Saturday’s Negotiating Tip:

Practice! Practice! Practice! While I believe that negotiation is a science and not an art, there is one aspect that is truly art-like and that is practice. The more you practice strategy, planning, tactics and skills, the better your negotiations will be.

The best place to practice is…everywhere! I try to negotiate everything, at least anything over $25. The reason is not that I always need to save money or that I want to play with people, but that I want to practice to develop my skills for the big deals. The more you try it the more the skills and tactics become natural to you.

Try this. The skill is patience. The tactic is “is that the best you can do?” The assignment is to try out this skill/tactic combination 10 times over the next few weeks every time you can. Patience is the most effective skill in your repertoire if you can learn to master it. Outside of the US this skill is used frequently and it is very effective on Americans. We are a nation of speed and immediate gratification. When you slow things down in a negotiation the other party always wants to speed them back up. Often they do this by giving you information or better pricing, both of which hurt their position. So take the tactic and ask the person you are negotiating with “is that the best you can do for me?” and shut up. Shut up so long that it is painful. It’s like doing the tenth rep with free weights or running an extra mile. It is painful and you will want to scream when you get through. The silence between you both is deafening. See how long it takes for one of you to speak, and if you speak first, you lose.

Once you develop your patience skill, start noticing how the other party seems like they just have to talk. The longer you are patient and quiet, the more beans they will spill. I’ve done this on many occasions and have had excellent results. Once you feel like you have mastered this try looking at them straight in the eye and being silent! You’ll be surprised what a salesperson can do for you when they have too much time to talk! You’ll save money as you practice, practice, practice.

Friday’s Negotiating Tip:

While it is advantageous in many ways to use win/win strategies where both sides get what they want, sometimes it is either not possible or not practical. Several times I’ve used my skills to get fantastic deals only to feel guilty later that I had somehow taken advantage of the other party. This is not good and makes for some restless nights.

If a negotiation goes too far your way, try to keep it from being a win/destroy outcome. Win/lose is something most people can accept. One of the ways I’ve overcome this mistake in the past is to come up with a way to refund some of the money. In one instance I negotiated a super deal with a fellow who turned out to be in deeper financial trouble than he let inferred. He had no choice but to accept my ridiculously low opening offer because he was afraid of not having the money that day to make his rent payment. I knew the guy to be a bit of a horse trader so I didn’t take his opening banter seriously. During the negotiation I even sweetened my deal and coerced him into giving me attachments for the item I bought for free, including a new case.

After I found out that he really wasn’t kidding and was having a hard time I felt very bad about the deal. Your conscience can make even the sweetest deal sour. To make up for the mistake I made up a reason to give him some of the money back by saying that the attachments he gave me were worth more than I thought and I felt like I should pay him for the excess cost. He was happy with the deal and we are still friends, even though I still had hurt him.

When you know that you make a mistake, do what you can to make up for it. No one refuses returned money. You never know when you’ll need that friend.

Thursday’s Negotiating Tip:

Numbers are a negotiator’s best friend. Being prepared with empirical information makes your arguments strong and hard to penetrate. Often when I’ve showed up to a negotiation with a strong case backed up with good information, the other side has completely folded. This has happened even when I provided the numbers ahead of time.

Let’s buy a new water heater. You always PREPARE before you negotiate. First, go log on to the computer and start researching water heaters. Take a file folder and fill it full of printouts that show what water heater is best and what the competitive prices are. Know what options are available, what average delivery and installation charges are, what options are available and which ones are on sale. Once you have this data, convert it to information. I often use simple spreadsheets that have the main models/brands that I like, the lowest prices and their locations and all the charges that I can find listed below. Then select the best deal from the options.

When you go to the Do-It-Yourself store carry this information with you. Explain that you want to buy the Superboiler 9000 for the best low price that you found if their price is higher. Be sure to discuss delivery, installation and all other costs that you regard as important to you. Once all their pricing is exposed bring out your information. Show the salesperson where they are off and request that they comply with the current information. It is virtually impossible for the salesperson to say “well, we provide better model or more extras” because you have the hard facts sitting right in front of them. They have no choice but to lower the price or lose the sale.

Although it is changing, the vast majority of retail sales people are not trained to handle numbers presented in this fashion. I hope your numbers are saving you money!

