negotiation

Here's What to Do If You Get Audited

Mikey Rox — Tue, 27 Feb 2018 09:30:09 +0000

We often exaggerate the phrase, "My worst nightmare," but when it comes to getting audited, it's true. Audits are many people's worst nightmare — but they don't automatically have to mean financial disaster. To help navigate the unwelcome process, consider these important steps to take as suggested by tax professionals.

1. Don't panic

A lot of folks' first response to receiving their audit notice is to panic. Just the word "audit" has the ability to throw everything into a tizzy. But in all probability, if you've reported your taxes accurately (or at least tried to), the situation is likely not as bad as you think.

"It can be easy to fly off the handle and make what can be simple requests for information into a pressure-filled, stress-inducing scenario," says certified financial planner Joel Ohman. "This need not happen if you have someone — a CPA, tax attorney, or other trusted professional — representing you and counseling you."

Slow down, take a deep breath, and call whoever does your taxes. Trust them; rely on their advice.

2. Read the notice carefully

Take a good look at the audit notice you received. Many audits are desk audits or computer document-matching audits rather than the complete tax return audits done in-person.

"If the audit request is a document-matching audit, they will typically ask you to verify certain lines on the return," explains Grafton "Cap" Willey, CPA and managing director of the New England division of CBIZ MHM. "Very often they will propose an adjustment based on the information they have received. They will state that you reported 'such and such' and they have additional documents that they do not see reported."

3. Prepare the required documents

Documentation is the key to success in audits. Provide organized documents such as 1099s, K-1s, W-2s, and canceled checks, and reconcile them to the amounts claimed on the return. If you do not have adequate documentation, it's more likely that you won't get the deduction.

"IRS information is not always correct, so look it over carefully and make sure that they have the correct information," Willey adds. "Investment gains and losses are often misrepresented and very often the IRS will assume a zero-cost basis on unreported transactions. Providing corrected information will usually satisfy them."

When going through your documentation, if you come up with more deductions than you claimed, don't be afraid to submit them in your response. The IRS can be very strict on accepting documentation for charitable donations and business expenses, however.

4. Submit your documents on time

Don't make matters worse by missing deadlines. An audit is a serious matter that can result in heavy fines, and you don't want to put more stress on the process by being uncooperative. Follow the guidelines and get your documents submitted by the date expected. (See also: The Easiest Way to Avoid a Tax Audit)

5. Don't let your mouth get you in more trouble

The IRS is very good at making people feel nervous about being audited, and when people are nervous, they tend to ramble — sometimes to harsh consequences.

"Remember the IRS's job is to appropriate your money for government needs, and your job is to justify why you should keep the money yourself," explains CFP Brent Dickerson, owner of Trinity Tax Advisory. "They are not your friend, and they are not there to help you keep money for yourself; many people in an audit situation fail to remember this fact. They let down their guard and often say things that they don't even realize can bite them. Therefore, it's in your best interest to have a representative work on your behalf with the IRS."

6. Bring your CPA with you to your in-person audit

If the audit is an in-person audit, consider bringing along a tax professional to represent you at the audit.

"The IRS is not afraid to try to intimidate a taxpayer representing themselves," Willey says. "A tax professional that has experience with tax audits should be aware of the rules and know when the agent may be fishing for issues. Very often, giving a tax professional a power of attorney authority may avoid the taxpayer from having to sit down with the IRS agent, which many taxpayers would like to avoid."

Make sure your records are well organized and well documented; make it easy for the agent to follow. If they have confidence that you're presenting good documentation, they will be more likely to accept what is presented to them.

7. Don't be afraid to disagree and negotiate

Sometimes a tax audit is a negotiation — you may have to concede to some changes on smaller items in order to not have big changes on larger items. It really depends on the agent. Some agents nitpick minor items, while other agents go straight for the big issues.

"In my experience, IRS field agents tend to rigidly apply the law in favor of the Treasury," says Matthew T. Eyet, Esq. of Sandelands Eyet LLP. "If at the end of the audit you think the agent got it wrong, file a protest to take your case to the Office of Appeals where the appeals officers are typically more taxpayer-friendly in their analysis."

In addition, he adds, unlike field agents, appeals officers are allowed to consider the hazards of litigation when negotiating a settlement. This almost always means a better result for you.

8. Hire an enrolled agent if you're caught red-handed

If you've really dug yourself a hole and committed criminal acts by submitting fraudulent taxes, you'll need more than a CPA to help you. An enrolled agent is a tax expert and recognized by the IRS as having unlimited right of representation. They're your best hope of the least amount of recourse.

"If you are facing counts of criminal charges, you'll need a lawyer," says Dickerson. "If your business is being audited or if you have a sole-proprietorship with lots of accounting needs, then you may want to opt for a CPA. All of these professionals have their own specialties when it comes to tax and each is able to represent clients in front of the IRS — but only attorneys can represent in cases of criminality." (See also: 10 Reasons You Should Really Fear an IRS Audit)

9. Pay what you owe ASAP

You want this situation to be over, and the best way to accomplish that is to pay what you owe immediately. If you don't, you run the risk of added interest and penalties with late fees on top of that.

If you don't pay the balance in full in the first 21 days of receiving notice of what you owe (for balances less than $100,000), penalties begin accruing. The faster you can get this squared up and put behind you, the better.

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This article is from Mikey Rox of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

How Being Uninformed Costs You Money

Sarah Winfrey — Thu, 21 Dec 2017 10:01:05 +0000

Have you ever negotiated what you thought was a good deal, only to find out later that you didn’t have all of the information? You probably could have gotten a better deal (or wouldn’t have made the purchase at all) if you had all the facts. That’s an awful feeling, because you feel like you let yourself down.

In fact, there’s a name for this kind of interaction, and there are things you can do to keep it from hurting you again.

Information asymmetry

When one party in any sort of transaction knows more than another, it’s called information asymmetry. This mismatch of knowledge means that one person — the one with more knowledge — has more power in the transaction.

That power differential is why you often feel terrible when you find out you got a bad deal because you didn’t know enough. You may feel like you didn’t hold the cards you thought you held — like you were manipulated, cheated, or lied to.

Information asymmetry and your money

When you don’t have all the information, you end up losing money. My family experienced this when we bought our first used car. We did all of the right things: drove it around, took it to a mechanic, and asked good questions. However, the previous owners didn’t disclose that they had used the wrong kind of chemical in the radiator, clogging the entire system. They cleaned it up just enough so it would pass the typical mechanic’s inspection, and they sold it to us.

We found out soon enough what had happened, and we had to replace almost every component of the car’s cooling system. It was incredibly expensive. A mechanic let us know what he found inside, and we were furious. Had we known about the previous owners’ mistake, we would have never bought the car.

If you’ve found yourself in a similar situation, you know the pain of paying for someone else’s transgressions. Information asymmetry causes many of our most frustrating money moments, because you almost always lose when you don’t know as much as the person you’re negotiating with. (See also: 10 Negotiation Mistakes That Will Destroy Your Deal)

Mitigating the effects of information asymmetry

While you can never get inside another person’s head, there are ways to get as much information as possible before you make a financial decision. Research shows that a balance of information creates the best deals possible — the kind where everyone ends up happy. Therefore, both parties should be interested in disclosing as much information as necessary. Here are some steps you can take to help that happen. (See also: 8 Negotiating Skills Everyone Should Master)

1. Educate yourself

Before you enter into any sort of financial transaction, make sure you understand how it works. If you’re getting a mortgage, understand the interest rate, whether your loan is fixed or adjustable, and the loan’s terms. If you’re entering into a business deal, understand the details of what the other person or company does, so you can make sure they are doing as much as possible for you. This takes time, but it will help you get the best deal.

2. Read the fine print

People end up uninformed when they don’t read every detail that is available to them. Sometimes, the fine print is literally so fine that it’s hard to read. When you take the time to read and understand it, though, it will often give you additional information that you need to understand the deal you’re getting — and to negotiate a better one if you need to.

3. Ask an expert

If you don’t understand some aspect of a deal, ask someone who knows the subject at hand to help you out. People sometimes balk at this step because experts often charge money for their assistance (think auto mechanics, home inspectors, and lawyers). However, if you want to be sure you’re getting a good deal, it’s worth the investment.

