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The self-help industry continues to produce hundreds of new books every year, explaining how people can live their lives, improve their identities, and build wealth towards financial independence. There’s nothing wrong with this approach, in particular. You never know when you’ll find an author, a blogger, or a friend who will put words in the right order, and the result is a connection that can change your life.

I know this from experience. Over the last decade, readers have contacted me privately to thank them for the information and the stories I’ve provided here, whether it’s a warning about a company you might not want to work with, or sharing my past mistakes in an effort to prevent others from making those same mistakes. When I realized I needed to make changes in my life, it wasn’t a guru, author, or blogger, or friend who opened my eyes. It was my own bad situation — the loss of a job, car, girlfriend, and apartment in a short time span. I had to make changes and then I found the Motley Fool’s “Living Below Your Means” message board.

The messages there, with thoughts from real people, not experts selling books or trying to attract pageviews, helped me come to terms with some changes I needed to make.

I already knew about the self-help industry. My first major job after college was with a company whose executive director lived and breathed life gurus and expensive brainwashing seminars. I never wanted any part of that.

The gurus of today owe a lot to philosophers of the past, Socrates and Plato in particular.

In fact, Socrates might have been considered a guru in his day. At least through the eyes of his student Plato, Socrates was a teacher. He placed a high importance of knowledge over ignorance, and knowledge even over winning an argument. This philosophy would prevent him from succeeding well within the media environment in the United States today, but his teachings have stood the test of time.

Because much of we know about Socrates comes from the writings of his protege Plato, it’s hard to know how much of of what we know about the philosophies of Socrates is filtered through Plato’s own philosophies. Keep that in mind as I continue to look through some specific examples of how Socrates and Plato have paved the way for modern thoughts about life and money.

The examined life.

In Apology, Socrates discusses self-knowledge. Self-knowledge, self-awareness, the examined life — these are all different ways of saying that in order to become a functional human being, you have to know who you are right now and accept who you are today before you can move forward.

This is a good way to sum up the initial purpose of Consumerism Commentary, and how I approached my finances in the two years or so leading up to starting this website, from about the year 2001. One of the first steps to improving your finances is taking an inventory of what you own and owe — your assets and liabilities. That gives you knowledge of your financial self, at least in one snapshot of time.

But beyond the dollars and cents, you also have to know who you are. Identify the habits you have and why you have them. Identify your core beliefs about money and wealth, especially if they are holding you back. Take some time to think about your values and what kind of life is important to you. Think about your history and whether you might have been subject to any biases as you were forming your values.

Only with a full understanding, after examining your life as it is today, will you be able to make the best decisions about where to go, how to behave, and who to be.

Learn from others’ writings.

Again, this represents my core approach to Consumerism Commesntary. It’s such a difficult lesson, though. The best teacher is often experience. Someone could tell you a hundred times not to stick a pair of scissors in an electrical socket. You could know that it’s probably a bad idea. But, you still do it anyway, and the result is you’re thrown across the room. Yes, that is a mistake I made when I was a child. Perhaps it explains much about me. Or perhaps it just shows that sometimes you often can’t comprehend consequences until you face them yourself.

People in the developed world know that being in debt is bad. They know that spending more than one has in income will cause major problems in life after a while. They understand that negative net worth is bad, and they understand the basic arithmetic that quantifies that result. But this knowledge generally doesn’t prevent people from finding themselves in uncontrollable debt due to overspending. The reasons people spend money often outweigh the potential for negative outcomes in the future.

So this is why writers try to warn others about the dangers of debt. They tell their own stories in the hopes that they will connect with someone and prevent them from learning the “hard way.” Socrates wants people to learn from others, just like bloggers do.

Socrates on contentment.

Happiness was an important part of the philosophy of Socrates. And over the last few years, one idea of his started to become popular again, especially as a series of different academic studies set out to prove similar theories. There is a relationship between money and happiness. One survey pinned a happiness plateau on a certain annual salary, and claimed that increases in income above that identified salary did not have a strong effect on happiness. Another survey showed that your happiness with your financial situation has more correlation with how you perceive your situation when compared to your friends and colleagues.

