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The prevalence of tipping is simply a fact of society. On several occasions, a friend of mine bemoaned the perceived necessity of tipping a specified amount to restaurant servers while dining out. He would ask the rest of our friends eating together at a restaurant, “When did the expected base tip go from 15 percent to 20 percent?” I’m not concerned so much as when cultural norms like these change, but how they change. Is it regional? Does a trend like this start among a wealthier subset and then trickle down to everyone else?

Most everyone who dines out understands that tipping is part of the unwritten agreement. If you can’t afford to pay and tip, you can’t afford to dine out. This social tradition has what I would expect to be practically full penetration throughout the United States. We’ve come to accept that restaurants do not pay their servers and bus staff a living wage on their own, and it’s the customers’ responsibility to bring that compensation more in line with a level necessary to prevent too much attrition in the industry.

With social media, the customers’ responsibility — or negligence — is clear. If you spend any time on Facebook or Twitter, or if you’ve seen any news programs covering entertainment, you’ve likely seen many incidents in the last year in which a disgruntled, undertipped server shames a celebrity by posting a copy of his or her meal receipt with a low tip. There’s two sides to every story; for every shamed, allegedly cheap celebrity or NFL professional, there is an allegedly disrespectful wait staff. It really doesn’t matter who is “right.” The point is that tipping in a restaurant, and tipping 15 percent to 20 percent for typical service, is a pervasive social expectation.

Hotel housekeepers may not benefit from the same, strong tradition of tipping as restaurant servers. An organization is trying to change that. A Woman’s Nation, an organization whose mission is to ensure that the value of women is recognizes and respected, is leading a program they call “The Envelope Please.” The purpose of the program is to encourage hotel guests to tip housekeepers one to five dollars a night, every night by placing an envelope for that purpose in every guest room.

Marriott is the first hotel brand to sign on.

And the hotel will certainly face significant criticism for doing so. If a hotel company blatantly encourages customers to tip, it is, in a way, admitting that it does not pay its staff a living wage. And if a large international corporation wants its employees to be paid a living wage, shouldn’t it be that corporation’s responsibility to do so? Shouldn’t it also perhaps be the industry’s responsibility to ensure it?

Of course, the idea of raising compensation faces the same old corporate obstacle: “If I raise the wages I pay, I have to raise my prices. I can’t raise my prices because I need to remain competitive.” There’s no doubt that it’s a difficult perspective to be in for a business. I have several friends who are not only small business owners like myself, but who also have a growing employee force, and they face these problems all the time.

I used to say that it’s the business owner’s problem to figure out, and if they can’t remain profitable while paying competitive wages, they have to come up with a different business plan. But I see that it’s often more complicated than that.

I’ll be honest. I haven’t always tipped housekeepers when I’ve stayed in hotels. That’s simply due to the fact that when I began staying hotels on my own, I had no idea at least a portion of hotel guests considered it normal to tip housekeepers. At the same time, I knew it was expected to tip hotel porters; maybe that’s because you see the “bell boy tip” in fictional entertainment so much, but never see the act of leaving a tip for the housekeeper in an envelope on the bed or nightstand.

This lack of understanding is the reason a non-profit organization focusing on the value of women would consider it important to provide some attention towards the option of tipping hotel housekeeping staff. But do housekeepers even need the tips in order to earn a living wage?

I checked Salary.com to put some numbers behind this movement.

In my zip code, a restaurant server gets paid a median hourly wage of $14, which was higher than I expected. A hotel housekeeper receives a rate of $13 an hour. In San Diego, California, both job types are paid a medium of $12 an hour. In Tampa, Florida, they both earn $11. From these figures alone, it seems that both job types require some additional compensation to make up for the industry’s low valuation.

Restaurants also know that customers will tip, so that is a justification for keeping pay low. As the idea of tipping hotel housekeepers becomes more pervasive, hotels may be just as willing to feel justified in the level of wage they pay because they know customers will make up for some of the deficiency.

