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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. Read this introduction to learn more about the series.

Calvin is in his early 40s, earning an annual salary of $120,000 plus bonus as an IT project manager in New Jersey. He recently finalized a divorce and has a teenage child. Read his bio here. Calvin is on Team Sara, with Certified Financial Planner Sara Stanich.

The net worth report below and following commentary refer to the last full month, November 2013. Last month’s report analyzed Calvin’s progress during the month of October. November’s theme is debt. Calvin’s thoughts are followed by Sara’s feedback and advice.

Sara Stanich, CFP appears courtesy of Stanich Group and Cultivating Wealth.

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I like the concept of crowdfunding. Websites like Kickstarter have been helpful to start-up businesses, sole individuals with an idea but without capital, and independent entertainers looking for support for their first project. It’s democratic capitalism; the best ideas receive necessary funding while the “investors” receive neither a financial return nor equity. It’s a great deal for those would-be creators who are successful in getting the word out about their projects.

Whether you’re starting a business, putting a new album together, or producing a movie, you start with a plan. To receive funding from investors, whether from the outside of your group or from support from a studio, you show people this plan. Investors want to see your financial viability. They need to understand how the investment will be used.

Crowdfunding avoids almost all accountability. When you blend classes of consumers, you’re asking for trouble. When companies can’t use the strength of their products to sell those products, they turn customers into salespeople, creating incentives to sell the products.

Multi-level marketing may be a legitimate form of selling products when it’s not used for a pyramid scheme, and it may be effective, but if you have to pay your customers to praise your products, it’s similar to bribery. The FTC has a spotted history of pursuing the worst of the pyramid schemes, but perhaps they should look at this new form of raising capital and determine whether it’s in the consumers’ best interests.

Like multi-level marketing’s ability to cross consumer categories, crowdfunding has the potential of doing the same. In this case, fans — the purest of all consumers — can become investors. Not real investors, because there is no potential of a financial return or partial ownership. In most cases, fans will receive something they might normally purchase later. Here are some examples.

In order to manufacture and sell a wireless microcontroller, the creators are asking for $5,000 through Kickstarter. Those who pledge $15 or more will receive the product once it is complete. Those who pledge $29 will receive the product plus one accessory. The highest pledge level is $399, and those who give at that level receive ten products and well as more accessories.

This wireless controller and its functional possibilities — like warning you via your mobile phone when your plant needs to be watered, controlling a robot, or changing color based on the device’s proximity to another object — have attracted enough fans to have collected almost $60,000 at the moment I’m writing this article — twelve times the original goal.

On the one hand, all this really does is shift what has traditionally been the process. Traditionally, creators follow these particular steps: Plan, raise capital, build, market, sell, profit, return profit to investors. Now, this process looks more like this: Plan (perhaps), market, raise capital by selling, profit, build, sell more if you haven’t already reached your full audience. For the creator, there are major benefits to this new model:

  • You don’t necessarily have to have a good plan. Traditionally, potential investors will scrutinize your plan, suggest improvements, and in some cases tell you there is no chance for your product to survive. You don’t have to prove yourself to anyone.
  • You don’t owe anyone anything. As long as you can fulfill your pledge premiums, you don’t have to return any of the money you collect, you don’t have to share ownership with investors, and you don’t have to answer to partners you never wanted in the first place.
  • You’ve reduced your start-up risk. When you invest your own time and money on an untested project, you could lose it all if your plan doesn’t succeed. Now creators are risking other people’s money, which can be positive or negative. If a project doesn’t reach its goal, the consumers can receive their refund quickly; if a project reaches its goal but the creators aren’t able to produce what is expected, the creator has to come up with the money for refunds, and Kickstarter itself doesn’t guarantee anything.
  • You have a good idea of the audience. If the world responds well to your Kickstarter campaign (or other crowdfunding attempts), then you have solid proof of your ability to reach a particular audience.

For these reasons, some very successful creators have turned to crowdfunding. I wrote about Amanda Palmer’s success a few months ago. She is a musician and performer with a very strong fan base. She used Kickstarter to raise $1.2 million (with an initial goal of just $100,000) to produce a new album, art book, and tour. Traditionally, funding projects like these have been the responsibility of record labels, who have in turn used investors’ money. The music industry has been changing, and many are less likely to fund tours for musicians who are not in the top ten in any particular popular genre.

By raising capital on their own, artists have more say in how their media is created. With less studio input into the form of the music, the output is much more authentic. While I was concerned at first that a popular artist like Amanda Palmer might be using her fans to take much more money than she needed for this project — a label would fund the bare minimum — I’d be more concerned if someone as mainstream as Taylor Swift, for example, were to attempt to use crowdfunding.

The CW television network ran a series called Veronica Mars, and the program generated a loyal community of fans. The show was canceled years ago, but the original producer saw that fans continued to be engaged in the show. The network permitted the show’s creator, Rob Thomas, to use crowdfunding to determine whether there was support for producing something new — a Veronica Mars movie.