Wednesday’s Negotiating Tip:

Attitude is contagious. If you walk into work with a smile and a happy outlook it will be picked up by everyone you come into contact with. Well, everyone but the angry guy that pours coffee on your head because he’s not a morning person. Likewise, if you are angry or hostile, the person across the table from you will pick that up and most of the time they will hand it right back to you. The attitude you bring to the negotiation will often set the tone for the entire conversation.

Try to go into the negotiation with a happy and helpful attitude. If you are grouchy on Monday mornings, then don’t engage in negotiations at that time. When the person you are negotiating with comes to the table angry or with a negative attitude, try to turn them to them away from the dark side of the force.

One of the ways I try to change the other person’s attitude is by giving them a heavy dose of positive attitude. Really, it is hard to continue to be mad at someone who is excited, happy and helpful. Take time to get to know them when you first start and see if you can find some common ground that you can talk about such as family, hobbies or sports. If you still can’t break the attitude offer to postpone the negotiation until another time.

Often, when negative attitudes prevail the outcome is lose/lose. It can lead to hurt feelings, insults and deals that are hard to follow through on. It will completely sap your creativity. Happiness will mean saving money!

Tuesday’s Negotiating Tip:

I can’t stress enough the importance of a positive outlook when negotiating. Several times I’ve heard “really, I don’t think they will go for that” or “there’s no way they will drop the price that much.” The fact of the matter is that you never really know. That’s why I approach each negotiation with a positive outlook and reinforce this by remembering the times I’ve gotten a great deal even though I thought it would never happen.

My brother is skewed a bit to the negative side. He called me in to help him negotiate the purchase of a house. This was a few years ago when housing was at a premium in Atlanta and often you paid more than the asking price for certain homes. When the first attempt at a house fell through, he was quite discouraged. I told him to hang in there and we’d try again.

He found another home that he liked and he told me right away that there is no way the builder would come down on the price. How did he know that? He didn’t. He just pushed his emotions onto the deal and all the negativity went into his perception of the negotiation. After a short chat or two with the real estate agent I found out some wonderful things. First, the builder had passed away and his son had taken over the business. This house was the first one that he the son had built. My brother is an engineer and he and I confirmed the fact because the house was not only well built but was in fact over-built. The young builder had not sold a home on his own and it was December, so I picked up that it was urgent for him to move this property so that he didn’t incur taxes and more payments.

With only a short period of actual negotiation I submitted a take-it-or-leave it offer and was able to get the house for him for $32,000 below the asking price. This was because I approached the negotiation with a positive outlook for success and an open mind to new information. I’m positive that you can do this to save money!

Monday’s Negotiating Tip:

We’re all concerned about the environment. What about your negotiating environment? When you negotiate the environment can strongly affect the outcome. Here in the South if you are buying a car the first thing the dealer tries to do after you look at a car sitting on the 100+ degree parking lot is to get you back into the air conditioned dealership. Often they will get you a cool bottle of spring water to whet your whistle. This consideration of your primary comfort needs is admirable, and it is carefully orchestrated.

The less you look at the car, the fewer questions you’ll ask and the fewer objections to buying they will encounter. If you want to test drive the car, they’ll even send a lot jockey out to cool the car down and then bring it to the dealer’s front door to keep you comfortable. All of this makes it easier for you to say “yes.”

Well, I like the heat. About a year ago I went looking for a pickup truck in July. The temperature was hovering around 98 degrees and it had not rained for days. The cars were covered in a light dust from the hot wind blowing. Advantage, me! I kept the poor salesperson outside for an hour as we discussed every single item on the shiny red truck. With every ounce of sweat the price dropped and extras were added on.

Negotiate in your preferred environment, not theirs. The added advantage will save you money!

Failed to Save Money

Scott says….

I failed to save any money today.

She says…

Forgot your lunch again?

Scott says…

Yes. So I had to buy lunch at the Sandwich Shop of Death at the building. Yuck! There were too small pieces of meat on the sandwich and some cold French fries. They charged me almost $7.00!

Marie says…

So, if I take the $20 you get per week and subtract $7.00, you should have $13.00 left in your wallet. Right?

Scott says…

Wrong. Bought a few biscuits this week. And some sweet iced tea. I’ve not used one single coupon all week, either.

Marie says...

So, basically you are broke again....right?

Scott says...