The increase in popularity for a frugal lifestyle, including downsizing living arrangements, adopting the minimalist culture, and spending money on experiences rather than objects, has been partially amplified by the latest major recession and, in many cases, borne out of a need (a lack of financial resources).

Socrates — or perhaps Plato — is likely smiling in his grave. Socrates is quoted: “He is richest who is content with the least, for content is the wealth of nature.” How many writers and bloggers, including myself, have said something similar? If you can be content with less, you will not maintain a constant desire for more.

Socrates also found fault with both wealth and poverty, through Plato’s illumination of his teaching in the latter’s Republic. Both destroy someone’s ability to produce good. As one becomes wealthy and doesn’t need to work for money, he can become lazy in his endeavors and work and other contributions to the world suffer due to a lack of financial motivation; poverty, on the other hand, deprives one from the resources necessary in order to do the best work.

“Wealth, I said, and poverty; the one is the parent of luxury and indolence, and the other of meanness and viciousness, and both of discontent.”

Morality is more important than wealth.

The desire for wealth pulls people away from moral imperatives. I’ve seen this personally. With money on the line, people will often lie, cheat, steal, and extort if they’re in a position to do so. We encourage entrepreneurs and CEOs to be greedy, not just because Wall Street and large institutional investors require it of them, but because today’s society places such a large importance on financial success. The heroes in the media are not those doing the most good (though it is often argued that providing jobs for many is doing good for the world), but a small percentage of athletes, a small percentage of performing artists, and politicians.

You can see that just by looking at your social media feed. How many of your friends mourn the passing of celebrities, or consider it a great tragedy when a “beloved” actor or athlete passes? An unknown solider, a child born in poverty, the many thousands of young women sold into sex slavery — very few mourn these tragedies. But a famous actor dies and it’s the saddest thing in 65.5 million years.

We see greed as a positive attribute, and claim that success is impossible without a strong desire for not just success but its specific symbols, primarily money in the bank.

Most importantly for Socrates, morality leads to happiness. Wealth, and the desire for wealth, leads away from morality. So where does that leave us who want to strive for financial independence? Do we need to put our financial desires aside to be happy? Or can we still aim for financial independence without desiring anything beyond what we need to pursue the moral lives we would like to live without the burden of financial distress?


I first heard about Acorns a few weeks ago. Acorns is a micro-investing mobile app designed to make it incredibly easy to invest small amounts in the stock market. As if designed perfectly for the Millennial generation, there’s no need to actually know anything about investing to get started; Acorn’s advisers simply designed a portfolio (based on “Modern Portfolio Theory”) that works for all investors using the app.

The creators of Acorn have found a way to solve major problems with the financial industry’s typical path to investing, and the biggest is the barrier to entry. Acorns lowers this barrier considerably. This is the continuation of a trend that stared centuries ago. Investing in equities was once the realm of the wealthy, not the middle class. Discount brokerages were the previous generation’s introduction to investing, allowing investing amounts as low as $100, and now Millennials are coming of age in an industry that allows them to invest with as little as $5.

Millennials (and everyone who owns a mobile phone today, but Millennials are the population most likely to bank and invest using a mobile device) are the beneficiaries of technological advancements that have greatly reduced the cost of investing. The cost of a trade to a brokerage is virtually nothing, and it has been the trend for brokerages to pass that savings onto the customers.

In the 1990s, it might have cost $35 per trade to buy and sell stocks with your full-service broker over the phone. Discount brokerages brought that cost down to $4 to $7 for certain types of trades, or about $20 for others, with some discount brokerages offering free trades for a limited time or in return for a small monthly fee.

And that’s how Acorns fits into this picture. It has moved the discount brokerage model to the mobile phone, has taken investment choice out of the equation for investors, and charges customers nothing to buy and sell. Instead, Acorns has a monthly account maintenance fee, which in the industry is called a “wrap fee.” This is a pricing model employed by Betterment, as well.

