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Why Your Credit Card Might Be Useless Overseas

The headline might be a bit dramatic, but it's true that more and more merchants in Europe and elsewhere will not accept credit cards without the "Chip and PIN" system —- an embedded chip in the card along with a PIN number (similar to that you are probably accustomed to with your ATM card).

You, however, don't have a PIN associated with your credit card, do you? Unfortunately, as this L.A. Times article reports, it's not an easy problem to fix:

Here's the catch: Americans cannot get such a card through U.S. card issuers.

So what do you do? Well, one way to be sure you always can get by is if your bank offers a combination ATM / debit card with the Visa or MasterCard logo. That has a PIN, so you're OK. But of course this means the money will come straight out of your checking account, so you'd better have enough in there to cover your purchases. Of course, that's not really credit anymore. It's also a bit less less safe, in that it's harder to get your money back if a merchant stiffs you in some way.

The Times article also suggests that some merchants will let you get by if you also have a picture ID, although this doesn't help you if you're trying to purchase something via an automated machine that isn't staffed by humans.

It's certainly not impossible to get by with your American credit card, but it's becoming more work to do so, so take this into consideration if you're hitting Europe any time soon.
See full article.

Related Entries:

Stinky: Credit Card Companies Pass Along Your New Card Numbers - 31 May 2006

How to Accept Credit Card Payments - 23 October 2006

Smartphones and PDAs the New Credit Cards - 11 January 2007

FICO Relents; Credit Card Authorized Users Can Boost Their Credit Scores - 12 August 2008

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Pump Your Gas in the Morning and Save Half a Penny, or Less

If you read this blog regularly (and you know you do), you may have noticed that I cast a skeptical eye on money-saving ideas that require maximum effort for minimum savings.

This year's gas prices have created all kinds of ideas on how to maximize your gas so you can save a bit. One of the ideas offered has been to buy your gas in the morning:

Buy gasoline during coolest time of day - early morning or late evening is best. During these times gasoline is densest. Keep in mind - gas pumps measure volumes of gasoline, not densities of fuel concentration. You are charged according to "volume of measurement".

Does this sound like a good tip? Maybe. According to Snopes, even if it were undeniably, 100% true, you wouldn't save much:

Even if the temperature/volume issue were a real and significant one, one has to consider the amount of savings to be gleaned from such a scheme. Assuming that a motorist typically bought 15 gallons of gasoline per week at $4.00 per gallon, and assuming that by carefully choosing to fill up at a particular time of day said consumer could realize a 1% savings, we calculate the total savings to be gleaned over the course of a year at about $31. Would that reward really be worth the potential inconvenience of adhering to a rigid fill-up schedule week after week?

Now Consumer Reports says that you're unlikely to get any savings by filling up in the morning, because fuel stored in underground tanks does not necessarily get cold overnight or heat up during the day:

Today's double-walled tanks work just as well at keeping fuel warm as keeping it cool. If fuel is warm when it's delivered to a station, it'll still be warm when it's sold a few hours later, whether that's five in the morning or two in the afternoon.

In other words, spend your time on more worthwhile pursuits, like maybe the pursuit of more money instead of pursuing miniscule cost savings at the cost of your time. See full article.

Related Entries:

Stock Up on Forever Stamps and Save Penny After Penny! - 12 February 2008

Gasoline Mike - a Static Encounter - 01 March 2008

High Gasoline Prices: Paying to Play - 28 April 2008

Sticker Shock at the Gas Pump - 28 May 2008

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A Little Soy Goes A Long Way

I would probably never do this, but as a vegetarian I was fascinated by Nora Dunn wringing every last ounce out of a bunch of soybeans to make mass quantities of soy milk, veggie burgers and tofu:

The last batch of soy beans I processed cost $1.50 and produced 24 meals. Want to know how? Read on...

It's amazing how far she makes the beans go. I was almost going to do it myself - until I got to this step:

Line a large pot with a pillowcase (or cheese cloth if you have an abundance of cheese cloths lying around) and pour your blender mix into the pillowcase. Then, squeeze the pillowcase for all it's worth! This is best accomplished with two people: one holding the pillowcase over the pot, and the other squeezing the soy - you'll definitely need two hands and some elbow grease for this one.

Putting a bunch of wet soybeans into a pillowcase and then squeezing them (not to mention convincing a friend to help me) sounds like a recipe for a messy and unhappy Justin McHenry.

This is why I'm a bad do-it-yourselfer. When the going gets tough, I get out of there.

But if you have a lot of gumption, Dunn has a lot of other interesting articles at Wise Bread, such as Paint A Room and Wash Your Face: More Uses for Powdered Milk Than You Ever Imagined. (I've never really imagined any, which again shows why I'm no good at these things. Dunn sees powdered milk and wonders what else she could use it for.)

(By the way, Nora Dunn is not the same Nora Dunn that used to be on Saturday Night Live.) See full article.

Related Entries:

Safe To Eat Sauces and Soups for People With Food Allergies - 04 November 2006

The Long Drivers - 09 February 2007

Bil Jac Frozen Dog Food for Dogs with Food Allergies - 06 June 2007

Long-Distance Dating - 30 July 2008

Contents of this feed are a property of Creative Weblogging Limited and are protected by copyright laws. Violations will be prosecuted. Please email us if you'd like to use this feed for non-commercial activities at feeds - at - creative-weblogging.com.

American Express Considering Your Housing Market When Giving Out Credit

One of the unhappy side effects of the housing market collapse/credit crisis is that many innocent people have to suffer, too. For one, your house is probably worth less than you thought it was until very recently (and you may even owe more on it than its current market value). And for two, the actions of others have cast a net of suspicion on you.