4. Ask specific questions

People can always choose to lie, but many will not if you ask them a specific question. Even if they’re willing to hide something or omit a detail, they often aren’t willing to outright lie about it to your face. For instance, if you ask, “Have you ever had problems with this home’s foundation?” you are more likely to get an honest answer than if you just ask, “Any serious issues with the house?”

5. Bring out the big guns

This isn’t always possible, but sometimes it’s appropriate to get someone with authority on your side, especially if you feel powerless. When it comes to information asymmetry, this often means paying a lawyer to represent or advise you. This can be expensive, but if you’re in a major negotiation or you feel like something is wrong but you don’t know what, it can save you a bundle in the end.

You can lose a lot of money because of information asymmetry, but you don’t have to. Train yourself to carefully gather as much information as possible before you enter into any sort of negotiation, and try to level the playing field as much as you can. Use your intuition during the transaction to gauge whether something is wrong. If you feel that way, investigate some more. In the end, you will get a deal you feel good about.

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This article is from Sarah Winfrey of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

8 Negotiating Skills Everyone Should Master

Kentin Waits — Tue, 19 Jul 2016 09:00:08 +0000

There was a time when a bit of haggling was expected in nearly every transaction — from the price of shoes to the cost of a loaf of bread. Sadly, negotiating is usually reserved for home-buying, the purchase of car, and used items these days. Still, knowing how to negotiate effectively can save you (and make you!) big bucks over a lifetime. Here are eight negotiating skills everyone should master.

1. Confidence

The relationship between buyers and sellers has been rigidly established from years of training and a culture where the price tag is almost always the last word. It takes a bit of fortitude to enter a conversation with someone over price, and try to get a better deal. If your confidence is shaky, start with low-stakes purchases at garage sales and flea markets, then work your way up to more significant purchases like cars or a house. (See also: How to Negotiate With Confidence and Strike the Best Deal).

2. Speed

Sellers want to move merchandise and they often embrace a "bird in the hand" philosophy to making a deal. With that in mind, sometimes simply being first is all the advantage you need. Keeping your ear to the ground, combing the classifieds, and being the first in line puts you in a position to beat the competition and walk away with great bargains.

3. Sociability

Great deals can be made between adversaries, but not between enemies. No matter what side of the negotiating table you're on, the ability to establish a rapport and keep things friendly and light will serve you well. Remember, negotiation is more of a dance than a death match. The best deals are those where both parties get to walk away relatively pleased.

4. The Poker Face

Imagine you've found the perfect antique hutch for a song at a local flea market. Congratulations. Now keep your emotions in check and start haggling. Remember, part of your leverage is not letting your enthusiasm show and subtly implying you have other options available. Admittedly, this is a fine line to walk and getting it right is more art than science. The key is to push just hard enough to sweeten the deal, but not so hard that it turns sour.

5. Patience

Negotiating can sometimes be awkward, especially for those new to the sport. Stay calm and try not to make the first offer. Why? Because if you're a seller, that price may be significantly less than the buyer was willing to pay. And if you're the buyer, that price may be significantly more than the seller was hoping for. I know, it sounds like a twisted game of chicken, but the person who throws out the first number is usually at a tactical disadvantage.

6. Creativity

Amazing bargains come in all shapes, so don't get hung up on just one way of striking a deal. Try bundling multiple items together for a better value or bartering goods for services and vice versa. Effective negotiation is a creative enterprise, so look for novel ways to make a great deal happen.

7. Preparedness

Successful negotiators may seem casual about it, but they're anything but. They've done their homework, know what an item is worth, know what they're willing pay and — most importantly — have cash in-hand to make a deal.

If you're negotiating the price of a gently used dining room set for example, avoid dropping this infamous line: "Sounds good, but I didn't bring any cash with me. Can I stop back tomorrow?" An unprepared buyer is simply being a flirt — one of the worst types of buyers for serious sellers. Usually, not being able to pull the trigger on a deal means all other potential offers are still in play (and you've wasted your time and the seller's time).

8. Determination

Negotiating can sometimes be a drawn-out process, so a little determination goes a long way. As long as both parties are engaged, keep the conversation going and try to find a middle ground that works for both parties.

A recent deal my mom made illustrates this point perfectly. In the market for a larger and more comfortable car, my 78-year-old mother negotiated at a local dealership for six full hours (seriously... the sales staff ordered lunch for her). Ultimately, she got the deal she wanted. Remember, if the terms aren't right, be willing to walk away (or in the case of my mom, stay for lunch, get your second wind, and keep on tryin').

Are you a skilled negotiator? What's the very best deal you've scored? Share your story!

This article is from Kentin Waits of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

The 6 Shopping Mistakes Keeping You From a Great Deal

Kyle James — Tue, 28 Jun 2016 10:00:09 +0000

In today's digital retail world, there are plenty of clever ways to save money while shopping, including traditional coupons, price protection policies, or cash back apps. But unfortunately, many shoppers still make some big mistakes along the way — mistakes that result in them paying way more than they should, either online or in-store. Here are some of the most common mistakes, and how to avoid them in the future.

1. Failing to Compare Prices

If you're blindly making purchases without investigating price, you're clearly spending more than you should. With the advent of smart shopping apps like ShopSavvy and Quick Scan, there's no reason not to compare prices on significant purchases. These apps work by simply scanning the item's bar code, and within seconds, you'll know if the product is sold cheaper down the street or online. Get in the habit of using one of these apps regularly and you'll never overpay again.

2. Never Considering Price-Protection Policies

While Amazon recently axed their seven-day price protection policy, many popular retailers still offer it. This is important to know, as retailers are always trying to anticipate demand and thus are constantly changing their prices, especially online. Take advantage of the following retailers' price-protection policies.

Best Buy (15 days): For an in-store purchase, simply return with your receipt and head straight to customer service. For an online purchase, call them at 1-888-BESTBUY to request your price adjustment.
Costco (30 days): Hang onto your receipt and if you notice a lower price within 30 days, simply visit the customer relations desk and receive the difference. If for some reason you lose your receipt, you can always return the item (no receipt required) and rebuy at the lower price.
Dick's Sporting Goods (14 days): For in-store purchases, you must return to the store of original purchase, with receipt, to get your price adjustment. For online purchases, call them at 1-877-846-9997 to request a price adjustment.
Home Depot (14 days): Bring the item and receipt back to the store within 14 days if the price has been lowered. For online purchases, you can call customer service at 1-800-430-3376.
Kohl's (14 days): You'll need the original receipt to get a Kohl's price adjustment within 14 days or purchase. Items that don't qualify include clearance, BOGO, and Kohl's Cares merchandise.
Macy's (14 days): Simply bring back your receipt within 14 days for in-store purchases. For online orders, use this form to get your price adjustment.
Staples (14 days): Take your original receipt back to Staples within 14 days and get the lower price. For an online purchase, call them at 1-800-333-3330 to get your price adjustment.
Target (7 days): Bring your receipt in, within seven days, if the item you bought goes down in price. Clearance items are not eligible for price protection. Also, keep an eye out on competitor's pricing as Target will also price match the following retailers within seven days of your purchase: Amazon, Walmart.com, BestBuy.com, ToysRUs.com, and BabiesRUs.com.
Wal-Mart (7 days): Wal-Mart will refund the difference if the price drops within seven days of your purchase. Exclusions include clearance, special buys, and value of the day products.

3. Buying the Wrong Items in Bulk

When it comes to buying items in bulk from warehouse clubs like Costco and Sam's, some items don't make the grade and should stay out of your shopping cart completely. Here are some to be aware of.

Brown rice: Due to the oil content in brown rice, it only lasts for three to six months on average, compared to an indefinite shelf life for white rice. Only buy what you can consume in a few months.
Condiments: Unless you eat hot dogs and hamburgers on a daily basis, you'll hardly ever use up all of the ketchup, mustard, and mayonnaise before they go bad.
Cooking oils: They just don't have a very long shelf life, so only buy if you know you'll use them before their expiration date.
Nuts: Because they are loaded with oil, they tend to go rancid fairly quickly. Even when stored in an ideal temperature and humidity, they only last a couple of months.
Bleach: This one was a surprise to learn. Apparently bleach is only usable for three to six months; after that it starts to lose its effectiveness.
Baking powder: A big box of baking powder is often a bad buy, as you typically don't need much, and it only lasts for six to 12 months, depending on how you store it.
Beer: Many shoppers will stock up on beer for an upcoming party and overbuy, leaving them with a lot leftover. If you're not a beer drinker, be warned that most beers only have a shelf life of three to five months.

