As featured in The Wall Street Journal, Money Magazine, and more!

May 2012

Editor’s Note: Thank you for your interest, this offer expired and is no longer available.

If you’ve spent any time on a plane in the past few years, you’ve probably noticed the growing gap between business travelers and the folks riding in the “back of the plane.” Business owners face a choice: standardize travel on a single airline network, or scour bargain booking websites for cheap fares. Under those conditions, American Airlines and Citibank have doubled down on a strategy win back business travelers. With the CitiBusiness®/ AAdvantage® World MasterCard®, the partners have combined a revamped rewards program with bonus miles for many business purchases.

How to earn more than you spend with AA’s business rewards card

Because Citibank also offers some compelling business credit cards attached to its ThankYou Rewards network, selecting this card really comes down to your company’s travel plans and spending patterns. Like most airline credit cards, the CitiBusiness/ AAdvantage World MasterCard racks up American Airlines AAdvantage miles for every dollar you spend. You’ll double your American Airlines AAdvantage® miles whenever you pay for an American Airlines itinerary with the card.

You’ll get the biggest return on investment from this account when you use this credit card on featured merchant partners, including certain office supply stores, telecommunications and car rental merchants. Citi and AA will double your American Airlines AAdvantage® miles on each of those eligible purchases, turning your accounts payable process into a travel generator for your company.

How to earn more than you spend with AA’s business rewards card

CitibankWith a $95 annual fee, waived for the first 12 months, this Citi/AA card clocks in on the expensive end of the airline credit card spectrum. However, if you use all your cardholder benefits, the card can pay for itself a few times over:

  • Waived baggage fees. AA normally charges $25 per checked bag each way in the United States. Book your itinerary with this card, and your first eligible checked bag flies free. So will the first eligible checked bags for each of up to 4 travel companions.
  • Annual companion certificate. Renew your cardmembership and spend $30,000 or more in purchases on the card in a calendar year, and you’ll earn a certificate that will let you bring a companion on a domestic economy round-trip flight. Note that when redeeming the companion certificate you will be responsible for ticketing fee, government taxes and fees that apply.

Best of all, the new primary cardholder can earn a signup bonus of 30,000 American Airlines AAdvantage® bonus miles after spending $1,000 in purchases on the card in the first 3 months of card membership. Use that toward a domestic round trip ticket under the new MileSAAver program, or toward a one-way coach ticket under the classic fare structure. And when you use your card receive a 25% savings on on in-flight food and beverage purchases.

Maximizing your rewards on AA’s global network

Choosing American Airlines as your company’s preferred airline makes the most sense when you travel often through any of the company’s “cornerstone” cities: Dallas, Chicago, Miami, Los Angeles, and New York. Despite AA’s recent financial reorganization, the airline remains part of the “one world” airline alliance, opening up opportunities for reward travel on more than a dozen partner carriers. With AA codeshare flights operating nearly everywhere, it’s not hard for you to rack up AAdvantage miles. While AA can be more expensive than discount airlines, their specialization in business travel means more flexibility for visiting clients and attending conferences.

Industry speculators have suggested that AA may end up merging with another legacy airline, like US Airways. As we learned from Delta and Northwest, and from United and Continental, it can take years for merged airlines to link up their rewards programs and their network partnerships. In the meantime, the CitiBusiness®/ AAdvantage® World MasterCard® could be right for your business if you’re an AA fan and you’re ready to cash in on some money-saving perks. So take a look at the online application for additional information and terms and conditions.

Photo: Kien Wai
CBS News


November’s Black Friday has been has been around for decades, but it’s only recently that it became the crazed shopping event resulting in deaths due to shopper stampedes. Online retailers invented Cyber Monday to bring some of the hype associated with brick-and-mortar retail locations to the internet. Don’t get me wrong; both “holidays” provide opportunities for discounts, but I can do without the ever-increasing marketing.

Teen Vogue wants to take advantage of the shopping holiday trend. Advertisers who pay more money to Teen Vogue for advertising will be allowed to participate in “Back-to-School Saturday” on August 11. Participating stores will on this day offer free samples and events, but there is no indication that the day will include any bargains. The retailers participating include many of the most popular brands among this demographic, like Aéropostale, American Eagle Outfitters, Cover Girl, and Tampax. Like all other spending holidays, this will be great for retailers, but not very worthwhile for consumers from a money management perspective.

Aeropostale - Teen ShoppingIf a sales tax holiday is a temporary reprieve from paying sales tax, a shopping holiday should be a temporary reprieve from buying products. Instead, there’s an increasing number of special events centered around spending money. That’s a great benefit to retailers, not to customers, despite occasional good deals.

For instance, American Express launched its Small Business Saturday campaign last year. On the surface, it seems geared towards helping “Main Street” recover by drawing focus to local stores rather than national branches. The deals, however, are restricted only to people who use their American Express credit cards. Many retailers don’t accept American Express cards because the fees for processing have traditionally been higher than standard MasterCard and Visa fees. By requiring the use of its own cards, American Express forces retailers to pay the AmEx interchange fees, resulting in a nice profit for American Express.