An easy example is American Express's recent statement that the company is now using local housing market data as one factor in determining whether it will give out credit. This has nothing to do with your home in particular, or your payments on your home, or any aspect of your credit history - it has to do with things such as the number of foreclosures in your area, the drop in home values in your area, etc. All things that you can do nothing about (unless you move, of course).

No one said life was fair. But here's another reminder, just in case you were starting to think otherwise.
See full article.

Related Entries:

Just Put the Condo on My American Express - 13 September 2006

Buying Foreign Currencies at American Express Company - 29 September 2006

Oh $#@&%!!!... RFID Credit Cards Can Be Hacked. Very, Very Easily. - 24 October 2006

Buy a Home with Your American Express Card - 24 May 2007

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Alaska Airlines Goes Cashless

Another airline is forcing you into credit-only onboard - as of August 5, Alaska Airlines began offering "the convenience of a cashless cabin. Passengers will no longer need to hunt for cash to pay for on board purchases..."

And, by the way, now that you have the "convenience" of a "cashless cabin", you should know that "Cash will no longer be accepted onboard."

I don't have a real problem with going credit-only, but I think it's sort of lame to call it a "convenience" when you force your passengers to use credit only and prohibit cash. The only party that is 100% guaranteed to consider this "convenient" is the airline that no longer has to deal with cash.

Anyway, just an FYI if you're zooming in or out of Alaska. See full article.

Related Entries:

Alaska Airlines Flight #536: Eine Notlandung und die Folgen - 29 Dezember 2005

Alaska Airlines and Row 44 to Trial In-Flight Wi-Fi in 2008 - 18 September 2007

Alaska Airlines to Test Wi-FI - 25 September 2007

Alaska AIrlines Switching Ticket Counters To Touch Screens - 17 February 2008

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Other Voices: Links for 8/14/08

From the PF blogs:

Mapgirl:

I just don't understand the DC housing market. How can people live here, save and have kids all at the same time? Unless you really are a K Street lobbyist raking in the dough, it's nigh impossible to live here and raise children all at the same time. (But is my dream of San Francisco any better? Hardly.)

Get Rich Slick:

I've noticed a disturbing new trend with some PF Bloggers - the deletion of dissenting comments to skew the discussion in favor of the authors point of view.

This is also a primary reason I don't have ads on my blogs, bloggers become "slaves" to the income from their "masters" and anything that interferes with the master/slave income relationship (i.e. reader comments) becomes a target for deletion or redaction.

Get Rich Slowly:

I made $120 for one hour of work last week.

On Tuesday, I participated in a neuroeconomics study at a nearby university. For sixty minutes, I lay inside an MRI scanner while answering questions about money. When I had finished, the researchers paid me $120. In cash.

I admit that with the four hour round-trip and the half hour of wait time, my hourly rate drops to something nearer $20, but that's still not bad.

See full article.

Related Entries:

Other Voices: Links for 7/17/06 - 17 July 2006

Other Voices: Links for 7/26/06 - 26 July 2006

Other Voices: Links for 8/25/06 - 25 August 2006

Other Voices: Links for 9/7/06 - 07 September 2006

Contents of this feed are a property of Creative Weblogging Limited and are protected by copyright laws. Violations will be prosecuted. Please email us if you'd like to use this feed for non-commercial activities at feeds - at - creative-weblogging.com.

Tiger Woods: First Billionaire Athlete

Living in the Cleveland area, I've heard a lot about Lebron James having the goal of being the first billionaire athlete (which explains James' interest in hanging with homeboy Warren Buffett). However, according to Forbes, Tiger Woods is going to beat James to the punch:

Woods is on track to pass $1 billion in career earnings by 2010. Becoming a billionaire-that is, having a net worth above $1 billion-will take slightly longer, since a sizable chunk of Woods' prize and endorsement money is eaten up by taxes and management fees-we estimated 45%. We also credited Woods with annualized investment returns of 8%.

From 1996 (the year Woods turned pro) to the present, we based his earnings on estimates from Forbes' Celebrity 100 list. In 2007, we estimate Woods earned $115 million, $65 million more than runner-up David Beckham.

Based on those criteria, we project Tiger Woods should join our list of the world's billionaires in 2011.

According to the article, Woods will be the first billionaire to have hit that mark purely as an athlete (meaning other billionaires have been sporty, but not actually professional athletes).

(I originally saw this item at The Wealth Report.)
See full article.

Related Entries:

Tiger Is Unstoppable - 25 February 2008

Woods & Hogan At 64 - 17 March 2008

Tiger Woods, His Knee and The Masters - 19 April 2008

Tiger Back On The Shelf - 18 June 2008

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FICO Relents; Credit Card Authorized Users Can Boost Their Credit Scores

Fair Issac Company, known also as FICO and as the inventor of the "credit score", has changed its mind on a plan that would have stopped people from becoming "authorized users" on others credit cards in order to boost their credit scores. Instead Fair Issac will continue to let authorized users boost their scores via their connection with good-credit customers. At the same time, Fair Issac says it will be more aggressive about finding and penalizing those who try to "piggyback" on the credit of people they don't even know in an effort to fool lenders into thinking their credit is better than it is.

If some of this confuses you, I'll back up.

Earlier this year Fair Isaac announced it would be tweaking its scoring system, with part of its refinement being to target "authorized users" on credit cards - people who are allowed to use the credit cards of others without being liable for actually paying the bill. In the past, parents might put kids as authorized users, or spouses with good credit might put their other half as an authorized user, all with the goal of helping boost the credit history & credit score of that user. Kids would then be more likely to get credit cards or loans at better rates down the road, and spouses with poor credit histories could improve their scores by being linked to their good credit spouses. As long as the authorized user didn't go hog wild spending on the card, it worked to everyone's satisfaction.

