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Podcast 130: Richard and Linda Eyre, The Entitlement Trap

This article was written by Flexo in Podcast. 1 comment.

On today’s Consumerism Commentary Podcast, Tom Dziubek speaks with Richard and Linda Eyre, authors of the book The Entitlement Trap: How to Rescue Your Child with a New Family System of Choosing, Earning, and Ownership. Richard and Linda discuss several concepts in the book including the definition of entitlement, the five family laws and reversing the behavior of a spoiled child.

Consumerism Commentary Podcast #130
Richard & Linda Eyre, The Entitlement Trap: S05E26 / 155

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[00:00] Introduction from Tom Dziubek
[00:36] Interview with Richard and Linda Eyre
– [00:54] Definition of entitlement
– [01:54] The measurability of entitlements
– [02:46] The difference between generations
– [04:15] Instant and delayed gratification
– [05:52] Nurturing self-esteem
– [06:58] Valuing effort over results
– [09:12] Giving children “ownership”
– [11:47] When children can perceive ownership
– [13:54] Five family laws
– [14:53] Positive reinforcement and entitlement
– [19:32] Money and the “family bank”
– [22:28] Avoiding focusing too much on money
– [23:14] Reversing bad behavior in children
– [26:18] Helping children set goals
[29:52] 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.

Theme music by Mindcube.

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Are Credit Card Annual Fees Worthwhile?

This article was written by Flexo in Credit. 17 comments.

The best credit card deals are often spoiled by an annual fee. Annual fees can range from about $50 to $2,500, with the high end reserved for the super-select American Express Centurion Card (the “black card”). In return for this fee, credit card issuers provide a range of benefits beyond what typical no-fee cards offer, including free gifts, a travel agency, and a personal concierge.

From the issuer’s perspective, an annual fee makes a card more exclusive. A higher-quality customer (in terms of credit worthiness and income) will apply for these cards, and these customers will spend more on their credit cards than typical non-business credit card users.

Issuers also use annual fees for certain cards catering to lower-quality consumers — those with lower credit scores who may not be able to qualify for regular credit cards. In this case, the annual fee helps reduce risk to the issuer, but just barely. More importantly, issuers charge fees for some below-average or sub-prime credit cards because they can; these customers have few options if they desperately need a credit card.

Annual fees are often waived for the first year, so be sure to check the terms and conditions to determine if you’ll need to pay up front or on the first anniversary of your membership.

The value of the annual fee

Whether a credit card is worth the annual fee depends on the conditions. The first condition pertains to the benefits you receive for the card in exchange for that annual fee. If the benefits you receive are worth more to you than the cash in your pocket would be, if you will use those benefits, and if the benefits wouldn’t be cheaper through other avenues, the annual fee might be worthwhile. In some cases, like for those with a substandard credit history, the benefit you receive of just having a credit card to use is worth the annual fee.

It’s important to note that whether you use those benefits plays a large role in determining whether the annual fee is worthwhile. It’s easy to say you’ll use the benefits, and then never take advantage. In some cases, you may wish to use the benefits, but find they aren’t all that great. I used a travel agent through a Visa Signature card, for example, but they weren’t able to do anything for me more than what I was able to do using the Internet myself. In fact, the travel agent needed 24 hours to get back to me, while I could have done the same thing immediately.

The second condition is whether you can receive these same benefits for less money from another service, and if those benefits are comparable.

Shop around. Another credit card may offer the same benefits while charging a lower fee — or no fee at all.

Furthermore, if you don’t pay your balance in full every month, you’ll be subject to interest fees. Worse, you could have late fees and higher default interest rates if you’re not careful. Any of these immediately devalue the benefits, and paying an annual fee on top of these other expenses would be even more detrimental to your financial condition.

In most cases, a credit card annual fee is not worthwhile, but at the same time, for some people an annual fee is not an automatic deal breaker. The extra benefits can often be found on cards that don’t charge annual fees, and these benefits are often unnecessary anyway. Even consumers with low credit scores can often find one free credit card for which they qualify. It’s mainly special situations and needs of experienced consumers that help to justify paying annual fees.

