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July 2007

Everybody Lies. That’s the mantra from House, a simple but entertaining television show, whose premises are strangely applicable to personal finance. Recently, Liz Pulliam Weston evaluated a survey about consumer credit card debt that used a mistaken assumption to create misleading data about average household debt.

When a survey says 90% of Americans are either liars or in denial about how much they owe on credit cards, you can bet it’s the surveyors who are the delusional ones. In June, CreditCards.com released a GfK Roper poll that purported to detail Americans’ relationships with credit cards. The survey contained plenty of interesting tidbits, but the poll takers went aground when they tried asking how the respondents’ credit card debts compared to the national average.

deviationThe survey started with the assumption that the average household owes $9,300. The surveyors then proceeded to ask respondents if they had less than $9,300 in credit card debt. When the good majority responded that they do in fact have less than that amount, the survey concluded that Americans are in denial or simply lying.

The problem is the $9,300 figure comes from a faulty or misunderstood study from CardWeb.com, which among other things, considers businesses in their end-of-the-year credit tally.

Well, for one, it’s irritating seeing a lie quoted in so many news stories, speeches and blog entries about credit card debt. Our national discussions about consumer indebtedness and bankruptcy are being distorted by the idea that we’re waddling around with four- and five-figure credit card debts.

The myth also gives false comfort to folks who think they’re “average” for having credit card debt, when they’re actually charging down the road to financial ruin. (Those folks are also the ones I’ll hear from after this column is published, by the way. Their arguments usually boil down to “I have credit card debt, so the myth must be true.”)

But mostly, the myth reflects badly on Americans. Most of us tell the truth, most of us aren’t in denial, and most of us aren’t nearly as stupid as some pollsters would like to think.

Liz also writes about how an “average” (mean) figure in populations with a high standard deviation can be relatively meaningless. If three three-year-old cousins spend the afternoon with their 85-year-old grandpa, you could say the average age of the four individuals is 23.5, but the number 23.5 is not representative of the four individuals in any way that’s relevant. It might be better to take Grandpa out of the calculation and focus on the average age of the children. Similarly, the CardWeb statistics include the year-end balances for those who pay their bill off every month. These are individuals who don’t carry credit, so they should not be included in the sample.

It’s very easy to simply trust numbers that are published in conjunction with a survey or scientific study, but that easily leads to misunderstandings. Misinformation can be distributed as easily as information throughout the world and applied to other data, as CreditCards.com did with this particular survey.

Now, here’s a question. Should people who play the 0% APR arbitrage game be included in statistics for credit card debt? They do hold the debt, but the debt was not obtained from a normal consumer action, like purchasing goods or services.

Photo: dan taylor


The Carnival is Up!

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The 111th Carnival of Personal Finance was hosted by plonkee money yesterday, in the theme of the Glastonbury Music Festival. I enjoyed Return Fraud: Returning Rocks Instead of TVs, The Minimum Wage is Now $5.85/Hour, But What’s the Point?, Will Health Insurance Really Save You Money?, and How Your Occupation, Education, Income and Net Worth Determine Your Social Class.


My girlfriend is a fan of some dollar stores, notably Dollar Tree, while I can take them or leave them. In a good dollar store, you can find everyday items with high enough quality to be sufficient at a price you don’t mind spending.

At the other end of the spectrum, dollar stores are able to keep low prices because the quality of some products is quite substandard. In June, some dollar stores were carrying the tainted toothpaste with a fake Colgate label.

dollar storeAccording to Marshall Loeb at MarketWatch and Consumer Reports‘ Shop Smart magazine, some multivitamins don’t contain the nutrients advertised on the bottles and electronic items often have inadequate gauge wiring.

We’ve purchased computer paper, shelf liner, baskets, and birthday cards at quality dollar stores, but items like pens, pencils, index cards, and other school supplies can be found for less money elsewhere. Surprisingly, we’ve even found wine glasses nice enough for outdoor entertainment; if they break en route, then they’re easily and inexpensively replaced.

On the other hand, one of my coworkers will never have any interest in dollar stores. I think dollar stores have merit, but you have to be a careful shopper and avoid some of the more substandard items and those items that can be found elsewhere for less money.

What are the best dollar store deals you’ve found, and what should you avoid?


The contest to win a copy of Complete Real-Estate Investing Guidebook will end tonight at midnight Eastern Time. If you’re interested in receiving this book for free, please state your case here in the next twelve hours.

