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August 2006

Final Question of the Day

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The final Question of the Day is being hosted at Get Rich Slowly, so take a minute to answer this question over there: What does money mean to you? The full schedule is contained below. Read the full article →

SafeDavid Bach, author of The Automatic Millionaire, offers suggestions for making your emergency savings automatic.

Before we get to the tips, most people agree that building an emergency stash of cash that can last long enough to cover three to six months should be one of the first financial priorities, even for those in debt. This can be difficult to achieve. Bach says the average American has less than one month’s worth of expenses set aside.

Here are some tips for getting to the three to six months point: Read the full article →

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Mental MistakeJonathan Clements from the Wall Street Journal decided to don his psychologist hat and evaluate the muddled minds of investors. He discovered four mindsets that hinder people from investing intelligently.

Let’s face it, amassing a decent-size nest egg isn’t exactly rocket science. All we have to do is save regularly, buy a few low-cost mutual funds and patiently await our reward. Yet most of us scorn such humble simplicity. Instead, we are too confident and too clever.

* People buy the investments they wish they bought at some other time. As the price as an investment rises, investors should “grow leery” of the value. Instead, people jump on the bandwagon for last year’s hot stock or commodity. If it works out in the short term, the investor feels like a genius and gains confidence to make more unsafe moves.

* People want to get even. If Jack’s identically-housed neighbor sold her dwelling last year for $1 million, Jack will have a hard time settling for $800,000. “[This is] about avoiding regret. If we sell for less than we paid or less than the neighbors got, we have to admit we made a mistake, with all the associated pangs of regret.”

* People shy away from their falling investments. In some cases, falling prices represent deteriorating “underlying fundamentals.” Clements uses the example of Treasury Inflation-Protected Securities (TIPS), and he believes the lower prices make them a better investment, with no damage to the fundamentals.

* People have no self-control. With the negative savings rate in the United States, we would rather spend now than put away our money and invest for the future. We convince ourselves that everything will be okay in the end. Jonathan Clements believes this may be our biggest mistake.

I can only speak for myself and say I believe I’ll be fine in the end. I’m working hard, saving money, making money in places I never thought I would be if you asked me a few years ago, finishing a master’s degree and contemplating my next steps in career and education, and always learning about investing. If I were to live like I was in 1999, spending more money on the commute alone than I was making, I would not be able to say the same.

Thanks to Jim Mahar for sharing the link.

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Earlier this week, I participated in JLP’s Question of the Day Marathon by asking about readers’ childhood experiences with money. The question received a number of great responses.

The Big Money by Fred KobrickTo spice up the event, I added a giveaway. One lucky random commenter will receive a free copy of The Big Money: Seven Steps to Picking Great Stocks and Finding Financial Security, by Frederick Kobrick. Perhaps the giveaway inspired readers to comment, because there were a number of great responses. Here was the official question:

While growing up, what were you taught about personal money management by your immediate family and surroundings (directly or by example, positive or negative), and how do these ideas factor into your life now?

Blaine Moore answered:

I am sure that I was taught a lot by example, since I seem to have a pretty good idea of what I am doing now and had a good base to build off of. I do not specifically remember many lessons though.

This is the case for many people, I think. Parents may not have taught specific lessons, but by modeling good behavior with money, they teach their children how to behave and manage money appropriately. Children can learn from negative examples as well, as Jason did:

Well, most of the teaching I received was by examples of what not to do. Sadly, most of my family was pretty bad when it came to money. The majority lived above their means instead of saving, kept credit card balances, didn’t put away money for retirement etc… I do think that growing up in a middle to lower class background is normally good for teaching people that you can’t have everything and you have to make priorities. But some of that goes out the window when your parents splurge on you every christmas and birthday.

Here’s an excerpt from the winner of The Big Money: Read the full article →

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Spending Philosophies: Five Tips for a Better Relationship

by Luke Landes

Money Magazine is profiling Michael and Brittany Abbate. Here is their situation. The couple used to have a total annual income of $135,000 to support them as well as their daughter, but thanks to a move from Chicago to Phoenix and a pregnancy, they now make less than half that amount. Due to the pay ... Continue reading this article…

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Even Renting is Expensive

by Luke Landes

Melinda Fulmer from MSN Real Estate is reporting on the most expensive cities for renters, based on “average rent.” Unsurprisingly, New York is at the top of the chart, followed by San Francisco, Los Angeles, San Jose, the OC, Boston, Oakland, San Diego, Washington, D.C., and Fort Lauderdale. With prices high — the average in ... Continue reading this article…

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Welcome BusinessWeek and Yahoo Finance Readers!

by Luke Landes

(Note: This post will stay at the top of the index for a while. Scroll down for recent blog entries.) I’d like to welcome any new readers coming from Karyn McCormack’s nice article in BusinessWeek Online, Best Blogs for the Young and Broke (which has been republished on Yahoo Finance). Karyn does an excellent job ... Continue reading this article…

