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The events that happened throughout my life, the paths that got me to where I am today, present an interesting story. I refer back to pieces of this story once in a while here on Consumerism Commentary but I never focus on it, nor do I ever really provide a complete narrative. When I write, I prefer to focus on things external to me. Although this blog started more like a personal journal interspersed with my financial details and interesting bits of information about personal finance, like many other long-lasting websites, it’s evolved over time.

Storytelling fills an important role. A good story triggers powerful emotions in readers or listeners, and these can be emotions of connection (like sympathy or jealousy or inspiration). Humans are emotional, not logical, decision makers, so strong emotions can cause readers or listeners to make decisions they wouldn’t have made without that emotional connection. Emotional triggers are certainly nothing new. Charismatic individuals have been using storytelling for centuries to spread religious beliefs, gain allies, and sell products.

The best salespeople today are keenly aware of this effect and use storytelling to convince people to spend money. A good story can change someone’s mind; a great story can change someone’s financial situation. Sometimes for the better, but often not.

For Consumerism Commentary, I try to think of ways to encourage readers to become better consumers: to make the most of the money they have, to improve their financial situation through building income and reducing expenses, to move towards a better financial situation than in the past even if full financial independence isn’t achievable. And, at least so far, I haven’t used my writing to sell products to readers. Yes, I’ve written or published some product reviews designed to help people make good choices about the financial products they use, including a way for readers to take advantage of those offers, but those have been generally directed at people who had already decided to use those products. I’ve tried hard not to sell someone something that wouldn’t be appropriate for them.

Storytelling has a much bigger benefit than selling products — it can sell ideas. And that starts to get dangerous. An inspiring story about quitting your job to blog full time can easily convince people who would otherwise know better to follow that same path in search of riches. I know for a fact that my personal success has given hope to people, even if their reasoning might have been, “If that fool can quit his job and sell a little blog for an insane amount of money, a smart guy or girl like me can do even better.” This is why I don’t make a big deal out of my story. This is why I take my role as a business coach for select clients very seriously. I don’t want to see people make huge mistakes.

People often ask me if blogging as a business has a future. People every day are quitting their jobs, ready to tell their stories online, ready to find a way to sell things to their readers, and they need to know if there’s a future in blogging. In fact, my girlfriend, who is also a blogger, asked me about this recently, but companies have paid me to hear my thoughts on the future of blogging, even though I’ve often been happy to chat with CEOs about it for free.

They ask me because I’ve been around. I’ve been on the Internet since about 1989. I’ve been building various types of online communities since 1990. I’ve been building websites and teaching people how to build websites since 1994. I know how to manage UNIX servers so I’m familiar with the technical side of the Internet, but I’m also as well as the social side (and that goes far beyond “social media”). And I watch related trends pretty closely, and I see a future that is troublesome for the small-time independent web publisher. Today’s environment is not one in which I’d suggest anyone quit their day job to be the next big blogger. Not without a head start, not without the financial backing that allows you to effectively compete, not without something that makes it clear that success is imminent.

That doesn’t mean bloggers can’t start today and become popular. That happens all the time. But translating that popularity into a sustainable living, or even better a valuable asset with the potential of lasting a long time or being recognized by the market as an acquirable asset, goes from rare to incredibly unlikely. But people beat the odds all the time. In fact, people who are more inclined to ignore the odds have an increased chance of meeting those goals, at least partially. I don’t want to say it’s impossible. The danger is in seeing others who have done something impressive and expecting the same will come with a little hard work. Make a living? Maybe. Make a great living? Well… Make a fortune? Doubtful.

The inspirational entrepreneurial story that spreads the lie that this path is the best way to secure a financial future is often incomplete. And the reason I’m writing this article in the first place is because I recently came across a story from a few years ago that is a perfect example of this. It shows you that a smart consumer will always need to look for the questions that go unanswered in any story.

Someone I follow on Twitter attended her sister’s wedding a few days ago, and posted a photograph of the two of them together, beaming with happiness. The individual I follow on Twitter will become clear in a few moments.

For some reason, I decided to look for more information, to learn more about her sister. One of the first things I found was her “origin story.” The trend with superheroes in movies recently is to present a character’s origin story — well, entrepreneurs have origin stories, too. And her story is about as sweet as it gets.

