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As featured in The Wall Street Journal, Money Magazine, and more!

October 2006


Hedge Funds for DummiesAnn C. Logue is the author of Hedge Funds For Dummies, which was recently released. She contacted Consumerism Commentary and offered to send a book for my review. I’ve been interested in hedge funds, and specifically in what individual investors can learn from these investments which are normally closed to everyone but very high net worth individuals and organizations. I agreed to review the book, and Logue has provided an excerpt: Read the full article →

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Baby with credit card and phoneThrough some discussion about placing blame for poor money management, we managed to gather several differing opinions about the source of the problem. Kids with no skills and parents who don’t teach seemed to be the biggest culprits, followed by schools without money management classes (which, when attempted, do more harm than good), and finally if at all, the credit card companies.

We have a litigious society in which people like to displace blame to corporations, who have the big packets to pay for damages, yes. And on the other hand, we have people who believe companies should promote their products however they want, and blame falls squarely on those naive enough to believe the advertisements.

An article in the latest issue of the University of Illinois Law Review says that credit cards, by design, take advantage of deficiencies in the human brain. (Link courtesy of Consumerist.) Here’s a summary of the author’s problems with credit cards:

* Banks that offer loans screen applicants thoroughly but much less rigorous screening takes place when those loans are in the form of credit cards.
* Individuals that take advantage of banks’ products, such as loans, are penalized by higher interest rates on their credit cards.
* Marketing techniques and inventives are designed to encourage debt.
* Credit card payments reduce sensitivity to price and promote impulse buying.

I am living proof that humans can break down the cognitive barrier that credit cards are designed to manipulate; if it weren’t for credit cards, I wouldn’t be earning cash back on every purchase and several recurring bills.

Yet, perhaps I do spend more because of my access to credit than I would otherwise. That may have been true several years ago. Once again, I’ll use my notebook computer as an example. Five years ago, I used credit to buy my current laptop, which recently died. Prior to the purchase, I had been doing web design work on a friend’s computer, but thanks to a day job where I was earning less than the cost of employment, I was having a little trouble locating cash.

I purchased a $1,500 computer — definitely not top of the line — on 0% credit, offered to me at the store where I was making the purchase. This provided me with a way to do web development without bugging my friends. As it happened, I also installed on this computer Moneydance, and later Microsoft Money, and managed to work my way into a better financial position after I saw the numbers were actually going down each month.

Now, when I buy my new notebook computer, it will be with a cash-back credit card, but I’ll be able to pay the entire balance off with cash when the payment is due.

The questions remain: Am I truly “beating the system” (I haven’t paid an interest charge or late fee in years) or am I still a victim of the credit card companies’ design despite my apparently intelligent use of credit? Are there any victims of credit cards or do people really have more control than this article claims?

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We’ve finally come to the last installment of Money Magazine’s 25 Rules to Grow Rich By, which has a catchy title, but is more or less just a list of “rules of thumb” that may or may not be applicable to any one individual. And let’s face it, you are all individuals. (Yes, we are all individuals!) 1 Now without futher ado, here are the final five. Read the full article →

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Money Magazine came up with 25 “rules of thumb” that will help your grow rich, albeit very slowly. Rules of thumb are often appropriate only for a fictional “average person,” but they can be good starting points for determining what is the right choice for any individual. I’ve looked at the first fifteen so far, and here are the next five: Read the full article →

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I Am Apparently Not on the Path to a Comfortable Retirement (Win $50,000)

by Luke Landes

So one of Consumerism Commentary’s new sponsors, Nationwide, has an interactive tool that asks a few questions and determined if you are on the path to a decent retirement. It’s a Flash-based tool with an annoying talking character (who you can mute if he or she starts to annoy you, too). The questions are meant ... Continue reading this article…

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Money Magazine: 25 Rules to Grow Rich By, Part 3

by Luke Landes

Last week, I started a short series looking at Money Magazine’s 25 rules to grow rich by. I’m breaking down the advice within the article into five separate blog entries here; you can find part one here and part two here. Here are the next five tips, with a bit of my own commentary thrown ... Continue reading this article…

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Money Magazine: 25 Rules to Grow Rich By, Part 2

by Luke Landes

Here are more “rules” from Money Magazine. I wrote about the first five guidelines yesterday, and here are five more with some of my thoughts thrown in.