Acorns charges users/investors $1 per month plus a percentage of their assets. The fee percentage is an annual 0.25% to 0.5% based on the account’s average daily balance. The first $5,000 in an account receives the 0.5% rate, and all dollars above that $5,000 are charged at a rate of 0.25%. Acorns says, “The more you invest, the more you save,” which is a nice catchphrase, but just like most so-called savings wherein a rate gets lower the more money you have, the more you invest, the more you pay (as a total percentage of your assets).

If your account balance is $500, your monthly fee is $1.21 per month. If your account balance is $100,000, your monthly fee is $22.88 per month. That’s on top of any fees that may be embedded within the investments chosen by Acorns. Compare this to Betterment’s current fee structure, where investors are charged either 0.15%, 0.25%, or 0.35% annually, with the best rate reserved for accounts with a $100,000 minimum balance. But with Betterment, the lower rate is in effect for your entire balance.

With my Vanguard account, I choose my own funds (though other people may simply invest in one, such as the Total Stock Market Index Fund), and there is no wrap fee. VTSMX has an “expense ratio” (internal management fee) of 0.17%, but that’s different than a wrap fee. That’s because the exchange-traded funds that make up the Acorns portfolio each have their own fees, from 0.05% to 0.20%. These fund fees are akin to the VTSMX expense ratio, so Acorns charges a wrap fee on top of the fees of the underlying investments.

Acorns warns potential customers in an agreement when signing up via mobile phone — an agreement that most customers will never read:

Clients should be aware that Acorns is designed with frequent investing in mind. This fee structure may not be appropriate for individuals looking to make few or infrequent small-dollar investments.

Wait a second. The beauty of Acorns is the ability to make small-dollar investments. Let’s say you open an account and make just a few $5 trades. If you deposit a total of $20 to test the account and leave your money there for a year, you’ll pay an annual fee of $12.12. The stock market might improve, but it’s unlikely to grow so much that the gains cover the fees. It may be “just $12.12″ a year, but that could be an unacceptable percentage of your balance!

If you’re not going to invest frequently, such as catching your remainders when you spend money on a daily basis or throwing five dollars into the account when someone expresses market frustration as Carl Richards is doing, this isn’t the right type of investing for you.

The fees may hardly be the point, though. There’s quite the possibility that Acorns represent a new way to invest thanks to the convenience of mobile technology. It has the potential to introduce a new generation to investing, and the long-term benefits for the individual outweigh the fees, if that individual is unlikely to invest in the stock market otherwise.

And given time, just like in the world of online banking, traditional brokerages will eventually follow. If there’s money to be made with innovative enhancements spearheaded by financial start-ups, the financial industry establishment will implement it, by either copying or acquiring the technology.

As a relatively young member of Generation X, I was an early adopter of technology that made the web the primary way for doing business. I started my own personal website out of a computer in my dorm room twenty years ago. A few years later, online-only banks started business. These Web-only banks inspired traditional brick-and-mortar banks to create ways to bank online rather then over the phone or in person.

Twenty years later, mobile technology is in that same position. The services offered may not be perfect today, but they will mature as mobile technology continues to reach an increasing portion of American consumers and investors.

I was planning to give Acorns a try by opening a personal account, but after taking the time to think about it, and after reading the Terms and Conditions, I’ve determined it’s really not for me. I will stick with my Vanguard account for now, though it’s been suggested to me that I should look into “private client” banking; once again, those with more assets receive preferential treatment — like free checks, lower mortgage rates, and access to personal loans. I haven’t made any decisions yet.

Acorns is available for iPhone and Android. Search for it at the applicable app store, or visit the website. Will you give the app a try? Is this type of investing beneficial to you?


Cash back credit cards can help consumers practice responsible spending while earning a little extra for their efforts when used properly. The days of earning 5% cash back for credit card purchases may be nothing but a memory, but the smart use of credit cards can still be profitable for diligent spenders. You may be able to find some credit cards offering a high level of cash back in certain spending categories, but these are often subject to maximums.

Most of today’s better cash back credit cards offer 1% to 2% cash back on purchases. However, if you look hard enough, you’ll find a number of credit cards with higher cash rebates than just 1%. This article lists a selection of cash back credit cards you can find today, and I update the article when there is new information to share.

