Scarcity vs. Abundance

I came across an interesting idea as I was cruising The Simple Dollar today. (I can safely say that this website has changed my life, and how I approach money. I have talked myself out of several misguided money moves just based on this website.) Trent was talking about the difference between the scarcity mentality and the abundance mentality.

The idea of scarcity vs. abundance was first discussed by Stephen Covey in his book 7 Habits of Highly Effective People. The basic idea boils down to how someone feels about the success that someone else enjoys. If you have a scarcity mentality, you look at someone else's success with disdain. You think that because that person has something you want, be it success, a new car, whatever, that you can't also get that item because that person has taken some of the resources available with which to obtain it. In other words, there is a pie that everyone gets a piece of. If someone starts taking a larger piece of the pie, that means there's less pie for everyone else.

If you have an abundance mentality, you feel the opposite. If someone gets something that they worked for, you feel that if you work to the same level you can also obtain the same thing the other person earned. To revisit the pie idea, there isn't just one pie. There are several pies, and more than enough pieces to go around if you work hard enough. Let's put it in car salesman terms: If Bobby goes out and works hard and saves and buys himself a Cadillac, Timmy can see that Bobby worked hard and achieved his goals. If Timmy has an abundance mentality, he feels that if he works hard, like Bobby did, he too can afford a Cadillac.

The reason I even brought up these ideas is the overarching feeling between salesmen that bringing in more salesmen on the sales floor means that there is less of a pie for everyone else. Most salesmen I've been around have a scarcity mentality, thinking that there is a finite number of customers that are going to be coming onto the lot, and the more salesmen you have on the floor the fewer opportunities for everyone else. Almost no one thinks within the abundance framework.

In my own experience, my dealership has gone through quite a bit of change over the past year. A lot of the older guys that I learned the game from have retired, leaving me as the third longest tenured salesman. Those older guys that retired weren't working from the same pies; if we had 13 guys, we had 14 pies. Each guy had his own pie of customers that weren't going to buy from anyone else (repeat/referral/family) and then there was the community pie of random customers that came on the lot.

With those older guys gone and replaced with younger, less established guys, the individual pies have shrunk, leaving more guys to share the community pie. I eat from the community pie as well, but I also have a large list of previous customers that come in and work with me. I work in the abundance mentality, because I know that the customers in my pie don't belong to the community pie. A lot of new salespeople struggle with that thinking, because they simply don't have the customer base. They almost have to work under the scarcity mentality, fighting with each other for sales opportunities.

So, how does all of this apply to you, the customer? Remember your salesman's name. If he gave you a card, bring the card. Because he's more likely than not working with a scarcity mentality, not remembering his name and working with someone else means that he is going to have to split the deal if you buy a car, which in turn leads to strife and resentment within the group.


Managing Money on a Commission, Part 3

The money management thing has been going good. I've managed to sock away a halfway decent amount of money into that high-yield savings account with ING Direct, I've pared down some of my frivolous spending, and I've starting keeping tabs on my money using Mint.com.

If you've never used Mint.com before, you should start. Now.

What Mint.com does is keep track of the balances in all of your accounts for you. It uses very high-level encryption, so your data is safe. I use it to check my checking account, both savings accounts, and my 401(k) account. All the balances are right there, easy to see. Mint also tallies all of your individual transactions on the accounts as well, so you can see where you waste a lot of money (my Achilles heel was fast food). You can create budgets as well, and Mint will alert you if you overspend in any particular category.

I also recently found myself in possession of a nice navigation/GPS/DVD touchscreen radio for my car. I was about to put it in when I learned that I would need to buy a $100 integration module for the radio to work correctly. No dice, man. Previously, I would have just blown the $100 and had myself a nice new radio. That mode of thinking doesn't (and can't) work for me anymore. So I sold it.

Instead of installing the radio, I decided to get a car dock and car charger for my HTC EVO 4G. The phone is a marvel. Instead of having a phone, an iPod, and a Navigation unit, I have my EVO 4G. The EVO takes the place of all of those devices (which I would have otherwise purchased), saving me at least $300. With that money saved, I can pay off another of my credit cards. I can also take the money that I earned from selling the radio and pad my budget that much more. The dock and charger for my EVO was $30 and I sold the radio for $75, so it paid for both the phone accessories and left a little bit to go into savings.

Small steps, I know, but you need to walk before you can run.


Staying Plugged In

One of the big problems with this job is staying "plugged in". By "plugged in", I mean alert. Active. Keeping my head up.

Sometimes, it's hard.

Very hard.

I mean, I stare at a parking lot all day, 6 days a week. My income depends on people coming into the area in which I can convince them to spend money on a product that they may or may not need. Whether the need is perceived or actual, it's my job to fill that need.

But sometimes, it can be hard to maintain that focus. I can stay "on" for a few hours at a stretch. Then, after a while, an idea for a blog post will hit me. Or, I will feel the need to listen to music. Or something else. I don't know.....oooh, a customer!


Managing Money on a Commission, Part 2

Last week, I introduced the "Managing Money on a Commission" series. It chronicles my personal fight to learn how to manage money when money isn't consistent. I've been looking at several personal finance websites, like The Simple Dollar, and applying their strategies to my situation.

I've always been a person that gets into something really fast, then dabbles in it for a little bit, then leaves it alone.

It's becoming increasingly obvious that this whole "money management" thing isn't one of them. This is something that I'm really going to have to work at daily, making smarter financial choices. For example, for lunch, I normally eat what we call "a bag of garbage": A sack full of multiple fast food items, none of which are good for you neither financially nor health-wise. $4-6 a day adds up at the end of the week, especially when you count the  breakfasts and dinners that I also have to purchase.

So I've decided to curtail that, by preparing large dinners at home using my not-insignificant cooking skill. (I used to watch Mom a lot in the kitchen and she taught me some stuff.) The leftovers from the previous night can be used for lunch. Sounds simple, right? What really boggles my mind is that I never really thought about doing this before.

I also opened a high-interest savings account with ING Direct. The interest rate of my savings account at my bank is only 0.25%, while ING Direct hovers at about 1.10%. I know those numbers seem small (and they are), but 1.10% is over 4 times more than my conventional savings account. Another reason why I opened the ING account is that it's online. When you do your banking with an online institution, you don't have access to your funds as easily as you would if they were just sitting over at the local credit union. That means that I can essentially steal from myself and create an emergency fund with money that I can't easily fritter away on non-essentials. My goal is to have $1,000 in that account by the time tax season rolls around.

My main plan is to create an emergency fund to fall back on, as well as pay off the rest of my credit cards (two down, one to go!). After I get those accounts zeroed out, I can start saving in earnest.