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February 2010


Today’s guest on the Consumerism Commentary Podcast is Gary Belsky, author of the book Why Smart People Make Big Money Mistakes and How to Correct Them: Lessons from the Life-Changing Science of Behavioral Economics and Editor-In-Chief of ESPN the Magazine.

Gary and Tom Dziubek discuss behavioral economics and how understanding how we make decisions involving money can help us make better decisions.

If you like this podcast, please vote for us in the First Annual Plutus Awards for “Best Personal Finance Podcast.” Thanks!

Consumerism Commentary Podcast #45
Production Number: S02E19
Segment Number: 62

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Table of contents

[00:00] Introduction from Flexo
[00:32] Interview with Gary Belsky
[00:47] Gary’s background
[03:44] Behavioral economics
[04:36] “Bonuses” vs. “Rebates”
[06:00] Mental accounting
[09:42] Understanding and combating your weaknesses
[12:12] The sunk cost fallacy
[14:06] Maximizers and satisficers
[16:24] Ignoring the base rate
[17:50] Self-insuring yourself through savings
[18:24] Understanding anchoring
[19:37] Fighting overconfidence in personal finance
[22:10] End

We always welcome feedback from listeners. If you have any comments for this episode or for any other, or if you have suggestions for future episodes, please leave us comments here or email us at podcast at this domain name.

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Along with tracking my finances on Consumerism Commentary, I also mention when the situation at my day job changes. For example, two years ago I successfully posted for a higher-level vacancy in my department (as expected). Last year I mentioned when I received a lower annual bonus and raise than I would have liked.

I’ve known the amount of this year’s raise and bonus for a few weeks, and I received the bonus this past Friday. Of course, I am thankful to have a job with good benefits during this period of near 10% unemployment, but I am still disappointed in the low level of compensation. I’m not letting this bother me; knowing that I have more control of my finance regardless of what happens in the office helps me not worry about what happens there.

Are your employers still keeping raises and bonuses low, knowing that employees don’t have many options in this economic environment?

In my photography class today, we worked on panoramas. Thanks to Adobe Photoshop for making the stitching so easy. This isn’t one of mine, but here’s a good example from Flickr.

Here are some articles I’ve enjoyed recently and a reminder about the Plutus Awards.

How U.S. Olympians pay the rent. Not every Olympic athlete, even gold medalists, get multimillion dollar sponsorships. The cost of training, competing, and traveling is tremendous, and not every athlete comes from a wealthy family.

How to get your super-motivated boyfriend to marry you. Interesting article in which Sam, the author, describes five observations of men focused on careers or other goals and how the women who love them might need to adjust their expectations. Let me know what you think of this article. I think there’s an assumption here that the woman must adapt to the man, but in a perfect world the best course would involve some compromise.

Do you have to give up convenience in order to save money? I believe there are several stages to becoming financially secure or independent. There may be a time where it makes sense to save every cent possible. I went through a phase like that several years ago. I had to survive without a car (relying on friends and public transportation), eliminate cable television, and share an apartment with three roommates. Now that I’m earning more than what I need for basic expenses and long-term saving and investing, I don’t have to be as tight. I willingly give up some income in order to buy myself more convenience.

Vote for the 2009 Plutus Awards. Consumerism Commentary is up for a few Pluties. Be sure to vote for your favorite finance products (savings account, brokerage, etc.) and blogs before the ballot closes on March 16.

Photo: Richard0

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It’s been a couple of weeks since I shared details of my push to get rid of the credit card debt. I’ve been diligently taking out exactly $100 from the ATM to spend from Saturday morning through Friday night. That’s just for daily, personal purchases that don’t contribute to the house as a whole, though. As I suspected, it hasn’t left me with many opportunities to do something nice for my wife, and this past fortnight has forced me to keep mentally reminding myself of a few things.

It can’t all be tasty

It’s still not second nature for me to think of my weekly $100 as partially being spent on boring and annoying things like gasoline and haircuts, to say nothing of clothing. I tend wrongly to assume on a Wednesday that, “oh, I still have $50 for lunch this week,” when it’s really closer to $20.

I also really want to be the kind of husband who frequently brings home flowers, but it just doesn’t seem practical, yet.

No month is going to be normal

It seems like there’s always something abnormal showing up to make the budget be a little off. Earlier in February I paid another $200 for Level 3 Improv classes, so I had to remember to make a credit card payment of $450 for March 1st instead of $650. (I’m making payments on the higher, newer debt at a rate of $1,300 a month, but doing it twice a month to help bring the interest down more.)

It’s also sort of vacation season. We did a fantastic job this past weekend in San Antonio not going hog wild with the spending, but it’s still a tendency of mine to want to whip out the plastic when confronted with temptation, especially if I’m drinking. There’s another mini-vacation coming up in Austin during SxSW, where we have a tradition of meeting our old-school nerdy blogger friends.

