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September 2007

As you may have noticed, we’ve been undertaking a redesign at Consumerism Commentary, with the intent of reducing clutter. Feel free to leave any comments, particularly if there is any features that no longer work for you. Here are a few articles I’ve read from the MoneyBlogNetwork and beyond this past week:

Index Funds Plus a few Stocks Works for Me. FMF keeps it simple with his investing strategy. This is similar to mine, as well, but my stocks are not performing as nice as I’d like.

Thoughts on Maxed Out. Mighty Bargain Hunter shares his thoughts on the documentary. It’s easy to get into debt problems, but difficult to get out. MBH says the key is preparation.

Words of Wisdom From Alan Greenspan. Five Cent Nickel took notes during the former Fed chief’s appearance on The Today Show. In short, he’s worried about the credit crunch, but he doesn’t believe we’re heading to a recession.

8 Personal Finance Lessons I Learned From Monopoly. Jim from Blueprint for Financial Prosperity has some ideas about how the old game can be linked to personal finance.

Illustrated Debt Snowball. No Credit Needed includes some charts that help visualize how the debt snowball technique worse. The traditional debt snowball (highest balances first) is not the most efficient way of getting out of debt. See 6 Steps to Building a Better Snowball.

Using Quicken to Analyze and Correct Bad Spending Habits. Get Rich Slowly used his software to motivate him to spend less on comics.

A Preview of the 2008 Federal Income Tax Brackets. AllFinancialMatters is way ahead of the game. I haven’t started by 2007 taxes yet.

Using Music to Teach About Money. Alpha Consumer interviews Benjamin Chavis, president of Hip-Hop Summit Action Network, about their program to inspire healthy money management skills in today’s youth.

Have a great weekend!

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A review of Mint.com follows.

Seven years ago, you would have found me blissfully unaware of my spending practices and their impact, flourishing my credit card without a second thought as I ran up my tab at restaurants and shops. I defined living life fully as having the things and experiences I desired, and I thoroughly enjoyed myself, imagining that I could travel anywhere and do anything I liked.

There was a catch, though. Only through intentional ignorance could I stand to keep it up, refusing to look my finances straight in the wallet. When I was confronted with bills I’d flinch, pay what I could, and hope to straighten things out later.

It was a frightening day when I finally faced my situation. During such “rich” living, I’d not realized the weight that my debt added onto my life. I was tipping the scales way out of balance, and the only way to even begin to fix things was to gather my finances and face the situation head-on.

Now, I watch my finances daily, with a slight degree of paranoia. I suspect that any moment I’m not paying attention, a spending mishap or stock fluctuation will sneak in and alter my financial landscape. I am obsessed with a constant need to know where I stand against my goals, planning strategies and swelling with pride at every small stride forward. I thrive as I watch my debt dwindle.

Besides my mindset, my biggest obstacle to financial awareness was my hatred of math. There, I’ve said it. I despise balancing checkbooks, tallying accounts, and performing almost any analysis involving a calculator. And though I’m starting to get to know them better, balance sheets, cash flows, and other documents which look like corporate financials make my eyes glaze over.

I have outlined my own budget and expenses several hundred times in Excel, only to find I never want to look at them again. It’s just how I am.

While I had high hopes for MS Money and Quicken, I found them to be expensive and somewhat burdensome to work with. I spent hours categorizing things only to realize that I didn’t have the time at home to keep it up, nor did I find the reports all that helpful.

I kept wanting it to be simpler, clearer, cheaper. My finances at a glance, in one place, but accessible online from anywhere without needing to remember scores of passwords.

I found this to some degree in Yodlee’s account aggregation, encountering the service first as Wachovia’s “One Stop” and then as Fidelity’s “Full View“. Some use Yodlee MoneyCenter directly, I’ve heard, but I always access their services via one of my account providers.

Though the service can look and work differently based on implementation, it’s relatively simple. Essentially, there’s a one-time setup phase, where you add your accounts, and then each day you log in and refresh your data to view a snapshot of exactly where you stand financially.

Bank accounts, loans, brokerage, credit cards, 401K and other investments tally up to a neat net worth, with transaction information easily accessible. Even insurance, frequent flyer miles and my billpay service can be added to this view. I set it up once, and now log in every day, sometimes two or three times a day. I told you it’s an obsession.

The problem? It’s great to get such a high-level at-a-glance view, but it hasn’t grown with my needs. There are no analytical tools, no way to categorize and tag items and get different views or reports of the information presented or any helpful tips to improve my situation.

