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March 2011

I always like questions about debt pay-off strategies because they’re partly about math and partly about psychology. The numbers are very important, and debt payoff strategies should not be planned or implemented without a good understanding of the long-term financial consequences. There are some cases where, from a personal perspective, it makes sense to formulate a plan that costs more in the long-run but alleviates other problems during its course.

That’s why I strongly encourage people to take a look at the Debt Avalanche method for paying off credit card debt before they blindly go with a different but popular solution. I understand why people are drawn to a strategy that theoretically takes longer to become debt-free and costs more in interest, and I have no problem with that choice as long as they recognize the long-term financial consequences of spending more money than necessary.

Today, a reader wrote in with a question about his debt payoff strategy.

I have $2,000 on a credit with 0% interest for a year and a car loan of $3,000 with 5.4% interest. My wife and I will owe big on student loans in Janaury and I want to get my car and/or credit card paid off fast. Should I pay extra on credit card payment or car? How important is it to pay off the 0% in one year, the interest will shoot up to 10% in April 2012.

I’ll answer the second question first, because it may have a bearing on the answer to the first question. It’s important to pay off the 0% balance in one year. First of all, although the credit card company is indicating the “go-to” rate will be 10% in April 2012, this is likely a variable rate. Most credit cards are using variable rates to get around the Credit CARD Act’s stipulation that makes it more difficult for credit card issuers to change (fixed) interest rates. It may be that when the introductory rate expires the rate on the balance is higher than 10%.

Also, when introductory rates expire before the balance has been paid in full, in some circumstances the go-to rate can be applied to the entire charged balance during the introductory period. That’s rarely the case with 0% APR balance transfer promotions, but it’s more common with deals that feature a limited-time 0% APR on purchases. I found that out personally with a store credit card once. Even with one dollar left of the original amount charged during the introductory period, one would likely owe back interest on the full $2,000 or more initially charged. Always pay off balances incurred during promotions before the introductory period expires. These 0% APR balance transfer deals are often great, but only if you abide strictly to the terms and take extra effort not to jeopardize your promotional rate.

I don’t know the rest of this reader’s financial situation, but given what was included in the note, my suggestion and my answer to the first question is to determine what payments are necessary to pay the $2,000 before the last bill is due in April 2012 and make that a priority. If the readers determines it would take $167 a month to pay the balance before the interest rate would increase, and if the cash flow is available, pay at least that much. Play it safe and get the balance paid off a little early, if possible. At the same time, pay the minimum or more to the car loan and student loan. When the student loan payments start in January, that will cut into your ability to pay off the car and the credit card. The reader can prepare for that by striving to pay off the credit card even faster.

Without knowing the reader’s cash flow, I wouldn’t be able to offer more specific suggestions.


Paul La Monica shares my concern that today’s market is reminiscent of the dot-com bubble of 1999. The bubble, if it exists, would be evident in higher than expected valuations for private companies like Facebook ($75 billion) and Groupon ($25 billion), not to mention Huffington Post’s recent sale to AOL for $315 million. In his article, Paul also refers to a few publicly-traded companies whose valuations are extraordinarily high compared to their earning estimates.

For companies whose shares are trading on private exchanges like SecondMarket, the hypothetical bubble may not affect most investors. I’d be concerned once Facebook, Zynga, and Twitter go public, though. These companies will probably go public at some point to take advantage of an influx of cash from a wider array of investors.

It just goes to show that some things really haven’t changed since 1999. The dot-com sector, like any other, has its winners and losers. Investors have to do their homework to find the former and steer clear of the latter.

It’s easy to judge Pets.com as an imminent failure after the fact, but it’s much more difficult to identify over-exuberance when it is happening. Doing homework and studying financial reports isn’t going to be enough when and if the bubble bursts. Right now, most investments seem historically high — tech stocks, oil, and gold, for example — while the only type of asset that seems to be laying low, at least when compared to values for the past several years, is real estate.

Just as it might be the best time to buy houses, particularly as an investment, it’s more difficult to get loans to do so on a leveraged basis. Buying low and selling high isn’t always as easy as it sounds with certain forces, putting aside investor behavioral psychology, work against you.

CNN Money


The small percentage of people who optimize their credit card rewards require using specific credit cards for specific types of purchases. Maximizing these rewards requires willpower, and possibly at least ten different cards. One travel rewards card would be used to book flights and pay for other travel expenses, one gas rewards card would be used to pay for gasoline, and so on. If you expect to spend a lot of time away from home in hotels, you’ll need a hotel rewards credit card to optimize your cash back and other rewards, like the Marriott Rewards Credit Card.

After you spend $1,000 in your first three months from account opening you can receive 30,000 bonus points on the Marriott Rewards Credit Card. After account approval Chase happily throws in two more free nights at a hotel in category one through four. The amount of points needed to redeem a free night stay varies on the quality of the Marriott hotel; the higher the category number, the more points needed to receive a free night’s stay.

