I was torn when Amazon.com, the online-only retailer for books, music, and movies, became popular. I liked the convenience, but it was clear that local brick-and-mortar bookstores would have difficulty competing with Amazon’s prices in the long term. I was swayed enough to the side against Amazon when I participated in a boycott of the company when they filed for a patent for the 1-Click ordering system.

Over the years, though, I’ve come to accept Amazon.com as a part of my life as a consumer, and I shop using Amazon.com for more than just books, music, and movies. I gave into my desire for speedy delivery and joined Amazon.com Prime, as well.

Amazon.com’s aggressively competitive tactics has extended recently to book publishing. With a book publishing arm, Amazon.com has the right to sell its own published books exclusively. With the new tools Amazon.com is offering authors, traditional publishers are having a hard time competing.

This week, I saw that Amazon.com is planning to open a physical, brick-and-mortar store in Seattle. It could be the first step to bring storefronts to more locations throughout the country, but that depends on the results of this one Seattle location. The purpose doesn’t seem to be to keep an inventory of books, movies, and other media on hand to sell, but to focus on Amazon.com’s own electronics, like the Kindle.

I was recently reminded of why I was wary about Amazon.com in the first place. I’ve seen what has happened to local book stores, some of which have gone out of business, and what has happened to Borders, with large, empty stores left in the wake. There are several local book stores that remain, but I can’t say whether the stores are thriving and predict how long they’ll last. I spoke with a book-lover who was mortified that I rarely shop in independent book stores and that Amazon.com is changing the landscape for consumers and hurting small business owners.

If Amazon.com extends its new store front model beyond one location in Seattle, the primary competitive target seems to be Apple, not local book stores. Yet, if the e-book, and particularly Amazon.com’s proprietary version of the e-book, becomes the preferred method of reading for more consumers, and these e-books could be purchased only from Amazon.com, local bookstores will be in danger.

What will a book store look like in the future? Will locally-owned book stores continue to exist as viable businesses?

Photo: shutterhacks
O’Reilly, The Globe and Mail, New York Times

The original version of this article, Amazon.com Retail Stores: Another Threat to Small Businesses?, is copyrighted by Consumerism Commentary.

If you enjoyed this article, follow @flexo on Twitter and visit Facebook for more updates.

The financial industry has been mostly static for centuries, with companies doing business and offering services not much different from how the companies operated for earlier generations of consumers. When there is innovation in the industry, it generally comes from smaller companies and entrepreneurs looking to fill a need that isn’t covered by larger, less flexible entities.

While today’s start-up companies are changing how customers interact with their money, most of these small business owners have the ultimate goal of selling their businesses to larger, more established companies who will then incorporate these new services if the start-up companies cannot become industry leaders without help. In the mean time, start-ups compete for funding from a growing community of investors in the industry.

Here are ten customer-facing personal finance start-up companies that could help change the way consumers interact with money. Some have already been thriving for a few years, while others are new to the industry. These are not in any particular order.

BrightScope

401(k) plans are tough to evaluate from the plan descriptions and prospectuses offered by plan administrators to employees. Employees can’t always choose the best investment options for them due to limitations by plan administrators. Additionally, plan administrators often change available investment options and automatically transfer employees’ money from one fund to another without sufficient notification to the investors.

BrightScope lets employees evaluate their company’s 401(k) plan. If, for example, you have two job offers and you’re comparing compensation, you can take the quality of the 401(k) plan into account by researching these companies. Each company receives an overall rating as well as scores in important categories including total plan cost, company generosity, and participation rate. You can directly compare each company with its industry peers.

The above image shows the overall rating for MetLife. For comparison with other companies in its industry, MetLife’s score of 73 is below Morgan Stanley’s 83.8.

LendingClub and Prosper

As technology advances, it brings manufacturers and customers closer together, often eliminating the need for companies that stand in between, adding to the cost of products and services. In some ways, the financial industry is a “middle man.” Banks take deposits in the form of savings and checking accounts, and turn that money around and lend it to individuals and businesses in need of capital. Peer-to-peer lending companies like LendingClub and Prosper take deposits out of the process; lenders can choose borrowers and lend money directly or invest in a group of loans packaged as an investment product with measured risk.

State regulations prevent peer-to-peer lending from being available to all United States citizens, and the primary concern is that customers who may not be able to take advantage of loans from a bank turn to these options where they can be charged nearly-usurious rates. For many people, however, peer-to-peer lending has provided a solution that banks have been unable to fill, whether for borrowers or investors.

Jemstep

For your investments that are not locked in a 401(k) with limited options, like your personal IRA or your taxable investment account, the variety of mutual funds and ETFs available is staggering. And unless you work with an unbiased financial planner, it can be difficult to choose the investments that will give you the best chance of making the most of every dollar you invest.

Jemstep is like an unbiased investment adviser with an immense set of data available to help you make investing decisions. You can create a profile for yourself that reflects your attitudes about investing. Most online investment recommendation engines stop at risk and time profiles, but Jemstep goes much further. You can decide how important fees are, whether you’re looking for actively managed funds or index funds, and whether potential tax plays a role in your investing decisions.

After calibrating your profile, Jemstep can evaluate your current portfolio and offer investment suggestions that are better suited to you.

Today, Jemstep announced it completed its Series A round of financing. Start-up companies look for funding from outside sources to grow their businesses before the business generates enough revenue on its own to finance its own operations. In total, Jemstep has raised $10.5 million from early investors in order to fund product development and hire employees.

HelloWallet

There’s a need for consumers to better manage their own personal finances. Over the last decade, this has been the realm of software like Quicken and Microsoft Money, but the latter has disappeared from the market and the former is increasingly seen as an outdated piece of software. In recent years, a number of companies had been developing personal finance management software for a new generation, incorporating mobile options and focusing on reporting and trending rather than reconciliation, though the depth offered could not compete with Quicken. Many of these companies have disappeared, and the apparent winner, Mint.com, was purchased by Intuit, the makers of Quicken.

HelloWallet has emerged as a new competitor for Mint.com, but while Mint.com is now free, HelloWallet charges users a fee of $8.95 per month. For the fee, you can be sure that the recommendations you receive are unbiased — companies and products do not pay HelloWallet for advertising placement within the service. The goal of HelloWallet is focused more on overall financial advice than tracking. Mint.com has moved in this direction, as well, however.

Dwolla

Merchant account service is a big business rules by large companies. Each time you swipe your credit card or debit card, a number of companies get paid in addition to the retailer from which you’re buying a product or service. Small business that need to operate on tight profit margins to compete with larger businesses suffer in these situations, because a larger proportion of their revenue is dedicated to paying these fees.

PayPal entered the marketplace and attempted to shake up the industry, offering a new way for retailers to accept credit card payments and for individuals to initiate person-to-person payments without the help of a bank. Dwolla has taken this model and, rather than relying on linked credit cards, has found away to put the focus on cash. The cash focus could be more financially responsible for a large percentage of customers.

Dwolla charges lower fees and allows users to send cash from person to person or to pay for a purchase using your phone. Customers can transfer payments using e-mail, the web, or social media applications within Facebook and Twitter. By default, the $0.25 fee is paid by the store or the recipient, though the individual initiating the payment can change this option. Transactions less than $10 are free.

SecondMarket and SharesPost

The buzz today is about Facebook’s imminent initial public offering (IPO) of stock. Soon, Facebook will be a public company, and investors will be able to trade shares of the company in a liquid stock exchange. For most people, this will be the first opportunity to invest in Facebook, a company that has grown significantly over the last few years. Of course, those who own part of the company already, like early and current employees, will see the biggest benefit after an IPO, assuming the company continues to grow.

You don’t have to be an employee to own and trade shares of Facebook, however. Two companies have specialized in creating a market between a small number of common or preferred shareholders — usually employees but also capital funds — with the wider audience of investors. I signed up with SharesPost (review here) last year to gain access to Facebook shares.

Occasionally, SharesPost holds an auction of shares held by investors who wish to liquidate their holding for the best price, and investors interested in buying can participate in the auction by naming the amount of shares they’d like to purchase and the price willing to pay. If there’s a match, SharesPost handles the transfer of shares. Surprisingly, the share price for Facebook’s Class B common stock has been stable over the past year, particularly given the volume of trading is significantly lower than it would be on an open market. The price has moved from $33 to $34 per share. It will be interesting to see how the stock performs on the open market.

SecondMarket is similar to SharesPost in that it creates a market for financial products that don’t have an accessible exchange for trading. With SecondMarket, you can trade public equity, fixed income and bankruptcy claims in addition to private shares.

Google Wallet and mFoundry

With technology changing quickly, smaller companies are able to jump on new technology. Google is not exactly a smaller company, but the company’s development operations function like a start-up. Google also has the size to buy smaller companies with innovative ideas early in their development. Google Wallet, however, was developed in-house. New technology in mobile phones makes it easier to transmit information securely in close range, and retailers are using that technology to accept payments without swiping a card. An application stores credit card information, and when a receiving device is in range and the consumer initiates the transaction, his or her device sends the information securely to the retailers.

As more mobile devices incorporate this NFC technology, contactless transactions will continue to increase. This was a hot topic in the media several months ago, and I explained why Google Wallet would not catch on as quickly as people were predicting. Today, Google Wallet is still limited to using only Citi MasterCard credit cards or Google’s own reloadable debit card.

There’s a smaller company that has seemed to penetrate this market deeper from Google. Among mobile payments, mFoundry works with banks and credit unions to develop their own applications based on the company’s technology. I’ve focused on start-up companies that face the public rather than other businesses in this article, but mFoundry does both. Mobile banking has a long road to becoming a mature and ubiquitous service, but it’s these companies that will help bring the innovative services to consumers and bigger financial institutions.

There are many other personal finance start-up companies worth mentioning, but I limited this list to ten across a broad spectrum of personal finance to keep this article interesting and not too long. If you feel I’ve missed something substantial, please feel free to share your thoughts in the discussion area below this article.

Normally, I do not allow business spokespeople to promote their companies in the comments on Consumerism Commentary, but as long as it’s relevant, I’ll allow short comments intended to note companies looking for broader exposure in the personal finance space, but I still reserve the right to edit, moderate, or delete promotional content.

The original version of this article, Top Ten Personal Finance Start-Ups, is copyrighted by Consumerism Commentary.

If you enjoyed this article, follow @flexo on Twitter and visit Facebook for more updates.

While the mainstream financial industry has faced a dizzying array of government and quasi-government regulations through most of the last one hundred years, non-bank financial products have, for the most part, evaded regulations. Catering to lower-income communities, payday loan storefronts and check cashing establishments have managed to justify their business models. The more desperate you are to pay your electricity bills and your rent before your power is turned off and you’re evicted, the more likely you are to willfully ignore the fact that the companies helping you are taking advantage of you in ways that a traditional bank would never be allowed to do.

The Consumer Financial Protection Bureau (CFPB) is now charged with recommending new regulations that go beyond retail banks, thrifts, investment banks, and credit unions into the murky world of non-bank financial products.

If you compare a short-term payday loan with a loan from a bank, you might see that the payday loan’s equivalent interest rate (APR) is 450% or even higher. Mortgages tend to be 3% to 7%, business and personal loans could be 5% to 10%, and credit cards are 10% to 20% unless you default. Anything higher, and the loan might be considered usurious. So how do payday lenders get away with charging 450% or more?

Well, these lenders frame what they charge as a flat or sliding fee, not interest. The loans are typically due in two weeks, the expected arrival of your next paycheck. It might not be fair to compare these fees with interest rates, because the borrower doesn’t hold onto the loan for a long time.

Or does he? There’s some evidence suggesting payday loans create a cycle; rather than paying off the loan when the next paycheck arrives, lenders offer an enticing deal to encourage borrowers to begin the next loan. The two-week cycle repeats.

The CFPB wants to hear from people who have had experiences with payday lenders. In order to get a good grasp on how non-bank financial products can and should be regulated, the organization is seeking comments from the public. What have been your experiences with payday loans? Feel free to share here on Consumerism Commentary, or tell the CFPB your story directly.

Photo: bigburpsx3

The original version of this article, Consumer Financial Protection Bureau Wants Payday Loan Feedback, is copyrighted by Consumerism Commentary.

If you enjoyed this article, follow @flexo on Twitter and visit Facebook for more updates.

In what almost seemed like a staged publicity stunt, Verizon Wireless quickly rescinded their plans for a new $2 fee for most bill payment options. An employee leaked an internal memo describing the new fee, and within twenty-four hours, the wireless company both confirmed and then rescinded the fee, citing their policy of listening to their customers. The timing was convenient; Verizon Wireless had been suffering from a number of mobile service outages that had customers complaining about the company.

It seemed to me there was more outrage about the service interruptions than the $2 fee. The fee was addressed within 24 hours while the service outages were never properly addressed. Would a company stoop to creating its own fake conflict in order to distract customers from other problems?

Real customer outrage is powerful, however. Bank of America’s $5 monthly debit card fee was in the works when massive consumer feedback was successful in convincing the company to reconsider its plans, and find revenue from consumers elsewhere.

There are issues more important than these small fees. While fees here and there can have a snowball effect, both over time and across other companies happy to charge the same fees once success is apparent, the bigger issues often don’t get as much attention. Wells Fargo’s change of policy to include mandatory binding arbitration is a much bigger problem for consumers than a fee, but since it isn’t immediately apparent how this could affect customers, people stay silent. Customers who have trouble with the bank will be prevented from availing themselves of a court process that includes discovery and appeals.

Most of the time, binding arbitration clauses won’t have any immediate effect on customers’ wallets unlike monthly fees, but the consequences could be worse. With enough outrage, Wells Fargo would likely change these plans, but the issue is not getting enough attention.

Here are some of this week’s most interesting articles in addition to a few articles I’ve published elsewhere.

Betterment is offering a series of articles surrounding new year’s resolutions. I kicked off the series earlier this week with a cross-posting of New Year’s Resolutions Help, Even If You Don’t Keep Them. The process of self-reflection is valuable, even if you don’t reach your goals or complete your resolutions by the end of the year. The original article is here.

I wrote about MyMoneyCircles, the upcoming personal finance boot camp hosted by Lynnette Khalfani-Cox, for Forbes. It’s free to enroll in the boot camp, and anyone who registers before January 8 has a chance to win an early-bird prize.

Maggie from Square Pennies warns that thieves are watching your trash. If you received, for example, a new high definition television for the holidays, don’t leave the box out by your curb with the rest of the trash and recycling. You could be signaling to potential criminals that your house is a good target. In the article, Maggie offers suggestions for taking care of packaging without advertising your house as a potential crime scene.

Nunzio Bruno claims that financial literacy is overrated. In order to effect change in the level of financial responsibility, focusing on financial literacy is not the answer. We need to spend more time focusing on behavioral change. More education in its traditional context — money management classes in high school that teach balancing checkbooks, for example — will have no effect on creating young adults who avoid debt and make smart financial choices.

I contributed an article for the GoBankingRates blog, It’s Possible to Save Too Much Money. I focus on saving for the future, but for many people, but it’s easy to forget that lives are short and money isn’t just for achieving a big bank balance.

The original version of this article, The Power of Customer Outrage, is copyrighted by Consumerism Commentary.

If you enjoyed this article, follow @flexo on Twitter and visit Facebook for more updates.

Update: Less than a day after a Verizon Wireless employee leaked a memo with this information, the company has announced that it will not be moving forward with the implementation of this $2 fee.

The sad fact is we now live in a world where many companies have left their customers behind in the search to squeeze every possible cent out of every transaction. I’ve long lamented the increasing incidental fees charged by airlines; you can’t eat, check a bag, or receive a seat assignment early without paying extra now, and soon you may not be able to sit or use the restroom in-flight without swiping a debit or credit card. Gas stations charge more for fuel if you want the convenience of using a credit card. Banks tested and for the most part ultimately backed away from monthly debit card fees.

Starting January 15, Verizon Wireless will charge its own customers $2 to pay their own mobile phone bills.

Only certain payment methods will be subject to this fee, but the new policy leaves only a few opportunities to avoid this surcharge:

• Enroll in auto-payment, so your bank account is debited or your credit card is charged the same day every month.
• Mail a paper check as if you’re still living in the twentieth century.
• Use your bank’s bill payment service.
• Walk into a Verizon Wireless store and pay a bill in person (an option for everyone, but a popular for those without bank accounts).
• Pay with a Verizon Wireless gift card.

If you use a credit or debit card to pay your bill via Verizon Wireless’s website or over the phone, the $2 fee will apply, but if you pay via check (electronic ACH or paper) via phone or online, there is no fee. It’s another case of payment type discrimination; it costs more to process credit and debit card transactions, and Verizon Wireless is passing that cost along to certain customers. The customers most affected are those who need to wait to the last minute to pay their bill — customers living paycheck-to-paycheck, many of whom don’t have bank accounts.

It doesn’t take much to avoid this fee, but it’s another hassle for many customers and an indication that the pattern of nickel-and-diming across a variety of industries will continue. And those most at risk are those who have the least power to do anything about it.

Photo: ColumbusCameraOp

The original version of this article, Verizon Wireless Plans Then Rescinds $2 Fee for Paying Your Bill, is copyrighted by Consumerism Commentary.

If you enjoyed this article, follow @flexo on Twitter and visit Facebook for more updates.

This is a guest article by Emily Guy Birken, author of The SAHMambulust. In this article, Emily explains and reviews the 3/50 Project, a movement designed to boost local economies.

The presents have been given out, the wrapping paper has been cleaned up, and Black Friday, Cyber Monday, and Small Business Saturday from American Express are just distant memories. Now may not be when most people are thinking about shopping, but it’s the perfect opportunity to commit to really help small businesses in your area for 2012. And what do small businesses need more than anything else? Loyal customers.

This is the basis of The 3/50 Project, spearheaded by Cinda Baxter, a retail consultant, professional speaker, and former retail business owner. Back in 2009, after hearing several reports about how patronizing local brick-and-mortar stores could help the economy, Cinda wrote about the achievability of economic recovery if we all simply commit to being good customers to independent retailers.

From that blog post, a movement was born.

The idea is very simple. Pick three local, independently owned businesses in your area — businesses that you would be sad to see shut their doors — and plan on spending $50 total per month among those three businesses. That’s it. The movement does not ask you to spend more than you already do. Just plan on $50 of your monthly expenditures going toward local businesses.

It is important to note that sometimes you will end up spending a little more money by purchasing locally rather than at the neighborhood box store or online. However, paying above bargain-basement prices means that you are also helping your local economy — a fairly easy trade-off in most budgets.

What’s exciting about making this commitment is the fact that it could contribute to our financial recovery. According to the statistics provided by The 3/50 Project website, every $100 spent in local brick-and-mortars results in “$68 return[ed] to the community through taxes, payroll, and other expenditures. If you spend that in a national chain, only $43 stays [local]. Spend it online, and nothing comes home.” Imagine the boom to the economy if everyone simply chose to spend some of their money locally.