4. Assuming the Final Price Is What You Have to Pay

If you assume the price on the tag is what you're stuck paying, you're clearly doing it all wrong. You've failed to consider money-saving tools like coupons, cash back, and the idea of negotiating a lower price. Here is how to take advantage of each:

Coupons: When shopping in-store, arm your smartphone with the CouponSherpa and RetailMeNot apps. The combination of both will provide you with a plethora of coupons to thousands of stores which the cashier can simply scan when you're checking out.
Cash back: Use free apps like Ibotta and Checkout51 gather rebates at the grocery store on items you'll be buying anyway. You will be amazed how quickly your cash back rebates add up. (See also: Earn Thousands Per Year with These Cash Back Sites)
Negotiate: Always look for damaged packaging, floor models, and imperfect items and negotiate a deal. Often times they will already be marked down, but managers want them out of the store quickly. To accomplish this, they will often sweeten the deal for you by 10% — 20% if you politely ask.

5. Always Buying Brand New

If you have the mindset that "new is always better," you're making a big shopping blunder. If you can consider buying used when making big purchases like a new car, to small purchases like textbooks, furniture, tools, and exercise equipment, you'll save significant money. After all, it makes smart financial sense to let someone else take the depreciation hit. While Craigslist is the obvious place to start your search, don't forget about GSALR.com which helps you find garage sales in your local area. The site even offers a Google map to each garage sale and allows you to filter your search by specific keywords like "furniture," "baby clothes," or "golf clubs."

6. Stocking Up Because It's a "Deal"

Do you ever fight the temptation to stock up when you find a good deal, even if in the back of your mind you know you don't need more than one? It's an easy trap to fall into and it often leads to overspending. An easy way to remedy this problem is to stick to your shopping list, and budget, and know that buying excess "deals" often leads to excess waste.

What shopping mistakes have led you to overspend in the past?

This article is from Kyle James of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

10 Negotiation Mistakes That Will Destroy Your Deal

Paul Michael — Mon, 04 Apr 2016 10:30:05 +0000

In any kind of bargaining situation, from million dollar property deals to purchases at a flea market, there are many pitfalls to avoid. What you say, and how you say it, can be the difference between walking away with a steal, or empty pockets. So before you make any more deals, make sure you steer clear of these 10 negotiating mistakes.

1. Waiting for Someone Else to Set the Price

It's one of the biggest mistakes in negotiating, and people continue to make it every single day. They believe that by waiting for the other person to speak, and say a price, they are putting themselves in a position of power. It's actually the complete opposite. By saying the price first, you are doing something called, "anchoring." For example, when looking at a new or used car, don't wait for the seller to set the price first. Come in low, and firm. You have now anchored the price you're negotiating over at a much lower place than the seller is comfortable with. He or she will raise it up, but you have set the bar.

It's a common tactic used in sale pricing. Set a high before-price, anchoring people to that. Then, drop the price by 50%. In reality, that lower price is actually the price the business wants for the item, but they are now making you believe you got a bargain. A full price $50 item will sell poorly compared to an identical $50 item that was originally marked as $100.

2. Showing Fear or Weakness

Sometimes striking a deal can be a scary prospect, especially on a big purchase like a home or car. However, as nervous or fearful as you are, you cannot let that play any part in negotiating. The salesperson is trained to smell that kind of fear, and will use it to his or her advantage.

So, whatever your stomach is doing, you need to have a calm, collected, and serious demeanor. Let the person know you're not to be messed with, by dropping a few hints about all the preparation you've done for this meeting. And when it comes time to talk hard numbers, do not show any kind of weakness either. Being stubborn may not be an admirable trait, but when it comes to the deal you want to make, stick to your guns. The old saying is true… give them an inch, they'll take a mile.

3. Signing Anything Without Reading It First

We have all signed agreements like the Apple terms and conditions, which appears to be about as long as War and Peace, without reading them. We know it's just not worth our time. But when involved in a negotiation, you must read over everything before signing. Never trust a salesperson at their word when it comes to contracts or binding agreements. You're signing something that could tie you up in knots for years, so make sure you know just what you're agreeing to.

If you need a professional to look it over, insist on that. Too often, someone will strike a verbal agreement, but sign one that is very different. Trust, in this case, is not going to cut it. Read it all, thoroughly, and ask questions at any time.

4. Not Doing Your Homework

When it comes to getting a great deal, you need to be prepared to put some time into researching it. Whether it's a new car, a home, a computer tablet, or even some fruit and veggies at the local farmers market, you cannot haggle blindfolded. If you try, you'll be uncovered as someone who doesn't know what they're talking about, and your deal will go nowhere. So, use the technology you have available to really dig deep. If it's a new car, find out exactly what the dealer paid for it, and what the typical "out the door" cost is. If you're at a farmers market, look around, and see what the prices are like at competing stalls. Does someone have a better deal on oranges? Can they match it, or beat it? Knowledge is power in any deal you are making.

5. Confusing Friendliness With Friendship

It doesn't matter if you are well-acquainted with the person you're dealing with, or they're a complete stranger. When it comes time to make the deal, amicability, charm, and kindness all confuse the issue. Salespeople, in particular, are trained to say and do things that make them appear like they're your best friend. They're not. They just want the sale, and they know quite well that they'll catch far more flies with honey than vinegar.

If you are caught in a bargaining situation and the other party is trying to say things that make you feel guilty about asking for something you want, it's time to regroup. A deal is a deal, and any kind of emotional blackmail or, "Hey, we're buds. Can you cut me some slack?" language has no place at the table.

6. Not Sticking to Limits

It happens at auctions all the time. People see something they have to have, whether it's on eBay or at a live auction. They say beforehand that "$1,000 is the highest I'll go," and yet when caught up in the heat of the bidding, they blow right through that limit and spend more than they can afford.

Setting limits is necessary to protect yourself in the bargaining arena. Before you enter it, you are calm and know the numbers well. Once in it, emotions can run high, and common sense gives way to pride or greed. Don't fall into that trap. If you can, bring cash to a live auction, and no other way to access funds. That means it's almost impossible to go over the limit you set.

7. Telling People What You're Ready to Spend

Never, ever give anyone that kind of information. Car dealerships rub their hands with glee whenever anyone says, "I'm willing to go up to $20,000." That information is something only you should know. As far as anyone else is concerned, you are willing to spend the least amount possible, and not one penny more. By giving out this information, you have given away your anchor. A slick negotiator can get you to go beyond that price with a, "Well hey, it's only $1,000 more, and it's such a good deal."

Now, what you can do is create a fake limit, and anchor the other party to that. You may be ready to spend $20,000, but set the max at $15,000. That's your top limit. When they get you to spend $16,000, they'll feel like they've won, and you know you were willing to spend $4,000 more.

8. Going for the Win

When two parties come together to discuss a deal, both want to win. Obviously, that cannot happen. The seller wants to get the most possible money, the buyer wants to pay the least. By obsessing over the win, you can lose sight of the ultimate goal — to get a deal. If you let the other party think they have won, when in fact you have come away from the table with everything you wanted, then you actually win.

What's more, if you try too hard to get every single thing you're asking for, you could blow the entire deal. So, know beforehand what you want out of the deal, rather than being greedy and taking it all.

9. Being Nice

While it may not be true that nice guys finish last, it can definitely apply in the deal-making process. Being warm and cordial is all well and good, but never be afraid to break away from that to show you mean business. You can laugh and smile all you want, but it's also okay to be stern, and say things that some may find abrasive or even rude. As long as you do everything in a civil way, there is nothing wrong with ditching the nice guy routine and playing hardball.

10. Showing Eagerness

"Oh I love this house. I love it, I love it, I love it. Let's make a deal." With a phrase like that — whether it's a home, a car, or a new TV — you're putting yourself in a position of weakness. You have just told your counterpart that you love what they're selling so much, you'll do anything to get it. They know this, and they'll use it to their advantage.

When faced with your dream home or car, never show those emotions to the seller. As far as they're concerned, you could go either way, and they'll really have to work hard to make a sale. And if it comes down to it, walk away. Get up from the negotiating table, and leave. You should never be afraid to let a deal go, no matter how much time you've invested. If it's not the deal for you, however much you love it, then you cannot go ahead.

What are your negotiation tips? Share with us in the comments!