Until Mint.com, that is. Launched last week, this free online money management service features the security and ease-of-use of the Yodlee platform with a host of simple yet effective tools for categorizing, analyzing and ultimately improving one’s relationship with money.

Their web site makes some impressive claims:

Mint is the freshest, most intelligent way for you to manage your money online. Not only is Mint free, it saves you money. While existing personal finance software “solutions” require hours to set up, a passion for accounting (is that possible?) and hours of weekly maintenance, Mint is virtually effortless.

Can it be true? Can it really save you money? Most importantly, can it save me from the things I most dread, mathematics and accounting?

I’ve been beta testing their service for a few months now, and have formed some strong opinions so far. So, let me introduce you to Mint.

[click to continue…]

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Best Buy is campaigning for better consumer education in High Definition to prevent store returns. Customers apparently purchase flat screen televisions and expect the complete high definition experience immediately upon hooking up their system with the same old equipment and cables. Despite the lack of knowledge, I don’t think an entire “education program” is necessary. Here are the basics about high definition without getting too technical. This covers what the typical consumer should know before shopping.

Why do I want high definition? If you want to experience great picture quality comparable to theater viewing, or if you want to be able to identify the individual blades of grass in the football stadium, then high definition is for you. If you’re just interested in “keeping up with the Joneses,” then maybe you should consider using money for something else, like saving, investing, or purchasing some other smaller piece of technology.

Now that the obvious is out of the way, let’s continue.

What size television do I need? No matter what size you get, chances are you’ll always want something bigger once it’s situated in your living room (or bedroom, or bathroom). The height of your television screen should be one third of the distance between your couch and your television. For example, if your favorite chair is seven feet from your television, you would need a television 28 inches high, which translates to a diagonal measurement of 57 inches. Chances are you can get by quite comfortably with something smaller. This “rule of thumb” seems a bit on the generous side to me.

What resolution do I need? How future-proof do you want your purchase to be? If you plan on having the television for ten years, go for the best resolution available, 1080p, especially if your set is 50 inches or larger. 1080p means there are 1,080 lines of resolution from top to bottom of the screen and each frame contains the full information to draw the entire picture. The other options are 1080i, which is similar to 1080p but not as clear, and 720p, which I would not recommend. Most people can’t tell the difference between 1080i and 1080p and many people see no improvement over 720p.

What contrast ratio is best? Ignore the contrast ratio, which is usually described as a large number to 1 (that is, 1,000:1). The numbers are basically meaningless. You can’t compare across brands or across display types as there are many ways to calculate the number and there are ways to make the ratio sound better than it is. Look at response time for LCDs; a single-digit nanosecond (ns) response is best.

LCD or plasma? Or projection? The type of television you want depends on your viewing and living conditions. LCDs are more transportable, plasmas have deeper colors. Rear-projection televisions are bulky and have poor picture quality, but are less expensive. Front projectors can provide a very large display but will have trouble producing a rich picture in a room that is not sufficiently dark. These projectors may be good for an entertainment room in your basement, but probably not for your living room.

Tuner or monitor? Some high definition televisions have their own built-in high definition tuner, so a cable box isn’t necessary unless you want to unlock premium channels. Some newer televisions include CableCard technology, which unlocks premium channels without a cable box, but must be supported by your cable provider. A few televisions are labeled as “HD-ready” monitors, which means they rely on the cable box to receive and decode high definition programming.

What kind of cable service do I need? If you plan to watch television broadcasts on your new television, you need high definition service, either over the air, cable (fiber optic or analog coaxial), or satellite. Cable providers like Comcast, Cablevision, or Verizon FiOS might include a few high definition stations with their basic digital service, but the best programming will cost extra.

High definition is currently only broadcast in 720p or 1080i, so if you plan on watching television only, you won’t benefit from having a television with a resolution of 1080p for another few years. As Broadcasters increase their bandwidth and content providers begin supplying programs at the highest resolution, 1080p will become more practical.

Most television is not broadcast in high definition, and sometimes standard definition broadcasts look worse on a high definition television than they do on a standard television. That’s something you’ll have to live with until cable companies cease standard definition programming. Standard definition programs on a high definition channel will often look very good, almost as good as the source material.