However, FICO began to see one problem with this system. A black market sprung up, in which good credit customers would "loan out" their good credit histories by putting strangers on their cards as authorized users for a fee. If you had bad credit, you could pay a certain amount of money to become an authorized user on the credit card of an upstanding credit citizen and your credit score would rise as a result, even though you hadn't done a thing to prove you'd changed.

(If you're wondering why people would sell out their good credit, there was actually a middleman who connected the good and bad credit customers, so the bad credit customers would become authorized users but would never actually get the credit card number they were being associated with.)

This presented a problem for FICO, because their scores become worthless if people game the system and FICO's partner lenders are giving out loans to bad credit customers based on faulty information about a person's credit worthiness.

Fair Issac's plan was to discontinue crediting authorized users, but there was resistance:

Lenders, meanwhile, raised a regulatory concern. They told Fair Isaac that they used FICO scores to comply with the Equal Credit Opportunity Act, which requires lenders to consider a spouse's credit history when weighing a potential borrower's credit risk. If Fair Isaac stopped recognizing authorized users, lenders said they wouldn't be able to use FICO scores to meet that requirement.

So, if you had been hoping to use the authorized user angle to improve or establish your credit, you are back in business. Whether the fraudsters are also back in business remains to be seen.
See full article.

Related Entries:

How to Accept Credit Card Payments - 23 October 2006

How to Drive Yourself Crazy: Credit Scores - 16 November 2006

Smartphones and PDAs the New Credit Cards - 11 January 2007

TransUnion Settlement Means Free Credit Scores for Everyone - 30 May 2008

Contents of this feed are a property of Creative Weblogging Limited and are protected by copyright laws. Violations will be prosecuted. Please email us if you'd like to use this feed for non-commercial activities at feeds - at - creative-weblogging.com.

Great Home Selling Fights

In the picture to the left, you see a happy couple spreading the news of their successful home sale. What you don't see are the many moments leading up to this sale, when the two of them were yelling at each other and their real estate agent about why the house wasn't selling, or at least not selling for the price they wanted.

Neal Templin writes an interesting article in the Wall Street Journal today, chronicling his and his wife's attempts to sell their Dallas home. While Templin actually makes out OK in the end, he does a nice job of detailing the stresses involved, especially when marriage partners don't always see eye-to-eye on what's important, how long to wait for a buyer, where to spend money on fixups, etc. Here's my favorite section of his piece, although I'd recommend reading the whole thing:

It soon became clear that Clarissa and I had different visions for getting the house ready for sale. I simply wanted to paint it and correct obvious defects, such as exterior wood that rotted during heavy rains last year. Clarissa wanted to redo the kitchen, install new fixtures in at least one of the bathrooms and much, much more. I fretted we wouldn't get that money back when we sold.

So we compromised. We spent $2,000 putting granite countertops and a new sink in the kitchen, and we merely painted the bathrooms.

But Clarissa didn't stop there. She paid a carpenter to put inlaid patterns on the wooden mantle. She spent hundreds on plants. She put in new lighting fixtures and new curtains and replaced a tattered awning.

Periodically, I would try to get her to slow down the spending, and she would tell me to buzz off. I was the one forcing the family to move yet again, and this time she was going to do the things to get top dollar for her house so she could afford a decent house in New Jersey.

My wife & I have sold two houses. While neither one sat on the market for a long time, we did have plenty of back and forth about how much money to put into each to make it more attractive to buyers. In both cases, the houses looked better when we sold them than they had ever looked while we lived there. (Which maybe is a lesson in itself - every once in a while, do the projects instead of just talking about them.)

Anyway, give the article a read. If you've ever sold a house, you're likely to see something of your past situation in the story told in the WSJ.
See full article.

Related Entries:

Book Review: The Complete Idiot's Guide to Real Estate Investing Basics - 21 July 2006

Book Review: Trump University's Real Estate 101 - 14 August 2006

My Home is Worthless! - 02 May 2007

Bootstrapping a real estate empire - 21 June 2008

Contents of this feed are a property of Creative Weblogging Limited and are protected by copyright laws. Violations will be prosecuted. Please email us if you'd like to use this feed for non-commercial activities at feeds - at - creative-weblogging.com.

FreeCreditReport.com Gives You Free Credit Report Only If You Buy Something Else

I've known this for a long time, but I was surprised to see that The New York Times would bother doing a story on it: The High Cost of a 'Free Credit Report':

Mr. Steele, 27, remembered a number of commercials for FreeCreditReport.com featuring a young Slacker singing about various life problems - living in the in-laws' basement, dressing as a pirate to wait on tables in a seafood restaurant - all because he had neglected to check his credit score. The ads were lighthearted and catchy, with lyrics like: "F-R-E-E, that spells free creditreport.com, baby. Saw their ads on my TV, thought about going but was too lazy."

So Mr. Steele headed to the site and filled out the information form, including his credit-card number, which he thought the site needed to verify his identity.

But a couple of months later, Mr. Steele noticed the site had been charging his credit card. While he believed he had signed up for a free report, he had actually enrolled in a credit-monitoring service that cost $14.95 a month. He says he never expected that it would cost anything.

"It's called FreeCreditReport.com," he said. "It's kind of easy to make that assumption. I didn't see anything in the process of signing up that said, 'Hey, if you don't cancel in 30 days or whatever, you're going to get charged.' "

Actually, FreeCreditReport.com does say on its home page that you will get a free credit report but will also be signed up for a product you have to pay for (they just put that message in subdued colors so you won't read it):

IMPORTANT INFORMATION

When you order your free report here, you will begin your free trial membership in Triple AdvantageSM Credit Monitoring. If you don't cancel your membership within the 7-day trial period**, you will be billed $14.95 for each month that you continue your membership.

