Owner: Beyond the Consumer URL:http://beyondtheconsumer.blogspot.com/ Join Date: Thu, 21 Jun 2007 18:26:47 -0500 Rating:0 Site Description: Personal finance, consumerism, and business news. Site statistics:Click here
Letter to their daughter 2007-07-13 13:31:00 All Financial Matters posted a letter from a couple of financial-savvy parents to their daughter. I loved it and wanted to spread word of it around. These parents had $1,000 saved up for their daughter when she was 14, via her allowance. The letter details some investing and saving advice for their child.Memorable quoteAs you can see, when the interest rate doubled (from 5% to 10%), your earnings over a 51 year period grew by more than a factor of ten – from about $11,000 to about $128,000!!Trivia: Albert Einstein discovered the Rule of 72. Read more:Letter
What would you do with $30,000? 2007-07-13 12:25:00 My goal is to have over $30,000, cash in a savings account, by the end of 2009. What would you do with $30,000? Assume no debt except a mortgage. Off hand:Keep it in savings, let it earn 5% interest or soDivide it up, keep an emergency fund in cash and invest the rest in the marketPay a huge chunk of mortgage principle with most of it, retaining some as emergency fundsFund a Roth IRA, 529, or some other retirement fund with the interest it earns in a 5% savings accountBuy a Lexus
Friday Linkfest 2007-07-13 12:09:00 It's a real estate themed Friday
Linkfest!Three key steps to selling your house online - Sell it yourself. Real estate agents are way overpaid. When their fees come down to reality, maybe they'll be useful.General Electric to sell WMC - GE dumps its mortgage division. It's subprime of course.Mortgage rates at 2nd highest this year - 6.73%. The subprime owners wish they had a rate like this. Still about the same as the rate this time last year. Somehow they manage produce entire articles every time the rates go up or down a few base points.If housing's down, why are rates up? - GE profits rose despite subprime woes - Still not enough to keep them from selling WMC.Ameriquest to pay $325 million to homeowners - For ripping them off, yet Ameriquest denies to wrong doing. Each homeowner gets about $800...likely far less than what Ameriquest scammed them out of. Ameriquest wins!Brand names houses?! - MBH's opinion on the new Martha Stewart homes.
Does a mortgage eliminate the benefits of investing in real estate? 2007-07-12 12:29:00 Is real estate really a good investment? I had a few minutes free and used zillow.com and bankrate's mortgage calculator to run some numbers. I picked a house in my neighborhood that was around 10 years old and had an average price today compared to the other homes in my neighborhood.The home was originally purchased for $110,000 in 1999. With a standard fixed 30 year mortgage at a reasonable 6% interest, your monthly payment would be $660. Today if you were to sell the house, it is supposed to be worth $156k. Last year (home prices have gone down a bit in my area - and will get worse as there are so many homes on the market now! my neighborhood is FULL of for sale signs, but anyway) the home was work $160k, the highest in a 10 year period. I'll go with $160 assuming you sold it in 2006 and got the best possible price so far.Your profit would be $50k minus 5% sales commission or so, leaving you with $42k in your pocket. Assuming you didn't put down a large down payment, the interest
The prada bag of the housing market 2007-07-12 09:04:00 This is just too bizarre; KB Martha Stewart homes. Of all the decisions you need to make when purchasing a home, does the fact that it was 'designed' in part by a woman on TV living somewhere on the east coast fall under a high priority?"I love all her things," says Menyon Green, a 42-year-old nurse who recently bought a Martha Stewart-KB Home in the Atlanta suburb of Fairburn, Ga. "I just knew this was going to be a good subdivision."What? How do you know it's going to be a good subdivision? I'll admit it, I own a Martha Stewart frying pan. It was on sale and it looked nice. But a house? Whether or not you have a door knocker with Martha Stewart's face molded in bronze on your house doesn't change the fact that it's a KB home - not exactly a builder known for its high quality."Right now it's a unique type of offering," says Rita Rodriguez, chief executive of Enterprise IG in the U.S., a brand and design agency. "You can invite someone to your home and say, 'This is a Martha S
Are pawn shops really that bad? 2007-07-11 10:49:00 MSN clearly doesn't like pawn shops
