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September 2007

As you may have noticed, we’ve been undertaking a redesign at Consumerism Commentary, with the intent of reducing clutter. Feel free to leave any comments, particularly if there is any features that no longer work for you. Here are a few articles I’ve read from the MoneyBlogNetwork and beyond this past week:

Index Funds Plus a few Stocks Works for Me. FMF keeps it simple with his investing strategy. This is similar to mine, as well, but my stocks are not performing as nice as I’d like.

Thoughts on Maxed Out. Mighty Bargain Hunter shares his thoughts on the documentary. It’s easy to get into debt problems, but difficult to get out. MBH says the key is preparation.

Words of Wisdom From Alan Greenspan. Five Cent Nickel took notes during the former Fed chief’s appearance on The Today Show. In short, he’s worried about the credit crunch, but he doesn’t believe we’re heading to a recession.

8 Personal Finance Lessons I Learned From Monopoly. Jim from Blueprint for Financial Prosperity has some ideas about how the old game can be linked to personal finance.

Illustrated Debt Snowball. No Credit Needed includes some charts that help visualize how the debt snowball technique worse. The traditional debt snowball (highest balances first) is not the most efficient way of getting out of debt. See 6 Steps to Building a Better Snowball.

Using Quicken to Analyze and Correct Bad Spending Habits. Get Rich Slowly used his software to motivate him to spend less on comics.

A Preview of the 2008 Federal Income Tax Brackets. AllFinancialMatters is way ahead of the game. I haven’t started by 2007 taxes yet.

Using Music to Teach About Money. Alpha Consumer interviews Benjamin Chavis, president of Hip-Hop Summit Action Network, about their program to inspire healthy money management skills in today’s youth.

Have a great weekend!


A review of follows.

Seven years ago, you would have found me blissfully unaware of my spending practices and their impact, flourishing my credit card without a second thought as I ran up my tab at restaurants and shops. I defined living life fully as having the things and experiences I desired, and I thoroughly enjoyed myself, imagining that I could travel anywhere and do anything I liked.

There was a catch, though. Only through intentional ignorance could I stand to keep it up, refusing to look my finances straight in the wallet. When I was confronted with bills I’d flinch, pay what I could, and hope to straighten things out later.

It was a frightening day when I finally faced my situation. During such “rich” living, I’d not realized the weight that my debt added onto my life. I was tipping the scales way out of balance, and the only way to even begin to fix things was to gather my finances and face the situation head-on.

Now, I watch my finances daily, with a slight degree of paranoia. I suspect that any moment I’m not paying attention, a spending mishap or stock fluctuation will sneak in and alter my financial landscape. I am obsessed with a constant need to know where I stand against my goals, planning strategies and swelling with pride at every small stride forward. I thrive as I watch my debt dwindle.

Besides my mindset, my biggest obstacle to financial awareness was my hatred of math. There, I’ve said it. I despise balancing checkbooks, tallying accounts, and performing almost any analysis involving a calculator. And though I’m starting to get to know them better, balance sheets, cash flows, and other documents which look like corporate financials make my eyes glaze over.

I have outlined my own budget and expenses several hundred times in Excel, only to find I never want to look at them again. It’s just how I am.

While I had high hopes for MS Money and Quicken, I found them to be expensive and somewhat burdensome to work with. I spent hours categorizing things only to realize that I didn’t have the time at home to keep it up, nor did I find the reports all that helpful.

I kept wanting it to be simpler, clearer, cheaper. My finances at a glance, in one place, but accessible online from anywhere without needing to remember scores of passwords.

I found this to some degree in Yodlee’s account aggregation, encountering the service first as Wachovia’s “One Stop” and then as Fidelity’s “Full View“. Some use Yodlee MoneyCenter directly, I’ve heard, but I always access their services via one of my account providers.

Though the service can look and work differently based on implementation, it’s relatively simple. Essentially, there’s a one-time setup phase, where you add your accounts, and then each day you log in and refresh your data to view a snapshot of exactly where you stand financially.

Bank accounts, loans, brokerage, credit cards, 401K and other investments tally up to a neat net worth, with transaction information easily accessible. Even insurance, frequent flyer miles and my billpay service can be added to this view. I set it up once, and now log in every day, sometimes two or three times a day. I told you it’s an obsession.

The problem? It’s great to get such a high-level at-a-glance view, but it hasn’t grown with my needs. There are no analytical tools, no way to categorize and tag items and get different views or reports of the information presented or any helpful tips to improve my situation.

Until, that is. Launched last week, this free online money management service features the security and ease-of-use of the Yodlee platform with a host of simple yet effective tools for categorizing, analyzing and ultimately improving one’s relationship with money.

Their web site makes some impressive claims:

Mint is the freshest, most intelligent way for you to manage your money online. Not only is Mint free, it saves you money. While existing personal finance software “solutions” require hours to set up, a passion for accounting (is that possible?) and hours of weekly maintenance, Mint is virtually effortless.

