I hardly use cash anymore. Almost every financial transaction I make as I go about my business is accomplished electronically or with plastic. Since putting to rest my cash-only experiment a year ago, I’ve only used cash in a couple of circumstances: food delivery when I’m too exhausted to cook, getting my clothing laundered or dry cleaned every few weeks, and supporting whatever issue for which my co-workers solicit (from Girl Scout cookies to bereavement gifts).
Hard money, coins and bills, are becoming obsolete. It will be a long time before cash ceases to exist in commerce, but physical money is less relevant for everyday commerce. Yet, the U.S. Mint continues to churn out billions of new coins each year. I’ve enjoyed collecting coins, hunting through change to find something rare or to fill holes in a book, but lately I’ve had much less of an opportunity to do so. I rarely have change in my pocket.
As I’ve mentioned before, the Mint (and Congress who has authorized this behavior) has gone overboard in their attempts to design coinage that has more value to collectors than it has to the general public. That will backfire; the mass quantities “collectible items” available make collecting them not a very special activity. Coin collecting will never again be the “hobby of kings.”
Rather than making an artistic design for a coin and letting it remain for a generation or two, the Mint presents programs like the State Quarters series. I thought this era was over; I didn’t realize until recently that the Mint intends to continue by releasing 56 more redesigns for the quarter, lasting until 2021.
The American the Beautiful Quarters series announced last year commemorates the establishment of national parks, forests and wildlife refuges. This is a worthy cause but I prefer Ken Burns’ documentary for drawing the public’s attention.
This is really about business. The Mint sells the coins to collectors at a significant mark-up from the face value of the coins, a mark-up that will most likely not be recovered by the collector.
There is some good news. The design for the reverse of the cent seems to indicate the Mint would like to return to a classical approach. I would prefer to see all “leader” portraits and buildings removed from coins to make way for more abstract or symbolic designs. The new union shield and ribbon is a step in the right direction.
This is a guest article by Outlaw, who lives and works in New York’s financial district and writes on the blog Credit Card Outlaw.
I don’t believe in conspiracies.
A few weeks ago someone I vaguely knew from college forwarded me an email about how the World Trade Center was likely destroyed by government “beam weapons.” I don’t even know what a beam weapon is, but it sounds absurd. Then, more recently, I was watching a special about Roswell on the History Channel.
Interesting stuff… But I just don’t buy any of these conspiracy theories, and here’s why: people love to talk. We can’t resist talking, in fact.
No employee or government official can be trusted for long before he or she gives in to the urge: a high-traffic whistleblower blog, an interview on CNN, a tell-all book. No matter how far up the food chain you go, people love telling others about their “hot” information. This is why insider trading is a problem. This is also why viral videos go viral.
It is this same human compulsion to share exclusive info that sometimes convinces me I have to spread the personal finance gospel. Now that I am totally immersed in personal finance — I blog about it, I read about it, I try to live it — I want others to get in on the action, too. I want others to see their money working for them, rather than only working for money.
When a friend tells me he is liquidating everything to load up on gold bullion, or that he plans to take his fiancee on some extravagant vacation financed entirely by high-interest credit cards (when he still has massive student loans to pay down), I start to get hives. And chest pain.
Fact of the matter is, I hate watching someone walk into the path of an oncoming bus. Especially if that person is a long-time friend or family member.
Despite this, being the armchair financial advisor no one asked for can lose you friendships. It can upset family. And it can even backfire… If you’ve ever given someone a well-researched stock tip, you know what I mean. If the stock goes down, your buddy blames you for his loss. As if you literally stole the money from his wallet and ran off with it. And if it goes up, you get no credit — he will praise himself for his amazing “find” and sound judgment.
I’ve developed a rule of thumb that seems to work really well for spreading the good word. Here it is:
1. Help close family members (parents and siblings only; grandparents are a lost cause) when you see them doing the wrong thing consistently, or when you know they could be allocating their money better, or saving much more. They’re your own blood, after all, and you have an obligation to help them get on the path.
