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Naked With Cash is an ongoing series at Consumerism Commentary in which readers share their households’ finances with other readers. These participants benefit from the accountability that comes from tracking their finances publicly and the feedback of the four expert Certified Financial Planners (CFPs).

For more information, read this introduction.

Over the course of 2014, four Consumerism Commentary readers have shared their financial reports, exposing the results of their financial choices on a day-to-day basis. Each participant is paired with one of our Certified Financial Planners. Throughout the year, the experts have provided insight and guidance to help our participants take their finances to the next level, and as the series is now ending, we are able to look back on the year. Learn about this year’s participants and experts.

Jake and Allie are animal lovers who enjoy their pets and have no plans for children. Both are committed to early retirement. Jake and Allie are both interested in owning side businesses, even though they plan to use their nest egg for living expenses. The couple enjoys travel and make it a priority to take trips throughout the year. They believe that it makes sense to use part of their combined $140,000 income to enjoy life now. (Read their update from last month.)

After reading Jake and Allie’s comments, you can watch a Google Hangout they participated in with Financial Planner Neal Frankle. Neal Frankle appears courtesy of Wealth Pilgrim and MCMHA.org. This month’s Naked With Cash is the last of the year, and includes information on debt reduction and a wrap-up of the year.

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The prevalence of tipping is simply a fact of society. On several occasions, a friend of mine bemoaned the perceived necessity of tipping a specified amount to restaurant servers while dining out. He would ask the rest of our friends eating together at a restaurant, “When did the expected base tip go from 15 percent to 20 percent?” I’m not concerned so much as when cultural norms like these change, but how they change. Is it regional? Does a trend like this start among a wealthier subset and then trickle down to everyone else?

Most everyone who dines out understands that tipping is part of the unwritten agreement. If you can’t afford to pay and tip, you can’t afford to dine out. This social tradition has what I would expect to be practically full penetration throughout the United States. We’ve come to accept that restaurants do not pay their servers and bus staff a living wage on their own, and it’s the customers’ responsibility to bring that compensation more in line with a level necessary to prevent too much attrition in the industry.

With social media, the customers’ responsibility — or negligence — is clear. If you spend any time on Facebook or Twitter, or if you’ve seen any news programs covering entertainment, you’ve likely seen many incidents in the last year in which a disgruntled, undertipped server shames a celebrity by posting a copy of his or her meal receipt with a low tip. There’s two sides to every story; for every shamed, allegedly cheap celebrity or NFL professional, there is an allegedly disrespectful wait staff. It really doesn’t matter who is “right.” The point is that tipping in a restaurant, and tipping 15 percent to 20 percent for typical service, is a pervasive social expectation.

Hotel housekeepers may not benefit from the same, strong tradition of tipping as restaurant servers. An organization is trying to change that. A Woman’s Nation, an organization whose mission is to ensure that the value of women is recognizes and respected, is leading a program they call “The Envelope Please.” The purpose of the program is to encourage hotel guests to tip housekeepers one to five dollars a night, every night by placing an envelope for that purpose in every guest room.

Marriott is the first hotel brand to sign on.

And the hotel will certainly face significant criticism for doing so. If a hotel company blatantly encourages customers to tip, it is, in a way, admitting that it does not pay its staff a living wage. And if a large international corporation wants its employees to be paid a living wage, shouldn’t it be that corporation’s responsibility to do so? Shouldn’t it also perhaps be the industry’s responsibility to ensure it?

Of course, the idea of raising compensation faces the same old corporate obstacle: “If I raise the wages I pay, I have to raise my prices. I can’t raise my prices because I need to remain competitive.” There’s no doubt that it’s a difficult perspective to be in for a business. I have several friends who are not only small business owners like myself, but who also have a growing employee force, and they face these problems all the time.

I used to say that it’s the business owner’s problem to figure out, and if they can’t remain profitable while paying competitive wages, they have to come up with a different business plan. But I see that it’s often more complicated than that.