Mary Riesgraf — that’s her name — started a confectionery shop, Sweet Mary’s, in Los Angeles. The business is registered to a home address, so there’s probably no storefront. These are the words she told AllParenting in an interview:

Sweet Mary’s was started out of pure joy that my sweets brought to my friends and family. I started making homemade sweets for holiday gifts and everyone kept telling me to start a business. I was afraid of making such a big commitment so I didn’t consider starting a business until Fall 2011. My boyfriend Leif and my three daughters (Grace, 11, Sarah, 10, and Emma, 8) were my biggest fans encouraging me to go for it. I am so glad I started. I have had a blast making sweets and I love hearing all of the great feedback from our customers.

It’s such a heartwarming story about success, and inspiring to anyone who is passionate about a skill and contemplating starting a business to focus and perhaps make a living.

AllParenting notes that she and her shop has garnered the attention of celebrities, making the shop an overnight sensation. Mary took an activity she loved and for which she had a talent, opened a store, and suddenly celebrities were talking about it. Not bad! The story refers to mostly actors who quickly jumped on her team and supported her as happy customers, like Jason Lee (“Earl” from My Name is Earl), Timothy Hutton (“Conrad” from Ordinary People), and Jenna Elfman (“Dharma” from Dharma and Greg).

I don’t want to criticize Mary. She’s done a great job — and congratulations to her on her recent wedding! The story is inspiring, but the interview neglects to focus on the huge advantage Mary has over a typical entrepreneur, tired of his or her job, feeling a pull to do something else with life. Mary had quite a few built-in connections. While she’s an actor and producer in her own right, her sister, Beth Riesgraf, is also an actor (and a talented film photographer). And the business was launched at the height of Beth’s popularity, as her show Leverage was coming to a close and fans were imploring the producers to keep the show running.

In the interview, Mary says, “My sister had tweeted about me and a bunch of our friends re-tweeted… It was explosive!” Today, Beth has 438,000 Twitter followers. I’m not sure how many she had in 2012, but I expect it was a similarly high number. If you want to be an entrepreneur, ask yourself how many Twitter followers your siblings have.

Mary also says about her first celebrity order, “Jason Lee ordered 150 of our Signature Caramel Chocolate Apples for his wedding.” The story of her success would have had less of an impact if she had said, “Jason Lee, my sister’s former fiancée and father of her daughter, ordered 150 of my caramel chocolate apples for his wedding a couple years before I launched my actual business.” Timothy Hutton, also mentioned as a celebrity customer, was Mary’s sister’s Leverage co-star. Sales or gifts, readers aren’t really sure what those orders are, but either way, they’re still in the family.

My intention isn’t to dampen the success of one particular sudden-entrepreneur, but just to show there are often a lot of details missing from our favorite inspiring entrepreneurial stories. This is just an example I came across recently, and one where I happened to know some of the missing pieces.

The problem is that a story like this can easily encourage someone to start their own business. Is that really such a bad thing, when the employment environment today is so bad and it seems to make a lot of sense for people looking for a better financial future to take matters into their own hands? Being a business owner does open lots of opportunities for personal, professional, and financial growth. But you have to do some market research and soul searching first. Don’t be swayed by inspirational stories. Ask questions! Get to the bottom of the issue. Find out why and how people succeed — not just how they say they succeed, because the true story is often much different than the marketing (and every story is marketing).

If you make decisions based on inspirational stories, whatever hard time you thought you had working at “just a job” could be much, much worse, when you find yourself struggling as a business owner. And then years later, when you discover you need to go back to the workforce, you’ll be in further trouble because you haven’t maintained your skills and have a gaping, unsuccessful hole in your résumé. Too many people are willing to be inspirational and motivational, and to be inspired and motivated, and too few people are willing to discuss realities. That just doesn’t sell as well.

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Since 2008, Sallie Mae has been producing a report about paying for college on an annual basis. Each year, the report surveys Americans across the country to determine their attitudes and actions surrounding funding for college tuition and expenses. This year’s report is extensive. It contains everything from a categorization of personas based on attitudes towards higher education to a breakdown of expenses paid. Like other good surveys, Sallie Mae’s report identifies stark differences between consumers’ attitudes about money and behavior with money.

