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January 2006

Last week, I finished reading Blink by Malcolm Gladwell. It’s not really about personal finance; it’s about the accuracy of certain snap decisions. I read the book with the intent of relating its message to the topics I focus on here.

Blink: The Power of Thinking Without Thinking describes how some people have the ability to make accurate judgments in a split-second. In some cases these judgments are more accurate than those following a systematic, scientific review of the situation. The main thing to take away from the book is those people who are experts in their field can often make better decisions subconsciously in the first two seconds of an event than what their conscious mind can handle.

Gladwell’s stories involved very little that most people could gain. Only years of experience can prime the subconscious for “thin-slicing,” and this point is often hidden in the book.

There was nothing I could learn from this book that could be applied as advice or thoughts for the typical investor. This is a book about experts. This is a book about Warren Buffetts — the author mentions the Oracle of Omaha to bridge the phenomenon to theories of investing at one point, but it doesn’t have anything that you or I could take away without years of intimacy with a subject.

What if you do have intimate knowledge of investing? What kind of snap judgments could be made? Whether a company is a good candidate for a buy? I think it would have to be something more specific. You could take a look at an annual financial report and know whether a company is in good shape or is hiding something. You could watch the CEO on Bloomberg TV or CNBC and know whether he or she has confidence in the company. That’s about as far as I see this going.

If you’ve read the book, feel free to share your thoughts on whether there is anything within that could be applied to personal finance.


There is a lot of talk on the internets about online savings accounts raising their interest rates for customers; here’s something a little different.

PayPal has been offering for a while a pretty high interest rate — over 4.25% — on money held in their money market fund. Unlike money market accounts and savings accounts, your money isn’t insured by the FDIC, but in reality, there’s little chance of your money losing value. Anyway, the company just sent out a communication to alert their customers that they are lowering their interest rate.

I will generally keep any money from transactions in my PayPal account for a maximum of a few days. I try to get the funds into ING Direct or Emigrant Direct as soon as possible. Continue reading for the full text of the email, if you discarded it thinking it was junk mail as many messages purporting to be from PayPal tend to be.
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Are you an underearner? The general consensus for increasings savings in financial advice circles is to rein in your spending, since the expense side of the equation is easier to manage than the income side. You can cut back your spending on cable television by 50%, but getting an equivalent 50% increase in pay is more difficult.

If you are an underearner, this might not be the case. You may have already reined in your expenses, but you’re still not making much headway, even though you’re working hard. An article in MSN Money explores this topic.

Do you have these traits?

* You talk about your life as if you’re trapped or have no choices.
* You underestimate your worth; you often give away your time, experience and skills for free.
* You crave the “comfort zone” and are controlled by fear.
* You’re vague about money, often not knowing exactly how much you make or owe or own.
* You’re “anti-wealth” and have negative attitudes about people with money, viewing them as greedy, snobs or workaholics.

I know I match the first two on the list, and maybe the fifth depending on my mood and the news cycle. Number three doesn’t make any sense to me and it should be obvious to my readers that number four doesn’t apply. I’ve got great skills and most people would consider me quite intelligent, yet I’m in a dead-end job at the moment. I’ve been trying to do something about that, but it’s been rough. I know I’m underemployed and I should have the responsibilities that go along with a job making perhaps twice what I’m earning now, but it’s been hard convincing others of that.

How about you? Have you ever been an underearner? The first piece of advice the author in the article gives is to change your mindset — and start charging more for your services. That may be a good start, but it doesn’t control the day job side of income. If you were an underearner, how did you improve your situation?


Carnival of Debt Reduction

This article was written by in Carnival. 1 comment.

Welcome to Consumerism Commentary for the 20th edition of the Carnival of Debt Reduction! If you are new to this blog, take a look around. You may want to find out more about me or browse through a categorical “Best of 2005.”

The Carnival of Debt Reduction is a living document that travels from week to week, showcasing great articles or advice on paying down debt. Let’s get started.

Free Money Finance holds the opinion that loans taken with only 0% down are debt traps. Not everyone agrees with this point of view. In his post, Are 0% Loans Good, Bad, or Does it Depend? FMF and a reader-commenter square off.

If you’ve ever felt scammed by your creditors, you have to take a look at this scam. Five Cent Nickel reports on a news story that involved one man being scammed out of $15,000. The scheme involves scammers who pull of a typical scam, then show up pretending to be detectives working on the case. (Didn’t I see this in a movie recently? Yes, it’s here in the script, on page 13 [pdf].)

Within minutes of buying his house, Jim from Blueprint for Financial Prosperity was accosted by refinancing offers. He is surprised to learn that these offers are accepted by people who just paid their closing costs!

Josh Cohen from Multiple Mentality has some news for some Ford owners, or those who are using the company’s e-bill tool to pay down their mortgage. If you fit this category, you will definitely want to read about these changes to and gripes about Ford’s e-bill system.

Do you experience paycheck paralysis? Do you work all week only to look at your paycheck and wonder where all the money went? If the answer is not “into the savings account,” then you need to read about this. Wealth Junkie offers advice from someone who has been strapped for cash — and survived.

Is history doomed to repeat itself? Wenchypoo delivers some Frugal Wisdom from her Warehouse about our conumerati culture. Our borrow-and-spend habits will be downfall of us or our future generations.

Kirby on Finance presents a four-step plan for tackling credit card balances.

The Wandering Indian Monk has discovered the benefits of refinancing HELOCs with the same bank that holds the HELOC. While noting the benefits, he also provides a warning.

