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September 2005

Savings Account Interest Rates Updated

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The table of savings and checking account interest rates has been updated to include some moves by Presidential, UFB Direct, and Virtual Bank.

Save Some Money On Gas

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Last week people were sounding the warning alarm for $5 gas at the pump. I didn’t echo the thought here because at the time on the surface it seemed somewhat reactionary. But some people are still claiaming we could shortly reach that… maybe.

Compare these two CNN articles. First, Rita could equal $5 gas, written September 22. Opening sentences:

Remember when gas spiked to $3-plus a gallon after Hurricane Katrina? By this time next week, that could seem like the good old days. Weather and energy experts say that as bad as Hurricane Katrina hit the nation’s supply of gasoline, Hurricane Rita could be worse.

Now here is a more recent article (September 28, today), in which Gerri Willis offers 5 tips for saving gas. The first few sentences:

Remember when gas spiked to $3-plus a gallon after Hurricane Katrina? By this time next week, that could seem like the good old days. Weather and energy experts say that as bad as Hurricane Katrina hit the nation’s supply of gasoline, Hurricane Rita could be worse. Analysts are predicting Rita’s aftermath could catapult gas prices to $4, even $5 a gallon.

Perhaps energy experts will come out once a week, every week, to declare that by “this time next week” we’ll see $5 gas. At some point, they will be correct.

Predictions aside, Gerri’s article does offer five tips as promised:

* Save from the start. Buy smart. At the very least, know the how your new car is rated in terms of gas mileage.

* Be high maintenance. Clean out the trunk, check air pressure in the tires, and keep your air filters clean.

* Find a buddy. Carpooling is a great solution for those who can give up some flexibility.

* Compare prices from home. Shop around for the best (lowest priced) stations on your route.

* Show us the deduction. Don’t forget the reimbursement rate for September through December 2005 is now 48.5 cents per mile. When I volunteer over the weekends this fall, I’m only getting 30 cents per mile in excess of 200 miles per day — a minimum I rarely reach. I suppose that’s why they call it volunteering.

A little tidbit gurus like to throw around is the first part of the phrase in the title of this entry. The second part is the sound Seth Green uttered as the voice of the character Chris Griffin in the new episode of Family Guy that was on earlier tonight.

“It’s not what you make, it’s what you spend.” Surely those who preach this phrase use an example of two people in the same position earning the same amount, having the same path to the current point in their careers. One spends more money than the other. The one who saves more builds wealth faster. Sure, that’s pretty straightforward.

But just like every other bite-sized nugget of “wisdom,” the credo just doesn’t hold up under real life circumstances. Take two frugal people in the same type of job. One is an event planner (and manager of that department) for a non-profit organization, the other is an event planner (and manager of that department) for a corporation. Let’s say they both have a decently frugal lifestyle and have expenses totalling $20,000 in the particular year we’re evaluating.

Our non-profit manager is making $40,000 during that year. Our corporate manager is bringing home $80,000. With the same conservative expenses, who is coming out on top, by leaps and bounds over time?

Our favorite phrase is often used in conjunction with the goal of becoming a “millionaire.” The fact remains that the individual with the highest net income at the end of the year, regardless of gross income or gross expenses, given the same opportunities for investment, is going to reach the goal first. Therefore, these two categories — income and expense — must be weighted equally. If you still believe that level of income is secondary to level of expense, someone has been trying to sell you something, and they have succeeded.

Raise Your FICO Credit Score

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You may have been offered a credit score when you took advantage of the free credit report offer. CNN is offering tips for boosting that score. But first a note. Often, credit scores offered by the credit reporting agency are not true FICO scores — the ones mortgage companies use when contemplating your credit risk, for example. I’ve heard some people boasting a credit score of 870 when the highest possible FICO score is 850. The best way to get your true FICO scores is through MyFICO.com.

Now that you have your correct FICO scores — one from each credit reporting bureau, obtained through the Fair Isaac Corporation — let’s work on raising the scores.