I’ll be honest. I haven’t always tipped housekeepers when I’ve stayed in hotels. That’s simply due to the fact that when I began staying hotels on my own, I had no idea at least a portion of hotel guests considered it normal to tip housekeepers. At the same time, I knew it was expected to tip hotel porters; maybe that’s because you see the “bell boy tip” in fictional entertainment so much, but never see the act of leaving a tip for the housekeeper in an envelope on the bed or nightstand.

This lack of understanding is the reason a non-profit organization focusing on the value of women would consider it important to provide some attention towards the option of tipping hotel housekeeping staff. But do housekeepers even need the tips in order to earn a living wage?

I checked Salary.com to put some numbers behind this movement.

In my zip code, a restaurant server gets paid a median hourly wage of $14, which was higher than I expected. A hotel housekeeper receives a rate of $13 an hour. In San Diego, California, both job types are paid a medium of $12 an hour. In Tampa, Florida, they both earn $11. From these figures alone, it seems that both job types require some additional compensation to make up for the industry’s low valuation.

Restaurants also know that customers will tip, so that is a justification for keeping pay low. As the idea of tipping hotel housekeepers becomes more pervasive, hotels may be just as willing to feel justified in the level of wage they pay because they know customers will make up for some of the deficiency.

According to one hotel insider, housekeepers are scheduled, at least in his institution, to clean 15 rooms a day. To a housekeeper, if everyone follows the expected guideline, she could walk away at the end of the day with between $15 and $75. If it costs very little to Marriott to put envelopes in every room every day, it could add up to a lot of extra compensation for housekeepers. If you assume the additional tips raise the effective hourly rate of a housekeeper by $4 a day, a hotel would not be able to match that through its own compensation plan. There’s no way a hotel could easily raise that pay of its housekeeping staff by that much.

With that perspective, it makes sense for hotels to encourage customers to tip. The staff will get a much better deal than the hotel could possibly offer. The only drawback is the potential downstream effect; more reliance on tips in the future might prevent hotels from raising wages competitively.

I’ll be keeping this in mind when I head to Louisiana this week for a conference and stay at the New Orleans Marriott.

Do you tip your housekeeping staff when you stay in a hotel?

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It was a long time ago, but I remember my first few weeks of college. Twenty years ago last month, I left my home state of New Jersey to live on campus at a neighboring state and to pursue my education degree. I had been away from home before for extended periods of time, but attending college was a new hurdle for me.

I was nervous. But before long, I felt at home in my adopted-for-college state and adjusted to the new state of existence well. My financial situation left much to be desired, though, if I had even known that there was something to desire. I had had a bank account for a couple of years, and a few jobs here and there, but I didn’t have much of my own money. My college education was being funded by scholarships, grants, loans, and my parents. At the time, I had no assets to put towards my education, and I think my parents were more interested in seeing me spend my time focus on my studies than on pursuing a job.

As I’ve written recently, I did discover at college that I had a small entrepreneurial streak, but I never would have admitted that at the time. Earning some money here and there allowed me at least to come up with something to spend while I was an undergraduate.

It’s common to give new college advice that pertains to saving money. “Living like a college student,” when fully graduated adults take inspiration from their frugal years as a student, involves the ideas of eating cheap food (ramen noodles?), furnishing an apartment with inexpensive items (a cardboard box chair?), and taking on roommates to keep living costs down. This is all great ideas, and adopting this approach in college can lead to a money-saving philosophy that lasts until later in one’s career. And considering so many college graduates are unemployed, these are good habits to keep under one’s belt for as long as one can bear the restraint.

This is a one-dimensional approach. As a student living on campus, unless you have unlimited funding from your parents, you are probably frugal by default. So as a new college student, you might benefit from some ideas for giving yourself a financial advantage on the day you leave campus with your cap and gown.

1. Decide that you’re going to position yourself well for the future.

By deciding to make your finances a priority instead of an afterthought early during your college career, you have the opportunity to adjust to a new mindset. Envision the future you want to have, as hard as that might be when you’re just figuring out who you are and what’s important to you. Studies show that college freshmen like you are probably too young to know for sure who you are, who you want to be, and what’s important to you, but that isn’t really the case. These things change over time. Just thinking about long-term goals can put you in a better frame of mind for making good financial decisions, even if your goals change over the next decade.