Cheapy the Cheapskate is celebrating his/her second anniversary of being smoke free. Read this entry to find out how much money Cheapy saved in those two years.

Amanda from Young and Broke points out the recent changes affecting student loan interest. What will these changes do to students’ education-related debt? Amanda tells us here.

Jay S. Fleischman writes the New York Bankruptcy and Consumer Law Blog. This week, he has submitted an article that provides the answer to the oft-asked question: can the bankruptcy court take a house co-owned with a non-debtor? If you’ve ever been in this situation, or foresee that you will, make sure you read the article. If you don’t think this will apply to you, feel free to read the article anyway!

Dan Melson from Searchlight Crusade presents part five of his series, Games Lenders Play. In this edition, a reader, who writes in to the website suspicious of his bank’s refinancing offer, has his fears confirmed.

Harrison, the webmaster and blogger behind Journey to FInancial Freedom, presents six tips for fighting debt to achieve financial freedom.

The Mighty Bargain Hunter — who originated the Carnival of Debt Reduction — focuses on an article from MSN Money and recommends a newsletter which provides a solution for preventing debt rather than controlling the damage after the fact.

No Credit Needed is proud to announce his new podcast which focuses on debt-related issues. Take a listen!

And finally, this week here at Consumerism Commentary, I put the “personal” back into personal finance and talked about my decision to move several thousand of dollars from savings towards debt — but in a manner not following the advice of your typical finance guru. Some discussion resulted, so check it out.

Next week’s Carnival of Debt Reduction will be hosted by Free Money Finance.

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Financial Sharing Within Couples

by Luke Landes

Marshall Loeb sent his readers an early Valentine with his article about financial information that couples should share. By couples, he’s referring to those who are married or sharing ownership of financial accounts. Number One: “Married couples and those with joint investments or accounts should know the names, addresses and contact information of each other’s ... Continue reading this article…

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What To Do When Your Bank Is Merging

by Luke Landes

Marketwatch has published an interesting article with advice for customers whose banks are going through a merger. I’m no stranger to this phenomenon. When I was 16, I had my first bank account with New Jersey National Bank. It was sooner or later bought by or merged with CoreStates (Dec. 6, 1996), then First Union ... Continue reading this article…

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New Emigrant Direct Credit Card

by Luke Landes

There have been rumors if this for a long time, but Emigrant Direct has finally announced their new credit card. This is a “platinum” MasterCard that offers up to 1.25 percent cash back on all purchases with no yearly limit. The rewards are deposited directly into your Emigrant Direct account twice a year. If you ... Continue reading this article…

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Articles for Wednesday [redirected]

by Luke Landes

Here’s what I would have been reading today if I hadn’t been so busy in the office: * The contratian view on Yahoo! * Why Yahoo’s dive may be goos news * Married individuals have almost double the net worth of those who are divorced or single. (Two can live cheaper than one? More later.) ... Continue reading this article…

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Tuesday Reading [redirected]

by Luke Landes

Here are some of the stories I’ve read or skimmed today, and there aren’t many: * Suze Orman says honesty is the key to riches * Three rules for a happy retirement [focus] * A great 401(k) can make up for a lost pension * Scam alert! Ticketmaster and Entertainment Rewards * SEC unanimously approves ... Continue reading this article…

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Buying a House vs. Renting a House

by Luke Landes

Liz Pulliam Weston published a column explaining why it’s smarter to buy rather than rent a home. She cited some statistics that show that the average net worth of home owners in any income range are much higher than that of renters in the same range. Liz warns the readers to stay away from “buy ... Continue reading this article…

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Problems With TIAA-Cref

by Luke Landes

Apparently I was not the only person having problems with TIAA-Cref. When I contacted the company to report my missing contribution, the customer service representative was very helpful and assured me the account would be adjusted. I had complete confidence, and when I checked my account yesterday, the deposit had been made and backdated. My ... Continue reading this article…

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Employment Trends in 2006

by Luke Landes

According to surveys, we should start to see some encouraging trends for those of us working for a living. Richard Castellini from CareerBuilder.com has the story. Trend 1: Bigger Paychecks. Employers plan on offering more to existing employees and new hires. Gain an advantage by knowing where you stand within the market for your position. ... Continue reading this article…

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Review of Smart and Simple Financial Strategies for Busy People by Jane Bryant Quinn

by Luke Landes

I just finished reading Jane Bryant Quinn’s new book, Smart and Simple Financial Strategies for Busy People. I’ve had it for a few weeks but the holidays stole my reading time. Now that you’ve read my excuse, let’s get to the review.

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Rebate Scams

by Luke Landes

One piece of advice by those who love frugal shopping is to take advantage of rebates whenever possible. Many people followed this advice in the recently passed holiday shopping season. Most of those purchasers will not receive their rebates. According to Senator Chuck Schumer, the most diligent customer who follows the complicated instructions exactly has ... Continue reading this article…

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Carnival of Investing #3

by Luke Landes

Welcome to Consumerism Commentary, this week’s host of the Carnival of Investing! The Carnival of Investing is a new Blog Carnival that collects the best blog entries in the past week or so that focus on the topic of investing. In the words of Mr. B. Rhymes, c’mon, c’mon, let’s get to it.

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Balance Sheet, December 2005

by Luke Landes

What a year! In my personal finances, I’ve mad some advances, but not without letting a few things fall between the cracks. The market turned sour in the last week of the year, and that had too much of an effect on my investment balances. Keep reading for some tables that show my progress over ... Continue reading this article…

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