The 3/50 Project is specific in how it defines an independent business. Though a franchised store may have a local owner, it is not one of the local businesses that The 3/50 Project is aiming to help. As a franchisee, the owner of a fast food restaurant, for example, can benefit from national ad campaigns, preferred vendor lists and large-scale price negotiations. This project is looking to help the independents who are relying on their own unique brand, pay their own expenses for marketing, rent and other operating costs, and operate from a storefront, rather than their home, a kiosk, or the internet. The full description of what constitutes an independent retailer is available here.

Deciding to try The 3/50 Project in your community does not mean that you have to give up your Starbucks coffee or your cheap groceries at Wal-Mart. There is room for national chains, internet shopping, and local stores in your commitment. This is an opportunity to be mindful about your spending, which should always be a goal of responsible personal finance. Why not help your local economy while you’re making savvy spending decisions?

Photo: Calgary Reviews
3/50 Project

The original version of this article, The 3/50 Project: Help Your Local Economy, is copyrighted by Consumerism Commentary.

If you enjoyed this article, follow @flexo on Twitter and visit Facebook for more updates.

When I first read the news about alleged Good Samaritans and Secret Santas paying off Kmart customers’ layaway accounts, the cynical side of my mind took over. What a great marketing maneuver for K-Mart. With mystery lay-off angels, they are saying, “Buy your gifts on layaway here, an action that could very well be profitable for us. There’s a chance someone will pay off your layaway account — but no promises.”

The press Kmart has received both in social media and in mainstream news has been significant. How can you not think that this movement, which seems to be tied almost exclusively to one particular retailer, is not an inside initiative? It also strikes me as odd that in many of the cases I’ve read about, the mystery helpers do not pay the accounts off in full. They leave a small amount left in the account for the customers to pay.

My cynicism is probably an overreaction, at least in most cases. I may be overreacting to the idea that Kmart needs whatever help in the press in can get. To illustrate what the experience of having your layaway account paid off by a stranger might look like, here is a personal account of what happened in one store:

… A young father wearing dirty clothes and worn-out boots stood in line at a layaway counter alongside three small children. He asked to pay something on his bill because he knew he wouldn’t be able to afford it all before Christmas. Then a mysterious woman stepped up to the counter.

“She told him, ‘No, I’m paying for it,’” recalled Edna Deppe, assistant manager at the store in Indianapolis. “He just stood there and looked at her and then looked at me and asked if it was a joke. I told him it wasn’t, and that she was going to pay for him. And he just busted out in tears.”

Before she left the store Tuesday evening, the Indianapolis woman in her mid-40s had paid the layaway orders for as many as 50 people. On the way out, she handed out $50 bills and paid for two carts of toys for a woman in line at the cash register.

“She was doing it in the memory of her husband who had just died, and she said she wasn’t going to be able to spend it and wanted to make people happy with it…”

Why are these generous people targeting almost exclusively Kmart? Many other stores, like Walmart, Best Buy, Sears and Toys-R-Us, offer layaway programs. It’s this association with one particular retailer that has my public-relations radar pinging.

Kmart as a business entity has been financially troubled for some time. Any press is good press, and charity-infused press is great press. Anything that drives people to shop, including the idea that a mystery individual will cover the rest of your layaway payments, can help the company survive.

Perhaps Kmart is singly targeted because of its history. This particular retailer has offered and profited from layaways consistently for decades, and Kmart is perhaps the one store most associated with this type of purchasing plan.

These acts of charity are coming too late to inspire a shopper to take a chance by initiating a new layaway plan in time to receive the gifts in full by Christmas. There is a small chance that someone might come in and make the payment, but is it worth the risk?

Let’s say you want to buy gifts at Kmart with a total value of $250. With the 8-week layaway plan, you would need to pay $26 today and four bi-weekly payments of $58. Assuming you follow through, you won’t be able to take home the gifts before Hanukkah or Christmas, and you will have spent $8 more than today’s advertised prices. If, however, someone pays the remainder of your layaway account before the end of the week, you would have received $250 in gifts after paying only $26. I would further assume that this charity will not continue after the holidays, so there is even a lower probability of a Secret Santa paying off layaway accounts after Christmas. If you give up paying after the end of the week because you were hoping for charity rather than planning to pay for the items in full, you’ll have sunk only $26 into a purchase you’d never receive.

In other words, it’s an expensive lottery.

Tom Dziubek, podcast host and producer and extraordinaire, and I were discussing this story. He mentioned that reading about the charity of fellow humans inspired him to remember to complete his own charitable contributions. The spirit of giving is infectious. Some Kmart shoppers who have been the beneficiaries of good will have done the same for other layaway customers, and people who read positive stories are inspired to do other good deeds.

This holiday season, I’ll leave my cynicism behind. Perhaps these random acts of kindness are not part of a marketing scheme. Perhaps the are simply the result of charitable individuals not associated with Kmart. Perhaps the media isn’t complicit with promoting one retailer over another. Just this once.

Like this article? Visit Consumerism Commentary and “like” this website on Facebook.

Photo: robertstinnett
Detroit Free Press

The original version of this article, Paying Off Layaway Accounts at Kmart, is copyrighted by Consumerism Commentary.

If you enjoyed this article, follow @flexo on Twitter and visit Facebook for more updates.

Today is Free Shipping Day, and thousands of online merchants are participating in this movement, offering free or reduced price shipping so customers have an opportunity to receive last-minute orders in time for the holidays. Free Shipping Day was founded by an entrepreneur-couple in December 2007 as a location for finding shipping discounts offered by major brands. Since its launch, the service expanded to Canada and the United Kingdom.

While shopping online is convenient, consumers often pay for that convenience through shipping costs and the delay between ordering an item and receiving the delivery. A benefit of ordering online is that you never need to leave your house, unless you prefer to see an item in person before making your purchasing decision.

Last night, I ventured outside with the goal of upgrading my cell phone. Verizon Wireless released the new Samsung Galaxy Nexus, and I figured this would be a good opportunity to replace my current, sluggish phone. Due to a car accident, traveling to the store took three times longer than it should have, and the store had no phones in stock by the time I arrived. I did have a chance to try the phone in the store, though. The sales representative offered me an opportunity to order the phone from the store, with no guarantee of when the order would arrive, but the price in the store was higher than the price on the Verizon Wireless website.

I realize that the price of this device would likely go down in just a few weeks, but I’ve been looking to get rid of my current phone for about a year. At least I didn’t need to pay a delivery fee. Verizon Wireless is not a merchant on the list of those participating in Free Shipping Day; this retailer offers free shipping in its normal course of business.

Here are the retailers participating in free shipping day.

Photo: kalleboo

The original version of this article, Free Shipping Day, is copyrighted by Consumerism Commentary.

If you enjoyed this article, follow @flexo on Twitter and visit Facebook for more updates.

Rather than blaming a representative or a corporate culture when discussions with a company don’t go the customer’s way, perhaps there are specific things the customer can do to encourage representatives to help. Money Magazine polled its readers and talked to experts to determine the best tactics for receiving the best customer service from companies. Many shared specific strategies they’ve employed that have led to success, whether the goal was to pay less for cable service, avoid fees or upgrade with an airline, or receive repair on a product out of its warranty period.

Be nice. Most of the stories I’ve read about receiving poor customer service could have been avoided if the customer wasn’t confrontational from the start. Direct confrontation rarely produces any result. I’ve been on the receiving end of confrontational attitudes. If someone threatens me or is verbally abusive, there is no possibility of me going out of my way to help that person. I can see why a customer service representative would not be motivated to help anyone who didn’t approach the situation calmly. Money Magazine suggests using flattery to encourage a representative to help. If you’re likable, it is more probable that someone would want to help you.

Hint you will leave. Not every company is interested in keeping every customer. Bank of America’s proposal to enact $5 monthly debit card fees made this clear: some customers are expendable. While the bank eventually reversed its position after public outrage, the damage to reputation was done. Most companies, however, do not want to lose customers.

If you hint that you have other options available, some companies will transfer you to a different representative whose only goal is to keep you, and these employees often have the authority to negotiate with you. This is how cable television companies and internet service providers seem to operate. If you can get to the retention department, and sometimes you can get there just by asking, you can cut your cable bill and perhaps receive some free extras.

Don’t give up. While some companies are flexible with their policies, they make you work for it. Low-level customer service representatives often can’t make decisions on their own, but they do serve to wear customers down so they give up before they get in touch with someone else at the company, a supervisor for example, who is more likely to be authorized to negotiate with you or provide the service you’re looking for. Even by increasing your hold time from one minute to two minutes before you reach the first level of customer service, companies count on callers to give up before they speak to one person.

If you’re patient and persistent, and you insist on talking to someone who has the authority to work with you, you will be in a better position to receive satisfaction.

Use social media. More companies have presences on Twitter and Facebook, and they’re looking to do good publicly. For example, every time I’ve mentioned Comcast on Twitter in any sort of negative manner, I immediately receive a response from a company representative who actively monitors discussions for opportunities to help. When you take your issue public, a company is motivated to address your issue in the hopes that you will retract your statement or rave about how the company went out of its way to rectify the situation.

Critical blog posts or videos, when they gain attention, can be public relations nightmares for companies. A few years ago, United mishandled and broke a passenger’s guitar. The passenger recorded a video and song titled United Breaks Guitars, and it went viral. He received an offer from United to pay for the guitars — as well as an offer from a guitar company for two new guitars for a new video.

Know what you’re entitled to. First-line customer service representatives may not know all the details of your agreement, but if you do, you can suggest solutions that fall within the terms. When you’re approaching a company looking for resolution to an issue, ask for something specific that the representative can do. Most customers, if they ask for something specific, are unaware of the options available, and a customer service representative might not be aware. If he or she is aware, the representative might not volunteer the information. By knowing what options are available according to the policy, you have an advantage.

Offer a “complaint sandwich.” This is a psychological manipulation tactic, and it works. If you start your discussion with a positive comment, move to a discussion of the issue you’d like to resolve, and end again with a positive comment, you’re more likely to receive the results you want. In my experience, this strategy is called praise-suggestion-praise. You could start a discussion by saying how much you love being a customer of the company. It’s important to be sincere and genuine, and to quickly get to the core of the matter so you don’t waste the representative’s time. After explaining your issue, offer praise again, thanking the representative and remaining positive that the two parties can agree about a resolution.

Contact the executives. One tactic that has shown to work is the “executive email carpet bomb.” Email addresses of the CEO and other important executives are often easy to find. If a general search of the internet offers no results, you might be able to use the SEC’s own tools or Google Finance’s corporate listings to find the right email addresses. Send an effective complaint letter to all the executives on your list to increase your probability of getting a quick resolution.

Have you ever received great customer service? What approaches were successful for you?

Photo: asgw
Money Magazine

The original version of this article, How to Receive Great Customer Service, is copyrighted by Consumerism Commentary.

If you enjoyed this article, follow @flexo on Twitter and visit Facebook for more updates.

Although Congress is dragging its feet in confirming the Consumer Financial Protection Bureau’s potential director, the bureau has been busy developing new tools to help consumers understand agreements that are potentially damaging to a family’s finances. Last year, issuers debuted new credit card statements designed to frighten borrowers into paying off debt faster. The new statements explicitly outlined how long it would take to pay off an entire balance by paying just the minimum each month.

The CFPB wants to bring this clarity to credit card agreements. These agreements are typically several pages long with small print, like this agreement [pdf] for a Wells Fargo Rewards Visa. The new look suggested by the bureau is more consumer-friendly than it is lawyer-friendly. It will likely need additional support with the terms in legal language, as well, but the new look makes it much easier to understand, and more importantly, compare offers between credit cards.

Here is the first section of the proposed new look for credit card agreements.

Right up front, you can easily find the important interest rates, including any introductory rate, regular rate, rates for balance transfers and cash advances, and penalty rates. It will be much more difficult to bury information if all issuers are required to include this information in a format like this.

Following the section displayed above, the agreement explains what payments need to be made, and that includes the formula for determining the minimum monthly payment. More information describes the consequences of missing a payment, including when a customer’s account will go into default, when the penalty interest rate will apply, and the effect on the late payment fee. The agreement also explains the way the interest is calculated in easy-to-understand terms. Consumers who read the agreement will be introduced to their grace period and also understand that if a borrower doesn’t take advantage of the grace period — that is, doesn’t pay the bill in full and on time — interest on new charges will be added to the credit card balance from the moment a transaction occurs.

The next section explains how the terms of the agreement can change.

This section highlights the fact that the issuer can change your interest rate on existing balances if you are 60 days late on a payment. Otherwise, issuers can only change rates for future charges, and even so, they cannot change the terms until after the first year of owning the card.

The form, as suggested by the Consumer Financial Protection Bureau, ends by summarizing several of the rights of the issuers and the rights of the customers. Issuers afford customers the right to close the account and to dispute charges, while they reserve the right to decline transactions, sue customers to collect debt, close the account without notice, and demand immediate payment in full in some circumstances. It’s pretty clear who the loser is in this arrangement, but if you’re smart and able to avoid problems, sometimes requiring a little bit of luck, you will be fine.

I like that this new credit card agreement template is straightforward. I like that it makes it easy to compare offers between cards. It’s a significant improvement over the standard forms I’ve been looking at for the last couple of decades, which seem to have only deteriorated in readability and increased in complexity. I think the design is a little too “Web 2.0″ for my tastes, but perhaps that’s just the CFPB’s implementation.

What do you think of this new credit card agreement format?

CFPB

The original version of this article, The CFPB’s New Credit Card Agreements, is copyrighted by Consumerism Commentary.

If you enjoyed this article, follow @flexo on Twitter and visit Facebook for more updates.

This is a guest article by Ginger, owner and curator of Girls Just Wanna Have Funds. She works as a psychotherapist with clients with whom money is a frequent topic.

When people think about financial freedom, most tend to think of it as this abstract state of being since it’s something that has yet to be experienced. Often this tends to be the reason why people rarely understand what prevents them from getting to this place in their financial life.

This brings us to the question and discussion of your Achilles’ heel. What prevents you from achieving your financial goals?

I often ask friends when talking about money goals, “Do you know what stops you from getting there? Do you want it badly enough?” Sometimes we’re so mired in what makes us comfortable that we can’t see past what it would mean to be successful in this area.

Success doesn’t have to mean paying off all of your debt in one year. It can simply mean taking baby steps to reduce the amount of money you send eating out. Avoiding trips to Target. Reducing mindless shopping habits which only further the raging spending addiction preventing you from seeing into the financial promised land. Those are all my Achilles’ heels, by the way.

How to identify your Achilles’ heel

Where do you most regret the money you spend? My pastor often says a man’s heart is where he spends his money (Luke 12:34). This rings true for me. When reviewing monthly transactions, I often saw where my money was going, as painful as it was to look at plainly in front of me. I kept saying to my self, “I spent what?!” There was a time when visiting Amazon.com and Target meant spending loads of money that I had no business spending.

Other financial transgressions meant spending more than I care to share eating out for no other reason than not wanting to cook that evening or choosing to eat instead of addressing how I was really feeling about a situation that upset me. The question I’d often asking myself is, “How did this help me towards my goals?” It didn’t help, as I had nothing to show for it but an empty plate or an item that I’d soon forget about once it arrived on my doorstep.

One day it all clicked.

This has taken some time. I’ve been writing my blog about money for a few years now. I finally connected how destructive my spending habits were in relation to my stated financial goals. I was sabotaging myself without really understanding why.

This changed with a decision

The same pastor I mentioned above also speaks about how many of the changes we need to make in life start with a decision, one decision to change the behavior and continuing to make that decision to stick with it. This might not — and often doesn’t — feel good, but if we’re to get to where we need to be then yes, it’s necessary.

Divorce yourself from your emotions

The pastor then goes on to tell us about the need to divorce ourselves from our emotions. And again, this rang true for me because shopping was almost like an addiction. I wasn’t shopping for clothes but more so for little things I needed, but if you know Amazon.com, you know it racks up! If I felt the desire to go out and buy something, I did so with no real thought about the connection between the purchase and my goal. I just knew that by buying this this item, it filled some unmet need within me.

In psychology, we talk about food and substance abuse addictions in the same way. The same rings true here, when sabotaging success for a momentary feeling of pleasure or fulfillment that never lasts.

It’s taken me some time to just decide not to visit Amazon.com. That was a huge victory for me since it’s just so convenient. I work a considerable distance from my home so I don’t really have the time go into stores, plus I don’t like shopping on the ground. Amazon Prime makes this really easy for me. If I order by noon, I will usually get my purchase by the next day. The cost? $3.99, or free if I choose the two-day option. As you can see this can get out of hand if you’re not careful. Now I add things to my cart and they stay there for weeks before making the purchase. My rule is to wait at least two weeks after adding something to the cart, and if I forget about it, I don’t need it.

Target is another beast. I won’t speculate about product placement marketing tactics in the store, because whatever they do in there works! I go in, and it never fails that I come out with way more than I need. As a result, I just don’t go there unless I absolutely have to, and these days my trips there are few and far between.

Has it been hard? Yep! But am I getting closer to my goal? Yes, and that feels even better.

Taming your Achilles’ heel will take introspection and honesty while making some hard decisions about how to change your spending habits. Deciding to take this on will be difficult but the results are worth it in the end.

To recap:

• Identify your “heart,” where you spend most of your money.
• Decide to change your heart from reckless spending to whatever financial goal you have in mind.
• Engage in serious introspection about why you spend the way you do. Are there other psychological needs that spending temporarily meets?
• Divorce yourself from the emotions which enable you to rationalize and accept destructive spending habits.

What is your Achilles’ heel, and how do you plan to tame it? Or have you tamed it?

The original version of this article, Tame Your Achilles’ Heel for Financial Freedom, is copyrighted by Consumerism Commentary.

If you enjoyed this article, follow @flexo on Twitter and visit Facebook for more updates.

Consumers in the United States spent more money online in one day, this past Monday, than they spent in any other one day in history. Online browsing and shopping resulted in $1.25 billion in sales on Cyber Monday, up 22 percent from the previous one-day record, last year’s Cyber Monday. The $1.25 billion in sales on Cyber Monday reflects the fact that more people shopped online than last year, up 11 percent, and the average shopper spent more money than last Cyber Monday, an increase of 9 percent.

When Cyber Monday was invented in 2005 by shop.org, the National Retail Foundation’s e-commerce division, it was based on the theory that more people had broadband internet access in their workplaces and would wait until sitting at their desks in their offices before shopping online after the holiday weekend.

At the time, Cyber Monday was not an event and there was no indication that the Monday following Thanksgiving was anything special in terms of online shopping activity. Retailers, however, bought into the idea and started creating marketing campaigns that encouraged people to shop on Monday.

Consumers simply followed the deals and succumbed to the hype surrounding yet another day dedicated to shopping, created by the organization that represents retailers, who obviously stand to benefit from more consumer shopping. More consumers neglected their work in the office this year to spend time browsing and shopping online than any Cyber Monday in the past, with more than half of all shoppers spending money from work.

Cyber Monday was not even the biggest day for online shopping until last year. This new holiday is an interesting story about how you can make anything you want real with enough marketing.

I’m just starting to organize my holiday shopping list. I’ve purchased a few items already but didn’t make any extra effort to shop on Monday. How much did you spend on this year’s Cyber Monday?