Keep in mind that in order to make credit card with rewards programs worthwhile, you must avoid interest charges and late fees by paying your bill on time and in full every single month.

Editor’s choice

Chase Freedom $100 Bonus. In advance of the holiday season, Chase is offering a $100 bonus for new cardmembers. The bonus will deposited into your account after spending only $500 within the first three months of owning the card. You can earn an additional $25 cash back bonus by adding an authorized user to your credit card account.

Besides these bonuses, Chase Freedom offers 5% cash back on up to $1,500 in purchases at and certain department stores. The headlining stores include JCPenney’s, Kohl’s, Macy’s, Nordstrom, and Sears, but many other stores are included. This could be beneficial for holiday shopping, but keep in mind only the first $1,500 spent qualifies for the 5% cash back rate. All other purchases — purchases in other categories or purchases in these stores beyond $1,500 from October through December — earn 1% cash back.

So while the most you can earn from the 5% bonus cash back rate is $75, your cash back at the 1% rate is unlimited. Chase Freedom carries no annual fee.

Other cards

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Naked With Cash is an ongoing series at Consumerism Commentary in which readers share their households’ finances with other readers. These participants benefit from the accountability that comes from tracking their finances publicly and the feedback of the four expert Certified Financial Planners (CFPs).

For more information, read this introduction.

This year, we have four participants who will share their financial reports, exposing the results of their financial choices. Each participant is paired with one of our Certified Financial Planners. The experts will provide insight and guidance that will help our participants take their finances to the next level by the end of 2014. Learn about this year’s participants and experts.

Laura and Leon, together, earn more than $125,000 a year. Their main focus right now is paying off student loans, and they want to have that done in order to be better ready to start a family. Laura and Leon hope that they can focus better on their finances, and learn to manage their money more effectively. (Read last month’s update.)

After reading Laura and Leon’s comments, you can read commentary from Roger Wohlner, CFP. Roger Wohlner appears courtesy of The Chicago Financial Planner. This month, there is a focus on estate planning.

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Naked With Cash: Brian, September 2014

by Luke Landes
Brian - September Naked With Cash

Naked With Cash is an ongoing series at Consumerism Commentary in which readers share their households’ finances with other readers. These participants benefit from the accountability that comes from tracking their finances publicly and the feedback of the four expert Certified Financial Planners (CFPs). For more information, read this introduction. This year, we have four ... Continue reading this article…

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Naked With Cash: Jake and Allie, September 2014

by Luke Landes
Jake and Allie - September Net Worth

Naked With Cash is an ongoing series at Consumerism Commentary in which readers share their households’ finances with other readers. These participants benefit from the accountability that comes from tracking their finances publicly and the feedback of the four expert Certified Financial Planners (CFPs). For more information, read this introduction. This year, we have four ... Continue reading this article…

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The One Action You Need to Take in Any Market Correction

by Luke Landes
Bear Market

As of today, the Dow Jones Industrial Average has erased all of its gains this year. We’re not quite in “market correction” territory, though. The S&P 500 is still up year-to-date, but it isn’t presenting as fantastic a return as was evident earlier in the year. We could be getting to the point where the ... Continue reading this article…

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Mark Cuban Wants to Cap Student Loans at $10,000

by Luke Landes
Mark Cuban Student Lans

We expect much from people we see on television. And it’s worse when we perceive someone to be smart and talented, even if they’re speaking beyond their area of expertise. We think someone who is a great community leader or someone who is a great business leader will make a great President of the United ... Continue reading this article…

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Hard Work and Practice Can’t Guarantee Success

by Luke Landes
Children Playing Chess

I’ve written extensively about taking control of one’s own finances. My life changed for me when I realized I had more control over my personal situation than I previously believed. Every human has the power to make every decision based on a future benefit. One can choose to use a pay raise to pay off ... Continue reading this article…

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How Do You Determine Your House’s Value?

by Luke Landes

Yesterday, I pointed out that the house you live in is an essential part of your net worth calculation. But determining the value of your house, especially if it’s the house you live in and not something you track as an investment, can be tricky. It’s easy to determine the value of your mortgage to ... Continue reading this article…

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