Did you see that the Braves are trading Schmolz this year? (changing the topic)

Marie says…

Not good, honey. You have to carry donuts into work tomorrow morning don’t you?

Scott says…

Crap! Forgot about that. Can you go find me a coupon?

Marie says…

Bailing him out of a jam as usual.

Sometimes you’ll have a bad week. Sometimes things just don’t work out. Don’t beat yourself up! Regroup and plan for the next week. You’ll be fine and you’ll still save money. Scott is still very conscience of what he’s spending and he’s learning more every day. I probably need to provide him a more robust collection of coupons for when he has to eat out. Oh, and maybe I should make him a sandwich since I forgot last night!

Today’s Negotiating Tip

The location of the negotiation can be very important to the outcome. Is it better to buy a used car at the seller’s home or at your home? Your home usually because you have the advantage of not having to drive the car back home. You may also have access to the internet to show the seller what the real Blue Book value is. If you want to negotiate with a Dentist is the best place his office where the other patience can hear you or over the phone where only the Dentist can hear? The Dentist is more likely to grant you a discount over the phone. Yes, you can negotiate with a Dentist. Yes, I have changed Dentist because I couldn’t get a cash discount.

Use location to your advantage and get the best deal for your dollar!

Fine for Checking Out Books

Scott says…

The library is a fine place for checking out books. Mostly because I incur fines since I can’t seem to get the books back in time. I’m a book junkie as you can tell by the constant book reviews. I’ll read three or more books a week on average. There was a time when I bought most of my books. But once you start keeping a strict budget you find out that books are VERY expensive and food is a necessity.

In order to keep my book budget to a minimum (ok, there is no book budget line but there is a Scott’s discretionary fund which is a whopping $20 per week) I’ve found ways to get books that I want to read without buying them.

1. The public library. This is the best use of government money (my money) in the world! I’m at the library once a week or more. The handy on line reservation system lets me view the available books and have them sent to the local branch. A friendly system call “Elf” let’s me know when the books arrive.

2. Remote library systems. Our county library is plugged in to other libaries such as other state and university library systems. I can get books on loan through this system using the computer as well.

3. Private libraries. When you start asking around you’ll find that most everyone has a stack of books at home. I raid my brother-in-law’s shelves all the time and return the favor by sending him DVD’s from my collection. Another friend of mine sells used books, so I swap out books with her.

4. Book swap. We started a book swap at our company. In the breakroom we placed a large bookshelf and everyone brought in some books. We can check out a book at a time from the shelves, or read them during a lunch break.

5. Club or organization libraries. The model train club I belong to has over 500 members. I got most of them to donate a train related book to a new library. The library now has about 400 rare books that can be checked out by any member for 30 days at no charge.

6. Barnes & Noble or other bookseller. I love to go to book stores and sit and read for free. They have comfy chairs, a great selection of modern titles and I can grab a game of chess occasionally. They get mad when I bring in my Thermos full of coffee, though.

Reading is fun and can be a very inexpensive form of entertainment! Save bucks, read books!

Marie says...

Why don't you tell them how you sit in the library and read Curious George books? And why didn't you mention Border's? What's wrong with my favorite book store?

Today’s Negotiating Tip

Timing is a very important piece of negotiating. When you choose to act is often critical. For instance, if you want to buy a car, which day would be better? December 31st or January 2nd? Most of the time December 31st is the best because the dealer needs to move the inventory off the lot to avoid paying taxes and they may also have annual sales goals to meet. When negotiating the price of a hair cut, is it better to do it at 9:00 am or noon? Often 9:00 am is a better time because a large number of people get their hair cut on their lunch break.

The next time you plan to negotiate a purchase, think of “when” and you’ll save money!

Today’s Negotiating Tip

Empathy is a powerful building block for your strategy. You will be able to best negotiate if you can put yourself in the other person's shoes. When you approach a negotiation, ask yourself:

• What does this person want from the deal?
• Can they afford not to win?
• Are they in a hurry to sell?
• Do they need to make a commission today?
• Do they like their job?
• Are they in a good mood?

Pretend you are the salesperson for a brief minute. You see her standing there in the appliances section. Put yourself in her shoes for a minute. Pretend that you are selling ovens and freezers. What day is it? Is it Friday? Maybe she is tired. Maybe she just started her shift at the store. How would knowing this affect her negotiating methods? Maybe she has not had a sale all week and needs to move something today or not get a paycheck. Maybe she has had the best week of her career and is looking at icing the cake with a big, fat commission from you. What clues does she give to tell you how she is thinking and feeling? Does her body language give you any tips?