Photo: comedy_nose
ComScore

The original version of this article, Record-Setting Cyber Monday, is copyrighted by Consumerism Commentary.

If you enjoyed this article, follow @flexo on Twitter and visit Facebook for more updates.

From a retail perspective, this holiday weekend was successful. The National Retail Federation — an organization that represents retailers and is always happy to report good news in the industry — says that total spending over the four-day weekend from Thanksgiving to Sunday increased 16 percent over the same time period in 2010 when measured by total dollars spent. The total number of shoppers increased 6.6 percent and the average spent by each shopper increased from $365.34 to $398.62, or 9.1 percent.

Even “Small Business Saturday,” which I still see as a self-serving marketing campaign on behalf of American Express, has produced anecdotal evidence of success from mom-and-pop small business owners, while some customers have expressed frustration that some of American Express’s advertising did not clearly mention that registration in advance was necessary to receive the $25 credit.

I can’t overlook the unseasonably mild weather, at least in the New York metropolitan area, as a contribution to people’s willingness to leave the house and shop this year.

On Friday, I spent most of the day on an airplane, traveling from Los Angeles to Newark. I did not have the desire to wait outside a store in a line Thanksgiving night, the eve of Black Friday. Over the weekend, once home, I did not completely refrain from shopping. I purchased a gift for my girlfriend as we passed an item of clothing she liked, as well as a few discounted items of clothing for myself. For myself, I spent about $50 for items that normally would have cost about $100 without the “one-day-only” discount.

This past week leading up to Thanksgiving, while I was spending time with family in California, I gave into pressure and purchased myself a few toys. I grew up playing the original Nintendo Entertainment System, and Legend of Zelda was my favorite game. After the great reviews of the latest iteration in this series, a few in my family decided to take a look at the game. After getting a chance to play it, I decided I wanted to have a copy of my own. I find that I don’t have the time to spend playing video games, but I splurged on the game for myself, anyway — without paying full price.

I have more shopping to accomplish over the next few weeks before the holidays approach. I think giving into the retail frenzy during the days after Thanksgiving is generally a mistake. I’ve seen this happen in past years; the hottest items, even those deeply discounted during Black Friday, can often be found at even better prices later.

Before you consider me overly frugal, take note that I plan to spend quite a bit of money on myself in the near future as I continue exploring my hobbies and interests with full force as I find the time.

How much money did you spend this weekend?

CNN Money

The original version of this article, How Much Money Did You Spend This Weekend?, is copyrighted by Consumerism Commentary.

If you enjoyed this article, follow @flexo on Twitter and visit Facebook for more updates.

For those in the United States, tradition and media influence have established today as a day for spending time with family, over-eating, and watching television. What could be more American than Thanksgiving Day?

Fast becoming a tradition for consumers is Black Friday (and to a lesser extent Cyber Monday). Retailers have discovered a tendency to for consumers to use the day after Thanksgiving as the perfect time to finish shopping for the holidays. With this observation, the stores compete with each other to grab shoppers’ attention with the goal of having customers depart with as much as their own cash as possible.

Tips for saving money on this holiest of holy consumer days are plentiful. Boiling down the most typical advice, consumers should pay attention, prepare with as much information as possible, stay focused, and get out or online early. For more solid tips for shoppers who are determined to spend money, take a look at The Insider’s Guide to Black Friday Bargains, an article I wrote for PC World.

But even the best advice ensures that you will spend more money. Retailers are happy with bargain hunters because they will spend more in the long run.

There are two paths for the informed citizen:

Path 1: Accept you are one small piece of a larger economy and admit that despite finding bargains, you will spend more money this holiday season than you probably should.

Path 2: Resist the desire to spend spurred by society and spend nothing.

Buy Nothing Day is the anti-consumerist “holiday” promoted by Adbusters. While it is “celebrated” on the Friday following Thanksgiving Day, the movement encourages focus on a larger issue than fighting against retailers who market to us 24 hours a day.

In a consumption-based society, we are draining the planet of its natural resources. Simply refusing to take part in Black Friday festivities will have little effect on the companies or the world. Buy Nothing Day should offer us a chance to look at the relationship humans have with the planet and look for room for improvement.

Use this winter, with the economy deteriorating and leaving many people with less money to spend anyway, as a chance to re-evaluate the way you celebrate the holiday season. Rather than buying CDs and DVDs, plastic toys, and electronics, all which will sit in landfills for thousands of years before breaking down after their usable life has ended and sometimes contain dangerous chemicals, discover new ways to share your love with family and friends.

One tip outweighs all others for Black Friday and the holiday shopping season at large: buy less. Buy intelligently and find your bargains, but use this year as an opportunity to rethink the way you approach holidays sponsored by retailers.

While you’re at the dinner table with your family today, use the friendly atmosphere to discuss whether a new approach to the gift-giving season could apply to your holiday experience.

Read more:

• How to Have a Green Christmas (EarthEasy)
• How to Have a Green Christmas (TIME)
• A Sustaintable, Intangible Christmas With Substance
• Buy Nothing Day

Photo credit: Hey Paul

The original version of this article, One Black Friday Tip to Rule Them All: Buy Nothing, is copyrighted by Consumerism Commentary.

If you enjoyed this article, follow @flexo on Twitter and visit Facebook for more updates.

I’ve avoided writing about Black Friday this year. In the community I follow, promoting the day after Thanksgiving for shopping has gotten completely out of hand. I wrote an article for PC World a few years ago, The Insider’s Guide to Black Friday Bargains, where the tips are still relevant for today’s shoppers. I’m not going to write a new article every year about how to find the best Black Friday deals.

As if Black Friday weren’t enough of a marketing scheme, a few years ago consumers were blessed to receive Cyber Monday, yet another day of hype encouraging people to buy more. I’m not always anti-consumerism, but I just find every year’s increased holiday sale hype, designed as a last-ditch, end-of-year effort to make up for poor sales since January 1, annoying. Doorbusters, bait-and-switch, and worst of all, and crazed Wal-Mart shoppers who are willing to kill others just to be first to grab some sale item that will be worth a tiny portion of its sale price in five months, make me embarrassed to be an American consumer.

The opposite approach is to put faith in Buy Nothing Day. The message of Buy Nothing Day is good, but like any temporary boycott, it just time-shifts spending; what you don’t spend on the day after Thanksgiving you’ll likely spend the next day. And if a sale expires, you’ll spend more.

The worst thing to come out of the holiday hype is “Small Business Saturday.” (Let’s just stop naming the days following Thanksgiving, also known as Turkey Thursday.) This is American Express’s effort to get consumers to patronize local stores in favor of national chains. On the surface, this isn’t a bad idea. Support business owners in the community by visiting smaller retail establishments who otherwise have a difficult time competing with large box stores like Best Buy, Wal-Mart, Target, and Home Depot. Your neighborhood appliance or hardware store generally charge more money for the same products offered by national chains because small stores have little leverage to negotiate with wholesalers. Working with a small business based in the community you live, having a friendly face who can help answer your questions, and building a relationship with a business owner might be strong enough reasons to settle for a higher priced item.

This is coming from American Express. Many small business owners simply can’t afford to accept payments using American Express cards. It costs more money for a retailer to accept most American Express cards than most Visa or MasterCard credit cards. When you do use your American Express cards at a small business, you are not helping the store as much as you would if you were to pay with cash. American Express interchange fees can take an unhealthy bite out of a small business’s profits. Also, unlike Visa and MasterCard, who generally split merchant fees with banks that issue their cards, American Express cards are generally not issued by third parties, and the company keeps the entire interchange fee.

The “Small Business Saturday” campaign was not created for the good of the overall economy. American Express offers this message, “The 2nd annual Small Business Saturday® is a day dedicated to supporting small businesses on one of the busiest shopping weekends of the year,” but the day supports American Express, which is not a small business. Through this campaign, American Express is offering small businesses that accept their cards to prominently display an advertisement that offers a $25 credit to any customer who uses an American Express card to purchase items totaling $25 or more at the location. There is little in this campaign other than self-interest and self-promotion on American Express’s part.

Is this bad? It’s hard to say. If you want to do your part to support local businesses that are in danger of closing partly due to the high prices credit card companies charge, shop there but pay cash. Forget about the 1% cash back or less you can earn, paid for by the small business owners. The $25 credit in the offer doesn’t support small businesses because this isn’t extra money that can be used to purchase more in a store. It’s a statement credit, designed to thank card holders for using American Express and requiring retailers that accept the cards to pay more to AmEx through fees.

American Express is, thanks to capitalism, allowed to promote almost anything it likes in order to increase profit. That’s how corporations compete, build value for shareholders, and help upper middle class households stay upper middle class and wealthy households increase their wealth. The company reports that small businesses saw an increase in sales due to last year’s Small Business Saturday campaign (but note that they didn’t see the same large increase in profits). Look past the marketing messages at who is most benefiting from this campaign.

When the sun goes supernova and engulfs the Earth, marketers will promote the event as the hottest party since the big bang.

The original version of this article, American Express’s Small Business Saturday, is copyrighted by Consumerism Commentary.

If you enjoyed this article, follow @flexo on Twitter and visit Facebook for more updates.

A few years ago, Netflix and Wal-Mart allegedly entered an agreement where Wal-Mart agreed to exist the DVD rental business and promote Netflix’s service and Netflix would not sell new DVDs to compete with Wal-Mart. A group of Netflix customers have banded together to enter a class action anti-trust lawsuit against the two companies for this practice, which allegedly allowed Netflix to gain dominance and raise customers’ fees.

Wal-Mart has agreed to settle the lawsuit. The company will pay a settlement fee of $27,250,000, with some of the proceeds going to affected customers. Netflix, on the other hand, has not yet stopped fighting the lawsuit.

You are included in the Wal-Mart settlement class if you live in the United States or Puerto Rico and you paid a subscription fee to Netflix to rent DVDs online anytime from May 19, 2005 through September 2, 2011. Any customer who had only a free Netflix trial does not qualify. You may receive a dollar or two from this settlement, but in order to receive your benefit, you must file a claim. You can receive the payment in cash or a gift card.

The $27 million from Wal-Mart will be divided between lawyers, who will receive up to 25% of the payment plus additional costs of up to $1.7 million, administration expenses, and fees to class representatives at $5,000 a piece. The remainder will be divided equally between all settlement class members who file a claim. To get an idea of how many customers might need to split an estimated $18 million, Netflix had 24 million customers in the United States at the end of September.

Netflix is still fighting the lawsuit. They might eventually settle, and if they do, customers who would qualify for benefits include any person or entity in the United States that paid a subscription fee to Netflix anytime from May 19, 2005 to September 30, 2010. If there are benefits to receive, class members will not need to take any action. Any class members who would like to excise themselves from the lawsuit or potential settlement and reserve the right to sue Netflix regarding this issue will need to mail a letter to opt out.

The official website for the Netflix Wal-Mart class action lawsuit regarding DVD sales is onlinedvdclass.com.

The original version of this article, Netflix Wal-Mart Class Action Lawsuit, is copyrighted by Consumerism Commentary.

If you enjoyed this article, follow @flexo on Twitter and visit Facebook for more updates.

You’ll never reach the top level in Abraham Maslow’s hierarchy of needs, self-actualization, if you concern yourself with your possessions. If you focus on acquiring gadgets, showering your children with toys, or achieving other materialistic pursuits, if you do so while neglecting the pursuit of including satisfying experiences in your life, you can never reach your full potential.

Even thinking about experiences beyond base needs is a luxury when abiding by Maslow’s theory, because pursuing fulfilling experiences requires discretionary income or available cash. Anyone who hasn’t been able to meet the lower-level requirements in the hierarchy may need to devote all resources to health and safety. For those of us in the developed world who have benefited from a society that allows successful people to do as they choose with their financial surplus, we often face questions about how to spend that money with an eye towards increasing happiness.

As I’ve found myself in a more comfortable financial situation over the last decade — and that comfort comes from an increased income and an ability to save for the future without sacrificing too much of my present — I’ve begun trying to find more ways to use surplus income (after meeting savings goals) to enjoy my life today. Financial writers often get caught up with the idea that people need to save as much money as possible for the future, but once there is some comfort with planning, there has to be an opportunity to enjoy life today.

Once my finances were on a solid path, I decided I was comfortable increasing today’s expenses. The gateway for me was most likely moving into a new apartment. If my only income came from my day job, I might not have been able to comfortably move from a small apartment to a nicer, larger apartment without making sacrifices somewhere else. By moving into the newer apartment, I recognized that my income stream outside of my day job would be fairly steady, and that I had an emergency fund for back-up in the event of a disaster. I also accumulated things. With my day job, I was able to afford cable again, but with extra income, I was able to justify high-definition service and a new, high-definition television.

I was able to afford to buy cameras, lenses, and other photography equipment (several of which I still purchased used to save money), and to explore this hobby further. This gets into the topic at hand: experiences vs. things. While photography equipment consists of things, they are items that allow me to explore a hobby — or possibly a future business — and create experiences for myself. I attended classes at the local arts council to further develop my skills.

A study from 2003 building on prior research about materialism explains that using money to acquire experiences increases long-term happiness than using money to acquire objects. Here are some of the results:

As anticipated, respondents asked to evaluate an experiential purchase indicated that it made them happier than did those asked to evaluate a material purchase. Respondents also indicated that experiential purchases were better financial investments than material purchases. Participants indicated that, compared with material purchases, experiential purchases made them happier, contributed more to their happiness in life, and represented money better spent. Respondents were also less inclined to say that the money spent on experiences could have been better spent elsewhere than the money spent on material possessions.

The authors of the 2003 study also offer suggestions for the causes of these results. Why do experiential purchases result in happiness more than material purchases?

• Experiences are more open to positive reinterpretation. As time passes, view of history becomes rosier.
• Experiences are more central to one’s identity. We are the sum of our experiences; people rarely identify with the items they’ve collected around their house as much as they identify with experiences like travel, operating their own business, and spending time with family.
• Experiences have greater social value. People like sharing and talking about their experiences, and this type of discussion fosters better relationships than talking about possessions.

A follow-up study in 2010 goes further to explain why experiences are more satisfying. This study found that it was easy to compare a purchased item, such as a high-definition television, with other similar items at the time of purchase and looking back. When comparing experiences, such as a family trip to Disney World, it’s much more difficult to make effective comparisons. Also, consumers are more likely to try to get the best deal when shopping for items with a strong field of comparable items but are more likely to satisfice when deciding to purchase an experience. Among other reasons, the researchers also determined that consumers are more likely to compare their material purchases with others’ purchases while have a difficult time doing the same for experiential purchases.

You may be looking forward to the holidays, wondering what type of gifts would make your family and friends happiest. You can always play to the utilitarian point of view by purchasing gifts that the recipient might need, but to have the greatest impact, consider finding a way to offer an experience that everyone would enjoy. The benefits might not be immediate, but an experience could create memories that outshine this year’s hot Christmas toy or latest Apple product for years to come.

Some experiential holiday gifts come to mind.

• A weekend getaway. Spend the weekend in a nearby city to save on transportation costs, and explore the town. This is something I did this past weekend in Philadelphia. It wasn’t a gift, but I am sure my girlfriend and I are going to remember our scary experience at the Eastern State Penitentiary for the rest of our lives.
• Dinner and a Broadway show. Good food and entertainment combine to make lasting memories that enhance happiness. For those who attend Broadway shows more than once a year, find a way to make it more memorable, perhaps with a backstage tour, VIP seating, or meeting the cast.
• Long-distance travel. It’s often less expensive to travel outside of the country than to travel across. Within the United States, there are almost endless opportunities for unique travel experiences as well. I will always remember the time I spent exploring Death Valley with my family.
• An exciting activity. My girlfriend seems interested in skydiving and hot-air-ballooning. I’m not a big fan of either of these activities because I would like to live for a long time, but I know these are activities that would make her happy if she were to live to tell me about them.

Consider leaving behind the material this holiday season and increasing someone’s long-term happiness by engaging in an activity or experience the memory of which will last a lifetime and become more favorable as time passes.

Photo: comedynose
Journal of Personality and Social Psychology 2003 [pdf] and 2010 [pdf]

The original version of this article, The Best Holiday Gift: A Shared Experience, is copyrighted by Consumerism Commentary.

If you enjoyed this article, follow @flexo on Twitter and visit Facebook for more updates.

While I’ve already offered my suggestions for this year’s best holiday toys, not everyone on your Christmas or gift-giving list is a child. You may have a special adult someone on your list who would appreciate something more useful. Although it’s early in the holiday shopping season, at least for me, some of the best deals are already starting to materialize, well before Black Friday.

If you’re looking for a great Christmas gift for one of your favorite people, consider one of these Christmas gift ideas under $100. Of course, these apply as well to Hanukkah or any other gift-giving activities you might partake in before the end of the year.

Have any good suggestions? Please leave them in the comments and I’ll add the ones I like to my list.

Gift ideas under $100: Around the house

1. Dremel Multi-Max Oscillating Tool Kit (Home Depot, $99.00). “The Dremel Multi-Max 2.3 Amp MM20 Oscillating Tool Kit incorporates a powerful, efficient motor that provides cool, smooth operation under load. This versatile tool features a compact design that makes it easy to handle in tight spaces..” For anyone who likes or wants to do work around the house.

2. Black & Decker B&D Convection Toaster Oven (Sears, $95.63). This convection toaster oven also comes with a rotisserie capability. I need to replace my toaster oven, and this is a capable option.

3. Task Force 204-Piece Standard/Metric Mechanics Tool Set with Case (Lowe’s, $89.98). With 204 pieces, this tool set is complete for any would-be handyman or handywoman, yet it is still portable.

4. Pure Beech Jersey Knit Sheet Set, 100% Modal (Bed, Bath and Beyond, $29.00 – $79.00). “The softness of these extremely soft and light silk-like sheets is reminiscent of your favorite T-shirt, offering incomparable comfort.” I’ve been a fan of jersey cotton sheets for several years. I find jersey cotton to be much more comfortable than sateen or other bed sheets.

5. Framed art (Amazon, up to $99.99). Adding art to the walls adds color and excitement to any room in the house. If you don’t know an artist willing to create work for you, shop for framed art.

6. Merkur Shaving Gift Set (Amazon, $106.50). “The set includes a chrome stand that holds a Merkur Classic Safety Razor and a fabulous badger Shaving Brush with a Chrome Handle. Also included in the set is an elegant Chrome Bowl that holds a Colonel Conk Shaving Soap.” Since April, I’ve been shaving the old-fashioned way, with a badger-hair brush, shaving soap, and a safety razor. My face has never felt healthier and I get a smooth shave. Add some inexpensive Feather blades and have smooth skin all day.

7. Helen Of Troy Hotspa Professional Ultimate Foot Bath (Amazon, $95.93). “Ozone (active oxygen) helps to control, reduce and eliminate bacteria Motorized Pedicenter rotates with the press of a foot.” These devices are quite relaxing, whether you’ve been on your feet all day teaching, hiking, or giving presentations to the board of directors.

8. Sterling Silver 1/8 Carat t.w. Diamond Heart Bracelet (Kay, $99.99). “Heart-shaped sterling silver links accented with round diamonds create playful style in this bracelet for her. One-eighth carat total diamond weight. 7″ in length. With lobster clasp.” For any women who like jewelery.

