PSA: Beware When Shredding Your Chase Sapphire Preferred Credit Card

csp_shred0Every credit card is getting a smart chip these days, which means a lot of expired cards. My shredder is rated for 12 sheets of paper at a time, and up until recently handled every credit card, CD, and DVD sent its way. But not the Chase Sapphire Preferred credit card. I knew it had a little extra heft due to some sort of metal (aluminum?) sandwiched between layers of plastic, but that fact somehow didn’t register in my shredding fervor… until I heard an awful crunching noise:



The results: The numbers on the back of the card are still visible, and the magnetic strip may still be readable. My shredder still works, although it has been making some funny noises. Not sure what to do with it now, perhaps industrial-grade shredder could finish the job? Now you know why Chase has started sending folks a prepaid mailer to send back your card when they replace it. :)

Benjamin Franklin and Compound Interest: “Money makes money. And the money that money makes, makes money”

bencompWe’ve all heard of the power of compound interest. We’ve all heard of Benjamin Franklin. But have you heard of the story where Ben Franklin let his money compound quietly for 200 years? Here’s an excerpt from the book The Elements of Investing:

Benjamin Franklin provides us with an actual rather than a hypothetical case. When Franklin died in 1790, he left a gift of $5,000 to each of his two favorite cities, Boston and Philadelphia. He stipulated that the money was to be invested and could be paid out at two specific dates, the first 100 years and the second 200 years after the date of the gift. After 100 years, each city was allowed to withdraw $500,000 for public works projects. After 200 years, in 1991, they received the balance—which had compounded to approximately $20 million for each city. Franklin’s example teaches all of us, in a dramatic way, the power of compounding. As Franklin himself liked to describe the benefits of compounding, “Money makes money. And the money that money makes, makes money”

Very neat. A bit of digging suggests it all started out as basically a dare. From a Philadelphia Inquirer article:

Benjamin Franklin, God love him, may have been the first Philadelphian with an addytood. How’s this for an in-your-face response?

In 1785 a French mathematician named Charles-Joseph Mathon de la Cour wrote a parody of Franklin’s Poor Richard called Fortunate Richard in which he mocked the unbearable spirit of American optimism represented by Franklin. The Frenchman wrote a piece about Fortunate Richard leaving a small sum of money in his will to be used only after it had collected interest for 500 years.

Fat chance someone would be dumb enough to try that. Ha. Ha.

Franklin, who was 79 years old at the time, wrote back to the Frenchman, thanking him for a great idea and telling him that he had decided to leave a bequest to his native Boston and his adopted Philadelphia of 1,000 pounds to each on the condition that it be placed in a fund that would gather interest over a period of 200 years.

The trusts for Philadelphia ended up a lot smaller than the trust for Boston, which many people assume is a result of poor management, but perhaps the lower returns were an acceptable result of Philadelphia following Franklin’s original instructions for the money:

“Boston has always prided itself that it compounded the money wisely. Philadelphia has always had an inferiority complex because it didn’t,” said Bruce Yenawine, a Syracuse University Ph.D. candidate in history who has spent years researching the Franklin funds in both cities. “But Boston decided to minimize risks and maximize proceeds. Philadelphia, on the other hand, focused on the other side of Franklin’s instructions by loaning the money to individuals. I think that’s more in keeping with what Franklin wanted.”

Franklin stipulated that the 1,000 pounds (the equivalent of $4,444) be invested and used to provide low-interest loans to “married tradesmen under the age of 26” to get them started in business. Over the 200-year life of the trust, money from the Philadelphia fund was loaned to hundreds of individuals, mostly for home mortgages during the last 50 years. Boston, meanwhile, invested the bulk of the money in a trust fund that Yenawine describes as “a savings company for the rich.”

This NY Times article suggests that the initial funds came from Franklin donating his own government salary:

The 2,000 [pounds sterling] Franklin set aside came from the salary he earned as Governor of Pennsylvania from 1785 to 1788. ”It was one of Franklin’s favorite notions, one he tried to get written into the Constitution, that public servants in a democracy should not be paid,” Mr. Bell said.