ConsumerInfo.com, Inc. and Freecreditreport.com are not affiliated with the annual free credit report program. Under a new Federal law, you have the right to receive a free copy of your credit report once every 12 months from each of the three nationwide consumer reporting companies. To request your free annual report under that law, you must go to www.annualcreditreport.com.

While I agree it's a little scuzzy, I'm surprised that anyone just assumes they'll get something for nothing without reading any of the fine print. Advertising and marketing is notorious for offering something "free" as long as you buy something else (or at least listen to a sales pitch). How many times have you seen this:

FREE CD Player/AM-FM Radio!*

blah, blah, blah

*with purchase of complete set of tires

We've seen it so many times many of us no longer trust ANYTHING that's free. If someone comes up to you on the street holding out a $10 bill you would automatically shy away, certain that anyone willing to give you money has a plan to get even more of your money in return.

Anyway, be careful out there. See full article.

Related Entries:

Business Credit Cards - Yes or No - 25 September 2006

Fads, Finance, and Free: How To Really Make Money on the Web - 01 November 2007

New Year's Resolution: Get Your Free Credit Report - 04 January 2008

TransUnion Settlement Means Free Credit Scores for Everyone - 30 May 2008

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My Neighbors Are Moving to a Smaller House

The moving truck was in my neighbors' front yard this morning, and I saw the movers pulling stuff out of the house as I picked the newspaper off the front porch. I'm not especially close to my neighbors, but it made me sad. They didn't really want to move, but the small ad agency the husband runs has been hit hard the last year or so, and they finally couldn't see staying any longer. Their kids are getting into high school and college, and the costs associated with that didn't help matters.

It's got nothing to do with me. Their finances are theirs, mine are mine. And I'm doing fairly well considering the larger economy. But it's still kind of a punch in the gut when you see people having money problems, even when you don't. (Or maybe especially when you don't.)

They say that people are often unhappy if they are wealthy but the people around them are even wealthier. I think it can go both ways. It can be unsatisfying to have good fortune when those in your circle of family/friends/neighbors are in trouble. When we're all doing well (in a middle-class sort of way), we're all fairly happy, and money doesn't come into the equation much. When those close to you start to do poorly financially, you can end up feeling a bit apologetic, or at least you try a little harder to mask your money around those people. That new car is a little less fun when you see that it causes a bit of unhappiness in the eyes of someone whose feelings you care about. See full article.

Related Entries:

How to Sell Your House for a Lot of Money with No Real Estate Agent - 23 June 2006

CASINOS MOVING TO SMALLER POKER TOURNAMENT BUY-INS - 18 February 2007

Get fit with the neighbors - 17 August 2007

I'm So Jealous of My Gay Neighbors - 08 October 2007

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Book Review: Why Work Sucks and How to Fix It

Why does work suck? Because full-grown adults are made to feel like children, Slaves to the clock, working by rules that are more fit to the 19th century then today. We work all week and then have to spend the weekend running errands until Sunday comes and that familiar dread creeps into the pits of our stomach. Even if our work life offers us some time flexibility, using that flexibility too religiously may lead to you being labeled as less than dedicated, which then leads to being passed over for promotions, while the guy who stays at work from 7AM to 6PM even though he does a lousy job and never gets his work done is ultimately rewarded purely on the basis of "face time."

I think this is a fairly succinct summary of the case that Cali Ressler and Jody Thompson make in their new book Why Work Sucks and How to Fix It. Ressler and Thompson were instrumental in the introduction of the Results-Only Work Environment, or ROWE, at Best Buy's corporate offices, and this book makes the case for why a ROWE is good for employees and smart business for all companies. And of course it offers many pointers on how a ROWE could be set up at your company.

As the name suggests, a Results-Only Work Environment is one in which you aren't judged by getting to work on time or talking a lot in meetings or leaving late, but instead you are judged by the quality of your work. Get the work done well, and on time, and the rest is up to you. That means you choose when you're at work and when you're not, not occasionally but always. Don't feel like showing up today? Don't. Want to sleep in and get your work done after dinner tonight? By all means. Want to follow your favorite band across the country? Go for it.

If it sounds like chaos, Ressler and Thompson make the case that it just takes some getting used to. They compare it to college - you do what you want, when you want, and as long as the work is done on time and done well, you are rewarded. In the work setting, the only difference is that you do more communicating as far as where you are and where you're going to be if someone needs you, so everyone else can get their work done on their own schedules, too. But no one has the right to pull rank on others' time, and no one has the right to "Sludge" someone else by commenting on how they choose to go about their work, including when they come into the office, when they aren't at a meeting, etc.

This doesn't mean there's no hierarchy or that there's no way to gauge who is doing a good job versus who is not. It means that being the "boss" is less about catching people daydreaming at their desks and more about managing results. The book's premise is that the low achievers actually get spotlighted easier in a ROWE because they can't fake it by simply putting in the hours or kissing up to the boss - they're either getting their work done or they're not.

While I think this is how the perfect office would run, I have some caveats, concerns, misgivings, whatever you want to call them. First, a ROWE seems to be only for white-collar workers. This is really for office environments - if you're working at a Best Buy store, for example, you'd need to be scheduled; you can't say "I'll sell stereos from 9PM to 1AM tonight."