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Money Magazine: 25 Rules to Grow Rich By, Part 1

by Luke Landes

Money Magazine seems to be publishing some good content lately. First, it was 7 shortcuts for major money hassles, and today it’s a larger feature on 25 rules to help you grow rich. I’ve never been one to play by the rules, which in my opinion, are made to be broken. In fact, I hate ... Continue reading this article…

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Money Magazine: 7 Shortcuts for Major Money Hassles

by Luke Landes

Money Magazine is running an extended feature targeting 7 of the most annoying money problems, and proving some easy solutions. Here is a shortcut to the seven shortcuts: 1. Ace your retirement. Buy a target-retirement fund in your 401(k). If you believe you’ll be retiring in 2030, you can buy a fund that targets that ... Continue reading this article…

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Know What Your Insurance Protects

by Luke Landes

Over the weekend, I received the annual benefits enrollment package from my employer. Last year, the health benefits offered by the company changed significantly to take advantage of Health Savings Accounts and to raise prices. Even after the multiple sessions with Human Resources, there were some of my coworkers who didn’t know the difference between ... Continue reading this article…

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10 Examples of How You Can Be Penny Wise, Pound Foolish

by Luke Landes

Everyone loves saving money, cutting back, and reducing expenses. However, sometimes there is a tendency to focus on the wrong things. While you’re busy feeling good about reducing little costs here and there, every once in a while you neglect the larger picture. Here are some examples: 1. Saving money by not going to the ... Continue reading this article…

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The Blame Game: Poor Money Management, Part 2

by Luke Landes

Before reading on, if you haven’t participated in this week’s giveaway, open up this article in a new window or tab and add your comments about asset allocation. You can win two interesting books just by leaving a comment. Thanks to everyone who contributed to the discussion about who is to blame for poor money ... Continue reading this article…

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What Can We Learn From SAS Real Estate?

by Luke Landes

Yesterday, the broker/owner of SAS Real Estate responded to the bad customer service issues I wrote about concerning a $300 refund due to me. She was unhappy the story was published, although she couldn’t dispute the facts. The whole problem would have been avoided if SAS did the Right Thing from the beginning. In this ... Continue reading this article…

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Review and Giveaway: The Bogleheads’ Guide to Investing: Asset Allocation

by Luke Landes

This is a look at the eighth chapter of The Bogleheads’ Guide to Investing, by Taylor Larimore, Mel Lindauer, and Michael LeBoeuf. This chapter focuses on asset allocation, the “most important portfolio decision.” The authors start by reviewing empirical research from the 20th century, including the studies that resulted in the development of Efficient Market ... Continue reading this article…

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Looking for Apartments, Update 7: SAS Real Estate Responds

by Luke Landes

Well, apparently SAS Real Estate came across my latest update on the $300 apartment deposit story, originating in June, and which I concluded in September. Sylvia from the company posted a comment on a prior post, and I’ll include her points here, to be fair:

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Winner of Giveaway Announced!

by Luke Landes

The selection of winners for giveaways on Consumerism Commentary is a supersecret process being kept confidential by the CIA. Therefore, I can only provide the results. The winner of last week’s giveaway is Jon K. The topic was the relationship between social drinking and career advancement, and here is part of Jon K’s comment: My ... Continue reading this article…

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David Bach’s Five Rules for Hiring an Financial Advisor

by Luke Landes

A few years ago, I had a brief chat with a financial advisor provided to me by my company, which also happens to be in financial services. I listened to what he had to say, but he was searching for commissions. His only offerings were expensive mutual funds. I decided to wait until I had ... Continue reading this article…

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The Carnival and Giveaway Reminder

by Luke Landes

The home of the Carnival of Personal Finance presents the 69th edition of the Carnival this morning. I selected some of my favorite articles from the submissions and included them first, but make sure you read through all the entries. There is a wide range of articles and I am sure you’ll find something that ... Continue reading this article…

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The Blame Game: Poor Money Management, Part 1

by Luke Landes

There’s a discussion at StopBuyingCrap about credit card companies’ evil tacticts. In fact, Cap comes clean with this humble admission: No body forced me to buy the mountains of Japanese comic books, computer hardware, and automotive parts. Sure, the credit card made it easier for me to spend money I didn’t have — but the ... Continue reading this article…

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Enhance Your Career By Consuming Alcohol (With a Giveaway!)

by Luke Landes

I linked to this article, but I wanted to focus on it when I had a chance. That chance is now. An article from Inc.com, a resource for entrepreneurs, says that drinking alcohol can help your career. Sounds too good to be true? Here’s how. Regular drinkers make 10 percent to 14 percent more money than those ... Continue reading this article…

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