Can it be true? Can it really save you money? Most importantly, can it save me from the things I most dread, mathematics and accounting?

I’ve been beta testing their service for a few months now, and have formed some strong opinions so far. So, let me introduce you to Mint.

[click to continue…]


This is the last tip in a 10-part series on purchasing residential rental properties based on my experience.

10. Utilities can use you up, so be careful.

Utilities can be a major issue for landlords if not set up properly. If you supply utilities to your tenants, you are generally not permitted to terminate these for nonpayment or other issues, and penalties can be severe.

Want to keep the bills in your name but have the tenants pay their portion to you? The law does not generally allow you to collect if they default on these sums, so you may risk losing out if the tenant stops paying their portion of the utility. Plus, you are still required to furnish them with these utilities, even if they fail to pay. Unless you can incorporate a flat fee into the monthly rent figure which covers your expenses even as costs continue to rise, it is best to insist that tenants pay utilities directly, under their own name. Then, in the event of default, you are not responsible.

This means that properties containing 2 or more rental units need to have split utilities; separate furnace, hot water heater, meters, etc. It is much easier and cheaper to purchase an already-split property than to try to do this yourself, so this is an important factor when you are looking at multiple-unit properties. Duplicate systems will mean more maintenance costs over time, however.

In addition, you should look into whether a property has gas heat , electric heat or oil heat and understand the issues involved. Electric heating systems can be very expensive, and therefore undesirable for tenants. Oil heat, while better-priced, can involve more system maintenance, since if the oil runs out, the system needs to be bled by a technician before the new oil will enter the system and begin heating. Based on technician availability, this can mean a few days without heat if the tank runs out and you don’t schedule ahead to ensure a seamless transition. Gas heating is generally the simplest to maintain from a landlord perspective, since if the gas company ceases to be paid, they cut off the gas supply, but can quickly reinstate service once payment is received.


Best Buy is campaigning for better consumer education in High Definition to prevent store returns. Customers apparently purchase flat screen televisions and expect the complete high definition experience immediately upon hooking up their system with the same old equipment and cables. Despite the lack of knowledge, I don’t think an entire “education program” is necessary. Here are the basics about high definition without getting too technical. This covers what the typical consumer should know before shopping.

Why do I want high definition? If you want to experience great picture quality comparable to theater viewing, or if you want to be able to identify the individual blades of grass in the football stadium, then high definition is for you. If you’re just interested in “keeping up with the Joneses,” then maybe you should consider using money for something else, like saving, investing, or purchasing some other smaller piece of technology.

Now that the obvious is out of the way, let’s continue.

What size television do I need? No matter what size you get, chances are you’ll always want something bigger once it’s situated in your living room (or bedroom, or bathroom). The height of your television screen should be one third of the distance between your couch and your television. For example, if your favorite chair is seven feet from your television, you would need a television 28 inches high, which translates to a diagonal measurement of 57 inches. Chances are you can get by quite comfortably with something smaller. This “rule of thumb” seems a bit on the generous side to me.

What resolution do I need? How future-proof do you want your purchase to be? If you plan on having the television for ten years, go for the best resolution available, 1080p, especially if your set is 50 inches or larger. 1080p means there are 1,080 lines of resolution from top to bottom of the screen and each frame contains the full information to draw the entire picture. The other options are 1080i, which is similar to 1080p but not as clear, and 720p, which I would not recommend. Most people can’t tell the difference between 1080i and 1080p and many people see no improvement over 720p.

What contrast ratio is best? Ignore the contrast ratio, which is usually described as a large number to 1 (that is, 1,000:1). The numbers are basically meaningless. You can’t compare across brands or across display types as there are many ways to calculate the number and there are ways to make the ratio sound better than it is. Look at response time for LCDs; a single-digit nanosecond (ns) response is best.

LCD or plasma? Or projection? The type of television you want depends on your viewing and living conditions. LCDs are more transportable, plasmas have deeper colors. Rear-projection televisions are bulky and have poor picture quality, but are less expensive. Front projectors can provide a very large display but will have trouble producing a rich picture in a room that is not sufficiently dark. These projectors may be good for an entertainment room in your basement, but probably not for your living room.

Tuner or monitor? Some high definition televisions have their own built-in high definition tuner, so a cable box isn’t necessary unless you want to unlock premium channels. Some newer televisions include CableCard technology, which unlocks premium channels without a cable box, but must be supported by your cable provider. A few televisions are labeled as “HD-ready” monitors, which means they rely on the cable box to receive and decode high definition programming.

What kind of cable service do I need? If you plan to watch television broadcasts on your new television, you need high definition service, either over the air, cable (fiber optic or analog coaxial), or satellite. Cable providers like Comcast, Cablevision, or Verizon FiOS might include a few high definition stations with their basic digital service, but the best programming will cost extra.