Second, while I understand and appreciate the fact that a ROWE treats you like an adult and lets you schedule your work and life in the way that is best for you, I still somewhat question the idea that everything is OK as long as "the work gets done." That notion seems to equate work with a stack of papers that has a beginning and end, and when you've finished, you're done. While it may be true that individual projects include distinct roles for many people, I think it's also true that work has some intangible times, times when you're not working on a project per se, but you may be laying the groundwork for future work, or boning up on industry news, or whatever.

In my work experience, there were definitely slow times when I felt like I just wanted to walk out the door, but at other times those slow periods were used to catch up on paperwork, or do one of those "nice-to-have" projects that always gets pushed to the side when the "work" is heavy and demanding. If it's all about getting the "work" done, when are you (or anyone else) doing the industry research or learning to use Excel or whatever else you might do to improve yourself and/or your company when the "work" isn't beating down your door? If we're all saying, "I'm done" when our piece of a project feels finished and no one is currently calling for help, do we put ourselves in the frame of mind that a company is only about urgent projects and not about preparing for future success?

Ressler and Thompson might have a perfectly good answer for that, so I won't push that point too hard (although I would like to know). In fact, I would highly recommend that every company and every manager read Work Sucks, regardless of whether or not they decide to go for a full-on ROWE. Even the thought process that says "These people are adults, they don't need me watching when they show up, when they leave, and when they're taking a personal call during work hours" is something more workplaces should embrace. (And to be fair, many do, whether they use a fancy name for it or not.) Give it a read and see what you can take away to make your work suck less. See full article.

Related Entries:

Book Review: Excuse Me, Your Job is Waiting - 11 April 2007

Book Review: Work Like Your're Showing Off by Joe Calloway - 28 June 2007

Book Review: It's Called Work For a Reason - 19 September 2007

Book Review: A Life at Work by Thomas Moore - 26 February 2008

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Personal Finance News: Air Travel Edition

I happened to come across a treasure trove of news this week concerning air travel and its effect on your personal finance. As you might guess, most of the news is bad, but some is simply interesting.

1. Airlines hope credit cards will help bail them out of financial crisis - Interesting article on how more and more airlines are going to credit-only on board, and that the long-term goal is to sell you not only drinks on your card, but pretty much everything else under the sun. Hey, you want to fly cheap? You're going to have to start doing your Christmas shopping in flight.

2. Credit-card companies: An unlikely savior for frequent-flier programs? - Blog post says that while frequent flyer programs are getting more and more stingy, the only thing that may stop them from becoming altogether useless is the fact that so many credit card companies own miles that they give out in the form of credit card rewards, and it's in the card companies' interests to pressure airlines to not go too far in their devaluing of these miles.

3. This article offers some news on new frequent flyer fees you might not aware of:

Effective Aug. 15, Delta will assess $25 for an award trip within the United States and Canada and $50 for all other award trips. To prove, again, that in the airline business, no really bad idea remains uncopied, Northwest immediately followed with surcharges up to $100. Given how money-hungry the U.S. airlines have become, I expect other big lines to adopt fees of this sort fairly quickly - and I also wouldn't be surprised to see fees growing even higher.

See full article.

Related Entries:

Informed Travel - 27 July 2007

MobiMate and Pocket Express Travel Edition Reviewed - 14 August 2007

Lufthansa Airfare Sale Alert: Act Now! - 13 March 2008

Travel Emergencies - 04 May 2008

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Eating Healthy Not So Cheap

I'm not a spring chicken anymore, so I've been trying to get my diet under control, exercise more, etc. One thing I've noticed is that eating healthy can really be costly. This may not be a revelation to most people, but I've never been one to pay a whole lot of attention to prices.

But I've been subscribing to Men's Health and reading the health section of my local newspaper, and I've been trying to follow some of the advice found in these places. But it's not so cheap to do so.

Two examples:

Pom pomegranate juice is supposed to fight atherosclerosis (heart disease) and contain antioxidants and do all sorts of wonderful things. At this store you can get a 16-ounce bottle for $4.99. (I think it is actually a little cheaper than that at my grocery.) That's a lot of money for 16 ounces of liquid. If it was the guaranteed fountain of youth, no problem. But it's just pomegranate juice. I'm still going to die someday, and so I have to question how much of the money I have while alive should go toward pomegranate juice.

Planter's now offers this NUT-rition Heart Healthy Mix, which is full of peanuts, almonds, pistachios, pecans, hazelnuts and the especially heart-healthy walnut. Over at Amazon I can buy three 9.75-ounce cans for $15, or $5 per. That's actually not bad in comparison to my local store, where I believe a single can was over $6. Nuts are never cheap, but add the heart-healthy tag (and the walnuts), and now you're getting into some serious cash.

Don't even get me started on the cost of multivitamins.

They might make me live a long time, but these superfoods are also going to make me go broke. See full article.

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Tacky? Yes. Convenient? Most Definitely

Running late for a wedding? Worse yet, you didn't have time for a gift? If your wedding just happens to be at this wedding hall in Israel, then no problem:

Guests at an Israeli wedding hall can now insert a credit card into a machine at its entrance, tap in a sum and leave a gift for the bride and groom.

"It's new in Israel and the world," Aya Alon Kaufman of the Gan Oranim hall in Tel Aviv said on Israel's Channel 10 television.

Well, it may be new, but I don't think it's going to sweeping the world. Although maybe the country, if your country is Israel, at least according to this paragraph which taught me something I didn't know:

Rather than bring boxed gifts, guests at Israeli weddings usually leave cash or cheques in envelopes they slip into a safe placed at the reception hall's door.

If I ever get married again, I'm just going to use PayPal.
See full article.

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A Lesson in Finance, Kids Style

Dayana Yochim has a fun article this week at Motley Fool about teaching a friend's 6-year-old daughter about credit after the girl received a credit card solicitation in the mail. My favorite parts:

"When you go to the store to buy Barbie a friend, if you pay for her with your new Visa, her friend will cost $1,087 and won't be paid for in full until you're 43."

