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6 Sales Traps You Need To Avoid If You Want To Get Rich

6 Sales Traps You Need To Avoid If You Want To Get Rich

Most of us have an inner desire to develop wealth, primarily because it affords us the type of financial security that makes life easier. There are a number of misconceptions that surround the accumulation of wealth, including the assertion that people can’t get rich simply because they earn too little. This is a consequence rather than a cause, and the fact remains that people struggle to accumulate wealth largely because they spend too much time and money on things that lack value.

A reckless approach to expenditure or a lack of focus will undermine any attempts to generate income, whereas frugality and hard work will drive success. In practical terms, those with a desire to build wealth must avoid prominent sales traps. These schemes are used by companies across multiple sectors to target those with a propensity to spend impulsively, although they rarely offer anything of tangible or long-term value. This is also an issue with short-term investment plans, so you must tread carefully when faced with the following examples:

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1. Marking down a marked up price

When companies or distributors hold sales events, you could be forgiven for thinking that any subsequent purchases represent far greater value than usual. It is not unusual for sales teams to inflate the price of a particular product in the weeks prior to a sale, however, before reducing this drastically and creating the false impression of value. Although huge reductions in excess of 50% are extremely enticing to customers, this means nothing if the original sale price was manipulated to mislead individuals about a particular product’s value. To avoid this, you need to take responsibility as a customer, recognize the dangers and shop around aggressively for the best possible deal. A specific percentage discount does not translate into pure savings, as it simply reduces either the manufacturer’s suggested retail price or the one initially set by the distributor. By comparing prices across the market, you can delve beyond individual deals and achieve value for your hard earned money.

2. The lure of exclusivity

Online price comparison technology has proved extremely challenging to retailers, as it creates an informed and motivated army of customers who are less susceptible to traditional sales techniques. This is where the concept of exclusivity comes into play, as this is a ploy used by stores to justify high price points and deter consumers from shopping around. By marketing goods as part of an “exclusive line” that is not available anywhere else, retailers can drive a far harder bargain and force the hand of impatient customers. This has proven to be a successful scheme, especially when it is aimed at impulsive spenders who are in the market for a specific product. Exclusivity deals are usually restricted to specific regions, meaning that you may be able to find your chosen product elsewhere. These deals are usually signed for a fixed period of time, and once this has passed the product will become available in other stores nationwide. Patience is therefore crucial, while more flexible customers can also shop around for a similar product that serves the same purpose.

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3. Persistence wins the day

The majority of successful salespeople are aggressive self-starters, meaning that they are generally self-reliant and persistent in the pursuit of their goals. This leads us to another common sales trap, through which customers are implored to make a purchase as a way of satisfying a relentless and driven sales effort. Although this is an obvious trap that relies more on direct communication and tenacity than psychology, customers can easily be influenced to buy if they feel pressured by the attentions of a sales representative. In this instance, the key is to remain grounded and communicate authoritatively with salespeople. If you have no need or desire for a specific product or service, remember that this is unlikely to change throughout the course of any dialogue. By focusing on this and communicating your stance clearly to a sales team, you can quickly discourage them from pursuing your custom. Time represents money to salespeople (especially those who rely on commission), so they are unlikely to chase leads where the customer shows a clear and unwavering lack of interest.

4. The art of accessorizing

Have you visited a furniture store recently? If so, you will have probably noticed perfectly standard centerpiece items, such as beds or sofas, adorned with a number of high end and visually engaging accessories. While the store will justify this by claiming that such a practice helps customers to visualize how their property will look in a fully decorated and accessorized room, it actually serves to enhance the appeal of ancillary products that are not included in the sale price of the core product. Not only does this make the core product itself look more enticing, but it also drives additional purchases. Awareness is crucial in this instance, as once you recognize this sales trap you can refocus on your needs as a consumer. The first step is to make a concise list of everything that you need prior to hitting the high street, while also establishing a fixed and viable budget for the trip. In order to ensure that the core product in question meets your needs, you should also look to strip it of any accessories or ancillary items before making a final decision. You could even bring in some of you own accessories from home, as this will present the product in a more realistic light.

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5. When insurance has no purpose

In addition to corporeal items, there are also a number of lucrative insurance products sold on an annual basis. As the ongoing controversy surrounding PPI claims proves, however, not all of these products offer value to the buyer or are sold in an ethical manner. There are two damaging sales traps to be wary of in this instance, as vendors will either sell erroneous policies that offer no discernible value or inadequate coverage that fails to deliver long-term, financial savings. The former policies tend to be sold aggressively by call center operatives, and they usually look to capitalize on client ignorance or gaps in knowledge. How do you avoid the insurance sales trap? The first step is to assume the role of aggressor when communicating with service providers, especially if you are in need of a specific product. More specifically, you will need to set out exactly what you are in the market for, detailing your need, budget and any additional data that helps to reduce risk. If you are contacted directly by a firm offering their products, you should also look to challenge their knowledge and ask them to clearly explain the terms, purpose and salient points of the policy.

