Excellent article...I agree with all your points. I charge everything...why not get something back for money I'm already going to spend? The protection is far superior as well...last year I had a credit card stolen, and before I even realized it was gone $1,000 had been charged to it. At the time, that was more than I had in my checking account, so had it been my debit card it would have been a HUGE pain. Oh not to mention I had $90 taken out of my wallet as well...that was gone forever and it was after that I capped my cash on hand to ~$40 and began charging everything. Cash and debit cards are for people who can't use credit responsibly.
Excellent article...I agree with all your points. I charge everything...why not get something back for money I'm already going to spend? The protection is far superior as well...last year I had a credit card stolen, and before I even realized it was gone $1,000 had been charged to it. At the time, that was more than I had in my checking account, so had it been my debit card it would have been a HUGE pain. Oh not to mention I had $90 taken out of my wallet as well...that was gone forever and it was after that I capped my cash on hand to ~$40 and began charging everything. Cash and debit cards are for people who can't use credit responsibly.
Credit cards are the way to go to maximize your money to its full potential. Why not earn rewards and cash for things you're going to buy anyway right?
-Raymond
I've used the buyer protection a total of 5 times on both AMEX and Visa...it was low hassle and the companies handled all the work..and in EVERY case, I got my money back. Try to to that after paying with a wad of cash. I've also never paid any interest on any of my credit cards and this year will make about $500 cashback. I agree that you DO need to be disciplined in your money spending...what is wrong with our society that we can't control ourselves in our spending and try to "fool" ourselves by only carrying cash? That's what a budget is for...if I see something I like that I haven't budgeted for, I don't get out the credit card. We also don't buy anything other than true necessities throughout the year and purchase special items on holidays and birthdays only. Aren't we all adults with some self control?
I do agree with you about deceptive pricing practices. One of the most egregious examples recently was the way certain gas stations price gas. Customarily the buttons on a pump for the different grades of gas from regular to premium, run left to right. This one station reversed the customary order so I found I had pumped myself a tank of premium at 20cents a gallon more than my regular. I purposely stay away from that gas station now.
And variable pricing without rationale is a turnoff as well. As a businessman the practice will quickly cost you in terms of customer base. Word does get around.
Variable pricing will work with the right rational. If someone gets a break on pricing because of being a regular customer or buying in volume, that is acceptable. If you use Ebay, the market sets the price dependent on interest in the particular product, and that is obviously acceptable.
As far a airline ticketing goes, check out Kayak.com.
On the other hand, if the guy in front of me buys a notebook for $9, and when I get to the register the price is $14, I might very well say, "Forget it--I'm keeping my money," even if I might very well have paid that much if I hadn't just seen someone get it cheaper. I think that's human nature, and it's why companies tend not to vary prices that way, even though I'm sure they would, if they thought they could get away with it.
As far as not complaining, I think it matters what you're complaining about. I don't complain about prices being too high (I just don't buy things if they're not worth the price). I do, on the other hand, complain about inscrutable pricing schemes (such as the airlines), where you can't actually get a reliable price quote. I also complain about deceptive schemes, where you think you've got an agreed-upon price, only to find some extra costs get added on later.
For the majority of homeowners who have a relatively low rate on their mortgage, investing the money instead of taking on a 15 year mortgage should lead to greater wealth creation. If the rate on my mortgage is 6.25%, my after tax cost is going to be lower, assuming that I file long form and am above the standard deduction. For arguments sake, lets say my after tax cost of my mortgage is 5.625%.
Now, lets say my mortgage amount is $200,000. My principal and interest payment would be $1,231.43 per month 30 year fixed at 6.25%. A 15 year loan at 6% would be $1,687.71 per month. The after tax cost of this rate is lower than 6%, but because less interest is paid each year, the spread isnt as large as is true in the 30 year example. You do get less of a tax deduction with a 15 year loan. More importantly, what if instead of paying the extra $456 on your mortgage each month, you were to invest it instead? Over 20 years, I would say that averaging 7.5% on this is quite conservative and more than realistic.
In 20 years, this would equate to over $250,000. The other tremendous advantage is that the money would be liquid. This is important if things in your life go very wrong (job loss, serious illness) or if things go very right (investment opportunity).
Paying off your mortgage early is certianly not a bad idea. It just isnt the best idea for many of us.
Also, never sign up for bi-weekly mortgage programs. You can do the same exact thing by dividing your monthly principal and iterest mortgage payment by 12 and adding this amount to your payment each month. It does the same exact thing and doesnt cost you a dime to set up, and their are no transaction fees!
Mortgage Accelaration plans: These are NOT for everyone! You must have 1. Good credit 2. Some equity 3. A relatively high average balance in your checking account each month.