And a little existential angst that every child is sure to understand:

"So now you have this huge Visa bill and an empty piggy bank and all of your friends are going to upstate New York in 10 days for a relaxing weekend. Only now you can't go because gas prices are insane and you decided not to go into PR after college where you could have earned money hand over fist, but, in retrospect, you wouldn't have felt like you sold your soul and ..."

Heh, heh. I especially enjoyed that last one. funny stuff. See full article.

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The Gas Is Free, The Sex Will Cost You

Tough economic times often bring out the greatest creativity in marketers.

Case in point: Brothel offers customers gas rebate:

A Nevada brothel is trying to stimulate business by offering free gasoline.

Clients of the Shady Lady Ranch will get a $50 gas voucher if they fork out $300 - worth about one hour's worth of services - at the brothel in Beatty, Nevada, 130 miles northwest of Las Vegas.

Owner James Davis said he already has had to order another $1,000 set of gas vouchers because the first $1,000 were spent in one week.

Better than a free Slurpee.

(Hat tip to Five Cent Nickel)
See full article.

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Other Voices: Links for 7/10/08

Around the PF blog world:

Stop Buying Crap: Five Thing I'll Never Buy My Future Kids:

From my experiences, the quickest way to raise a bratty child is to buy them lots of crap to appease them, and what better way than a gigantic TV in the car, with a full collection of sponge bob DVD?

The Wastrel Show: The Art of Doing Nothing:

Doing nothing is an art. It's a treasure. Once you master this craft there is no turning back. For the less you do, the less you want to do. I've spent the past few years streamlining my environment, so much so, that each anniversary brings me less to do. I can now sit perfectly still anywhere I choose and neither read a book, listen to music nor engage my mind in anything other than the stillness of the moment. I can just sit back and observe the world as it unfolds itself to me. A world that I was once too busy to notice.

Brip Blap: Learn to Think Bigger:

Many investors will establish a pattern of investing that suits them, and then defend that pattern to others (and to themselves) even if it doesn't work. A good example is index fund investing. The conventional wisdom is that it cannot fail. The truth is that it's the investing pattern with the best possible return for a non-knowledgeable investor, but even then it's subject to a number of caveats. If you happened to be withdrawing your money now, the last eight years would have been essentially 0% returns on those funds.

Single Ma: Spending Challenge:

Nordstrom - how can I resist a shoe sale when the friggin store is less than 5 minutes from my house? It's a set up!

See full article.

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More on Grocery Store Loyalty Cards

My post last week bashing supermarket loyalty cards brought this response from Craig, whose Flickr photo I used as part of that post:

The photo above shows a loyalty benefit to using the cards at Krogers and my local Krogers brand, King Soopers. For every $100 you spend at the store each month you get 10 cents of a tankful of gas at their gas stations. It's not huge, but considering the store and the gas station are just up the road, it keeps me going there.

I agree with Craig.

I had forgotten about this new twist that many supermarkets are adding. This is what a loyalty card should be - you spend a certain amount at that store and you get something in return. In other words, you are rewarded for your loyalty. I will admit that one benefit to my own local grocery store is that your purchases lead to gas discounts at their store-owned stations - the more you spend in the store, the greater your gas rebates. It's a good thing.

However, I stand by my position on grocery store cards as a way to get "sale prices" on certain items. Since everyone is eligible to get the sale price if they have the card, it's not anything special; it's merely a way for the store to track your purchases.

Nevertheless, Craig makes a good point that I had missed.
See full article.

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Is Compulsive Shopping a Mental Disorder?

Nancy Trejos wrote an interesting article in the Washington Post last week about compulsive shoppers. Here's the lead:

Shannon Hassemer went on a shopping spree when she got her first credit card in college. Tired of owning just one pair of tennis shoes, she quickly filled her closet with luxury items from designers such as Gucci, Coach and Louis Vuitton.

"I wanted to fit in," she said. "I was tired of looking like a boy."

It was a boost to her self-esteem, which she describes as particularly low. Over the years, shopping became a source of comfort. It was a daily habit. When she had children, she started buying them expensive clothing. Now at 36, shopping has become a source of pain. She has enrolled in a debt-consolidation program to pay down the $35,000 she owes on her credit cards, and she is getting therapy once a week.

I have to admit that I normally scoff at the idea of people having a "problem" when it comes to shopping - I just think they lack self control. This article sort of budged me, at least a little. This part in particular:

According to a study in the American Journal of Psychiatry, 5.8 percent of Americans are compulsive buyers. They buy things they don't necessarily need or can't afford to the point that it affects their relationships, their finances and/or their health. Even mounting bills aren't enough to keep some hard-core shopaholics from spending money on clothing, vacations or meals at fine restaurants...

...

It is so widespread that the American Psychiatric Association has for years been discussing including compulsive buying in its manual of mental disorders, which it plans to finish updating by 2012.

I don't believe that everyone who digs themselves into credit card debt has a mental illness, just as that hangover from the 4th of July doesn't make me an alcoholic. However, I'm coming around to the idea that some people's lack of self control is not 100% laziness or greed, but a true need to fill a void in their lives. Some people drink and do drugs, some people shop - that's plausible. Just because shopping doesn't contain an addicting substance like alcohol or drugs, that doesn't necessarily mean it couldn't be addicting to some people who come into it with the wrong frame of mind.

I'd probably equate it more to a gambling addiction - not because they are alike in terms of the reasoning behind them, but because they are both a mental addiction versus a physical addiction.

What do you think?
See full article.

