Chapter 5
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Comparison Shopping
◦ Compare Brand Names and Sizes
 Unit Price
 Remember: Time is an Opportunity Cost
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Grocery Stores
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Club Warehouse Stores
◦ Carries largest variety of food brands, foods, and
services
◦ Limited in Brand Choice and Items
◦ Cheapest place to buy food
 Sold in Large Quantities
 Opportunity Cost:
 Must have place to store
 Money saved up in inventory of food
 Often a membership fee
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Convenience Stores
◦ Open 16-24 hours a day
◦ Limited in selections
◦ More expensive than grocery stores
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Brand-Name
◦ Well known throughout the country or region
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Private-Labeled
◦ Produced specifically for that store
 Food Club, Great Value, Kroger
◦ Cheaper than brand name
◦ Manufacturer?
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Bulk Foods
◦ Typically: Larger quantity = Lower price/unit
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Offered by brand name manufacturers
Can save you large amounts of money
HOWEVER
◦ Opportunity Cost: Money Saved vs. Time Spent
collecting
◦ Often requires to buy more than needed
◦ Makes consumer buy brand name products
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Advantage Card/Loyalty Card
◦ Lower prices if used
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Criticisms
◦ Customers paying actual price / non-cardholders
paying higher prices
◦ Tracking spending habits
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Price not the only factor in determination
Style
◦ Changes with recent trends
◦ Name brand vs. Store brand (cheaper)
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Durability
◦ Purchasing for Service Flow (amt of time you are able to
use the item and value placed on use)
◦ Certain fabrics last longer
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Cost of Care
◦ Dry Cleaning (more costly)
◦ Hand Wash Only?
 Opportunity Cost
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Clothing costs gone down over the years BUT
can still save money
Consignment Stores
◦ Used Clothing Lower Prices
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Buy on Sale
◦ Holiday Shopping Sales
◦ Seasonal Sales
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Shop Online
Avoid Designer Labels
Make a List Before Shopping
◦ Avoids Impulse Buying
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Advantages:
◦ Less UP FRONT Costs
◦ Don’t pay Maintenance Costs or Property Taxes
◦ Mobility
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Disadvantages:
◦ Nothing when decide to leave
◦ Bound by Lease Agreement
◦ Often cannot change appearance
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Advantages:
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Equity (savings account)
Investment (Appreciate)
Can make look as you choose
Income Tax Cuts (Interest is Tax Deductible)
Disadvantages:
◦ Large Down Payment (usually 20%)
◦ Property Taxes, Home Owners Insurance, Possibly
Mortgage Insurance
◦ Maintenance Costs
◦ Housing Market (value, selling, etc.)
◦ Must qualify for Mortgage
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Know Your Lease!! And Follow The Lease
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Pay Security Deposit
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Rights:
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Responsibilities:
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Landlord Responsibilities:
◦ Agreement (usually) between 1 to 3 years
◦ Money kept by landlord in case of skipped rent or damage to the rental
◦ Use apartment as stated in lease
◦ Privacy
◦ Pay rent on time
◦ Take care of property
◦ Notify landlord if repairs needed
◦ Apartments must have minimum services
◦ Obey building safety laws
◦ Must make repairs within certain amount of time
 Tenant can make repairs and withhold rent of repairs not made quickly
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Avoid These Clauses:
◦ Confession of Judgment Clause
 Landlords lawyer can plead in a court case FOR YOU if owner
feels their rights been violated
◦ Inability to Sue Clause
 Give up your right to sue owner for negligence
◦ Arbitrary Clauses
 Owners right to cancel lease for any reasons
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Try to Have Added These Clauses:
List of what comes with rental
List of community facilities you get to use
Other promises made by owner (painting, etc.)
Right to cancel lease for emergency (payment stated in
lease)
◦ Right to change rental to suit you (ceiling fan, shelves, pics,
etc.)
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No more than 33% towards Housing
Comparison Shop, Pre-Qualify, and sign a Mortgage
◦ Long term installment debt (Principle + Interest)
◦ Escrow Accounts
 Pay for Homeowners Insurance (required), Property Taxes in Mortgage
Payment (Mortgage Insurance)
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Closing Costs
◦ Extra Fees to Buy a House
 Check on Title, Appraisal, Loan App, Credit Check, Inspection, Taxes,
etc.
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Points?
◦ Fees paid to lender when don’t feel interest is enough to make
profits.
◦ Each point equals 1% of purchase cost of home
 EX. 1 point on a $100,000 mortgage = $1,000
◦ Must be paid up front
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New or Used?
◦ New cost more but less repairs
◦ Used
 Get the Car Facts – Look at the history or maintenance,
accidents, etc.
 Have looked at by independent mechanic
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Registration Fee
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Extended Warranty
◦ State fee to license the vehicle
◦ Usually annually, sometimes biannually (by state)
◦ Varies based on type, weight, age, and value
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Protection for major repairs
Miles and/or years
Additional money to extend
Lemon Laws also provide protection
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Normal Maintenance and Major Repairs
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Depreciation
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Insurance
◦ Depends on how much driven and how well taken care of
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Decline in value over time
All durable goods deteriorate over time and lose value
Technology makes depreciation occur
Wear and tear
General rule is about 20% a year first 2 years
◦ REQUIREMENT IN STATE OF OHIO FOR LIABILITY
 Pays any bodily or property damage you cause if in accident
◦ Classify based on age, gender, and marital status
◦ Based on demographic statistics
◦ States have Price Limits that can be charged
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Type of Car
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Where you Drive
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Uses of the Car
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Marital Status
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Safety Record
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Grades
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Number of Drivers
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Age
◦ Safety record of car, costs to repair, etc.
◦ Theft rate, population, etc.
◦ How many miles a day do you drive the car
◦ Married have lower accident rates than single
◦ Your driving history
◦ Most companies offer good student discounts. EVEN THROUGH COLLEGE!!
◦ How many drivers use the car
◦ Younger drivers in more accidents = higher insurance rates
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Liability
Collision
Comprehensive
Uninsured/underinsured motorist
Bodily Injury
Rental/Towing