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This article is from Paul Michael of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

This Recent Grad Paid Off $34K in Student Loans and Launched a Business (In Just 4 Years)

Alaina Tweddale — Fri, 16 Jan 2015 14:00:04 +0000

Stephanie Halligan had just graduated from Boston University with $30,000 in student debt and no clear plan to manage her payments. A degree from a top tier university like her alma mater is a huge accomplishment for anyone, but it was even more so for Halligan, who was the first in her family to graduate from college.

Despite her top notch degree, Halligan had difficulty with her job search. (It was 2009, after all, one of the worst years of the recession, and jobs were scarce.) Halligan had landed a $1,000 per month internship and was living in downtown Boston, where rents are notoriously high. "What had seemed like an insignificant amount to borrow while I was in school was actually a lot," she says. "After graduation, I didn't really know what I had gotten myself into. I didn't know how I was going to add up the dollars and cents to cover everything."

Learning the Money Ropes

Halligan knew something had to change if she was going to make ends meet. Coincidentally, as part of her internship, Halligan was offered the opportunity to teach personal finance classes to refugees new to the U.S.

"I taught them about the banking system in this country and about how credit cards work," she recalls. "Ironically, I was earning minimum wage and was starting to rack up credit card debt because I couldn't pay my monthly bills."

Halligan realized she was learning marketable skills through her internship, which she could likely parlay into a new career. "I realized the only way I was going to work my way out of this [debt] was to find higher paying work," she says. "I knew I had to be creative about how I found my next job, so I started taking more responsibility at my internship and started my job search in earnest."

Halligan's tenacity paid off and she was soon able to leverage her new experience into a full-time offer at a nonprofit in Washington DC. Her starting salary was $47,000 per year, a nice boost from what she was bringing home as an intern. "I felt like I was making more, but D.C. is also expensive," she says. "But, once I had a salary, I had something to work with and was able to start getting aggressive with my student loan payments." (See also: You Should Always Negotiate a Raise: Here Are 10 Reasons Why)

Negotiation and Debt Repayment

Halligan's overall debt now totaled $34,000, and she knew she wanted to pay it off as fast as possible. She'd grown up with parents who'd almost lost their home to foreclosure because of their own debt struggles. It was a cycle she didn't want to repeat.

At first, Halligan worked to keep her living costs as low as she could. Her frugal life choices allowed her to chip away at her balances, paying a little extra here and there. After her first performance review and salary increase, she realized she'd need to make more money if she was going to make a significant impact on her hefty student loans. "I started doing research about how to negotiate my salary and started taking on side work." Halligan admits the side work didn't amount to much at first, but that her negotiation research yielded almost immediate returns as she learned to articulate her worth to her boss. Over the next two years, Halligan's net negotiation gain was $13,000. (Here's how she did it.)

Soon after, she left the nonprofit for a higher-paying startup, where her incoming salary was $70,000. Halligan was living frugally and had been incrementally increasing her monthly student loan payment. "I started with $300 per month, which was my minimum," she says. "I started adding to that in $100 increments. I'd also earmark half of all unplanned income like my tax return, job bonus, and even a $20 birthday gift and used it pay down my loan balance." (See also: How One College Grad Paid Off $28,000 in Three Years on a $30K Salary)

Around this time, Halligan realized that it was within her reach to pay her remaining $10,000 student loan balance within a year. In addition to the salary increases she'd negotiated, she was running a successful personal finance blog and freelancing on the side.

As Halligan started to see the light at the end of her debt tunnel, she got increasingly aggressive with her payments. "I didn't want lifestyle increases to creep in when I received salary bumps," she says. "I knew I'd have more life options if I had the loan paid off." She increased her monthly payment to between $800 and $900 per month. "I had set a goal to pay them off by the end of 2013 and I did. I made my last payment in October of that year. It was a little less than four years from when I'd started repayment," she says.

Going Solo

As her final payment date approached, Halligan realized she wasn't happy with her job. She was designing online financial games for students, which she loved. It was the requirements outside of that work that were off-putting. "I was looking for a new job, but as I got close to paying off my debt, I started to realize it was possible to start my own business," she says. "I'd been saving, I had the expertise, and I realized my skills were in demand." (See also: Starting Your Dream Business Is Easier Than You Think: Here's How)

A week after she made her last loan payment, Halligan left her job. She's been debt free and working for herself since — now a little over a year. Today she is a financial education consultant, program designer, and marketer at her company, Empowered Dollar. Halligan currently earns less than she did at the startup but, she says, "I measure my career differently now. I feel like I bought time and freedom." Halligan works flexible hours, can work while traveling, and even recently returned from a five week trip through South Africa, Mozambique, and Tanzania. "Even though I'm not richer income-wise, I don't have any debt to pay off. That makes my life feel richer," she says.

Are you paying back your own student loans? What strategies work best for you and how long do you expect your plan to take? We want to hear your story in the comments below.

This article is from Alaina Tweddale of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

10 Things Besides Salary to Negotiate at Work

Qiana Chavaia — Tue, 06 Jan 2015 10:00:05 +0000

Fringe benefits. Aren't they great? And one of the best things about being offered a new job is the leverage to negotiate your benefits package, which is often worth thousands of dollars. So don't leave money on the table — here are 10 things besides salary to negotiate at work. (See also: How to Negotiate Higher Pay at Your Next New Job)

1. Retirement Plans

Your company should already have detailed retirement plans in place, but in a few cases, you might be able to negotiate contributions to your 401(k). If your company's plan is unsatisfactory, you may also be able to negotiate higher salary or other perks in lieu of 401(k) matching.

2. Bonuses

Bonuses are subject to an employer's discretion and are generally performance based, but you can establish an expected yearly bonus range up front and negotiate what percentage of your salary to expect. Conversely, if you're risk averse, you might consider negotiating a higher base salary instead of a bonus.

3. Additional Performance Compensation

Though you are a salaried employee, if you're in any type of position where your job is to generate new business, you can discuss additional compensation for bringing deals in the door — such as commissions, for example. The amount can be equal to a percentage of the total deal amount — perhaps 1% or more. If you're confident in your sales ability, you may even choose to take a lower salary for such an agreement.

4. Non-Compete Clauses

Some employers add non-compete clauses in their employment agreements. Watch out for the wording of these, because they can prevent you from leaving and immediately going to work at a competing firm, for yourself, or engaging in side work while with the company and for a specified time frame after. In some cases, this can even extend for one or more years after your departure. Non-competes can also prevent you from taking your clients and contact lists with you.

5. Paid Vacation, Holidays, and Sick Days

There are no laws mandating paid vacation, holidays, and sick leave. These are considered fringe benefits and are an agreement between you and your employer. Chances are, your employer has outlined the standard vacation and sick leave limits for all employees, but you can still negotiate additional vacation and sick days if you don't feel the offering meets your expectations.

6. Flex-Time

More and more companies are recognizing that the majority of work responsibilities involve work that can be completed without your physical presence at the office, so negotiate reduced office hours. Substitute them with telecommute hours. You can ask for compressed work days or set days where you don't come into the office at all.

7. Higher Salary to Opt-Out of Health, Dental, Vision, and Life Insurance

You are not required to participate in the company health benefit plans, but if your company has one in place, great — you have a choice. Should you decide to participate, it'll cost your employer a monthly amount — let's say equal to 100% of your monthly payment. So, if you're paying $250 per month, your employer is also paying $250 per month. You can speak with executive officers and negotiate a salary increase if you elect to not participate in the company sponsored health plan.

8. Professional Development, Tuition Reimbursement, and Memberships

Companies encourage professional development, as well as joining professional groups and organizations because these activities support your efforts to network and bring in new business. Display your interest in participating in such activities and discuss initiation fees and annual dues. Do the same for independent study and continued education courses you're interested in taking.

9. Transportation and Meal Plans

Ask for a weekly transportation credit and/or meal plan to help you cover the cost of being an employee. These expenses are tax-deductible for self-employed individuals, but come out of your pocket as an employee. After all, your boss is likely writing off a portion — if not all — of her expenses. Don't be afraid to casually mention how many companies offer transportation programs and meal plans.

10. Reimbursement of Expenses

If you travel or entertain clients for work, your company will reimburse you for your expenses, but take it a step further by asking for a company credit card if you'll have recurring outlays. This way, you won't have to wait until the following month to be reimbursed.

Have you negotiated these or any other forms of non-salary compensation at work? What was your strategy?