Buried within the 58-page PDF summary of the report is something very actionable for today’s American consumer. Researchers asked the participants of the survey what actions their families had taken to make college more affordable. Other interesting data in the report include how families assign responsibility for paying for college in theory, and how those families actually divide the payment responsibility in actuality.

Graduation

This is all very interesting, and the report is a great read for someone who has the time. But by focusing on the specific ways families have made college more affordable in the last year, I can share tips for people wrestling with the cost of college today, and these tie into the recent Naked With Cash topic of the month.

Many families adopted more than one of these strategies, so don’t limit yourself to just one. Also, not every strategy is right for every family or every student.

1. Choose an in-state school for lower tuition fees.

Percentage of Americans using this strategy for the 2013-14 school year: 69%. Colleges typically offer reduced tuition rates for in-state residents. One reason public colleges and univertsities (state schools) offer reduced tuition for in-state residents is that household property taxes already paid often go to support these institutions. Colleges with state government funding have a charter that requires the school to offer many public services in return for that taxpayer support, and reduced tuition rates for in-state residents is generally one of those benefits.

It’s a long time ago now, but I’m surprised my parents didn’t require me to find a college to attend in my home state. I suppose they didn’t want me to feel any limitations; but they and I would have saved a lot of money had I attended a public university in New Jersey.

2. Cut back on the student’s entertainment spending.

Percentage of Americans using this strategy for the 2013-14 school year: 66%, up from 60%. The classic frugal approach to saving money requires reducing expenses in one area to pay for something else, either savings or a different expense. In this case, saving money by reducing entertainment expenses can help handle the expenses of attending college. Fewer nights out at the movies, fewer bad restaurant meals, fewer rock concerts — all of these reductions can add up and help make more funds available for tuition.

Dollar for dollar, earning more money can be more effective than saving money from one expense category to better handle another. The student can get a job. But reducing expenses is still a popular strategy and can be employed to afford college.

3. Choose a school closer to home.

Percentage of Americans using this strategy for the 2013-14 school year: 61%, up from 59%. The difficulty with attending a distant school is the cost of traveling between home and college. Attending a school with significant distance from home helps a young adult handle more life responsibility without falling back on parental assistance, but that comes at a price. One benefit of attending a school close to home is the reduced cost of transportation, though that benefit could be negated by more frequent trips to and from school.

With parents close-by, they are able to assist in other life matters, with a potential result of reducing living expenses for the student while at college.

4. Live at home.

Percentage of Americans using this strategy for the 2013-14 school year: 54%, down from 57%. Perhaps as a sign of an economic recovery, fewer families reported students living at home rather than on campus. Living at home can be one of the biggest money-saving tactics for some students. While dorm living has the potential of forcing a frugal existence, it doesn’t always work out that way. Most of the time, staying at home not only reduces expenses through shared household costs, but living with parents reduces the student temptation to spend money at campus and off-campus social events.

Now, I think living on campus adds to the academic experience, and being part of a social group on campus has an importance for personal growth and, in some cases, a potential for lifelong interpersonal networking, but when the goal is to save money, sometimes it’s a smart decision to make those sacrifices.

5. Parents reduce spending.

Percentage of Americans using this strategy for the 2013-14 school year: 45%, down from 48%. It’s not just the student who can reduce spending to better pay for college. Parents can reduce spending as well.

6. Students work more.

Percentage of Americans using this strategy for the 2013-14 school year: 48%, up from 47%. As mentioned above, given the choice to earn more or spend less, earning more can be much more fruitful. You can only reduce expenses down to the basic necessities, but the potential for earning income is unlimited. I realize this is a very optimistic view, ignoring some of the realities of life. And one of those realities is that many families rightly feel that when a young adult is in college, their primary job should be their education. Work distracts from a student’s ability to gain as much as possible out of the experience of attending a university.

But again, it’s a matter of priorities. If finances are a concern, and they should be more often than they are, students taking on more work for more income can offset the cost of attending the school. The best jobs find a balance between maintaining one’s focus on education and producing income. My job at the university’s music library as an undergraduate wasn’t very lucrative, though it did help pay for tuition, but being a web consultant for professors was a little more rewarding.