Stop cheating!

Okay, so even though I used my debit card recently at Starbucks, it was because it was after the time I was supposed to go to the ATM, but I hadn’t made it there, yet. When I did find an ATM, I managed to find one that would give me $90 instead of $100.

But here are the things that got added to the newer card since February 13:

  • MyFax – $10 – I almost never use this online fax service, but it seems like a really handy thing to have. I’ll make a to-do to decide one way or the other
  • Mozy.com – $9.95
  • Toll roads – $40
  • Web hosting – $22.89 – this number fluctuates a lot, primarily because I have more domains than I know what to do with, and I can’t ever bring myself to cancel them.
  • FedEx Kinkos – $8.29 – this was actually for work, so I should get it reimbursed. I almost never pay for things on behalf of my employer, so I’m not even sure what form to use, if form there be. New to-do.
  • Cinematic Titanic – The Alien Factor – $9.99 – there it is. I spent $10 that I shouldn’t have on a goofy, fun movie. I’ll have to remember to find the $90 ATM again tomorrow.
  • iTunes – $1.09 – Ack, I did it again! I couldn’t resist buying the Metallica song “Wherever I May Roam.”
  • Mobile phone bill – $95.36 – this is $10 more than usual because of the Haiti thing.

So, I had two moments of weakness, but I have a way to make it up to myself. The particularly annoying thing about this past fortnight is that I had to get another haircut after just 10 days, because the first time I sought out a proper manly barber, he did a terrible job, and two days ago my head looked like a dirty blond helmet. I don’t know, I think his eyesight is going, because the straight razor performance was abysmal, too.

What about the legacy debt?

For paying down the legacy credit card, I’ve only been using “extra” money: the cash that comes in from jobs like writing here. This year I switched payments from my name to our little corporation, and the corporation just got paid for the first time. What I’m supposed to do now is have the corporation pay me a “reasonable salary” and then use that money to pay down the credit card.

Does anybody have advice for figuring out what a “reasonable salary” looks like?

Credit Card Debt Totals Change
Legacy Debt $944.95 +10.28
Newer Debt $4,657.71 -247.61

You can cheer me on and/or witness my money minutiae on Twitter if you want to.

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Today, Intuit officially launched the first new version of Quicken for Mac in years. I do not own an Apple computer, so I have not seen this software for myself. I do know from reading many reviews that the Mac versions of Quicken in the past have lagged in quality behind the equivalent Windows-based software.

As the name “Quicken Essentials for Mac” (QEM) implies, there are not as many features in this updated version for Mac users as there are in the current Windows versions.

Here are some of the features that are included.

Easier set up; faster to use: QEM offers the unique Mac look-and-feel, easy navigation, and all the keyboard shortcuts users expect on Mac. Setup only takes 10 minutes. Users simply search for their bank, and synch using their online credentials.

Broad banking support; no data entry: QEM currently imports data from 12,000 financial institutions, with support from 18,000 expected by year end. This is nearly quadruple the previous support of banks, credit unions, credit card companies, brokerage houses and lending institutions. All of that means less data entry.

Improved categorization; better understanding: QEM “learns” the most popular categories from users, improving categorization over time. This means users spend less time organizing transactions, and more time understanding where their money goes, and how to save and do more with their money.

Easy conversion: The converter feature easily transfers historical data from past Quicken for Mac (2005, 2006 and 2007), Quicken for Windows (2007, 2008 and 2009), and Microsoft Money.

As I mentioned, I do not own an Apple computer and I have no immediate plans to purchase one. I would love to hear impressions, reviews, and other comments from readers who have purchased Quicken Essentials for Mac.

Current price for download or CD-ROM: $69.99.

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Needs Versus Wants: The Great Spending Debate

by Kelly Whalen

This article is presented by Kelly Whalen, Consumerism Commentary staff writer. It’s fairly straightforward to figure out the difference between a need and a want. Needs are basic: food, shelter, clothing, water, warmth. We can also add to that our emotional needs: love, friendship, and care. Wants seem easy to define. Wants are all the ... Continue reading this article…

7 comments Read the full article →

Take a New Inventory of Your Credit Cards or Pay New Fees

by Luke Landes

I’m growing more concerned about my relationship with credit card issuers. We’ve been getting along mostly well for several years. I charge many of my expenses, pay my bills on time, collect some rewards, and they don’t levy any additional fees. These companies are certainly making money off of me through the interchange fees they ... Continue reading this article…

30 comments Read the full article →

Vote for Your Favorite Financial Products and Blogs

by Luke Landes

Earlier this year, the personal finance blogging community nominated their favorite products, services, and blogs to be considered for a new annual awards ceremony, The Plutus Awards. (The name comes from the relatively unknown ancient Greek god of wealth, Plutus.) These awards are designed to celebrate the best in personal finance. I’ve been working on ... Continue reading this article…