I use a credit card that charges an annual fee, waived for the first year. It’s an airline credit card I’ve mentioned before, the United MileagePlus Explorer Card. I recently passed my first anniversary with the card, though they have not yet charged the annual fee. The benefits have already paid for the potential fee, thanks mainly to the ability to check luggage for free on Continental and United flights and travel certificates. If I didn’t travel often, and if Continental/United didn’t already have low rates for direct flights on the routes I need, there would have been no reason for me to sign up for this card.

Some credit cards with annual fees

For an overview of the typical credit card featuring annual fees, here is a list of some of the most popular. For the cards that are listed as not having the fees waived for the first year, new customers might be able to negotiate this and avoid paying the annual fee once.

Credit Card	Annual Fee	Waived First Year?
American Express Gold Card	$125	No
Blue Sky Preferred From AmEx	$75	No
Southwest Airlines Rapid Rewards Plus	$69	No
United MileagePlus Explorer	$95	Yes
Gold Card From AmEx OPEN	$125	Yes
Gold Delta SkyMiles From AmEx	$95	Yes
Platinum Card From American Express	$450	No

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Why I Still Drive My Old Honda Civic

This article was written by Flexo in Best Of, Consumer, Frugality. 38 comments.

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

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

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

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Life Without Cable TV: Week One

This article was written by Smithee in Consumer. 19 comments.

(No, I don’t plan on writing about this on a regular basis, just when an interesting milestone occurs.)

It’s been a full week since my family turned off the TV service and to summarize: we’re doing fine. As expected, I’m discovering some of the “known unknowns” of being a person without cable but who still cares about TV shows. Let’s start with the big one.

How much money am I really saving?

In my previous article, I estimated we’d be saving about $100 a month. For some people, that doesn’t seem like a lot. It may even seem like regular TV service is worth that much. But I was finding it increasingly hard to live happily knowing that I was paying for something I wasn’t using.

I put together a spreadsheet of the shows we had “Season Passes” for, which added up to 44 different shows that happen roughly once a year. Not all of them were “OMG I have to watch this!” In fact while collaborating on the spreadsheet with my wife I learned that we like a few things less than I thought we did.

For each show, I looked to see if it was on Hulu and found that 18, or 40%, of them are.
If it wasn’t on Hulu, I looked to see if it was on Netflix (we have the Xbox streaming service), and 2 of them were. This is important because those two were from Showtime, meaning we’d otherwise have to pay for them on iTunes.
Of the remaining 24, I looked to see how many were available over-the-air (we got a tuner for the Mac Mini that’s plugged into the projector) and saw that 9 of them are. We can use the Mac as a free DVR for those and still skip the commercials
That leaves only 15 of the original 44 that we can’t get for free. If we bought them all, it would cost $364 a year, saving us $70 / month instead of $100 / month.

To put some of that in perspective, we used to pay $29 a month for HBO, Showtime and a bunch of movie channels that were never playing anything good. But we really only wanted to watch Dexter, True Blood and The No. 1 Ladies’ Detective Agency. Buying those from iTunes will cost $92 a year instead of $348 from cable.

Plus, this way I get to feel the righteousness of only paying for the things I want to watch, which is how it should have always been done in the first place.

The other money thing that’s still unknown is how much money we’re saving on the electric bill by not having the DVR plugged in. I’m not kidding, when I unplugged it, the room got significantly quieter. If only I had one of those Smart Power Meters.

The Spoiler Problem

I follow about 200 people on Twitter, and I read the news from many different sources most weekdays. I even check Facebook sometimes. Some of these people want to talk about the amazing, exciting, “holy crap!” moment on a particular TV show the night before. So I’ve been thrust into the argument: should there be a grace period for talking about a new episode on Twitter, or should people just keep their eyes shut if they haven’t seen it yet? I’ve argued for both sides of the argument, but I’m currently in the “reader beware” camp. It’s just unreasonable to ask people to silence themselves because I’m enjoying a different lifestyle.