Keogh Plan Account Holders May Be In Trouble

by Luke Landes

It pays to pay attention to letters from your banks and brokerages. If you don’t you could end up owing money to the government. The Keogh Plan is a popular alternative to a traditional pension for individuals who are self-employed. It’s a tax-deferred retirement plan in which contributions are tax-deductible and mandatory distributions begin at ... Continue reading this article…

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Congress Will Attempt to Fix Abusive Bank Policies

by Luke Landes

Earlier this month, I wrote about how overdraft fees are becoming more popular with banks finding ways to assess the fees more often, in tandem with raising what the customer owes each time — sometimes several within a day — an account is overdrawn. Laura Rowley’s latest column mentioned that a few congressmen are interested ... Continue reading this article…

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50 Credit Cards Offering 0% APR on Purchases

by Luke Landes

Editor’s Note: Thank you for your interest, these offers expired and are no longer available. Warning! Taking advantage of credit card companies may be fun and profitable, but it is dangerous if you don’t know what you’re doing, or if you do know what you’re doing but are not careful. If you miss one payment, ... Continue reading this article…

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More Increases to Minimum Wage on the Cards

by Luke Landes

Last Tuesday, the federal minimum wage officially increased to $5.85 per hour and will be $7.25 by 2009. Senator Ted Kennedy and other Democrats are already talking about increasing the minimum wage further beyond 2009, to $9.50 by 2011 or 2012. Liana Fox of the labor-backed Economic Policy Institute said part of the reason for ... Continue reading this article…

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Where Did You Come From, Where Did You Go

by Luke Landes

Thanks to the following blogs or websites (not including RSS readers or search engines) who sent the most visitors to Consumerism Commentary during the month of July. # Consumerist # The Simple Dollar # MoneyBlogNetwork Home # AllFinancialMatters # pfblogs.org # FiveCentNickel # Free Money Finance # Blueprint for Financial Prosperity # Get Rich Slowly ... Continue reading this article…

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Weekly Roundup, First Guests Edition

by Luke Landes

Here are some of the articles I enjoyed from the MoneyBlogNetwork and beyond this past weekend. Before I get to that, don’t forget I’m giving away one copy of the Complete Real Estate Investing Guidebook. As of last night, there were only 30 people interested, so chances to win are still pretty good. Mighty Bargain ... Continue reading this article…

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Market Update: July 26, 2007

by Luke Landes

I wish I could have sold my second quarter ESPP shares when they were awarded earlier this month. By the time next month’s trading window opens, I won’t have made as much money unless things swing around fast. Dow down to 13,435.53, S&P 500 down to 1,473.04, Nasdaq down to 2,599.34. [CNN]

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Penelope Trunk’s Career Tips Don’t Always Apply

by Luke Landes

Penelope Trunk is an outspoken supporter of everything Generation Y has to offer. Most of the time, I agree with her. I do believe the workplace is changing to make the most out of the skills and behaviors of younger people — it’s “adapt or die.” But not all sectors of the working world are ... Continue reading this article…

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Back to the Dealership for Regular Maintenance and More

by Luke Landes

My 2004 Honda Civic is quickly approaching 75,000 miles, and it’s time to take it in for some maintenance. I haven’t been to the dealer since my maintenance at 20,000 miles a little over two years ago. Since then I’ve been getting my oil changes and tire rotations at the local Pep Boys. I’ve used ... Continue reading this article…

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This Week in the Archives: 401(k) Guide, Shea Stadium, and Overtime

by Luke Landes

Here are some articles which you wouldn’t have missed if you had subscribed to the RSS feed four years ago. From July 23-31, 2006: * Emigrant Direct’s New Website is Up * The Last 401(k) Guide You’ll Ever Need: Five Tips, Part 1, Part 2, Part 3, and Part 4 * The Economics of Shea ... Continue reading this article…

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Retirement Assets Up 11%

by Luke Landes

According to a survey by the Investment Company Institute, retirement assets throughout the United States increased 11 percent in 2006 to a total of $16.4 trillion. That increase covers investment performance as well as transfers in and out of accounts. My retirement accounts grew 52 percent last year thanks mostly to my contributions. It’s easier to have ... Continue reading this article…

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Consumerism Commentary Now Uses SezWho

by Luke Landes

I installed a new feature on Consumerism Commentary last night. You can now rate comments posted by other visitors by answering the question below each comment: “Was this comment useful to you?” As more votes are recorded for your comments, you build a profile, which can be viewed here or on any other blog that ... Continue reading this article…

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My MBA at the University of Phoenix Online, Part 5: The Team Experience

by Luke Landes

Last year, I began sharing the details about my experience with the University of Phoenix‘s online campus. I completed an MBA through this program, and experienced the best and the worst of what the school has to offer. Nowhere is the wide range of possible experienced more clear than in dealing with the university’s “learning ... Continue reading this article…

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Market Update: July 24, 2007

by Luke Landes

On paper, my investments lost over $1,000 today. S&P 500 down to 1,511.04, Dow down to 13,716.95, Nasdaq down to 2,639.86. [The Street]

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Is a Wal-Mart Back-to-School Sale Newsworthy?

by Luke Landes

Last year, I asked whether a CNN article describing a sale at Wal-Mart was newsworthy. At worst, it seems like free advertising. Some commenters pointed out that Wal-Mart’s actions, as the world’s biggest retailer, are important indicators for the economy. Wal-Mart’s public relations agents are too busy defending the company’s image, so I suppose it’s ... Continue reading this article…

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Federal Minimum Wage Will Increase Today

by Luke Landes

Today, and every summer through 2009, the federal minimum wage will increase $0.70 an hour. For those working full time at the federal minim wage, the increase to $5.85 an hour will mean an extra $1,400 over the previous rate. This 14 percent raise is pretty significant, but it still keeps the minimum wage earner who ... Continue reading this article…

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