Relating this back to personal finance, here is another Elements of Investing excerpt relating a Ben Franklin quote and compound interest:

Think in terms of opportunity cost. Think of every dollar you spend as the amount it could grow into by the time you retire. Ben Franklin famously advised, “A penny saved is a penny earned.” He was right but not entirely right. The Rule of 72 shows why. If you save money and invest it at, say, a 7 percent average annual return, $1 saved today becomes $2 in about 10 years, $4 in 20 years, and $8 in 30 years, and so on and on, inevitably growing. So the dollar a young person spends on some nonessential today would mean that $10 or more will be given up in retirement.

No-Thanks-giving: The Things You Hate The Most

Before we get into being all thankful for family and friends and caffeine and stuff, let’s complain about all the stuff you hate dealing with.

From a WSJ article on why we still hate the airline industry (shocker!), here is a list of what good and services Americans are least satisfied with. Based on the American Consumer Satisfaction Index survey.


Let’s see what I think about the top 5:

  • Internet Service Providers: Well, they do charge a lot for very mediocre speed and the reliability has been spotty recently. Not to mention they keep fighting Net Neutrality. I wish I had Google Fiber.
  • Internet Social Media: I’m not really sure what this means. I am not very active on Twitter nor Facebook. MMB commenters are all smart and good-looking, but reading the internet comments on major news sites like CNN does make me sad about humanity.
  • Subscription Television Service: My inability to let go of live sports is certainly costing me a bundle, but cable TV hasn’t actively pissed me off… this year. Well, wait, my laggy DVR does appear designed in 1994 with a 386 processor.
  • Airlines: I know that there are hardworking folks in the airline industry, but I just had an entire conversation with a Delta gate agent and they didn’t make eye contact even once. Why provide good service when everyone hates you anyways seems to be the attitude. The problem is that selling cheaper airfare with lots of gotcha add-ons is that it works and they are now making good money. Sigh. I can’t believe people haven’t revolted yet on how seat pitch keeps decreasing every freakin’ year.
  • Wireless Telephone Service: I have no real complaints. There are many options now if you want to avoid full-price, full-service cellular carriers. Basic cell phone service can be pretty darn cheap these days. I guess I’m just still amazed by what my smartphone can do with a data plan while I’m in the middle of nowhere.

Chart: The Reason You Never Get Anything Done

This highly scientific chart shows why many of us are so inefficient. I’m definitely guilty of this one.


Another insightful comic from XKCD, via Abnormal Returns.

Top 10 Best Dirt Cheap Beater Car Models?


In 2006, Jay Lamm organized the first 24 Hours of LeMons (official site, Wikipedia) in which cars picked off the street that cost under $500 (not counting safety equipment) raced each other for 24 hours straight. The name and format parodies the legendary and prestigious 24 Hours of Le Mans racing series. A penalty might involve welding a huge metal sculpture on your roof to increase weight and air drag. Racing accessible to the masses and a sense of humor? Awesome.

In a recent Car and Driver article, they listed the most successful models after 8 seasons and 104 races. I figure, if you want to know if a car model is durable, race it for 24 hours straight. Here are the top 10:

  1. Volvo 240
  2. 1984–1993 Mercedes-Benz 190
  3. ’90s RWD Lexus (SC300/400, LS400)
  4. Alfa Romeo Milano
  5. Mazda Miata
  6. Acura Integra
  7. 1984–1991 BMW 3-series
  8. Ford Taurus (mostly SHOs)
  9. Ford Festiva
  10. Mazda B-platform (Mazda 323/Protegé, 1991–1996 Ford Escort/1989–1994 Mercury Capri)

The Volvo 240 has gained a near-mythological reputation for reliability, with many claims of 300,000+ miles and 20+ years. (Start noticing how many you still see on the road, even though the last model year was 1994!) Forget owning a Prius, roll up in a 240 and you’ll have some frugal cred. No longer Swedish-owned and losing market share, Volvo’s most recent commercial is still trying to live off the reputation of this model:

I’m not familiar with the Alfa Romeo listed, but otherwise these are older cars that appear to have been designed and engineered with tolerances such that they can take a lickin’ and keep on tickin’. Older Benz and Lexus models were known for this. Given the race parameters, perhaps it also means that they can be fixed with a standard tools and parts that don’t cost a fortune.