So if I don’t want to be spoiled—and I don’t—then I have to know which shows are on which nights, again. In this respect, I’m being transported back to the last century, because with a DVR and cable, it told me what was coming up, and I only had to wait at most twenty minutes to watch the latest enthralling installment. If it means saving $70 a month, I’m willing to risk being spoiled on occasion.

Getting on Verizon’s Radar

Just a few days after Verizon turned off the TV service, I got an e-mail from them like I had never seen before. The subject was “Notice of Claim of Copyright Infringement” and I’ll paste some of the relevant bits here for future Web searchers, and for your amusement:

We are contacting you because our records indicate that the Internet protocol (IP) address provided to us by the copyright owner was assigned to your service on the date and time identified by the copyright owner. While this activity may have occurred without your permission or knowledge by an unauthorized user, or perhaps by a minor who may not fully understand the copyright laws, as the primary account holder, you are legally responsible for all activity originating from your account.

Then it showed me some details of an episode of “30 Rock” I had gotten through a torrent feed. The weird thing is that it wasn’t even a new episode. Here’s the rest of the e-mail:

Copyright infringement is a serious matter that violates U.S. copyright law and subjects infringers to criminal and civil liability. It also violates our Acceptable Use Policy (http://www2.verizon.net/policies/acceptable_use.asp) and Terms of Service (http://www2.verizon.net/policies/tos.asp). If you, or someone using your Internet connection, are engaged in the conduct alleged by the copyright owner, we urge you to stop (and ensure that anyone else who might have access to your Internet connection also stops).

Protecting Your Privacy: The copyright owner has not asked Verizon to identify you, and Verizon will NOT provide your identity without a lawful subpoena or other lawful process. However, if the copyright owner does issue a lawful subpoena or other lawful process that seeks information about your identity or account, Verizon will be legally required to provide the requested information to the copyright owner.

So after verifying this wasn’t a phishing e-mail, I quickly turned off the torrent feeds for shows that were also on Hulu. I created most of these just for backup purposes, in case the TV service got interrupted by weather reports, which is still a potential problem for those shows we’re planning on getting over-the-air.

After Googling a particular phrase, I found a page on Verizon.com that included a link that said something like “read more about our copyright policy”. When I clicked that link, it asked me to log in first. No, thanks.

Did I get put on Verizon’s radar because we turned off the TV? Was it just 30 Rock that they noticed, or are they searching for all NBC shows? Are some popular torrent feeds actually operated by the copyright holder in order to find thieves? We may never know the answer to these questions.

But I can say that I am now doing everything that is both a) legal and b) sensible in order to enjoy the same TV shows we enjoyed two weeks ago. It’s going well so far.

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Earning What You Have: The Mindset I Hope I Never Lose

by Smithee

I think I come from a moderately humble background. My parents are both college graduates, which is a statistical leg up by itself, but my father had to work two jobs until I was 15, and I’m the youngest of my siblings. Mom also started working part-time when I was about 10, and then full-time ... Continue reading this article…

15 comments Read the full article →

How to Save Money at Baseball Games

by Flexo

I am not a very good baseball fan. I grew up with the Mets as the team of choice in my family although none of us were much into sports. This loyalty was solidified with the team’s World Series win in 1986 when I was ten years old, the prime age for baseball fandom. Now ... Continue reading this article…

24 comments Read the full article →

A Sexier Retirement: 10 Exotic, Affordable Retiree Havens

by Sasha

I’m a regular reader of this blog, Get Rich Slowly, Five Cent Nickel, Cheap Healthy Good, and a number of other blogs which encourage me to live more frugally, to save my pennies for retirement. Save, save, save, they say. And so I am. Like a squirrel storing up nuts for an endless winter, every ... Continue reading this article…

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This Week in the Archives: MBA Degrees, Fancy Weddings and Student Loans

by Flexo

In case you haven’t been visiting Consumerism Commentary for a year or two, here are some of the articles you may have missed. These are from April 23-30, 2006: * Apr. 24: The Penny Costs More Than One Cent (5 comments) * Apr. 24: Good News: Get Your Degree in Two Weeks (5 comments) * ... Continue reading this article…

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