According to one hotel insider, housekeepers are scheduled, at least in his institution, to clean 15 rooms a day. To a housekeeper, if everyone follows the expected guideline, she could walk away at the end of the day with between $15 and $75. If it costs very little to Marriott to put envelopes in every room every day, it could add up to a lot of extra compensation for housekeepers. If you assume the additional tips raise the effective hourly rate of a housekeeper by $4 a day, a hotel would not be able to match that through its own compensation plan. There’s no way a hotel could easily raise that pay of its housekeeping staff by that much.

With that perspective, it makes sense for hotels to encourage customers to tip. The staff will get a much better deal than the hotel could possibly offer. The only drawback is the potential downstream effect; more reliance on tips in the future might prevent hotels from raising wages competitively.

I’ll be keeping this in mind when I head to Louisiana this week for a conference and stay at the New Orleans Marriott.

Do you tip your housekeeping staff when you stay in a hotel?

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If you have any questions for me, I encourage you to go ahead an ask. It’s great to hear from readers, whether it’s to ask a question or challenge me on my opinions. The link to contact me is unfortunately now buried at the very bottom of this website, or you can just click here to send me a message. For financial questions where anonymity might be important, particularly if you have a question about your personal situation and would like me to ask the readers, there is an option to send me a message without providing your personal information. This has come in handy with readers many times.

A question I received recently pertained to my savings accounts. Here it is, from reader Mike:

Do you still have an account with Capital One 360 and their 0.75% APY?

I ask this in a sarcastic manner. Having recently found your article from November 13, 2012 talking about how Capital One was at the time taking over ING Direct and that you did not see enough reason to close your account. Even though a savings account is for protection and not an investment I still find it hard to swallow that all Capital One and the other online savings account sites can only offer a pitiful 0.9% at most.

When I first opened an account at ING Direct, the interest rate was more than 4% APY. Those were good times, at least compared to the world of deposit accounts since the recession. I was earning those higher rates on a much smaller balance than I had at the bank later on, when rates all across the board tanked to below 1%.

Banks offer higher rates on savings accounts to attract customers. But with a facility to borrow money from the Federal Reserve at insanely low rates, close to zero, there’s no incentive to offer higher rates to average depositors like you and me. Experts who watch the Federal Reserve Board believe they may start raising rates, or at least hint at the possibility of raising rates sometime in the future, after the next meeting this month. It could be a long time before banks decide to offer rates on savings accounts that exceed the historical rate of inflation.

Savings is an important part of a household’s financial picture, regardless of the interest rate. Low rates make savings more painful.

Let’s get to my savings accounts, which were the real focus of the question. My last public financial statement was from December 2011 and didn’t include anything in my business accounts. The statement indicated I had $66,531 in savings, and almost all of this was in ING Direct (now Capital One 360) savings accounts. This was technically after the sale of my business (Consumerism Commentary), but I didn’t include any proceeds from the sale in my public balance sheets. But that ING Direct/Capital One 360 account remained roughly the same after the sale.

Since the time of that final balance sheet, I’ve occasionally withdrawn from the savings account, but it is still open. And, in fact, the $17,000 in my Capital One 360 account reflects nearly the totality of my cash savings; everything else is invested. I’ve left my investments alone for the most part, and have been living mostly on the income from the company that purchased Consumerism Commentary. But in order to make that work, I have to occasionally dip into my savings to assist. It’s a better choice than selling investments. Had I planned my taxes a little more carefully, and had I better anticipated what my tax bill would be with the change in investment income rates, I could have kept more cash ready to go, but it didn’t work out that way.

Capital One’s purchase of ING Direct and the resulting Capital One 360 brand have had no impact on the quality of the account. I am certain the interest rate would be the same regardless of the name of the company or the corporate owner.

My account at Capital One 360 has survived the Great Consolidation.

