Chapter 11 Buying with
Cash and Credit
Mr. Newman
Featuring: Stephanie Pitera
and Lindita Cosovic
Wise Buying
• Once you have your budget,
shopping comes into play…
Whoa… Slow down crazy lady!!!
BUT I LOVE SHOPPING!!!
Okkkkkkk… Anyways.
• Its not always easy to be a
wise shopper…
• So many choices or goods and
services
• For example the Supermarket
• Shelves are stocked with all kinds of:
−
−
−
−
−
−
Food
Packaging
Quantities
Varieties
Flavors
ETC
I KNOW THAT’S WHY I LOVE IT!!!
Ok, well then…
• Here are some tips for wise
buying…
I’M SO EXCITED!!!
Wow… This woman
LOVES shopping…
• Wise Buying Tip #1 Knowing
what you want and what can
afford…
• Again we have the example of
this…
Wow… This woman
LOVES shopping…
• We know which one I want…
(HINT \/ \/ \/!!!)
• However, I drive this one \/ \/ \/ \/
Knowing what you want
and you can afford…
• Like it or not, often times we have to settle
for the less expensive model
• The same goes for the restaurant we eat in
or the clothes we wear.
• You must be SENSIBLE with your
purchases.
Sensible…
Not So Sensible…
Knowing what you want
and you can afford…
• Sometimes it is best NOT to make a
planned purchase
• It is as important to know what you can
afford as to know what you want
Wise Buying Tip #2
• Wise Buying Tip #2 Plan Ahead. Do
NOT buy on impulse.
• Make a list of things to buy and shop around
• Compare prices and brands
• Different places= different products= different prices
Wise Buying Tip #2
• Wise Buying Tip #2 Plan Ahead. Do
NOT buy on impulse.
• It could be foolish to buy something because it is on sale…
• Would you buy a lawnmower on sale if you had no lawn?
• Think to yourselves how many unused tools, sporting
equipment, kitchen utensils, and clothing that were
bought just because they were on sale.
Wise Buying Tip #3
• Wise Buying Tip #3 Read Labels, Tags,
and Guarantees
• A lot of valuable information is on a product’s label, tag or
guarantee
• For Food, a label must state the weight, ingredients, and nutritional
facts about the product
http://www.mcdonalds.com/us/en/food/food_quality/nutrition_
choices.html
Wise Buying Tip #3
• Wise Buying Tip #3 Read Labels, Tags,
and Guarantees
“In the case of canned peas…”- which of the following will
the ‘smart consumer’ buy?
THE CHEAPEST ONE!!!
• CANNED PEAS ARE ALL THE
SAME…
• OH STOP IT WITH THE
ORGANIC NONSENSE!!!
Wise Buying Tip #3
• Wise Buying Tip #3 Read Labels, Tags,
and Guarantees
• A lot of valuable information is on a product’s label, tags
or guarantee
• For clothing, labels state where the item was made, the materials
used in its manufacture, and cleaning instructions.
• If a article of clothing requires dry cleaning, it will ultimately be more
expensive to own then a similar article of clothing that is machine
washable
Wise Buying Tip #3
• Wise Buying Tip #3 Read Labels, Tags,
and Guarantees
• A lot of valuable information is on a product’s label, tags
or guarantee
• For electronic appliances such as dishwashers, air conditioners, heat
pumps, furnaces, refrigerators, etc, have the EnergyGuide Label
• The EnergyGuide Label provides an estimate of the yearly cost of
operating the appliance and how that appliance compares in energy
usage with competing products
Wise Buying Tip #4
• Wise Buying Tip #4 Watching for
sales, specials, and clearances….
• You can save money by buying items on sale…
THAT’S WHAT I LIVE FOR!!!
Wow… So yeah, Wise
Buying Tip #4
• Wise Buying Tip #4 Watching for
sales, specials, and clearances….
• A sale item is not worth buying if you don’t need it (DUH)
• Many stores run sales following Christmas and national
holidays such as Presidents’ Day.
• By waiting for these sales, considerable money can be
saved
I THINK I’M GOING TO BURST!!!
Intense… Continuing
Wise Buying Tip #4
• Wise Buying Tip #4 Watching for
sales, specials, and clearances….
• Consumers can also take advantage of “Going Out of
Business” Sales or “Seasonal Clearances”
• Prices at such sales are often well below their non-sale
prices
• These sales can be found in newspapers, often times with
coupons for additional savings
Intense… Continuing
Wise Buying Tip #4
• Wise Buying Tip #4 Watching for
sales, specials, and clearances….
• In addition to sale items, you want to know more about the
items that are not on sale.
• One of the major sources of information about products
and services is advertising
Advertising
• Advertising consists of paid
announcements (ads) that call
attention to a product or service
in hopes of attracting
customers
• The purpose of advertising is to
increase sales by creating
demand for the advertised
products
Advertising
• Advertising can be seen or heard
through the internet, radio, TV,
newspapers, magazines, handed out
flyers, mail, billboards, instore
displays, window displays etc, etc,
etc.