2. Let friends and co-workers spend their money however they want. You can’t convince someone to lead a financially sound life if he or she has already committed to a delusional “rock star” existence fueled by credit cards. If your friend’s spending habits are truly unbearable, you need new friends. Just as it is hard to stop drinking if all of your friends are stone cold alcoholics, it is hard to remain financially savvy if those around you abuse wealth and do not understand the time value power of money.
When you do stage an “intervention” with a family member, keep it low key. I have personally found that “show, don’t tell” is an excellent strategy here: rather than lecturing to them about interest rates or emerging market ETFs, loan them one of your favorite books on personal finance or investing. “I’d love to get your views on this one when you finish reading through it,” is what I say. It’s low-pressure and laid back. (The Richest Man in Babylon is good for those who seem to have no respect at all for money. For more hopeful cases, try an inspiring Warren Buffett biography.)
If they are ready to see the light, they will. And if not, hey, at least you tried. Now get back to making money.
Photo credit: Solo, with others
Today’s guest on the Consumerism Commentary Podcast is Manisha Thakor, author of Get Financially Naked: How to Talk Money with Your Honey, a book that is designed to help couples improve their communication about financial matters. Manisha Thakor is a passionate advocate for women and financial independence, and has experience in the financial industry as an analyst and portfolio manager. She is a Chartered Financial Analyst (CFA).
Tom Dziubek speaks with Manisha Thakor about her latest book. You can visit Manisha Thakor’s website and follow her on Twitter.
Production Number: S02E13
Segment Number: 54
To listen, use the player above (Adobe Flash required), download the podcast here, subscribe to the podcast RSS feed, or use the iTunes link. Note: open links in a new window (Ctrl-click or Command-click) to avoid interrupting the podcast.
[00:00] Introduction from Flexo
[00:30] Interview with Manisha Thakor
– [00:44] Why people haven’t been heeding financial advice
– [01:40] Manisha’s background and inspiration
– [02:35] Do women need more assistance than men?
– [03:12] Getting financially naked
– [04:58] How to discuss money with your partner
– [06:44] Planning for retirement
– [09:46] The costs of raising a child
– [10:51] Manisha’s experience getting financially naked
[15:55] End
We always welcome feedback from listeners. If you have any comments for this episode or for any other, or if you have suggestions for future episodes, please leave us comments here or email us at podcast at this domain name.
Yesterday, President Obama put forth a proposal to recover a projected shortfall in TARP repayments. When the TARP was created, the EESA statute specified that the president would need a plan before 2013 to avoid shortfalls that would add to the deficit. Instead of 2013, we got one this week. Is it a good plan? Here’s what you need to know:
All huge banks are affected, no small banks are
Working on the assumption that the nation’s biggest banks either directly or indirectly benefited from the rescue program (or “bailout”), the new fee will be applied to “the debts of financial firms with more than $50 billion in consolidated assets, providing a deterrent against excessive leverage for the largest financial firms”. That’s extra-syllable speak for “try to prevent banks from making the greedy risky bets that created this mess.”
The fee will not apply to small or community banks. (For more on why you might consider a community bank, take a look at the “Move Your Money” meme.)
It will not apply to FDIC deposits
In other words, the money that you put in the bank is irrelevant to this proposal.
The fee will be 15 basis points per year
If you’re unfamiliar with “basis points”, that just means 0.15%. So, here’s the formula for how much one of the enormous banks would be taxed:
Amount owed per year = 0.15% * assets held by the bank – Tier 1 capital – FDIC-assessed deposits
So if a bank has $1 trillion in assets, $100 billion in Tier 1 capital, $500 billion in FDIC deposits, then the amount subject to the tax is $400 billion, meaning the bank will owe $600 million per year.
Can this be improved?
From what I’ve seen of signs held by Tea Party protesters, Obama’s message of “we want our money back” should be quite appealing (even though as of yet, nobody’s taxes have been raised, but this proposal is intended to prevent a larger deficit). Given how long it’s taken to come to light, I’d like to think this proposal has been very carefully crafted.
Still, I’m not sure if I agree with the “indirectly benefited” part of the argument, assessing the fee on every ridiculously-big bank, regardless of whether they accepted TARP funds.