. I say, "What's the big deal?"Pawnshops really are just loan companies that take small items as collateral. It is a competitive industry, so annual interest these days is usually around 22%.People who put their stuff up for collateral at a pawn shop probably don't have great credit, so 22% is likely better than the rate on their credit card. Are there pawn shops that charge more? Sure, but as they say it's a "competitive industry" so you can just go to another pawn shop that charges less.these days, planners see more people using pawnshops who don't appear to be traditional customers. One of them is Monica Martinez. A computer programmer, the Raleigh resident had always stayed away from "seedy" stores but has become a regular customer at Capital Cash, where she's selling off a stash of jewelry to pay a hefty tax bill. "It's either this or leave the country," she says.I'm glad to know that Monica thinks leaving the country to avoid paying taxe
The iPhone fine print 2007-07-11 10:31:00 You always have to read the find print. No deal is ever as good as it is advertised. Call me cynical because well, I am. Anyway, here's a little page about the fine print on the iPhone
.All uses of the network are always rounded up to the nearest kilobyte or minute.This is pretty common and has been around in cellphone-land since they first came out. Most of the "fine print" in this article are not exclusive to the iPhone, but of service in general.Customers can be billed even though the call doesn't go through, even if it is the networks' fault. Customers also get charged for unsolicited messages.A failed call is still billed for a minute?International messages are charged additional fees as are files over 300Kbps.Unless you've used a smartphone before, this may be something to watch out for while using your new iPhone. I assume he means 300kb not 300kbps. It doesn't say what the additional fees are.Top speed seems to be 200KbpsI think this is due to the slow EDGE network. By comp
Ford is a little behind 2007-07-10 15:11:00 Ford envisions its company could utilize technological breakthroughs in battery technology not yet invented in order to bring a plug-in hybrid Ford to the market within 5-10 years.Mulally said the rollout of Ford plug-in hybrids is dependent on advancements to lithium ion batteries that will be charged by the car's owners using regular household electrical outlets.Consumers have been waiting a long time for an automaker to offer the next generation of ultra-fuel-efficient, gasoline-optional carsWhich is why another company already did it. Read more:little
, behind
Subprime Woes: How do you get in this bad situation? 2007-07-10 12:26:00 In this bankrate article, Tara writes in asking what she can do to save her home.She writes: Is it OK to try to refinance our home for a lower monthly payment even though we know that we will most likely be filing for Chapter 13 bankruptcy in three months -- when my savings run out and our second home goes into foreclosure? We currently have an interest-only payment loan that eats up 63 percent of our monthly income.Not only does Tara have an interest only loan that consumes 63% of their income, but they have a second home as well?Even if their home (that they are living in) has a higher interest rate, what good would refinancing do? 63% of your income is an enormous amount to be spending on a mortgage. Tara lives in a house she can't afford, and unless she can fit herself into a 30 year fixed conventional loan, she needs to sell and start renting. But it gets worse because she has 2 homes!I wonder how she got in such a mess? A job loss? An ARM on the second home? Need we ask about a Read more:Subprime
Having a baby - links to other blogs 2007-07-10 08:31:00 Here are some great blogger insights into the financial aspects of having a baby.Home Finance Freedom asks, Is Your Baby Cost Free? and points out the gross overspending we do on our children (although 1 coat for 2 kids is a bit much). I disagree with the idea that a book and an encyclopedia CD-ROM constitutes a decent preschool education. Do parents forget that kids go to school to learn basics like math and science, and come home needing to learn a whole new set of principles like personal finance, morality, business ethics, etc. Learning doesn't stop when the schoolbell rings. 3:30 is not "sit at home and watch TV for 3 hours" time.Memorable quoteSpending to provide a healthy, happy child is different from spending to use a child as a billboard for the parents’ ostentation.Does it really take $1,000,000 to raise a kid? I think the mountain of "stuff" is only part of the problem. As All Financial Matters reveals, some parents spend mountains of money on parties and celebrations. W Read more:Having
, links
Citibank Driver's Edge - Worthless 2007-07-13 20:53:00 So much for my 6% for a year rebates! The "cash back" on the CitibankDriver
's Edge card can only be used towards new car purchases and vehicle maintenance. I could never spend on maintenance items for what I spend on 6% of my gas purchase (or 3% for that matter). I read the entire terms and agreements - twice, and somehow I missed it. What they sent me in the mail, with my initial cards and my first statement, give no information about "redeeming" the cash back. I also got in the mail a pamphlet about "Thank You" points, but all it talked about was converting my "cash back" into "points". I had no intention of doing that.How confusing! The sad part is that my mistake has caused me to open up a worthless credit line. So, I've just cut them up and paid it off and will call in the morning to get the address. I'll send a certified letter and cancel the card after it reflects paid in full.Fortunately I can take the hit on my credit score since I don't plan on financing anything else fo