Will my old DVD player work? Yes, you can hook up your old DVD player to your new television. Don’t expect your DVDs to look fantastic. If your DVD machine was purchased in the last year, it may be “upconverting,” which means it will convert standard definition DVDs (all DVDs are standard definition) to higher resolution. You’ll need to use component cables or HDMI cables to take advantage of this feature.

You can’t play HD DVDs or Blu-Ray discs in your old DVD player (except for some combo discs which are being phased out). If you want true high definition movie experience, you’ll need to purchase an HD DVD player, a Blu-Ray player, or a combination device that plays both. The movie studios are quickly choosing exclusive deals with either HD DVD or Blu-Ray formats. The two are basically on equal footing in terms of quality, but HD DVD players cost less.

If you want to get started right away, choose either HD DVD for its better prices, or view the current library of movies available on each format and choose the technology with the highest number of movies you’d like to experience in high definition. Here are the HD DVD and Blu-Ray library libraries on Amazon.com. High definition discs cost more than standard DVDs.

What kind of cables will I need? Component cables, which include three RCA cables for video and the standard red and white RCA cables for audio, are sufficient for 1080i. Your cable box won’t need an HDMI output until television is broadcast at 1080p. You may want an HDMI cable if you have an upconverting DVD, HD DVD, or Blu-Ray player.

The store will try to sell you expensive cables, usually Monster brand. You don’t need these cables; they are overpriced, and the less expensive cables are just as good over short distances. Monoprice.com is a good source for inexpensive cables. I don’t expect Best Buy’s consumer education program to inform about the quality of less expensive cables. The store’s mark-up and profit margin are very high for these items, much moreso than for the televisions.

Do I need a new audio system? Possibly not. If your current surround sound system accepts digital optical connections, in many cases you do not need to purchase anything new. Audio signals travel over HDMI as well, but only newer audio systems have HDMI inputs. You probably only need 5.1 channels. Your DVD player will likely do all the audio signal decoding you need.

Chances are you will not be satisfied with using your new television’s built-in speakers for all audio. Television manufacturers don’t focus on providing great audio on the sets because they expect most customers will be connecting the panels to surround sound speaker systems.

What brands should I purchase? You can’t go wrong with any of the major brands, but do extensive research before purchasing. Each model has its own quirks, and as long as any particular item has been on the market for several months, you will be able to find detailed commentary from professional critics and customers. My favorite first stops for commentary are Consumer Reports, CNET’s user reviews, and Epinions.

I own a Sharp Aquos 42 inch LCD.

This is all you need to know to get started. Feel free to contribute any additional tips, offer corrections, or pick a fight.

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Every so often, I’ve been going through some of the more popular credit card issuers and presenting a list of their credit cards, highlighting some of the better programs for rewards. So far, I’ve looked at the best credit cards from American Express and Capital One.

Credit cards can be dangerous tools in the wrong hands. It’s been many years since I’ve paid an interest charge or late fee; I would suggest anyone who does not pay their credit card bill completely each month should ignore these posts. For those looking for good deals, perhaps Citi has something to offer.

Citi Professional Cash Card

This Citi Professional Cash Card and its cousin, the Citi Professional Card With Thank You Network, offer similar rewards. Purchases at restaurants, gas stations, office supplies, and car rentals earn 3% cash back or 3 points for every dollar spent. All other purchases earn 1% cash back or 1 point per dollar.

The difference is that the earnings from the cash card can be redeemed via check while the points earned with the Thank You Network card can only be collected through purchasing items through Citi’s network of merchants. The good news is that many of these merchants offer gift cards.

Also, the Citi Professional Card With Thank You Network is currently offering a 10,000 point bonus after your first purchase, redeemable for a $100 gift card.

The Cash card offers a regular purchase interest rate of 10.24% and the Thank You Network card offers 11.24%. Both cards offer a 0% introductory rate for purchases for 12 months.

Citi Bronze/AAdvantage® MasterCard

The Citi Bronze/AAdvantage® MasterCard, which comes in other flavors such as Gold and Platinum, offer rewards for frequent travelers on American Airlines. With the Bronze card, one mile is earned for each two dollar spent, while the Gold and Platinum level cards earn one mile for each dollar. Miles can be redeemed not only with American Airlines, but with 25 top airlines, car rental companies, and hotels.

These three cards offer sign-on bonuses after your first purchase. You will earn 5,000, 12,500, or 15,000 points depending on the level of card you own. The increasing benefits come with increasing annual fees, however. The Bronze card has no annual fee while the Gold and Platinum cards charge $50 and $85 respectively. This annual fee can be worthwhile if you make the most out of these credit card rewards.

