Simplifying the way you manage your finances can make sticking to a budget much easier. Limiting the amount of time it takes to actually manage your budget will make it more likely that you will do it. With the right technique it should only take you 20-30 minutes a week to stay on track.

The most time-consuming part of the process is the actual setting up of the budget. So don’t try to do this with a house full of kids and other relatives over the holidays. Allocate the time and place, and stick to it. If necessary put a “Do not disturb” sign on your door, turn off your phone, and disconnect from the internet (eliminate distractions!).

While there is a plethora of software to simplify the preparation of a budget, a simple spreadsheet is all you need. Don’t complicate the process by having to learn a new program.

A good way to start is to assemble any bills and receipts you can get your hands on. A credit card statement is perfect if you charge most of your purchases. Begin your document by listing your monthly income and expenses. Estimate, in round numbers, what you spend on each expense every month. You don’t need to be precise, but err on the side of more rather than less with expenses.

Be sure to include:

* Mortgage/rent payments
* Utilities costs (electricity, gas, phone, water etc)
* Groceries
* Food
* Transport
* Car expenses
* Clothing
* Education expenses
* Entertainment
* Gifts

A Simple Budget – The 60% Solution

One of the simplest types of budget is called the “60 Percent Solution”. In essence, this budget aims for you to fit your monthly expenses within 60% of your gross income.

This will allow you flexibility for long and short term savings, spending money and retirement planning. These can be what often break a budget, because people fail to budget for them.

While the percentages will vary depending on your circumstances, consider the guidelines below:

Allocation of Income

60% – Monthly expenses
Housing, clothing, food, transportation, utilities, insurance, communication.

10% – Retirement
In some countries this forms part of a compulsory superannuation plan, but if it doesn’t for you, you should have this deducted automatically from your paycheck.

10% – Debt reduction or long term savings
A good financial adviser will recommend how to invest this money, which will also serve as an emergency fund.

10% – Short term savings
These are the funds set aside for those every now and then expenses: birthday and Christmas gifts, car maintenance or repairs, uninsured medical expenses, appliances, home maintenance.

10% – Pleasure
This will include recreation, eating out, movies or whatever you want, without the worry of breaking your budget.

Having a household budget with fewer categories will make it much more manageable and help you to realise your financial goals.

A Simple Household Finance Budget is a post from: Smart Money Mindset.com

Making sure you get paid what you are worth can be difficult, especially if you have just been offered a great job. But don’t be shy, and remove the myths about salary negotiation from your brain, because if you don’t, they can prevent you from getting the salary you deserve.

I used these principles recently to get a friend from an initial offer of 2.8% to a 19% pay rise on a new position – yes, in the middle of a recession! That’s almost 7 times more! She was extremely disappointed with the first offer she received, but too polite to ask for more – until she talked to me of course! Please be aware of these myths, and don’t fall victim to them:

Myth 1: Aim for the highest salary

When you look at your life, you will probably realise that cash is not always the most important thing. Consider carefully other benefits, bonuses and quality of life that a position affords. The job with the highest salary might enslave you and leave little time for home, hobby or sport activities.

Myth 2: Employers don’t like negotiating salaries

Most employers have respect for a person who is firm in the way he values him/herself. There is no harm in justifying to an employer why you deserve more.

Myth 3: If you don’t indicate your expected salary, your application won’t be reviewed

You will sometimes find “expected salary” to be a requirement in job ads. By quoting a figure, be it too high OR too low, you can either eliminate yourself from consideration, or lock yourself into a salary that is below what you really want.

If you are qualified and meet all other criteria, employers will not ignore your resume because it doesn’t list a salary range.

Myth 4: There is no room to move

If an employer believes you are the perfect candidate for the job, and the offer on the table is below your expectations, it is rare indeed that they have no room to move. Exceptions are possible.

Myth 5: A “starting salary” is OK to begin with

Don’t fall for this one! Most salary increases are negotiated on your current wage. Accepting a lower “starting” salary, without any negotiation, will impact your negotiations for years.