From a retailer’s perspective, the idea is groundbreaking. Take the popular idea of event-based shopping and bring it to one of the most powerful consumer demographics: teenagers and parents of teenagers who want their children to have everything all of their children’s peers have in the fear that not to have the same things would deem their children an outcast. Retailers need to pay a cover charge to Teen Vogue to participate, but the fee will likely prove to be worthwhile.

From a consumer perspective, there’s nothing to this even other than yet another opportunity to spend more money than necessary. Will you participate in Back-to-School Saturday?

Here’s some video insight into marketing the “extruded plastic dingus” to children.

Photo: GabrielaP93
New York Times


In my article earlier today about the recession era bail-out programs, I touched on the idea that sometimes, there are methods to judge a decision outside of its immediate profitability. The bail-outs may have provided a return on investment for taxpayers or they might not have. The idea that the programs could earn money was certainly used as a selling point when the programs were initially up for discussion in Congress, but the idea of preventing a full economic collapse trumps the possibility of walking away with “more” at the end than the money that was put into the efforts.

I recently read in the news about the U.S. Postal Service cutting its workforce by 150,000 workers between now and 2015. The Postal Service has announced the first round, offering buyouts of $15,000 to 45,000 mail handlers. This first round of buyouts would total $675 million but would help stave off the organization’s growing losses in the billions. Last year, I discussed the complete elimination of the Postal Service in favor of private companies that may do the job of delivering mail better — though at a higher price. A lively discussion ensued, with participants offering well-reasoned arguments in favor and against eliminating the U.S. Postal Service.

The final comment was from John, who added the following.

You people watch too much news, and learn too little real truth. You need to worry about your own lives, and stop thinking you can fix the world by balancing its books. Some things are not meant to make money.

Cash in handThis thought is worrisome. An enterprise that does not make money is not sustainable by itself. If we don’t proactively address the problems of mounting losses for the U.S. Postal Service, it will disappear on its own. The Postal Service does not receive any taxpayer funding, so it must pay for its own operations through its own declining revenue. Unless the organization finds a way to adapt to changing consumer demands, such as the declining need for mailing and delivery of letters, it will collapse under the weight of its own operating expenses. Reducing those expenses by cutting back its workforce and perhaps eliminating a day or two of service will provide some temporary aid. It’ll take a significant change in the business model to make the U.S. Postal Service viable over a longer period of time.

John’s point is interesting, though, because it points to an assumption that is easy to skip past without looking: that something is only worth doing if it makes money.

American society is built on this idea. Money is what we use to afford the things we need to survive first, such as food, water, and shelter, followed by everything else we would like to have that goes above and beyond the basic life needs. Without money, we would need to turn to bartering or indenture to survive. We could work for someone else who directly provides what we need to survive in return for that work, or use our skills in exchange for food and shelter. These are inefficient, so the use of money makes life infinitely more bearable and opens the opportunity for people to build wealth over time.

Sometimes, however, the things worth doing are not very profitable. People often work for non-profit organizations when they believe in the missions of those organizations, even if their skills could attract a higher salary working for a for-profit company. Investors don’t simply put their money into the investments with the highest possible returns, they invest in what’s relevant to their lives.

In my own life, I am looking to my future and attempting to decide on a number of possible paths in terms of my career. On the one hand, it would be nice to take what I’ve earned from investments and find new opportunities that allow me to make the best use of the skills I’ve developed to, I hope, provide a continuation of income. I’m openly looking for business opportunities and forming new partnerships. I’ve already been in several discussions with potential partners about ideas that could prove to be profitable, though some touch on my need for creativity a little more than others.

The impetus is to make money, whether by creating a product or service for which customers are willing to pay or by creating something of value for investors. Serial entrepreneurs start businesses with the intent of selling those businesses later on for a profit, and expert serial entrepreneurs are able to repeat this pattern several times. You almost have to lack a passion about your businesses in order to change directions frequently and to come to terms with putting your hard work behind you. I like to consider myself passionate about the work that I do when I have the flexibility to be in control of it, so the detachment that serial entrepreneurship requires might make it unattractive to me.

I’ve also considered other opportunities, not as much focused on the potential to sell either products, services, or the business itself. Having built up an emergency fund and safety net is essential in order to have the luxury of contemplating spending significant amounts of time, energy, and possibly money, on ventures whose path to profitability is murky or even impossible. I’m passionate about the arts, and I’d like to spend more time exploring that area of my brain.

One part of me would like to find an opportunity that has a path to profitability, but that isn’t going to be easy. The more I focus on determining how I can have a lucrative life involved in the arts, the less time I’m spending being involved doing something. My desire to find this balance probably started when I worked for an arts-related non-profit out of college, not earning any money and being very frustrated with my situation.

The market defines which activities are worthwhile, and a pure economic view makes that easy. The salaries for engineers are higher than the salaries for teachers, so from an economist’s perspective, the market has determined that engineers are more important to society than teachers. Supply and demand is at work, too. It may be harder to become an engineer than it is to become a teacher. If everyone placed the highest priority on earning money, more people would forget about teaching entirely and strive to become engineers (assuming I’ve simplified the economy so much that engineering and teaching are the only options for careers).