Over the last eleven years, I’ve opened savings accounts at dozens of banks to review the process and the experience of being a customer for readers. I don’t know of many other reviewers who have gone so far to review savings accounts; most reviewers take a look at the terms or the advertising copy and base their reviews on that. Since selling the site, I’ve had no need to continue opening savings accounts across the country and the internet. And I wouldn’t advise most people to have savings accounts at dozens of different banks. So I took some of my own advice and began closing accounts, moving cash to either Capital One 360 or Wells Fargo, the latter of which is where I still having my primary personal and business checking accounts.

That was the Great Consolidation. It took a few years, with the last account (American Express Personal Savings, currently offering 0.8% APY) closed a few weeks ago. Why close American Express when it’s five basis points higher than Capital One 360? It really doesn’t make a difference. Well, it makes a difference of $8.50 a year. Although, I wouldn’t like paying an $8.50 yearly fee for a savings account, the difference in interest earned isn’t that much of a big deal. I’m not chasing rates now — in fact, I never chased rates.

Considering it would take as much effort to close the Capital One 360 account as it would take to close the American Express Personal Savings account, there’s no reason I can give other than habit. I’ve had the Capital One 360 account longer (as ING Direct), and even though it’s no longer the hub for electronic transfers from dozens of other savings accounts, it has made its impression. And despite all the bad customer service stories from Capital One’s credit card division in previous years, none of the bad behavior seems to have leaked to Capital One 360.

I would prefer, however, to keep most of my cash where my investments are. My investments are almost all housed at Vanguard. The investment company offers a money market fund, but over the last few years, the returns haven’t been much better than online savings accounts. In fact, it’s been worse.

The point of the reader’s question seems to be about interest rates. Why stick with Capital One 360 when the rate has been lowered so much? Well, rates everywhere are down. The better options are not better by enough so that it makes too much of a difference. And if the other option is to invest in stocks or real estate rather than keep money in cash, you’re trading liquidity for the chance of income or appreciation, and adding risk on top of that. Savings and investing serve different purposes.

In short, the cash I have currently is almost all in a Capital One 360 account, the continuation of the ING Direct account I’ve had since July 29, 2002. (The Wells Fargo account is a continuation of the one I’ve had since 1993 or so.)

Where do you keep your savings? What’s your favorite savings account today?

If you have more questions for me, contact me now.

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According to a new survey, 63% of Millennials own no credit cards. For this poll, the Millennial generation is defined as those in the United States aged 18 to 29.

The survey, put together by BankRate, attempts to get to the root cause for the lack of penetration of credit cards among this younger demographic, despite the attempts to sell the idea of credit cards to this generation. These attempts mostly come from those older than Millennials. BankRate’s survey points out that each successively older age group is more likely to own multiple credit cards.

Instead of credit cards, Millennials prefer to use debit cards. Despite all the information that’s available that shows how debit cards are worse that credit cards for active use, credit cards aren’t gaining traction. Banks have also spent the last few years making debit cards more attractive by adding rewards and new consumer protections that approach the offerings of credit cards, yet they tend to fall a little short. And they still don’t provide the benefit of building a credit history, something older Millennials have already discovered as they’ve attempted to finance a car or house purchase with a loan or mortgage.

Millennials are tied economically to the recession. In the development of an adult, the age range currently associated with the Millennial generation is when world and political awareness sets in. For Millennials, this came at a time where the events of the world were defined by the economy. This period of maturity included the Great Recession, the credit crunch, significant penalties for the banking industry, new regulations, and banks behaving badly. It’s no surprise those who came to understand the world during this time are wary of banks and the products they push.

That doesn’t explain why credit cards are shunned while debit cards are praised. After all, debit cards are bank products, as well. There must be an element of distrust of debt, not just the banking industry. And that might come from the recession, too, as Millennials saw their older relatives and friends struggle with debt.