Myth 6: Asking for less improves your chances

Few employers hire on salary alone, and his strategy can sometimes backfire by devaluing you in the eyes of the company, and actually decrease your chances of landing the job.

Myth 7: Agree to the offer ASAP

Don’t believe that if you don’t jump at an offer, an employer will rush to make the offer to someone else. Get the offer in writing, and if you have any doubts, take at least 24 hours before accepting. Understanding that you have room to negotiate will help you to get the salary you deserve – the first offer from an employer is rarely the last and final offer – salary negotiation is part of the process.

Know Your Value

Knowing your own value is one of the most important skills to have generally, but being able to realise it is even more important. Look at the value you add and expect to be compensated accordingly. If you are unable to get the compensation (monetary and non-monetary) you think you deserve there are always alternatives – you are more resourceful than you dare to let yourself think!

Salary Negotiation – How I Helped a Friend Get a 7 Times Larger Pay Rise is a post from: Smart Money Mindset.com

Sometimes life throws you a surprise… like being given two days notice that you’re booked in to give a lecture to 35 students at the London School of Economics! Which just happened to sell out in 2 mins… no pressure then…

So here’s the interesting thing, not that I had the lecture arranged – it was pencilled in but never confirmed – but that it sold out so fast. An email was sent to students, who won’t necessarily be sat by a computer checking email (like the rest of us at work!), and 35 people responded withing 2 mins.

The title of the session is “Recession-Proof Yourself”

And however much I’d like to think the interest was due to my dashing good-looks (ok,ok, no picture was sent with the email) it actually points to something more insightful – A lack of financial education and resources for young people.

Now these students will be the brightest of the bright, doing degrees in Economics, Management, Business and so on, but they will not have knowledge of some basic financial principles – because no-one’s taught them. I know, because after 4 years of financial training at university I was still £22,000 in debt and had no idea how to manage my money!

The other sad thing is that those who had tried to seek out financial advice were probably given what could best be described as average information, or even worse. For me the first big financial step I took was opening a current account and yes, taking advantage of the interest-free overdraft. And then being financially astute as I was, going to another bank and doing exactly the same thing! Yep, I had a £3,100 maxed out rolling overdraft the day I left uni.

Drug-Dealing and Debt Conditioning

I often talk about how debt is pushed in a similar way to drugs – starting with the “free sample” – and this is how debt is pushed to students with the interest-free overdraft. Before long as students we get conditioned to thinking it is perfectly normal to be thousands of pounds in debt.

Now these students will be the high-earners of tomorrow… who having been conditioned into debt-driven lifestyles at univeristy will continue to rack up increasing levels of mortgage, credit card and personal debt based on multiples of their increasing income. Without realising it they will pay thousands upon thousands more for their possessions than if they hadn’t use debt to finance their lifestyles.

So hopefully the lecture today will be a first step in getting these students to seek out better and more effective ways to manage their money. I’m not the only one talking about this so even if not with me, the lecture should hopefully give them a nudge in the right direction! I know I could have done with it when I was in their place.

Lecturing at the London School of Economics today, Interest-Free Overdrafts and Drug Dealing – Eeek! is a post from: Smart Money Mindset.com

In the lead up to Christmas we are always bombarded with sales messages. “Save 50% here!”, “Buy one get one free!”. These offers come to us with the promise of “saving” us money. Are you really saving money? Probably not!

It’s often the case that we end up spending, not saving as a result of these messages.

The reason is the Big “Saving Money” Scam – we are fooled (including fooling ourselves) into believing we are saving money by taking advantages of these offers. The reason is that we don’t realise there are actually three different ways to save money.

The Three Ways to Save Money

1) Wants-Driven Saving
2) Needs-Driven Saving
3) Cash Saving

1) Wants-Driven Saving

Ever seen a special offer that really grabbed your attention?! One like “60% off this plasma TV but only while stocks last!” “75% off this leather sofa – only for the next two weeks!”. You might already have a perfectly good TV and sofa but you don’t want to miss out on such a good deal right?

