What Our Chinese Guides Taught Us About Pragmatic Consumerism

If you followed Beaker’s and my stories about our trip to China, you already know that we visited Beijing and Shanghai in November 2009. You also already know that it was an amazing trip with a variety of different learning experiences.

XianChina, in my point of view, has the world’s most fascinating economy. It’s growing at near double-digit rates. Despite its Communist government, China creates vast amounts of wealth, and has a mixture of capitalism and communist in their economy. Just this simple fact amazes me.

China is becoming very influential in the world’s markets. So, are its consumers. For example, Chinese car market is booming. For decades the Chinese government dictated where its people could live, work and whom they could to marry. Now, all of this is left to Chinese people to figure out. The government even encourages personal vehicle ownership.

Our Chinese guides told us that they will not discuss the Chinese government, Tibet and politics with American tourists. They were very honest and open to anything else we wanted to know.

That’s what we learned about Chinese consumers:

1. Most of Chinese consumers are unspoiled by the easy credit. I guess it is because Chinese financial system is not geared towards consumerism and spending. The credit, even though, it does exist, is not easy to get. It is accessible mostly to higher income consumers. But not a lot of them are interested in credit. The Chinese are very cautious about their spending and stay within their means.

We should realize that Chinese culture is one of the oldest cultures in the world. Chinese frugality is a result of the traditions and heritage. I think because of this heritage, no matter how much credit might be accessible in the future, this attitude towards spending won’t change a lot. They love saving and not spending.

2. Chinese also love budgeting. They won’t spend anything unless they budgeted for it. The typical Chinese family will make a list of things they want and need to buy and will discuss it. Together they will decide what they really need and what products are the most appealing to them price and quality wise. There are no impulse, “make me feel good” buys.

3. Our Chinese guide with the American name Joe admitted spending almost a year researching what condo he wanted to buy. He said he could spend about six months researching what computer he wanted to acquire. He admitted spending hours on the Internet comparing different products, brands, features.

Also, word-of-mouth is one of the research tools Chinese use.

Chinese deliberate very carefully over every purchase from food to TV, from clothes to what beauty items to buy. They take a lot of shopping trips simply for research purposes without buying anything. And they take their time.

I think China is a phenomena where Communism and consumerism co-exist, and do it very well. However, Chinese consumerism is a very pragmatic type. Something that we all can learn from.

photo credit: Wilson Loo

Don’t Take Abuse. Know Your Rights.

My friend from work came into my cubicle with tears in her eyes. No, she was not being laid off. She was not having troubles with her boyfriend. She was not upset about anything work related. She admitted that she was being hounded by a debt collector. She owed $135 in medical bills that she was unaware of until the day she got the phone call from a debt collection agency.

Since that day her life turned into a never ending nightmare of phone calls from a man who was threatening to call her mother, to tell her boss, to put a lien on her house and to impound her car. Once my friend was woken up in the middle of the night by this guy! When she asked him why he was calling her in the middle of the night, he responded with a simple “To make sure you are at home.”

I listened to my friend spilling out her frustrations and fears. The debt collector that was calling my friend was obviously violating the Fair Debt Collections Practices Act. Obviously my friend was letting him get away with it. Few people are aware of their rights. Unfortunately, my friend was one of them.

I told her that she needed to take a deep breath, pick up the phone and face her issues. But she also had to know her rights. She could fight back against unfair and unethical debt collections tactics. It did not matter that she owed money, a debt collector owed her consideration and fair treatment.

He also needed to respect her rights.

Right # 1. The Fair Debt Collection Practices regulates how debt collectors can contact you. They cannot call you in the middle of the night! If debt collectors are calling you outside of 8:00 AM and 9:00 PM time frame (unless you agree to it), you can and should report them.

Right # 2. You want to make sure you are not falling victim of a scam. Make sure that the debt you are requested to pay is yours. Ask questions, request specifics: ask for the names of the caller, the collection agency and the creditor. I strongly recommend requesting something in writing stating what you owe. If the debt is indeed yours, try to work out some kind of payment plan.