Awesome Travel Hack That Turned Economy Seats into a Flat Bed For Two


Ever watch those commercials for Singapore or Emirates Airlines with beautiful people sleeping on luxurious beds while flying across time zones? Jason Blum, a film producer known for the Paranormal Activity franchise, figured out a way to get ‘er done without paying over $10,000 a seat, via Businessweek.:

When Jason Blum and his wife flew to Morocco last year, they could have gone first class. The cost, though, was $22,000. And Blum, possibly the most profitable movie producer in Hollywood, never pays full price when a cheaper alternative will do.

Instead, Blum bought a row of seats in coach for $1,800. He obtained the measurements of the legroom void in front of these seats and had a custom, trapezoidal air mattress built for $500. He packed this contraption into his carry-on. Once airborne, he inflated it, creating a combined seat/air-mattress surface large enough to sleep next to his wife. Estimated savings: $19,700.

Unfortunately, I couldn’t find any photos by Blum. It was probably similar to the SkyCouch from Air New Zealand:



But that has very limited availability, so I think it’d be cool if he started selling those custom air mattresses to the rest of us!

Yale Professor Subtly Threatens High-Cost 401(k) Plans

Speaking of how to deal with bad 401(k) plans… Yale Professor Ian Ayres decided to write letters to thousands of 401(k) plan sponsors that have high costs and fees according to data from website Brightscope. I’m totally paraphrasing and adding humor (although I already found it amusing), but Ayres basically wrote:


I’m a Yale Law prof. Your 401(k) plan ranks among the most expensive. I’m writing a paper about how expensive plans suck money from employees. You do know that you have are required by law to act solely in the interest of participants, right? Oh, by the way, I’m going public with your company name in Spring 2014. You might want to make some changes to your plan before then.

Have a nice day!”

You can read a PDF scan of one of the letters here. Here is a draft of his paper titled “Measuring Fiduciary and Investor Losses in 401(k) Plans”.

[Read more…] in Economics Textbook!

Years ago I was contacted by an author named Gary Clayton who wanted permission to feature me in the next edition of his book. I said certainly, and pretty much forgot about it as it wasn’t published yet. The book was (is?) the bestselling high-school economics textbook in the country – Economics: Principles and Practices published by McGraw-Hill. Then a couple weeks ago a student named Cameron from South Adams High School in Berne, Indiana left a surprise comment on my blog:

So our economics class just read about your money blog in our book and we wanted to see if blog still existed. It does! You should definitely give a shoutout to our class in your next update!

Again, I said certainly, and asked for a scan or photo of the sidebar article as I’d never seen it before. Well, here is the blurb mentioning and picture of Cameron’s Economics class!

[Read more…]

Billboard #1 Song In The US is about Frugality?!?

For the 4th week in a row, the #1 song on the Billboard Hot 100 is “Thrift Shop” by Macklemore & Ryan Lewis featuring Wanz. It’s also currently the #1 download on Amazon MP3 Top 100. The song is about… frugality? …buying clothes from Goodwill? …how paying $50 for a brand-name t-shirt is stupid? From Wikipedia:

Macklemore spoke to MTV News about the meaning of the song: “Rappers talk about, oh I buy this and I buy that, and I spend this much money and I make it rain, and this type of champagne and painting the club, and this is the kind of record that’s the exact opposite,” he explained. “It’s the polar opposite of it. It’s kind of standing for like let’s save some money, let’s keep some money away, let’s spend as little as possible and look as fresh as possible at the same time.”