Removing time machines from the equation, do you have any tweaks to this proposal, or an entirely different idea for covering a projected shortfall? (Fair warning: if you say “cut back on government waste and spending”, I hope you can provide specific examples of things you want to cut, and an educated guess on how much it would save.)
The President to Wall Street: “We Want Our Money Back, and We’re Going to Get It”, from the WhiteHouse.gov blog
This article is presented by Kelly Whalen, Consumerism Commentary staff writer. Kelly is celebrating her one-year blog anniversary this week.
Everyone loves a good deal, but finding time to comparison shop at various stores can be time consuming. As a parent of four kids I’m not keen on taking the kids to multiple stores just to save a few dollars, but I have found ways to save money using social media.
As I mentioned in my previous post, you can contact customer service via Twitter and often receive a quick response. It seems backwards that regular customer service isn’t as efficient and fast as social media service, but that’s the nature of social media — it’s quick.
Discounts on services. Did you know you can also contact your service providers to discuss billing issues, or getting a discounted rate? Comcast is a great example of customer service via social media (in this case Twitter) done right.
As part of my yearly financial checkup I go through each and every expense we have to see where we can cut back. I contacted Comcast via Twitter, and was able to secure a promotional rate on our internet service that reduces our bill by nearly $30 a month for a full year. That’s a savings of $360 from taking twenty seconds to send a tweet!
So far I haven’t heard stories of credit card companies lowering APRs on Twitter, so it’s better to go through executive customer service. That trend may change as more companies embrace Twitter.
You may also find people who are willing to do work for you for free or discounted rates. Whether you need a software developer, an assistant, or a staff writer ;) you can find people through Twitter who are willing to help.
Coupons, deals, giveaways, and freebies. Shopping via social media keeps getting easier and more fun. You can become a fan of products, services, and companies you use regularly on Facebook or follow them on Twitter. It benefits the company by allowing them to reach customers who are loyal, and it benefits you in many ways.
Here’s how following or “fan-ing” a company can work for you:
Discounts and coupon codes: You can follow CrocsOnline to get info on their deal of the day, win promotional codes, and win free shoes for example. Boutique hotel chains, clothing manufacturers, small businesses, and big corporations all offer savings to their followers.
Contests: Many companies also run contests on a regular basis. Some may use bloggers to run their contests while others will have guessing games like this example from Roger Smith Hotel in NYC. There are giving away a night in a hotel room every day at 11:00 am EST. Prizes can be as small as a sample pack or as large as hundreds of dollars in gift cards, or even vacations.
Giveaways: You can win giveaways by re-tweeting messages, participating in twitter chats, and by finding giveaways on blogs and websites searching the hashtag #giveaway. If you are following your brands on Facebook they will announce giveaways ahead of time so you can be prepared. It usually involves commenting or emailing the answer to a question.
New products: If you are a fan of a small business they may ask you to sample a new product so they can get feedback from people who are regular users of their products.
Many people I know scoff that they don’t have time for Twitter or Facebook, but using social media as a tool to connect with your favorite companies is a great way to save money.
Have you ever used social media to get a discount, coupon, or enter a giveaway?
Yesterday, a magnitude 7.0 earthquake struck Haiti, with the center only less than ten miles from Port-au-Prince, the capital of the country. Of course, the news of the devastation has been everywhere in the media. Major landmarks have been destroyed by the disaster, including the Presidential Palace and the Port-au-Prince Cathedral. Haiti is a poor country and their own emergency services will not be able to handle the estimated deaths of over 100,000 persons.
Beware of unscrupulous scammers using this disaster as an opportunity to take advantage of well-meaning would-be humanitarians. Don’t respond to emails asking for donations — go directly to the organizations you trust. Donate only to well-established charities working directly in Haiti. Right now, unless you’re on a medical team planning to visit Haiti yourself, the best way to support immediate relief efforts is to donate to organizations focusing on water, food, and medical supplies.
Here are my suggestions.
On Twitter and Facebook, I have seen a number of messages suggesting people who wish to help relief efforts send a text message stating just “HAITI” to number 90999. A $10 charge will appear on your phone bill. This will function as a donation to the American Red Cross. I’m waiting for a response from the ARC to let us know how quickly they will receive donations via text message. I have confirmed the full $10 will be transferred to the organization without mobile phone companies taking a fee per message out of the donation. It’s important to know where your money is going and how fast it’s getting there. The ARC has also dedicated $1,000,000 from its International Response Fund to relief in Haiti. Donate to the American Red Cross International Response Fund here.
