Owner: Money, Matter, and More Musings URL:http://www.thetaoofmakingmoney.com/ Join Date: Sun, 15 Apr 2007 02:45:31 -0500 Rating:0 Site Description: Discussions on money making, money management, personal finance, debt, credit cards, interest rates, and other financial matters. The blog focuses on financial issues related to youth. Site statistics:Click here
Yes, There Are Educated People Who Think Like This 2007-04-14 19:19:13 Over the last couple of weeks, on separate occasions, I met at least two guys who must have *never* read anything about personal finance, or retirement, or health insurance. Interestingly, these are in my close-friends-circle…people with whom I interact almost every other day. Both of them are educated (”educated” = can solve complicated math problems, and/or mend people’s bones), work for big organizations, and are well into their twenties.
Here is the essence of our conversations.
——–
About retirement savings with Friend 1
Golbguru: It’s great that you are on a good job early in your life. You can sack a ton of money through 401K and other retirement related savings options.
Friend 1: 401K is “great”? But, doesn’t contributing to 401K reduce your take-home pay? I want more money with every paycheck, 401K is not for my types.
Golbguru: Huh !? What? (I really wanted to say: you got to be kidding me!)
——&nd Read more:Educated
12 Hour Downtime, Courtesy of Dreamhost And My Procrastination 2007-04-14 17:38:01 Please accept my apologies if you tried to access this site over the last 12 hours and were greeted with an unfriendly “bad_httpd_conf” error.
I have ranted about Dreamhost troubles earlier. And after all that, I still haven’t switched my service provider. I delayed switching after Dreamhost offered to put me on a different server and things looked better. I should have known better…
Anyways, this is how procrastination bites.
Note to self: LEAVE-DREAMHOST-NOW.
stuffShare This
Read more:Courtesy
, Downtime
, Procrastination
How To Generate *Valid* Credit Card Numbers 2007-04-12 18:53:31 Due to the nature of the information in this post, I need to start with a disclaimer. The purpose of this post is *not* to create fraudulent workable credit card numbers. It is to explain the math and the science behind those numbers that most of us see day in and day out; and hence this post should be viewed from a purely academic perspective.
Typical credit card anatomy
Before we understand how credit card numbers are generated, here is a brief explanation of what the numbers on a typical credit card mean.
Out of the 16 numbers on a typical credit card, the set of first 6 digits is known as the issuer identifier number (read this for details), and the last digit is known as the “check digit” which is generated in such a way as to satisfy a certain condition (the Luhn or Mod 10 check). “Luhn check” is explained later in this post. The term sounds intimidating, but it’s really a very simple (and elegant) concept.
Taking away the 6 identifier digits a Read more:Credit Card
, Numbers
Midweek Readings From Money Blogs 2007-04-11 21:46:23 Here are a few articles worth reading (thinking about) this week.
The Festival of Frugality #69, “Save All Week Long” Edition by SVB @ The Digerati Life. SVB has done a great job in compiling a ton of articles for the festival. Some of my favorite picks are Joys of Frugal Living! by Dawn @ Frugal for Life, Frugal lawncare - Part II Overseeding by MFJ @ My Financial Journey, What Does It Mean to Be Frugal When You’re Wealthy? by Frugal Law Student.
Money
Question: Where to Put the Money? @ The Sun’s Financial Diary. This is the first of a series of questions asked by readers, and answered by a few bloggers. The main objective is to encourage reader participation…so head over and feel free to contribute your answer and/or criticize other answers.
Top Ten Things I Learned On My Vacation Through The Southwest by David @ My Two Dollars. Vacations can be really instructive….for example, here is a part of what David learned:
I saw poverty like I had not seen Read more:Blogs
, Midweek
Zecco Drops Minimum Investment To $1000 2007-04-11 18:14:52 Just received this email from Zecco Trading which says:
Thank you for opening an account with Zecco Trading.* This is just a friendly reminder that you have not funded your account and we wouldn’t want you to miss the opportunity to take advantage of our extraordinary offer. For the next 2 weeks, we’ve lowered the minimum to open an account from $2,500 to $1,000.
This is something I was looking forward to…but not expecting.
I opened a Zecco account a few months ago but I didn’t want to put in $2500…so never funded it. I think I will grab this new offer.