Empathy is one of the first steps toward a win/win which we’ll discuss further as we go along. Start learning to watch for signals that the salesperson gives you. As we progress we’ll learn to interpret them.

And The Academy Award For Saving Goes Too…

Scott says…

Marie and I walked away from the theater. It was our date night. Our daughter was at the special “Parent’s Night Out” at her school, we had some extra entertainment budget money left over in our Dave Ramsey Financial Peace envelope system, and we had four hours to ourselves. We enjoyed a fine Chinese meal without using a coupon, which is rare. Then we went to see a movie.

We had two coupons for a free movie. However, when we got there we were informed that we couldn’t use the coupons to see the money we wanted to see because it had not been in the theater long enough. Marie and I looked at the other movies and decided we really just didn’t want to pay full price ($12.00 each) to go to the movie. That would have totally blown the budget. So, we went and had coffee and conversation instead.

Honestly, I enjoyed chatting with my wife more than I would the movie. Really, we don’t sit down and just talk to each other much. Our daughter is always there or we’re working at something or other. Either way, $6.00 worth of coffee made for a very pleasant evening. Saving money is great for your relationship.

Marie Says...

I enjoyed it, too! (wink)

Today’s Negotiating Tip

One of the most sinister sales tactics know to the consumer market is the legendary puppy dog close. This closing tactic works like this. You go into a pet shop with your daughter and ask about buying a puppy. Your daughter picks one out but it is a bit more expensive than what you wanted to pay. The owner of the store tells you to take the puppy home for the night and if you decide you don’t like him, bring him back the next day. Now really, your daughter is going to let you bring that dog home, right? While this describes the tactic, you and I will mostly see this in other venues. The used car business will give you a three day free trial use of the car. Furniture and TV rental stores will let you take that big, wide screen digital theater set home just to let you see how it looks in your living room. Guess who winds up buying that TV after your friends and family see it in the your living room and you get the time to wear your “pride of ownership” t-shirt for a while. This is a deadly, deadly tactic with an amazing success rate.

Negotiators can only avoid this tactic one way. Do NOT take the merchandise home. While it can be tempting, your best defense is to recognize it and walk away. By the way…the next time your over this way come see my new leather sofa!

Today's Negotiating Tip

Tactic: Negotiate With Cash

When you are negotiating (not haggling, which is tactical) be sure to PLAN to carry cash. There is something very magical about cash. The salesperson that sees you count the bills and move them back and forth in your hands will watch the movements very closely. I hold the cash loosely in my hands and even drop a bill for more affect. The whole time we are talking I keep asking "is that the best you can do for me?" Then I shut up. The silence is a killer and the salesperson will feel like they have to talk. Cash is still king. By paying cash you should expect at LEAST a 3-4% reduction in price just because it costs the store that much to process the credit card payment. I never use credit cards by the way, and don't even have one.

New Year's Resolution

Welcome to Rainy Day Finances, sponsored by Rainy Day Financial Group. I'm Marie Perry and I'll be your host as we help you and your family save money every day! My husband Scott and I have saved over $25,000 and reduced our debt by $38,000 in just the past year and a half. Over this time we've found new ways to cut costs and manage our budget better.

Since then we've committed ourselves to helping others that are victims of credit cards or the bad economy. Scott and I teach Dave Ramsey's Financial Peace University and provide counseling help to those in financial need.

Professionally I'm a tax preparer here in Georgia and have worked in the legal field for many years. Scott works for a large consumer products group and is a negotiator and cost cutter. We both teach classes on budgeting, coupon savings and negotiating for consumers. Together we are committed to helping YOU SAVE MONEY in 2009! Tht's our New Year's Resolution.

Today's Negotiating Tip:

It's a buyer's market out there so take advantage of it if you are able to. This means don't buy it on credit, but if you have cash and have planned (key word) the purchase, you can probably negotiate a great deal. Carry cash with you when you go and ask for the best deal possible. Remember to use the magic phrase "is that the best deal you can offer me?" and remain quiet for a period of time with the salesperson thinks about it. Everything is negotiable! Don't be afraid to walk away!

Look for more consumer negotiating tips as we blog away!