The fact is that the sales price is often just the real price or acceptable price to the retailer. For example have you have you ever heard of a sofa store where there isn’t a sale on?!

The sale price is often the price they need to make a decent profit. The law may have required them to sell that item at “full-price” for a time in some of their stores, but in reality they are happy with the sale price.

The reason this is important is because we are talking about “Wants-Driven Saving”. This is a saving on an item you are tempted to WANT but don’t really NEED. And what compels you to buy is the false idea that you are saving money in the future by buying the item.

Are You Realling Saving?
In actual fact you’re not saving money, you’re spending money – right now! Managing your money well relies on thinking about cash flow – this is a cash outflow from your monthly budget – not a cash inflow. This is a false or fake kind of saving, which will lead you to actually increase spending and most likely increase debt.

You are also being subjected to a sales trick called “creating scarcity”. The seller creates the sense that there is competition with others and that you may miss out on this wonderful deal since “the offer runs out soon!” or “all the items might sell!”

These purchases give us a momentary thrill, they make us feel good for a little while. And we quieten the little voice in our head saying “you’ve just spent money idiot!” by justifying it as “future savings” when nothing could be further from the truth.

The sad fact is that millions of people drive themselves into financial difficultly doing exactly this – all the while thinking they are being “financially smart”.

2) Needs-Driven Saving

Needs-Driven savings remarkably enough are savings based on items you NEED, not WANT. These are savings on items you would have bought ANYWAY, even if there was no discount or offer. For example this could be a two for one offer on groceries or a discount voucher for petrol.

These are real savings as you are reducing the amount of cash flowing out of your pocket – cash that would have flowed out anyway.

One of the best money saving tips is to focus on Needs-Driven Savings when you are being bombarded with savings offers. Filter through them and find the right ones.

For example my girlfriend was recently offered a card that gave 50% off at a lot of London restaurants, for a price of course. Now if we dined out a lot, and felt this was something that fitted under one of our needs, then the card might have been worth it. However interestingly enough the 50% discount didn’t apply on Fridays and Saturdays at most places, the days we were most likely to go out. And also we were able to get 50% off vouchers for most of our favourite restaurants anyway for free elsewhere – so for us that fell under Wants-Driven Saving and we didn’t get the card.

So Needs-Driven Saving does mean you save money. Now what to do with that cash you didn’t spend? Funny you should ask…

3) Cash Saving

This is what I would call really saving money. Taking money from your paycheck and putting it into a savings account. Why – because the cash is still there. It hasn’t been spent. It is earning interest. You have actually saved money which is now building on itself.

Part of cash saving can also includes paying down debt. This is because you immediately reduce your cash outflows when paying off debt. See my previous post A Guaranteed Profit On Your Money? It’s Possible!

So if you take the cash from Needs-Driven Saving and pay off debt, you not only save that cash, but also get a guaranteed return on it. Now doesn’t that all sound better than option 1 above?

The Challenge with Saving

The challenge for us is the balance between the three, particularly with Needs- versus Wants-Driven savings. For example what would you call saving money on expensive Christmas presents? Did you NEED to buy expensive presents in the first place? No-one’s immune to this by the way, myself I’m partially prone to spending on gadgets like the iPhone!

The answer is, as always, “it depends”.

It depends on your personal circumstances. If you are knee-deep in debt (usually because of Wants-Driven Spending!) then you will need to restrict yourself to spending on only the things you need, look for savings there, and focus on paying off debt. If you have more flexibility then spending on things you want isn’t necessarily a bad thing – so long as you don’t kid yourself into thinking you’re actually saving money… and so long as you are cutting unnecessary expenditure elsewhere.

Think about the last few times you were tempted by an “once-in-a-lifetime savings” offer? Did you really save money?

