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The Best Holiday Gift: A Shared Experience

This article was written by Flexo in Consumer. 15 comments.

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.

Wrapped Gift 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.

Abraham Maslow's Hierarchy of Needs 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]

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Set Up Beneficiaries for All Your Accounts

This article was written by Flexo in Personal Finance. 11 comments.

While anyone moves towards financial independence, there is a time to think about what would happen to one’s financial accounts if one were to most unfortunately pass away. It’s a morbid thought, no doubt, and it’s easily avoidable in a world where talking about death is difficult. I don’t like to contemplate my own mortality, but realism must sink in as one grows older, particularly when and if life as a single person gives way to the start of a family.

Planning for the inevitable future can involve wills and trusts, but there is a rather simple step that could help potential heirs avoid some problems. Probate could prove to be expensive and problematic, and investors or savers can add one or more beneficiaries to most financial accounts to bypass probate. The beneficiaries named on any financial account will be able to receive money left behind in that account following the death of the account owner without involving lawyers or a hassle.

You can add a beneficiary or a payable-on-death (POD) to most savings and checking accounts. Sometimes, banks seek information about beneficiaries during the account opening process, but not always. Many banks don’t allow you to change beneficiaries online. For banks with brick-and-mortar branches, you may need to visit a personal banker with the beneficiary or with the beneficiary’s personal information (address, Social Security number, etc.) in order to change or add a designation. If you don’t see any options for adding beneficiaries online, contact the bank directly.

It’s also possible that some banks do not allow account holders to designate beneficiaries on deposit accounts. ING Direct is one such bank. Unfortunately, the heirs of the deceased’s estate could have problems receiving the balance in one of the most popular online bank accounts. If this is an issue for you, consider moving your money from ING Direct to a bank that allows payable-on-death designations. With a will or a trust, this designation might not be necessary. Of all the choices, however, POD is the easiest, and every bank should offer it.

Almost always, brokerages and banks will ask for a beneficiary when you open an investment account, whether the purpose of the account is short-term investment or retirement.

Don’t think that your accounts are too small to worry about how the funds will be distributed after you pass away. The accounts could grow, and even if they don’t, the funds you have could be important to someone in the future. With small balances, there is even more of an incentive to avoid costly probate fees.

If you’ve been through any sort of major life change, like a marriage, divorce, or the birth of children, you should take a moment to review your accounts to ensure the proper beneficiaries are listed. As a single guy, this hasn’t been a major priority for me, but as I age, I’ve started to recognize its importance despite the lack of a wife and children. This will be one of my first steps to ensure my funds get in the right hands at the right time, followed by creating a will.

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Honda Recalls One Million Cars

This article was written by Flexo in Consumer. 5 comments.

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.

Honda CR-V 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

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According to Wells Fargo, My Name is Business Customer

This article was written by Flexo in Banking. 11 comments.

I chuckled when I received my replacement business debit card in the mail yesterday. Although I never had any problems with my account, and I’ve always received mail from Wells Fargo addressed properly, at some point, someone in the bank decided the name of the owner of my business accounts is “Business Customer.” As Wells Fargo is continuing to update their branding following their purchase of Wachovia, the bank wants to get new cards and documents in the hands of its customers. I know that large banks sometimes see their customers as nothing but numbers, but not much can be considered less personal than the bank referring to one of its patrons as “Business Customer.”

Wells Fargo Card My Wachovia Visa Business Check Card would have been replaced with a Wells Fargo Visa Business Platinum Debit Card if it weren’t for this strange error. The “Platinum” moniker sounds fancy, but as far as I can tell, there are no features on this card beyond what I had previously, including a debit card form of a “zero liability” policy.

Rather than activating the card listing me as “Business Customer,” I called Wells Fargo’s customer service to have a new card with the correct name shipped to me. Besides waiting on hold for a business representative while my cell phone battery approached its daily little death — I could really use a new phone — the resolution was easy and I should have a new card in about a week. My old Wachovia debit card, which displayed only my business name, not my own name, on its face, will continue to work.

I am a customer of Wells Fargo for almost all of my business banking. Almost all business checks I send are initiated through Wells Fargo’s bill payment website, so I hardly use paper checks. I have not yet found a good Wells Fargo product that offers competitive interest rates for business savings. Most of my business cash is deposited at ING Direct, in a business savings account. I am looking for other options, though; if Vanguard were to offer a free cash management account for businesses with less than a total of $1,000,000 deposited or invested, I’d most likely move everything there to consolidate all business accounts at one location.

Photo: Tony Webster

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Citigroup Accused in Death of Customer

by Flexo

Three months ago, a healthy 49-year-old business man walked into a Citibank office in Jakarta, Indonesia to discuss the matter of a $5,500 debt on his Citi Platinum credit card. The events that followed are unclear, but four hours later, the man left Citi offices in a wheelchair. Citi cars drove him to a nearby ... Continue reading this article…

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Podcast 103: Lost and Found, Geneen Roth

by Flexo

Today’s guest on the Consumerism Commentary Podcast is Geneen Roth, author of Lost and Found: Unexpected Revelations About Food and Money. Geneen has appeared on national television shows including The Oprah Show, 20/20, and The NBC Nightly News. Geneen is the author of eight books, including The New York Times bestsellers When Food is Love ... Continue reading this article…

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Safe Donations to Victims of the Tsunami in Japan

by Flexo

Updated March 16, 2011. If you have been paying attention to the media, you most likely saw terrifying footage of tsunami waves destroying much of the eastern coastal areas of Japan, particularly Miyagi prefecture. Friday’s earthquake measuring 9.0 magnitude on the Richter scale triggered massive waves that leveled homes and farms, left thousands missing, forced ... Continue reading this article…

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Kraft Downsizing or Protecting Consumers?

by Flexo

In last Sunday’s Consumerism Commentary Podcast, our guest from Consumer Reports, Tod Marks, talked about product downsizing. With commodity prices rising, companies — particularly food product companies — are trying to determine how they can cover their increasing production and distribution costs without losing their competitive edge. In order to maintain the same price point, ... Continue reading this article…

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