Citi Dividend Platinum Select

I consider the Citi Dividend Platinum Select to be the flagship rewards card. Unfortunately, it is not quite the card it used to be. Many past cardholders saw a reduction of the cash back rewards and were later suggested to change to the Citi Dividend World MasterCard. For new card members, the Citi Dividend Platinum Select offers 5% cash back at The Home Depot and on Home Furnishing and Home & Garden purchases from 4/1/12 to 6/30/12. After 6 months, this is reduced to a 2% cash back bonus. All other purchases earn 1% cash back.

The Citi Dividend Platinum Select for Students offers the same features, but has a different promotional rate. The card for students offers a 0% APR on purchases, cash advances, and balance transfers for 6 months, while the standard card extends that offer for 12 months.

Citi Driver’s Edge Platinum Card

For one year, this card offers 6% cash back on purchases at supermarkets, gas stations, and drugstores and 1% rebates on all other purchases. This is one of the best rebate offers that I’ve seen lately. After one year, the 6% level drops to 3%, putting a damper on what otherwise would be the only card to use for certain purchases.

You also receive rebates for each mile you drive, $1 for each 100 miles. That can add up considerably. Citi verifies your mileage by requiring a copy of auto service receipts with odometer readings.

Unfortunately, the rebate isn’t pure cash. The rebated can only be used towards the purchase of a car, repairs or service, or merchandise in the Thank You network. The maximum you can earn each year is $1,000 in rebates, higher than other rebate programs, but not unlimited.

Like some of its other cards, Citi also has another version of this card, the Citi Driver’s Edge Card for College Students. The difference here is the lack of the 6% rebate offer; the highest purchase categorizes max out at 3%.

Citi Home Rebate Platinum Select Card
The Citi Home Rebate Platinum Select Card is another good replacement for the Citi Dividend Platinum Select. For 6 months, this card earns a 6% rebate benefit on purchases on utilities, cable and satellite television, internet connection, and telecommunications services. After 6 months, this rebate is reduced to 1%, the same as the rebate for all other purchases.

If you don’t want to use this card for purchases, consider balance transfers. During this promotion, there is no balance transfer fee and no interest charged on transfers for one year.

As always, these credit card rewards are not for everyone. If you pay interest or late fees, you won’t benefit from any special offers. Only consider opening new credit if you are an expert at managing your own money and buy only what you can afford to pay each month.

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Weekly Roundup, Jogging Edition

by Luke Landes

The first spin-off from my original personal blog was a blog in which my roommate and I chronicled our adventures in physical exercise through jogging, about 7 years ago. I’ve finally gotten up off my butt again. Each day this week, I’ve been taking laps around my apartment complex after work. Actually, I missed Wednesday […]

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Financial Advisers and Stock Brokers: What’s the Difference?

by Luke Landes

You would think that the roles and responsibilities would be clear and there would be a strong line between individuals who call themselves financial advisers and those who call themselves stock brokers. The obvious answer is that advisers give impartial advice based on the best interest of the client and brokers sell products as a […]

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Financial Curriculum: Classes About Money Management

by Luke Landes

Earlier this year, I shared my opinion that personal finance classes should not be required in high school thanks to an overloaded general curriculum and dubious results. My opinion is that basic money management is better taught — if in school at all — in the earlier years. The Citi Foundation sponsors a financial education […]

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Shared Money: Combining Finances With Your Partner

by Luke Landes

Yesterday, I received a question from a reader, Lindsey. I’m not much of a fan of giving advice; there are professionals out there whose job is to provide sound financial advice. All I can offer is my opinion. Here is Lindsey’s question. What should you do if you and your partner decide to combine finances […]

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The Declining Value of the MBA

by Luke Landes

Among the high-powered analysts and hedge-fund superstars, obtaining an MBA is losing its attraction. Even degrees from the most prestigious schools like Harvard and Wharton are viewed as a waste of time and money if the student could be earning hundreds of thousands of dollars a year as a stock analyst or millions as a […]

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Weekly Blog Roundup, Fall Season Edition

by Luke Landes

I am not a television junkie, but I appreciate good entertainment. Hence, I’m looking forward to the upcoming series of Heroes, House, and The Office. While I’m preparing by setting my digital video recorder to record all the new shows in glorious high definition, I’ll be reviewing some of the recent articles from the MoneyBlogNetwork. […]

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