This article is from Qiana Chavaia of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

6 Ways to Ask Your Boss for Better Work-Life Balance

Ashley Marcin — Mon, 08 Dec 2014 10:00:08 +0000

Work. Life. Balance. Three words that — in combination — have the power to transform your entire way of looking at the world. (See also: 9 Ways to Protect Your Personal Time From Work)

But how exactly do you achieve this seemingly elusive goal? Well, I've been on a journey over the last decade to figure it out. Here are some tips that have helped me, and they have the power to transform your situation as well.

1. Step Back

It's incredibly easy to get tangled up in the day-to-day responsibilities and deadlines. Eventually, we lose sight of what our priorities are, whether at work or at home, and life becomes this exercise in keeping our heads above water. First, take a step back and think about what it is you want from your personal and professional sides. Be specific. Write it down. Revise. Rewrite the list again. Then make a game plan.

2. Check Yourself

Before you approach your boss with any ideas or make major changes yourself, look at your time management to see where it could be improved. Many of us let work creep into our personal time when it doesn't need to. Or we over-commit to things outside of work that chip away at whatever time we have left. To start, track your time for a few days (on an Excel spreadsheet, a time management app, or just paper). Consider it an audit.

Once you see where your energy is going, write out a list of all your day's activities. Give weight to musts (work, obviously — but also the things you need in your life to be happy and healthy). Eliminate the extraneous wherever possible. In the past, I even found it helpful to write down time-suckers that fell outside my job description to show my boss. (See also: The Time Management Problem Most of Us Have)

3. Request a Meeting

See if your boss will meet with you for even 15 minutes to discuss your work-life balance. I like sending an email request with a brief description so it's on the calendar. Now, I've had a variety of bosses in the past ranging from awesome to not-so approachable, so I understand it can feel intimidating. Just remember: This is your life we're talking about. Fortunately, your workplace has already invested a lot of time and money in you — so you need not fret that bringing up concerns will get you canned. Quite the opposite, actually. There are some tremendous advantages for keeping employees happy, including better retention rates and even higher profits.

4. Prepare Yourself

Be organized in your approach. Talk about what you see as perceived time-wasters in your position. Offer some opportunities you have mapped for change. Basically, don't show up at the meeting expecting your boss to wave a magic wand. You need to offer both practical and creative solutions to your problems. And the help you suggest can range from personal improvement (taking continuing ed classes) to manpower stuff to better software that might automate some of your work. Sure, these ideas may get shot down, but you'll get points for trying, especially if you do your research.

For example, after a full-time receptionist had retired (and wasn't replaced due to a dismal budget) in the office where I served as an executive assistant, I used to get bogged down serving as a backup for phones. I had many other, more pressing tasks to complete for my boss. When he discovered how much time I spent on the lines, he moved a receptionist from another department to our office part-time to shift the workload at my suggestion. Lesson here: Your boss may not even realize what you do all day and may completely agree that your time is being spent on the wrong focus.

5. Flex It Up

Check in with your HR department to see what types of flexibility programs your employer offers. Sometimes you can move around your work hours to accommodate other parts of your day (coming in early or late, depending). Other times, you can work more hours some days and, therefore, fewer overall days of the week. A few of my friends have even organized a work-from-home schedule for certain days. Most offices offer some type of flex program, so it's just figuring out what might work for you and your boss. Obviously, all jobs have different responsibilities so not all flex arrangements work in all cases.

6. Take Your Time

I know this one can seem easier said than done, but when you get time off — take it! If you have holiday breaks, don't check email or even bring your laptop home. Make a habit of totally disconnecting on the weekends. If your job requires you to have a level of connectivity during time off, set a realistic window (and communicate your plan to your boss). Otherwise, set your automated out-of-office and rest and relax. I worked in an office once where everyone constantly checked their emails while on vacation. So, I simply asked my boss one day if that was required of me, and she said absolutely not and encouraged me to enjoy my time away. Problem solved. If your job routinely urges you to keep tabs on work on your personal dime, it might be time to polish your resume.

How have you carved out better work-life balance? Please share in comments!

This article is from Ashley Marcin of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

6 Ways to Trick Salespeople

Damian Davila — Tue, 16 Sep 2014 17:00:06 +0000

You have to deal with a salesperson to make a big purchase.

It might be a refrigerator, a car, or even a house. Very often, you feel dissatisfied with the way a negotiation went. You may walk away feeling like you got taken for a ride, and that you had no defense for the wiles of the salesperson. (See also: The 7 Laws of Negotiation)

Well, it's time to stop thinking about defense. It's time to turn the tables and start owning the outcome of your big purchases. To jumpstart your negotiations, learn these six ways to "trick" salespeople.

1. Buy Them a Cup of Coffee

Apply the rule of reciprocation on salespeople.

When you first encounter a salesperson, greet her with a small gift (something as small as a piece of gum) or do a small favor for her (open the door). The idea is that you are binding the person to return the favor.

No matter where in the world you are, this is a trick that works in negotiation. No matter how cheap your gift is, it will dramatically improve your chances of getting what you want. For example, in a study restaurant servers who presented the check with a mint and then paused to give the customer a second mint and tell them that this one is just for them got a 20% increase in their normal tips.

Ideally, buy them a mug of coffee, a cup of strong tea, or a can of Coke. Turns out that consumption of caffeine makes people much easier to persuade. Just don't use the drinks from the waiting room; instead bring one from outside that "is just for them."

2. Talk Fast at the Beginning

Right after you hand that free cup of coffee, get the talking going… fast!

Fast talkers are perceived to be more persuasive. The sweet point is about 195 words per minute, fast enough to force salespeople to focus, yet slow enough for them to still understand you. If you talk beyond 195 words, people start judging if you really know your stuff.

If you keep a fast pace, people don't have enough time to come up with counter arguments. So, channel your inner John Moschitta and start practicing that fast talk.

3. Slow Down Once They Agree

However, once you have the salesperson agreeing with you, start slowing down. If you talk too fast to somebody that agrees with your message, then you have the reverse effect as talking fast.

Even when somebody welcomes your ideas, you need to give them time to evaluate your speech and agree with you more.

This is when you slow down from 196 words per minute to about 144. If you talk slower than that, people start perceiving you not as persuasive again.

4. Curse Smartly

If you think that good negotiation skills and cursing don't go together, let me tell you that's some BS.

This doesn't mean that you're going to open a can of potty mouth and spread it all over the place. The key is to use the word "damn" towards the beginning or end of your speech. The tactical use of this word significantly increases not only the persuasiveness of your speech, but also the perceived intensity of your words in the mind of the listener.

Researchers theorize that the smart use of curse words gives the impression that you are being candid and not following somebody else's agenda.

5. Look "Eye-to-Eye"

Take a cue from waiters and waitresses on how to get what you want.

A study from Cornell's School of Hotel Administration found several techniques employed by servers to increase their tips. One that stands out for our purposes is "seeing eye-to-eye."

This means to:

Establish eye contact throughout your conversation;
Bring your face closer to that of the salesperson;
Position yourself so that your eyes are at the same height;
Mimic the salesperson's body language and posture.

6. Learn the Four Square System

Think of good salespeople and you're likely to think of car salespeople.

You might not like some of their techniques, but in the end they do a decent job at getting you to buy a car. A cornerstone of their technique is the four square system.

The main idea of this worksheet is to take the attention from the total price and focus the entire conversation on the monthly payment. Any good car salesperson knows that you can wiggle the monthly payment without lowering the total price. For example, you can:

Increase the number of payments;
Provide a bigger down payment;
Accept a bigger value for a trade-in.

Read this confessional from a car salesman on how to work the four square worksheet so that you can use it towards your advantage, or simply "flip the table" by demanding that it is not used in your negotiation at all.

What is your favorite way to "trick" salespeople?

This article is from Damian Davila of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Wages Are Rising — Here’s How to Get Your Cut

Amanda Meadows — Thu, 04 Sep 2014 15:00:06 +0000

Thankfully, after wage levels remained stagnant for many years, wages are finally rising! Annual gains could hit 4% by 2017.

That said, employers are still conservative and not rushing to pay you more. Here are some helpful tips on getting your share.

1. Join an Industry on the Rise

Information technology positions such as programmers, developers, analysts, and engineers continue to fare well. Cities are battling each other to court IT companies. Have a background in mathematics, science, or information systems? Start interviewing for jobs in that arena, where the starting salary is already higher than the average.