When you picture your future, it makes it easier to see how the decisions you make can lead in the direction you want to go. And if you dedicate yourself to being smart about money, you have the potential to keep that in mind every day you have a choice pertaining to money.

2. Spend time with people who make good decisions.

As you determine what values are important to you, find people who share those values. Regardless of your course of study, you will have the opportunity to associate with other students. Choose your friends well. The idea is not to be strategic from a networking perspective. The value of a friendship is not what that friend could possibly do for you in the future. Do not be a user of people.

The more time you spend with people who share the same values as you, the more you will accentuate those positive qualities. If you are around people who are aware of their financial responsibilities, and maybe want to achieve financial independence some day, that approach to money will continue to influence how you make your own decisions.

3. Join campus organizations.

I was a member of a fraternity. I joined because the group was more like an honor society, and some of the best professionals in my field had been involved with the organization. I also started a collegiate branch of another professional organization at my university, and encouraged my fellow students to become members. Being a member of these organizations gave me instant connections with professionals outside of college, and even provided me opportunities I might not have received had I not shared those credentials.

Campus organizations give you the opportunity to be involved with something you’re passionate about while at the same time building important leadership skills. Even better than just joining an existing organization, start your own.

4. Make yourself valuable to staff.

When I was in my first years of college, there were very few people in the country who had the ability to build websites. I was one of these people. The university needed websites for its collegiate departments, and professors needed websites to share information about their research or their courses. I worked closely with professors to design their websites, and it helped me build deeper relationships with those I worked with.

Make yourself an expert in some kind of service that the college staff needs. You could turn this into an opportunity for income. And while most of the tips here focus on positioning yourself well for the world after college, nothing can help you more than leaving college with money in the bank.

5. Get involved beyond the campus.

One area for improvement during my time at college was my involvement outside of campus. I was not a local student, so I wasn’t too familiar with the community outside my college. Without a car, I couldn’t explore the area too often. I had to rely on my friends who live near campus and grew up in the state. As a result, I probably missed some opportunities because I didn’t focus on being present beyond my campus.

What I noticed is that my fellow students who were involved in their fields’ organizations outside of campus were always positioned well to find jobs in the community during breaks and after college. For example, as a student studying music, it wasn’t enough to play in as many university ensembles as possible. A musician who chooses to play in community ensembles, he or she would be exposed to a wider variety of people and possibly be positioned for success in that field after college.

And getting involves with national non-profits like Habitat for Humanity can further prepare you with attitudes and ethics that come in handy for succeeding in life and building wealth over the long-term.

6. Travel to locations different than where you grew up.

Nothing effects your view of the world more than actually viewing the world. When you live most of your life in one place, as many college freshmen have done, you aren’t often exposed to people who live significantly different than you. I wish I had done more traveling while in college, whether being involved with something like Semester at Sea, studying abroad, or traveling throughout the country.

Nothing gives you better perspective about your finances — and about the advantages you have — than seeing first-hand what it’s like to spend time in a variety of communities.

7. Focus on your studies, but foster any ideas you might have.

The college experience is about more than studying, writing research papers, taking exams, and making the honor roll. You want to do all of those things, and do them well, but you also want to take the years you have before major life responsibilities to explore. Spend time every day brainstorming about projects you can create that align with your passions. So many great stories start with projects that came out of an idea someone had in college.

While you have this cushion, use time to explore your hobbies or turn them into a business. Toss ideas off your friends. Put up a website, and see what sticks. It’s unlikely you’ll start the next Facebook, but give yourself a chance to follow your crazy ideas. They might lead to something amazing.

These above money ideas may not sound like money ideas at first. But they are all related to how you begin to live your life, and after college, how you to continue to reach for your goals. If you like some of these thoughts, Please share this with your favorite college students.

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If you’ve been online in the past week or two, you have no doubt seen viral videos of strangers — and maybe even your friends — dumping buckets of ice over their heads. There is a charitable cause behind these videos. Most, or at least some, of the cold, soaked folks are accepting the challenge to support the ALS Association, a non-profit organization that provides support for research, assistance for people with Lou Gehrig’s Disease (Amyotrophic Lateral Sclerosis), and coordination of care, and the organization advocates for its cause through political lobbying.