The Veronica Mars campaign became the fastest Kickstarter project to reach $1 million in funding, only four hours and twenty-four minutes after it was announced, and then became the first project on the website to ever achieve $2 million in pledges. The project currently stands at $3.6 million with 25 days left in the campaign.

Fans who pledge $10 to the Veronica Mars campaign receive a PDF of the script; the one backer who pledged $10,000 or more will receive a speaking role in the Veronica Mars movie.

The $3.6 million should be sufficient for producing a Veronica Mars movie, but using just money from fans was not the original intention. Warner Brothers would likely have sought other investors to fund the movie’s production had it brought in only its goal of $2 million, taking the full funding as an indication the movie could find an audience and be profitable. But if funding continues at this pace, the Kickstarter campaign is likely all that will be needed.

While this is another example of a great use of crowdfunding by well-seasoned producers, but it seems to be the opposite of the core mission of Kickstarter. Veronica Mars is not a start-up, looking to sell an audience on its idea. These aren’t scrappy filmmakers scrounging to find just a little bit of funding to move forward with their creative process. Warner Brothers is a big entity, and while the film industry may not be thriving, there are certainly more opportunities for investors than turning to fans. With the public paying attention to these big campaigns, there’s a bigger chance of missing opportunities to fund smaller projects that have no other avenues for raising capital.

In the end, everyone gets what they want. Even if the Veronica Mars movie isn’t a hit, the funders receive their DVD copies or other memorabilia, the fans are satisfied with the movie as long as it’s good, and if producers finish the movie and send out the premiums without using all of the money from Kickstarter, the rest is profit, in addition to profit from any sales after the fact. Best of all, the producers get around their responsibility to more sophisticated investors, who want to review financial plans for quality, claim ownership or a percentage of the profits, and have some say in how the project is produced.

Fans don’t want that; they just want their DVDs.

Do Kickstarter campaigns (or similar crowdfunding attempts on other sites) take advantage of fans’ willingness to spend money? Or is crowdfunding just a more efficient way of creating products and getting them to consumers, without involving too many other parties?

Hollywood Reporter, Kickstarter


If you travel frequently and are interested in earning points to redeem for stays at Hilton’s family of hotels, car rentals, vacations, or experiences, you may be familiar with the Hilton HHonors program. The Hilton HHonors program awards its members on eligible purchases with at least 3 HHonors Bonus Points per dollar spent and up to 10 HHonors Bonus Points per dollar spent on hotel stays within the Hilton HHonors portfolio*. The program is designed for frequent travelers, and as of today, new holders of the Citi® Hilton HHonors™ Reserve Card can take advantage of a big sign-up bonus: two weekend nights at a Hilton hotel.

Limited-time bonus: two weekend night stays

After spending at least $2,500 in purchases on the Citi Hilton HHonors Reserve Card within the first four months of account opening, the HHonors program will send the cardholder two certificates, each good for one weekend night at most Hilton hotels. The only hotels not included are Waldorf Astoria locations that don’t offer regular-rate rooms. You’ll receive the certificates six to eight weeks after you’ve achieved the qualification threshold, and they will expire one year after they are issued.

Citi Hilton HHonors Reserve Card cost and benefits

The Citi Hilton HHonors Reserve Card is a Visa Signature card, offering the amenities that come from this tier of credit cards. Like many other Visa Signature cards, the benefits like concierge service come with a cost. There is an annual fee of $95. The fee is not normally waived for the first year of membership.

International travelers will be pleased that this card does not charge additional transaction fees for purchases in foreign countries. Additionally, the card includes a chip that makes it compatible with the technologically superior point-of-sale card acceptance devices in Europe. Worldwide, an increasing number of merchants are no longer accepting credit cards with magnetic strips in favor of cards with microchips. These often require the cardholder to enter a PIN instead of a signature, similar to the debit card system in the United States.

All purchases are charged a variable rate of 15.24% APR and cash advances are charged a variable 25.24% APR. There is no introductory period with lower interest rates for purchases, transfers, or cash advances.

There are other fees holders of the Citi Hilton HHonors Reserve Card should be aware of: a balance transfer fee of 3% or $5, whichever is greater and a cash advance fee of 5% or $10, whichever is greater and a late payment fee of up to $35.

Hilton HHonors Rewards program

For frequent travelers, a reward program based on points can be more valuable than a cash back rewards program. For that to be the case, you’ll need to make as much use out of the proprietary rewards as possible.

In terms of accumulating points, Citi Hilton HHonors Reserve Card holders earn 10 HHonors bonus points for every dollar spent on stays at hotels part of the Hilton HHonors portfolio. That includes Hampton, Embassy Suites, Doubletree, Conrad, and Waldorf Astoria in addition to hotels with Hilton in the name. The program provides 5 HHonors Bonus Points for every dollar spent with airlines and on car rental services. All other eligible spending earns 3 HHonors Bonus Points for every dollar spent. On the surface, this seems to be a better deal than the average rewards in cash back programs, usually around 1 percent to 2 percent, but the key to the program’s value is only understood by looking at how the HHonors Bonus Points can be redeemed.