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How To Handle Requests For Financial Advice

by Luke Landes

I don’t have to remind myself that I’m not an expert when it comes to money. While my choices have improved over the past few years, I still make mistakes at about the same rate I always have. Even recently, I thought I could outsmart the public and take advantage of Toyota’s recent bad news. ... Continue reading this article…

29 comments Read the full article →

Eat Like the Locals and Profit Twice

by Smithee

My wife and I went on a mini-vacation this past weekend (our first using only cash), and while we didn’t specifically plan to limit spending on meals, we managed to do better than I had hoped. Of course she knows about my serious push to do what I can to erase my credit card debt, ... Continue reading this article…

7 comments Read the full article →

Reader Poll: Proposal to Lower Retirement Age

by Luke Landes

Dennis Kucinich is floating a proposal around the Senate which would create a six-month period in which anyone age 60 can retire voluntarily and receive partial Social Security benefits. This is a $15 billion bill funded by the bailout and stimulus. Kucinich estimates that by offering retirement two years early, a million workers will leave ... Continue reading this article…

18 comments Read the full article →

New Credit Card Rules Take Effect Today

by Luke Landes

May 22, 2009 seems like ages ago. That is the date that the Credit Card Accountability, Responsibility and Disclosure (CARD) Act became a law, changing the way credit card issuers interact with their customers. As of today, this law is now fully in effect. The new regulations are designed to help protect consumers from practices ... Continue reading this article…

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Podcast 44: Tax Tips for Big Life Changes

by Luke Landes

Today’s guest on the Consumerism Commentary Podcast is Bob Meighan, CPA and Vice President of Consumer Advocacy at TurboTax. Bob and Tom Dziubek discuss income tax tips related to big life changes such as getting married, buying a home, having or adopting a child and changing jobs. Production Number: S02E18 Segment Number: 61 To listen, ... Continue reading this article…

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Smithee’s First Vacation with Cash

by Smithee

I’m currently winging my way down to San Antonio (where The Alamo is), except in a car and not with wings. My wife and I are signed up to join some of the members of The Atlantic Paranormal Society with an investigation of spirit activity in a gorgeous inn. We’ve been talking and daydreaming about ... Continue reading this article…

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E*TRADE Bank Moving Customers to Discover Bank

by Luke Landes

A number of E*TRADE Bank customers have written to Consumerism Commentary to inform me of this recent news. E*TRADE is planning to move its banking customers to Discover Bank. I have a savings account at E*TRADE but I have not yet received any communication from the bank. Thanks to E*TRADE’s fast external ACH transfers, the ... Continue reading this article…

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Tax Refund: Spend It, Save It, or What?

by Kelly Whalen

This article is presented by Kelly Whalen, Consumerism Commentary staff writer who attended Toy Fair this week in New York City. Should you be one of the millions of Americans (nearly 75 percent) who receives a tax refund this year, you may be making all sorts of plans for your money. Some people will plan to ... Continue reading this article…

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You’re Not That Great: 4 Ways to Combat Overconfidence

by Luke Landes

Overconfidence leads investors to believe they can make buying and selling decisions that would result in their performance beating the indexes. Most professional fund managers don’t beat the indexes on a consistent basis, so there is little reason to believe that amateur stock-pickers will be able to succeed where professionals have failed. Are you overconfident? ... Continue reading this article…

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Am I a Jerk at Work?

by Smithee

Last Thursday, Dallas/Fort Worth got more snow in one day than had ever been recorded before. People who had never seen a snowman before were suddenly able to roll their own, traffic was terrible, and offices were closed. The next morning, when nobody was going anywhere, my employer (who is the second-best employer I’ve ever ... Continue reading this article…

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Realistic Expectations For Making Money Through Blogging

by Luke Landes

When I started Consumerism Commentary in 2003, after about eight years of writing on the internet in a smaller, more personal capacity, I only had two goals: to track my finances while working to improve my money situation and to learn more about personal finance by finding articles, sharing links, and adding occasional thoughts of ... Continue reading this article…

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Podcast 43: Financial Samurai

by Luke Landes

Today’s guest on the Consumerism Commentary Podcast is Sam, the founder of the Financial Samurai website. Sam, Flexo, and Tom Dziubek discuss the Samurai Fund, early retirement, and the Samurai Codes of Honor. Production Number: S02E17 Segment Number: 58 To listen, use the player above (Adobe Flash required), download the podcast here, subscribe to the ... Continue reading this article…

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Smithee Debt Update, February 13, 2010

by Smithee

This was a pretty good week for saving money. Last weekend, I took my strict $100 out of the bank for the next seven days, but I also ordered a small-ish present for my wife, which cost about $50. As a result, I set myself a challenge to see if I could spend $50 or ... Continue reading this article…

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