* Pay your bills on time. If you’re more than 30 days delinquent on any bill, it will negatively affect your score. Pay them on time.

* Keep credit card balances low. The ratio of debt to available credit affects your score; the higher the ratio, the higher your score. Keep this in mind if you consolidate multiple credit cards to fewer. This can result in the same level of debt but a lower level of available credit.

* Don’t open unnecessary accounts. I know from personal experience that being at a sales counter in a store and being offered a 10% discount “just for applying” for a store credit card can be enticing. 10% is a good discount! On the other hand, opening credit card accounts lowers your FICO score.

* Manage your credit cards responsibly. Using cards properly by paying off the balances quickly and taking care of installment loans builds up credit history. Banks will see someone with a favorable credit history as less risk as an individual with no history.

* Closing an account doesn’t help. If you made mistakes in the past, they won’t go away from the credit report simply by closing the account. Some items can stay on the report (and be factored into your score) long after you’ve reformed your ways.

New York City Salaries

by Luke Landes

I heard this on the radio yesterday, but I couldn’t find it online as I was looking at the wrong magazine. (It appeared in New York Magazine, not The New Yorker.) If you’ve ever wanted a good idea of how much money various people in New York City make, New York Magazine has conducted an ... Continue reading this article…

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What Are You Afraid Of? Part 2

by Luke Landes

Earlier, I posted a summary of the first half of Money Magazine’s newest feature, Your Six Biggest Money Fears. In the feature, six general fears regarding personal finance are discussed and debunked, and for each an alternate concern is posited. Outsourcing makes many white-collar Americans concerned about their job. Still, it’s mostly blue-collar jobs that ... Continue reading this article…

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What Are You Afraid Of?

by Luke Landes

CNN Money has an extensive feature on how general consensus is wrong again. The articles look at the biggest money fears, how they may be unreasonable, and what should worry the public instead. Here are the first three from the series. The remaining three appear in a follow-up post here at Consuermsim Commentary. While Americans ... Continue reading this article…

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Deciding to Go Back to School

by Luke Landes

Once in a while, we talk about the Master of Business Administration (MBA) degree here (see Is the MBA Worthwhile? and Good Time to Be an MBA). Free Money Finance had a discussion this week about going back to school as well. How do you know if going back to school is the right thing ... Continue reading this article…

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HOWTO Let Google Blog Search Access Your Full RSS Feed

by Luke Landes

If you have a popular blog that generates income through advertising, chances are you offer an RSS feed that contains only an exceprt of each entry. This is a good way to encourage readers to visit the blog to continue reading. In the similar interest of drawing traffic to the site, you should also want ... Continue reading this article…

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Emergency Funds, Doing Okay?

by Luke Landes

We hear all the time how Americans are not saving enough for emergencies. The “Emergency Fund” is heralded as the first step in getting a sound financial footing, before thoughts about investing in stocks or making large purchases enter the brain. The idea of putting aside cash for a (very) rainy day has been a ... Continue reading this article…

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ING Direct Offers New Feature

by Luke Landes

ING Direct is now requiring a new method to entering your secure PIN when logging in to view your account, involving a series of keystrokes that will be different each time you log in. This seems to be a method to thwart keylogging software. Here’s the notice: ING DIRECT is always working to provide you ... Continue reading this article…

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ING Direct Adds Account Linking Feature

by Luke Landes

This may be old news, as I don’t know when this feature was added, but it is definitely appreciated. I was reading the seven simple solutions for managing your money from Kiplinger, and it inspired me to automatically deposit my paycheck (through Direct Deposit) into an savings account rather than my checking account. I found ... Continue reading this article…

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Credit Card Grace Period

by Luke Landes

After I learned to stop using my credit card for buying things and paying for expenses, I learned how to use my credit card deals for buying things and paying for expenses. By this, I mean I realized that I can use the credit card as a tool, especially if it offers a rebate like ... Continue reading this article…

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Income Statement, August 2005

by Luke Landes

In conjunction with my August balance sheet, here is my August income statement, followed by some notes.

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