The Big “Saving Money” Scam is a post from: Smart Money Mindset.com

Relying on just a pension to get you through your old age? You could be setting yourself up for disappointment, pain and financial hardship.

Are you being manipulated and ripped off by financial companies? Read below and judge for yourself. This post is for all of you not lucky enough to have a final salary pension from your company.

“A Guaranteed Return” on Pensions

“Pensions Offer a Guaranteed Return” is a line repeated by financial advisors and commentators across the world to convince you to take out a pension. It’s simply not true. Here’s why:

Let’s start with some definitions. Some common definitions of “guaranteed” are:

“Something that assures a particular outcome or condition”
“An unconditional commitment that something will happen or that something is true”

And of “return”:

“To produce or yield”
“a coming back again”

So a “Guaranteed Return” should be something that without question will happen, and will come back to you. Pensions are sold on the idea that whatever contributions you make, the government will add the tax back that you’d paid on that money – therefore a “Guaranteed Return” exists cause you definitely get that tax back.

So here’s the thing with pensions – yes, you get the tax break and employer contributions if applicable… but they’re not guaranteed to come back to you. This is because you have to leave the money in there for 30-40 years – and a lot can happen in that time…

You’re Charging Me How Much?!

One of the main factors reducing your pension pot is over that period your pension company will be charging you an annual percentage fee based on the value of your total pot. This has been shown to reduce the amount of your overall investment by over 40% (yes, almost half!) by the time you retire.

Over those 30-40 years you will also have inflation eating away at the real value of your money, so even if you have got more in the pot than you put in, it may be worth less in terms of what you can buy with it.

Wanna Mess With Your Financial Advisor’s Head?

Just for fun ask a financial advisor the following question about the “Guaranteed Return” on pensions:

“So are you telling me that whatever happens (“Guaranteed”) that my pension pot will be at least the money I’ve put in plus the government tax breaks on top, and that’s what will be available to me (“Return”) on retirement as a bare minimum?”

The answer will be something like:

“Errr… no… ummm… not exactly”

You:

“So would I be right in saying that with the management charges, and your charges, and the fluctuations in the stock market, that even with your “Guaranteed Return” it’s perfectly possible that on retirement I will have less money than I put in, and even that will be worth less cause of inflation, just like it happened to thousands and thousands of people in the US and UK?”

“Errr… yes?”

“So how is that a “Guaranteed Return” then?”

Silence…

The Guaranteed Return line is so embedded in the pensions sales pitch it’s ridiculous. On TV recently I saw a husband and wife being told that their personal pension would pay out a fraction of what they thought, and they would barely be able to survive on retirement… and the financial advisor there said (yes you guessed it!) “Pensions are still a good investment because they offer you a guaranteed return”. I would say to that financial advisor try telling that to someone who’s got less money than they put in… but he actually did, on TV!

Oh, and did I mention that you of course do get taxed when you eventually take your pension.

So although pensions are sold as a rock solid “Guaranteed Return” investment, they are still an investment, with all the risks that come with investing. Plus unlike other investments, unless you’ve gone for a pension you personally manage, you have little real control over how that money is managed. Historically we can see that pension funds have NOT on the whole outperformed the market… but they still charged you for the priviledge of “managing” your money though.

Even the Power of Compounding is Taken Away

Pensions are also sold on the idea that the contributions you make will build and compound over time to give you a large pot of money at the end. Those of you who understand compounding (see my free debt report on the right for more information on this) will know that the amounts invested in the early years are the most important as they can build for the longest time.

Guess when most of the fees are taken for pension… yep, that’s right, in the beginning! So when your pension pot should be building up nicely to compound over the next 30-40 years, massive chunks of it are being taken away to pay for set-up fees, financial advisor fees. It’s not unheard of for these fees to amount to 60-70% of your contributions in the first few years, costing you massively by severely reducing your future pension pot.

