Three Kinds of People Shop at Wal-Mart

According to an article in today’s New York Times, Wal-Mart now views it customers in three distinct groups. Following a difficult year of experimenting with more upscale products, they realize their current customers don’t want to pay for more expensive items.

In their first interviews since a management shuffle last month, John Fleming, the new chief merchandising officer, and Stephen Quinn, the new chief marketing officer, said that after a year of intense research, the discount giant is seeing its 200 million customers as belonging to three groups.

There are “brand aspirationals” (people with low incomes who are obsessed with names like KitchenAid), “price-sensitive affluents” (wealthier shoppers who love deals), and “value-price shoppers” (who like low prices and cannot afford much more).

The new categories are significant because for the first time, Wal-Mart thinks it finally understands not just how people shop at its stores, but why they shop the way they do.

Wal-Mart plans to target these groups with advertising using their new slogan, “Saving people money so they can live better lives.” This new focus fits right in with the philosophy of this site.

If you shop at Wal-Mart, what group do you fall in?

Hey Kid, Here's The Checkbook

The Simple Dollar published a post today raising the question of how much details kids should know about the family's personal finances. I certainly believe they should know a lot about it. Here is what we are doing.

To get our kids interested in reading, we got them library cards. To get them interested in saving, we opened savings accounts for them. To get them interested in investing, we bought stocks in a few good companies they knew.

Now they each read four or five grades levels above their age. They choose to put their gift money in their savings accounts. They follow the prices of their stocks and news about their companies. By buying the stocks over time through a DRIP plan, I have had the opportunity to discuss how the fluctuation of market can create opportunities for them. They understand the concept of dollar cost averaging.

I think it is important for the kids to learn the basics of household accounting. As soon as they begin to show discretion, you can share more of the details with them. I look forward to turning Quicken over to my son before he leaves the house. A few years of experience, can only help him in the future manage his own finances. I think we have an obligation to teach our kids this basic skill.

I have to share with you a story when my son was about 5 years old. I took him to a toy store. On the way there, I told him, he could spend $5 any way he chose. In the store, he ended up in front of a shelf crying, “I can’t afford anything!” - Another invaluable financial lesson.

How much detail do you share?

Low Risk 10.1% APY CD?

I categorize my investment style as modest conservative. Recently, I opened a CD account with a new bank in town, Flagstar Bank. I was enticed by the 10.1% APY on a new 6-month CD, but there was a condition. I had to open a checking account with them as well.

The banker who assisted me typed in the wrong address in the system as she set up my account. I spotted the mistake before signing the documents. The banker “fixed” it and re-printed the document with the correct street number.

A few days ago, my neighbor came to the house to bring mail from that very bank. It was addressed to me, but it had the incorrect address the banker had originally entered. Inside the envelope was a debit card for that checking account. The banker's typing mistake delivered my debit card into my neighbor’s hands. Thankfully, my neighbor was honest and made the effort to bring the debit card to me.

After working with bank to fix the problem (not sure yet if it is fixed), I have to ask myself “Was it really a low-risk investment?”

You Can't Take It With You

A man, who loved money more than just about anything, said just before he died to his wife, "Now listen. When I die, I want you to take all my money and put it in the casket with me. I want to take my money to the afterlife with me. When he died she did what she had promised, came over with the money box and put it in the casket. Then the undertakers locked the casket down, and rolled it away. So her friend said, "Girl, I know you weren't fool enough to put all that money in there with your husband!"

She said, "Listen, I'm a Christian. I can't go back on my word. I promised him that I was going to put that money in that casket with him. "You mean to tell me you really put that money in the casket with him!!!!? "I sure did," said the wife. "I wrote him a check."

Free DVD Rentals

I suppose I go a little overboard when I hear the word free. I request free stuff when I really have no use for it at all. I got three free razors this year, but I have had a full beard for nearly 30 years. I got two free cigars and a free subscription to Cigar Aficionado, but I don’t smoke. There is one type of freebie, however, that I get regularly, and the whole family enjoys - free DVDs.

The best source of free DVDs is a local library. Mine regularly acquires 20 copies of most new popular DVD releases. I simply subscribe to my library’s email mailing list of new DVDs. When the email arrives, I go online and reserve them right away. I’m usually one of the first in line, and I only have to wait a week or two for the DVD to arrive at my local branch. My library also actively buys many foreign films and documentaries, so we stay up to date with Chinese films too. The other advantage of borrowing DVDs from the library is that you can keep them checked out for 7 days. Unfortunately, not all library systems have DVDs, so this might not be an option for some people.

Another source of free DVD rentals is Redbox. Redbox is a company that places DVD vending machines inside many businesses. You can find them in McDonald’s outlets, Walgreen’s, and other places. We happen to have one inside our local Wal-Mart. Redbox charges $1.00 per night to rent a DVD, but they pass out codes that can used to get a free rental. The trick is to find out what those codes are.

InsideRedbox is a website that collects these codes and makes them available. Individuals report codes that Redbox gives to them, and other people report if the code was successful for them when they used it. A high success rate indicates the code is probably good for a free movie. Redbox requires that you scan your credit card, and they will charge it if you fail to return to DVD by 7:00 pm the next day, so be careful. You can also reuse the codes as long as you use a different credit card.

