CONSUMERS : Priority for the ‘90s Should Be the Big Payoff
If American consumers don’t want to find themselves coming up way short in the upcoming decade, they’d better start getting smart now for the 1990s, experts warn. So just what sort of resolutions ought savvy consumers make for the New Year and the decade beyond?
Attention, shoppers, here’s some select advice.
Your No. 1 priority for the ‘90s, financial advisers and consumer advocates say, should be to pay off those high-interest credit cards. There’s an especially pressing reason to do so, besides, of course, the simple, ugly truth that too many Americans charge too much on their plastic.
Consider that as the old decade passes away, so, too, will whatever tax advantage you might have held in writing off the interest costs on credit cards, many of them charging rates of 18%-20%. On your 1989 taxes, you can deduct only 20% of those stiff fees; in 1990, only 10%; after that, it goes to 0%.
Still, “60% of the people still don’t pay off their credit cards within the grace period and they end up paying all that high-interest,” said Andrew Tobias, author of a number of best sellers, including “The Only Investment Guide You’ll Ever Need,” and “Managing Your Money.” Tobias, in a phone interview from Miami, urged smart consumers to “pay off all of their high-interest credit cards, making 20% tax-free, risk-free money.”
“It’s also good for the country,” he said, “because people are borrowing too much and not saving enough. We’re selling Hawaii for a lot of VCRs. We’ve sold a good chunk of downtown Los Angeles, too. Of course, we have every right to do that, but I’m not sure it’s the right thing to do. It’s like the Indians when they sold Manhattan. . . .”
Tobias, who added that “it’s very hard to get rich borrowing on credit cards,” continues to recommend his novel plan of buying essentials in bulk to save money.
“The savings can be very dramatic,” he said, explaining that instead of buying one medium tube of toothpaste for $1.89, consumers should wait for the economy size to go on sale and buy six “at a great price. That’s a year’s supply but it’s 40% less per ounce. And that’s a 40% tax-free return on your money.”
Steve Brobeck, of the Washington-based Consumer Federation of America, endorsed Tobias’ credit-card advice and recommended that consumers “before they make major purchases, . . . should read Consumer Reports. Not just the Buying Guide, but the monthly magazine. It’s good not only for products (ratings), but it has good general information such as articles on cholesterol levels.
“And anyone who doesn’t consult it before buying a new car is looking a gift horse in the mouth,” he said, adding that families who can’t afford the magazine or buyer’s guide can find them in most local libraries.
Brobeck also urged consumers not only to comparison shop but to “seek to negotiate a better deal. Nothing is fixed any more. Everything is open to negotiation. You can haggle over virtually everything, even mortgage loans. On high-ticket items, merchants are increasingly willing to haggle over the price.”
But the relationship between retailers and customers need not be adversarial, said Bill Dombrowski, vice president of corporate affairs for Carter Hawley Hale, parent company of the Broadway department stores. Consumers, he said, “should take advantage of the improved level of service. We’re placing more emphasis on service than ever before and people should take advantage of the help salespersons can give them.”
When buying, especially big-ticket items like appliances, smart shoppers know it pays to look beyond just the price tag. Consumers, for the sake of their future utility bills, as well as of the environment, should try to pick products that save the most energy, experts said.
Then, once those products get in their homes, “there are a number of ways consumers can be more efficient,” said Denise King of Southern California Gas Co. “The No. 1 thing is to keep natural gas appliances clean, properly adjusted and in good working order. They can control their usage with conservation measures. And if they’re remodeling or need to replace appliances, they should consider higher efficiency” units.
If you have to replace a gas water heater, she said, consider models with an 85% rather than the standard 76% efficiency rating. They may cost $100 more up front, but you’ll save $15-$30 each year on gas bills.
Consumers also can conserve energy and cut their bills by taking advantage of new technologies in “lighting, appliances and building materials,” said Michael Shames, executive director of Utility Consumers’ Action Network (UCAN) in San Diego. “There are numbers of new things--improved insulation, film for windows that reduces the amount of heat buildup in the house, better caulking materials.”
If you’re looking to preserve your own energies, it also might be wise, the experts said, to consider consulting some common consumer experts. Like? Well, consider travel agents, said Eric Friedheim, editor in chief of Travel Agent magazine in New York.
“That’s where they’re going to get the best advice about discounts, lower air fares, trendy destinations and hotel accommodations,” he said. “The reservations systems are computerized and (agents) can find a lot more options than a person on his own.”
Consumers in the 1990s will have to be “much more sophisticated” about all kinds of computerized and otherwise high-tech products and services, said Ken McEldowney, executive director of the nonprofit Consumer Action group in San Francisco. “Purchasing is going to be done by various types of computer technology. And that’s going to have incredible implications in terms of consumers being able to make intelligent decisions. . . .”
McEldowney and Shames both see potential problems in the development of sophisticated, consumer computer data bases and computerized, credit-card purchases of almost all goods, including groceries.
McEldowney said he fears that “the technology is going to drive a wedge between those who are computer sophisticated and those who aren’t.” He also has concerns about fraud increasing with the computer systems.
Shames, meantime, worries about consumers’ “privacy rights.” As computerized buying expands, Americans must “demand from merchants that personal buying habits not be disclosed without permission,” he said, adding that consumers must learn to see the trade-offs between high-tech convenience and the reality that, “almost everything you purchase with a credit card is on . . . data bases and that recorded information may become shared with other companies.”
And if Big Brother doesn’t snare unsuspecting consumers in the 1990s, watch out because other woes just might: Crime will continue to be a major American headache, law-enforcement officials say, adding that bunko schemes and fake charities, for example, assuredly won’t disappear in the next decade.
But Good Samaritans with smarts more than ever will know in the ‘90s that “it’s a good idea to check out references before you give to a charity you don’t know too much about,” said Linda Cuarenta, senior investigator for the Los Angeles City Social Service Department.
“If a charity is soliciting in Los Angeles and we have the organization on file, we can tell people about it,” she said. “Or we might not have it on file but have heard of it. People can call us ((213) 485-5003) and ask. They should also ask the charity for its financial statement and a brochure about it. If it’s legitimate, they should send it.”
Two other sources that check on charities: the National Charities Information Bureau in New York (212) 929-6300 or the California Attorney General’s office--in Los Angeles, (213) 736-2044.
And when it’s all said and done, what’s the best consumers can hope for from the ‘90s? Well, maybe the advent, finally, of a kinder, gentler age?
“People are much more violent than 25 years ago,” cautioned advice columnist Dear Abby. “We’re living in stressful times and we have to find some way to get along, with relatives, with friends, with each other. We should try to hurt as few feelings as possible. There’s no right way or wrong way to do things. But there is a diplomatic way to do everything.”