Inflation is Going to Eat You Alive

Now let’s say you’re one of the lucky ones – you have a good fund manager, they make you a decent amount of money and you cash in your pension pot when the stock market is riding high.

That lump sum of cash now has to go into an “annuity” and a company will do that for you. So that cash goes into a relatively “safe” investment, such as government bonds, and gives you an income per year. How much this is depends on the annuity rates at the time (e.g. 5%) and how much you put in.

The problem is that the annuity doesn’t increase with inflation. So as you live into your retirement you’ll see prices increasing around you, and your money not being able to buy as much, year by year. With people living longer and longer inflation can literally eat you alive.

For example let’s say inflation runs at a relatively stable 3% and you’ve been “lucky” and have lived 25 years into retirement. Your annual income will now buy you less that HALF of what it did when you retired. (If you want to know the calculation for this let me know).

So even if you were able to get a decent annual income on retirement (no easy task) you could end up in your final years trying to get by on a very small amount of money. More than likely you were just getting by when you retired, so who knows how bad it could be after inflation has its way with you.

So what’s the alternative?

Well there’s no easy answer to this. I’m not saying that you shouldn’t invest in pensions – just that you should understand completely how they work and the risks you take on – and please don’t tolerate anyone spinning you the “Guaranteed Return” or “Safe Investment” lines.

Relying on the government to help is also a mistake. Government pensions are unlikely to even provide a basic level of income in most countries, especially with relatively less young people paying tax to support an ageing population.

The alternative is really a mindset shift. Stop thinking that you’ll be able to rely on your pension alone – it’s a dangerous game to play, a game where you can have little or no control. Ultimately it’s about building and creating multiple sources of income upon retirement (e.g. buy-to-let properties, other savings, investments in bonds etc.) and investing in yourself.

With people living longer and more importantly, maintaining their health, 65 is now just an arbitrary age for retirement, based on an industrial age way of thinking. Most people on retirement can be just as economically productive as they were, if not more, and age is less of a restricting factor. Chances are after working for 30-40 years, you’ll be bored to death (forgive the pun!) on retirement and looking for something to do anyway!

Why not teach yourself the skills now so you don’t have to rely on just a pension to get you by. Just a thought…

Relying on Your Pension? You’re Dead Already is a post from: Smart Money Mindset.com

Like watching TV or movies? You could be programming your brain for financial suicide!

TV and movies are full of false values or beliefs, also known as “Memes”, that we pick up and believe in without even realising. Some of the worst are around money and wealth. By getting these into your head you could be sabotaging your financial success without even realising.

Movies Are Keeping You Poor!
Think about movies for a second. My favourite for this is Titanic (I’m not saying that’s my favourite movie by the way!).

“The Rich Are the Bad Guys”
Do you remember the dinner scenes? They show all the rich people being boring and stuffy, arrogant, and you get a sense of Kate Winslet (the heroine) being restricted, uncomfortable, and that the people around her are untrustworthy. And the main bad guy in the movie is here, her rich fiance.

“Poor People Have More Fun”
Meanwhile down below the poor people are partying like mad! Lots of smiling, fun, drinking, and a really warm and friendly environment, and our poor hero Leonardo di Caprio in the middle of it having the time of his life! The place our heroine would rather be.

Do you really think that’s what it was like on the Titanic? Where did you get that belief from? Who told you that?

Think about the movies you watch and you’ll find the above is usually true. There is a hidden message that being rich leads to unhappiness and being poor is somehow more honest and real, and even respected.

“It’s Romantic to Sacrifice Wealth”
And at the end of the movie what happens? Rose’s granddaughter and husband are spending thousands searching for treasure, the necklace with the huge diamond. And what does Rose do with it? Throw it in the sea?! So it can be with her dead lover?! How romantic?!

How about taking that diamond and giving it to her granddaughter so she can financially secure her and her descendants for years to come – so they never have to worry about money, paying for school, medical care if they get sick? Nope, it’s on its way back to Leo so he can do God knows what with it… because that’s the “right” thing to do? Give me a break…

Want To Be Wealthy? Don’t Watch Dallas!
If you watch a lot of television you’ll see the same values or beliefs within those. Take programmes like Dallas, Dynasty or even recently The O.C.