6. The quest for high-yield, short-term investments

In the quest to build wealth, you may be tempted by any of a number of investment opportunities. You will need to be cautious, however, as the demand for instant, high returns has triggered a rise in the number of risk-laden schemes and ill-considered investment traps. While some of these investment opportunities may well have the capacity to trigger quick returns, they are primarily aimed at inexperienced investors who fail to understand the relationship between risk, return and long-term gains. To avoid this, you will need to research your chosen market and ensure that there is an opportunity to earn reliable, long-term gains that offer a suitable reward for your investment. The market for sustainable assets and green investment is particularly strong at present, for example, especially when you consider that there are now viable technologies that reduce carbon emissions and consumption in sectors such as fuel, energy, and even data storage. This trend is likely to continue for the future, making this a far more suitable investment option than those that revolve around real estate flipping and pyramid schemes.

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Featured photo credit: Wallet Credit Card Cash Money/Steve PB via pixabay.com

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Last Updated on July 10, 2020

The Definitive Guide to Get out of Debt Fast (and Forever)

The Definitive Guide to Get out of Debt Fast (and Forever)

Debt can feel crushing, like a weight that is always weighing you down. Looking at those numbers, it can feel as if you’ll never get out from under it. However, if you really want to learn how to get out of debt, it is possible with a great deal of focus and self-control.

Getting out of debt isn’t impossible. Like any big goal, all that it takes is an action plan to identify where you are and creating a plan to zero out your debt.

Identifying All of Your Debts

The first part of paying off your debt is getting a complete picture of what you owe. When you have everything written out in front of you, it makes it much easier to create an action plan. Depending on how much you owe, it might also help you realize it’s not as bad you might have originally thought.

Here’s how you can get started identifying your debts:

1. Own Your Debt

Before you start identifying all of your debts, take a moment to process that you have debt but want to get out of it.

Forgive yourself for any past mistakes, missed payments, or overspending. It might be painful to accept how much debt you have at first, but you must own it.

2. Make a Debt Tracker

It’s astonishing how few people ever created a tracker to understand their total debts. Most likely, it comes from not wanting to accept the guilt of having debt, but, if avoided, it can make it nearly impossible to get out of debt.

Open up a new Google or Microsoft Excel sheet and list out all of your debts. Start with the name of the creditor, interest rates, total balance, loan term length (if any), and the minimum amount due each payment. This will include student loans, credit cards, and any other type of debt owed.

3. Get Your Debt Number

Once you’ve made your debt tracker and taken the other steps, identify your total payoff number. This is crucial, as you will have a starting point and a clear goal that you are trying to achieve.

Prioritizing Your Debts

All debt is not created equal. It’s imperative to understand that there are different types of debt.

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1. Understand Bad and Good Debts

Bad debts are usually paying for things you want instead of always need. While there might be some emergencies that max out your credit cards, often times it’s excessive spending[1].

There are three main types of bad debt:

  • Credit Card Debt: The average American household owes over $16,000 in credit card debt!
  • Auto Loan Debt: According to CNBC , the average auto loan in the US is $30,032!
  • Consumer Loan Debt: Consumer loan debt isn’t as common as credit card and auto loan debt, but it’s still considered bad as interest rates are usually between 10-28%.

Good debt is identified as investments in your future. Here are three common types of good debt:

  • Student Loan Debt
  • Mortgage Loan
  • Business Loans

2. Decide Which Debt to Pay off First

Once you know each type of debt and their interest rates, you can begin to pay off debt quickly.

Focus on paying off bad debt first, regardless of if it is a credit card or auto loan. Start by paying off the loan with the highest interest rate first.

If you have several credit cards with different interest rates, you want to focus on the one with a higher APR. You will actually save more money by eliminating the card with the highest interest rate.

3. Don’t Pay the Minimum Amount

Paying the minimum amount digs you into a hole as interest rates will offset your payment. Even a small amount more than the minimum can help you pay off debt much faster.

Removing Obstacles to Pay off Debt Quickly

Creating a debt tracker and prioritizing a plan is simple, but avoiding temptation can be difficult.

1. Set a Reminder to Track Your Debt

“If you can’t measure it you can’t manage it.” -Peter Drucker

It’s so important to track your debt to ensure that you get it paid off quickly. Similar to working out and measuring your results, you need to track your debt constantly. Start with a weekly reminder, where you sign on and log your updated number. Did you increase, decrease, or stay the same?

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Regularly tracking your student loan balance can be incredibly motivating, as well. You will get a huge confidence boost each time you see your total debt amount decreases.

