade later, they come to me wondering why they keep seeing a fee on their statements while their money hasn’t grown at all. They didn’t know of the high expense ratios and account fees. This has led to their distrust of investments in general.

Due Diligence is Key
Whether it is shopping or investing, making the effort to understand how something works and functions will greatly enhance the intrinsic value of owning it.

• If it is a consumer product, check out product reviews to see what everyone else is saying. Maybe they found a flaw with the product that you believe is a deal breaker. It is better to learn of it before an item fails when you need it most.
• If it is an investment vehicle, understand the process that yields a profit. Learn of the risks involved that can cause a loss. Avoid a financial product if it confuses you.

The golden rule: make sure you understand what you’re getting before you pay for it.

(Photo credit:wburris)

• Site Policy...
• Vent Post: Too Many Rules on eBay Nowadays!...
• Used or Pre-owned Video Games and Media Are Perfectly Fine...
• Practice the Fundamentals of Price Negotiation...
• 6 Safety Measures for Buying and Selling on Craigslist...
• Suspicious Terms That Ruin Great Deals...