Redbox is aware of this website, and they don’t seem to have an issue with it. I suppose Redbox earns some revenue from some people who don’t return them in time. Redbox can end the free codes at any time or make them single use, so I take advantage of it while the taking is good.

Yes, getting free DVD’s is a good thing. The only negative is listening to the kids complain that they never get to go to the movie theatre.

E*Trade Bank – Working Hard for my $25 Bonus

Last week, I opened a saving account at E*Trade Bank to earn a $25 sign-up bonus. The minimum amount to open an account was just $1, and after 30 days, I will receive the bonus.

Tonight, I was setting up the new account in Quicken, and I wanted to set up the automatic update to the account. First, I tried to log into the account at the E*Trade Bank website, but I realized I didn’t know my login information. Apparently, I had failed to record the ID and password in my password management program when I set up the account. Having been unsuccessful in my attempt to have the website email my ID to me, I had to call them for help.

Granted, it was Sunday evening, but customer service was working. That seemed good, but the problem was there weren’t enough agents to handle the call volume. The automated service was unable to recognize my account number or Social Security Number, so I had to wait for a live person. A recorded voice informed me that the wait time was around 20 minutes. I pressed the speakerphone button and set the handset down, and then I found another task to work on as I listened to the hold music.

When a man finally answered, I went through the process of reciting my personal information to prove my identity. I explained my problem to him, but he said he was on the brokerage side. He told me my account didn’t have a login ID associated with it. I guess that was why I didn’t know it. He was unable to set up my account, and there was no option online to do it. I needed to speak to someone on the banking side. They could set up my account for me. He suggested that I call back again tomorrow when the wait would not be so long, but I wanted to just resolve the issue now, so I agreed to wait for banking customer support.

Again I turned on the speaker phone and waited another twenty minutes for the next customer service agent. After proving my identity and explaining my problem to him I was a little upset to learn that he was also on the brokerage side, and he couldn’t help me.

So having failed on the second attempt, I accepted that I will have to call back tomorrow. In the usual fashion, when the customer service agent had not helped me, he read from his script. “Is there anything else I can help you with?”

What had originally seemed like a great return on a $1.00 investment was beginning to look like a lot of work for a mere $25. I think I’ll be reluctant next time to try to pluck a sign-up bonus of this value. At the moment, it hardly seems worth the effort.

Mortgage Defaults -- Watching Open House on CNN Today

I TiVo “Open House” every weekend. Lots of good information on that show and Gerri is one of the best hosts for this type of show.

When I watched yesterday’s Open House today, my son, a middle schooler, over heard Gerri talk about the recent rise in mortgage defaults. He asked me, "What is a fixed mortgage and what is an ARM?"

I paused the show, and turned on my computer. What a good opportunity for me to give my son some financial insights.

After using INGDirect.com and BankRate.com to show him what the mortgage terms are. I started a spreadsheet. When he saw that if a person get a 30 year fixed mortgage, and paying on schedule for 30 years, total payments would be almost 3 times the original loan. He was quite shocked. He was equally shocked when he realized that after ARM’s initial rate period is over, the rate can float. I told him that’s exactly what Gerri is talking about on the show today, that people took ARM mortgage a few years ago have to pay higher rate now and some are having trouble to keep up the payment, the financial institutions can foreclose these houses according to the law. These people may lose their homes.

“Did they know when they sign up a few years ago?” My son asked.

“I guess they did. The loan officer is required to explain that to borrowers." I said.

"Before making a big decision, people should weigh the risk first and think of a plan B if things do not go the way they hoped.” I told my son. “Some people may just take the biggest risk of losing their home if rate goes higher, it could be their plan B."

“That’s a very bad plan B.” My son said. I cannot agree with him more.

Do you have a good plan B for you and your family? Could you tell me your plan B?

Pit-- Family Game Night Tonight

Dinner is worth a mention, pizza, Cheese Cake Factory cheesecake, and seedless red grapes, all from Costco. It was more than plenty for a family of four and a great value too, about $3.75 per person. There is even pizza left over for the children's snack tomorrow.

Tonight is family game night. Pit was the choice, not much thinking required. Pit is a card game in which players attempt to "corner the market" in a particular commodity. I am not sure how much the kids understand the concept of cornering a market, but they sure do like to yell out during the play. It is so much like being a trader on the floor.

It is not a bad game to play with children. The rules are simple, and it takes about an hour to play.

Any Penny's Financial Plan

I have been approached by many financial planners and advised by family and friends to have a financial planner. However, I am a little scared, afraid that I will end up like a chicken that asks advice from a fox.

After all my husband and I do have a basic financial plan which is "Spend less than I earn." At least that plan has helped us accumulate our first million dollars.

When reading "The Millionaire Next Door", I thought the writer knew us, but not very well.

When reading "Rich Dad, Poor Dad", I thought the writer had a gimmick to make a lot of money, but it seemed quite risky.

When listening to Clark Howard, I have to say, I agree with most of what he says. After all, great minds think alike. It's too bad; however, his emphasis is on the spending side, not the earning side.

I have much knowledge and experience to share, but I want this blog to help facilitate my personal search for financial wisdom from you, my readers. Help me to reach my ultimate goal of having a content, comfortable, and worry-free life.

Would you please share with me your basic financial plan in one sentence?