Set weekly and monthly goals so you can have short term wins and keep the momentum going.

2. Hide Your Credit Cards

If your biggest debt is credit cards, you need to eliminate temptation and remove them from your wallet.

Some people have gone to extreme measures by freezing their credit cards. Why? This would create an ice block around your card, which would require you to chip away at it slowly. This will give you time to think if it’s the best idea to buy that thing you’re about to buy.

3. Automate Everything

Willpower can be a huge downfall to paying off your debt. By automating your bills each month, you will ensure that willpower isn’t involved.

4. Plan Ahead

Getting out of debt will require some sacrifices, but with enough planning, you can make it work.

For example, if you know that you have a friend’s birthday or family dinner coming up, plan ahead for the costs. Whether you need to cut back on spending the week before, pick up a side job, or meet them after dinner, do what is needed.

5. Live Cheaply

The only way to get out of debt is to make some sacrifices on your spending habits. Find ways to save money each month so you can apply that amount to your outstanding debts. Here are some ways to save money each month:

  • Live with roommates
  • Cook dinners and prepare lunches for work instead of eating out
  • Cut cable and choose Netflix or Amazon Prime
  • Take public transit or bike to work

Finding the Lowest Interest Rates

The higher your interest rates, the harder (and longer) it will take you to pay off any debt.

If possible, you want to find ways to lower your interest rates to help get out of debt quickly. Here’s how you can get started:

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1. Maintain a High Credit Score

Your credit score will have a large impact on your ability to refinance your loans and receive a lower interest rate. If you have a low credit score, it’s unlikely you will be able to refinance your loans. Use these credit tips to increase and maintain an excellent score:

  • Never miss a payment
  • Don’t exceed 30% of your credit limit
  • Don’t sign up for more than one card at once
  • Limit hard inquires, like auto-loans and new credit cards
  • Monitor frequently with free credit-tracking software

2. Find Balance Transfer Offers

Start by opening a free account on credit.com. Credit.com offers you the chance to open a free account and see what type of balance transfer offers you can receive. Some of your existing credit cards might already have 0% or lower APR balance transfer offers available.

Contact each of your credit card providers to ask about lowering your rate for a one-time balance transfer offer[2].

If you do take advantage of this option, make sure that you use a balance transfer and not a cash advance. Cash advances have a ton of high interest fees (15-25%, depending on your credit card) and will only compound your debt problem.

How to Get Rid of Debt Forever

Setting up a plan, removing temptations, and getting the lowest interest rates is the first step to get out of debt.

1. Keep Monitoring and Adjusting

Once you have a plan, don’t get comfortable. Track your debt payoff plan and make the necessary adjustments when needed.

Monitor your credit scores with a free site like CreditKarma. The higher your credit score climbs, the more likely you will be to secure a new, lower-interest loan.

2. Earn More Money

There are only so many ways to save money. Instead of clipping another coupon or making sacrifices for your morning coffee, find ways to earn more money!

Think about it…it is much easier to find ways to earn an extra $1,000 per month than find $1,000 to cut from your budget.

Here are some examples of ways to earn more money:

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Talk to Your Boss

Have a conversation with your boss about current salary and/or commission rates. If you’re not satisfied or want a change, don’t be afraid to look around at other positions. Some of them might even have a student loan debt reimbursement plan!

Start a Side Hustle

This could be coaching students on the weekends, driving for Uber, or taking paid online surveys. There are tons of ways to make money outside your 9-5. Now that you have a clear plan to pay off your debts, you’ll be more motivated than ever to figure out creative new ways to earn money.

Build an Online Business

There are so many websites and blogs that earn money from ads, affiliates, and other online products. Find your niche and get started.

3. Celebrate Your Wins

As you progress in your debt payoff journey, don’t forget to celebrate your wins. You need to always reward yourself for the hard work and discipline that is required to get out of debt.

While you shouldn’t celebrate so big that it increases debt, make sure to factor in little rewards to keep you motivated.

4. Set New Financial Goals

Eventually, with a plan and these steps, you can rid yourself of your debt. Once you do, make sure to celebrate your monumental achievement, but don’t stop there.

Now, you can focus on acquiring wealth and increasing your net worth. Set new financial goals so you have a new target to aim toward. Here’s how to set financial goals and actually meet them.

These could be anything now that you are debt free! Think about where you want to travel, buying your first home, or saving for your future retirement. Just like before, make sure that your goals are specific, measurable, and achievable.

Conclusion

Congrats, you can now set a plan in motion to finally pay off your debt quickly (and hopefully forever)!

Remember, if you want to get out of debt quickly, it’s not always easy. Just like any big goal, there will be sacrifices, challenges, and problems to overcome.

More Tips on Getting out of Debt

Featured photo credit: Pepi Stojanovski via unsplash.com

Reference

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