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Gardening in New Jersey: Invasion of the Bunnies

by Luke Landes

If you plant a vegetable garden and you live in New Jersey, this news may concern you. Conditions are apparently perfect (a mild winter and enough spring rain to encourage a lot of vegetable growth) for an increased number of baby bunnies (link free for next 14 days only) this season. There are an average ... Continue reading this article…

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Home Theater Equipment: What’s In My Basement

by Luke Landes

This is a guest post written by Darren R. Sussman, founder and chief engineer of Reid Sound, Inc., a company specializing in audio/visual services for all types of events including theater, concerts, meetings, tradeshows, and more. This is the second of two parts. The first part is A Shopping Guide for the Enthusiast. In this ... Continue reading this article…

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Home Theater Equipment: A Shopping Guide for the Enthusiast

by Luke Landes

This is a guest post written by Darren R. Sussman, founder and chief engineer of Reid Sound, Inc., a company specializing in audio/visual services for all types of events including theater, concerts, meetings, tradeshows, and more. This is the first of two parts. I am involved in audio-visual professionally, but what I do is more ... Continue reading this article…

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Submit to the Carnival and Stay in Touch

by Luke Landes

Bloggers, don’t forget to submit your own favorite personal finance post to the Carnival of Personal Finance, which will be hosted on Monday by the MoneyBlogNetwork. Readers, please keep in touch with the latest from Consumerism Commentary by subscribing to the blog’s RSS feed. You can also subscribe to receive updates via email. When you ... Continue reading this article…

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The Ultimate Shopper’s Guide, Part 2: Home Video

by Luke Landes

Here’s more from Money Magazine’s feature about finding deals, starting with technology. I shared their cell phone shopping tips although I’m not shopping for phones at the moment. However, I’ve been thinking about a new entertainment center for a while. I know I won’t be buying anything until I’m out of this apartment, but I ... Continue reading this article…

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Opus Dei and IESE, a Nontraditional MBA, and Ethics

by Luke Landes

As I’m now in the final two weeks of my graduate studies, I’ll be writing more in reflection about my time earning an MBA with the University of Phoenix Online. What caught my eye tonight was the description in Business 2.0 Magazine of a European business school that is bucking the worldwide trend set by ... Continue reading this article…

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Future Spending, Two Big Items, Part 2: Acoustic Guitar

by Luke Landes

You may not know it from reading Consumerism Commentary, but I’m a musician. That is, I used to be a musician, as I rarely have the chance to practice. The instruments I’ve been known to play include piano, guitar, clarinet, saxophone, trumpet, mellophone, baritone horn, percussion, crumhorn, and of course, kazoo. I studied music education ... Continue reading this article…

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Opened a Second Account With ShareBuilder

by Luke Landes

Last week, I decided to take advantage of the ability to acquire $75 for opening an account with ShareBuilder. My first trade will be executed today. Rather than purchasing an exchange-traded fund (ETF) like last time, I decided to go with a well-established stock. My order was placed for $70 worth of Microsoft (MSFT). While ... Continue reading this article…

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Future Spending, Two Big Items, Part 1: New Computer

by Luke Landes

I own a Fujitsu C-6631 Lifebook notebook computer, which I purchased in 2001. At that time, my living situation was in a state of flux and I was working at a non-profit organization, spending more money on my commute than I was making. It was bad news all around. To bring in extra money, I ... Continue reading this article…

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0% Balance Transfer: You May Be a Terrorist

by Luke Landes

If you deviate from your banking habits by initiating a transaction more than $5,000, your bank will help the government spy on you. The federal government wants to catch terrorists and money launderers, and banks are required to assist. Since 1996, banks have been required to file a Suspicious Activity Report (SAR) whenever they detect ... Continue reading this article…

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The End of Credit Card Rewards?

by Luke Landes

An article on CNN Money seems to imply that Credit Card rewards programs will be decreasing. I mentioned at the beginning of the month that American Express would be changing their reward program. This may be a sign of things to come; it’s possible that more card companies will follow suit. Today’s article says programs ... Continue reading this article…

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Some New Tips for Saving on Gasoline

by Luke Landes

I was reading through my monthly statement and related materials from ING Direct and came across some tips for saving money at the pump. Three of the tips are old hat, but two are new to me. * Plan trips efficiently. (Old hat.) I take this to mean that it’s best to do as much ... Continue reading this article…

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Carnival of Business #16

by Luke Landes

Welcome to Consumerism Commentary and the 16th edition of the Carnival of Business. If you’re new to this website, feel free to read about me and this blog and peruse a collection of articles from the first half of this year. There were a number of submissions this week, and below you will find all ... Continue reading this article…

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