Gift ideas under $100: Electronics

9. Sony BDP-S380 Blu-ray Disc Player (Amazon, $98.00). “Enjoy Blu-ray Disc movies in brilliant high-definition resolution or upscale the quality of your DVDs to near HD. Instantly stream a wide variety of movies, TV shows, live sports, videos, and music from Netflix, YouTube, Pandora, Hulu Plus and many more.” If you have a high-definition television, you must adopt Blu-Ray and replace your DVD player. There is simple no comparison between (even up-converted) standard definition and high bit-rate Blu-Ray video and audio.

10. Sony Cyber-Shot DSC-W530 14.1 MP Digital Still Camera (Amazon, $99.99). “Shoot more life with the Sony DSC-W530. Capture landscapes with one touch using Sweep Panorama, get that perfect portrait with Smile Shutter, snap wider scenes with the 26mm wide angle lens, get high quality photos with 14.1 megapixels, and automatically get clear shots with SteadyShot image stabilization and iAuto; all in a sleek little design.” This camera features a Carl Zeiss lens, offering a great quality picture sure to beat the camera built into your phone.

11. Roku 2 (Roku, $59.99 to $99.99). “With Roku, get instant access to tons of entertainment — with more choices added all the time.” This device allows you to watch any media content on your (most likely high-definition) television, accessing the internet wirelessly from anywhere in your house. It seamlessly links to your Netflix and Hulu content as well as many other services.

12. Garmin nüvi 1300 4.3-Inch Widescreen Portable GPS Navigator (Amazon, $98.94). “The thin nüvi 1300 has a widescreen display, yet it’s slim and light enough to take along on all your travels. This affordable GPS comes with regional mapping, announces streets by name, offers pedestrian navigation options and calculates a more fuel-efficient route with ecoRoute.” I’m looking for a new GPS navigator for my car, as I’ve been using my phone since my last device was stolen.

13. Kindle Touch Wi-Fi, 6″ E Ink Display (Amazon, $99.00). I have been using my iPad for reading books purchased via Kindle, but if you have no need for an iPad and just want the ability to access your library from anywhere, choose the Kindle. Now members of Amazon Prime can read books without paying for each.

14. Coby DVD938 5.1-Channel DVD Home Theater System (Amazon, $90.01). “Dynamic sound meets sleek design in Coby’s DVD938 home theater system, which includes a progressive scan DVD player plus a 5.1-channel home theater speaker system (subwoofer and five satellite speakers).” This is a bargain if you don’t need HDMI and you’re looking for compatibility with USB players, SD cards, or karaoke.

Gift ideas under $100: Fun stuff

15. Tauntaun Sleeping Bag (ThinkGeek, $99.99). “In the sub-zero wasteland of the planet Hoth, only the strong survive… and of course those lucky Jedi protected by the thick skin of a Tauntaun.” Any Star Wars fan, adult or child, would appreciate the comfort of avoiding the cold by sleeping inside a tauntaun. ThinkGeek offers lots of gifts for science fiction and fantasy geeks and tech nerds.

16. Bicycle Premium Mega Masters Poker Chip Set (Amazon, $99.95). “The Bicycle Mega Masters Poker Set is a premium poker set for the poker enthusiast. It includes a handmade, high-lacquered wooden case with 500 11.5-gram Bicycle clay filled poker chips in a four-color assortment of red, blue, black, and green… [and] two decks of Premium Bicycle brand playing cards.” Invite your friends over and lose more money to them than the cost of buying this set.

17. Halex Premium Vivace 113mm Bocce Set (BocceBallSets.com, $94.98). With this set, you can entertain your friends with both backyard games: bocce and croquet. Best to buy these sets during the off-season for the best prices. This set normally costs $140.

18. Bob Ross Deluxe Oil Painting Set In Wood Box (Amazon, $85.00). “Bob Ross Art Sets enable the beginner artist to create a beautiful oil painting through Bob’s easy and informative instruction methods and top-quality materials. This Deluxe Art Set contains everything needed to get started in the Bob Ross ‘Wet on Wet’ technique.” Thankfully, this set comes with an instructional DVD. You recipient will be on his or her way to creating masterpieces.

Gift ideas under $100: Financial stuff

This is a personal finance blog, after all.

19. $100 Treasury Bond (TreasuryDirect, $100). TreasuryDirect offers gift functionality, so as long as you have an account and have the Social Security Number of your recipient, you can give the gift of a savings bond, a low risk investment that will earn interest over time.

20. Stock (ShareBuilder, $100). If you would like to give someone a financial gift, particularly a young individual who has an interest in the stock market but is a beginner, consider a ShareBuilder gift card to get them started. This is a good time to introduce young investors to the concept of transaction fees, as well.

21. 2011 United States Mint Silver Proof Set (United States Mint, $67.95). “The 2010 United States Mint Silver Proof Set contains all 14 circulating coins in stunning proof condition displayed in three protective lenses, each bearing the S mint mark of the United States Mint at San Francisco.” Great for collectors or non-collectors, and it can inspire and create young numismatists.

22. Kids’ Savings Account (ING Direct, $25 and up). Opening a new ING Direct Kids Savings Account is a great way to teach a child or teenager good saving habits and concepts like compound interest.

Here are some more ideas:

• Gifts That Avoid Both Extra Stuff and Cliches
• 12 Last-Minute Gift Ideas
• Christmas Gifts That Make a Difference
• 25 Christmas Gift Ideas Under $10
• 25 Christmas Gift Ideas Under $25
• 25 Christmas Gift Ideas Under $50
• Christmas Gift Ideas for Military Members

The original version of this article, 20+ Christmas Gift Ideas Under $100, is copyrighted by Consumerism Commentary.

If you enjoyed this article, follow @flexo on Twitter and visit Facebook for more updates.

In the midst of the economic recession a few years ago, layaway programs made a big comeback. Previously a great method for buying items that may have been on the expensive side in eras when credit was not available to many consumers, the same economic conditions returned when credit card offers became scarce recently. Layaway programs are popular around the holidays, because consumers who plan in advance can reserve popular gifts (like the year’s hottest toys) while saving for the complete purchase, regardless of whether a credit card is available.

Taking Walmart’s layaway program as an example, we can draw a comparison between shopping with a layaway program, using a credit card, and paying with cash. Assume you use Walmart’s full layaway period, October 17 through December 16, you make payments for two months before receiving your item, and you pay a $5 up-front fee for the privilege. Assume also you are buying items that cost $250 in total. The $5 fee over two months equates roughly to a 12% annual percentage rate. That’s not that much different from credit card rates, possibly a little lower than average.

With a credit card, however, you can take the purchased item home immediately. With layaway, the store holds the product for you until you’ve completed your payments. If you decide later on not to finish purchasing an item on layaway, you’ll need to pay another fee in order to get your initial deposit of 10% of the item price and any subsequent payments back.

Without a layaway program or a credit card, you would need to save on your own before having enough cash to buy your items. If it takes two months to save up, you would receive the item at the same time you would have if you had taken advantage of layaway, but without the item reserved for you, it might be sold out by the time you can afford to buy it. That’s reason enough to avoid some of the most popular holiday gifts. The best option is to save for your holiday spending — or spending for any large item for which a layaway program would be beneficial — well enough in advance of needing to complete the purchase.

There are several benefits of taking advantage of a layaway program for holiday shopping.

• Reserve your item in advance, ensuring the popular item will be available later.
• Avoid traditional banks and credit cards, and likely pay smaller fees.
• Keep your savings in your bank account.

Layaway programs provide an alternative to saving in advance, with a fee to pay for the privilege. In some cases, it can be a better deal than paying with a credit card, though consumers making credit card payments have the advantage of taking the purchased item home immediately.

Besides these benefits, there are potential drawbacks and dangers. One important drawback of layaway programs is that you lock in the price when you place your downpayment. If the store offers a sale later on, you won’t be able to take advantage of the lower price without cancelling your layaway and incurring fees to do so. If the item you wish to buy is offered at a deep discount, you may be willing to incur the cancellation fee, but otherwise the result is paying more to take home an item than shoppers who bought the item that day without the help of layaway.

Be aware of your store’s policies. While the cancellation of a layaway program usually won’t prevent a full refund (minus fees), some stores take a stronger stance and offer no refunds.

There is a lot of pressure to buy gifts during the holiday season in an effort not to disappoint loved ones. It’s much easier to manage expectations — or it can be, if a family has a philosophy of managing expectations already — than to jump through financial hoops to buy the latest and greatest trendy gifts.

Have you taken advantage of a layaway program?

The original version of this article, Layaway Programs: How to Buy What You Can’t Afford (Yet), is copyrighted by Consumerism Commentary.

If you enjoyed this article, follow @flexo on Twitter and visit Facebook for more updates.

This is a guest article by Emily Guy Birken, author of The SAHMambulust. In this article, she offers suggestions for cutting the costs associated with car ownership.

Owning a car is an expensive proposition, but most of us never stop to consider the cost of each trip. Unless you live in a city with great public transportation, you use a car for everything. We jump into our cars to commute, run errands, visit friends, go shopping or even just take in the fall foliage. Be proactive about your car to keep your ownership costs low.

Here are five ways to make sure that your car remains a manageable expense, rather than a financial black hole.

Don’t cheap out on a mechanic.

When you find a reputable mechanic whom you trust, don’t expect to see bargain basement bills. Mechanics not only have to stay on top of the ever-changing trends of car engines, but they also need to make sure their (very expensive) tools keep up with cars’ needs and are well maintained. A knowledgeable mechanic is worth the extra money. One who doesn’t know what he is doing but will save you a couple of bucks can often cause expensive harm to your car. This is not the place to try to save. You’ll spend less in the long run if you’re willing to pay a great mechanic.

Looking for the cheapest mechanic will cost you more money in future repairs, so don’t be penny wise, pound foolish. Think about the larger picture.

Make smart gas choices.

There may be a great deal of hype about premium fuel options, but most daily drivers are just fine with the lowest octane gas at the pump. If you’re not sure about your car’s gas needs, check your owner’s manual. Even if the recommendation is for the premium grade of fuel, chances are that you would only need to fork over for the high-grade stuff in warm weather, when hauling extra weight, or driving on extremely steep mountain roads. Any other times, save yourself the money. And if you’re still not sure what your car needs, talk to your mechanic or check the internet message boards devoted to your make and model—there are plenty of them!

Watch the advertised prices as the station. You may pay more for your gas if you use a credit card, because many stations now charge gas customers different prices depending on whether they use cash or a credit card. You may be able to make up some of the difference with a gas rewards credit card, but again, make sure the price you pay above the cash price is worth the benefits.

Provided you pay off your credit card each month, this could be a savvy way to reduce your fuel bill each month and keep you motoring for less, as long as you make smart choices.

Take good care of your tires.

Tires are one of the costliest items that you will have to replace during the life of the car. While they are not made to last forever, you can ensure you get your money’s worth out of each set by practicing good maintenance. Keeping the tires properly inflated will not only make sure they last but will also save you on fuel efficiency. Check your tires monthly for underinflation and wear.

Keep your car clean.

If you live in an area with long, cold winters, you’re probably surrounded by cars that are rusting away. Cars that are exposed to salt will succumb to rust, which can shorten the lifespan of the vehicle. Especially in winter, you want to make sure that your car is regularly cleaned and waxed to keep the metal safe from the eroding properties of salt.

Similarly, if you notice a chip of paint missing from your body, touch it up! That spot is open to the elements and salt and will eventually rust over.

Don’t ignore little problems.

A friend’s car was revving but not catching when he turned the ignition. When he tried again, the car started and he went along his way. The problem? He was short on transmission fluid. Had he not topped off that fluid, he could have destroyed his transmission and been looking at a multi-thousand dollar repair bill, plus an out-of-commission car. Because he took care of the problem quickly, he paid just a few dollars for transmission fluid instead of using his maintenance budget for the year in one shot. We can become so used to the idea that we just jump in the car that we can sometimes end up ignoring small warning signs. If your car is behaving oddly, get it to a trusted mechanic quickly. Always pay attention to small issues.

Maintaining your car is an investment that will keep you motoring for years after your less-savvy neighbors and friends have had to replace their vehicles and spent unnecessary costs.

Photo: sridgway

The original version of this article, 5 Saving Money Tips for Car Owners, is copyrighted by Consumerism Commentary.

If you enjoyed this article, follow @flexo on Twitter and visit Facebook for more updates.

When a sales approach reveals itself to be significantly profitable for a company, you can bet those who run that company will want to expand that approach. Last year’s “Black Friday” day-after-Thanksgiving sale on Amazon.com was popular, and this year the major online retailer is extending the event throughout the week leading up to Thanksgiving, and offering publicized deals throughout the entire month of November, counting down to the start of “Black Friday Deals Week.”

The Black Friday Deals Week Countdown features electronics, home and kitchen, and jewelry, but Amazon has deals throughout all categories. The featured deals follow the style of Amazon’s “Lightning Deals,” where the retailer offers a usually deeply discounted item every several hours in limited quantities and for a limited time. The deals are not announced ahead of time, so in order to take advantage, shoppers would need to check Amazon.com often.

Shopping online beats running around from store to store on Black Friday, running the risk of being trampled by crazy shoppers. On the other hand, you may miss out on a retailer’s best doorbuster-type deals if you don’t get out of the house. Some companies take advantage of the fact that this is the one time of the year that a large population of consumers are obsessed with finding great deals, and it’s easy for retailers to present an offer as a once-in-a-lifetime discount for shoppers who haven’t properly researched their desires. An event like Black Friday also open the opportunity for retailers to take advantage of the impulse reaction, leading people to buy what they don’t need simply for the feeling of scoring a great deal.

Perhaps I’ve become lazier over the last few years. Except in a few specific situations, namely photography equipment, I’ve found that Amazon.com consistently offers lower prices on the items I find myself needing or wanting most often. I often don’t bother to shop around unless it’s for a major purchase. If Amazon’s price ends up being slightly higher, I don’t worry too much. Thanks to all the money I’ve saved over the past decade, my overall savings compared with shopping at retailers like Best Buy and Circuit City more than make up for the difference.

How closely will you monitor Amazon.com’s Black Friday Deals Week Countdown? I might visit the site several times a week to see what the trends are. I haven’t organized a shopping list for the holidays yet.

Related: Christmas gift ideas under $100 and best holiday toys for 2011.

The original version of this article, Amazon.com’s Month of Black Friday Deals, is copyrighted by Consumerism Commentary.

If you enjoyed this article, follow @flexo on Twitter and visit Facebook for more updates.

This article is written by Consumerism Commentary’s columnist, Ellen Cooper-Davis. Ellen’s column looks at the role of spirituality within the context of personal finance. For an introduction to this column, see Ellen’s first article, The Pastor and the Purse. Your feedback is welcome.

It’s time for a little geography lesson.

Look at the tag in your pants. Right there, below the strict instructions not to put them in the drier, which you, like me, probably ignore, it tells you where your pants were born. “Made in Mauritius,” my pants tell me. The magic Interwebs let me know that this is a tiny island nation off the southeast coast of Africa.

Now I am curious. Because in my experience, small island nations don’t necessarily fare well where clothing manufacturing is concerned. So even though a part of me doesn’t really want to know…I check on the labor practices of the manufacturer. The results are not encouraging.

This means I will have to find a different source of pants. And since I’ve raised the question of ethics in manufacturing, it also means I’m more likely to intentionally seek out brands of clothing that have higher standards. Oh, sure, I could shrug and try to forget I ever looked that up, or pretend that sweatshop labor does not clash with my values at all… but it does. And I did. And that’s the problem. Once you know something, you can’t un-know it.

Most of us move through our consumer lives in blissful ignorance. We don’t know where our clothing, gadgets, trinkets come from, and frankly, we don’t care. We just want them to look good, work well, and entertain us. We don’t want to know about child labor or sweatshop labor or toxins. Because if we knew — if we really allowed ourselves to open our eyes and see the truth, and to notice the places where this truth grates against our most deeply-held truths — then we would have to change.

Ignorance isn’t really bliss. It’s just ignorance. As a society, we would never tolerate knowing nothing about where our food comes from. We want some reasonable assurance that it is safe to eat, that it will nourish us, that it is what it says it is. Why would we deliberately embrace ignorance when it comes to materials, labor conditions and sources of other consumer goods? After all, those are real human beings on the other end of our supply chain. To pretend otherwise is not only ignorance, but dangerous.

In some ways, this is the essence of any spiritual path. It is about taking the teachings and values of that path, and aligning your real, everyday life with them. This includes what we do, what we say, how we treat people, and what and how we consume. It isn’t easy, and no one does it perfectly, but we can all start where we are. I can start with my next grocery trip, or the next time I need new socks. I can start with rearranging my investment portfolio, or I can start by exploring fair trade gifts for this holiday season. Here, at the intersection of soul and money, there are hard questions to be asked. If I am who I say I am, what must I do?

What consumer goods do you research from a values perspective? What do you wish you could evaluate from that perspective, but don’t know how? What would you prefer to remain totally ignorant about? Are there any “lines in the sand” for you, issues or practices that you absolutely do not tolerate in your consumer choices?

The original version of this article, Spirituality and Money: Knowing is Only Half the Battle, is copyrighted by Consumerism Commentary.

If you enjoyed this article, follow @flexo on Twitter and visit Facebook for more updates.

Christmas and Hanukkah are right around the corner, and if you have children, they might already be looking forward to the holiday season. Gift-giving is a big part of the holiday season, as it has been for a long time. Commercialism is the most popular American religion as we approach the end of the year. Stores will do their best to attract shoppers this year with sales for the best holiday toys and displays designed to take advantage of all the tricks that psychology has discovered about retail suggestion. The television commercials will be attacking children directly.

Some families succeed at resisting the materialistic urge, making the holiday season about something other than receiving presents. I’d like to think that when I have children their desires will be deeper than toys that will receive attention for a week then be stored in a closet. I am a realist, though, and considering I’m prone to enjoy “toys” like cameras and electronics, I’m sure my kids, not being able to escape their peers and their influence, will be desirous of the things most marketed in their general direction.

Confounding the problem but possibly easing the stress for parents who do want to indulge their children’s materialistic dreams, CNN has assembled a list of the most popular holiday toys. There are a few that I probably would have enjoyed as a kid. Here are some of the more interesting items from the list as well as a few others I’ve added after researching this year’s interesting toys for kids and young adults.

These prices are current as of November 1, 2011.