High definition is currently only broadcast in 720p or 1080i, so if you plan on watching television only, you won’t benefit from having a television with a resolution of 1080p for another few years. As Broadcasters increase their bandwidth and content providers begin supplying programs at the highest resolution, 1080p will become more practical.

Most television is not broadcast in high definition, and sometimes standard definition broadcasts look worse on a high definition television than they do on a standard television. That’s something you’ll have to live with until cable companies cease standard definition programming. Standard definition programs on a high definition channel will often look very good, almost as good as the source material.

Will my old DVD player work? Yes, you can hook up your old DVD player to your new television. Don’t expect your DVDs to look fantastic. If your DVD machine was purchased in the last year, it may be “upconverting,” which means it will convert standard definition DVDs (all DVDs are standard definition) to higher resolution. You’ll need to use component cables or HDMI cables to take advantage of this feature.

You can’t play HD DVDs or Blu-Ray discs in your old DVD player (except for some combo discs which are being phased out). If you want true high definition movie experience, you’ll need to purchase an HD DVD player, a Blu-Ray player, or a combination device that plays both. The movie studios are quickly choosing exclusive deals with either HD DVD or Blu-Ray formats. The two are basically on equal footing in terms of quality, but HD DVD players cost less.

If you want to get started right away, choose either HD DVD for its better prices, or view the current library of movies available on each format and choose the technology with the highest number of movies you’d like to experience in high definition. Here are the HD DVD and Blu-Ray library libraries on High definition discs cost more than standard DVDs.

What kind of cables will I need? Component cables, which include three RCA cables for video and the standard red and white RCA cables for audio, are sufficient for 1080i. Your cable box won’t need an HDMI output until television is broadcast at 1080p. You may want an HDMI cable if you have an upconverting DVD, HD DVD, or Blu-Ray player.

The store will try to sell you expensive cables, usually Monster brand. You don’t need these cables; they are overpriced, and the less expensive cables are just as good over short distances. is a good source for inexpensive cables. I don’t expect Best Buy’s consumer education program to inform about the quality of less expensive cables. The store’s mark-up and profit margin are very high for these items, much moreso than for the televisions.

Do I need a new audio system? Possibly not. If your current surround sound system accepts digital optical connections, in many cases you do not need to purchase anything new. Audio signals travel over HDMI as well, but only newer audio systems have HDMI inputs. You probably only need 5.1 channels. Your DVD player will likely do all the audio signal decoding you need.

Chances are you will not be satisfied with using your new television’s built-in speakers for all audio. Television manufacturers don’t focus on providing great audio on the sets because they expect most customers will be connecting the panels to surround sound speaker systems.

What brands should I purchase? You can’t go wrong with any of the major brands, but do extensive research before purchasing. Each model has its own quirks, and as long as any particular item has been on the market for several months, you will be able to find detailed commentary from professional critics and customers. My favorite first stops for commentary are Consumer Reports, CNET’s user reviews, and Epinions.

I own a Sharp Aquos 42 inch LCD.

This is all you need to know to get started. Feel free to contribute any additional tips, offer corrections, or pick a fight.


Guide to CitiBank Credit Cards

by Luke Landes

Every so often, I’ve been going through some of the more popular credit card issuers and presenting a list of their credit cards, highlighting some of the better programs for rewards. So far, I’ve looked at the best credit cards from American Express and Capital One. Credit cards can be dangerous tools in the wrong […]

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10 Tips for Buying a Residential Rental Property, Part 9: Bigger Is Not Always Better

by Sasha

This is the ninth tip in a 10-part series on purchasing residential rental properties based on my experience. 9. Bigger is not always better. As your property size and square footage help to determine your tax rate, an acre or more of land really isn’t necessary. You’ll mow it (or pay to mow it) and […]

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Weekly Roundup, Jogging Edition

by Luke Landes

The first spin-off from my original personal blog was a blog in which my roommate and I chronicled our adventures in physical exercise through jogging, about 7 years ago. I’ve finally gotten up off my butt again. Each day this week, I’ve been taking laps around my apartment complex after work. Actually, I missed Wednesday […]

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Financial Advisers and Stock Brokers: What’s the Difference?

by Luke Landes

You would think that the roles and responsibilities would be clear and there would be a strong line between individuals who call themselves financial advisers and those who call themselves stock brokers. The obvious answer is that advisers give impartial advice based on the best interest of the client and brokers sell products as a […]

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Financial Curriculum: Classes About Money Management

by Luke Landes

Earlier this year, I shared my opinion that personal finance classes should not be required in high school thanks to an overloaded general curriculum and dubious results. My opinion is that basic money management is better taught — if in school at all — in the earlier years. The Citi Foundation sponsors a financial education […]

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Shared Money: Combining Finances With Your Partner

by Luke Landes

Yesterday, I received a question from a reader, Lindsey. I’m not much of a fan of giving advice; there are professionals out there whose job is to provide sound financial advice. All I can offer is my opinion. Here is Lindsey’s question. What should you do if you and your partner decide to combine finances […]

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