The rate at which cardholders earn points differs depending on the card owned. Cardholders of the Citi Hilton HHonors Card (no “Reserve” in the title) earn a smaller number of HHonors Bonus Points for each dollar.

Hilton HHonors is somewhat flexible with their redemption program, allowing two-way conversions of their HHonors Bonus Points with various airline miles programs, but there is no good way to convert HHonors Bonus Points directly into cash. For the most part, you’ll need to spend or convert HHonors Bonus points to redeem their value.

The Hilton HHonors shopping mall offers electronics, accessories like purses, and entertainment such as a Kentucky Derby package for two (if you have nearly 4.5 million HHonors Bonus Points handy). To get an idea of the value of each point in terms of shopping, a Canon Pixma Office all-in-one printer goes for 95,500 HHonors Bonus Points. The listing does not present the printer’s model number, but the image matches the Canon PIXMA MX512 Wireless Color Photo Printer with Scanner, Copier and Fax, sold for $108.00 on currently, with a retail price of $149.99.

To use your HHonors Bonus Points for hotel stays, which will for most people be the main purpose of earning points in this program, the redemption rate is determined by the class of hotel where you’d like to stay. Hotel categories range from class 1 to class 7, so one night can cost anywhere from 7,500 HHonors Bonus Points to 50,000 points. Some Waldorf Astoria locations, depending on the time of the year, can cost as much as 60,000 HHonors Bonus Points for one night’s stay.

Owners of this card are granted membership in the Hilton HHonors program with gold status for as long as they are holders of the Citi Hilton HHonors Reserve Card. Gold status sits just beneath diamond status and above silver status and provides a 25% bonus on HHonors Bonus Points earned and complimentary access to high-speed internet throughout Hilton’s properties as well as the highest speed offered in properties where there are speed options.

If these benefits are worthwhile to you and your traveling needs, apply for the Citi Hilton HHonors Reserve Card.


Yes, it’s frustrating to need to reach for my wallet and type in my credit card number every time I want to complete a purchase online. According to a recent MasterCard and Harris Interactive survey, 58 percent of consumers agree with me. Consumers even abandon their online shopping carts when the check-out process requires too much effort.

That might be good news for consumers. If a small barrier is all it takes to prevent someone from making a purchase, perhaps that purchase was not a necessity. Leaving more money in the bank rather than spending that money on some product that does not drive enough desire to get through a relatively painless process can only be beneficial to the shopper’s financial condition. Retailers, on the other hand, will obviously see consumers’ lack of purchase consummation as a problem, directly affecting sales and revenue.

The solution is to store the details pertaining to your payment method so it can be automatically retrieved at the point of sale. is certainly a pioneer with this approach. This company’s one-click purchasing process using stored credit card or debit card information makes buying a smooth process, although it created an uprising about patents when this feature was introduced many years ago.

PayPal has a good solution as well. Stores that allow payments through PayPal enable users to associate a credit card and avoid the need to type in a credit or debit card number each time.

Consumers can also use browser add-ons or downloadable programs, like LastPass, to store credit card information retrievable with a click or two.

Purchasing items online is much safer and more secure than being out in the world, carrying a wallet with all your credit cards and cash, and handing your credit cards to a waiter or gas station attendant who disappears for several minutes. Online security, as long as you confirm you are visiting a secure website, is trustworthy. No one is going to intercept my secure internet connection when I’m buying something online, and for the most part, I trust companies not to expose a database of credit card numbers to the public. That exposure is just as likely to happen when shopping in brick-and-mortar stores as when shopping online. The situation is unlikely, and shopping online does not add to that risk.

There is no universal solution, a one-click purchasing experience like that on, available to all retail websites. But there is also no equivalent to the one-click purchasing experience when you shop in store locations, either. Swiping a payment card or transmitting a secure wireless signal from your mobile phone gets close to the experience, but you still need to take out your wallet or your phone.

While retailers want to make it easier for consumers to pay money, consumers should be careful about making this process to automatic. Trading money for an object of some type should involve at least some opportunity to stop and consider the purchase. Technology makes it incredibly easy for consumers to part with their cash or increase their debt burden, and retailers want to make it easier. Consumers should be working against that trend and moving in the opposite direction.

If not, retailers will soon be able to simply reach into consumers’ pockets and take that money. Some companies offer free trial periods for their products and services without making it blatantly obvious that customers will be charged at the end of the trial period. Some create significant barriers to canceling the service in advance of the ending of the trial period. Consumer groups often criticize these policies, and some might be considered scams. If consumers make it increasingly easy to give up money without thought, then we’re just as much to blame.

Photo: Håkan Dahlström


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