Restricting ads to children 2007-07-18 08:42:00 If you've been interested in the subject at all, you'll know that advertising to children has been getting some attention for the last several years. Most notably is the Teletubbie/McDonald's fiasco. Advertising to children is nothing new. The new Transformers movie is based off of an 80's cartoon show that was created for the sole purpose of selling Transformer toys.Parents don't seem to get upset when media and corporations turn their kids into mindless consumers, but they do get upset when it makes them fat.Are food and drink firms going to restrict advertising to children? I doubt it. But saying you are is certainly good PR. They aren't going to stop advertising (or even restrict it), they are just going to shift it to something else. It probably won't be as obvious, and I bet most parents will fall for it.The self-imposed rules include pledges by seven companies who will no longer use licensed characters, such as those made popular through movies or TV shows, to advertise o Read more:Restricting
Does a credit card make you purchase more? 2007-07-18 08:29:00 Do you buy more with a credit
card? I was listening to Dave Ramsey the other day and he read off a statistic that McDonald's found customers charging an average of 47% more per ticket when buying with a card vs cash. Other studies showed the figure around 30%. I'm sure its higher for fast food joints. When you are buying a $3 happy meal, it only takes a super-sized fry and an apple pie-thing (do they still sell those?) to knock it up another couple of dollars.But are we spending more with the card, or are we just spending more per transaction?I think it depends on the individual. I don't think I fit this statistic. If I have cash, honestly, I'm more likely to spend it. Maybe its a generational thing? My budget is all done electronically. My bank account is my "money". If I have a $10 bill in my wallet, that just feels like extra spending cash. I'm more likely to stop at a convenience store to buy a soda if I have a dollar. If my wallet just has the plastic in it, I'm more likely
Paying taxes for forgiven debt 2007-07-19 14:05:00 Another article on paying taxes on a forgiven debt. Any debt that is forgiven by your lender is considered income. Fortunately most of us won't have to face these kinds of problems. Very few of us are $200,000 in debt. The average credit card debt is only $9k.What gets me is that you aren't just paying taxes on the money you borrowed and never paid back. I suppose I can understand that, as the lender gets breaks as well when it writes off unrecovered debts. But how much of that "debt" isn't what you borrowed...but just interest and fees? I borrow $5k from the lending company, miss a payment and lose my job, and they write off a balance of $10k after a year because of all the fees. So I pay taxes on 10k instead of 5k? That's a little hard to stomach, especially since default rates and fees are just absurd.Which makes me wonder, if I borrow $5k and they add a ton of fees and charges to hike up the balance, do they WANT me to pay? What happens when a lender writes of a debt? Tax break
Credit score plummets for no apparent reason 2007-07-23 10:01:00 I have a credit card that, through their online service, gives me a Transunion credit score. I've heard the score given through these types of services is not exactly accurate, but it's a complimentary service and sort of act like "credit monitoring".Now, I'm in a position where I may have to pull my full credit report, despite having just pulled it in February. My score has been around 790 (not great, but acceptable) fairly consistently, yet just this month the new score was reported as 755. Now, I know I just opened a credit card (which I am unfortunately closing since I missed the part where my rebates could only be used for one or two things - things I don't have use for), but that certainly should not account for a 35 point drop.Most interesting is when I clicked on a link that gives me a generic description of why my credit score is such and such, it has 2 items. The first is that my most recent account is very new. Check. The second is that I have multiple accounts that show
Netflix - most consumer friendly company on Earth? 2007-07-25 13:03:00 I just got this email today from Netflix. It reads:Great news! We're lowering the price of your 1 DVD out at-a-time plan to $8.99 a month plus applicable taxes. Now you can enjoy Netflix for less!You don't need to do a thing - except pay less.Netflix lowered my pricing plan by a buck. I didn't even have to switch plans, they've just started charging me a buck less.I'm pretty sure this is the first time a company