Update: According to National Public Radio, it could take an average of 90 days for the American Red Cross to receive funds donated via text message. If you want your donation to have an immediate effect, I suggest giving with your credit or debit card through the organization’s web site or phone service.
Update #2: Here is the official response from the American Red Cross:
100% of your text donation will support the American Red Cross relief efforts in Haiti. The carriers and Mobile Accord will work to get the Red Cross these donations as quickly as possible. It can take anywhere from 60-90 days for the Red Cross to get these funds. Despite this delay in receiving funds, the American Red Cross will continue to provide relief in Haiti and these donations will cover expenses incurred after the fact.
Also, Sprint is charging normal text messaging fees for your donation while Verizon, T-Mobile and now AT&T are allowing these text messages for free.
Doctors Without Borders (Médecins Sans Frontières) is responding to the destruction of hospitals and other medical facilities by setting up clinics. The city’s own resources are unequipped to deal with injuries and casualties. In the United States, first responders like firefighters, police offers, and emergency medical technicians show up almost immediately, but Haiti has no such structure. More MSF staff will be arriving in Port-au-Prince in the next few days. Donate to Doctors Without Borders here.
The World Food Programme is bringing food assistance to victims of the earthquake in Haiti. In addition to the WFP’s food stores already in Haiti, more food is arriving from El Salvador, enough to feed 30,000 people for up to seven days. Donate to the Friends of the World Food Program here.
Also, to locate American family members suspected to be missing in Haiti, call the United States Department of State at 1-888-407-4747.
The more profitable your employer, particularly if it is a large corporation, the more attention the employer pays to its biggest asset, its employees. Profitable companies offer perks to employees like vacation days, 401(k) matching contributions, health care subsidies, free lunches, on-site day-care, unlimited restroom breaks, and development opportunities. Don’t confuse these benefits designed to woo would-be and current employees with actual caring.
Corporations do not care about employees. Your boss and your co-workers might care about you as a person, and if they do, that’s a good thing. But a corporation provides benefits for only two reasons: to attract the best talent and to keep that talent motivated and productive. Even the primary purpose of health benefits are to keep you in the office doing your work rather than sick at home.
From a corporate point of view, employees are only seen as how they affect the bottom line. This is the same way you should view your employer. Forget about corporate loyalty.
In finance, the term “sunk costs” refer to expenses that have been spent and can’t be recovered. When making business decisions you have to ignore the past and decide what options are the best moving forward. The same idea applies to time you’ve spent with a company. I’ve talked to many people who say, “I’ve already spent fifteen years at this company, so I might as well stick around until retirement so I can get a package.” I’ve heard this even when the speaker had another twenty years before retirement!
The past is a sunk cost. Look only at the present and the future. Those retirement packages are designed to chain you to your employer but with some fancy maneuvering you might be able to get a better deal by changing jobs. Even if you haven’t been working long enough at the company for your 401(k) matching contributions to vest, you can use that when negotiating your compensation for your next job.
Think about your greater state of being in addition to your finances when making life choices, but when dealing with your employer, focus on the bottom line. Just like a company has a responsibility to its shareholders to maximize revenue and minimize expenses, you have the same responsibility to yourself and your family.
The economy is rough right now, and a lot of people I know are sitting tight waiting for better employment news and other indicators that certain companies are hiring again. One of my friends has been out of a job since 2008. Even though it’s an employer’s market, employees can’t let employers take advantage of their talents and work ethic.
Generation Y isn’t the only group of workers rejecting the unblinking loyalty to employers once favored.
- Always keep your eye open for new opportunities.
- Always have a basic résumé updated and ready.
- Always stay up-to-date in your field.
- Always say yes to manageable projects.
- Always look to meet new people in your industry.
- Always let outsiders know you are interested in moving forward with your career.
- Always look for ways to be successful working for yourself.
- Always have options.
What do you suggest to help ensure employers don’t take advantage of employees in today’s job market?
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