For those who are unaware about Zecco Trading, it is an investment portal…much like Sharebuilder or Etrade. The main difference being that Zecco offers free trades while other firms charge some kind of a commission or monthly fees. Here is a snapshot of what it has to say about trading fees:
For rookies like me, that sounds pretty good.
investment, news, personal financeShare This
Read more:Drops
, Minimum
Interesting Bumper Sticker 2007-04-10 20:06:32 I am not making any political statements with this bumper sticker; just found it amusing (it’s amusing when you read such things in Texas)…and had a camera in my hands.
Presidents will come and go; it’s up to us to make sure that we don’t make this an American legacy. Work hard, spend smart, think, and don’t make your children suffer.
musings, stuffShare This
Read more:Bumper
Frugality In Practice: A Few Drops Of Cooking Oil And A Saved Lock 2007-04-10 17:33:42 Recently, we started having problems with our house keys. Initially, only my key had problems getting in the lock..and we thought that it could be because it was getting worn out or something (my wife’s key worked well). However, sometime during the last week, the other key also started giving problems and the situation deteriorated rapidly. The keys would completely go inside the lock only after much tinkering and after application of considerable physical force. After some procrastination, we decided to contact the apartment management and request them to replace the lock.
The lock that almost died
That evening, I don’t know how it came to my mind, but I thought of applying some cooking oil to my key to see if that lubricates the lock’s interiors. So I put a couple of drops of oil on either side of the key and with great hopes tried the lock again. It took about 5 or 6 cycles of inserting the key, twisting to lock and unlock, and removing the key, and after that Read more:Drops
, Frugality
, Practice
Current Sharebuilder $50 Bonus Promo Codes And Other *Free* Offers 2007-04-09 18:43:14 Here are two Sharebuilder promo codes, for a $50 bonus, that seemed to be active when I checked yesterday:
ym50 (or try this link)
share50
While I was browsing around the Sharebuilder website, during my attempts to find/verify promo codes, I also found other offers that may interest some of you. For example, here is an offer for a $49.95 “Premium Investor Start Kit“. What comes with the kit essentially makes it free:
The $50 account bonus will in itself pay for the cost of the product. That makes the rest of the goodies free.
There are other versions of the “Investor Starter Kit”, and all of them include an account bonus worth the cost of the product…so basically you can choose any of them and still get some free stuff.
I haven’t made up my mind about getting one of these kits, but the *premium* kit offer looks attractive to me. Some months ago, I mentioned that after successfully receiving multiple account bonuses, Sharebuilder became wiser Read more:Bonus
, Codes
, Current
, Offers
, Promo
The Sunday Review #15: Money Picker Edition 2007-04-08 14:21:13 I was looking up some money videos on YouTube, and stumbled on this interesting one…
[If the video does not work in your browser, click on this link to watch it.]
…and got myself busy looking for stats on people who pick up money found on the streets. Here are some facts, from an USATODAY article, about people who pick up pennies on the street:
If 76% folks will pick up a penny, may be 100% will try to pick up a dollar bill?…or may be not. I think there are high chances that the percentage will not change much with increasing amount (it’s a pity the video does not show cases where people see the bill and yet don’t attempt to pick it up).
It would be very interesting to know what the remaining 24% percent of people think about the pennies (USATODAY mentions 23%, so may be there are 1% people who are *undecided* or whatever). Not worth the bending effort? Or too shy to pick up a penny? Or leave it for someone who deserves it more? Or perhaps some oth Read more:Edition
, Money
, Sunday
Saved Some Money On Airline Tickets 2007-04-16 20:31:16 First, some general thoughts about buying airline tickets. It’s like buying company shares in the stock market. The first time you see a fare, it raises some “stock market-like”questions; for example: is it going to rise or fall in time to come? should I wait for a better time or buy immediately? what will happen if the price falls suddenly after I make the purchase? and other similar questions. So, to make a long story short, buying “good deal” airline tickets has the same kind of anxiety attached to it as buying a “good” stock.