On top of this, there are quite a few loud voices in the media who prefer debit cards over credit cards, and even though the reasoning they preach is often faulty, the message contains an aspect of contrarianism that Millennials, as a group, seem to like.

The survey is missing something obvious. The use of credit cards among different age groups isn’t a comparison that makes a lot of sense. We shouldn’t be comparing the 18 to 29 year-olds with today’s older generations. These can be interesting data, but it can’t be used to prove any hypothesis that might be suggested by the survey other than “younger people use and own credit cards less than older people.” The better comparison would be between the use of credit cards among Millennials today and the use of credit cards among other generations when they were the age of today’s Millennials.

That would result in some clearer conclusions. We do know that Millennials today are often entering the workforce with higher student debt loads than any other previous generation. That could be a reason Millennials are wary of anything that has the potential to increase debt, as credit cards might. Debit cards are marketed much more heavily today. They didn’t even exist when some older generations were as young as today’s Millennials. Some of these facts should be considered when trying to determine why Millennials don’t carry credit cards.

In general, as one gets older, one progresses in one’s career and builds more wealth. With more wealth, people will grow more comfortable using financial tools like credit cards. I would be surprised if the situation with Millennials today is much different than the situation with Generation X, twenty years ago. In the 1990s, Generation X was coming of the age where awareness of politics and the world kicks in. There was a recession in the late 1980s and early 1990s.

This is from an article from the Los Angeles Times in 1995:

By graduation, [Michael Puccini from Chapman University] had a wallet full of plastic and was $3,000 in the hole. Plus he owed $13,000 in student loans. Overwhelmed, he moved back home after a tearful phone conversation with his father.

“I had a lot of fun with credit,” says Puccini, 30, who has found work in Los Angeles as a public relations agent. “But I’m really paying for it. It’s kept me from doing a lot of things.”

More than any other generation before them, today’s young adults are emerging from school and beginning their careers weighed down by a heavy burden of debt. And fresh data suggest this burden is growing. A Southern Californian’s average credit card balance increased 20% from 1993 to 1995, according to the market research firm Claritas Inc. But for those in their 20s, the balance jumped 70%, to $2,159 as of Sept. 30.

These numbers may look small compared to what surveys throw around today, but debt at this level was a significant burden at the time. Generation X hasn’t truly recovered, and are not poised to be able to live in retirement the way investing firms advertise and the way many among the generation prior to the Baby Boomers, the Silent Generation, often appears to be able to afford. Generation X clearly took advantage of credit cards as they were marketed to them, and it may have been to their detriment.

Yes, the use of credit cards did allow Generation X to spur one of the greatest runs in the real estate industry by buying town houses, condominiums, and single family homes before they were able to afford it, but Millennials may see the struggle of Generation X today and be familiar with stories of the struggles of Generation X in the early 1990s. If they are, it would make sense that Millennials would try to avoid these problems by avoiding credit cards.

Millennials are also the most educated, in terms of college matriculation and advanced degrees, so there might be some truth to the idea that Millennials, as a group, believe they are smarter and more aware of the world than earlier generations — or at least, they might believe they are smarter today than other generations were when they were in the 18 to 29 age group. And thus, Millennials could feel comfortable keeping their approach to finances different than those who have come before.

I never like to generalize attitudes across large swaths of Americans, but there are definitely measurable trends, even if one can always find anecdotes that contradict those trends.

Should Millennials get with the program and start using credit cards instead of debit cards? I want to say yes. Credit cards are simply better products for consumers. But it’s not that simple. The same BankRate survey shows that when Millennials do use credit cards, they don’t pay the bills in full ever month. Only 40% do, compared to a larger percentage of older age groups. Again, this should be obvious; Millennials haven’t yet built the financial independence or stability through their careers that older people have built. So there’s a lot more Millennials need to do to take control of their finances besides just switching from a debit card to a credit card.

