Buying the necessities Shopping for food. Americans spend billions of dollars a year on food it s important to know how to get the most from your

Transcription

1 Buying the necessities Shopping for food. Americans spend billions of dollars a year on food it s important to know how to get the most from your food dollars. I. Comparison shopping A. Involves making comparisons among brands and sizes (what to shop for), & also where to shop. B. Only comparison shop as necessary by weighing time and transportation costs (remember time has an opportunity cost) C. Advertisements and coupons can save time & money it s an inexpensive way to comparison shop

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4 II. Trade-offs in food stores A. Americans usually do their food shopping in either supermarkets or club warehouse stores (Sam s club, Costco, etc) B. Club warehouse stores usually offer the lower prices, but their items are only sold in large quantities. 1. The trade-off is saving a little money on the price, but you must buy large quantities C. Convenience stores carry a limited selection of items, have the highest prices, but are open more hours 2. The trade-off is saving time but you must pay higher prices

5 D. When you shop, many of the food items will have brand names names that are well known nationally or regionally and usually cost more. E. Some supermarkets or wholesale stores have their own brand names known as private labels or store brands F. Some consumer surveys say it s possible to save as much as 40% by buying store brand (private labeled) products. 1. Generic products have no brand name & you can save even more by buying generic 2. The trade-off is a lower price but the quality usually isn t as good as a brand name or store brand

6 G. Per-unit pricing of goods makes it easy to compare prices H. If you use cents-off coupons regularly, you can reduce your food bill by more than 10% over a one year period. 1. The trade-off is time the time it takes to collect & match the coupons to the products when shopping. You need to decide if the money you are saving using coupons is worth the time you spend

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8 Which is typically true of shopping at a convenience store? A. Higher prices B. More selection C. Shorter hours

9 Which is an example of a club warehouse store? A. Walmart B. Home Depot C. Costco D. Speedway

10 Clothing choices Americans spend $400 Billion annually on clothing and other products. Variety is typically the motivating factor involved in clothing choice.

11 I. Comparing clothing value A. Clothing value depends on price, style, durability, and cost of care 1. Style buying current styles, which tend to change each year, can be expensive because new clothes must be bought each year a. buying classic styles, which are more basic & don t change as much, will help your clothes last longer & save money. Ex = buy stylish clothes each year to keep in fashion and have less money to spend on other items or buy less stylish clothes which results in more money to do other things

12 2. Durability how long will the clothing last? The longer it lasts the more durable a. When you buy an item of clothing, you are buying it for the service flow that it gives you b. Service flow the amount of time you get to use a product & the value you place on this use. Ex = you buy a jacket that costs $300 & you use it for three years service flow is $100 per year 3. Cost of care you must also factor in the cost of care involved in clothing that must be hand washed or dry cleaned versus machine washable

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14 II. More for less A. Clothing costs have decreased significantly over time, but it is still wise to buy clothing on sale. B. Clothing sales usually occur at the end of a season but don t become a bargain fanatic buying sale items just because they are on sale C. If you buy an unnecessary item because it s on sale, you may not be saving money at all. It s wise to determine your wants as well as your realistic needs before shopping at any sale

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16 To rent or buy (housing) I. How much should you spend? A. There are economic & psychological advantages and disadvantages to both owning your own home & renting B. If you buy, avoid spending more than you can afford. Lenders use certain rules to help buyers determine how much housing they can afford

17 C. You will need a cash down payment and closing costs 1. Closing costs may include fees for title search, legal costs, loan application, credit report, house inspection & taxes 2. The buyer usually pays the closing costs, but the seller may pay part or all of the costs if this will make it easier to sell the house D. Points are also included in the closing costs 1. Points are fees paid to the lender & figured as a percentage of the loan 2. Each point the lender charges (usually 1 to 4) equals 1% of the amount borrowed 3. Lenders charge points when they believe that the current interest rate isn t high enough to pay the expenses involved in handling the mortgage & still make a profit

18 II. Purchasing a house (financing) A. Many different types of mortgage & financial packages are available. B. Mortgages involve down payments and interest C. Mortgages are paid in monthly installments D. Property taxes, homeowner insurance, and mortgage insurance are often included in the mortgage payment. Ex = You buy a $125,000 house and make a $20,000 down payment, you will need a mortgage for the remaining $105,000

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20 III. Renter rights & responsibilities A. Most renters sign a lease (contract) for 1 to 3 years. Sometimes you may pay extra to get a 6 month or 9 month lease. B. Read your lease carefully and be aware of clauses in the lease C. Tenant rights the right to use the property for the purpose stated in the lease. 1. Right to privacy a landlord usually can t enter an apartment, house, etc. anytime he/she chooses. 2. A landlord may enter to make necessary repairs or to show the apartment, house, etc. to a potential renter

21 D. Tenant responsibilities 1. Paying rent on time, taking reasonable care of the property, and notifying the landlord if major repairs are needed (leaky roof, broken window, etc.) 2. The lease may limit how the apartment, house, etc can be used no pets, allowing only the person named on the lease to live there, no subletting. 3. Pay a security deposit a refundable deposit (usually 1 months rent) in case the rent isn t paid or the apartment/house is damaged etc. 4. Must give written notice if leaving before the lease ends, which can result in fees & fines for breaking the lease

22 E. Landlord responsibilities 1. Landlords must provide minimum services (such as heat and water) and that the place is fit to live in. 2. Obey building and safety laws fire escapes & smoke detectors may be required. 3. To make repairs within a reasonable amount of time (this is usually stated in the lease). In most states, a tenant has the right to pay for repairs & withhold that amount of rent if the landlord doesn t repair the problem themselves 4. Rent-control laws limit the amount a landlord can charge in rent

23 Buying and operating a vehicle When buying a vehicle you will have trade offs, such as a bigger engine versus having to buy less gas, small vehicle versus large vehicle, and new versus used. I. Buying and operating a vehicle A. The costs of operating a vehicle include; 1. Registration fees are state fees paid each year. In most states, the amount of the fee varies depending on the vehicles age, weight, type & value. 2. Normal maintenance and repairs oil & filter changes, tune ups, tires, etc.

24 3. You may buy an extended warranty that covers problems beyond the time frame in the warranty offered by the manufacturer or dealer 4. Depreciation a decrease in the value of a vehicle as it ages a. Occurs because of technology changes & new features on new makes & models b. Physical wear & tear depends on how hard the vehicle is driven, how many miles its driven, and how well its maintained 5. Cost of insurance most states require liability insurance that covers bodily injury and property damage. 6. Cost of insurance varies based on sex, age, and driving history.

25 A security deposit is normally twice the rent A. True B. False

26 Points on a mortgage are paid to whom A. Buyer of the property B. Seller of the property C. The bank D. Donald Trump

27 You buy a jacket for a hundred dollars, you wear it four times what is the service flow A. $400 B. $100 C. $50 D. $25