7. Tax credits/deductables.

Percentage of Americans using this strategy for the 2013-14 school year: 42%, up from 41%. If you qualify for tax deductions or credits for paying college tuition (or later, student loan interest), you must take advantage of these! The American Opportunity Tax Credit was a reorganization of tax credits for education that have existed previously, like the Hope Credit. The Lifetime Learning Credit is included in the same tax form as the American Opportunity Tax Credit, and that credit assists adult scholars looking to further their education.

8. Add a roommate.

Percentage of Americans using this strategy for the 2013-14 school year: 41%, up from 35%. When living out of his family’s home, whether on campus or off campus, having a roommate greatly reduces the cost of living. In terms of rental costs, I don’t think I’ve ever seen a situation where the cost of a two-bedroom apartment was more than twice the price of the associated one-bedroom apartment. So having a roommate saves money on rent. And then you have shared utilities, shared groceries (if you get along well enough), and other shared living expenses.

9. Accelerate.

Percentage of Americans using this strategy for the 2013-14 school year: 28%, up from 27%. My girlfriend in college was proud of her ability to graduate a semester early. I know that finances were a concern for her family, and to this day I feel bad for trying hard to convince her to stay at the university rather than opting to move back home and attend college in her own home state of Pennsylvania. She also paid for a semester of tuition by selling Beanie Babies, which were in a consumer frenzy at the time. Getting through an undergraduate degree in as little time as possible, taking as few credits as possible, will always be a money saver compared to the alternative.

10. Early loan payments.

Percentage of Americans using this strategy for the 2013-14 school year: 23%, up from 22%. If you can pay off the loans before interest is capitalized, you can save lots of money. Once you are being charged interest on your interest, you start dealing with compounding interest. Thankfully, federal student loans have a grace period during which time interest is not capitalized. But you’re not required to send minimum payments to those student loans while they’re deferred. If you do anyway, you can reduce your liability later on.

Private loans are easier to understand — the faster you pay them off, the less you’ll pay, always.

11. Parents work more.

Percentage of Americans using this strategy for the 2013-14 school year: 19%, down from 20%. Often called the ultimate sacrifice, parents taking extra jobs or working overtime for the benefit of their children’s education could be considered by many as going above and beyond the call of parental duty. Maybe that’s why only 19% of American families admit to this tactic. But for some families, particularly those whose kids are in that family’s first generation of potential college students, making that sacrifice so that the students have a better chance of living of financially secure life makes a lot of sense. It requires a long-term view, focusing on survival of the family in the long-term.

12. Change majors.

Percentage of Americans using this strategy for the 2013-14 school year: 19%, steady. How does changing a major result in saving money? Some courses of study can be more expensive. If you’re studying international relations, you may be expected to travel overseas. If you are in a specialized scientific major, you may have exorbitant lab fees that someone studying another science may not need. And there is the perennial view that students should enroll in majors that provide a long-term monetary return, like engineering or finance. That may not save money in the short-term, but a higher starting salary certainly makes repaying college loans easier.

13. Attend school part time.

Percentage of Americans using this strategy for the 2013-14 school year: 17%, up from 15%. It can take longer to earn a degree, but the cost per year can be significantly reduced by taking fewer classes each semester. This opens up the student’s schedule to work a full-time job without sacrificing attention spent on education. It’s much more realistic to get through school completely debt free by taking a part-time approach, but it does come at a cost. Many students who take this approach never finish their undergraduate degree. As they continue at their job, they find themselves receiving more and more responsibility and are more likely to think that college degrees are unnecessary.

14. Transfer to a less expensive school.

Percentage of Americans using this strategy for the 2013-14 school year: 12%, up from 9%. There was a significant increase in American students opting to transfer to a less expensive school. Maybe this is due to a recognition of the importance of financial security and a stronger avoidance of unmanageable debt. It may be more reasonable to manage college expenses my starting a student’s college career in a less expensive school, as one might if they start at a community college for two years and later transfer to a four-year college to complete a degree.