“Having Money Means More Problems”
In these programmes in the first episode everyone has money and all looks well on the surface… but before long the story lines take hold – like one character losing all their money due to a crooked business partner or accountant; kids out of control due to all the money their rich parents give them; those same kids taking drugs and needing to go into rehab; adultery; domestic violence; robbery; threats etc. etc.

What does that condition your brain to think? That being rich is all one big party? Not quite.

More like:

“Well if I get rich, I could lose it all, lose my wife/husband, my kids could become drug-addicted criminals, and people will come and try and steal my money”

… think about it, how many of those beliefs do you currently hold about becoming wealthy? What’s the conclusion?

“Well, maybe it’s better to have a little money, but not too much cause I don’t want to turn into an asshole and get my kids screwed up”

Really have a think about it – what beliefs do you have about becoming wealthy and where did you get them from? These beliefs are almost certainly holding you back from what you want financially.

Watching TV? You’re Committing Financial Suicide! is a post from: Smart Money Mindset.com

Learn how in only a 5 minute phonecall you could save double digit amounts on your credit card interest rate!

Credit card companies are keen to keep you as their customer – no matter how they may act. You are worth a lot of money to your card company and have a lot more power than you realise in your relationship with them. Use this fact, and the call scripts below, to your advantage to lower interest rates on your credit cards by simply asking them. You can save thousands using this method.

Credit cards and how they make money

Credit card companies make money from their customers in a variety of different ways. Apart from the interest rate they also make money from late payment fees, cash withdrawal or credit card cheque fees, or even from companies that want to put leaflets in your monthly statement letter.

However people aren’t aware that credit card companies also make money by you simply using the card, as retailers are charged a fee by the companies providing the card machines in their stores, and part of that goes to your credit card company. So credit card companies are very interested in keeping you as a customer – remember this in your call!

You must understand how call centers work

The majority of your interaction with your credit card company will be over the phone, and so will this negotiation, so you need to know how call centers work. I worked in a call center for over a year on various campaigns as they are called, on both inbound and outbound calls. My job was to monitor and train call center staff on making sales calls and dealing with customer cancellations – i.e. stopping them.

What you’ll find with call center staff is that they will have differing levels of authority to take actions depending on their experience and grade. So whilst one might not be able to change anything on your account, others will be able to make significant changes. The call center staff will also be under instructions to NOT lose customers – remember you are worth money to the card company and they will avoid losing you as far as possible.

The Negotiation and Call Script

For this I want to use some key negotiation principles. Firstly make it fun – negotiation is a game remember? So have fun on the call and smile (the person on the other end of the phone will be able to tell). Secondly use powerful open questions, and no questions with a yes/no answer. When asking questions put the pressure on the other person to come up with a solution – make it their problem.

So call your credit card company and follow these instructions:

After the introduction and security checks the call should go as follows:

Call center: “So how may I help you?”
You: “Could you tell me the APR on my credit card please?”
Call center: “It’s XX% sir”
You: “Please reduce that for me”

At this point the call center may be a bit lost, but will likely ask why you want the rate reduced or will say it’s not possible. In response do not say things like “Are you sure?” or “Why can’t you reduce it?” as these offer an easy way out to end the call there and then. Instead tell them that you are a good customer, have been paying your card on time and would like the rate reduced please. After your explaination use the line “So, please reduce the rate for me”. The use of the word “So” is important as it implies everything that been said before it is true and justifies what is said after.

If they refuse again use the argument that you have been offered better rates elsewhere, but you don’t want the inconvenience of moving credit card companies. Use the “So…” line again. A lot of companies have a three “No” rule which means around the third “No” from either person, a different approach has to be used.

If the call center representative says they are not authorised to lower the APR then ask to speak to someone who is, and repeat the above script.

