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Stop Getting Ripped Off: Why Consumers Get Screwed, And How You Can Always Get A Fair Deal
By Bob Sullivan
Stop Getting Ripped Off: Why Consumers Get Screwed, And How You Can Always Get A Fair Deal by Bob Sullivan is a great read for savvy consumers. The book starts with a fascinating chapter titled "Why Consumers Get Screwed." The chapter tells us a basic lack of consumer math skills, deregulation of business, a desire to believe in magic, and sociopathic salesmen all contribute to American consumers being economically hosed.
Sullivan writes: "I'd take a pure form of a market economy with little or no government involvement any day. But we have nothing of the sort. Generally, we have industries where corporations enjoy powerful monopolies and legal immunity from misbehavior, all the while requiring shoppers to act as if they should abide by the rules of a free market. False advertising is so rampant in the banking industry, for example, that the Federal Reserve did a study of bank account switching costs in 2008 and described the current system by this bitter phrase: banks employ a 'bargain-then-rip-off' strategy to reel in customers and then exploit them. …Of course, the Fed hasn't done anything about bargain-then-rip-off pricing."
To demonstrate the gullibility of people, Sullivan tells us the story of Uri Geller, who claimed to be able to bend spoons with his mind. Geller claimed powers of psychokinesis, and the media ate it up. Geller's do-it-yourself advice was quite basic: "Is there is a radio that is broken? Want it to start working. Television broken--just want it to start working." Heck, I can't get my broken radio to work, even with the use of tools. But, that's another story.
Magician James Randi and Johnny Carson came up with a simple way to expose Geller on national TV. Carson provided Geller with spoons and other props that had been isolated from any prior manipulation. When Geller appeared on the Johnny Carson Show, his powers vanished. He couldn't bend spoons. Randi would go on to become famous for exposing nonsensical tricks pawned off as supernatural powers.
Sullivan writes: "You've heard this endlessly: If it sounds too good to be true, it probably is. But if it sounds pretty good, well, what then?" Sullivan's book helps us see the line between real bargain and probable rip-off.
The bulk of the book helps consumers deal with specific purchases and services, including:
*Buying A Car
*Buying A Home
*Getting Cell Phone Service
*Paying For TV Service
There's even a small section about the usefulness of starting your own business, freelancing, and moonlighting to help earn extra money. (If you pursue running your own small business from home, I hope you'll also take a look at my book, Getting Rich In Your Underwear: How To Start And Run A Profitable Home-Based Business.)
Sullivan's chapter on credit cards is particularly insightful. While many of us know we should never carry a credit card balance and fully pay each month's charges before the due date to avoid the insanely high interest rates that credit cards charge, we seldom see detailed advice for consumers who are forced to carry a balance, perhaps due to an unexpected expense the consumer can't handle.
Sullivan shows us how credit card average daily balance is calculated. Because there is no grace period for those carrying a balance, Sullivan introduces the "Pay Early, Buy-Later Strategy," which emphasizes making early credit card payments and deferring purchases until the end of the month.
Sullivan explains: "Say you make a single $3,000 purchase for plane tickets in a month during which you have no grace period because you are carrying a balance. To make life easy for now, we'll say that balance is one penny. If the purchase is made five days before the end of a thirty-one-day month, at a rate of 29 percent, interest charges will be $11.92. But if you make the charge five days into the month, the interest charge is more than five times higher at $64.36."
The book also introduces what it calls the "Clean Card Strategy" to take advantage of the grace period to minimize interest paid. For those who are forced to carry a credit card balance, these strategies could save hundreds or even thousands of dollars.
Sullivan shows us how statistics can be misleading and that there's a myth that most Americans are grossly overusing credit cards. We've all heard that the average American carries $8,000 in credit card debt. However, this paints an incomplete picture. Sullivan explains: "…Only about one in twenty Americans carry a balance of more than $8,000 each month. The extreme cases of $50,000 debts drown out the truth of the matter--half of U.S. households owe $2,400 or less to credit card companies, and, in fact, many owe nothing. So those of you who like to think that America is dominated by families who outfit their living rooms with the latest technology using plastic to spend money they don't have--you're wrong…. the exaggerated myth of the hyperconsuming American is used as justification for egregious bank behavior."
While most of us have heard about the importance of examining our credit report to assure no errors on it cost us money, fewer know about the other reports that affect us. Sullivan tells us about CLUE reports, which are like credit reports for houses. A CLUE report examines liability issues that could influence homeowners insurance rates. CLUE stands for Comprehensive Loss Underwriting Exchange. It is a free report. The book also mentions the Medical Information Bureau Report, but noticeably absent from the book is a discussion about purchasing private health insurance.
The one chapter I'd strongly disagree with is the chapter about buying a car. While Sullivan does a great job discussing purchasing a new car and the advantages new car buyers have today due to information available online, to a true cheapskate, trying to convince consumers of the advantages of new car buying is just crazy talk. Buying used cars saves money. Alas, Sullivan doesn't discuss purchasing used cars.
Overall, I highly recommend Stop Getting Ripped Off: Why Consumers Get Screwed, And How You Can Always Get A Fair Deal by Bob Sullivan. I also recommend his other book Gotcha Capitalism.