	Angry Birds: Knock on Wood Game. Angry Birds is a highly addictive, award-winning game, generally for mobile devices. With this new edition, the game crosses over to the real world. While it isn’t as portable as a cell phone app, it will, at least for a short time, get your kids to look at something other than a small electronic display. Today’s price: $26.98.
	Hot Wheels Wall Tracks Starter Set. What I like about this toy is that it takes the matchbox car idea to the next dimension — literally. No longer are kids confined to designing tracks that operate in mostly two dimensions (allowing for hills and loops). These tracks can be applied to walls, increasing the opportunity for creative civil engineering. Today’s price: $27.99.
	Vtech – InnoTab Interactive Learning Tablet. While the Angry Birds game coaxing kids away from their mobile devices, this tablet draws them back to electronics, particularly appealing to kids who see their parents playing with their iPads. Apps on this tablet include an e-book reader, a calendar, and a coloring book. Today’s price: $79.00.
	LeapFrog LeapPad Explorer Learning Tablet. One table for kids obviously isn’t enough. Like the InnoTab, this device offers educational apps and games, but there are more apps available for purchase. The applications are focused on learning and will adjust to your kids’ reading ability. The device also includes a camera. Today’s price: $99.
	Lazer Stunt Chaser Dragonfire Remote Control Car. Kids without cats in their household don’t experience the joy of having something chase after laser spots. Rather than getting a cat, take a look at this remote control car that automatically chases the laser. Rather than the standard remote control devices, this car comes with a laser pointer as well as a ramp. This car will do more tricks than your cat. Today’s price: $59.95.
	Logo Board Game. Perhaps leading to a good lesson about how people, particularly kids and young adults, are influenced by branding, this game pits family member against family member in an effort to recognize the most brands. A good logo is instantly recognizable, but what’s the effect of a memorable logo when we go shopping? A recognized logo makes us feel comfortable, and shoppers like that feeling. A game like this further enhances ability to recognize the logos. I wonder if the brands need to pay in order to be included in the game; it’s something of an advertisement. Today’s price: $19.84
	Qwirkle. This is a family game where the object is to use the provided tiles to create lines of matching shape or matching color. I suppose it’s a mix between Uno, dominoes, and Scrabble. I’ve played this before and I can see a family enjoying the game. It doesn’t take very long to finish. Today’s price: $17.69
	Polaroid 300 Instant Camera. Everything old is new again. Technology has advanced so much that digital cameras are inexpensive. Even the most recent batch of phones have lenses and sensors that can produce decent photographs. But there’s something special about a toy camera that can produce a print almost immediately. Polaroid is bringing analog back. Keep in mind that you’ll need to buy film separately, and at $1.30 a print, instant photography is not exactly an inexpensive hobby. Today’s price: $89.98
	Sesame Street Let’s Rock Elmo. What would the holiday season be without yet another Elmo toy? This year, the “Let’s Rock” Elmo will likely be hot. Elmo comes with a microphone, tambourine, and bongos, and can interact with the instruments. Other instruments, also with interactivity, are sold separately. If keyboards or guitars capture your child’s imagination better, the options are available. Today’s price: $57.21

The original version of this article, Best Holiday Toys 2011, is copyrighted by Consumerism Commentary.

If you enjoyed this article, follow @flexo on Twitter and visit Facebook for more updates.

Simplification is usually a good choice for finances whenever it is available, and the bulky wallet is due for a technological upgrade, simplifying back pockets of men’s jeans everywhere. I’ve received the occasional comment about my “George Costanza” wallet; as I collect receipts from my day-to-day transactions, the leather becomes increasingly distended. Google’s first in the United States on the train towards eliminating this particular bulge and lightening the load for those who carry cards and money in bags. In fact, Google re-purposed a clip from Seinfeld to tease the public about this forthcoming technology.

In Europe, this technology already exists, even if it isn’t ubiquitous yet: your mobile phone will be able to function as a payment mechanism with merchants who accept credit cards. New mobile phones will include a chip that securely transmits a credit card number of choice to a cashier’s receiver. Just like the PayPass or other credit card technologies that allow you to wave your plastic like a Jedi to pay for your groceries, cell phones carrying digital wallet applications will theoretically take the place of your bulky, card-filled wallet.

Despite strong marketing from Google and other companies getting ready to launch digital wallet services, there are still some barriers to this technology.

• Most phones do not contain the NFC (near-field communication) chip that makes secure wireless communication between the phone and a retailer’s receiver possible. In fact, the Google Nexus S is the only phone in the United States that contains this technology as of today.
• The Google Nexus S is only available on Sprint. Consumers who want to take advantage of this technology right away would need to leave Verizon Wireless or AT&T.
• Not all credit card companies are on board. Google Wallet is launching with help from Citi and MasterCard. Visa, American Express, and Discover will operate with slightly different technologies. They’ve made the details available to programmers, though, and the issuers may be included in future versions of Google Wallet, or they will sponsor their own, competing applications.
• Many people are still skeptical of security. I’ve often maintained that secure digital communication is more secure than handing your credit card to a waiter who disappears for five minutes, but there is a mistrust of credit card databases stored by financial companies. In order to use technology like this, you provide your credit card information to yet another third party.
• With more of your financial information in the hands of others, you are open for more and better-targeted advertisements and unsolicited offers. Using a digital wallet will certainly require your agreement with a document outlining terms of use, and that document will undoubtedly reduce your rights to privacy. Your credit cards know where you spend your money and how much. Do you also want Google to know?
• This service may replace your cash and credit cards, but that’s only part of your wallet. You may use your wallet to hold your identification and driver’s license, your health insurance identification card, your roadside assistance card, your mass transportation access card, your office security key, and your casino player’s club card, just to name a few. Some of these may be supported by Google Wallet and similar applications in the future, but some won’t.
• Until all merchants accept wireless transactions, you’ll still need to carry your credit and debit cards. In fact, even if a merchant accepts NFC payments, if the technology is a little old, it won’t accept payments from cell phones.
• My cell phone’s battery is generally dead by the end of the day. Without a wallet and without a back-up battery, how will you pay for an item with a phone that won’t turn on?

If you’re an early adopter of technology, feel free to jump on the bandwagon. Google Wallet is not quite ready for mass consumption.

The original version of this article, Google Wallet Not Ready for Prime Time, is copyrighted by Consumerism Commentary.

If you enjoyed this article, follow @flexo on Twitter and visit Facebook for more updates.

Delivery company — or logistics company, depending on how you look at it — UPS is taking a page from Amazon.com’s Prime service and offering better delivery options for customers willing to pay a fee.

When I didn’t work out of my home, I’d often come back after work to be greeted by the familiar yellow slip sticking to my front door. While occasionally, my package would be waiting with a neighbor, occasionally my signature was required. And less frequently, for particularly valuable deliveries, my signature was needed in person. I’ve made many trips to the UPS delivery warehouse 45 minutes from my house in order to pick up a delivery I couldn’t be home to receive during delivery hours. I had always had the option to redirect delivery to another location, however, after paying a fee. At one point this fee was $4, but I believe it has increased over the past few years.

On October 3, UPS is launching the “My Choice” service. The basic service is free, and this provides a notification a day in advance of a scheduled delivery. The notification will include a four hour window during which the package will be delivered. The company is offering a convenient feature to pre-authorize a delivery needing a signature. This is an excellent feature for someone who receives UPS deliveries regularly.

If you want more than the basic service, pay a $40 annual fee to receive access to a delivery tracker. UPS does a good job of telling you when your delivery is on the truck on the way to the point of delivery, but this new service is like GPS for your package. Another service available narrows the window during which your package will be delivered. For another $5, you’ll receive a two-hour window rather than a four-hour window.

Are these features worth a $40 annual fee? If I weren’t working from home, I might take advantage of pre-authorization to ensure my packages are delivered without me needing to be present, but I’m not sure I’d pay a $40 annual fee for a tighter guaranteed delivery time.

zyphbear

The original version of this article, UPS Premium Service, is copyrighted by Consumerism Commentary.

If you enjoyed this article, follow @flexo on Twitter and visit Facebook for more updates.

As an owner of a Honda Civic, I was concerned with the car maker’s latest round of recalls. My 2004 Honda Civic manual transmission LX sedan was not affected by the recall, but it wasn’t too long ago that both Honda and Toyota were issuing recalls. At the time, I reacted by buying shares in Toyota, thinking I could take advantage of a good company’s bad news. The investment saw some upside for a short period of time, but since I didn’t sell, it’s back to where it started.

The Toyota recalls were so hyped by the media, I thought it was a great opportunity. The recent Honda recalls seem to be attracting less attention, but even if they were, I don’t think I’d jump in with an investment in Honda. Here’s the information on the latest Honda recall:

• 930,000 Fits and CR-Vs will be recalled for a potential problem with the power window switch.
• 26,000 CR-Zs will be recalled due to the possibility of the car rolling backwards when the transmission is not engaged in reverse.

For the most part, recalls involve nothing more than taking a car into the dealership for a quick repair. Lives are rarely on the line.

For me, since I am not affected by the recall, I have bigger concerns; it seems the latest edition of my mainstay for the last decade, the Honda Civic, was panned by Consumer Reports. A friend of mine who has been a loyal Ford owner for the last decade has expressed his pleasure in the news and perhaps vindication. My current car and my previous car, a 1997 Honda Civic LX, ran beautifully as long they have been in my hands. I only replaced the older car after I received it back after lending it to a relative for a year while I was not driving and there was an unidentifiable problem. The 2004 recently passed 140,000 miles and should last many more.

When the car finally reaches the point where the cost to maintain its operation is higher than the remnant value of the car, I’ll need to look at my options. If the recent crop of Honda Civic editions is not reliable and recommended, I’ll look for a change. By the time I buy a new car, a sedan might not be at the top of my list, anyway, depending on my needs and perhaps desires. I may ot be looking for a Civic or an comparable sedan.

Here’s Honda’s statement about the recalls:

Honda will voluntarily recall 80,111 CR-V vehicles from the 2006 model year in the U.S. to replace the power window master switch. The design of the power window master switch can allow residue from interior cleaners to accumulate, which can, over time with switch use, cause the electrical contacts to degrade and may lead to a fire in the switch. No injuries or deaths have been reported related to this condition.

Additionally, Honda will voluntarily recall 5,626 CR-Z vehicles from the 2011 model year in the U.S. that are equipped with manual transmissions to update the software that controls the hybrid electric motor. In the affected vehicles… it is possible for the electric motor to rotate in the direction opposite to that selected by the transmission. If this occurs and the driver has not engaged the brakes, the vehicle may slowly roll in an unexpected direction…

Which automobile maker delivers the highest-quality vehicles today?

Photo: labnol
Honda

The original version of this article, Honda Recalls One Million Cars, is copyrighted by Consumerism Commentary.

If you enjoyed this article, follow @flexo on Twitter and visit Facebook for more updates.

Earlier this year, AT&T announced its plans to acquire T-Mobile, a plan that would change the landscape of wireless service in the United States and pave the way for an industry dominated by two large players: the new AT&T and Verizon Wireless. Today, the U.S. Justice Department stepped in, issuing a complaint to block the acquisition.

T-Mobile is currently a lower-cost option for wireless service, and the acquisition would most likely result in less competition and higher prices. Earlier this year, the Department of Justice blocked a merger between H&R Block and TaxAct, and the move was questioned when deals like the one between AT&T and T-Mobile were allowed to continue. As we can see now, the government is attempting to take the anti-duopoly approach across industries.

The Comcast acquisition of NBC was a different type of acquisition, and the Department of Justice did not seek to block it. The unified company can now control media from their creation to delivery, and this type of vertical integration seems to not be seen as anti-competitive, even though it could result in increased cost for the consumer and content exclusivity where none existed before. Deals like the one between AT&T and T-Mobile or between H&R Block and TaxAct take a marketplace and offer the consumer fewer choices.

Sprint, the distant fourth player in wireless, lobbied the Department of Justice to block the merger. While the block may be in the best interest of consumers, it’s definitely in the best interest of Sprint, likely to be pushed out of the market after the proposed acquisition. If the shoe were on the other foot, and AT&T were to buy Sprint, T-Mobile would be the company seeking to block the deal on behalf of consumers.

Consolidations and acquisitions can be good for the economy when there are major inefficiencies. Capitalists, for the most part, don’t want the government stepping in to block he progress of business and the growth of corporate empires. In theory, if one company gets so large that the consumer is left with poor choices, the market will eventually correct itself with new players willing to meet the neglected needs of the consumer. But when the cost of becoming a large enough presence in a market dominated by one or two companies is prohibitive, as it most likely is for offering cellular service due to the necessary infrastructure, blocking an acquisition might be a better solution than waiting a decade, a generation, or more for new competitors to re-shape the consumer landscape.

In its own words, the Department of Justice explains the decision:

The Department filed its lawsuit because we believe the combination of AT&T and T-Mobile would result in tens of millions of consumers all across the United States facing higher prices, fewer choices and lower quality products for their mobile wireless services.

Consumers across the country, including those in rural areas and those with lower incomes, have benefitted from competition among the nation’s wireless carriers, particularly the four remaining national carriers. This lawsuit seeks to ensure that everyone can continue to reap the benefits of that competition.

This isn’t the only acquisition of concern recently; Capital One was the winning bidder for ING Direct. Although the deal would make Capital One “only” the sixth largest bank in the United States when measured by deposits, the government and regulators are not taking this deal lightly, seeking more comments from the public.

Do you think the Department of Justice should block the AT&T acquisition of T-Mobile?

Photo: whiteafrican
Department of Justice

The original version of this article, Department of Justice Blocks AT&T Acquisition of T-Mobile, is copyrighted by Consumerism Commentary.

If you enjoyed this article, follow @flexo on Twitter and visit Facebook for more updates.

When gasoline prices at the pump increased to the point where the cost was a major news item engendering backlash among the public, oil companies were sporting big profits. Consumers reacted by buying more fuel-efficient cars and traveling less, but there is another approach for investors — an approach that mimics what commodities and hedge fund traders do. There are a few suggested approaches, but some work better than others.

One approach is to simply buy stock in the companies that are increasing prices to hedge against cost increases. The theory is that if prices of consumable goods increase to drive profits for the company, owning part of the company will turn those higher expenses to investment returns.

A quick check of gas price data and Exxon Mobil’s performance shoes that stock prices don’t always correlate with an increase in gas prices, but Exxon Mobil did provide dividends to investors during the last major period of gas price increases, from December 2008 to now. Investors during this time would have received $5 per share in dividends. If you estimate you’ve paid $5,000 more in total gasoline costs since December 2008 than you would have if gas had remained at $1.70 per gallon — and this is an assumption I’ll continue to use here — it would have taken 1,000 shares of XOM to earn that back in dividends. Those 1,000 shares would have cost a total of $80,000 in December 2008 and they’d be worth only $72,000 today.

This strategy would not have been very efficient. What about industry ETFs? The United States oil ETF, USO, would have seen performance not quite as bad as XOM over this period, but there would be no dividends. Investing directly in companies that profit from higher prices does not seem to be a winning strategy.

A bunch better choice would be an ETF that tracks gas prices closely, regardless of the stock performance of the companies involved with delivering gas to the consumer. Over this time period from December 2008 to today, UGA, an ETF that takes this approached, has increased 130%. Gas prices increased from about $1.70 to about $3.60 per gallon, or an increase of 111%. This seems to be the better approach for hedging against gasoline price increases. From an absolute dollar perspective, earning back the $5,000 in additional gasoline expense over this period would have required an initial investment of $3,850, a more reasonable down payment.

There are other ways to hedge gas prices, like selling put options on UGA. If you’re willing to gamble that UGA will trade at a certain minimum price on a certain day in the future, you can take a profit to help offset your gasoline expenses. If you take that bet and UGA is not trading at that price, you could lose money on the trade, but you’d be paying less at the pump, so you’ve saved money anyway. I think buying the ETF is a better idea for most investors than dealing with options.

Another option, in combination with investing, is to ensure you’re getting the best prices for the gasoline you buy. It doesn’t make too much sense to drive out of your way to get to the isolated station with the lowest price, but be aware of your options. Find the best gas credit card for you and use it to earn cash back, but be wary of stations that charge different prices depending on whether you use cash or credit.

If you are planning to buy a new car, consider cars rated with high gas mileage. The effects of these ratings aren’t linear; a 5 MPG upgrade from a 15 MPG vehicle to a 20 MPG vehicle has more of an effect on your finances than a 5 MPG upgrade from a 35 MPG vehicle to a 40 MPG vehicle, but it’s clear that a 40 MPG vehicle, while slightly better than 35 MPG, is a significant improvement over 15 MPG. Efficiency has its own environmental benefits beyond the cost of fuel, so some people may feel it’s worthwhile to buy fuel-efficient cars even if the higher prices make overall cost savings (including car price and gas) harder to achieve.

Right now, gas prices may not be the biggest financial concern for a family. The public now expects high prices despite not too long ago bemoaning when prices climbed above $1 per gallon. Transportation can be a significant expense for a family, though, particularly in locations where the career economy is based mostly on commutation, like New Jersey and California.

Photo: crowt59
Gasbuddy

The original version of this article, How to Hedge Against Gasoline Price Increases, is copyrighted by Consumerism Commentary.

If you enjoyed this article, follow @flexo on Twitter and visit Facebook for more updates.

I always wondered why stores like Target and Wal-Mart added groceries to their already wide variety of products for sale. I figured these stores were attempting to be more of a one-stop-shop for all shopping needs, keeping customers in the store longer, and providing less of a reason to go to the supermarket, grocery store, or farmer’s market.

That may be partly true, but there is more to it. In general, shoppers visit box stores once every two to three weeks, but they visit grocery stores twice as often. Not only would shoppers stay in these stores longer, if Target and Wal-Mart provide a compelling reason to become a shopper’s primary stop for groceries, they’ll come back more often. This is one way that marketers, experts in what motivates consumers, are having a big impact on how companies design their businesses.

These marketers are incredibly in tune with the minds of shoppers. They’ve created thirteen to twenty “seasons” for shopping, to ensure the products they want shoppers to buy are those that they present at any time during the year. Seasons vary, but at any point of time, there’s some prevailing zeitgeist that is perfect for marketers to take advantage of. Here are a few examples.

• December Holiday or Christmas season
• Thanksgiving season
• Back-to-school season
• Valentine’s Day season
• Start-of-the-summer season

The true art of the seasonal display is to trick out products that don’t seem like obvious impulse buys — like vacuum cleaners or tissue boxes — in a way that makes shoppers grab first and think later. People are usually willing to spend more during special seasons, retailers and manufacturers say, especially if they are spending on their children.

One example of the power marketers have is given in the Wall Street Journal article quoted above. To sell more vacuum cleaners to college students, they requested the manufacturers design them in specific colors that college students like to see around their dorm: pink, blue, and black. The Dirt Devil vacuum cleaners are typically red, coinciding with the “devil” theme, but to sell these products to college students in a back-to-school display, they developed versions of the items with the specified colors.

Stores are continually tweaking their tactics. During back-to-school shopping season, more and more products are being included in these sales, even if their connection to school is tenuous. Stores are packaging other items together to make shopping easier. The goal, of course, with all the different seasonal displays that the directly to the mood of the season, is to get shoppers to spend more on impulse purchases. With related products in the line of view, the more likely a shopper will pick it up and spend more money.

There’s nothing wrong with spending money on items you need, but the impulse buy bypasses advance planning, shopping around, and saving money in advance if necessary. While experienced shoppers might be able to tell whether an offer is a good deal, it’s not always immediately apparent to everyone.

Marketers know how the human mind works, and it’s virtually impossible to beat them at this game. The best smart shoppers can do is to be aware of how every tiny detail of your experience in a store is designed to get you to part with your money. This awareness helps you stop and think — sometimes.