Here’s the YouTube version (some explicit NSFW lyrics!) and also a link to the clean version. Is this a sign? Or is it just a catchy beat like Gangnam style?

[Read more…]

Book Review: Bossypants Memoir by Tina Fey

I have a goal this year to read and review more books, ideally a book per week on average. Recently, I’ve been into reading biographical books about interesting people pursuing their passions. Feel free to send me some suggestions.

Tina Fey’s Bossypants seemed like a funny auto-biography about someone who grew up in a “normal” working-class family and took a little while to become a respected writer, actor, producer, and comedian. Wealthy, too: Fey reportedly makes $500,000 per episode of 30 Rock and has an estimated net worth of $45 million. I should add that I have never seen a full episode of 30 Rock, although I have seen some SNL Weekend Updates, all the Sarah Palin skits, and a few of her movies.

The book was definitely Tiny-Fey-style funny and a quick read, but it wasn’t very revealing. I should have known, as the book is crosslisted under both “Humor & Entertainment” and “Biographies & Memoirs”. Indeed, I get the impression that she’s actually quite a private person and is reluctant to share anything truly intimate. She considered herself an ugly, unpopular nerd in high school. Well, that applies a lot of people. She worked a menial job at the YMCA while supporting her improv education. Eh, okay. Besides the funny bits, here are my highlighted quotes:

On being a leader:

It is an impressively arrogant move to conclude that just because you don’t like something, it is empirically not good. I don’t like Chinese food, but I don’t write articles trying to prove it doesn’t exist.

On discrimination:

When faced with sexism or ageism or lookism or even really aggressive Buddhism, ask yourself the following question: “Is this person in between me and what I want to do?” If the answer is no, ignore it and move on. Your energy is better used doing your work and outpacing people that way.

On teamwork:
[Read more…]

How Do I Tip The Trash Collector?

Ah, holiday tipping. This little post still gets a steady stream of comments, even several years later…

Invariably this time of year, all the “tipping experts” of the world unite and tell us ignorant folk what to do. Is it just me, or is it a cushy job to tell other people how they should spend their money? I think they all just secretly copy each other. I’ve made a little collection of links below, and all of them say that you should tip the trash collector if your municipality allows it:

I appreciate the idea of tips as an annual “Thank You”, but my question is how do I tip the trash collector? I’m never around during pickup. Tape an envelope to the bucket and hope it doesn’t blow away or get overlooked? Nobody even gets out of the truck these days, it’s just a driver and a robotic arm. Am I supposed to wait around for when they come, which varies from 6 am to 1pm on a weekday and jump out when they finally arrive? Sorry, but I don’t like them that much.

I’ve read conflicting reports about USPS mail carriers. According to, they aren’t allowed to receive cash or cash equivalents, although physical gifts worth less than $20 are okay. Technically, gift cards that are not redeemable for cash and only good at a single store are also acceptable. Now I’m thinking lottery tickets (if they win, they’ll have broken the rules, but then they don’t need the job anymore :)). I don’t really have anyone else – nannies, gardeners, personal trainers…

Where I used to live, people left out a case of beer or soda for the trash collector. No idea why, but maybe because it’s pretty easy to spot. People have never heard of it here. Does anyone else do that?

Dilbert Teaches You About Investing

The Dilbert comic often dispenses good investing advice, but sometimes it’s either so spot on or so subtle that I think it’s worth repeating to makes sure everyone gets the lesson behind the joke.

Perils of market timing explained:

Alternate title: Momentum investing explained, via Abnormal Returns

Survivorship bias explained:

This actually happens!

Financial advisors with high costs and bad incentive structures explained:

Buyer beware…

Subprime mortgage crisis explained:


On a more serious and practical note, don’t forget about Dilbert’s One-Page Guide to Everything Financial.