A few days ago, I booked two tickets to Philadelphia as a part of our short vacation plans over the Memorial Day weekend. To avoid spending a ton of money on airline tickets later, I decided to book them right away (for once, didn’t really procrastinate). Searched on major websites: Expedia, Orbitz, Farecast, etc., and as usual….found cheaper deals on airline websites directly. Both Continental and Southw Read more:Airline
, Airline Tickets
, Money
, Tickets
The Sunday Review #16: Cartoon Contemplation Edition 2007-04-15 15:12:38 It would probably take a whole post…may be more to convey the message in the cartoon…so I will just leave you guys to savor it in your own way. If you know of any good source of money related cartoons, please feel free to share.
Moving on to some interesting articles of the week.
The Dangers of Financial Paralysis - And How To Get Out Of The Rut by Trent @ The Simple Dollar. Learning from his experience, Trent proposes a 6-step plan to get into action to improves your finances. Sometimes I wonder if it is more of a financial “inertia” than a “paralysis”. It’s not like people don’t do stuff….they do it, but they just want to keep doing what they have been doing all along….even if that’s what got them in the rut in the first place.
Dividend by Blain @ Stock Trading 101. The post answers basic questions like “what is a dividend?” and “why companies pay it?”. Short and simple with no invest Read more:Cartoon
, Contemplation
, Edition
, Sunday
23 Valuable Lessons In Personal Finance On CNNMoney 2007-04-17 17:01:32 Check out this nifty “step-by-step guide to gaining control of your financial life” by CNNMoney. It’s an all-in-one package sort of deal with 23 lessons covering topics like investing basics, kids and money, retirement, car buying …and many more…almost everything you would want to know towards better personal finance management. The lessons start from basic know-how and proceed towards advanced concepts. For example, shown alongside is a snapshot of the lesson on retirement (lesson #13).
Some of the lessons include handy tools (or calculators) that you can use to crunch up some numbers as you read. A multiple-choice type test accompanies each lesson. Use the tests to check how much you have learned (or how much you need to learn). For example, here is a test question from the lesson on investment:
I stumbled on an interesting tool right in the beginning of the guide (in lesson #1); it’s called the “Prioritizer“. It’s pretty hand Read more:Lessons
, Personal
Thursday Money Blogs Roundup: Credit Card National Bank Edition 2007-04-19 22:21:27 First, here is a story that most of us are familiar with:
[Click here for video source]
But don’t worry! here is the perfect solution to our problems. It’s a new bank in town that promises to lighten your financial burden.
[Click here for video source]
And now for some interesting posts from fellow bloggers:
Parallels Between Gambling And Investing by Jonathan @ My Money
Blog.
Personally, this makes me worry a lot about the self-directed nature of many people’s 401k/403b/TSP plans. Do they really know that they are investing in? The 401k industry seems to rely on the fact that most people just go with the default choice given to them. Few people question their investment choices. I don’t have the article on me right now, but something like 80% of 401(k) holders have no idea what expenses they are being charged on their retirement accounts.
Festival of Frugality #70 by NCN @ No Credit Needed Blog. NCN has done a great job putting together some nice articles. Here are Read more:Blogs
, Credit Card
, Edition
, National
, Thursday
An Example Of Bad Credit Advice 2007-04-18 17:05:18 I was reading this article about “How many credit cards are too many?” on the American Chronicle [noticed it earlier on Binary Dollar] and realized that it was actually dishing out advice that can hurt some people’s credit scores. It’s not a *horrible* article, but the problem is that it mixes good advice with bad. I have a feeling that such articles may be carrying a greater potential to confuse and mislead people than outright, easily identifiable, bad articles. Below, I have quoted some parts of the article and my commentary on the related issues.
The article starts like this:
Most Americans have between four and twelve credit cards in their pockets. There are also those who have even more rising up to twenty or more. Have you ever wondered how many credit cards are too many? How does the amount of credit cards you carry affect your credit report and score? Here are some thoughts about the subject.
So far it’s not that bad. However, it is clear that th Read more:Bad Credit
, Example
Rich Dad, Poor Dad, Smart Dad, Stupid Dad 2007-04-20 19:15:39 Let’s play a sarcastic devil’s advocate for a minute and view the world from the perspectives of four different dads. I will try to keep this short and simple.
Rich dad: Life is all about cash flow. Income producing things are assets and everything else is a liability. Accordingly, food, clothes, cars, homes, computers, TVs, kids, love, and non-earning spouses are liabilities. You should have a net worth of $10 million before you die, only then you will be wealthy. Get rich quick (?). All other dads are stupid.