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Professor Sues Virginia Lottery for Giving Out Prizes

I would expect better of a business professor. Read this:

When Scott Hoover bought a $5 scratch-off ticket in Virginia called "Beginner's Luck" last summer, he carefully studied the odds. Even though he figured his chances of winning were a long shot, he felt the odds were reasonable.

Hoover, a business professor at Washington and Lee University in Virginia, wasn't surprised when his tickets didn't bring him the $75,000 grand prize, but he was shocked to learn the top prize had been awarded before he bought the ticket.

"I felt duped into buying these things," Hoover said.

He discovered the Virginia State Lottery was continuing to sell tickets for games in which the top prizes were no longer available. Public records showed that someone had already won the top prize one month before Hoover played. He is now suing the state of Virginia for breach of contract.

I'm not understanding the problem here.

This wasn't a raffle where they kept selling tickets after the winning number was called. It was a pre-printed lottery ticket, with its destiny already decided - either the printing said you won or it said you lost. Your chances didn't go up or down based on what was printed on other tickets in the game - it was all predetermined, and anyone that plays these scratch off games knows it! And, beyond that, there were many other prizes to be won besides the $75,000 prize, so why should they stop selling the tickets just because the top prize was claimed?

What seems crazy to me is that this professor believes that in a lottery with many multiple prizes, the game should be ended the minute the top prize is awarded. We all know the lottery generally gives one big prize and a lot of smaller prizes, right? But what if this scratch off game worked like this: what if the top prize was $1 million, there were 2 $100K prizes, 5 $50,000 prizes, 10 $10,000 prizes and a bunch of smaller ones. When does the lottery pull that game? When the $1 million prize is claimed, leaving many large prizes out there? Or, maybe when the 100K prizes are claimed, even though the biggest prize is still out there, as well as some other substantial prizes? Who decides when that game is cut off - a disgruntled player?

Point is, there are a predetermined number of scratch off cards with a predetermined number of winners and losers. The cards are (hopefully) randomly distributed to lottery sellers, and the players all have the same chance of winning something. Sounds fair to me, especially when the rules clearly state that it is so. See full article.

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Midnight Grocery Madness

CBS News has been running a series of reports about "The Other America" recently. The way things are going, it might soon be titled "Most of America". Anyway, this week they visited a supermarket on the south side of Chicago that gets a midnight rush on the first of every month - that's when the money that used to be "food stamps" gets loaded electronically on to the debit cards that are now used.

What I found interesting about the report - and it's to CBS' credit that they point this out - is that many of the people using the food stamp money are employed, and employed in "respected" industries such as health care. They can't be brushed off as lazy or stupid; they're working for a living and can't make ends meet with the rising costs of food, gas, etc. It's kind of scary.

Anyway, if I can handle the technology, you should be able to watch below. A little sobering video as we prepare to celebrate our nation's birth...

See full article.

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Not a Fan of Supermarket Loyalty Cards

Came across this article titled "Yes, Loyalty Cards Save You Money" that, as you might guess, makes the case for store loyalty cards being a great thing.

The author, Stephanie Nelson, brushes aside any privacy considerations, saying basically that since you buy your groceries in plain view, what's the problem with the store keeping track of what you buy? She says "Supermarkets do not share their databases with other parties without permission," a statement I take some exception to, because generally your information can be shared unless you expressly state that it can't, so I'd be surprised if grocery store chains weren't sharing their information. Sounds like a major profit center to me; I wish she would've backed up this statement a bit more.

Anyway, even if you put privacy concerns to the side and think it's nice to have a coupon for a free can of Fancy Feast spit out of the machine when you buy some cat food, my problem with the store loyalty card is something different.

As far as I'm concerned, grocery stores force you to sign up for store loyalty cards and carry them with you, and they give you the same savings they used to give you without the cards.

For example, the spaghetti sauce that is 79 cents off with store loyalty card used to just be "on sale." There is no "on sale" anymore if you don't have that stupid card in your hand. And if you forget that card, you are being penalized, because what used to be "on sale" is now "on sale" only to those with the card, so you actually pay a premium for those items if you don't have a card or if you forget yours.

In reality, calling them loyalty cards is a joke, because I don't have any more loyalty to one store because of them. It's not like I'm getting a free set of dinnerware for every $1000 I spend, for the "loyalty" I'm showing to the store. No. No extras for me giving my loyalty.

In fact, the only point of the card is to hold me hostage, in the sense that I don't get the "savings" unless I'm willing to let them track my every purchase and willing to take on the extra hassle of carrying the card on my keychain or shoving it into my overflowing wallet. And, since every supermarket now has the same stupid card program, you can't escape them by showing your loyalty to a store that would actually deserve it by not forcing you to carry a card - they no longer exist.

Attention grocers: get rid of the cards and just put stuff "on sale" again. Then you'll get my loyalty.
See full article.

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Stealing Daddy's Money

My 6-year-old son recently stole his first wad of cash from me. I had left $40 out in a place that was actually above his eye level, but he saw the bills from a short distance away and climbed up to get them. To his credit, he believes in sharing, so he gave one of the twenties to his sister. She promptly told on him.

"I wish I'd never done it!" he said through his tears, as his mother and I tried to look grave and suppress our laughter. Not that I think stealing my money is a minor offense, but his self punishment, the gnashing of teeth and rolling on the bed crying his eyes out, was much more psychic pain than either of his parents could've or would've been inclined to inflict.

"Are you ever going to do that again?" I asked.

"No!" he sobbed.

"OK. Then lets be done with it. I believe you."

"Waaaaah!!!!!"