Right #3. Assert your right to privacy. Tell the collector that you are the only person to be contacted. It means that the collector should not be contacting your employer, neighbors, relatives or friends.

Right #4. Don’t tolerate whatever abuse a debt collector decides to dish out. The collector is not allowed any idle threats, use profane language, or imply any threats or use negative comments about you. For example, the collector cannot threaten to impound your car just to get you to pay your debt.

Right #5. You can tell a debt collector to stop contacting you by phone. Send them a certified letter stating you preferred methods of communication. Make sure to keep track of all collection letters. But remember, sending such a letter does not get rid off your debt. You still owe money.

For more information go to ftc.gov.

Once your debt is in collections, you credit score has already taken a big hit.  Don’t ignore your debt. Don’t avoid collection calls. It is not a solution. The longer you take to act, the deeper the hole you’ll find yourself in. Please remember that no matter what you do and how you handle a debt collection, you have to act quickly and responsibly. Most importantly – know your rights!

Catching Up On Your Year End Financial Planning

The 2010 year end is almost here, and hopefully most of us are looking at our finances and asking ourselves a question: “Are we ready for 2011? Is there something we need to do before 2010 ends?”

Most of us probably have already done everything from buying Christmas gifts and donating to charities to scheduling annual doctors visits to make sure our flexible spending accounts

are zeroed out. But for those people who (like me) are too busy with work and blogging, and too tired from Holiday parties or just too relaxed on their couches with a book in hand or a favorite movie on TV, I came up with the “Year End To Do List.”

DSC_0042-cb_1_72 - My New Years Eve Look - Coutesy of my Grandchildren
During the Holidays, financial planning is obviously not a high priority on our holiday agenda. But if we do some planning right now, it might save us some money in the future. I am sure you already know all of the stuff I summarized in my list. But I think a refresher course might not hurt, and a summary below might be useful to consider.

Disclaimer: Aloysa is not your personal financial adviser. Please take this fact into consideration if you decide to follow the list below.

Year End To Do List:

1. Evaluate your portfolio. Do you have some deadbeat stock that you don’t want? Why hang on to it in anticipation of better times? Consider getting rid off them now. Why? Because you can use losses to offset gains (if you have any) to minimize your tax liability. You can use up to $3,000 in capital losses to offset your gains. Do you have any leftover? You can carry it over to the next year. Just make sure that you do not sell your deadbeat stock and buy the same or similar stock within 30 days in order to take advantage of the losses.

2. Don’t forget to max out your IRA contribution to the full IRA contribution limits (if you can). You can contribute up to $5,000 this year. Don’t forget your 401K too!

3. Some of us have traditional IRA accounts. I will not go into explanations of what it is because I assume that if you have it, you know what I am talking about. If you are clueless, skip this and move on to # 4. One of my friends is considering converting her traditional IRA accounts to a Roth. She anticipates that her income tax rate will increase significantly in 2011. I think everyone is given an opportunity to convert their traditional IRA to Roth in 2010. If you do the conversion in 2010, you will be able to delay paying taxes until 2011 or 2012. If later you are not sure anymore and think that the conversion was not a right move, you have until October 15 of the year following the year of conversion to change your mind.

4.  I believe that one of the proposed changes by the deficit commission was to reduce the tax benefits of charitable donations. If this proposal becomes law, our charitable contributions might be limited to whatever rate will be determined. If you are in higher tax bracket (Check your 2011 tax brackets) you might not get a full tax deduction on your charitable contribution. But this year you still may be able to take advantage of charitable contributions (subject to certain limitations). In the end, you will feel good too because you supported your favorite charity and a great cause.

5. You are finally totaling your receipts and looking at your flexible spending account balance. What do you see? There is some balance left! You decide to do an annual exam with your physician. Wait a second, don’t rush to see your favorite doctor. I’d recommend you consider putting your annual check up off because under health care reform, most employer insurance plans must offer free preventive care, starting in 2011. You might be better off making some flexible spending account changes and spending your flexible spending account balance on a new pair of glasses, contact lenses, or getting flu shots if you didn’t get them yet.

photo credit: bterrycompton