Avoiding the Pitfalls of Deceptive Deals
In the modern world, things aren’t always as they seem. With an entire field dedicated to figuring out how consumers think and how to convince them to buy products, it can be hard to tell what is and isn’t worth your money. This is especially true with deals. Often times, a deal is just a marketing tactic to make a product more appealing. This tactic works incredibly well in any field it is employed in, including real estate. To avoid falling into these marketing pitfalls, here is a blog post by Jackie Lam from our friends over at Charlie Blog, who have allowed us to share it here!
When Deals Aren’t Really Deals
Mega annual sales. Buy one get one free deals. Free shipping if you spend X. It’s far too easy to get enticed by a supposed bargain, thinking that you’ll save some beans. It’s only after you’ve made the purchase that you learn the juice just ain’t worth the squeeze.
We’ll go over some of the perils of these supposed deals. Using behavioral finance, which explains why we make the money decisions that we do, we’ll uncover why you might fall in a spending trap. Plus, we’ll offer some tried-and-true ways on how you can avoid these faux deals.
Overspending on Bargains
We’ll all been guilty of this. I’ve stepped foot into a Dollar Tree or Big Lots, reveling in the fact that nearly everything in the store is just so darn cheap. Do I feel like a Miss Moneybags and go hog wild? You bet. While it’s no shopping spree on Rodeo Drive, I’ll end up spending more than I intended to and oftentimes buy things I don’t even need.
You also might shell out more dough when you see the price tag with the original price against the sales price. This might trick you into believing that you’re saving, whenIn fact you aren’t scoring that much of a bargain. You probably can get the same item for a similar price at retail elsewhere. This deal trick is called anchoring, which is when an initial piece of info is used to base one’s spending decisions.
For example, when discount retailers put the “compare to” price on a tag, you see the original price, they are made to believe that any number lower than it must be a good deal. So if the price tag on a sweater says the retail price is $50, and the sale price is $30, you might think to yourself, “Sweet, I’m saving 20 buckaroos.” When in fact, you can probably find plenty of sweaters in the shopping-verse that go for $30 at full price.
Instead, try this: Before you walk into a store, compare prices online. There are a handful of awesome sauce shopping apps to compare prices on items you’ve had your eye on. Doing your homework before you embark on your shopping adventure can help you gauge whether you are indeed getting a bargain.
When the Deal is More Trouble Than It’s Worth
I had a good friend who used a daily deals site to get dental work. Sadly, the dentist didn’t know what he was doing, the work was subpar, and she ended up having to shell more dough on getting her teeth fixed.
And I don’t know about you, but I’ve booked a flight at a less-convenient airport to save $50 on the plane ticket. Only to spend $40 on the shuttle and waste two hours in traffic #facepalm!
The illusion of a deal lures you in, but you might pay for it later. Numbers are sexy — it’s fun to fixate on numbers and pay as little as possible only to regret it once the fog lifts. For bargain hunters like myself, I get a high from paying less for something. However, that high quickly gets deflated after I find myself duped. Buyer, beware!
Instead, try this: Don’t look purely at numbers, focus on value. If buying the cheaper set of tires might put you in danger, than it’s far better to invest in higher-quality ones. Otherwise, you might end up ponying up more costs later on or stress.
Buying Something Just Because It’s on Sale
Again, personally guilty of this. I’ve spent countless hours scouring over the wares at a thrift shop, or buying something online simply because there was a big sale. (Think Black Friday, Amazon Prime Day, or any other “big sale” day or event.)
I ended up walking away with a wide grin across my face, feeling smug about my money-saving prowess. But over time, realized I didn’t even need half of that stuff. Most of it ends up collecting dust in the closet. Case in point: I once bought 40 sets of Beatles stationery at a yard sale, thinking they were rare finds. It turned out they were cheap Korean knock-offs — yikes!
Instead, try this: Add friction to the mix. Friction is essentially anything that makes it more difficult for you to buy. Retailers employ tactics to make your shopping experience as easy as possible. That’s probably why you’re shopping cart items are saved, and you only have to click on a few buttons to make a purchase.
You can add friction by deleting the items in your shopping cart. You can also give yourself a waiting period. I have a 14-day wait list for non-essentials. I’ll wait two weeks to buy something. After the hold period, if I still want something I’ll consider it.
Shopping at a brick-and-mortar store? Use cash. Studies show that you spend more using a credit card than with cash. And if you’re using cash, carry larger bills. Research reveals that even though five $20 bills have the same value as a single $100 bill, people tend to think that the $100 is more valuable, and thus will hold on to it longer than with smaller bills.
Spending Because It Provides Release
Receiving an endless string of goodies delivered to your doorstep from online purchases can feel like Christmas every day. But c’mon, unless you’re an unboxing Youtube sensation, do you really need most of that stuff? Indulging in retail therapy gives you a psychological hit as a sugar high would. You get an initial hit, only to crash shortly. Shopping out of boredom, anxiety, anger, etc. , harms your pocketbook and your mental health. You might also suffer from a bout of regret and shame after overspending.
Preferring instant gratification over long-term gains is called hyperbolic discounting. If you were given the option for a cupcake today, or wait a month and get two, you might spring for the cupcake today instead of thinking of the longterm gain.
Instead, try this: Replace bouts of retail therapy will something that could equally make you feel good, but also boosts your well-being. For example, while it’s much easier to sit on my couch and shop online, I’ll benefit more from an energizing sesh on my drum kit.
Think about how the money you save by not spending today could go toward something fun or important later. Should you spend $100 today on a cool gadget, or put that money toward your summer vacation to the Marquesas Islands? While you’re tempted to splurge on killer leather boots, your future self will thank you if you squirrel money away toward a down payment for, say, a house instead.
Tricking Yourself Into Thinking You Won’t Buy Stuff
Oh, I’ll just window shop. Perusing your favorite stores thinking you have the willpower of a superhero is a mondo illusion. This cognitive bias is called restraint bias, which has us believe that we have more willpower than we actually do. We might think we can resist temptation in the here and now, but chances are we’ll cave in the face of a deal.
Instead, try this: Avoid temptation in the first place by making it nearly impossible to buy something. AKA don’t visit the store in the first place or go without your wallet. For a more intense measure, block online marketplaces and retail sites.
Another huge thank you to Charlie Blog for letting us share this post with you. This isn’t the first time they have let us share a post from their blog, and we certainly hope it won’t be the last! If you liked what you read, take a look at their blog for more great posts. Or if you want more from Team AGC, THE Northern Virginia Real Estate Team, you can view our latest posts here!