You are most likely to be successful if you also bank with the card company, have a good history of making payments on time on the card, have regular use of the card, have a good credit score, or any combination of those.

What if they say no?

So what happens if you are unsuccessful? Just try again. Yes, it’s that simple. You will most likely get through to another advisor, and hopefully one with greater authority to change your rate. If they say “I notice you called earlier today/this week” just answer “yes” and stay silent. What if you called earlier? It doesn’t change anything about this call, although they will hope it puts you off asking them to reduce the rate again.

It’s worth trying this!

Changing your credit card APR can make a huge difference to you, especially if you are in the process of paying off your debts. For example if you have a balance of $1,000, and minimum payments of 2% of your balance per month, a change of APR from 20% to 15% could reduce the actual amount of interest you pay in cash by up to 56%! (I’ve made some nice spreadsheets that do all the calculations for me in case you’re wondering!). So it’s well worth trying it out!

Tell me how you get on

Please do try this out and tell me how you get on. I would love to hear from people who have tried the above technique and got their rates down – and try it on multiple cards if you have more than one. If you don’t mind send me the figures on your balance, the minimum payment per month, and the old and new APR so I can work out the impact it will have on your finances. Email these to info@smartmoneymindset.com.

Good luck and remember the customer is always right!

Reduce the APR on Your Credit Card in 5 Minutes! is a post from: Smart Money Mindset.com

Here’s some advice on using negotiation tactics learnt from Indian parents to save yourself plenty of money.

One thing about being the child of Indian parents is that you get to see them in operation across a number of areas – feeding 200 members of family with a highly effective mobile kitchen infantry unit; fitting 200 members of family into a three bed-semi; getting every single auntie you’ve ever met to drag you onto the dancefloor at a wedding; organising an array of potential suitors when a daughter or son is ready for marriage (I’ve managed to evade this one so far!).

However the most impressive, and to be honest most uncomfortable, is when they are negotiating over buying something. You see being brought up in the UK has given me the fantastic quality of English politeness, which is respected around the world. However our desire to be what we think is polite often leads us to missing out on opportunities to save money.

I remember many a time wanting to curl up and become invisible when the following conversation would take place when on holiday between my mum and usually a shop keeper trying to sell some souvenir or gift:

Mum: “How much is this please?”
Shop keeper: “It’s $50 Madam” (or whatever the currency was)
Mum: “That’s too much, I’ll give you $5″

Now my wanting to be polite would never let me start the negotiation off there, but my mum had been genetically engineered as an Indian to know how to negotiate, and had also probably seen her parents do the same. And you know what? She might not have got it at $5, but most likely at $10 (still less than my starting price would have been), and interestingly that was usually the price the shopkeeper was aiming for anyway.

This tactic is known as an Opening Gambit in negotiation terms and stated simply means “Ask for more than you expect to get”. You will quite often surprise yourself with what is possible.

There’s a saying that goes “You never make more money per hour than when you’re negotiating”. If you think about it, it’s usually true.

What’s being too polite costing you? Let me know and what you could do about it!

Check out my upcoming Top Ten Indian Negotiation Tactics for more on this!

How Being Too Polite Costs You Money is a post from: Smart Money Mindset.com

Save Money on Virtually Anything With The Top Ten Indian Negiotiation Tactics (TINTs)

Here’s my top ten list of the Indian Negotiation Tactics (TINTs as I call them) that I have picked up off parents, uncles, and random relatives I’d never seen before or probably will again…

I’ve used these and similar tactics to negotiate anything from £5 off a hat to over £100,000 off an investment property. The key is to take one tactic and try it out next time you are buying something, get comfortable using it, and then add more tactics as you go.

Of course you probably can’t use these tactics in Harrods (although I’d be interested to hear if anyone has!) but without doubt these will save you money.

10. Be a reluctant buyer

Approach the negotiation as if you’re not really interested in buying and just looking. Any whiff of keeness on your part and the price automatically increases.