Health and medicine professionals are also riding a higher tide. Nurse practitioners, registered nurses, and practical nurses are all making more, but nurse practitioners are especially in demand with the expansion of health care coverage to more citizens.

Financial sector workers like traders, bankers, and fund managers continue to do well (surprise, surprise). Due to the continued need for credit and asset analysis, there is room to join the financial sector with the right experience.

Areas that do not see much growth are categories in which tons of eager candidates compete for jobs: teaching, marketing, public relations, and customer service. If you find yourself in one of those categories, try spinning your experience to applying for positions at companies in information, health, engineering, and finance.

2. Ask for a Raise

If you are currently employed, now would be a good time to ask for a raise. When was your last raise? It should typically happen every year. If you have gone longer than two years without a raise (and thanks to the recession, many have), it will be fairly reasonable and easy to ask. (See also: 5 Things to Say to Your Boss to Get a Promotion or Raise)

When to Ask for a Raise

Try asking three to four months before the annual review. Annual reviews tend to happen at the end of the fiscal year, when the money is spent and companies are more conservative. Asking before your company's annual wage hike is ideal because you can state your case before the bosses evaluate the staff. Plus, you likely do a lot of great work that your bosses do not know about. Make them aware of your worthiness and negotiate your slice before the pie has been cut.

Leverage Your Education

Have you spent most of the recession going to back to school in the summers, nights, and weekends? It's always a good time to take advantage of your new income potential. Those who can boast a college degree for entry-level positions can ask for more than those with a high-school degree. Try asking your employer to review your new experience and education level when considering your raise.

3. Relocate to a High Minimum Wage State

Many students and working parents find themselves in need of extra minimum wage shifts in industries such as retail, fast food, and customer service. If you are work for hourly wages, now might be a good time to relocate, as 13 states raised their minimum wage in 2014. Even more good news: Those same 13 states are seeing faster job growth than the states that did not increase their minimum wage. This may also be a good time to leverage a higher paying position elsewhere for an hourly raise at your current job.

How are you planning to boost your wage? Please share in comments!

This article is from Amanda Meadows of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

The Easy Way to Negotiate a Cheaper Hotel Room

Deia B — Thu, 14 Aug 2014 15:00:03 +0000

Here's something you may not know: Hotel rates are not set in stone. It's often possible to get the best deals simply by picking up the phone and negotiating your way into low rates, upgrades, and freebies. (See also: 20 Secrets of Last Minute Travel)

Very rarely will these opportunities be advertised, so the only way you can find out if a hotel negotiates is by picking up the phone and asking the hotel staff. Just follow the steps below, and remember to be nice, be polite, and charming as hell.

Timing Your Visit

If your trip coincides with the busy season, it's unlikely that the hotel will negotiate their rates. When they can get other guests to pay full price, they're probably not going to give you any discounts.

If you travel during the off-peak season, however, you're in luck. Hotels are more willing to negotiate when business is slow. The front-desk staff should have some leeway to allow discounts for guests who ask.

You'll have a better chance of succeeding if you call as soon as you know your dates. You can try calling at the last minute or even negotiating in person when you arrive at the hotel, but you may end up not getting a room at all.

Regardless of whether you speak with the hotel staff by phone or in person, do it when they're not busy. Avoid check-in and meal times; call in the late afternoon instead. You don't want to speak with someone who is overwhelmed by arriving guests at the reception desk. You want his full attention, so it may be a good idea to ask if it's a good time to talk at the beginning of the call.

Making the Call

Before you call, arm yourself with the hotel's published rate, as well as the rates of its competitors. You can get this information from the hotels' official websites and hotel booking sites. To minimize your searching time, go with comparison sites like Hotelscombined.com and Trivago.com.

If the hotel is part of a chain, there may be a national or even international hotline. The operator at the 800 number will probably not have any power to give you a discount. Call the hotel directly instead and ask to speak with the manager, if possible.

Ask for the Best Rate

Start the negotiation by saying something like, "I found your rate online for $200 per night. Is that your best rate?" You may or may not get a better deal right away.

Follow up by asking, "Is that the best you can do?" or, "Can you do better than that?"

If you still don't get the rate you want, continue by saying, "I can't spend more than $150." Then, see what response you get. It's a good rule of thumb to try getting 25% off your starting rate because hotels generally pay that amount to third-party agents like online booking sites and travel agents for finding guests.

Mention the Competition

You can also try dropping the names of the hotel's competitors. For example, you can say, "Hotel Down the Avenue has a free gym for guests to use and they only charge $175 per night. Would you be able to give me $150 per night?"

Tweak the Dates

If you have some flexibility, ask the hotel manager, "Does that happen to be a busy time for the hotel? Would you be able to lower the rates if I change my dates?" Hotel rates fluctuate a lot, so simply adjusting your travel dates could affect the rates dramatically.

Another trick you can use is to start out with a two-night stay and later say, "I can extend my stay to three nights if you could give me a better deal."

Special Discounts

Ask if there are any special discounts. The hotel may call it a special rate or saver rate.

Hotels often have discounts for AAA members, AARP members, senior citizens, government workers, military members, veterans, travel industry employees, hotel shareholders, business travelers, and loyalty program members. Boutique hotels may even offer introductory rates for first-time guests.

Discount Rooms

Much like the clearance racks at clothing stores, hotels also often have discount rooms that they don't offer to regular customers. There's usually a defect that makes the manager decide to keep the room empty. For example, there may be a stain in the carpet or a lamp may be missing.

Depending on the hotel, you may be able to get this room at a discount. Just ask, "Do you have any out-of-order rooms? I'd be willing to stay there if the price is right."

Upgrades and Special Requests

If you have a special request, leave it for later in the phone call. Otherwise, you may be given a more expensive room. You want to know their base rate so you can decide for yourself if whatever addon you want is worth the extra charge.

Once you get a rate you like, ask, "Oh, by the way, will this be an ocean-view room?" If the hotel manager says it's not and that you'll have to pay more for an ocean-view room, you can judge for yourself whether to pay the higher price.

This is also a good time to ask, "Could you throw in the breakfast?" You can also ask for a room upgrade or free parking.

Before you end the call, get your reservation confirmation code and the name of the person on the other end of the phone. These details will help you if there's any confusion or problem with your reservation later.

Have you ever negotiated a lower room rate? What worked for you?

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This article is from Deia B of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

8 Things Real Estate Agents Don't Want You to Know

Carrie Kirby — Thu, 14 Aug 2014 13:00:05 +0000

Ask a real estate agent what she or he is hiding from clients, and you will almost always get the same answer: Absolutely nothing.

After all, ethics are built into the training agents need to renew their licenses, and some disclosures are even mandated by law.

"In my experience I have found most agents to be very ethical in terms of disclosing information to both clients and other professionals," one agent told me in an email.

That said, there are plenty of things about the home buying and selling process that agents are not required to disclose to clients. There are truths that some agents tell you about but others don't. And there are things that agents disagree amongst themselves about. (See also: How to Choose a Real Estate Agent)

1. You May Be Able to Get More by Selling It Yourself

A 2007 Northwestern study showed that sellers in Madison, Wisconsin, who signed up for a "for sale by owner" service netted more money on their homes. Why? Their homes sold for about the same price as similar homes handled by agents, but they didn't have to pay the 5% to 6% commission agents charge.

However, the study did show that FSBO properties in that time and place took longer to sell.

Other more recent studies have come to a similar conclusion: FSBO sales get closer to their asking prices than those handled by agents.

2. Those "Comps" Are Out of Date

Many agents will use recent sale prices in your neighborhood to help determine the asking price or offer price for you. But Lorri Rosenberg Arazi, a well-regarded Bay Area agent, said, "We look at the comps to give us guidelines, but the thing that people aren't realizing is that the most current indicators of the market price are the pending sales — and you don't know what the pending sale prices are."

A really good agent who is well connected with other local agents will be able to get a feel for what pending sale prices are by asking around, Arazi said. Many agents — especially if they are not local to the area where you are buying or selling — won't have access to that more current info. But of course, they'll never tell you that.

3. They May Tell the Other Side All About You

Have you ever been in negotiations over a house, and your agent said, "The buyers' agent said they are coming around to the idea of your price," or "the agent said they really, really love your house"?

When I first heard these things, I was appreciative that my agent was able to gather this inside info for me. But then it made me wonder, is my agent telling the other side what we say?