has lowered the price of my service with them. Usually they will offer a cheaper plan, and if I'm lucky they'll tell me about it, but I always have to call up to take advantage.I hope AT&T is taking notes. Read more:Earth
Update on Interchange fees 2007-07-25 12:27:00 Here's an update on the controversial interchange fees, something that I wrote about before.They say that these fees are a concealed burden on customers because the inflate the price of retail products for all customers.I have a very simple solution to the whole thing: allow merchants to pass the fee directly to their customers. Make sure they do not charge more than the interchange fee, but just bring it out into the open. Now it no longer burdens those who pay in cash and it opens up competition (because what consumer is going to use Amex that charges them 4% of the transaction when they can use VISA that charges 2%?). Problem solved. Read more:Update
Should a spouse stay home with the kids? 2007-07-25 11:37:00 Here's an article, "When parenthood pulls on the purse strings", which goes to extreme lengths to convince you that one parent should stay at home. Personally, I'm all for a stay at home parent in the first few years of life, but I'm not going to go out of my way to convince myself of the benefits that MSN would have you believe. Some of these are stretching it!Child Care: $600 to over $1,000 per month for adequate day care or in-home child care takes a big chunk out of second paychecks.True, but spouses can also work part time to cut this down. As well, if the spouse isn't making plenty more than $1,000 a month, he/she probably isn't in a great career or has much education anyway.Wardrobe: Even in a "business/casual dress" office, you need work clothing and possible dry cleaning.I have to ask: What did you wear to work before you had a baby? Did all your work clothes magically disappear? Clothes, properly cared for, last many, many years. Unless you were sitting at home doing not
Would you trust the planet to your credit card company? 2007-07-25 10:23:00 Your credit
card company
spends most of its time trying to figure out ways to get more money out of you. Every time I find a mistake, I call to correct them and am treated like a criminal. By the time the mistake is corrected, myself and the CSR are so exhausted from the experience, there are no apologies and only curt goodbyes.Frankly, I don't trust
my credit card company to "do the right thing" unless I'm watching them like a hawk. So would you trust your credit card company with the planet
? Me, neither.But GE thinks you will with their new ecofriendly credit card. I hope someone got a raise when they came up with this idea; "Let's take away people's rebates, encourage them to charge even more on the card, and make them feel good about it!"So where will your former 1% go?earmark that amount for projects that reduce greenhouse gasesThe whole idea comes from the ridiculous notion that you can buy "carbon footprints". I love these buzzwords! If you are wondering what a carbon footpr
Want my business? Show up. 2007-07-27 15:39:00 There is something about the home service industry that is nearly universal. If you need someone to come to your home, meaning they have to do all the leg work, you are going to get a huge window and if you're lucky, they might actually come.Take my cable internet service, for example. After a week of waiting for their special appointment, they never bother coming. They make a new appointment, and again do not show up. The very idea that I would be upset about this is mind-boggling to them. They assume customers have nothing better to do than sit around waiting for them to do their jobs.This is always blamed on something. It is not the company's fault, ever. Sometimes it is the weather, or traffic, or another customer was being difficult, or a driver called in sick. The cable company actually told me that the reason they hadn't shown up was because they had too few drivers for the amount of appointments they were making. When I suggested they hire some more employees, they told me t
Qwest CEO goes to jail, does not pass go 2007-07-27 15:09:00 Here's a bit of news that made me smile, Qwest's CEO Joe Nacchio gets 6 years in prison for stealing 52 million dollars. And he has to pay it back. But why stop there?Qwest's CEO was just following company policy. Stealing is incorporated into their business model. Shareholders or customers, it doesn't matter, these are pockets full of green that must be added to the Qwest bottom line.When I was in college I had to deal with Qwest for landline phone service. They come out, to hook up my service, and charge me $80 worth of services that I specifically asked them not to do. After months of trying to get the charges removed, they "reorganized" my bill and suddenly no one could even verify what the charges were. It was all just one lump "past due" balance with no history attached whatsoever. I did not have my original bill, Qwest CSRs could care less and supervisors never called back. What's a poor college student to do?All this time I've been paying my regular bill, minus the $80 ba