9. Get them to go first

Never ever give your price first – even if they have a price tag get them to start the negotiation with a price. If possible get them to give you an already discounted price before the negotiation starts. A good line is: “What’s the best price you could give me on this my friend?” (add the my friend bit in there to make it harder for them to be hard-nosed with you!)

8. Flinch and Use Silence

When you get the price flinch, as if it almost hurts to hear that price, and at the same time say something like “Wow!” or repeat the price… then stay silent, even if it gets uncomfortable. The last bit is key!

7. Always ask for more than you expect to get

Always set your price lower than you’re prepared to pay. If you set it at what you want to pay and they accept immediately you’ve lost out on saving some money!

6. Smile and make it fun

Negotiation is a game and treat it as such. Always be smiling and friendly, joke and make it fun. It’ll make the process more light-hearted and harder for the seller to resist your demands.

5. Bracket

Bracketing is where you make a counter offer so that the average of the prices is really what you’re prepared to pay. E.g. If the price is £20, and you’re happy to pay £15, offer them £10 and let them come down.

4. Take up lots of their time

The more time you take up, the more energy and effort the seller has invested in the negotiation, and the harder it is for them to walk away without getting something back for all that time and effort.

3. Remove authority

Make it so that you are not the decision-maker. e.g. “I have to check with my husband/wife etc.” That way you always appear friendly and blameless for all the negotiation hassle

2. Ask for that bit extra

Even once you’ve got down to almost agreeing a price and you sense the seller won’t budge, ask for something extra to seal the deal that is not cash. For example if you’re buying a bed and sidetables, ask for a lamp for the sidetables so you can read at night.

1. Be prepared to walk away

And finally, but most importantly – in any true negotiation you have to be prepared to walk away. The moment you think you want what’s on offer and won’t go back your mindset will change, and the seller will pick up on this. Always be prepared to walk. Very often you get the deal just as you’re walking out the door.

Let me know what you think of these!

Save Money With Indian Negotiation Tactics! is a post from: Smart Money Mindset.com

If someone offers you a guaranteed profit or return on your money what should you do? Yes, that’s right, RUN!!

You see in personal finance there are very few things that offer a guaranteed return, in fact I know of only one. (if you know any more please do tell me!). However that doesn’t stop people using phrases like:

• “You definitely get your money back and more!”
• “The stock market always goes up in the long-run”
• “Your money is safe”

When in reality nothing could be further from the truth. The explanation of a guaranteed return by saying “the stock market always goes up in the long-run” is probably the worst, if you don’t believe me ask someone who has spent the last 10 years making pension payments invested into the stock market and after management fees and the timing of his investments has less than he put in!

However there is one place you CAN get a guaranteed return, and that’s in making early debt repayments.

You see finance companies use the power of compounding against you (sign up for my Free Dangers of Debt Report on the right for more information), by charging you interest on interest on credit cards, loans and mortgages.

However by making extra debt payments you can use the compounding effect in your favour, and then some! Take the following simple mortgage example:

• Mortgage: £200,000, 7% interest, 25 years, monthly payment, £1413.56

Over the course of the mortgage the following happens:

• Pay the bank: £424,067
• Pay off what you borrowed: £200,000
• Pay in interest: £224,067

Let’s say that more clearly, you will pay the bank over double what you borrowed! The majority of that being interest!

However make overpayments of just £300 a month and this happens:

• Mortgage paid off in 16.4 years
• Almost 9 years off the mortgage!
• Total future payments saved: £145,597

Yes, for £300 a month you get £145,597 back as your return. That’s a guaranteed return of 7% for those 16.4 years, the same 7% the bank was charging you.

Certainly looks more attractive than the interest you’re getting on your savings right?!

What guaranteed return could you get on your money using this method?

Let me know what you think below!

A Guaranteed Profit On Your Money? It’s Possible! is a post from: Smart Money Mindset.com