Many agents say they characterize conversations with clients only to the extent that it helps the client's case. But keep in mind that the two agents are working together to close the deal — and that gives them incentive to share any and all information that will get them there — including information about you.

4. Open Houses Are for Finding New Clients

"An open house serves me more at finding prospective clients than it does to actually market the house itself," one agent wrote on an online forum. "Not that you shouldn't hold open houses… it is good exposure. [But] for every five or six people coming through the door, maybe one of them actually liked the house, and I've got three to five properties in the area nothing like the house that I offer to show the other four or five people when I'm done."

Other agents have told me the same thing, usually when I ask them to hold an open house for a property I'm selling.

That said, as a seller, I would rather leave no stone unturned. I have sold a property to a buyer who came to an open house, I have friends who did the same, and my grandparents bought their current home after dropping into the open house. So it's not a if open houses never sell houses — it simply may not be their main purpose.

5. Commision Is Negotiable

Recently my parents contacted an agent for help listing a relative's home. The agent told them his commission was 6%, which surprised me considering that all the agents I had worked with recently charged only 5%. I called him up and at first he insisted that 6% was standard for that particular town. But when I pressed him on it, he finally agreed to drop his commission to 5%, "just for us." This expert says that commission is always negotiable, but if you pay too low a percentage, the agent may not have much incentive to work hard for you.

6. You Could Have Gotten a Better Price

"You haven't always gotten a great deal, whether buying or selling, but I will almost always tell you that you did well unless you got royally hosed, because everyone wants to get a good deal," one agent confessed.

In one way, buyers, sellers and agents all want the same thing: to close a deal. But when you look beyond that, our incentives diverge. How a deal gets done and exactly what deal gets done matter a lot more to buyers and sellers than to agents.

The book Freakonomics cited research showing that when real estate agents sell their own homes, they get higher prices and take longer to sell than other sellers. The theory here is that even though your agent makes more money if you sell for a higher price, the difference in commission isn't enough to justify the added work of holding out. So, Freakonomics authors reason, agents must encourage clients to accept the first reasonable offer you get, while holding out for top dollar on their own homes.

Not all agents agreed with the Freakonomics writers' conclusions; one response pointed out that agents' biggest incentive is to build up repeat business by helping clients get the best deals they can.

7. They Could Play Both Sides and Double Their Money

Some states allow "dual agency," which means that if the buyer or seller has no agent, your agent could represent both sides and keep the whole commission, which would normally be split between two agents.

Some buyers see this as a way to save money by negotiating with that one agent to cut his or her commission. But one agent warned that agents dealing with unrepresented buyers or sellers don't always offer to cut the commission.

"That agent just double-ends the deal and gets paid twice. No deal, no saved commission, just less aggressive representation," the agent posted to an online discussion.

The organization Consumer Advocates in American Real Estate recommends against consenting to dual agency, warning that representing both sides prevents your agent from advocating for you — because now they also represent your adversary and are not allowed to do anything to either party's detriment.

"That means that they can not help you negotiate price or terms of your real estate transaction. It means that they are getting paid twice as much for doing a tenth of the work," CAARE warns.

8. You Picked an Awful House

"I don't always like the property that you may be bidding on, but if you fall in love with it, and there are no glaring deficiencies, I will do my best to get excited about it too," one agent wrote.

But do some agents go farther than that, and overlook real problems with houses just to get that commission?

If you believe the letters and responses in Barry Stone's column House Detective, some agents not only overlook problems themselves, but recommend inspectors who do the same. In one letter, a client complained that the agent told them not to attend the inspection; later they received an inspection report that seemed to overlook problems. Stone called foul.

"Agents who are honest and ethical do not give that kind of misleading advice to clients," he wrote.

What did your real estate agent fail to tell you? Please tell us in comments!

This article is from Carrie Kirby of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Tips From a Hostage Negotiator That Anyone Can Use

Mikey Rox — Mon, 19 May 2014 08:24:23 +0000

If you've ever pondered the ins and outs of hostage negotiation, today's your lucky day, punk. Michael E. Witzgall — tactical consultant, author, and teacher at the Charlie Mike Enterprises, a hostage rescue and SWAT school — offers his expert knowledge, divulges a few dos and don'ts of negotiating, and details some of the finer points to remember when somebody's life is on the line. (See also: 5 Phrases to Avoid While Negotiating)

We can all agree that hostage negotiation is a terrible situation for everyone involved, including the actual negotiator. He or she is directly responsible for the survival of those being held hostage. Which is why it's first important to understand why hostage negotiators are so critical in these types of situations. As Witzgall explains it, "If negotiations are allowed to start, 95% of all hostage or barricaded situations are successfully negotiated out." Compare that to chemical (gas) tactics (a 40% failure rate), sniper attack (80% suspect mortality rate), and a team assault (92% probability that an officer, hostage, or suspect will be injured or die), and you can start to understand why negotiations are favored.

But what exactly is the goal of the negotiator? Obviously it's to defuse the situation and get the hostages out alive, but there's more to it.

According to Witzgall, there are five main objectives:

Establish a rapport with the suspect(s), thus gaining their trust.
Help calm the situation by creating an atmosphere of stabilization (bad guys and officers).
Gather intelligence about the suspect(s) and/or hostages.
Gain time.
Keep the suspect from dehumanizing the hostages or committing suicide.

Types of Hostage Negotiations

Just as there are many objectives of a negotiator, there are different types of negotiators for different types of situations, too.

First Responder

As the name indicates, this type of "negotiator" is generally a patrol officer or the point man on a SWAT team. First Responder negotiations, according to Witzgall, are:

Usually done talking through a door or from behind a position of cover.
Difficult at best.
Ad-libbed (often making it up as you go along).
Very dangerous (a mistake can cause serious problems).
Done to stall for time until the suspect surrenders or a better plan is developed (or a real negotiator arrives).

Standard (Team)

This type of negotiation is based on the team concept. Team members are generally highly trained professionals.

Team Leader: Manages the team.
Primary Negotiator: Maintains contact with the suspect.
Secondary Negotiator: Makes recommendations to the primary negotiator on subjects to speak on.
Intelligence Negotiator: Gathers intelligence.
Coach (Psychologist): Listens in.

Face-to-Face/Close Contact

Like First Responder negotiations, Face-to-Face/Close Contact negotiations are done in very close proximity to the suspect location. "Remember, this is not TV. We do not go sit down next to the suspect and 'chat'," says Witzgall. "The difference between the two concepts is that Close Contact negotiations are done intentionally — by a member of a negotiations team — rather than by chance."

In hostage negotiations, there are many invariables, which means that anything can go wrong at any time. Keeping that in mind, Witzgall provides a few dos of negotiating that help facilitate a positive outcome followed by a list of don'ts that can cause the situation to go badly wrong.

"Do's" When Negotiating

Not all of these do's will be relevant to the sort of negotiations most of will enter in our daily lives, but several certainly are.

Be empathetic, reassuring, and credible.
Control your own emotions, stress, and voice.
Keep the suspect(s) talking.
Keep the suspect(s) in decision-making mode.
Encourage a positive outcome.
Understand any demands.
Talk on the suspect(s) level.
Keep any hostages "human."
Listen (follow the 90/10 Rule — listen 90% of the time, speak 10%).
Gather information.

"Don'ts" When Negotiating

As with the do's, not all of these are applicable in non-hostage contexts, but most are, especially the advice to control our own emotional responses.

Talk too much.
Ask off-the-wall questions.
Be argumentative.
Be pushy.
Use trigger words.
Be defensive.
Get angry.
Make promises.
Get caught in a lie.

Running the Negotiation

Now that we've established do's and don'ts, let's get to the matter at hand — the actual negotiation.

The suspect has taken hostages for a reason… because he or she wants or needs something. The goal of the negotiator is to tow the line of the suspect's demands long enough to save those inside, however that may happen. Some things are negotiable, Witzgall says, while others are completely off the table. What things fall into these two categories?

What Can Be Offered

Food and water. Never more than requested.
Money. This is a good delaying tool.
Cigarettes or other minor comfort Items.
Room or building climate control.
Alcoholic beverage (ONLY after serious consideration).
Clothing.
Religious material (ONLY after serious consideration).
Bullet resistant vest/helmet.