In the end I had to comfort my thieving child instead of punishing him, by telling him the story of when I filched some of my brother's paper route money for a while, only caught when my parents started to wonder where I was getting all those half dollars. (I miss the half dollar, by the way.)

Parenting is not easy, but luckily there are enough ridiculous moments like these to balance out the tedium and whining and refereeing that comes with the territory. See full article.

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How to Think Like Warren Buffett, Part 31

With this post, I finally reach the end, or at least the current end, of the long-running series started back in August of 2006, dissecting the words of Warren Buffett as read via his annual Letter to Berkshire Hathaway shareholders. Of course, I expect Buffett to live to be 135, so this series will continue on a yearly basis after today's post.

For now, though, a look at 2007 via the eyes of Warren Buffett...

I think the whole first 4 paragraphs of this letter are worth reproducing here, especially as pertains to the subprime crisis that so many people are still feeling the effects of:

Our gain in net worth during 2007 was $12.3 billion, which increased the per-share book value of both our Class A and Class B stock by 11%. Over the last 43 years (that is, since present management took over) book value has grown from $19 to $78,008, a rate of 21.1% compounded annually.*

Overall, our 76 operating businesses did well last year. The few that had problems were primarily those linked to housing, among them our brick, carpet and real estate brokerage operations. Their setbacks are minor and temporary. Our competitive position in these businesses remains strong, and we have firstclass CEOs who run them right, in good times or bad.

Some major financial institutions have, however, experienced staggering problems because they engaged in the "weakened lending practices" I described in last year's letter. John Stumpf, CEO of Wells Fargo, aptly dissected the recent behavior of many lenders: "It is interesting that the industry has invented new ways to lose money when the old ways seemed to work just fine."

You may recall a 2003 Silicon Valley bumper sticker that implored, "Please, God, Just One More Bubble." Unfortunately, this wish was promptly granted, as just about all Americans came to believe that house prices would forever rise. That conviction made a borrower's income and cash equity seem unimportant to lenders, who shoveled out money, confident that HPA - house price appreciation - would cure all problems. Today, our country is experiencing widespread pain because of that erroneous belief. As house prices fall, a huge amount of financial folly is being exposed. You only learn who has been swimming naked when the tide goes out - and what we are witnessing at some of our largest financial institutions is an ugly sight.

Happy news on Berkshire's insurance business, but a warning:

Finally, our insurance business - the cornerstone of Berkshire - had an excellent year. Part of the reason is that we have the best collection of insurance managers in the business - more about them later. But we also were very lucky in 2007, the second year in a row free of major insured catastrophes.

That party is over. It's a certainty that insurance-industry profit margins, including ours, will fall significantly in 2008. Prices are down, and exposures inexorably rise. Even if the U.S. has its third consecutive catastrophe-light year, industry profit margins will probably shrink by four percentage points or so. If the winds roar or the earth trembles, results could be far worse. So be prepared for lower insurance earnings during the next few years.

Another warning that any new Berkshire shareholder should consider:

Berkshire's past record can't be duplicated or even approached. Our base of assets and earnings is now far too large for us to make outsized gains in the future.

In other words, while Berkshire is a good stock, it's not the growth stock it used to be, and not the growth stock it was when Warren Buffett became an investing superstar.

This next section is well worth the read, although lengthy. It's about what Berkshire wants, and doesn't want, in the businesses it acquires:

Charlie and I look for companies that have a) a business we understand; b) favorable long-term economics; c) able and trustworthy management; and d) a sensible price tag. We like to buy the whole business or, if management is our partner, at least 80%. When control-type purchases of quality aren't available, though, we are also happy to simply buy small portions of great businesses by way of stockmarket purchases. It's better to have a part interest in the Hope Diamond than to own all of a rhinestone.

A truly great business must have an enduring "moat" that protects excellent returns on invested capital. The dynamics of capitalism guarantee that competitors will repeatedly assault any business "castle" that is earning high returns. Therefore a formidable barrier such as a company's being the lowcost producer (GEICO, Costco) or possessing a powerful world-wide brand (Coca-Cola, Gillette, American Express) is essential for sustained success. Business history is filled with "Roman Candles," companies whose moats proved illusory and were soon crossed.

Our criterion of "enduring" causes us to rule out companies in industries prone to rapid and continuous change. Though capitalism's "creative destruction" is highly beneficial for society, it precludes investment certainty. A moat that must be continuously rebuilt will eventually be no moat at all.

Additionally, this criterion eliminates the business whose success depends on having a great manager. Of course, a terrific CEO is a huge asset for any enterprise, and at Berkshire we have an abundance of these managers. Their abilities have created billions of dollars of value that would never have materialized if typical CEOs had been running their businesses.

But if a business requires a superstar to produce great results, the business itself cannot be deemed great. A medical partnership led by your area's premier brain surgeon may enjoy outsized and growing earnings, but that tells little about its future. The partnership's moat will go when the surgeon goes. You can count, though, on the moat of the Mayo Clinic to endure, even though you can't name its CEO.

Long-term competitive advantage in a stable industry is what we seek in a business. If that comes with rapid organic growth, great. But even without organic growth, such a business is rewarding. We will simply take the lush earnings of the business and use them to buy similar businesses elsewhere. There's no rule that you have to invest money where you've earned it. Indeed, it's often a mistake to do so: Truly great businesses, earning huge returns on tangible assets, can't for any extended period reinvest a large portion of their earnings internally at high rates of return.

And an addendum to the above:

The worst sort of business is one that grows rapidly, requires significant capital to engender the growth, and then earns little or no money. Think airlines. Here a durable competitive advantage has proven elusive ever since the days of the Wright Brothers. Indeed, if a farsighted capitalist had been present at Kitty Hawk, he would ha