Poor dad: Life is absolutely not about money. Spend as you like and live paycheck to paycheck. Never have a backup plan for financial disasters. Consumerism exists for the benefit of the universe. Never get rich. All other dads are stupid.
Smart
dad: Life is about happiness. Do what you think you are good at. If you prefer to stay employed rather than own a business yourself, then stay employed. Look for ways (within your means) to increase your wealth, but don&rsq Read more:Rich Dad
, Stupid
Patience Dear Readers 2007-04-22 00:29:46 I have initiated the process to change my hosting service provider. Finally, it’s time to say goodbye to Dreamhost.
Honestly, I have no idea what to expect in the next 24-48 hours…but I am hoping that things don’t get horribly messed up. If they do get messed up, or if some of your comments or some of my posts disappear in the process, please understand.
I don’t know how other bloggers view this hosting/server/DNS stuff, but for a mechanical engineer these things sound more like an *ordeal*.
personal, stuffShare This
Can You Save Too Much In An Emergency Fund? What Do You Think? 2007-04-27 18:30:34 Recently, Ben @ Money Smart Life ran a series of posts on “Can You Save Too Much In An Emergency
Fund“. The purpose of the series was to answer this question posed by a reader:
“Is there such thing as saving too much money in an emergency fund? What’s the best place to keep the money you do save so it still earns you something while just sitting there?”
I contributed a quick response to the question and it looked like this:
Let me start with the basic idea of an “emergency fund”. According to my definition of the concept, it’s a pool of money to account for *unexpected* circumstances and must adhere to the following three requirements:
It should easily available in an emergency (must be liquid and easily accessible through common instruments like cash or checks).
There should be a sufficient margin of safety built into it (a part of my answer to the question lies here).
It should be held as risk free as possible (you don’t want a devalued poo
Thursday Money Blogs Roundup: Pig Fat Diesel Edition 2007-04-27 06:53:11 Read about an interesting solution to energy crisis on BBC the other day:
American oil company ConocoPhillips and Tyson Foods, the world’s biggest meat producer, have announced that they will produce diesel from pork fat. Cows and chickens will also be transformed to power motor vehicles. The companies say that this renewable source of energy will be cleaner than conventional diesel. It is hoped that it will be available at petrol stations by the end of the year.
Naturally, there will be ethical and psychological concerns about having pigs, cows, and chickens in your fuel tank, so it will be interesting to see how this thing goes. Those who have objections against this pig-into-diesel concept should read this:
Animal fat and other waxy waste is usually turned in to ingredients for soaps, cosmetics and pet food.
Do you know if you are already using soaps or cosmetics with animal remains?
Anyways, let’s get to the money blogs roundup.
The Income Divide - Two Sides by Lazy Read more:Blogs
, Edition
, Money
, Thursday
How Much Is Your Monthly Electricity Bill? 2007-04-26 20:47:38 Here is a snapshot of our electricity bill for the month of March.
That’s slightly on the lower end of our bill spectrum, but the average is not very far from that amount. Probably around $48. I am trying to find the lowest bill we ever had (I think it was around $38)…but in all probability, I might have shredded it already.
This is for an all-electric apartment (so no gas usage at all). It’s not like the retail electricity price is low in this area…it’s about 9.28 cents per kWh (see the number under “Rate” in the image). It’s just that we tend to use less electricity (by the virtue of grad school timings, our small but sufficient apartment, all CF lights, and our lifestyle).
Assuming that we keep consuming around 500 kWh (the “Usage” in the image above is the electricity used in kilowatt-hour or kWh), our annual electricity consumption can be estimated to be around 6000 kWh.
According to this report by the Department of E Read more:Monthly
Are Car Manufacturers Compromising On Safety In Favor Of Style? - The Story Of Poor Bumper Design 2007-04-25 19:09:10 Insurance Institute for Highway Safety
(IIHS) released some interesting crash results in a report published in March this year. The report summarizes the damage and the costs involved for numerous vehicles when crash-tested at 3 mph (corner impact) and 6 mph (full impact) for bumper performance, in tests that were designed to simulate real-life vehicle-to-vehicle impact scenarios. Just to put things into perspective, the average human walks at about 3 miles per hour….so we are talking of really low speeds.