What CANNOT Be Offered

People.
Weapons.
Ammunition.
Medications / drugs. (Prescription medications may be subject to consideration.)
Media attention. (Unless it can use it as a tool.)
Vehicles without a kill-wwitch system.

What You Should Do If You're Ever in a Hostage Negotiation

Now that we know the basics of hostage negotiation, let's all keep our fingers crossed that we never have to use these skills. If we do have to pull a real-life Kevin Spacey, however, Witzgall offers a few of the finer points to remember.

NEVER trade places with a hostage.
Do not allow third party negotiating (wife, clergy, friends).
Do not allow it to go mobile.
Take your time.
Obtain something in exchange for demands.
Always work through deadlines.

All in a day's work.

Few of us will ever need this advice in an actual hostage negotiation, but what about when negotiating a big pruchase like a house or a car? Please share your most intense negotiation in comments!

This article is from Mikey Rox of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

How to Pay Less for Your Next Vacation

Deia B — Fri, 25 Apr 2014 09:36:19 +0000

You can find really great travel deals online. With numerous price comparison websites for flights, hotels, and car rentals, it's easy to identify the cheapest online options. (See also: Get the Lowest Rates From Travel Websites)

But the prices you see on the Internet may not be the best deals available. If you're willing to spend some time and effort, you may be able to haggle prices down even more. The downside? You'll have to speak to an actual person and charm your way into lower prices.

Not every company will negotiate its prices, but it's worth a try. At best, you get to enjoy lower rates and perhaps some freebies. At worst, you just pay the regular rates. (See also: Always Negotiate These Costs)

Hotels

After you check the online rate, make a phone call directly to the hotel. Be careful with the timing of your call. Avoid busy times like during meals or close to the hotel's check-in time.

Speak to a Manager

If the first person who answers the phone won't negotiate, try asking for the sales manager or the front office manager. Explain that you really want to stay there, but the price is too high for you, then ask nicely for a better deal. If you have to, mention that your other option, the hotel's competitor, offers a lower rate.

Ask About Discounts or Perks

Check if the hotel has any special discounts that you can take advantage of. For example, there may be lower rates for members of certain groups or for corporate travelers. The hotel may also have unadvertised packages that could include parking or bar tabs.

In some cases, hotels that won't lower their rates may offer complimentary upgrades or throw in freebies like breakfast, parking, Wi-Fi, or spa treatments.

Book Last Minute

As a last resort, call the hotel again the day before your trip. Hotels are more willing to negotiate at the last minute because they don't want the room to be empty. However, if you do this, make sure you have a back up accommodation option with a good cancellation policy in case the hotel is full.

Flights

When it comes to flights, your haggling skills don't come into play as much. However, you still have options. (See also: Top Travel Reward Credit Cards)

Book by Phone

You may be able to score a better deal over the phone just because the airline's phone agent has access to more inventory than is available online. For example, you may be able to get a seat on a positioning flight, which happens when the plane flies not strictly to earn ticket revenue, but to get to another airport in time for its next flight.

Ask for a Credit After a Price Drop

You can also call to get a refund or airline credit if the price drops after you make a reservation. Check your ticket conditions; you may have to buy the ticket directly from the airline to take advantage of this price-drop protection.

Ask for Discounts

When you speak to the airline representative on the phone, ask whether they offer any discounts that apply to you, such as student discounts or military discounts. And if you don't mind traveling at ungodly hours or from isolated airports, let the representative know. Both are often offered at discounts.

Cruises

Just like with hotels and airlines, after you get the cruise price online, call the cruise line directly to get another quote. When you call, check for any special discounts and extra fees.

Call a Travel Agent

With these prices as base rates, contact a travel agent and find out what his best price is. A good travel agent who has built close relationships with cruise lines can get you big discounts. Be honest and let him know that you are shopping around for the lowest prices. (See also: Hidden Travel Fees)

Some travel agents may refuse to work with you, and that's OK. Other travel agents may charge a non-refundable deposit for a consultation; you'll have to decide for yourself if the fee is worth the potential savings of working with that particular travel agent.

Have you haggled to drive down travel costs? What worked for you?

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This article is from Deia B of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

You Should Always Negotiate a Raise: Here Are 10 Reasons Why

Alaina Tweddale — Mon, 21 Apr 2014 08:36:16 +0000

The idea of negotiation may send you into a tailspin, but recent research indicates you may want to overcome your fear. For many people, the "ask" is a high barrier, one that helps companies across the country keep salaries and, consequently, costs low. According to the experts, salary negotiations offer many benefits to an employee. Surprisingly, they aren't all about the money. (See also: How to Win Salary Negotiations)

1. For New Hires, the Money Is on the Table...

Lewis Schiff explains in his book Business Brilliant that three out of four new hires accept the first salary they're offered, without negotiation. Meanwhile, he found, nine out of ten HR managers admit being willing to offer a higher starting salary, if only the candidate asks. That means there's a huge potential payoff for just a short conversation.

2. ...And It's Worth a Million Dollars

Over a career lifetime, a 20-minute annual salary negotiation can add almost one million dollars to your bottom line. Let's take a look at fictitious friends Adam and Anna to illustrate. The friends begin their careers at the same company at age 22 with a $50,000 per year annual salary. At each annual performance review, Adam happily accepts the 2% pay increase he's offered. Anna, meanwhile, negotiates an extra 1%, getting herself a 3% annual raise per year. At the end of their careers at age 65, Anna's salary tops out at $178,226 while Adam's reaches just $117,159. Over the course of their careers, Anna earns $977,287.60 more than Adam. (See also: Ways to Boost your Take-Home Pay)

3. Negotiating Earns Respect

According to a survey on job negotiation, 84% of bosses have more respect for a candidate who negotiates than for one that does not. It doesn't always mean you'll get a salary bump in the current year, but the act of negotiation increases your odds for the future.

4. It Helps Close the Gender Gap

Men are four times as likely to negotiate salary than women, according to Linda Babcock and Sara Laschever, authors of "Women Don't Ask: The High Price of Avoiding Negotiation." Over the course of a career, lifetime earnings become increasingly disparate as men negotiate more often with each performance review, promotion, or new job. The gender gap, says Babcock in her research, can often more accurately be defined as a negotiation gap. The easiest way to decrease the gulf, for women, is to learn the art of the ask. (See also: Why Women Don't Negotiate)

5. It Allows an Early Retirement

According to David Larson, professional negotiator and owner of NegotiatingSalary.com, someone who negotiates an extra 1% increase per year can retire seven years earlier. Negotiate an extra 2% and you can retire 11 years earlier.

6. Even With a Raise, You're Cheaper Than a New Employee

Employee turnover is expensive. In a recent interview Larson said that it costs an employer approximately 150%-250% of an annual salary to hire and train a new worker. Many managers would rather avoid the time and cost of getting someone new up to speed. Your job as a negotiator is to convince your manager (and probably her manager as well) that your pay bump offers the company more benefits than would bringing in a new hire.

7. You Can Ask for Perks Instead of Dollars

Not every employer can offer more money in every situation, no matter how skilled a negotiator you are. You may, however, be able to negotiate for other flexible job perks like more vacation time, a signing bonus, or an altered work schedule.

8. The Odds Are in Your Favor

According to a recent survey, four out of five people who asked for a higher salary last year received it. An additional 8% didn't get the raise but did receive additional benefits or incentives. Those are awfully good odds.

9. Life Isn't Fair

Turns out pay raises aren't always awarded to those most deserving, industrious, or ingenious. Larson, who has negotiated more than 700 salaries, admits that pay raises "are never even. Most people get nothing. Some people get more. The ones who get more are the ones who know how to convince their bosses to give them more." (See also: Convincing Your Boss to Let You Work From Home)

10. Your Fears Are Unfounded

Most people don't negotiate salary because they're afraid a new job offer will be rescinded or they'll offend a current boss. According to the professionals, neither is likely to happen, so long as you ask well. When I asked Lori Marcus, executive recruiter and Principal at QUAD656, an employee recruitment form, if she's ever seen a hiring manager rescind a job offer, she said, "No. Not for asking for more money." However, she conceded, "It's all in the approach." In short, it's important to always be respectful and to frame the conversation in terms of how your pay bump benefits your employer.

Of course, knowing why to negotiate is only the first half of the battle. Knowing how to negotiate is equally, if not more, important.

Have you negotiated a salary increase? Did you get it? Please share your experience in comments!

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This article is from Alaina Tweddale of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread: