Hello from Alaska! I’ll be back to regular posting shortly.
Here’s some articles that caught my eye this week:
Calorie counts don’t change most people’s dining-out habits – Washington Post
Apparently, telling people the amount of calories on menu items doesn’t change their eating habits, cheap or not. Now, I know that I personally do find it helpful, because many times I’m eating out primarily to hang out with friends and the food is not the goal. But in general, we must fight our human nature:
Experts say that for most diners, the issue is not about having information but about lacking self-control. Behavioral economists have for years zeroed in on a logical hiccup: We are unable to balance short-term gains with long-term costs. Many humans are simply really, really impatient. With eating out, the gains are immediate (yummy giant burrito!) and the costs are delayed (staggering bills for heart disease!).
Working families’ incomes have grown in recent decades. But the gains came mostly because they worked longer hours than because of wage increases, according to new research by the Brookings Institution‘s Hamilton Project. [...] Among two-parent families, median earnings did rise by an inflation-adjusted 23% from 1975 to 2009. But the parents’ combined hours worked increased by 26% during the same period–accounting for most of the income gains.
The median income for two-parent families rose to $70,000 in 2009, for working 3,500 hours a year on average, compared with working about 2,800 hours in 1975 to earn $56,600 (in 2009 dollars). Hmm.
Law School Economics: Ka-Ching! and Reactions – NYT
Law schools have the power to raise prices and increase enrollments without any decrease in demand… even as the job market worsens for lawyers. Result: Law school tuition rises 4x faster than even overall college tuition costs, which are already skyrocketing. Are law schools abusing this pricing power?
I changed up some of the design of the website last night, not really sure why, I had some free time and have been meaning to try some things out. I don’t have the motivation to do a complete redesign, but wanted to update things slightly to account for modern screen sizes and resolutions. I’ve made the content a bit wider (this also allows for larger embedded images), widened the sidebars a bit, made the text a bit bigger, and changed the spacing a little. Let me know if you have any suggestions.
Happy Birthday America! Here’s some of what I’ve been reading over the long weekend:
The Death of the American Dream I
A good long-ish editorial from the The American Interest magazine about the “American Dream”. The American Dream used to be owning your own family farm. “In 1900, 41 percent of Americans worked on farms. Today fewer than 2 percent do.” The updated Dream became lifetime employment (plus a pension of lifetime income) plus owning a home through a 30-year (half a lifetime) mortgage. There is no longer lifetime employment these days, and perhaps the government-subsidized 30-year mortgage is up next. Also see Part II.
$1 Billion That Nobody Wants
An NPR investigative article about how the US government keeps making billions of dollar coins, even though most people prefer paper bills. I suppose this answers why you can buy coins from the US mint with a credit card, enabling people to rack up credit card rewards, and also a good way to meet minimum spend requirements for the big bonus cards. I think the two options should be to either stop making paper bills, or stop spending so much money pushing dollar coins on us. Until then, since the coins exist already, we are essentially getting paid by the government to distribute them.
Fidelity’s Experience Proves Bigger Doesn’t Mean Better
Morningstar article outlines reasons why Fidelity is having some issues with their actively managed funds. One issue is manager turnover; Their average manager tenure is 3.2 years, ranked 24th out of the 25 largest firms. They also have too many funds and not enough talent for all those positions. For example, Fidelity has 17 large-growth funds geared toward retail investors alone. As they earn a big chunk of profits from retirement plans, they will be much less likely to allow unconventional managers who take risks for big returns. Also see my review of Fidelity’s Portfolio Advisory Service product.
United and Continental Merger Updates
If you haven’t heard, United and Continental are merging, and you can link your accounts and transfer miles between the two frequent flier programs at your convenience. Combine your two balances to make one award flight, for example. I’m a United Elite and I heart my Economy Plus seats. Thanks reader Michael for the tip.
The Continental OnePass Plus credit card is still offering 30,000 miles + $50, and will still work after the merger.
While catching up on some reading over the weekend, I found two articles that both dealt with large issues that we’ll have to face over the next few decades. Predicting the future is always difficult, but sometimes the numbers can seem very compelling.
Oil & Commodities
Jeremy Grantham is co-founder of GMO, an investment management firm with $107B in assets. That doesn’t mean he necessarily knows the future. But in his April 2011 quarterly letter titled Time to Wake Up: Days of Abundant Resources and Falling Prices Are Over Forever, he does manage to put together a convincing argument that we are using up our natural resources very quickly, and we can’t continue on at this rate. It’s mathematically impossible.
Will we find other energy sources to replace cheap oil? Will technology allow us to do more with less? Probably, but I doubt the transition will be a smooth one. I think learning to be less dependent on natural resources (read: be frugal, efficient, and less wasteful) will even more important financially than it is now.
Medicare & Taxes
Paul Krugman is a Nobel-winning economist with a popular blog at the NY Times. In a recent Op-Ed titled Seniors, Guns and Money, if you strip out all the political stuff, you’ll find this: In the coming years, there will be either significant cuts in Medicare, or tax increases to pay for the rising heath care costs.
One, our population is aging, with more retired seniors being supported by fewer workers. Two, health care costs keeps rising on their own. As he says, “It’s just a matter of arithmetic.” Either the government will raises taxes to pay for all this, or there will be major cuts in benefits. My guess is both.
Today, I find myself staring at a bunch of links that are mildly interesting, but nothing that inspires much additional research or spewing of opinion. Maybe I’m just tired and cranky. In any case, I think they are worthy of sharing.
Tiny Transformer Apartment
A fellow in Hong Kong has created an apartment with sliding walls that transforms what is basically one big room into many – a bathroom, kitchen, living room, or a bedroom simply appears with a bit of pushing. Quite cool in only 344 sq. ft. It’s easiest to watch the video to really understand it.
Lendle, eBookFling, BookLending
Apparently you can lend eBooks on Amazon Kindle now, but it’s not really built for easy sharing. If a publisher allows their eBooks to be sharable, you can lend out each book only once to another user for 14 days. If enough Kindle users sign up with a regular stream of books, it might actually be useful.
Mortgage Brokers Argue Over No-Doc Stated Income Loan For Stripper
Read the thread of emails from the bottom up. An exotic dancer in North Carolina applies for a stated income loan (no income or bank statements) based on an income of $140,000 a year. An excellent example of the keen underwriting skills shown across our great land in 2007.
Calendar of deals: What’s on sale when
Consumer Reports provides a general guide to what items tend to go on sale at the same time each year. For May, we’re looking at athletic apparel, camping gear, and lawn mowers.
Law Students Lose the Grant Game as Schools Win
The NY Times reports that some law schools are awarding more merit scholarships in order to attract better students. The catch is that the scholarships require you to be on the top third of the class, which if you give enough scholarships means some are guaranteed to promptly lose those scholarships and get hit with the full bill. Lesson to prospective law students: read the fine print.
Kind of hidden at the bottom of my last post was that discovery that there are new ways to join Pentagon Federal Credit Union, known commonly as PenFed. There are several reasons to join this credit union, including at-times competitive certificate of deposit (CD) rates, a credit card that gives you 5% cash back on gas, and low interest rates on mortgages and auto loans. (Their 5/5 ARM mortgage is relatively unique.)
In general, membership is open to the military, US government employees, or the family or household of existing members. Previously, the most open way to join was with by paying $20 to join the National Military Family Association. (I didn’t realize this was tax-deductible.)
However, recently two new ways have popped up on their eligibility page. First, you can become eligible by joining the Voices for America’s Troops group for a $15 one-time fee (not tax-deductible). Second, you can join by being a Red Cross blood donor (blood or money). I’ve donated both blood and money to the Red Cross, and many of you probably have as well so it may be a good time to join. You’ll need to keep $5 in a share account. Maybe somebody new can apply and tell me how they verify this, but I bet they are using the honor system. Thanks to reader Paul for the tip.
American Red Cross Employees and Volunteers. A volunteer is defined as anyone who provides wealth, wisdom, or work. Wealth can include a blood donation or a financial donation.
I’ve finally caught up to 2009 and created a Facebook Page for MyMoneyBlog.com, with a little nudge from reader Amy. With this page, my hope is to be able to share links and other quick news that might not make it into a blog post, as well as interact with readers. Additionally, if you are a regular Facebook user and “Like” the page you’ll get all these things plus new post updates fed into your regular news feed.
promote awareness for this bribe you into checking it out, I have set up a quick giveaway for a $15 eBay gift card that I bought from Groupon yesterday. Just visit the page and look on the left for the “Sweepstakes” tab. All you need is your e-mail. I am using the third-party app Wildfire to manage this giveaway, so you’ll need to approve a Facebook app. Contest ends Sunday night 4/3 at midnight Pacific.
You don’t need to “Like” the page to enter, but it would definitely provide me a nice ego boost.
(As I publish this post, I see that California and Hawaii are on a tsunami watch after an 8.9 magnitude earthquake hit Japan. Goodness.)
Earlier this week, my brother-in-law sent me a link to a post on the Art of Manliness blog on How to Make a Bug Out Bag: Your 72-Hour Emergency Evacuation Survival Kit by a wilderness survival instructor. He knows that I have a fascination with survival gadgets in case of disaster or “revolution”.
From what I’ve read about governmental emergency response, in a real mass disaster, average citizens should not expect assistance for at least 72 hours if not a week. Chances are that it will be chaos and only the seriously ill will be attended to. You’ll be on your own for a while, so you should be prepared.
Ever since reading the book Emergency: This Book Will Save Your Life, I have been collecting bits and pieces of emergency gear. I went on a flashlight binge, buying a solar-powered flashlight, LED headlamps, big D-cell maglites, tons of cheap LED flashlights, and stocking up on batteries. I bought a couple big pump-style water filters, and small hiker-style water filters. I have other basics like a first-aid kit, and the standard case of water bottles on rotation.
But as a highly analytical person, I think I really just like spending hours and hours reading reviews and weighing the pros and cons of different brands of devices. As a result, I don’t actually have a fully equipped “bug-out bag“, and all my stuff is definitely not in a backpack ready to grab-and-go. Since the pursuit of perfection is often the enemy of good-enough, yesterday I went out and spent $100 on this pre-packaged Emergency Kit.
Yes, I already have a lot of the stuff inside already and yes, I probably could have made something better myself for cheaper, but I feel better already. (After I get the bag, I’ll see if I really can make something better for cheaper.)
If you’re thinking about switching online stock brokers, perhaps due to a price increase, here are some low-cost options. To avoid the common $50 to $75 ACAT transfer-out fee for moving your entire portfolio somewhere else, you can sell all your positions, transfer out the cash, and then have them close the account. You may be subject to capital gains taxes. Otherwise, look for a broker that will cover your transfer-out fee.
Still want free trades? WellsTrade still offers 100 free trades per year with assets of at least $25,000. They may be feeling squeezed as well, but with the ability to cross-sell with other Wells Fargo products like checking accounts and credit cards, they are probably still making money. Bank of America also offers free trades, but with a $25,000 cash balance only.
If you’re looking to build a low-cost, index fund portfolio, I would recommend opening a Vanguard Brokerage Services account with their unlimited free trades for all Vangaurd ETFs. Indeed, many other brokers offer some sort of free trades on a limited list of ETFs including Fidelity, Schwab, and TD Ameritrade. I personally like the selection at Vanguard the best.
If you want to trade individual stocks, the rock-bottom low-cost broker appears to be Just2Trade at $2.50 a trade. They never seem to do any promotions.
I also have an account with OptionsHouse at $3.95 a trade which uses the same Penson clearing firm. A FW member TheHimalayas posted that they were allowed to switch over to OptionsHouse with no ACAT fees because of this, but I haven’t verified this myself. I am happy with my OptionsHouse account, and the fact that they grandfathered us existing members at $2.95 a trade doesn’t hurt.
OptionsHouse also has a bunch of promos going on. If you open a new account with at least $3,000 and use the code FREE100, you’ll get 100 commission-free trades for stock or option trades executed within 60 days of funding the new account. Alternatively, you can get up to $100 in ACAT fees rebated to you when you transfer your account with a minimum value of $3,000 with the promo code ACAT100REFUND. They also have a 100 free trades + $125 in transfer fee rebates offer for IRAs with the promotion code IRAFREE.
Finally, another solid option at the $4.95 price point is TradeKing. TradeKing will credit your account transfer fees up to $150 charged by another brokerage firm when completing an account transfer for $2,500 or more when you send them a copy of your account statement with proof of the transfer charge.
Here’s another Groupon national deal, this time for $50 gift card for $25 at Nordstrom Rack, which seems like a nice name for Nordstrom Outlet. I think I’ve been to one before, it’s like a fancier Ross’s or TJ Maxx. Shoes, clothes, accessories, etc. List of store locations. This one is good until midnight 11/22.
Limit 1/person. Valid at all Nordstrom Rack locations. In-store only. Not valid for gift cards. Not valid with other offers or discounts. EXPIRES ON 12/31/10.
If you don’t have a Groupon account already, please use my sign-up link first. It’s free for you, and I’ll get some Groupon credit for future deals. Groupon is a popular group-buying site where in major metro areas you get one deal per day from a local retailer as long as enough people sign up for it, along with occasional nationwide offers.
Leonardo da Vinci isn’t usually quoted when it comes to personal finance; I don’t think he really cared for the topic very much. However, I’ve been doing some reading about him and I really enjoyed these quotes attributed to him and wanted to remember them:
- “Simplicity is the ultimate sophistication.”
- “I have been impressed with the urgency of doing. Knowing is not enough; we must apply. Being willing is not enough; we must do.”
- “It’s easier to resist at the beginning than at the end.”
- “He who wishes to be rich in a day will be hanged in a year.”