I made $2000 in an hour

Before we get to how I made $2000 in an hour, let’s define what my definition of income is. It’s not what you make, but what you keep.

Let me elaborate it a little more, Real-income is what you save after paying taxes & non-discretionary expenses.

Suppose, Mr. Frugal makes $100k a year but the country he lives in has a 99% income tax, did he really make $100K?
Answer : NOOO!! Real – income is what you bring home after-tax.

Also Mr. Frugal finds some way to reduce his annual expense by cutting on some expenses, should the savings be considered as an extra income?
Answer : Yes!!! Because you get to keep that extra savings & it adds up in his account.

SO if Mr. Frugal is able to find ways to reduce his interest payments on mortgage or car, negotiate his insurance bills, etc. The money that was saved without any compromise in utility, is sort of an income. In fact, I consider it a real income (equivalent to getting a raise).

Now that we have defined what real income is, let’s get back to how I made over $2000 in an hour. Well, I did it just by negotiating.

Negotiating is not the norm here in the USA. A regular person here doesn’t negotiate in their daily life. They accept store prices, bank fees, hotel or Airbnb prices, etc. as given. However, back home (India), we were trained to negotiate for pretty much everything – for a rickshaw ride, private tuition, vegetables from a street vendor, a rental apartment and even for buying a house. In short, we were wired to ask for low prices. And the worst that would happen is that the person at the opposite end would say “No”. And if that happens, we would simply move or take the deal. But it won’t hurt to ask. We were somehow trained to negotiate on a regular basis. It became second nature to us.

It became so ingrained that I thought everyone would negotiate. And I was surprised to see that folks here don’t. In general, people in the USA think that negotiating is not cool or somehow it is beneath them. And therefore they lose a lot of opportunities of saving/making money. To those folks – let me tell you, negotiation is a super power. Here is what I did to save over $2000 by spending less than an hour of my time.

1. Negotiating Rent:

In California, rents are quite high, especially in the bay area. We had a long list of requirements when we started looking for a 1 bed apartment in Jan. And the best we could find was quoted for $2495 per month and a $100 application fee. (which is nonsense). So I decided to negotiate even though I knew that the apartment companies in the US generally don’t negotiate. There wasn’t much downside in negotiating. So I went forward with negotiating. Here is what happened (all via email):

Me: $2495 is too high. I would close the deal if you can reduce it to $2395 and waive off the application fees.

They: Sorry, but we don’t negotiate the rent. But we can waive off the application fees for you ($100 gains so far)

Me: Well, if you think about it, reducing the rent by $100 per month is just a 4% reduction. Also, if you consider that the schools have already opened up, many families won’t be looking to move-in in Jan. So I would assume it will be a bit difficult for you to find a new tenant in such a short span. On the other hand, if you can reduce the rent by $100 per month, I would stop looking at other apartments and lock-in your apartment today. This way we would help each other out & lock in a great deal.

They (this time they directly called): Ahh, we read your email and we are ready to reduce it to $2400 per month and waive off the application fees.

This total conversation, emails & a call, took less than 30 mins. And we saved $1300 that we would have to pay from our post-tax income. And considering our ~30% tax rate, we saved $1857. Not bad for a 30 min conversation, right?

2. Negotiating car insurance:

This was pretty straight forward. I have been a GEICO customer for the last 3 years. And this year when they sent me a quote for car insurance renewal, I saw that they had kept the same price as last year- $441.72 for 6 months. So I decided to call the GEICO agent:

Me: (After sharing all my details) I would like to know if you could reduce the quoted price without reducing any coverage. I have been a customer for the last 3 years and have had no tickets or accidents. So there is a high probability that even this year, GEICO would just make the profit out of me. If you cannot, I will try to get a quote from another provider.

Agent: (Hesitated a bit first but after confirming from his supervisor) Ah Sir, since you’ve been a loyal customer, we can provide you a 15% discount. That would bring down your insurance cost to 377.69.

This conversation, including the wait time, took over 20 mins. And at the end, I saved $128 post-tax ( 2×6 months discount of $64 ) . And again, considering our 30% tax rate, we saved ~$182. Not as good as the savings in rent, but not too bad. Because if I don’t get any tickets or get involved in a mishap, this discount would further compound. Next year I can ask for an additional discount on $377.

Overall, I saved $2039 in an hour, just because I negotiated. It took me a step closer to my goals.

To be fair, there have been many other instances where I tried negotiating and I failed. There are no downsides, only upside. Even if you fail at that time, you will slowly get better. And that skill will compound into more savings in the future.

All you have to do is ASK. Go try it out.

Note: If you liked what you just read, you will also enjoy reading my blog about investing: 100 to 1