On the other hand, Millennials are in a position to change the way other Millennials relate to their finances. This has already started. Millennials — or in some cases Generation X representative who seem to be in tune with the needs and desires of Millennials — are changing the financial industry. Generation X put the banks online, but Millennials are inventing new ways to bank. Crowdfunding, person-to-person lending, mobile payments, financial advisory without human advisors, and other new technologies will shape how Millennials deal with their finances. If Millennials want to stick with debit cards rather than credit cards, in time, debit cards or some other technology will grow to contain all the features necessary to most benefit the consumers.

It might take some time, but I trust the Millennials to figure it out. If something doesn’t work to the changing needs of a generation as it gets older, that generation will change the industry. It has already begun to happen.

Here’s a story about that recent study about Millennials.

By the way, I found Michael Puccini, the Generation X representative featured in that 1995 Los Angeles Times article. He’s now a freelance writer and publicist, after a career in media publicity.

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It was a long time ago, but I remember my first few weeks of college. Twenty years ago last month, I left my home state of New Jersey to live on campus at a neighboring state and to pursue my education degree. I had been away from home before for extended periods of time, but attending college was a new hurdle for me.

I was nervous. But before long, I felt at home in my adopted-for-college state and adjusted to the new state of existence well. My financial situation left much to be desired, though, if I had even known that there was something to desire. I had had a bank account for a couple of years, and a few jobs here and there, but I didn’t have much of my own money. My college education was being funded by scholarships, grants, loans, and my parents. At the time, I had no assets to put towards my education, and I think my parents were more interested in seeing me spend my time focus on my studies than on pursuing a job.

As I’ve written recently, I did discover at college that I had a small entrepreneurial streak, but I never would have admitted that at the time. Earning some money here and there allowed me at least to come up with something to spend while I was an undergraduate.

It’s common to give new college advice that pertains to saving money. “Living like a college student,” when fully graduated adults take inspiration from their frugal years as a student, involves the ideas of eating cheap food (ramen noodles?), furnishing an apartment with inexpensive items (a cardboard box chair?), and taking on roommates to keep living costs down. This is all great ideas, and adopting this approach in college can lead to a money-saving philosophy that lasts until later in one’s career. And considering so many college graduates are unemployed, these are good habits to keep under one’s belt for as long as one can bear the restraint.

This is a one-dimensional approach. As a student living on campus, unless you have unlimited funding from your parents, you are probably frugal by default. So as a new college student, you might benefit from some ideas for giving yourself a financial advantage on the day you leave campus with your cap and gown.

1. Decide that you’re going to position yourself well for the future.

By deciding to make your finances a priority instead of an afterthought early during your college career, you have the opportunity to adjust to a new mindset. Envision the future you want to have, as hard as that might be when you’re just figuring out who you are and what’s important to you. Studies show that college freshmen like you are probably too young to know for sure who you are, who you want to be, and what’s important to you, but that isn’t really the case. These things change over time. Just thinking about long-term goals can put you in a better frame of mind for making good financial decisions, even if your goals change over the next decade.

When you picture your future, it makes it easier to see how the decisions you make can lead in the direction you want to go. And if you dedicate yourself to being smart about money, you have the potential to keep that in mind every day you have a choice pertaining to money.

2. Spend time with people who make good decisions.

As you determine what values are important to you, find people who share those values. Regardless of your course of study, you will have the opportunity to associate with other students. Choose your friends well. The idea is not to be strategic from a networking perspective. The value of a friendship is not what that friend could possibly do for you in the future. Do not be a user of people.

The more time you spend with people who share the same values as you, the more you will accentuate those positive qualities. If you are around people who are aware of their financial responsibilities, and maybe want to achieve financial independence some day, that approach to money will continue to influence how you make your own decisions.

3. Join campus organizations.

I was a member of a fraternity. I joined because the group was more like an honor society, and some of the best professionals in my field had been involved with the organization. I also started a collegiate branch of another professional organization at my university, and encouraged my fellow students to become members. Being a member of these organizations gave me instant connections with professionals outside of college, and even provided me opportunities I might not have received had I not shared those credentials.