15. Use the military.

Percentage of Americans using this strategy for the 2013-14 school year: 3%, down from 4%. In the early days of the GI Bill, joining the military was a good way to ensure you’d be able to afford college. The latest “Post-9/11″ GI Bill covers the full cost of in-state tuition at public colleges and up to almost $20,000 a year at private schools. The financial benefits don’t end with the tuition assistance. Since the beginning the GI Bill, this has been one of the most effective policies in the history of the United States for bridging low-income families into the middle class. And it’s still there for students willing to put their lives on the line to defend the United States and to be a part of the military establishment.

Every family has a plethora of options for saving money for college, and the best results come from taking the strategies that apply to your particular family in combination. How do you plan to save for college?

Read the full report from Sallie Mae here.

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Gallup’s annual “Mood of the Nation” poll sampled 1,018 adults from across the United States earlier this year, and the results show that more Americans say they are worse off financially right now than they were a year ago. 42 percent of the respondents consider themselves to be worse off, 35 percent say they are better off, and 22 percent claim to be in the same financial position.

This sentiment is surprising considering the economy has been continuing to improve and the stock market (measured by the Dow Jones Industrial Average) was up 26.5 percent in 2013, the biggest annual increase in 18 years. Also, the official unemployment rate for December 2013 was 6.7 percent, the lowest rate of unemployment since October 2008, the last month before the economy began seeing the effects of the Great Recession.

Why are people feeling less financially secure about their current situation while the economy, as a whole, has been improving?

Averages don’t tell a complete story.

First, it’s clear that averages don’t apply to everyone. You can’t predict with precision any particular woman’s height when you observe that on average, women in the United States are 5 feet, 4 inches. Americans are in a better financial situation overall, but that doesn’t mean than any particular household is thriving more than last year.

But a survey of a representative sample should show that there is a positive trend.

Self-reporting and questions about feelings are not very accurate.

When the economy is improving but people’s financial lives aren’t, it doesn’t have much to do with averages. If the survey looked at people’s bank accounts and credit card statements, the results would undoubtedly be different than the Gallup poll’s results. This poll is asking people to make a judgment call. It’s a survey that asks about feelings, not about a financial reality. People don’t always know how to accurately report their financial situation.

That doesn’t mean that the survey has little value. Feelings about one’s financial situation are important, because it’s those feelings — not “reality” — that determine the choices people make about the future. It’s possible to have more money in the bank and less credit card debt this year than one had last year, but feel worse about the financial situation.

More knowledge results in more concern.

If you were blissfully unaware of the danger you were in financially last year, and at some point discovered the truth about your financial situation, it’s possible you’re more stressed this year than you were last year about money, despite being in a better position. My concern about my finances increased when I stopped ignoring my bills. The year I began keeping track of my finances, I might have reported feeling worse off financially than I felt the previous year, despite the truth that I was on the road to financial improvement.

Your friends appear to have improved.

One way people determine whether they’re better or worse off financially is by comparing their financial situation with the perception they have of their friends’ financial situations. Studies have shown that income satisfaction isn’t necessarily correlated to certain amounts of income, but the differential in income between a person and his or her friends and colleagues. In other words, a $50,000 income is satisfactory if your friends earn $40,000, but it’s not satisfactory if your friends earn $75,000.

This comparison plays a role in how you judge your financial situation. If your friends appear to have had a much more successful year than you have, you might be inclined to believe and report that you’re worse off financially now than you were the prior year.

And here’s the kicker. Your friends really are richer than you. A new research paper published this year uses the “friendship paradox” to illustrate this. The friendship paradox describes how your friends are more popular than you, because people who have more friends are more likely to also be friends with you. This is described in Slate:

People who have a ton of friends are more likely to be your friend in the first place. They have a greater tendency to make friends. People with a lot of friends drive the average number of friends up in tons of other people’s social networks because they are connected to so many other social networks…

It’s similar to going to the gym and feeling like the most out of shape person there. The reason that everyone around you is so in shape is because they’re at the gym all the time—that’s why you’re seeing them. Everyone else is at home relaxing and not getting in shape. You’re looking at a very biased sample of people.

When we compare the finances of our friends, we’re also looking at a biased sample of people. And when you see the wealth of your friends (and its growth over the past year) outshine your own, you’re more likely to feel bad about your financial situation and report that negative feeling in a survey.

The media affects your perception.

