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impulse buying

How We Got Duped Into Buying A Timeshare

By //  by Khaleef Crumbley

[I initially wrote this post first for Little House in the Valley as part of a blog swap about our worst money mistakes]

My Scariest Money Mistake, And What I Learned From It

It was a dark and stormy night… Actually, it was a beautiful sunny day in Mexico while my wife and I were on our honeymoon. My wife and I were extremely happy with the frugal decisions and the help that we received that allowed us to keep our wedding costs under $5,500. We also received two weeks from my mother’s timeshare and we were able to stay at two different resorts (it was really three, but I will get into that a little later) for free!

A Great Start

While we were in Mexico, we were approached each day by several people who were trying to get us to sit in on timeshare presentations in order to get free items or, in some cases, cash. We sat in on several during our stay and were able to take part in a couple of tourist activities for free.

The first resort in which we stayed was pretty much our idea of perfection; while the second resort was a lot like a huge hotel that was in a fairly remote area. It was while we were at the second resort that we encountered our final timeshare sales presentation.

Going Downhill In A Hurry

Timeshare Scam

The guy who tried to sell us on the timeshare was probably one of the worst salesman that we have ever come across. Even with that, the numbers and the options seemed so much better than all the other presentations that we had been to. For some reason, as we continued to look over the options that were presented, we thought that it actually made sense. 😳

I don’t remember our exact thought process as we talked to this gentleman – I believe his name was Jimmy – but from what I recall, a conversation with him was not enough to push us over the edge. That’s when he brought in the big guns!

By “big guns”, I mean a woman named Grace (or Gracie, I’m not sure). From what I remember she was an attractive, well-dressed, articulate, funny, and seemingly intelligent woman. My wife and I immediately took to her personality and by the time we finished talking to her, we were convinced that we would be almost foolish to leave this deal on the table.

There were a few things that factored into our decision: We were convinced by the fact that we could exchange our timeshare for one closer to us (to avoid the cost of a flight out to Mexico), we could sell our week if we weren’t going to take a vacation that year (we were told how huge the market was for individual timeshare weeks), and the two exchange companies that we became members of both had deals to give you free weeks (or at least weeks at a tremendous discount) if you are willing to book them within a month or two of the time of travel.

Also, one of the exchange companies gives 2 free weeks per year to all members (these are separate from those last-minute deals I just mentioned)!

Every time we thought of an objection as to why it would not work for us, Grace was able to come back with a provision in the contract or a feature of the timeshare itself that would allow us to easily overcome that objection. Needless to say, we purchased a timeshare a little over seven years ago and that purchase has haunted us ever since.

The Big Lesson

I think the biggest lesson that I learned from this is that I need to be able to conduct my own research before entering into any deal. Since the economy was doing so well in 2006, I’m sure that the timeshare market was booming and that people who owned them were able to make money just by selling their weeks (something that we were assured of). However, I should have made myself familiar with how the market normally responds in the middle of a recession (since I expected one to happen in a few years).

We also should’ve  looked at just how long it takes for someone to see a sale once they put a week on the market, and also how much, if any, they have to reduce their asking price.

We also should have talked to people who currently owned timeshares to find out if they had experienced significant increases in the maintenance fee since they signed the original contract. This is something that has plagued us greatly – the first year’s maintenance fee was under $500 and seven years later it is now up to about $750! I guess the one good thing is that we only pay this fee once every two years.

It would’ve also made sense to research what the average exchange fee is for moving a week from the home resort to another within the system. Another consideration would have been how often we plan to use the timeshare and what the cost of our lodging would be without it.

Here is the full financial blow: the timeshare cost about $5,000, an amount which we had to finance and a very high interest rate. After making payments for less than a year we decided it will be better to use a zero percent offer from one of our credit cards to pay off the balance. On top of that, this year is the fourth year in which we had to pay a maintenance fee. In 2007 this fee was less than $500 and it has gone up each year to be about 750 this year…who knows what it will look like in 2015.

Our Lesson Applied

Hopefully by now you can see the importance of researching every financial deal before you sign on the dotted line. Had we considered any of the things which I listed above, I’m sure that we would not have taken the offer. I guess the one good thing out of it is that after we signed the contract they allowed us to move from the mediocre resort into their resort (which was as amazing as a first resort)!

My wife and I conducted an abnormal amount of research one year later when it came to purchasing a car. Every time we began to talk about finances in the dealership I whipped out my laptop and was able to examine every detail of the deal using my spreadsheets. We have definitely learned our lesson from the timeshare incident, and every time we have to drain our bank account to pay one of these maintenance fees, or look online and see the tens of thousands of timeshare weeks that have filled the market, we feel the pain of our mistake.

So if you don’t remember anything else from this little tale, please promise me (and yourself) that you will always perform the necessary research before entering into any financial arrangement!

Filed Under: Personal Finance Tagged With: impulse buying, impulse shopping, money mistake, timeshare, timeshare costs, wedding costs

Why Over-Spending Isn’t Always a Money Problem

By //  by Kevin M

Does it often seem that you can’t control your spending? You have a budget, and even a forced savings plan, but your debt levels are going up just as fast. The problem may be impulse spending and recreational shopping—which are actually two sides of the same problem.

