Dave Ramsey Chapter 5

21 terms by lelindsey123

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Consumer Awareness

What does "Caveat Emptor" mean?

buyer beware

Annual Percentage Rate(APR)

cost of borrowing money on an annual basis; takes into account the interest rate and other related fees on a loan

Buyer's Remorse

regretting a purchase soon after making it

Brand Recognition

consumer awareness that a particular brand exist. It is part of product positioning.

Financing

to buy an item with credit; paying over time.

Finite

having a beginning and an end

Impulse Purchase

to buy an item without thinking about it

Opportunity Cost

the true cost of something in terms of what you have to give up to get the item; the benefits you would have received by taking the other action.

Rule of 78

pre-payment penalty in a financing contract; the portion of a "90 days same as cash" agreement that states that the entire loan amount plus the interest accumulated over the first 90 days becomes due immediately.

Significant Purchase

an amount of money you spend, usually $300 or more, that causes some pain to part with.

What are the five steps you should follow before making a significant purchase?

1. wait overnight
2. consider your buying motives.
3. never buy anything you do not understand.
4. consider the opportunity costs of your money.
5. seek wise counsel.

Companies use every angle to aggressively compete for what?

your money

The average American is exposed to about how many advertisements daily?

around 3,000

What are the four major ways that companies compete for your money?

1. Personal selling
2. advertising as a marketing tool.
3. tv, radio, internet, and other media.
4. product positioning

What is the sign of a well trained salesperson?

They answer your question with another question.

What are product positioning techniques used to get the attention of consumers?

-brand recognition
-color
-shelf position
-packaging

What percentage of "90 days same-as-cash" contracts convert to payments which are usually at 24% APR with rule of 78's prepayment penalty?

88%

How much is spent on online advertising directed at kids?

$15 billion

True or False;
According to Harvard University, for every hour of tv per week that you watch, you spend an average of $100 extra a year.

False: $200

True or False; Contentment comes from material items.

False; no amount of stuff can equal contentment.

What does the spoiled, red-faced, grocery store kid living inside of us all represent?

immaturity

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