Photo: Keith Williamson
Wall Street Journal

The original version of this article, Retail Marketers Attract Shoppers With 13 to 20 Seasons, is copyrighted by Consumerism Commentary.

If you enjoyed this article, follow @flexo on Twitter and visit Facebook for more updates.

I’ve spoken out against the concept of “extreme couponing” a few times already. In search of ratings, television shows — and in particular, “reality” television shows, use creative editing to make practitioners seem crazier than they are, but the concept has caught on so well, some people, in real reality, stop at very little in order to save some money. Never mind that the mathematics behind extreme couponing is often exaggerated; never mind that the typical couponer could earn more money than she saves by spending the same amount of time working more; never mind that excessive couponing ruins savings possibilities for everyone else and increases prices.

The pressure to find the biggest score has couponers breaking laws under the auspices of “savings savvy.” People who still have non-digital newspaper subscriptions have been reporting an increasing number of missing deliveries. These newspapers are being stolen off porches by unscrupulous discount hunters. Walking door-to-door isn’t efficient, however, and many couponers have discovered that they can simply lift stacks of papers earmarked for early morning deliveries and newspaper vending machines.

Earlier this month, an extreme couponer was arrested for stealing newspapers. Legitimate extreme bargain hunters claim that this practice is not common, and this is not a behavior that extreme couponers support. This message is getting lost in today’s culture where super-frugality is a sport, and getting products for bargains, for free, or for even less is more important than either logic, ethics, or the law.

People can certainly be successful without resorting to illegal tactics and without hoarding unneeded products in order to pay less money for needed products, but the competition to win at this game can be so intense that it drives people to do stupid things. And when they’re caught, they claim they didn’t know stealing was illegal.

“Moderation in all things” is a classical philosophy ideal that, when followed, could help guide someone toward a more satisfying life. I don’t always agree with this philosophy, but when it comes to extreme fanaticism about a concept, the purpose will sometimes become secondary to the fanaticism itself. The idea behind extreme couponing isn’t to get as many great deals as possible, and build new shelves and buy more refrigerators to store all these great deals, it’s to spend as little as possible on those items which are necessary.

If extreme couponing has turned into an obsession, especially if it encourages someone to resort to breaking laws to satisfy the thrill of getting something for nothing and reducing the quality and quantity of time one spends on other important things in that person’s life, any possible savings will not make up for the lowered quality of life.

Photo: calamity_sal
KSDK

The original version of this article, Extreme Couponing: Woman Arrested for Stealing Newspapers, is copyrighted by Consumerism Commentary.

If you enjoyed this article, follow @flexo on Twitter and visit Facebook for more updates.

After noticing, month after month, that I include the value of my 2004 Honda Civic in my monthly net worth updates, a reader wrote in to Consumerism Commentary to ask why I haven’t given into my desires and purchased something newer or more exciting. I’ve had a bit of a storied past with cars, but in my current, more responsible era of my life I’ve been sailing through without any car problems, and saving money in the process.

I had been driving a Honda Civic I purchased used, but after receiving the car back from a relative, it never operated the same. In 2004, I accepted a teaching position and I needed a reliable car to drive to the school every day. The old Civic, at 160,000 miles, just wasn’t as reliable as I needed it to be. Since my necessity to avoid breaking down was my new first priority, I decided to sell the old Civic and buy a new one. As the 2005 models were arriving, I purchased a brand new Civic.

Typical financial advice at the time was to always buy a used car. With Civics, which were said to operate great beyond 200,000 miles if cared for well, there was just a small price difference between a slightly used car and a brand new car was. For the extra one or two years of worry-free driving at the beginning of ownership, the extra money seemed to be worthwhile to me. I bought a 2004 Honda Civic around the time the 2005 models were arriving, so I was already getting a slight discount on the new car. I took out a loan (outside the financial industry) at an interest rate of 2% to finance the purchase.

The car in this photograph is not my car.

Rather than trading in the old Civic, I sold it on Craigslist, and got more cash than I expected. I paid the loan off quickly. Since paying the loan off, I’ve had very little car-related expenses. I have the dealership perform regular maintenance and oil changes, and besides tolls, fuel, and the occasional car wash, that’s all the money I put into my car. I could probably save more money by choosing a mechanic other than the dealership, but I’ve had problems with that approach in the past with other cars. Going to the dealership gives me peace of mind, and I’ve never had any problems with their work.

Although I was a fan of driving when I was younger and always jumped on every opportunity to drive on road trips, years of commuting have spoiled my joy. I do enjoy driving fun cars, but I see that more as an occasional luxury than a lifestyle choice. A recent study shows that the enjoyment drivers get out of driving fun or luxury cars doesn’t last more than a few weeks, so when you buy a BMW or Ferrari, the euphoric feeling you might get from driving doesn’t last long. If I want to enjoy driving, I can always rent a nicer car. This should help me better appreciate the fun.

Buying a new car like I did doesn’t pay off if you have the desire for a new car every few years. I have no need to impress clients, so leasing a car doesn’t make any sense. Also, I don’t have a garage, so leaving a nicer car out in the open in asking for trouble. I live in a crime-free area, so it’s not that much of a concern, but I’d prefer knowing that something of great value could be locked away. I’m not going to park a Ferrari in my open parking lot, and I’m certainly not going to take it to Queens to visit my girlfriend and leave it parked on the street.

• By not having a $300 per month car payment since July 2007 has saved me $14,400.
• By not choosing a gas-guzzling vehicle, I’ve probably saved another $9,000 since buying the Honda Civic new in June 2004.
• I’ve probably saved another $3,000 to $4,000 by buying a car that requires hardly any maintenance.
• I’ve saved at least $16,000 and possibly much more by choosing not to buy another new car until this Civic dies. Now that I’m not commuting to an office every day, this car could last for many years.

At some point, my needs might change. Maybe I’ll have a family and need a bigger vehicle for transporting my hypothetical children and their friends. I can’t predict my needs or desires in the future, but for now, I’m not buying a new car, and I’m enjoying the savings both by spending money on other things I enjoy and by thinking about and investing in my future.

Would you replace your current car if you had cash available? Should I put a small part of my future aside to spend extravagantly on a nice car and have some fun?

Interesting. This article drew a lot of criticism from Consumerist readers who say that a car from model year 2004 isn’t old enough. The criticism missed the point of the article, which is that continuing to drive the same car saves money over buying a new car. There’s no competition to see who can drive the oldest car. As I pointed out in the article, at a time when reliability was the foremost concern, buying a ten year old (or older) used car, without a strong indication of how well it could run and for how long, would have been a significant mistake. Plus, the mileage is a better indication of operational “age” than model year.

Photo: save_7

The original version of this article, Why I Still Drive My Old Honda Civic, is copyrighted by Consumerism Commentary.

If you enjoyed this article, follow @flexo on Twitter and visit Facebook for more updates.

I received a notice in the mail stating that I could receive benefits from Verizon Wireless as a result of a class action settlement. The lawsuit alleges that the mobile phone company failed to provide free roaming as part of Verizon’s “America’s Choice II” calling plan. The plan documentation stipulated that there would be no roaming charges in certain cases, but the company allegedly charged consumers for roaming anyway.

Any customer who was part of this plan is automatically entered into the settlement class, and if the judge rules against Verizon Wireless, customers will receive 25 additional wireless calling minutes, expiring after one year, than can be used to cover monthly overages. This works out to about two extra minutes a month, so it’s not exactly a windfall. Anyone who prefers a different form of compensation, including anyone who is no longer a customer of a Verizon Wireless plan that includes a monthly minute allowance, can opt to receive a transferable PIN for 40 calling units, valid for two years. The number of minutes that these 40 units represent depends on the countries you call.

In addition, if you’d like to exclude yourself from the class action and hold onto your rights to sue Verizon Wireless independently for loss due to the company’s roaming charges, you can do so until September 27.

If the judge rules in the plantiff’s favor, the fees to lawyers and class representatives won’t affect the compensation to customers. The attorneys are asking for $6 million from the judge to pay for their work over the past five years, and the class action representatives are asking for $20,000 each for their work. Verizon Wireless would have to pay the fees as determined by the judge in addition to providing the free minutes to customers in the class.

You can find more information about this class action lawsuit at cowitsettlement.com.

The original version of this article, Verizon Wireless Roaming Charges Class Action Lawsuit, is copyrighted by Consumerism Commentary.

If you enjoyed this article, follow @flexo on Twitter and visit Facebook for more updates.

The best way to get the most for your money when shopping for school supplies is to start early. While there are some good deals and good sales during the summer before the school year starts, you can only take advantage of them if you’re prepared. Some deals aren’t ask great as they’re advertised to be, so it pays to take on this task deliberately, not in a mad rush the day before school starts, with crowded stores, frantic shoppers, and empty shelves.

The goal of back-to-school shopping is to get what the students need and to do so without spending a fortune. In today’s consumer-driven world, it’s not surprising that kids want what they see on television and what other kids have. The balance between these wants and needs is important, and parents shouldn’t be afraid to say that needs come first and wants can be evaluated later.

1. Receive guidance from teachers.

Many teachers communicate with parents before the school year starts to make sure incoming students have a list of the materials they’ll need for the class. Notebooks, pens, pencils and subject-specific tools usually top the list of requirements, and this can be a long list. In this article, I was planning to include a list of the required materials for incoming sixth graders at a public elementary school in Queens, New York, but it was too long to include here. Take a look at this list (pdf): Grade 6 Student Required Materials.

You can anticipate lists like these getting longer as schools don’t include materials for students in their budget and teachers, who often pay for school supplies from their own pockets without school reimbursement, are affected by the recession just like everyone else.

2. Locate your reusable materials from last year.

Students do not need a new backpack every year. A quality name brand backpack should last several years, if not an entire elementary school career. Some manufacturers like Jansport have a lifetime guarantee, so there is rarely a need to buy a new backpack unless it’s been severely damaged, and certainly no need every year. You may save money in the short-term by buying a generic backpack, but if it’s made out of lesser quality materials, it won’t last long.

Unused paper from one year can be a starting point for the current year. If the child didn’t fully use notebooks from the previous year, the leftover pages are as good as new. Pens, pencils, markers, and crayons can be used until they’re depleted. Loose-leaf binders and folders can survive more than one year. It surprises me that a Flash drive is required for sixth graders, but there should be no need to buy new drives every year.

3. Find the best deals.

I’ve acquired a habit of going to Amazon.com for many of the things I buy. They usually offer the lowest prices, and I benefit from free shipping and, at least until the law is eventually changed, no sales tax (though the use tax on my state income tax return negates that benefit). When it comes to school supplies, however, I’ve noticed that Amazon.com does not always have the lowest price, even taking into consideration those advantages.

During the summer, it’s best to keep checking local convenience stores like CVS or Duane Reade for their best specials. Walmart and Target will often present too-good-to-be-true discounts on back-to-school items, and you’ll generally need to move quickly to take advantage of these.

Staples often competes well with these stores for school supplies. I was in Staples a few days ago and they were selling a $10 savings pass. This pass grants the holder a 15% discount on back-to-school items for a limited time. Some quick math tells me you would need to spend about $67 in back-to-school supplies at Stapled in order for this savings pass to pay for itself.

Check for your state’s sales tax holiday. Most states that participate in sales tax holidays have several days set aside for shopping for back-to-school supplies. Being granted the benefit of not owing sales tax is not a guarantee that you’re getting a better price. Check the sales at the stores where you shop to determine if you lose a discount in exchange for the brief tax relief.

Price comparison websites also help. Keep FatWallet and PriceGrabber on your internet speed dial.

4. Manage your child’s expectations.

At a certain age, children start feeling pressure to fit in. That means they are concerned about their appearance. They want to have clothes and accessories (like backpacks, book covers, and bags) that allow others to quickly identify them within a certain group. Parents have the tough job of balancing the need for their kids to not be an outcast with the need for their kids to understand that superficial things like clothes aren’t all that important.

Growing children go through clothing fast, and it can be expensive to clothe a child with new threads every year — or more often than every year. The art of parents convincing children that wearing handed-down clothing is not shameful seems to be lost, for the most part. If a child has a source for slightly used clothing, like an older sibling or a bigger friend, these handed-down clothes can serve as a core wardrobe with one or two new items each year.

Back-to-school shopping can be a teachable moment for parents and their children, identifying the differences between wants and needs. Needs should be the priority, and parents can indulge in their children’s wants only when their finances make it possible. That is, all other needs should be met first. This approach does not work well unless parents effectively live by this philosophy for their own expenses. A child who is neglected the satisfaction of realized desires during the process of learning about needs and wants could develop a negative attitude, particularly if it’s clear that the parents indulge their own desires without prioritizing needs first.

5. Keep your budget in mind.

Back-to-school shopping is not a monthly recurring expense, so many unsuspecting parents forget to include this need when planning a budget. If a household doesn’t have cash left over from income after taking care of other expenses and saving, families could end up raiding a goal-oriented savings account or taking out the credit card for back-to-school supplies. Few things feel worse than the need to reduce your vacation fund in order to cover back-to-school shopping as if it were a surprise. Going into debt would feel worse.

Either way, make a note to remember to budget for school supplies next year.

If back-to-school shopping was included in your budget, establish a frugal mindset for yourself to ensure you stay within budget. Again, it comes down to managing your children’s expectations.

What are some of your best practices and tips for back-to-school shopping? Leave your suggestions below. If you are a member of the Consumerism Commentary community (use the Log In or Register link at the very top of the page) and you leave the best suggestion, you will receive extra points that can be used for purchasing Amazon.com gift cards in the Consumerism Commentary Store.

Photo: kevindooley

The original version of this article, The Best Back-to-School Shopping Tips, is copyrighted by Consumerism Commentary.

If you enjoyed this article, follow @flexo on Twitter and visit Facebook for more updates.

For several years, many states offer sales tax holidays, several dates set aside during which merchants will not charge customers sales tax. Each year, the dates and the participating states change. I’ve updated this list for 2011 as we’re approach the back-to-school shopping season. Consumers should take advantage of the few days their state offers a break from paying sales tax on needed items, if the state is participating.

The benefit of not owing sales tax on a purchase can add to typical sales and discounts. In some cases, the sales tax holiday has enabled retailers to neglect offering discounts they otherwise would have offered, so make sure you watch the prices of the items you plan to buy. Retailers may schedule sales to end at the same time the sales tax holiday begins.

Each state that offers a sales tax holiday sets its own qualifying dates and products. Qualifying products vary by state, but most who have a tax holiday offer school supplies as qualifying purchases. Others include Energy Star products, computers, weather preparedness items, and in one case, hunting equipment.

Here’s a list of each state’s sales tax holiday this year.

I’ll update this list as we become aware of official changes.

The original version of this article, Sales Tax Holidays, 2011, is copyrighted by Consumerism Commentary.

If you enjoyed this article, follow @flexo on Twitter and visit Facebook for more updates.

According to a recent survey by AAA, 62 percent of American drivers would not be able to pay $2,000 for car repairs without going into debt with a credit card or asking for money from friends or family. While the savings rate is positive, it’s not common for consumers to put aside a portion of these savings specifically for car repairs. Many New York residents are likely dealing with this issue right now. Just a few days ago, a hail storm tore through some areas of Queens and Long Island. Social networks like Facebook were buzzing with videos of the storm as well as photographs of tennis ball-sized hail and the resulting damage.

Comprehensive insurance typically covers this type of damage, but not everybody has comprehensive insurance. The survey’s results suggest that 20 percent of drivers needing $2,000 for repairs like windshield and body damage caused by hail will put the repairs on a credit card because they don’t have the money in a bank account while 11 percent will be asking around for help or taking money out of their home equity or retirement accounts.

There are a few approaches to take to help prepare a household’s finances for a car repair emergency. For the most part, it’s the same as preparing for any emergency. There are a few tactics related to cars that would be helpful to consider.

• Buy low-value cars. There is a strong case for buying well-used cars at great prices. Owning old cars are possible and worthwhile, particularly if you don’t need to drive excessively and you responsibly maintain the car’s performance. When Mother Nature or a crazy drunk driver brings damage to your old car, you don’t feel as great a loss as you would if the same damage afflicted a new car.
• Buy new or late-model used cars. The typical advice experts offer is to avoid brand new cars because a new car loses the most value the minute you drive it off the dealer’s lot. Depreciation is mostly irrelevant if you own the car forever, though. Then again, many people who plan to own their new car forever and use this as a rationalization for buying a used car don’t accurately predict their predictions several years in the future.
• Continue making “car payments” to your savings. If you do buy a car and have an associated car loan, once you make your last payment, start transferring the same amount to a designated savings account. For example, if you’ve been paying $300 a month for the past five years for your no-longer-new car, rather than increasing your spending once you’ve paid off the balance of the loan, start depositing a monthly $300 into a high-yield savings account. Many banks let you customize the name of your account, so every time you transfer money, you’ll remember that it is designated specifically for your “Car Repair Fund.”
• Consider comprehensive insurance. Unlike liability insurance, which covers the damage you cause to other vehicles, the type of insurance that covers damage caused by nature or an unidentified individual is not required. Lenders may require comprehensive insurance during the life of the loan, but once you own the vehicle without debt, you can remove comprehensive insurance. It may be worthwhile to continue the insurance anyway, particularly if the value of the car is still greater than the cost to repair typical damage. It may be cheaper to self-insure — using the technique in the bullet point above — but continuing insurance is a valid option.

Are you financially prepared for damage to your car?

Photo: Dakota Kingfisher
AAA

The original version of this article, Most Americans Can’t Pay for Car Repairs, 4 Tips to Help, is copyrighted by Consumerism Commentary.

If you enjoyed this article, follow @flexo on Twitter and visit Facebook for more updates.

Last November, the Consumer Financial Protection Bureau began to take shape after being a part of a bill in Congress signed into law in July 2010. Now, a year later, the bureau is ready to launch. Elizabeth Warren was appointed by President Obama to assemble the bureau, and in this role, Congress pressed her on the bureau’s powers and accountability. In the end, though Elizabeth Warren is suited for the role of director, it became clear that moving her from the role of establishing the bureau to the role of its director would be politically difficult.

The President has nominated Richard Corddray, former Ohio Attorney General, to the role of director of the Consumer Financial Bureau. As director, after being approved by Congress, he’ll oversee consumer issues including credit cards, credit bureaus, payday lenders, mortgage brokers, student loan companies, debt collection, banks, and credit unions.

The Consumer Financial Protection Bureau is charged with being an advocate for consumers in an industry that is often suspected of misleading customers. The playing field isn’t level; with complicated financial products, even the most studious consumers can get caught up in products with terms that are unfavorable. When there’s another news story about a financial company whose salespeople mislead, intentionally confuse, omit important details, pressure customers for their signatures, or outright lie, trust in the industry among the general public decreases. If the new Consumer Financial Protection Bureau works as planned, consumers will be armed with more and better information about financial products and will gradually learn to trust the industry again.

This bureau will have the ability to issue new rules for financial companies and some non-financial companies, but there are many things the bureau will not be able to do. For example, it will not have the power to limit payday loan fees. These fees, which when viewed as interest rates can be equivalent to 100% APR loans, are beyond the reach of the bureau. It will, however, be able to redesign product documents that outline the terms and conditions of financial products, so customers can easily understand and evaluate their products. Credit card companies have already redesigned statements, which help customers see the actual cost of debt.