Most of us have good intentions when it comes to living within a budget, but something falls apart in the execution. Here’s the problem: spending money feels good! Much like a drug, spending can create a high. Recklessness usually does! Think how it feels to speed on an abandoned road—you know you shouldn’t, but you still do. You may regret it afterward (accident or police summons) but while your doing it you feel so free, as if nothing can stop you.

So it is with spending. While you’re spending it can feel as if you’re treating yourself, breaking out of your routine, or even getting away with something. You’ll regret the empty bank account or the higher credit card balance afterward but none of that matters at the moment.

Shopping while Bored

Recreational Shopping And Boredom

Do you remember Jim Carey’s line in How the Grinch Stole Christmas (said to no one in particular): ”Am I just eating because I’m bored? Have you ever asked yourself the same question? Boredom is the reason we do all kinds of things in addition to eating: watching TV, drinking (alcohol), web surfing, texting and, yes, shopping!

It seems counter-intuitive that in a world where we seem to be “so busy” all of the time that we always find time to engage in activities that are at least moderately self destructive. Maybe that’s why we seem to be so busy!

The most basic solution to recreational shopping and impulse spending then seems to be one of time management, or better put, spending more time on productive past-times as a way of reducing the amount of time available for the not so productive ones.

The Connection Between Recreational Shopping And Impulse Buying

If you have a problem with impulse spending, the last thing you want to do is to put yourself in a position where you’ll be tempted—think of an alcoholic hanging out in a bar as an analogy. If recreational shopping is a response to boredom, it’s probably the single worst activity if you want to control your spending. It puts you in the place where the most damage can be done.

Many people do it, more than we commonly believe. It’s easy enough to convince ourselves that it isn’t really happening. We’re just heading out to buy a pair of shoes—but four hours later we come back with two new shirts, a golf bag, a pound of Godiva chocolate—oh and since we were gone longer than expected we had to grab lunch at the Cheesecake Factory. A $50 pair of shoes morphs into a $200 full-out mall outing, complete with lunch.

Can you see how that plays out in the willing mind? It starts with some level of necessity then mushrooms into an expensive shopping spree.

Since the best way to get rid of a bad habit is by replacing it with a good one—here are some suggestions to replace recreational shopping and impulse spending with more productive activities.

How To Fight Recreational Shopping And Impulse Buying

Shopping Excitement

Start An Exercise Program

If you have time and energy to burn, rather than trying to handle it at the mall or some other shopping outlet, do it through an exercise program instead. Not only will exercise soak up the extra time and energy, but it will have positive health benefits. You’ll be swapping a bad habit—shopping—for one with constructive benefits.

You don’t have to spend money doing this either—you can walk, bike, or exercise or lift weights at home. Bonus: there’s good feeling that comes from exercise that may very well replace the “high” that comes from shopping.

Spend More Time With People

So far we’ve discussed boredom and it’s affect on spending, but isolation is another culprit. Spending often results from shopping trips that are taken to alleviate loneliness, or as an attempt to use things as a substitute for the people who don’t seem to be there to keep us company.

The way to deal with this is to be purposeful about getting together with people. Phone calls, emails and the social media are one way to do it, but there’s no substitute for face-to-face contact. That’s the most basic way to build relationships.

While you’re getting together with people you’ll be a) building the relationships that will make spending money less necessary, and b) cutting down on idle time that leads to spending.

Commit To Reading The Bible

Building our relationship with God is how we can fill that void that leads to recreational spending. The way to make that happen is by prayer, fellowship with other believers and by immersing ourselves in God’s Word—the Bible.

All of that takes time. And when we invest that time, we’ll not only grow in our spiritual lives—which will ease our perceived need for stuff—but we’ll also have less time for shopping.

Learn A New Skill

Many of us want to earn more money, get a promotion or get a new job, but we don’t have the skills to make it happen. By diverting time into learning new skills we’re preparing ourselves for a brighter future. But that effort will also take time away from shopping, and that’s yet another budget friendly past-time.

And once again, as you learn new skills you’ll also feel better about your future and about yourself. That by itself could lead to less reliance on the high that spending brings.

Get A Part-Time Job Or Start A Side Business

These are yet another example of a double win in the war against recreational shopping and impulse spending. Not only will you have less time for spending money, but you’ll also have the obvious benefit of having more money.

[Find out when you should and shouldn’t let your employer know about your side business]

One caveat here: if you take this approach, be sure that it doesn’t enable even more spending!

Get Involved

If we use spending to fill emotional voids, then doing volunteer work may be just what we need to cut back on unnecessary spending. It may sound like semantics, but helping others is an excellent way to help ourselves to feel that we have a higher purpose in life.

When we help others, we’re not only working to relieve some of the stresses of the human condition, but we’re also making an outstanding witness to others of both our faith and of the strength of our convictions. And convictions beat bad habits every time.

If you’re finding that you’re spending more money than you should, it may not be a money problem after all, but a time management issue. Use the time that you would spend shopping and buying for purposes that will improve your life. Any activity that allows you to grow in your faith, your relationships, your health, your career or your income will fit the bill. It’s just a matter of replacing a bad habit with a good one. Or two or three or more.

Have you ever considered that you may be using spending as an answer either to boredom or to some type of emotional void?

photo credit: Freedigitalphotos.net

Filed Under: shopping Tagged With: impulse buying, recreational shopping, shopping, spending

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