Does dumping ice on your head have anything to do with curing a disease, and does it matter? I suppose the answer to both questions is no. There seem to be some disagreements about who started this latest craze. People have been dousing themselves with water to bring attention to causes for a while, but someone wishing to support the ALS Association caught onto this idea and it has certainly captured a lot of people’s attention.

And it’s working. According to the ALS Association, the organization has received $22.9 million in charitable donations between July 29 and August 19. For some context, that collection compares with just $1.9 million raised during the same time period last year, during which time no viral video was asking people to support the ALS Association. That is massively impressive. Good job, everyone who donated.

Still, more questions need to be asked. The ALS Association explains that the increase in donations come from both existing donors — those who have historically supported the organization — as well as 453,210 new donors. Presumably 453,210 persons or thereabouts were inspired by the video to do something they wouldn’t have otherwise done. And existing donors might have increased their normal contributions to be part of the frenzy.

How much of the $22.9 million has come from these 453,210 individuals? Are we looking at a case where a small group of major donors seized the opportunity to help the organization manifold, while your average ice bucket warrior kept their contributions slim? Does the organization even know what to do with $22.9 million?

Before I contribute to an organization, I like to know a little more about it, beyond the mission statement, beyond the marketing. The most important thing is whether the organization is a good charity, and that could mean many different things. Is the organization’s mission in line with something I’m passionate about and interested in? Are the executives taking care of the money they receive?

In the case of the ALS Association, the non-profit’s 11 executives earned $1.8 million in salary for the tax year ending January 2014. Another $950,000 was spent by the organization for marketing consultants. The organization raised a total of $23.6 million in funds that year, and only $363,000 of that was from government grants. During that year, only two individual donated more than $5,000 to the organization; one contributed $5.75 million and the other gave $500,000. While this doesn’t guarantee how people donated this year, it does seem like a good portion of contributions come from small donations like those that might result from a campaign like the ice bucket challenge. This is encouraging.

Here’s the organization’s explanation for the $5.75 million contribution:

In December 2013, the association received a bequest totaling $5,750,000, establishing a term endowment according to designations made by the donor. The proceeds of this bequest are to be maintained by the association in an endowment fund for a period of ten years. Earnings from the fund are restricted to support research and may be spent on a current basis.

The ALS Association’s total expenses in the last fiscal year wee $26.2 million, up from $25.7 million the prior year. These expenses include research grants, patient and community services, public and professional education, fundraising, and administration. Those administration expenses are 7.3% of the total. Charity Navigator, a company that rates non-profit organizations, comes up with a different result of 11% using the prior year’s financials, but considers that to be relatively efficient and provides the organization with an overall four-star rating.

The CEO received total compensation last year totaling $362,458. Is that the right price to pay for a non-profit CEO for a company with annual expenditures of more than $25 million? Maybe. Or maybe knowing the CEO is in a financial position those with ALS would like to find themselves in makes the idea of supporting the organization less tasteful. I do know that running a non-profit organization like the ALS Association is complex and difficult, yet an established organization certainly takes advantage of the willingness of people to support that organization — whether it’s smart people and consultants to advise the CEO or whether it’s the corps of thousands of volunteers who assist non-profit organization through some of the less sophisticated tasks of operating the programs.

Taking all things into consideration, the ALS Association seems to be on solid financial footing and is actively working towards its mission. The money raised by the organization has historically been distributed through grants from the ALS Association to groups doing the hands-on work in research in care, hospitals and universities. Judging by their financial disclosures, their IRS Form 990, and their reviews, you can feel confident giving to the organization.

There has certainly been some criticism in social media about the ice bucket challenge. Many challengers passed along the message by asking that the people they “nominate” either dump a bucket of ice water on their head or donate. This has stirred backlash — other people believe that people should donate regardless of whether they want to record and share a video of an impromptu ice shower. And there are always a good percentage of people who take the challenge, sharing videos with their friends on Facebook, without even mentioning ALS or otherwise identifying the purpose of the video.

