Useless Financial Advice

The June 2012 issue of Smartmoney magazine featured two popular types of finance articles – a how-to piece about saving money on health care and an interview with a policy expert about rethinking retirement.  Both of these are big topics in the world of finance; after all rising health care costs and inadequate retirement savings are two things that affect each and every one of us at some point.

I admit that the health care article was thoroughly researched.  In addition to standard advice about negotiating with your doctor and finding cheaper meds via mail-order or getting generics, it has some tips for questioning tests ordered by your doctor, going to physical therapy and timing your dental work in one calendar year to save on your federal tax bill (provided your medical bills exceed 7.5% of your adjusted gross income).

The interview with psychologist Laura Carstensen, an expert on aging, focuses on making the most of retirement.  She offers several “solutions” for overburdened social security system, from increasing the retirement age to creating a “phased retirement” based upon a moderately paced career path with more flexible schedules (assuming this will cause less burn-out and allow us to enjoy work longer).

In my opinion, these types of advice articles, and there are many similar ones that periodically crop up in print and online, are practically worthless because they ignore real solutions that would actually help the majority of people. 

I understand that there are times you can negotiate with your doctors and hospitals.  However, when you’re really, really sick or your loved one is truly sick and facing astronomical costs, are you in a frame of mind to negotiate care and bills?  Most people are not and should not have to. When my European friends have to undergo major surgery or treatments, all they have to focus on is getting better or caring for their loved ones.  When you’re scared and facing new and complex medical terminology, the last thing you want to think about is how you’re going to pay for care.   These types of articles ignore the human side of things, as if it’s negotiating for medical care is the same as a cable bill!  You can throw all the great advice about getting a detailed bill and scanning for medical overcharges but who the hell wants to deal with that during a time of crisis? (And while I’m ranting, who the hell has the time to figure out if their anesthesiologist is also “in network” like their doctor or hospital?)

A friend had a child in intensive care, racking up hundreds of thousands in bills.  Although she had insurance, she still had to pay quite a lot out of pocket.  The worse part is that she did not bring home a completely healthy child.  As she received mysterious bill after bill, she also had to focus on caring for her sick child.  I’ve read similar stories of parents desperately fundraising for their child’s care.  I can’t believe that anyone should have to worry about finances at a time like that.  It’s fine that some people pay more for cable or airplane tickets because they’re bad at negotiating or comparison shopping.  However, this should not be a consideration when it comes to essentials like health care.

In the retirement article, one key point is that we must work longer to make our finances last longer.  The interview states that 88% of people 65 to 74 are healthy enough to work.  Great advice, in theory.  The reality is that the majority of older people who want to work longer simply can’t.  While some climb high enough up the ladder to enjoy respect or can jump into consulting, many more people face age discrimination and are the first to be laid off.  It’s great that 88% of older people could work; however, how many companies are eager to hire these people? The expert also states that longer careers would be possible if we all didn’t work so hard in the “middle” years.   While  I do know people who have opted out to go back to school, which is not really a break, or to travel, most people who ramp down or opt out of work do so to care for kids or parents.   The majority of these people don’t find great jobs after their “break”.  I’m not saying that we can keep the current retirement age or benefits as is, but the typical solutions given in money magazines are not very realistic either.

The lack of reality is what bothers me most about discussions addressing health care in the U.S. and retirement.  They seem to be made by the upper echelons who have little or much less to worry about in terms of finances, with little regard for how the majority of people will be affected.

I’m even more bothered that many regular middle-income people I know seem to feel the same way, especially if they haven’t been personally affected by serious health issues or reached retirement age.  I want to know if they will feel the same if/when they face a serious illness or if they have a sick child.  And when they reach age 70, I wonder if they will re-think how great or easy it will be to work longer….maybe they’ll get lucky and Walmart needs a greeter.

June 22: Only Negotiate The Big Stuff

Every Wednesday, I’ll (try) to post up a Simple Living Tip, with an emphasis on tips that can be done while living a more traditional 9-to-5 life. 

In an ideal world, you’d negotiate everything from the smallest purchase to salary.  My belief is that we all need to learn to like (love?) negotiations because if you don’t learn this very important skill, you will pay more for almost everything and not be able to leave your 9-to-5 life or even retire comfortably.  Note: Remember these tips are for those who haven’t made the big escape from traditional work life and are more likely to be in urban settings.