• With this all said, we have various
forms of advertising which include…
Appeals to Reason, Need, and
Interest
• These ads all appeal to reason, need, and
interest. They are simple, yet catch the
buyer’s attention and are easy to
understand.
Appeals to Reason, Need, and
Interest
Appeals to Reason, Need, and
Interest
Examples of Appeals to Reason,
Need, and Interest (Want)
• http://www.youtube.com/watch?v=IocCC1jeTY
• http://www.youtube.com/watch?v=k7nsBo
qJ6s8
• https://www.youtube.com/watch?annotatio
n_id=annotation_660006&feature=iv&src_
vid=h8-avPUxyno&v=9hhjjhYGQtY
Appeals to Vanity
• These ads are designed to make people believe
they will look or feel better. These ads often
feature attractive people, and make the
consumer believe that if they use the product,
they will look or feel just as glamorous.
Appeals to Vanity
Examples of Appeals to Vanity
• https://www.youtube.com/watch?v=H6Z6Q
hpCH9g
• http://www.youtube.com/watch?v=ZCwDb
AvzeL0
• http://www.youtube.com/watch?v=1Ig5gTg
OkRw&feature=related
• http://www.youtube.com/watch?v=6DriBY
QvG_4&feature=related
Exaggerations or Half-Truths
• These ads imply that great changes will occur if
the consumer uses the product. However, the
messages are exaggerations or only half true.
Cocaine drops will not stop a toothache, the skin
cream will not eliminate wrinkles in minutes, and
Hydroxycut will not help consumers to shed
pounds instantly.
Exaggerations or Half-Truths
Examples of Exaggerations or Half
Truths
• http://www.youtube.com/watch?v=TD8Km2L
Xyng
• https://www.youtube.com/watch?v=FWAFOP
ntWYc
• http://www.youtube.com/watch?v=aMqd5EQ
XD-g
• http://www.youtube.com/watch?v=_oACRtQp-s
• http://www.youtube.com/watch?v=cu8XNJm
QsCI
Appeals to Emotions
• https://www.youtube.com/watch?v=nTN4DBogHo0
• https://www.youtube.com/watch?v=p31I9YgnIeM
• http://www.youtube.com/watch?v=Eyu3OqP9S-U
• These ads all appeal to emotions such as
love, grief, and sorrow. The charity ads
make consumers want to donate money to
stop the suffering of the people in the
advertisements.
Appeals to Emotions
Appeal to Emotions
Examples of Appeals to Emotions
• http://www.youtube.com/watch?v=yOQk_p
WmisA&feature=related
Desire to Conform
These ads all represent Desire to Conform. These
ads make the viewer want to be like everyone
else. Silly Bands and Blackberry are considered
items that “everyone has.”
Desire to Conform
Examples of Desire to Conform
• https://www.youtube.com/watch?v=hQw3m
VWXncg
• http://www.youtube.com/results?search_qu
ery=Gap+Khakis&oq=Gap+Khakis&aq=f&a
qi=&aql=&gs_sm=3&gs_upl=19683l21691l0
l21957l10l8l0l0l0l0l0l0ll0l0
• http://www.youtube.com/watch?NR=1&feat
ure=fvwp&v=m9UYOURsnR0
Identification
• These ads use celebrities like Vanessa
Hudgens, Jessica Simpson, and Ellen
DeGeneres to promote products.
Identification
Examples of Identification
• http://www.youtube.com/watch?v=IpfzaqIuR34
• http://www.youtube.com/watch?v=AiFQ408da
Yc
• http://www.youtube.com/watch?v=zbavu2AlME
• http://www.youtube.com/watch?v=rhDH6H2V0Q
• http://www.youtube.com/watch?v=jIntO6yCflI
• http://www.youtube.com/watch?v=AIEpiyh3dI&feature=related
Getting something for nothing
Examples of Getting Something For
Nothing
• http://www.youtube.com/watch?v=NJEKqI1
e714
• http://www.youtube.com/watch?v=LVx6lp5I
C6o
• https://www.youtube.com/watch?v=bzdyp9L
7se8
Brand Names
• These advertisements all promote popular
brand names. They are simple ads, but
the consumer immediately recognizes the
product because of the company’s name.