But if the numbers can be believed, it’s working. It doesn’t even matter that some people are dumping water and maintaining the virality of the cause without donating or without mentioning ALS. In this case, it’s working, because the medium is so large, the message is getting through. Assuming the ALS Association is not behind this, and that it is a true grassroots campaign, this is a beautiful situation for the organization. Usually, you have to spend a lot of money on marketing to raise funds like this, and companies that handle the fundraising often take a significant piece of the revenue.

For example, hiring a company to handle telemarketing keeps some of the most important outreach work for an organization manageable, but a company that raises $133,000 might keep $111,000 for itself, leaving only $22,000 to the organization it’s working for. $22,000 is better than nothing, but it’s just a portion of the total raised.

In this case, I have to side with the supporters of the ALS ice bucket challenge, not the critics. In other cases, yes, acting foolish on social media in support of a cause, without even mentioning that cause, could backfire. People who have no concept of charity will naturally join in on the fun when they see their friends and strangers doing it. It reminds me of the planking meme from a few years ago. There was no organization to support, just a feeling of inclusion in a popular movement. Luckily for ALS, the penetration of the ice bucket challenge meme is so high that even if 60 percent of video participants have no idea about ALS and neglect to donate money, the benefit to the organization is still fantastic.

If you do choose to participate, you should focus on ALS and give to charity yourself, to the extent that it fits in with your budget, whether it’s $1, $5, $100, or more. Then again, if you don’t give, even if you don’t mention ALS, in this case you are likely still helping the organization. However, you could look at the recent figures and determine your $100 amid a haystack of $22.9 million in one month has diminishing returns for the organization this year, and might do better for an organization that receives much less public attention — at least this month. There are many ways to look at the situation to determine whether you should participate and donate.

Some of the other criticisms of the challenge don’t really stand up to scrutiny. Is it a waste of water? The amount of water needed for the challenge is negligible, but could be seen as a waste in areas where there is a drought. Is it a case of “slacktivism,” where people can feel good about “supporting” an organization without really doing anything? Maybe, but if so, just throwing money at a problem is the same thing — the real charity is donating time and effort. What I don’t like is that this is an indicator of how culture is changing from an externally-focused, doing-good model to a look-at-me-I’m-doing-good model. Celebrities are jumping in on the craze. I’ve even seen friends use the ice bucket videos to market their businesses or “personal brands.” The self-centered trend runs counter to altruism, empathy, and charity, so it’s interesting to see this combination of people drawing attention to themselves in addition to the disease.

Will you do take the ALS ice bucket challenge? Donate to the ALS Association here.

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Overcoming Competitive Inertia: Stop the Comparisons!

by Luke Landes
Marching Band

I grew up in competition. It was a part of my life, all over the place. And sometimes competition moved me to push my self far, motivating me to be excellent, and in other cases, competition broke down my will to excel. An individual reacts to competition different depending on the psychological factors, the situation, ... Continue reading this article…

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Get the Most Value From Frequent Flyer Miles

by Mitch Lipka

Whether you’re the most frequent of frequent flyers or someone who is more likely to have miles expire, understanding the real value of what you’ve earned is the key to making the right choices as a consumer. With miles programs constantly being changed and consumers’ loyalties challenged, those with frequent flyer miles have to decide ... Continue reading this article…

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Study: Wealthy People Are Mean, Entitled, and Narcissistic

by Luke Landes
Money found

No, I’m not attempting to start a class warfare riot. As the title of this article states, recent studies have shown beyond any doubt how wealth or a feeling of wealth leads people to behave in a more self-interested manner. Paul K. Piff, a social psychologist post-doctoral scholar in the Psychology Department at the University ... Continue reading this article…

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Kathleen, December 2013 Net Worth

by Luke Landes
Naked With Cash: Kathleen, December 2013

In Naked With Cash, seven anonymous Consumerism Commentary readers publicly track and analyze their finances on a monthly basis. For almost a decade, I tracked my own finances on Consumerism Commentary; now I’m sharing the benefits of public accountability with the participants. I’ve partnered with financial planners who will offer some guidance along the way. ... Continue reading this article…

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