The bureau will also handle hundreds of thousands of complaints filed by consumers.

Government agencies tend not to work as planned, however. The financial industry lobbies hard to ensure the government doesn’t stand in the way of profits, and while the industry does agree that consumer protections are important, it would prefer to work with the many government agencies already charged with industry oversight. Many politicians will side with the financial industry, moving forward more legislation to limit the role of the new bureau even further.

The original version of this article, The Consumer Financial Protection Bureau, is copyrighted by Consumerism Commentary.

If you enjoyed this article, follow @flexo on Twitter and visit Facebook for more updates.

I’m a big fan of saving money on necessary spending. Grocery shopping is expensive, and food and household staples present an excellent opportunity to find coupons and save money with every visit. The savings can be substantial if you’re willing to put in the time to find the right coupons, dumpster-dive to collect other people’s circulars, and annoy anyone in line behind you at the cashier as you buy in excessive bulk and wait for all the coupons to be processed.

A recent article on CNN Money describes a coupon addict who, inspired by a television reality show, saved $300 this month on groceries through diligent or obsessive coupon-collecting. She’s a student, and apparently has the free time to scour print and the internet to come up with methods of overbuying that will result in saving money. The grocery bill dropped from $400 to $100, and that’s a great feeling. Getting a 75% discount is a major score for anyone who has to spend money.

Saying she saved $300 is bad math, though, because in order to save $300, she had to spend much more than she would have if she bought only products she needed. The test is whether all the products she purchased — and they are enough to fill up a spare bedroom in the house — are consumed by the family or thrown away because they are not needed until they spoil. Additionally, to buy products on sale, most likely, she compromised on products they would normally buy. The food she purchased might not have been as healthy or as fresh as the food on which she couldn’t have saved as much.

Welcome to America’s new coupon craze. It began nearly three years ago as a sensible response to an economic catastrophe but has since morphed into something more complex — a national fixation with refusing to pay retail that has turned otherwise normal families into coupon-clipping, Dumpster-diving (for circulars), cashier-pestering stockpilers who march through grocery stores with bulging binders of coupons and fill shopping carts with more free jars of mustard and cat food than they could ever use in a lifetime.

There’s no baby in the house, but Lauren couldn’t resist buying 30 containers of infant formula on sale for $3.78 each. Because she had collected piles of $5-off coupons, she earned a $1.22 store credit on each sale — the holy grail to serious couponers. (She used her credit to buy ribs for a Memorial Day feast and donated the formula to tornado victims in nearby Joplin.) As couponing became an obsession, her mom started to worry. “Your eyes light up like a slot machine whenever you see a deal,” Joyce told her. “Admit it, you’re an addict!”

Even if $300 per month is the actual, repeatable savings after taking spoilage and over-purchasing into account, I have to wonder how many hours she spends finding coupons. While some websites make this an easier chore, the act of extreme couponing can consume one’s life. While $300 per month on groceries is a good savings, if she takes the time she spends couponing and gets a job, even after taxes, she could earn more than $300 a month.

If she ceases couponing, the family would have a spare bedroom free because it wouldn’t be full of groceries for storage. If they so desired, they could earn $300 per month or more by renting the room to a tenant.

While extreme couponers are not hoarders, they often share are trait in common. Both hoarders and some extreme couponers acquire and don’t discard possessions that have limited value. If there’s a possibility of a product being used some time in the future, a couponer would not want to let that purchase go to waste. Spending less money per item to get more is a core couponing concept, but it results in over-purchasing and spoilage. Throwing unneeded food or products out would be a waste of money.

The article shouldn’t have claimed that this family’s extreme couponing results in a $300 savings each month. This math compares the over-purchasing price pre-coupon against post-coupon. If the student were not couponing, the family would be purchasing much less. If all this work results in just a $300 benefit to the checking account, if she wanted to contribute financially to her family sporting a six-figure income, she could be better off with a part-time job. The “hunt” and the “score” are so psychologically appealing, though, that the brain can easily rationalize extreme couponing despite better uses of money, time, and space.

I can’t wait for this craze to be over.

Photo: Walmart Stores
CNN Money

The original version of this article, Extreme Couponing Fuzzy Math, is copyrighted by Consumerism Commentary.

If you enjoyed this article, follow @flexo on Twitter and visit Facebook for more updates.

My Facebook feed exploded the other day with news that Netflix was changing its pricing scheme. For some customers, those who subscribe to unlimited streaming and DVD plans, the new price would be a 50% increase. I subscribe to Netflix. A few months ago I re-instated my account to take advantage of the streaming-only option after canceling my account due to my lack of DVD receiving and watching. I will not be affected by the price change, but many of my friends will be.

The backlash, in terms of comments and threats, has been severe. Netflix released a press release stating that the reason for increasing the fee for certain customers was to better reflect the cost of doing business. Price changes are rarely about cost. More often they reflect market forces, like demand. Netflix has decided to increase the price because they have determined that they will profit more, despite the possible loss of customers that would come as a result as an increase that seems to be significant. With fewer legitimate competitors in the market, Netflix may feel they have some room to raise prices without fear of competition.

It still may be true that Netflix is experiencing an increase in cost. More customers are choosing the streaming option, now. Netflix needs to pay fees to distributors in order to receive streaming rights, and these are structured differently than DVD rental rights. These deals ensure production companies earn money to represent how a movie is viewed. Somewhere down the line, content creators, like writers, directors, and actors, receive royalties, and online viewing has only recently begun to be considered in that calculation.

Judging from an unscientific monitoring of feedback, many customers who currently have the unlimited streaming and DVD plan will switch to the unlimited streaming-only plan. Given the option of keeping their plan and paying more, reducing the plan and paying less, or canceling membership outright, that second choice seems to be popular. This may have been exactly what Netflix intended. While Netflix’s payments to distribution companies for streaming a movie or television show online might be higher than the payments for rights to rent out DVDs, sending, retrieving, and processing DVD rentals create overhead costs that make that type of service less profitable than streaming. This price change might be Netflix’s way to gently coax customers to switch away from DVD rentals towards streaming only.

If that is true, it is ironic that those most upset with Netflix’s pricing and public relations tactics are exhibiting the behavior most desired by the company. While customers may believe switching to a less expensive streaming-only plan will hurt Netflix, it may actually prove to be more profitable for the company.

Nevertheless, for those complaining about the company’s pricing tactics, it doesn’t hurt to remember a few things.

• Watching movies and television shows on demand or renting DVDs is a luxury, not a necessity or a right. If the service is unaffordable, stick to your budget and cancel the service. This isn’t like a increase in gasoline prices from $2.50 to $3.50 per gallon overnight. People need gasoline to work and earn an income. The backlash against Netflix seems to be more severe than that against any gasoline price increase in the past five years.
• Only canceling your account — and most other customers canceling their accounts — will send a message to Netflix. That’s unlikely to happen.
• The price for unlimited streaming and DVDs still seems like a pretty good deal when compared with other entertainment options, like seeing movies in a theater or subscribing to cable or satellite, particularly if you include premium channels.

Were you affected by the Netflix subscription rate change? If your costs would increase, will you be changing your plan?

The original version of this article, Netflix Increases Subscription Price for Some Customers, is copyrighted by Consumerism Commentary.

If you enjoyed this article, follow @flexo on Twitter and visit Facebook for more updates.

“Buy now! A $2,000 value, only $79.95! This week only!”

What is value, really? When a product is on sale, why do we say that product is worth more than we pay? It’s psychological. We’re getting a deal. We presume the company is taking a loss in order to bring us a special offer, figuring that the company’s real goal is to get us to buy more. We think the company wants to sell more products with a profit to make up for the loss leader. That’s possible in many cases, but if the buyer is convinced that a deal is a good value, then it doesn’t matter whether it leads to more purchases.

A product’s value is whatever customers are willing to pay. If that’s $2,000, that’s the value. If sales aren’t moving well at $2,000 but there’s a market for the product at $79.95, I would say that the lower price, among the two options, is the canonical value. This concept has another level; there is a simple formula one can use that could take the frequency of buyers at a variety of price points into account to determine an overall average value.

When sellers advertise a product at the lower price point with a marketing tactic like the one used in this first line of this article, I tend to take the opposite viewpoint. I even feel bad for those who paid $2,000 for a product that is worth $79.95. And if customers who purchased the product for $2,000 find out that the identical product is now sold at the lower price point, I imagine they would be upset. They might feel swindled, and they wouldn’t entirely be wrong.

Prices for products change all the time. Today’s latest technology always costs a premium when compared to next year’s price for the same item. With technology, this premium is for the cachet of being an early adopter or the privilege of having the latest innovative product. With this rationalization, early adopters don’t have a problem with a product being sold later for a lower price. Most products don’t have this sort of psychological premium, though.

This is why I have a difficult time dealing with a lot of sales. I am fine paying a lower price for a product, and I’m often fine paying a higher price for a product if I think it’s a good value. I’m just not a fan of marketing messages that try to convince shoppers of the “real value” of a product.

The original version of this article, What is Value? It’s Often a Lie., is copyrighted by Consumerism Commentary.

If you enjoyed this article, follow @flexo on Twitter and visit Facebook for more updates.

The debate pitting the concept of buying versus the concept of renting will never end. With a primary home, there may be a plethora of financial calculators and endless real estate analysts to help you make the decision. There are financial considerations as well as non-financial considerations, and pundits on either side who swear their way is the only way and will argue their position to anyone who will listen.

There’s a similar debate concerning cars. Buying a car provides the benefits of ownership, but leasing allows someone to reach for a vehicle perceived to be nicer for a more affordable monthly payment. Never mind that when the lease is up, you’re left with nothing but less money in the bank. I rent my home because I don’t plan to stay much longer, but I purchased a car — a new but well-priced car — because I planned to keep it until its useful life surrendered. If I had chosen a lease, I’d still be making payments, but I’d have a nicer car.

That’s the rationalization that people use when they take advantage of rent-to-buy offers. Stores like Rent-A-Center allow people to drive home something they might like or need, like a flat screen high-definition television or a refrigerator, when they might not be able to afford to purchase the item with one check. Most people turn to credit cards, and subject themselves to 15% to 30% interest. This addd thousands of dollars to the cost of these items over time. Either they are unaware of the reality of the added cost or they believe the extra money spent through interest is worth the convenience of having what they want or need today — without having to delay their gratification through saving in advance.

Credit cards aren’t available to everyone, though. Particularly during the credit crunch, when layaway plans came back into favor for a short period of time. Even now, a spotty credit history could keep even responsible people from finding a credit card with a high enough spending limit to make a major purchase. Renting to own is a fashionable alternative, but the costs can far exceed credit card interest.

According to Consumer Reports, Rent-A-Center is offering a television valued elsewhere at $1,890 for 104 weekly payments of $39.99 a week. The small weekly payment makes this offer very attractive. The allure of a small periodic payment makes any deal seem better — just ask late-night infomercial-based salesmen who sell their products for three easy payments of $19.95 — when the same products are sold in stores for one payment of $19.95. Just ask car salespeople who, depending on the customer, will try to talk in terms of monthly payments rather than sticker price. There is truth to this concept; it is the monthly cash flow that has the most effect on an individual’s budget, but it’s a weak argument for long-term financial stability.

The Rent-A-Center payments for the television add up to $4,195 over the two-year period, and that works out to be equivalent to an interest rate of 92%. That’s payday loan territory.

The company understands that its customers generally choose renting to own as a last resort and are perhaps not in a stable financial situation. Rent-A-Center settled with Washington State for allegedly using underhanded tactics to take advantage of its customers.

Is there ever an occasion when renting to own is a good idea?

Photo: tamakisono
Consumer Reports

The original version of this article, The True Cost of Rent to Own, is copyrighted by Consumerism Commentary.

If you enjoyed this article, follow @flexo on Twitter and visit Facebook for more updates.

Meal plans at college are convenient. A student’s food costs are wrapped into each semester’s tuition bill, allowing them to focus on academics and college activities rather than finding the money for each meal. Many colleges offer similar meal plan choices, and the two most popular options are plans that offer either three meals a day or two meals a day. In addition to the ability to swipe a card to qualify for a meal, many dining plans offer points to be used for additional food expenses, whether in a dining hall, a campus fast food establishment, or a convenience store.

The prices for the meal plan vary from school to school. Meal plans are expensive, and most students don’t take full advantage of them. Here are some examples of how much a typical meal plan would cost per semester at some schools. At some schools, the two plans cost the same amount. The difference would be in the number of “points” one may receive for extra meals, and since these point systems differ from school to school, I don’t include them in the table.

Many schools require students living on campus to sign up for a meal plan. These prices not only pay for the food, but help defray the college’s costs of running dining halls on campus, and all students share these costs regardless of whether they use the dining halls.

Choosing a meal plan

Most colleges and universities offer a choice between a two-meal-per-day plan and a three-meal-per-day plan. There may be additional options offering fewer meals, and the plans also often different combinations of meal points or flex points. In general, if you must choose a meal plan, choose a plan that matches your habits. If you’ve never been a breakfast eater or if you’re a night person, the three-meal-per-day plan will likely be a waste of money for you, assuming it costs more than the other plans. You won’t magically begin eating breakfast just because you receive that meal as part of your semester bill.

Similarly, if you haven’t been much of a cook at home, you won’t become one at college. These two trends are likely to continue, but can be reversed with some discipline and effort. If there’s no impetus for change, though, expect to continue living and eating with the same patters.

Wasting money

The college knows that you probably won’t eat every meal provided on your plan. For plans with points, colleges some how get away with expiring the points at the end of the semester or year without rolling them over to the next semester or providing the student a refund. To take full advantage of the meal plan and the price you pay, students must eat every meal and use every point, and that’s not a realistic expectation.

Cooking to save money

Cooking is an alternative to eating every meal in the dining hall. Unfortunately, some dorms don’t have facilities for cooking. There may be rules against keeping appliances in dorm rooms, and you may not have access to a refrigerator and a microwave. If you do live in a dorm with a shared kitchen, whether living in a suite, where a number of roommates share a common area, or a dorm where there is a kitchen on each floor, you’ve probably paid more for your housing costs than if you were to live in a dorm on campus without these facilities.

If you can cook, do it. You might be able to choose a lower-volume meal plan. Some colleges offer meal plans that include fewer than two meals per day, though options may be limited, especially for first-year students. You can save money by buying a smaller meal plan and make up the difference by cooking additional meals.

Many college students waste money with meal plans primarily because they don’t think about it. If someone else is paying the tuition bills each semester, or if student loans are covering most of the costs, the act of paying for daily expenses is several steps removed from the act of incurring those expenses. This disconnection between eating and payment reduces the awareness of how much things really cost.

College students who care about their financial future must be aware of what they are spending and find ways to reduce costs, a particularly difficult task when there is no immediate feedback or consequences to the choices. Dining plans make it possible for colleges and universities to overcharge you, so look at all your options, make the best choices, and increase your awareness of the costs of dining on campus, off campus, and cooking.

The original version of this article, How a College Meal Plan Wastes Money, is copyrighted by Consumerism Commentary.

If you enjoyed this article, follow @flexo on Twitter and visit Facebook for more updates.

I’m usually awake late at night, and I’ve occasionally helped myself shut out distracting noise late at night by keeping the television audio on at a low volume. Invariably, the late night programming is centered around show-length commercials for a variety of products. Kitchen devices seem to be some of the most popular products sold late at night, but I’ll occasionally subject my fading consciousness to annoying money-making products. There are big promises, like making thousands of dollars in days or retiring a millionaire in just a few years.

Invariably, the commercials feature testimonials from people who have participated in the program, and show these participants surrounded by all the expected trappings of luxury, hoping to take advantage of the typical greed of the American consumer.

One of these companies has been sued by the Federal Trade Commission for making misleading claims about the amount of money one could be expected to earn by using their products. But wait; there’s more. The feds are also going after one of the company’s customers who appears in the commercial, a woman who lied about how much money she made participating in the program. This is the first time a testimonial has been targeted in an FTC suit.

Most of the money people earn with the product and company targeted in this suit — Russell Dalbey’s “Winning in the Cash Flow Business” — made money not by the techniques taught in the program but by selling the program to other customers. This is a typical multi-level marketing scheme, where the bulk of the income comes from the process, not the product. The product is irrelevant; the customers are the salespeople, and the product could be switched with any other product and the business plan wouldn’t change.

Regardless of the business plan, the FTC is only concerned with the misleading claims of profiting in minutes, without explaining that customers need to keep paying the company for marketing materials — products that allow customers to become salespeople and continue spreading the product while sending income up the side of the pyramid.

Products like this aren’t limited to late-night infomercials. Whenever you consider buying an “information product” from an online site, ask yourself a few questions:

• Is the information not available elsewhere for free?
• Are you being asked to make money for yourself and for the company by becoming a salesperson rather than just a customer?
• Are the company’s profits based on affiliate or downline sales?
• Do the customers’ testimonials sound too good to be true?
• What are the hidden costs, like products you’ll need to buy?
• Do you have to continue to “upgrade” in order to receive all the promised benefits?

FTC via WalletPop

The original version of this article, Avoid Late-Night Infomercial Scams, is copyrighted by Consumerism Commentary.

If you enjoyed this article, follow @flexo on Twitter and visit Facebook for more updates.

Before my girlfriend purchased a new car, she was always careful to refuel her old car before the gas gauge dipped below a quarter of a tank. I’ve been living on the edge, letting my gauge drop to one-eighth of a tank or less before refueling. Her concern was that the gauge didn’t seem very accurate; the needle traveled from one quarter to empty much faster than it moved from full to three quarters. No one wanted to be stuck on the side of the road without gas in the tank.

Consumer Reports offers some tips to avoid the damage you could cause to your car by letting the fuel tank approach empty.

• Keep your gas tank no less than one quarter full.
• Fill up before heading out on a long trip or to work as you could get stuck in traffic and have a longer ride than intended.
• Don’t rely on your car to tell you how many miles are left, as those range numbers can be deceiving and run down quickly, depending on how you drive.
• We all want to save money at the pump, but instead of driving miles away to the gas station, use online tools or even smart phone apps to find the cheapest gas near your house.

In addition to these tips, the article explains the mechanical problems that could result after not applying these suggestions. Of course, you could avoid some of these problems by moving from gasoline fuel to electricity. Electric cars may not be perfect replacements right now, but they do offer a way to distance a driver from oil companies and gas stations. In addition, electric cars will benefit from the newly designed EPA window stickers.

The new stickers have more numbers to understand. The sticker pictured here applies to gasoline vehicles, but electric vehicles have a sticker with even more numbers, including a measurement called MPGe, the equivalent MPG in a gas-powered car. The best electric cars get 99 MPGe.

These new stickers allow you to compare an estimated annual fuel cost as well as how much you would save per year compared to the average car in any particular vehicle class. What’s even more interesting for technologically savvy buyers is the QR code. Each sticker contains a QR code that can be scanned by mobile phones. When the code is scanned, it will bring you to a government website where you can use the car’s data to customize the calculations of cost based on your personal usage and driving habits.