Campus organizations give you the opportunity to be involved with something you’re passionate about while at the same time building important leadership skills. Even better than just joining an existing organization, start your own.

4. Make yourself valuable to staff.

When I was in my first years of college, there were very few people in the country who had the ability to build websites. I was one of these people. The university needed websites for its collegiate departments, and professors needed websites to share information about their research or their courses. I worked closely with professors to design their websites, and it helped me build deeper relationships with those I worked with.

Make yourself an expert in some kind of service that the college staff needs. You could turn this into an opportunity for income. And while most of the tips here focus on positioning yourself well for the world after college, nothing can help you more than leaving college with money in the bank.

5. Get involved beyond the campus.

One area for improvement during my time at college was my involvement outside of campus. I was not a local student, so I wasn’t too familiar with the community outside my college. Without a car, I couldn’t explore the area too often. I had to rely on my friends who live near campus and grew up in the state. As a result, I probably missed some opportunities because I didn’t focus on being present beyond my campus.

What I noticed is that my fellow students who were involved in their fields’ organizations outside of campus were always positioned well to find jobs in the community during breaks and after college. For example, as a student studying music, it wasn’t enough to play in as many university ensembles as possible. A musician who chooses to play in community ensembles, he or she would be exposed to a wider variety of people and possibly be positioned for success in that field after college.

And getting involves with national non-profits like Habitat for Humanity can further prepare you with attitudes and ethics that come in handy for succeeding in life and building wealth over the long-term.

6. Travel to locations different than where you grew up.

Nothing effects your view of the world more than actually viewing the world. When you live most of your life in one place, as many college freshmen have done, you aren’t often exposed to people who live significantly different than you. I wish I had done more traveling while in college, whether being involved with something like Semester at Sea, studying abroad, or traveling throughout the country.

Nothing gives you better perspective about your finances — and about the advantages you have — than seeing first-hand what it’s like to spend time in a variety of communities.

7. Focus on your studies, but foster any ideas you might have.

The college experience is about more than studying, writing research papers, taking exams, and making the honor roll. You want to do all of those things, and do them well, but you also want to take the years you have before major life responsibilities to explore. Spend time every day brainstorming about projects you can create that align with your passions. So many great stories start with projects that came out of an idea someone had in college.

While you have this cushion, use time to explore your hobbies or turn them into a business. Toss ideas off your friends. Put up a website, and see what sticks. It’s unlikely you’ll start the next Facebook, but give yourself a chance to follow your crazy ideas. They might lead to something amazing.

These above money ideas may not sound like money ideas at first. But they are all related to how you begin to live your life, and after college, how you to continue to reach for your goals. If you like some of these thoughts, Please share this with your favorite college students.

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The Root Cause of Your Financial Problems and the Source of Your Success

by Luke Landes
Success

Any person is a product of his or her environment to a significant extent. And because so much of our personality is formed when we are under the age of ten, there’s something to be said for the benefits of being a child within a family situation that has a positive approach to money management ... Continue reading this article…

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Naked With Cash: Betsey S, July 2014

by Luke Landes
BetseyJul2014i

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: Laura and Leon, July 2014

by Luke Landes
Laura and Leon - 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, July 2014

by Luke Landes
Jake and Allie - Naked With Cash 2014

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: Brian, July 2014

by Luke Landes
Brian - Naked With Cash 2014 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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Quicken 2015 for Mac Review and Giveaway

by Luke Landes
Quicken 2014/2015 Mobile App

I have one free download code for Quicken 2015 for Mac to give away to a lucky reader. Instructions are at the bottom of this article. It’s been nine years since Intuit released a version of Quicken that was both fully-featured and designed to run on Apple’s hardware and operating systems. The Quicken Essentials for ... Continue reading this article…

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