Will poor folks be shut out of the housing market? 2007-07-26 11:25:00 Ah, the American dream. Purchase as much house as you possibly can and foreclose 2 years later. Wait, what?Subprime lenders might be getting a clue, because they've effectively dumped the 2/28 loan. What shocked me is that they claim it is the "most popular loan". Really? When I bought my house 2 years ago, the very idea that I would sign a 30 year loan contract and have no clue what the interest rate could be in a couple of years was ridiculous. Would you sign your mortgage with the interest rate blank and let the lender fill it in later whenever they wanted? No? So why would you let them do it a couple years later? Unless you have a very specific set of circumstances, this is mind-bogglingly stupid.What's a consumer looking to refinance to do, they ask?Mortgage brokers and loan officers say borrowers who need to refinance their subprime mortgages still have options -- just not as many. Some lenders might still offer 2/28 and 3/27 ARMs, although the rates might be high -- possibly i Read more:folks
On credit cards and debit cards... 2007-07-26 11:07:00 Kilpinger's got a couple interesting articles. This one on credit
disclosure reform greatly interested me because I'd been waiting to hear some updates on this particular topic. Here's the official press release from the Federal Reserve. The skinny is that regulators want more information on credit card statements and applications.Some I am pleased with, others seem like a waste. Forcing them to give 45 days notice, instead of the current 15, before making term changes is pretty important in my opinion. For anyone who carries a balance, 15 days (where the changes would likely take effect the next billing cycle basically) isn't much time to reject the changes and move their debt somewhere else. Disclosing the amount it could cost you if you make only minimum payments (check out the proposed formats here and here) seem a little overboard. I suppose it is necessary for some people, but I want my statement (and my terms) to be simpler and easier to read, not more complex.Taking out the
Sitting on a patent should have no reward 2007-07-30 12:15:00 More news about ebay and their "Buy it Now" patent violation. The patent is idiotic. Basically, a patent on the idea of selling a product for a fixed price while it is in auction - which clearly shows our patent/copyright/property laws are seriously messed up. This is nothing unique or revolutionary, it's pretty common sense. At any time during an auction if you reach a desired amount you can cancel the auction and just sell it.The problem is that this company, MercExchange, is a patent troll. It buys up "ideas", sits on them, and waits for some other company to use a similar idea and then it sues. It is a company based entirely on filing lawsuits for profit against other companies. They produce nothing, offer nothing, and do nothing. They are, in my opinion, leaches on the economy and anti-capitalistic mongers wasting time with frivolous lawsuits designed to earn them a buck for doing nothing at all.Another example is the MS suit against Linux for hundreds of patent violations, most Read more:Sitting
, reward
What is the average credit card debt? 2007-07-30 10:03:00 When you see an article headlined "The big lie about credit
card debt", you have to read it. So I did, and it was interesting. It points out some flaws in the polling system used to calculate credit card debt. The average credit card debt, they say, is $9,300. That does sound pretty high.What is the real figure? Well, I don't know personally. The article didn't convince me that their method was any better. $2,000 is believable, but then again so is $9,000. I'm not sure what to believe, and I'm not sure it really matters. All that is important is that we are not carrying balances and have no debt. Is comparing ourselves to other's debt any different than comparing the kind of cars we drive, or what features our houses have? If we feel like having $3k in revolving debt because the average is $9k, isn't that "keeping up with the Jones'", and isn't that just as bad?A fascinating topic would be the average debt, not just card debt. Including mortgage, and especially including car an