The EPA stickers for gasoline-powered cars include a new calculation called gallons per 100 miles. This can be a more effective calculation for comparing vehicles because it takes into account the fact that a one mile-per-gallon difference between gas guzzlers is more significant than one mile-per-gallon difference between more economical cars. For example, while the difference between 20 MPG and 25 MPG is the same as the difference between 35 MPG and 40 MPG, if converted to gallons per 100 miles, the difference between the less fuel efficient cars (5 GPHM vs. 4 GPHM) is more than the difference between the more fuel efficient cars (2.86 GPHM vs. 2.5 GPHM). This type of calculation makes more sense when you consider that most people have a constant driving distance. People don’t base their driving on the gallons they’d like to use, so that is a variable. The constant belongs in the denominator; in other worse, GPHM is better represents the reality of driving.

Photo: vallis-clausa
Consumer Reports

The original version of this article, Don’t Run on Empty, and New EPA Stickers for New Cars, is copyrighted by Consumerism Commentary.

If you enjoyed this article, follow @flexo on Twitter and visit Facebook for more updates.

If you have less-than-stellar credit, you’re at a significant disadvantage when you go to a dealer to purchase a car and seek financing through the dealer. Banks or intermediary loan brokers charge dealers a fee to extend credit to a risky customer. Rather than denying someone credit, the company that finances the loan charges risky applicants a higher interest rate. This higher rate is supposed to compensate the lender for the level of risk they take on by offering credit to an individual they believe to be at-risk for default.

The higher interest rate isn’t enough; the loan brokers or banks can charge the dealership an additional fee for approving a risky customer for credit. By agreement, the dealers are not supposed to pass this fee to the customer. No dealership owner in his or her would be willing to take on this added expense without recovering the cost of doing business through higher prices, so that’s what they do. This acquisition fee is often rolled into the price of the car without being itemized; customers are unaware that, due to their credit, they are paying more for the car itself in addition to their higher interest rate.

When it comes to buying a car, you can educate yourself as much as possible about the invoice price, dealer incentives, how long the car has been on the lot, and the local market, but the dealer will always have the upper hand. Even when you think you’ve have a killer offer, the dealership wouldn’t let the car go unless they’re happy with the terms. The economy over the past few years brought difficult times for many dealerships. You may have been able to get fire-sale deals for some time — if you had the means to buy during the time that credit was difficult to come by. Today, however, the market for new cars has returned.

Here is what you can do to avoid some of the hidden dealership tactics:

• Don’t buy a new car. You can spend less money by letting the first owner deal with the worst part of depreciation. Just don’t be penny wise, pound foolish; don’t spend less for a used car that you’ll just need to pay more to service or replace.
• Avoid the dealership. Craigslist is a great venue for finding used cars. The summer is a great time to look, too, as people go off to school where they no longer need a car or as fresh graduates leave their car behind in favor of mass transit options in the city where they’ll be initiating their career.
• Have stellar credit. If you need financing, take steps to improve your credit score now. Having a good credit score saves you from acquisition fees and higher interest rates.
• Buy with cash. Don’t rely on banks to finance your purchase. Again, you can avoid acquisition fees here, but you also avoid interest rates altogether. If you don’t have the cash now but need transportation, buy a cheaper used car with cash and start your own “car payment” saving — $300 every month, for example — and when you’ve saved the value of the car you’d like to buy, pay with your savings.
• Settle for a less expensive car. If money is tight, you don’t need a “luxury” vehicle.

What have been your recent experiences with car dealerships?

Photo: dok1
KHOU

The original version of this article, Car Dealers Pass Loan Acquisition Fees to Buyers Without Disclosure, is copyrighted by Consumerism Commentary.

If you enjoyed this article, follow @flexo on Twitter and visit Facebook for more updates.

In my attempt to be a good son to my mother who lives about as far away from me as possible in the contiguous United States, I decided to send a bouquet of flowers for Mother’s Day. Sending flowers may be cliché, but I know she appreciates it, so I’m happy to send them.

I’ve used all the major flowers brokers in the past: 1-800-Flowers, ProFlowers, and FTD. When shopping around, I generally choose the company that offers the best deal at that particular time. For Valentine’s Day, I used ProFlowers to send bouquets to both my mother and my girlfriend, and did not have a problem with either delivery.

I decided to go with FTD this Mother’s Day because, when combined with cash back from my credit card and cash back from Ebates, I was going to get a good deal. In fact, I had some bonuses “pending” in Ebates, which means I would need to complete a purchase through their retail portal in order to receive some of my bonus cash. I placed the order with FTD last week for the “large” bouquet (eight to twelve stems) of my mom’s favorite flowers with a basic vase. I paid extra for the flowers to be delivered on Mother’s Day.

FTD, like the other major national flower retailers, doesn’t actually deliver the flowers. They work with local florists who handle all the details, including picking the flowers, designing the bouquet, arranging the delivery, and driving to the location. I understand that Mother’s Day is one of the busiest days of the year for flower delivery, but what followed was a disaster.

As I head to bed on Sunday night, my mother still had not received the flowers nor any communication from the local florist. I understood that delivery might be late on Mother’s Day, so I wasn’t that concerned. I visited the FTD website to inquire about my order. The automated system responded that FTD would contact the local florist to provide me with an update.

By Monday afternoon, I still had not heard from FTD, and my mother still had not received the flowers. I called FTD and provided my information. While I was on the phone, the customer service representative, who was very friendly and apologetic, put me on hold to contact the local florist to determine what happened. When she returned, she said the local florist had told her that they’re very busy and would be able to look into my order and call FTD back in a half an hour. The FTD representative said they would call me back once they heard from the local florist.

She offered to give me a 10% discount off of my shipping charge. This, of course, was unacceptable; the shipping and handling charge for Mother’s Day was $21, so I was not going to accept a $2.10 refund for the failure for the flowers to be delivered. I asked only for them to reduce the shipping charge from the inflated Mother’s Day price to the “normal” shipping charge, considering the flowers were not delivered on the holiday. She acquiesced without a challenge.

FTD never called back after that half hour. I didn’t hear from the company until Tuesday morning. Aaron, the new customer service representative handling the case, apologized for the inconvenience and confirmed a fresh, beautiful bouquet of flowers would be delivered that day. Aaron was able to get things done; he removed the shipping/service fee completely, took 40% off the cost of the bouquet, and sent me a $20 coupon to retain me as a future customer. My mother received the flowers that day and sent me a photograph from her phone when they arrived. The flowers hadn’t bloomed yet, but the bouquet did match the basic description of the item that I ordered, even if the arrangement looked a bit uninspired.

When I was first concerned that the shipment wouldn’t arrive, I mentioned my dissatisfaction on Twitter, and was met with compassionate responses from people who recognized I was not alone with my problems. In this month’s review at Consumer Reports, FTD was rated thusly:

In our small study, 1800Flowers.com was best at sending what was ordered, followed by ProFlowers.com and FTD.com. The flowers most likely to look the way they did on websites were tulips, roses, and orchids. Mixed bouquets had more substitutions than the rest. If you want to make sure your flowers prompt a smile, pick a color scheme that matches your Mom’s favorites, then steer away from mixed bouquets. If you’re unhappy with what gets delivered, call customer service.

The company’s customer service department also noticed my tweets; I was contacted almost immediately by a Twitter-based consumer support individual who was quite busy that day sending tweets to dissatisfied customers offering to help. It was this communication, not my initial phone conversation, that inspired the call from Aaron.

The main problem is with the local florist who obviously couldn’t handle all the orders they received for Mother’s Day. Communication with FTD wasn’t perfect, but they did resolve the issue as best they could, and the final effort to provide the discount and a coupon for a future purchase did help improve my impression of the company. I didn’t feel they were trying to blame the local florist, and even though I’m sure that’s the issue, my business was with FTD, not the local florist, so in the end they are responsible for the level of service I receive.

I will likely use the coupon for a purchase as long as it doesn’t expire before the next time I decide to send flowers. I’ll continue to shop around for the best offers, though I might stay away from holiday delivery in the future.

Update: I received the coupon through the mail, and it does not apply to online orders! In order to use the coupon, I need to call the company to place an order, as if I am stuck in the twentieth century. Perhaps it’s my fault for not verifying the coupon could be used online — this I would have thought was a reasonable assumption. A coupon designed to be difficult to use is a coupon designed not to be used. How disappointing.

What has been your experience with holiday flower delivery with any company or with FTD in general?

Photo: apdk

The original version of this article, Mother’s Day Fiasco With FTD: A Review, is copyrighted by Consumerism Commentary.

If you enjoyed this article, follow @flexo on Twitter and visit Facebook for more updates.

The last time average gasoline prices reached $4.00 a gallon, people were agitated. I wasn’t immune either; I’ve commented on the rising prices as well. Although I’ve been thankful that gas prices in this country are lower than many other places in the world, and has prices in New Jersey are generally lower than average, it was hard to ignore the effect on my wallet, particularly when commuting was such an integral part of my working existence.

I don’t drive every day anymore, so I’m not personally affected as much by gas prices, but I would still like to see them low. After all, gas prices affect prices of everything, as modern consumer society relies of distribution of products from one place to another. The price of gas is reflected in most items from the grocery store (or restaurants if you eat out more than you cook), the electronics that you buy, your travel expenses, and in the cost of living overall.

While there’s not much you can do about the price of all items other than cutting back what you can, when you can, you can use technology to save money on gas. I’ve been using Fuelly to track my gas usage and expenses, but this doesn’t do much for me other than track the data. I haven’t been able to use this information to save much money.

CNN Money offers some suggestions for websites and mobile apps that, if used correctly, will help you save money on gas.

• GasBuddy helps you find the cheapest gas station on your path, thanks to user submissions, with incentives for sharing information.
• Bankrate’s gas calculator helps you determine whether it’s worthwhile to drive out of your way to save a few cents per gallon. Saving money on gas is pointless if the extra miles you drive eliminate the cost advantage.
• Carticipate for iPhone and Facebook helps you find carpools along your route or share your ride.
• Gashog operates somewhat like Fuelly, but the interface is better if you have an iPhone. You can track your fuel economy for each tank. While the app costs $0.99 compared to the free Fuelly, you don’t need internet access to track your information.
• Route4Me for the iPhone evaluates the map that includes all of your destinations and determines the most efficient route for completing all your chores that involve driving.
• Mapquest has incorporated gas price tools that will help you decide where to be a customer.

These apps and websites will help you make better decisions about spending money and driving, but don’t do much to help your fuel economy. Here are some ways to soften the effect of high gas prices.

The original version of this article, Use Technology to Save Gas Money, is copyrighted by Consumerism Commentary.

If you enjoyed this article, follow @flexo on Twitter and visit Facebook for more updates.

Whether it’s extreme couponing or group-couponing, the idea of saving money has the country frantically searching for deals and spreading the word through social networking. I’ve had to hide a number of friends whose total social discourse has been reduced to posts about their favorite deals — and WRITING IN ALL CAPITAL LETTERS when they’re sharing a deal that benefits them if their friends sign up, too. The fact that “couponing” is an accepted word in a culture that doesn’t frequently verb nouns unless the words truly speak to the zeitgeist indicates that we may be working so hard to save money that it may have the opposite effect.

Don’t get me wrong. In general, saving money is a great idea. Most people need to do more of it. Although the trend seems to be embedded in today’s social consciousness, perhaps due to the recession and the struggling middle class, couponing does not always coincide with saving money.

In fact, couponing encourages consumers to spend more than they would have otherwise. Getting new deals every day in an email inbox lets marketers walk in your home and sell you products you don’t need and wouldn’t have purchased if you didn’t willingly invite them in. Spending hours scouring for coupons or driving miles out of your way to save a few dollars is an inefficient use of time and money. Your time spent attempting to save $0.50 on a can of beans could be better spent earning several dollars with a quick task or more working overtime at your job, helping you afford beans at the everyday price — and more.

Furthermore, certain deal sites are known to make deals appear more attractive than they are. For example, one coupon I saw recently looked like a great deal: $200 off a notebook computer, for a limited time, through a deal website. A price history check showed that the deal was only $50 off that retailer’s normal price — and another major website without a special deal was offering the same computer for $100 less than the “deal” price.

The deals propagated online — especially those that persist from the same retailers — are only popular because they work for the retailers. Retailers pay fees to companies like LivingSocial and Groupon, so if they weren’t profiting from the arrangement, they would stop offering the deals. Merchants are profiting because consumers respond to these marketing tactics with the belief that they’re saving money. According to the latest government surveys, consumer spending is increasing. The increase may be due to the perception of deals or due to an improving economy, but regardless of the reason, retailers are not slowing down their relationships with deal-broadcasting services. This is an indication that people aren’t just shifting purchases from a non-deal to a deal; they are purchasing more than they would be otherwise.

From a retailer’s point of view, a deal that goes viral is great at first. It brings in a good profit right away — but these customers don’t stick around. In fact, many retailers complain that these are some of the worst customers they have. These buyers will be off looking for the next deal. No retailer would be able to afford creating once-in-a-lifetime deals every month to retain extreme bargain hunters, and some don’t want to.

I’m not calling for an end to the frenzy over the possibility of saving money. I do think it’s best to be an educated consumer, and that means taking a second to ask yourself a few questions rather than blindly jumping on the deal bandwagon.

• Is this something I need, or am I only buying this because it was marketed to me?
• Is this really a good deal or does it only look like one?

This may be too much to ask for many people, but any pause filled with a short burst of mental activity before a purchase can’t hurt.

The original version of this article, The Group Couponing Craze: Good for Merchants, Bad for Consumers, is copyrighted by Consumerism Commentary.

If you enjoyed this article, follow @flexo on Twitter and visit Facebook for more updates.

There’s good news for currency purists in Utah. If a shopper is so inclined, she could use gold and silver coins to make purchases. Technically, that has always been the case, but now there is a law on the books that makes it clear. There is a slight problem with this idea, however. The legal value of a coin is the face value, the amount that is listed on the coin through the minting process. The commercial value is not based on the coin’s intrinsic value. In other words, you may have paid $1,000 or more for an ounce of gold in coin form, but to a retailer, it’s only worth $50.

The true purpose of this law is to establish silver and gold coins or bullion as currency rather than an investment. With this in place, investors won’t owe state taxes for investment gains or sales taxes when they sell, but they will still owe federal taxes. Bullion is generally held for investment rather than transactional purposes, so until now, the capital gains tax would apply when gold and silver are exchanged for cash or other investments.

The secondary purpose of this law is to flaunt the state’s power in the face of the Federal Reserve. The Federal Reserve has effected the move away from using gold and silver as currency. Some influential people throughout the country are calling for abolishment of the Federal Reserve system and a return to a gold-based currency, but it’s unlikely such a drastic shift will take place.

Don’t start breaking your bullion out the vault for use at the grocery store, but with prices at historically high levels, it might be a good time to consider selling. This isn’t investment advice, though.

The original version of this article, Gold and Silver Officially Currency in Utah, is copyrighted by Consumerism Commentary.

If you enjoyed this article, follow @flexo on Twitter and visit Facebook for more updates.

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% of what I receive in my mailbox goes right to the recycle bin or the shredder. While walking to the mailbox is a nice break in the day and offers an opportunity for some exercise, it’s mostly a waste of effort.

Very few important documents are sent by mail. Almost all official paperwork I need to deal with is emailed, scanned if not initially generated on a computer or if requiring a signature. Even fax machines are obsolete, at least for me. I’ve eliminated almost all checks I receive and send in favor of electronic payments. I’m not the only one who is receiving less overall mail; the reduction in volume is part of the reason the U.S. Postal Service needs to cut costs.

To save money, the Postal Service is offering $20,000 buy-outs to workers to eliminate costs. The government is considering cutting mail delivery to five days, eliminating service on Saturday. One possible way for the organization to survive is to offer service more like commercial delivery services like UPS and FedEx, where the focus is on packages and commercial delivery. Or, rather than competing with the private sector, close down the business.

This may not be a good time to eliminate the 580,000 Postal Service jobs, with unemployment still high and millions looking for jobs. The agency is the second largest employer of civilians in the United States, and an immediate elimination of the Postal Service would have a devastating effect to the economy. Taking a long-term view, perhaps it’s a good idea for the Postal Service to be phased out — and the current announcement is a step in that direction.

The Postal Service doesn’t receive funding from the government. The agency is designed to operate through its own revenue, but it hasn’t been very successful. Should the U.S. Postal Service be eliminated?

Photo: i-am-marvin

The original version of this article, Should We Eliminate the U.S. Postal Service?, is copyrighted by Consumerism Commentary.

If you enjoyed this article, follow @flexo on Twitter and visit Facebook for more updates.

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% of the mobile market, and with Verizon Wireless at a close second at 31%, this would create an effective duopoly.

This could be good news for AT&T customers who are frustrated with dropped calls, slow data downloads, and spotty 4G service. T-Mobile’s network is easily combined with AT&T’s, as they both function with the same GSM technology.

The U.S. Government Accountability Office, in a study that is proactively cited by AT&T executives strongly in favor of the merger, says that services prices for the consumer have fallen from 1999 through 2009, a period which has seen consolidation of wireless carriers. However, the GAO has recommended to the Federal Communication Commission that regulators should do more to increase competition among carriers and to increase transparency regarding fees and prices.

If the deal goes through, and considering the FCC’s encouragement of mergers and acquisitions recently I expect it will, Verizon Wireless will likely follow suit with a renewed bid for Sprint-Nextel.

Those with basic mobile needs might want to consider alternative options. The big wireless carriers get a lot of attention, but some of the smaller, independent companies can offer basic services at a lower price point. Some of these smaller companies are owned by the major networks or use the major networks’ infrastructure, so they might not be as independent as they first appear. For example, Boost Wireless and Virgin Mobile simply resell use of Sprint’s network.

Pre-paid plans are popular, and for many, cost less than a contract. Most of the mobile providers use slightly different branding for their pre-paid plans, perhaps because they believe the target market is different than for contract-based customers. In fact, since mobile phone companies often require credit checks before customers can be approved for a plan, those without a credit history or with a damaged credit history may be required to enroll in a pre-paid program with an initial deposit.

Financial analysts and consumer groups all have something to say about this deal. Consumer Reports looks at the effects a deal might have on customers: T-Mobile users will likely see rate hikes and Sprint customers who are generally more satisfied than customers of AT&T or T-Mobile will likely be pushed out of the market, but coverage for AT&T and T-Mobile might improve. The fact that the two carriers to be merged operate on different wavelengths, even if they use the same technology otherwise, might hinder coverage consolidation in the short term. Read more from Consumer Reports.

Analysts seem divided. Some think the mobile industry is overdue for consolidation. Others believe fewer choices is not good for the consumer or wireless device vendors and infrastructure suppliers. Read more from the analysts.

What type of mobile carrier do you use? Do you think this acquisition will be beneficial or harmful to the mobile communications industry?

The original version of this article, AT&T Acquiring T-Mobile USA: Today’s Mobile Phone Options, is copyrighted by Consumerism Commentary.

If you enjoyed this article, follow @flexo on Twitter and visit Facebook for more updates.