That might drive up supply and eventually force engineering salaries down, but obviously, society would not be able to function in the condition where earning money is the sole driver for life’s biggest choices. Yet that is exactly how a lot of advice-givers and gurus see the world. We must invest in the stock market for the long term to provide the highest chance of retiring with enough money. We must choose a career that doesn’t leave us moving back in with our parents. We must do the work as required of us by our bosses and exceed expectations in order to plead our cases for a minuscule raise that doesn’t have that much relevance over the course of our lifetime. We must negotiate with our credit card company to lower our APRs, avoid debt whenever possible, and cut out daily lattes.

This is a world that is focused primarily on money rather than on satisfaction with one’s life. Once you have enough money to survive your life in an acceptable condition, you can move beyond the limitation of needing income and can start to tackle problems and questions without the concern about whether it is profitable to do so.

Photo: stevendepolo


The Treasury Department of the United States has released its latest analysis of the various bail-outs enacted during this and the previous Presidential Administration, and not surprisingly, the outlook is good. The government frames the analysis of its own policies in terms of investment return. The Troubled Asset Relief Program (TARP) housing programs and the conservatorship of Fannie Mae and Freddie Mac will account for significant losses for the American taxpayer, but according to the analysis, these losses are more than offset by expected “Federal Reserve excess earnings” of $179 billion through 2015 as well as by expected gains from the government’s investment in AIG and the Treasury’s Mortgage Backed Securities Purchase program.

This accounting seems a bit sketchy, and the issue was raised by Gretchen Morgensen at the New York Times. The analysis neglected an important aspect: costs versus benefits. A cost-benefit analysis would help inform taxpayers whether the series of bailouts constituted an effective approach. Focusing on return of “investment” — whether these programs made money for the American taxpayer — is the wrong approach to analysis. The goal was not to make money, but to prevent the economy from collapsing.

AIGThat safety net can only come with a cost, and that cost might not be apparent. You can easily hide costs in an analysis that ignores the effect of an increased money supply as well as the missed opportunity to invest the same money elsewhere (opportunity cost). A cost-benefit analysis furthermore needs to accept certain assumptions about what might have happened to the economy of the United States had the government allowed entire industries to collapse.

It’s not difficult to use selected financial information to indicate the taxpayer bailouts will break even or possibly result in some kind of profit, and the desire to couch the success of any endeavor in the financial return is the result of a capitalistic society. Bailouts, however, are in effect a socialistic (societal) approach to capitalism: all taxpayers chip in to help selected industries, for the Greater Good of the economy, and you can’t measure social (societal) programs in capitalistic terms such as “return on investment.” You can look at the outcome, in this case, an economy that has been improving despite high unemployment, and compare that with the likely outcomes that would exist if the bailouts were not initiated. That’s a hypothetical situation that economists will never agree upon.

The idea that the bailouts need to earn money for themselves seems to be a way to placate those who need an excuse for the expenditures within a frame of capitalism. This analysis is saying that both the Republicans and Democrats, all generally agreed on the flurry of bailout programs, are justified in approving these measures, but the justification only works when there aren’t significant holes in the financial analysis. It’s better to justify the bailouts by pointing out the overall health of the economy compared to likely alternative scenarios while admitting this benefit to all came at a cost to taxpayers.

Photo: Affiliate
New York Times, United States Treasury Department


Podcast 162: TOPGUN on Wall Street

by Luke Landes

Today on the Consumerism Commentary Podcast, Jay speaks with LT Commander Jeffery Lay, author of TOPGUN on Wall Street: Why US Military Should Run Corporate America. They talk about the leadership qualities missing from Corporate America and what investors should look at to make the right decisions. Consumerism Commentary Podcast TOPGUN on Wall Street: S07E06 […]

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CitiBusiness ThankYou Card Review

by Joe Taylor Jr.

Editor’s Note: Thank you for your interest, this offer expired and is no longer available. Citibank wants to lure more business owners away from American Express and Chase with a credit card that cribs from its competitors’ playbooks. Like the original Platinum Card, the CitiBusiness ThankYou® Card streamlines expense reporting and adds significant purchase protection […]

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Investing for Dividend Income: Not All That Passive

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Passive income is the Holy Grail of financial independence. Modern Western society and capitalism rely on the Puritan work ethic. The idea is that labor is valuable to society, and that hard work leads to success. But the truth is that most people would prefer not to trade their time and effort for financial survival. […]

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by Luke Landes
Eighth grade

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When someone who has accumulated debt across a number of credit cards embarks on the journey to rid himself or herself of this debt, and when that person is generating enough monthly income to cover all expenses and the minimum payments due on all cards with additional funds left over, there are two main philosophies […]

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Podcast 161: My Mother Was a Mail Order Bride

by Luke Landes

Today on the Consumerism Commentary Podcast, Tom Dziubek speaks with Aloysa, founder of the personal finance website My Broken Coin about how her mother came to America by becoming a mail order bride. She talks about the decision to find an overseas husband, what the search process was like, the risks involved and how the […]

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