[Image source:www.iihs.org]
The results of the bumper tests are not very encouraging. Here is how IIHS president Adrian Lund summarizes them in the report:
The whole purpose of bumpers is to keep damage away from head-lights, hoods, and other parts that are expensive to repair, but this purpose was accomplished in only 2 of the 68 tests we conducted. In the rest, what we found is that bumpers aren’t up to the job.
When bumpers fail their functional requirements, safet Read more:Bumper
, Manufacturers
, Style
Skybus - From Seattle To Columbus And Back In $40.80 2007-04-24 22:57:53 Came across some interesting information about Skybus on The Consumerist. The newly launched airline is offering $10 one-way deals for travel between Columbus
, OH and a few other cities across the country. Your flight has to either originate from, or terminate at Columbus (you can’t fly between City A and City B without stopping at Columbus).
Nice. But first check out the quirky requirements. The Consumerist points out to a few of them in it’s post, like:
Outside food and drink are prohibited (good luck enforcing that one. I’m sorry sir, we’re going to have to turn this plane around if you don’t dispose of your sandwich).
Customer service: “We don’t have a phone number. Seriously. We’d love to chat, but those phone banks are expensive. And a good website like skybus.com is even more convenient.”
Hmm. Interesting. Check out the full list of Skybus’s “Rules of Flying“.
Just for kicks, I tried booking a roundtrip tic Read more:Seattle
Festival Of Frugality #71: Definitions Of Frugality Edition 2007-04-24 12:24:06 Welcome to the 71st edition of the Festival
of Frugality
. Before we start with the festival submissions, here are some thoughts. Sometimes, when we are engrossed in squeezing out every ounce of worth from a penny, it is easy to loose sight of reason and rationality. Hence, every once in a while, to put our actions into perspective, it is beneficial to take a step back and look at the bigger picture. In this spirit, let’s first review *frugality* before we jump to the articles.
What is Being Frugal? by Dawn @ Frugal for Life.
Because I live frugally, doesn’t mean I don’t spend money and don’t find enjoyment. I become more thoughtful about my decisions and how it will impact me in the future. I decide if this item is something I need or can use multiple times. Frugality is about restraint, discipline, finding the best value and using the item up till it can’t be used anymore.
Frugality as defined by Wikipedia.
Frugality (also known as thrift or thriftiness) Read more:Definitions
, Edition
Stuff That’s Painful When Piled 2007-04-23 22:03:24 Here is a list of potentially problematic things that grow exponentially if you do not pay attention to them on time. These are all commonplace things that have just one lesson associated with them: a stitch in time saves nine. Perhaps there are more lessons involved like: procrastination is a thief of time …and money, and an ounce of prevention is worth a pound of cure…it’s the same thing all over; look at it any which way you like.
Bills: Everyone must have gone through piles of bills at some point of time in life. Pay your bills as soon as you get them. When you get into a habit of “ah..it’s not due for another month” they start piling up and then we conveniently start forgetting about them.
Debt: The best time to attack debt is right when it shows signs of existence. Remember, compounding and time are debt’s best friends. Together they can wreck a havoc in your life. Prepare a plan of action (lifestyle adjustment, increased income, reduc
The Sunday Review #17: Earth Day Edition 2007-04-22 13:05:54 For those who are not aware, every year, April 22nd marks the “Earth
Day”. In short, it’s a day when people *suddenly* realize the importance of global warming and environmental degradation. It’s like those other days when we suddenly realize the significance of our mother, father, spouse, children, teachers, and grandparents. But hey! one day is better than none. So, on this occasion “Earth Day
”, let’s spend some time on a few green thoughts. Here is something to get you started (source):
“If every household replaced its most commonly used incandescent light bulbs with CFLs, electricity use for lighting could be cut in half. Doing so would lower our annual carbon dioxide emissions by about 125 billion pounds. This action alone could halt the growth in carbon dioxide emissions from the United States, given recent growth rates.”
Update [thanks to Super Saver]: Home Depot is giving away 1,000,000 Compact Fluorescent Light bulbs toda Read more:Edition
, Sunday
Carnival Of Debt Reduction #85: The American Way Of Debt Edition 2007-04-30 11:23:18 Let’s start this edition of the Carnival
of Debt Reduction with some historical perspective on debt in America. Here are some interesting facts on consumer debt in the 19th century (source).