However, we all have time limits and some people just hate negotiating so I’m attempting to provide some “rules” that will make negotiating easier and do-able when you have limited time:

1. Negotiate only on purchases over a certain amount. You decide the amount that is worth it for you but I wouldn’t advise over-haggling on $10 items. 
2. Negotiate your salary.  If you don’t negotiate anything else, the one thing you should do is negotiate your salary.   This doesn’t only apply to money. You can negotiate benefits such as vacation time or tuition reimbursement, etc.  Despite my introverted nature, I am very proud that I’ve negotiated my starting salary at my current company and this has translated to higher earnings over time.
3. Make negotiating a fun game. Repeat the mantra “It doesn’t hurt to ask” over and over in your head. 
4. Pick a negotiations method – by phone, in person, or in writing (email or mail even).  If you really hate negotiating, email is probably the easiest.  I’ve successfully negotiated everything from medical discounts to car prices and even salary via email.  For me, asking in person is the hardest because I think the other person (usually a salesperson) is judging me.  If the amount is big enough, however, I will ask!  Pick the easiest method for you and skip the rest.  Note: For salary, I presented my case via email but at some point, this should involve a person-to-person discussion. 

Do you have great negotiating skills?  Any negotiating/simple living tricks? Share your success stories and inspire the rest of us!

Just Ask! Pushing My Luck Saves Me Money

I’ve been wimping out on my Just Ask! Negotiations challenge.  After a recent small victory over a $40 bill, I haven’t called the cable company to re-negotiate and I was this close to not asking for a fee waiver that would save us $140.  Why? Because I have a lot of pride and the vendor has been more than generous with discounts and fee waivers of late. True, this vendor has gotten a lot of our hard-earned cash this past two years but I still didn’t know if I should push my luck by asking once again.

Well, I sent off a short email.  I thanked them for their work and cautiously broached the subject. They quickly waived the $140 fee.  Success!

One of these days I should add up the savings due to my Just Ask! mindset.  Off the top of my head, I saved about $1,000+ on car repairs, at least $2,500+ in medical-related costs, and a good chunk of change for service providers like cable and phones.  Although not officially part of this self-challenge, my husband has also saved us money by asking for discounts here and there. 

As I mentioned, sometimes (oftentimes) my resolve waivers.  However, this blog holds me somewhat accountable and my string of successes reinforce the importance of asking. Lesson Learned:  You may think you’re pushing your luck, but it’s all in your head.

Just Ask…The Friendly, Loyal Customer Way To Negotiate

Since last year, I’ve challenging myself to negotiate, or just ask, for discounts and deals.  While I thought this would be a straight-forward challenge,  I’m realizing that there are many, more things to learn in my mission to become a master negotiator.

My two recent successes are:

1 ) Time Warner Cable – Got free DVR service for 3 months ($15/mo savings)

2 ) Verizon DSL – Knocked $11/month off high-speed DSL, without signing up on a new contract or bundling

I’ve had mixed results with both of these companies.  Sometimes I get a discount; other times their Customer Service representatives have stood firm.  Before calling, I always arm myself with ads from their latest promotions and competitor offers.   I start off as polite but I admit that I am usually very ready to get mad or indignant. 

This time was different. 

My new approach? While I did have competitor offers on hand, I was in a much more friendly mood.  I told them about better offers from their competition.  Then I listened as they rattled off all the benefits of their company, tried to get me to bundle my services, and told me all the ‘bad’ things about the competition.  I expressed my disappointment that long-time, loyal customers never get the best deals.  At that point, both Reps decided to “see what they could do for me” and gave me the discounts.   I just wish that Time Warner would offer a discount without the pathetic 3 month limit.

I’m not 100% sure if my new approach will always be more successful. A lot will depend on the individual customer service representative.  Maybe the most important fact is this:  I felt like I had a human conversation with a nice, helpful person.  Plus, I don’t dread having to call Time Warner back in 3 months to “see what else they could do”.  If you’re the type who dreads negotiating, this friendly approach might be best for you.

Just Ask…Saves Us $1,200

This Just Ask! Negotiations experiment is becoming quite a learning experience.  Basically I’m challenging myself to “just ask” for discounts and deals whenever possible.  This is not as easy as it sounds because it’s not really in my nature to ask.  If I’m expecting negotiations, in the case of car purchases for example, I am prepared and eager to go.  However, if an unexpected opportunity comes up, I usually let it go.  I probably should carry around a big “Just Ask” post-it note with me at all times.

This recent success  taught me that it’s okay to ask more than once, even if you already got a discount.  Normally I’m so happy to get one discount that it never occurs to me to ask again.  That would be pushing my luck, right?  However, situations can change and therein lies the opportunity. 

Recently, a medical clinic caused me a minor inconvenience.  It was minor in the grand scheme of things but at that moment, it seemed like a big roadblock.  The doctor had already offered me a 20% discount on the procedure plus an additional $300 off.  At the urging of a good friend, an expert bargain hunter herself, I sent off an email expressing my frustration and asked that they “do something” to compensate me.  I truly did not know what to expect, hence my wishy-washy request.  At most I expected them to increase the discount.  Instead, they offered to give me a full refund — a $1,200 savings!