I saw The Wolf of Wall Street in a movie theater a few weeks ago. The film focused on a stock broker who committed crimes, stole investors’ money, lived a lavish lifestyle, and didn’t really get in that much trouble for his misdeeds. Much of the movie focused on his lavish lifestyle without too much criticism. Some will see the film as a glamorization of a lifestyle of excess, some will see it a a condemnation, but I think it was more successful as the former.

For all the criticism of the “one percent” in American culture over the past few years, we are still fascinated by the lifestyles of the rich and famous, as we see through films and television. While more of the middle class struggles, the more we look to the media to help us escape through fantasies about the financial life that will almost always be out of reach. More programs prey on the public’s desire to see stories about rich people, whether they’re stories of success or failure.

Either way, the proliferation of showcases of wealth in the media has an effect on the way we view our own lives, and this might also play a role in our perception of financial progress. That is, the more we see people flaunt their wealth in the media, the worse we feel about ourselves.

Do you feel worse off financially now than last year?

Here’s the question the Gallup organization asked in its survey:

Next, we are interested in how people’s financial situation might have changed. Would you say that you are financially better off now than you were a year ago, or are you financially worse off now?

I am financially worse off now. Technically, that may not be the case. I just paid a large tax bill, and my January balance sheet suffered because of that. But this is a tax bill I knew — or should have known — was coming, so my wealth hasn’t really changed. In fact, I’ve earned more income than I’ve spent over the last year, so my financially situation should have improved.

How would you answer this question?

Photo: Flickr/Gamma Man

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I’m a reluctant entrepreneur, but I’ve learned to be less self-conscious about the fact that this is the designation society has given to me as someone who started his own business. While many people after, but also before, the recession have started side businesses to improve their financial security, for me, a hobby turned into a profitable and enjoyable way to spend my time.

But entrepreneur was always a dirty word to me, even after I came to the realization that I was, in fact, an entrepreneur. The word hustle is now associated with side businesses, but a hustle is a con, a scam. These words have always had the connotation of being less than forthright in business, using deceptive practices to get a customer or mark to part with his or her hard-earned money.

Entrepreneurship has a rich history in the United States, considering this is a country of immigrants, and every batch of latest immigrants has a hard time finding acceptance in traditional jobs, and language and cultural barriers often keep communities looking within for business.

Self-employment as a result of side businesses is a growing trend, but not necessarily due to immigration. This is the focus of Kimberly Palmer’s new book, The Economy of You: Discover Your Inner Entrepreneur and Recession-Proof Your Life. Kimberly is the money editor and Alpha Consumer blogger for U.S. News & World Report, and I’ve had the great pleasure of working and speaking with her over the past few years. She joined me recently to discuss the theme of her latest book.

Continue reading this article to listen to the audio or to find a link to download the audio for later. You can also subscribe to the podcast in iTunes. Visit Kimberly’s website at ByKimberlyPalmer.com.

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12 Alternative Financial Resolutions for 2014

by Luke Landes
New year hat

New Year’s resolutions have become so cliché that the process of making them has become a joke. People settle for mundane goals for the year like “losing weight,” “quitting smoking,” and “getting out of debt.” These are great goals, of course, but most who think about these only when the calendar changes soon forget their ... Continue reading this article…

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How to Save Money Without Worrying About Coupons

by Luke Landes
Coupons

The retail industry has everyone fooled. While millions of people spend their time scouring for deals, clipping coupons from the newspaper if they’re old-fashioned, plugging into the latest mobile deal applications if they are somewhat more technologically inclined, sharing their finds on Facebook to recruit friends for group deals, the companies on the other side ... Continue reading this article…

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Subscription Culture: You No Longer Own Anything

by Luke Landes
Dollar sign

Most financial experts agree that if you need a car, buying is almost always a better financial decision than leasing. Even if you have to borrow money for the purchase, traditional financing is a better option than making payments for a couple of years and having nothing to show for it unless you’re willing to ... Continue reading this article…

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The Great Gatsby Backlash

by Luke Landes
Art Deco

I’m looking forward to seeing Baz Luhrmann’s new film treatment of The Great Gatsby. The book, of course, is a seminal piece of American literature, and the new movie is yet another in a long line of interpretations. I like the director’s previous works, and I expect I’ll enjoy the new film. I read The ... Continue reading this article…

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