The Marriott Rewards Credit Card awards all cardholders with points for every eligible dollar spent. The amount of points earned for certain purchases is as follows:

  • Three points for every $1 spent at over 3,600 Marriott locations
  • One point for every dollar spent on other purchases

There is no maximum to the number of points that cardholders can earn every year, and the points never expire as long as the credit card account remains open and in good standing. Your account must be in good standing at all times, and any missed payment or charge over your limit will forfeit your ability to earn points. One mistake will not close your account, but multiple mistakes could.

The Marriott Rewards Credit Card includes a variable purchase APR currently at 15.24%, and there is currently no introductory offer. There is a annual fee of $45, but there is a $0 introdcutory annual fee for the first year, after that, the annual fee is $45. Chase offers a couple additional perks worth mentioning with this card:

  1. Earn ten night credits upon account anniversary, toward your next Elite membership level
  2. Earn an additional Elite night credit for every $3,000 spent annually

Depending on where you stay when you’re traveling for business or pleasure, the Marriott Rewards Credit Card offers a great rewards program with an excellent up-front bonus. To apply, visit their secure application page.


This is a series on finding, selecting, and working with financial advisers or planners. Recently, I evaluated the types of financial professionals to help readers start on the right track. This article looks at the varied professional designations and certifications.

With a number of organizations granting different types of financial certifications, it’s easy to get lost in a sea of letters. Having initials after your name on a business card helps those you meet know that you’ve been able to pass some type of testing to earn your certification, but the content and extent of testing changes depending on those initials.

The public is generally aware the type of education someone might have when he suffixes Ph.D., M.D., or M.B.A. to his name. There are different requirements for these degrees depending on the institution that awards them, but with professional certifications like CFP®, CFA, and CPA, only one organization administers the certification for each. This way, customers and clients can be sure they are receiving the specific service they require. That depends, however, on the public understanding of the certifications.

The Certified Financial Planner® (CFP) designation is granted by the Certified Financial Planner Board of Standards. In order to become a CFP, an applicant needs to take a variety of courses focusing on overall financial planning and specific areas of finance, pass an examination, have experience in the field, and abide by a code of ethics. Once someone has been granted the certification, he must focus on continuing education and continue to pay license fees. This is the primary designation for financial planners, and if you plan on working with an adviser to help you with your overall financial picture, the CFP certification helps you feel confident that the professional you hire will help you make the best decisions for you.

Chartered Financial Analyst (CFA) is a certification administered by the CFA Institute. The CFA designation is awarded to those who, like Certified Financial Planners, have relevant education and experience. Chartered Financial Analysts are not financial planners, for the most part. The certification focuses on quantitative analysis, economics, financial reporting, corporate finance, and portfolio management. There is nothing wrong with having a CFA on your team of advisers, but their focus is not your total financial package. You’re more likely to find a CFA working for a corporation than for an individual.

Certified Public Accountant (CPA) is a certification granted by the states and territories. There is a standard examination that applicants must past, uniform across all states. The examination is designed by the American Institute of Certified Public Accountants (AICPA), but certification does not require membership in this organization. Like the other certifications, it’s not enough to pass the exam. To qualify, one needs the appropriate education and experience.

In some states, the experience needs to be in public accounting, specifically. Public accounting focuses on what companies or other entities must report about their finances to the public, like annual reports. This may or may not be relevant to your personal needs. When I shopped for a tax accountant for my business, I did not deem the CPA designation to be necessary. If my business were to have shareholders other than myself, or more specifically, trade on a stock exchange, the CPA designation would be more appropriate.

CPAs can also earn an add-on certification, Personal Finance Specialist (PFS). Personal Finance Specialists are CPAs who have had additional training and experience with financial planning. Many who are certified with the PFS designation also have the Certified Financial Planner designation. (He who collects the most letters must win.)

Chartered Financial Consultant (ChFC) is a designation similar to Certified Financial Planner, but the requirements are somewhat different. The ChFC certification requires more coursework, but there is no examination. The coursework focuses on comprehensive financial planning — the type of guidance most households look for when they seek financial advise.

This isn’t the end of financial designations. Chartered Life Underwriters (CLU) are insurance agents, and not necessarily trained to look at a client’s overall financial picture. Certified Investment Management Analysts (CIMA) focus on asset allocation and other aspects of portfolio analysis. There are dozens of other designations, each focusing on a specific area of finance.

The certification is only one part of your evaluation of a potential financial adviser or planner. The existence of the right certification does not guarantee that a professional will be the right match for your needs. For most family financial planning needs, look for the CFP or ChFC designations.


Charles Schwab Acquiring OptionsXpress

by Luke Landes

I’m not surprised that smaller trading firms attract the attention of the larger brokerages and banks. ING Direct acquired ShareBuilder (see my ShareBuilder review) in 2007. Today, OptionsXpress (see my OptionsXpress review) has announced that it will be acquired by Charles Schwab for $1 billion. OptionsXpress is one of the best discount brokerages, offering low ... Continue reading this article…

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How Much is True Love Worth?

by Luke Landes

Matchmaking is a big business, particularly when the matchmaking services are geared towards the wealthy. With these services, women join for free, and men pay hefty fees to be matched with these women. This is a one-sided arrangement, but it is based on the demographics of the clientele; for the most part, the dynamics follow ... Continue reading this article…