A similar thing happened to my husband, too. In his case, he had a serious complaint about an unscrupulous web-hosting company.  After several emails back-and-forth, he won. Many would have given up but he was fighting back on principle and to save us some money.  I’m very proud of him.

So I’m learning that it’s okay to ask more than once, hesitation is a great negotiating tool, , and negotiating opportunities are everywhere.

An Aside: Some people may wonder why I lump negotations under the Simple Living category.  The art of negotiations is definitely not so simple and, as I’m learning, there is always room for improvement. However, without solid negotiating skills, you’re going to lose out financially in many situations whether it’s the cable company, auto repair or home buying.  Those are big money leaks that could compromise your ability to enjoy a simpler, better life.

Just Ask…Saves Me $1,000 On Car Repairs

The title of the post is a bit misleading since the savings occur not so much to my negotiating savvy as to a momentary hesitation and near-tears panic…

I’ve been challenging myself to negotiate for discounts (or Just Ask!)  in all situations.  Nowhere is this more important than car repairs.  As I was leaving work on Friday, my car stalled.  AAA towed me to a nearby mechanic.  After an hour of diagnostics, they determined that the problem was a faulty computer, or ECM, that affects 2005-2007 Corollas. There is a technical service bulletin for a free replacement of this part as long as it is still under warranty; if you’re unfortunate to experience this issue after the warranty period, you’re screwed.  Toyota has kept this issue hush-hush despite the fact that the stalling can occur while the car is in motion!

When the mechanic showed me the technical bulletin, he quoted me a price of approximately $1,000. The ECM itself is $788 plus labor and taxes.  At this point, my recollection of events is a bit blurry.  I became upset about the $1,000 price tag.  I remember getting indignant about the pricing since the problem is clearly a defective product.  I blurted something about not being able to afford this and having to call AAA to tow the car again.  My parents live nearby and I figure I could get their advice and buy some time to make a decision.  At my hesitation, the mechanic said he’ll check again. After 1 minute, he returned and said that the repair should be covered under warranty and that I can get it fixed for free at a dealership.  I’m happy he told me BUT I was thisclose to authorizing the repair. If not for my hesitation, or what I would like to call my “Just Cry” moment, I may have been on the hook for an expensive under-warranty repair! 

The car was repaired by the dealership and is now working fine.  Unfortunately, the ECM issue has happened to me before on the same car.  This is something that is supposed to be a simple one-time fix so now I have to write some letters to Toyota headquarters and document the situation in order to protect myself (and warn others).

I guess the moral of the story is that even at your weakest moments, hesitation is a powerful negotiating tool.  I guess the near-tears tactic may not work if you’re a burly male but I’m an average-looking older female so you don’t have to be a cute young woman either.  And it helps that I was not faking my distress. 

Negotiating Success And Failure On The Same Day

Last week, I asked my doctor for an additional discount on an upcoming surgery (not covered by insurance).  Today they agreed to the discount. We’ll save an additional $300 on top of a 20% discount. Normally I wouldn’t have asked since they already gave me a discount. However I was holding myself to my Just Ask! negotiations challenge and the upcoming surgery was an additional unforeseen cost.

On the other end of the spectrum, I failed to get a discount at my dentist.  This was my second attempt but they wouldn’t budge.  Even though money magazines and blogs often suggest bargaining on medical costs, I personally haven’t had much success! At most I’ve gotten a 5% discount.  

The difference between my doctor and the dentist is a personal relationship.  We’ve spent quite a bit of money at my doctor over the past year and he knows we’ve been a “cash cow”.  I also believe that he and his nurse do sympathize with our situation on a human level.   In contrast, I don’t really know my dentist.  I’ve been going to the same dental clinic for 6+ years but I’ve seen different dentists and the  majority of the cleaning is done by the hygenist.  When I asked for the discount, I’m talking to a receptionist or billing person who only sees me as one of hundreds of patients.

Free Money Finance had an interesting post and discussion about a reader’s personal experiences with negotiations.  The reader felt like he was less successful than others when it came to getting discounts.  Was he giving the wrong vibe? Was he too nice or too rude? I do think that how you ask makes a big difference.  I have more success if I’m nice and smile.  Sometimes I have to get tougher.  On bigger items like cars, healthcare and salary, I’ve succeeded when I’ve had research to back me up.  Oh, and show confidence at all times!

How about you? Have you noticed a pattern of success and/or  failure in your own negotiations?