Should I sell my bike? 2007-08-02 11:44:00 I have a bike that I usually commute with that is worth around $1,500. With poor weather lately, I've had to take the larger car, which of course gets far worse gas mileage. After some reflection, we have been discussing selling the bike to pay towards the debt (which would pay it off faster) and then purchasing a small hatchback for less than $2k after we are debt free, paying cash of course.So I decided to run some numbers.Scenario 1: Keep it, continue to commute. Given I ride about 3 out of a 5 day work week due to weather, etc, and my mileage (I won't list all the numbers here), 3 days with the bike and 2 days with the car will cost - assuming $3.00 a gallon - about $575/yr in gasoline. However my wife and I often carpool to work, maybe twice a week.Scenario 1a: Keep the bike, continue to commute 3 days a week, carpool 2 days a week. Now my gas only costs $172/yr.Scenario 2: Sell it, commute with car only. Sell the bike, it goes into the debt. $1,500 is taken from the sale. This
What will a brand new car really cost? 2007-08-02 09:23:00 If you're anything like me, you balk at the very idea of paying more than $15k for an automobile. The value of these things sink like a rock. The depreciation is even worse on a luxury car. I wonder what this guy felt like when he traded in his car. If the link doesn't work, it's a 2002 Volvo S80, very nice, full leather interior, with only 87k miles on it selling for $12,000. Guy probably traded it in for around $9-10k. The MSRP on this vehicle brand new was around $45k. Over 5 years that's a depreciation of $6,600 a year!Assuming a no-down zero-interest loan (we'll assume the guy has awesome credit since he's buying a luxury sedan) he was paying $750 a month on the car while it was going down in value $550 a month. So over 5 years, this vehicle cost him $583 per month to own, not including all his maintenance costs.Compare this to the person buying the car now. When people take care of their vehicles, they can last forever (I've had plenty over 150k that looked and ran brand n
Mortgage accelerator program? 2007-08-01 11:38:00 I was a bit skeptical when I read this article about high speed mortgage payoffs. What would they recommend to pay off your mortgage, I wondered?Apparently, it's some ADB reduction plan on a daily compounded HELOC. A huge red flag went off when it said: get a variable-rate, home equity line of credit (HELOC) instead of a fixed-rate loan for their first mortgageWoah, wait a minute. I should get a variable rate revolving loan instead of a traditional mortgage? How is that better?So I read on, and the process sounds pretty simple, if it weren't ridiculously complex. You put all your paychecks into this loan, basically as a payment. Then you pay your bills with the loan. Well, that makes sense if you stick to a budget and make sure that you put more in than you take out. This part got me thinking:When the account holder deposits a check, the debt immediately falls for a lower balance used to calculate interest. If the paycheck arrives on the first of the month, and the mortgage isn't du Read more:Mortgage
Home owner's insurance nightmare 2007-08-01 11:20:00 My home owner's insurance
is a nightmare. I purchased my home two years ago, got the home insurance for around $700 a year. Then a few months later my mortgage company sends me a letter: Did we forget to mention? You need additional windstorm insurance, we've happily applied some of ours at a hugely inflated rate for the few months since you've owned the house and adjusted your escrow to pay it. If you find your own insurance, let us know. Enjoy your new mortgage payment.I wrote back complaining that they never told me about windstorm insurance and that I could have signed up for it in the first place, and didn't feel like I should be paying insurance for previous months for a disaster that never happened. Thanks for taking 3 months to bother realizing your mistake, and thanks to the insurance company and the mortgage company for never even mentioning that I needed this insurance. Oh, and thanks for telling me it's my fault and to pound sand when I complain about it.So I go out an
Derogatory credit report UPDATE 2007-08-01 11:07:00 A couple of weeks ago I checked my credit
score, which I get for free with my Providian card that...well, I don't actually use and only keep because of the free score (sorry Providian). Anyway, this score fluctuates several points between months but has remained stable over the last year, which is as far back as they display the records. The score for July however dipped 30 points. I had opened up a credit card with Citibank, so I at first assumed it was because of that - though that seems like quite a drop just for opening a line of credit. However on the "reasons" it said, and still says, "You have multiple accounts showing late payments or derogatory remarks."That's not good! I feared that either someone I do business with report
ed me late, which I have not been, or maybe an account had been opened I wasn't aware of and wasn't being paid. After mulling it over I was torn between waiting a few months to see what happened and just biting the bullet, checking the report, and seeing
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