It's Just Money

60% Off When You Take Up To 25% Off The Already Discounted Price!

I'll call the sub-header of this post, "Math Word Problems in Retail."  I have noticed a trend lately.  I first noticed it during the holidays, when I was doing my Christmas shopping.  Retailers are getting very creative in how they word the discount in the sale/clearance section. 

I mean, it was difficult enough on the average american when a $45 sweater was marked $25% off.  Most Americans are awful at doing math in our heads.  So, we either short cut it, "let's see, 25% off of $40 is $10, and 25% off of $5 is $1.25.  So, it's $45 minus $10, which is $35, minus $1.25, which is $34 minus a quarter, which is $33.75."  Hmm... is this sweater worth $33.75?  I dunno, is it closer to being worth it since I have spent all this time calculating the price in my head?  Actually, that method is pretty old school, since most just whip out their cell phones and use the calculator.

But now, they have these two step discounting methods.  The headline of this post is an actual sign that I saw at Macy's recently:

"60% Off When You Take Up To 25% Off the Already Discounted Price!"

And of course, on the actual signage the 60% Off and the 25% Off were about double the font size of everything else.  So, what do our minds do?  We don't bother with the smaller words, and just do some really basic math.  "60% and 25% sounds like 85%.  That's a lot." 

So, there I was, killing time, with no intention to buy anything.  But, heck, if I can get a screaming good deal, maybe I'll buy something.  I see a nice shirt, and pull it off the rack.  It's even my size.  Fortunately, this Macy's has price scanners (don't you wish every store had that?).  The tag on the shirt said $50, and there was a red sticker over the price tag (not over the $50, because they want you to know the original, inflated price) that said $25.  I took it to the price scanner, and it said "$20.00"

What?  I thought it would be less.  Dang it, maybe I should do some math in my head.  Wait a minute, what did that sign say?

"60% Off When You Take Up To 25% Off the Already Discounted Price!"

Aargh!  It says "60% Off" and the rest is just noise.  60% off of $50 is $20.  The $25 sticker and the extra words on the sign are just there for confusion.  It's there to get me to grab a shirt from the rack when I wouldn't normally.  By the time the shirt is in my hands, the likelihood that I am going to buy something just went up a whole bunch.

Heck, the fact that they got me to stop at a rack and even look already increases the odds that I will buy something on some exponential level.

Nothing worse then realizing that you got suckered in by effective marketing or store signage.  In the end, all is well.  I put the shirt back on the discount rack, and left empty handed.  The shirt wasn't worth $20.  And the original tag of $50?  You must be joking.

White House to Consider Selling Annuities

I'm wondering if Obama and Geitner are going to start cold calling and making annuity pitches over the kitchen table.  Kings of the Living Room!  According to this Bloomberg article, the White House is considering how they can encourage workers to invest their savings in annuities to create guaranteed income streams.

Seriously, the government is now getting into the business of giving financial advice? No thanks. Isn't this the classic overreaction that we see from our investors after a major market move, either up or down?

This isn't even a biased political commentary. The Republicans are just as bad as the Democrats on this count. Remember when W. Bush was running for President in 2000? One of the items that he campaigned on was giving Americans the ability to invest their portion of Social Security in the stock market. Then we had a market crash, and that idea died. Can you imagine if this passed a couple of years earlier? Criticize Social Security all you want, but it is what it says it is, a social program, a safety net. Instead we would have had everyone dumping "their portion" of Social Security into dot-com stocks in 1999. The bubble would have been even worse, and the crash more devastating.

Fast forward ten years, and we have come off of the "lost decade" and specifically a recent market crash. So, what is the answer? Time to get super conservative and invest our retirement portfolios in annuities. Great job timing the market two years after the fact.

Buddy from Charles in Charge becomes a Broker!

This story makes me laugh, but then it annoys me.  Financial Planning Magazine deemed it newsworthy that the guy who once played the sidekick to Charles, played by Scott Baio, on the 80s sitcom, Charles in Charge, has become a Financial Planner.

Actually, from the story, it appears that he is becoming a broker.  The difference is important, but sadly not recognized by a magazine called Financial Planning Magazine.  You see, he is going to work for the brokerage firm, Wadell & Reed.  Not that working for a brokerage firm precludes you from being a financial planner, although I would argue that it severly limits your ability to do so.

Additionally, the article quotes a Wadell & Reed spokesperson as saying, "He’s passed his Series 7, he’s passed his Series 6, he’s passed his health and life examination. He was just activated at the beginning of this month. He is now trying to build his own financial planning practice."

The problem is that those are broker and insurance agent licenses.  It is a license to SELL securities, mutual funds, insurance and annuities.  It doesn't give you any training, knowledge or ability to provide actual financial planning services.

But this is a good story.  I applaud Aames for turning his life around.  He has gone through some really difficult periods, including bankruptcy, homelessness, attempted suicide, not to mention having to be "the guy who was the sidekick on Charles in Charge."

Want to help in the Haiti relief efforts?

The news coming from the earthquake in Haiti is simply heartbreaking.  Living in earthquake prone California, we certainly have a heightened awareness of the potential dangers of earthquakes.  However, even with that, I don't think we can fully understand the devastation to this small, poverty stricken country.  It has been frequently reported in the past day that they are the poorest country in the Western hemisphere.

This means that certain things that we take for granted simply are not reality there.  Things like buildings built to earthquake safety standards, well trained and equipped emergency response people, the ability to bring in aid from nearby regions quickly and safely.

I pulled this off of Kathy Kristof's twitter (@kathykristof).  She has compiled a list of links and tips to help those suffering in Haiti.

Read her advice here, and take a moment to help now.