Brand Names
=
=
House Brand- Chain Store Brands
Generic Brands- Same product but without well known or
household name
Examples of Brand Names
• You Pick http://www.youtube.com/
Bait and Switch- store (or in this case online)
advertisements of a well known product offered at a low
price to attract customers(bait) but when in the store (or on
website), the sales person sells them another product
because the product is sold out or is of less quality then
other similar products
Examples of Bait and Switch
• http://www.youtube.com/watch?v=sgz6W0d
CQCY
• http://www.youtube.com/watch?v=qQrpA5E
W4Jw
• http://www.youtube.com/watch?v=3Blk3q2e
X7Y
Super Bowl Ads
• http://www.superbowl-commercials.org/
• http://www.nola.com/tv/index.ssf/2012/02/s
uper_bowl_2012_ads_the_comple.html
3 Advantages of Advertising
1. Advertising stimulates competition and
results in lower prices for consumers
2. Advertising stimulates demand therefore
encourages large-scale manufacturing
3. Advertisers pay for almost all of the
programs that we watch on television or
listen to over the radio
3 Disadvantages of Advertising
1. Since the purpose of advertising is to sell
goods, the advertiser is not always concerned
with the best interests of the consumer
2. It is expensive for firms to advertise and thus
drives the price of the products up with cost
3. Advertising brand names reduces competition
and makes consumers believe one product is
different/ better than products in competition
Federal Agencies for Assisting
Consumers
•
Consumer Product Safety Commission
– Monitors the safety of 15,000 products
– They issue recalls of any dangerous products
• Food and Drug Administration (FDA)
– Protects consumers against dangerous foods, drugs, and
cosmetics
• US Department of Agriculture (USDA)
– Inspects and regulates the grading of meats, fruits and
vegetables, frozen foods, and canned products
• Federal Trade Commission (FTC)
– Monitors advertising and can take action against companies that
issue false or misleading statements about their products or
services
Examples of State and Local
Agencies for Assisting Consumers
•
Board of Health
– Monitors the health and well being of a town or state
• Departments of Licensing
– Licensing departments are the first line of quality for
professionals such as teachers, doctors, lawyers, etc
• Office of Community Affairs
– Assists consumer affairs to assist consumers and provide them
with education
Examples of Nongovernmental
Consumer Service Providers
•
Consumers’ Research or Consumers Union
– These two groups test products independently of the
government and companies to give an honest rating
– Their findings can seen in Consumer Reports/Research
• US Pharmacopoeia
– Test drugs and vitamins. Ones that pass get a USP mark
• Underwriters Laboratories
– Tests electrical equipment for fire and shock hazards
– Ones that pass get a UL mark
Business and Professional
Associations
•
American Medical Association (AMA)
– The AMA is an association of doctors who produce their own
medical journal and are an association of accomplished doctors
• American Dental Association (ADA)
– Gives approval for dental products which help prevent cavities
• American Bar Association (ABA)
– Makes recommendations as to the qualifications seeking
employment as a lawyer
Personal Finance and Credit
•
Installment Plan is a method of buying something on credit
with scheduled payments over time
• A contract is signed for an installment plan which states the
following items
– A statement showing the selling price of the item, size of the down
payment, total finance charges, and final selling price
• Charge Accounts are offered in large department stores or
chain stores in order to keep the same customers
– With a charge account, title to the merchandise passes to the buyer
with a promise to pay it back in usually 30 days of the bill date
Personal Finance and Credit
• If you pay your bill off in time, no finance charges, extra
money paid on these products for interest, need to be paid
• A Revolving Charge Account entitles buyers to repay a
portion of the balance every month instead of in full
Personal Finance and Credit
• Credit Cards are the little plastic cards which came into
existence in the 1960’s and 1970’s with “Diner’s Club”
• Today, Visa/MasterCard is the biggest credit card company
by the amount of transactions
• American Express is the biggest in terms of American Dollars
spent
Personal Finance and Credit
• Credit Cards can be discussed on many levels of charges,
advantages, disadvantages, perks, frills, etc
• Annual Fees are the costs for that credit card from year to year.
American Express has them for all AMEX cards
• Late Charges are charges that incur if the cardholder does not
pay anything towards their balance within a specific day (30)
• Interest Rates incur if the entire balance is not paid off that
month. They are usually 1.5% and begin to be the reason for
why people get into trouble with their credit and debt
Personal Finance and Credit
• Debit Cards are the most recent credit products offered by
banks in order to pay for goods and services
• Debit Cards automatically deduct cash out of a savings or
checking account immediately as they are charged.
• Fees can occur if there is no money in the user’s account in
order to pay for these goods or services
• These cards have taken the place of formerly popular items
such as paper checks and ATM cards
Personal Finance and Credit
• Personal Loans are given to a borrower based on that person’s
income, savings, investments, etc. The more someone is worth,
the more they will be loaned
• Home Mortgages are loans to finance the single biggest
investment in most people’s lives, their home
– Mortgages are long term loans with terms of usually 15 or 30 years
• Collateral is the security one gives the loaner if they default, or
do not pay back their loan back.
– In the case of a mortgage, the collateral is the actual home
Personal Finance and Credit
• Variable Rate Mortgages are a new type of mortgage in which
the interest rate the bank offers is extremely low, but during the
course of the loan, the bank can raise the rates
• DO…NOT… EVER… TAKE THIS LOAN
• These mortgages lead to the housing market crash of 2008 because
banks raised these rates to an incredibly high rate
• Home Equity Loans are loans people take out against the
amount they have already paid against their mortgage
– For example-$200,000 paid on a $300,000 can be taken out again
• Home Equity Loans are popular because:
– Current Federal tax laws make these loans 100% tax deductable
– Home Equity Loans can be obtained at lower rates then other loans