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Other Community Projects and Interests

by Luke Landes

When I’m not busy with Consumerism Commentary, I have a small window for working on other projects. Most of these have stemmed from Consumerism Commentary or focus on the personal finance community, but every so often I get a chance to focus on my other interests. Here are some of the other projects I work ... Continue reading this article…

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Podcast 101: The Squeaky Wheel, Guy Winch

by Luke Landes

Today’s guest on the Consumerism Commentary Podcast is Dr. Guy Winch, author of The Squeaky Wheel: Complaining the Right Way to Get Results, Improve Your Relationships and Enhance Self-Esteem. Guy received his doctorate in clinical psychology from New York University in 1991 and completed a postdoctoral fellowship in family and couples therapy at NYU Medical ... Continue reading this article…

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Should We Eliminate the U.S. Postal Service?

by Luke Landes

I don’t bother checking my mailbox every day. Most of the paper mail I receive is junk, and I’m sure the same is true for most households. Unlike Gmail, I can’t create an automated filter to organize my paper mail, and there is no built-in junk-mail screen. As a result, 95 percent of what I receive ... Continue reading this article…

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Ink Plus℠ with Ultimate Rewards℠ $100 Bonus Cash Back

by Luke Landes

Editor’s Note: This limited-time offer has expired. One of the more difficult credit cards to be approved for is a small business credit card. Many small businesses that are just starting out don’t have the credit necessary to be approved for a high-end credit card. Therefore, small business owners often need to put their personal ... Continue reading this article…

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Potential Doctors Attracted to Primary Care Physician Jobs

by Luke Landes

The Health Insurance Reform Bill was signed into law a year ago. It’s already having an effect on the state of the medical profession. Thanks to some incentives, general practitioners or family doctors, typically the best choices when one is selecting a primary care physician, are becoming attractive jobs. It’s easy to see why, for ... Continue reading this article…

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ING Direct Electric Orange Raising Credit and Margin Rates

by Luke Landes

On May 16, ING Direct will change the rate is uses to determine the cost of overdrawing the Electric Orange checking account. ING Direct’s overdraft system is a little like Passover, where we ask how this bank is different than all other banks. Rather than charging an overdraft fee if you send an electronic check ... Continue reading this article…

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Why Airlines Continue to Add Fees

by Luke Landes

I don’t like the fact that when I think I know how much it will cost me to travel round-trip from where I live to where some of my family lives, New Jersey to California, there always seems to be new fees I hadn’t considered. I’ve managed to eliminate most of these extra fees by ... Continue reading this article…

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Blue Sky from American Express Review

by Luke Landes

Editor’s Note: Thank you for your interest, this offer expired and is no longer available. Most American own multiple credit cards, sometimes as many as ten. Is this overkill, even though credit cards can be valuable tools? Perhaps. For anyone who optimizes credit card rewards, while trying to minimize the typical effect of increased spending ... Continue reading this article…

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Are Stocks Too Risky?

by Luke Landes
Cliff climbing

When it comes to investing for the future, there appears to be an interesting dichotomy. The typical financial advice marketed to the middle class — upper and lower — calls for long-term growth through investing in the stock market. The typical sales pitch — and I use “sales pitch” as a general term, not necessarily ... Continue reading this article…

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Chase Eliminating Debit Card Rewards

by Luke Landes

JP Morgan Chase Bank is not done changing its programs in apparent response to new regulations against fees. The large bank is increasing ATM fees to $5 for non-customers and considering limiting debit card transactions to $50 or $100. Now, Bloomberg News is reporting that they are eliminating their debit card rewards program. Debit card ... Continue reading this article…

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Capital One ShareBuilder Review

by Luke Landes

Updated August 2014. I’m not a frequent stock trader. The closest I’ve been recently to stock trading is participating in a $1,000 investing competition with some colleagues this year. With my long-term view of investing, looking at stocks every day and executing costly trades does not make sense for my approach to my own finances. ... Continue reading this article…

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AT&T Acquiring T-Mobile USA: Today’s Mobile Phone Options

by Luke Landes

This weekend, AT&T announced its plans to buy T-Mobile USA for $39 billion, pending regulatory approval. The new company would be the leading mobile telephone (and data) service provider in terms of customers. With the new AT&T soaking up 39 percent of the mobile market, and with Verizon Wireless at a close second at 31 percent, this ... Continue reading this article…

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Podcast 100: National Financial Capability Challenge

by Luke Landes

Today’s guest on the Consumerism Commentary Podcast is Carrie Schwab-Pomerantz, President of The Charles Schwab Foundation, which is sponsoring the National Financial Capability Challenge as well as the Make Change Count program. Consumerism Commentary Podcast #100 National Financial Capability Challenge: S04E22 / 124 Adobe Flash required Download – RSS – iTunes Table of contents [00:00] ... Continue reading this article…

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Working With a Financial Adviser: Whom Do You Trust?

by Luke Landes

This is a new series on finding, selecting, and working with financial advisers and planners. A few days ago, a friend asked me on Twitter whether I had any articles on this topic. While I had a few old posts marginally related to financial advisory, I didn’t have anything in-depth. People consider working with financial ... Continue reading this article…

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