Before organized consumer credit, there were five major lending sources: pawnbrokers, illegal small-loan lenders, retailers, friends and family, and mortgage lenders.
Indebtedness was common prior to the 1800s. Unfortunately, it was hidden from view in the grocer’s book and the pawnshop ledger, in the butcher’s tab and the memory of friends.
Early levels of national consumer debt were measured in 1858, when it was estimated the nation’s total household debt load was 1.5 billion dollars. By 1890 the level of consumer debt had risen to 11 trillion dollars.
The 1890 census discovered the average household had about $880 of debt and only $475 in annual income. Compare that to 1998 when family debt was $33,000 and annual income was $32,800.
Between 1896 and 1916, short-term hous Read more:American
, Edition
The Sunday Review #18: Parents Of Obese Children Edition 2007-04-29 12:57:45 Over the weekend we were shuttling between our town and another big city on some errands. During one of the drives, me and my wife got into an interesting discussion on obese children and their parents’ mentality. The cause of the discussion was a family of 5 (3 obese children with 2 obese parents) who ordered a huge lunch at one of the fast food outlets where we stopped for coffee. I will try to pen a few thoughts that churned out of the discussion.
What are parents of already obese, 8~10 year old kids thinking when the kids are gorging on 1/2 pound burgers and massive amounts of Coca Cola? Don’t they worry about the potentially life-threating medical conditions that their kids can develop in future if they continue to pile on fat? It’s not like “oh..I didn’t notice”…especially when you have a 8~10 year old kid weighing 200+ pounds. Kids don’t become obese overnight…it takes years of bad-food-habits. So if you notice your child Read more:Children
, Edition
, Obese
, Parents
, Sunday
Spirit Airlines Deal: $0.01 Each Way 2007-05-02 21:24:48 Right on the heels of Skybus’s $10 deal, Spirit Airlines
is offering a $0.01 airfare promotion with a lot more destinations (than Skybus) available.The only problem: the promotion ends today at 11:59 pm ET. So, if you have been generally looking for some airline tickets, hurry up to Spirit Airlines and see if you get lucky.
The image above shows an example airfare for travel between Detroit and New York.
Of course, like all promotions, “limited seats”, “limited dates”, and other blah blah applies, so read the fine print carefully.
deals, promotions, travelShare This
Junk Snail Mail Contest - Who Sends You The Most Financial Junk? 2007-05-02 15:50:28
That’s a part of my junk mail pile (neatly arranged) from the last few weeks. Finally, after much procrastination (as usual), I got to shredding the damned things yesterday. This time, I documented the rogue mail senders, so that I can systematically hate them according to how much junk they send me. Here are the results:
Chase was the undisputed winner in our little junk mail contest. With 27 letters - some pre-approved offers and some of those stupid $10 checks - in a span of about 3 weeks, the king of junk mail seemed to be hell-bent on ruining our cheap paper shredder.
Bank of America, Citibank, and Discover also sent some junk to our mailbox, but they don’t come anywhere close to Chase. However, Citibank and Discover still managed to aggravate the shredder by sending over-sized junk mails. Verizon didn’t really send *financial* junk, but I included it nevertheless since it ranked among the top 6 contenders. It should be noted that these junk mail numbers do n Read more:Contest
, Financial
A Way To Reduce Spending - Think About The Number Of Hours You Will Need To Work For Stuff 2007-05-01 16:30:44 Here is a quick money hack. If you compulsively feel like buying stuff when go window shopping, then this might work for you. Whenever you want to buy something, make it a habit of thinking in terms of the number of hours you will have to work in order to earn money equal to the cost price of the thing you want to buy. For example, assume that you earn $5 per hour (minimum wage in some states, on the lower end). Now, suppose you want to buy yourself a $5 smoothie just to satisfy your sugar craving. Instead of thinking about the cost of the smoothie in terms of the dollar amount, tell yourself that it requires one full hour of work to buy that smoothie. That will surely make some of you think twice.
To further illustrate the point, and to get some interesting numbers, I ran this ‘hours-of-work‘ thinking through some hypothetical people earning different salaries per hour - minimum wage workers ($6.25/hour), graduate assistants ($15/hour), high school teachers ($25 per hour) Read more:Hours
, Number
, Spending
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