Also, if anyone tells you that you need to refinance your first mortgage to do this, they are ripping you off. Same goes for the network marketing firms that charge the outrageous fee of $3,500 to do this. They will tout this "software" that will guide you thru the program. This software is completely unneccesary. We offer this for $995. If you are not in a state that we are licensed in, maybe I can direct you to a firm that will help. Again, most people are better served to invest and use arbitrage, rather than this program-but if you are really debt adverse, this might be a good program for you.
I attended an investor meeting last night with a guest speaker from United First Financial peddling the MMA software. As some of you have concluded, the product is pure snake oil. The notion that it is some powerful collection of complex algorithms able to save users money through interest cancellation techniques is simply false.
Rather than struggle with spreadsheet analysis to reach this conclusion, one need only look at the ground rules offered by the salesmen. It only works if you pay more money into the ALOC/HELOC then you take out. That difference, or positive cash flow, isn't accumulating anywhere as savings, instead its being used to pay down the money you borrowed from the ALOC/HELOC to make principle payments on your primary mortgage.
The initial results seem impressive because rather than making small additional principle payments on your own, which would eventually have the same affect, the program has you borrow larger sums from the ALOC/HELOC for those principle payments then uses your own positive cash flow to pay them off.
The software does little more then tell you when your ALOC/HELOC balance is approaching zero so you can borrow another chunk for a principle payment to your primary mortgage. Really, since you have to input all the data yourself, it doesn't tell you anything you couldn't already have deduced, very easily, on your own.
Finally, for those considering the United First Financial product or others, keep in mind that banks aren’t going to let you cheat them. They’re perfectly happy with you borrowing money to pay down other borrowed money. And they don’t care if you pay off your mortgage early because they will use that extra principle payment money you’re giving them to get a higher return somewhere else – something you could and should do yourself rather than invest in snake oil.
Interesting article about the obvious differences between generic and big name manufacturers. I have an issue to put to light, however.
I must say that is rather irresponsible to advise your readers to "If it fails, you take it to a store that carries it and politely explain your problem and ask if there is a way they can help you."
As someone who toiled in retail during college, I can say that you were hated by my ilk. Why in god's name would you think its cool to come into retail stores and blab about your problems instead of working through the manufacturer. That you expect retail employees to do the work of packing and shipping your box to the manufacturer through the exact same process that consumers have to use is evident that you are not qualified to give good advice on consumer advocacy or money saving strategies.
There are some FANTASTIC ideas in this post. However, as a cook who wants to avoid trans-fats, I would hope that there was an alternative to shortening. Would a 'light' olive oil work as a substitute in the crust, or would butter be a better alternative?
I have a Chase UAL Visa DC. I believe Citibank offers an AA one. There's plenty of other award earning debit cards. You're being foolish if you think you're not paying fees on foreign credit card transactions. They may be lower than the debit card fees but you're still paying them.
You can only drink so much of it because it can have a diuretic or laxative effect (not a good thing either). I love the bands because they take no preparation - just ready to work when you need them!
My red ink has had to be re-filled (they did it for free) but it just ran out again. I barely use my printer and the other two colors are fine.
Also, I just paid to have the black re-filled. I did a couple of shiny, photo quality prints and the new black ink rubbed off the photos. The HP ink didn't.
Couldn't agree more. Why use cash? It smells funny, takes longer when used in a transaction, offers zero protection, and offers nothing in return. Nowadays, if you use cash, you liken yourself to the old ladies of the 90s who would whip out their checkbooks whilst everyone behind gasped and moaned.
The definition of a fair price (at least mine) is what someone is willing to sell something for and what someone else is willing to buy that something for. Straightforward, simple.
When prices rise too high (an opinion), then people will either choose or be forced to buy less of that item. Perfect example: gasoline. The price keeps on rising because demand does not go down. Until people perceive they can't afford it anymore, the price stays high.
Best advice: quit complaining about being taken advantage - if something is priced too high, don't buy - or change your lifestyle to accommodate the price.
HI Guest: Yup - since all my bills are consolidated to the credit card, some months can have eye-popping balances. However, as long as you're living within your means and budgeting properly, then whether you are paying 5 different bills that add up to one big total or just one big bill, you're still doling out the same amount of money!
And I also agree with the other comments about CC companies not liking the likes of me too much: I'm not making them any money. But they give me that choice, and until they take it away, I'm happy using my credit card responsibly and paying it off in full each month.
re: Anonymity - using a credit card each month does certainly impede on my anonymity. However if big brother is really watching me, he has many other tricks up his sleeve to keep tabs on us and I'm not doing anything wrong anyway. So.....maybe it's callous of me, but there you go.
re: Debit cards - I haven't seen a debit card yet that offers frequent flyer miles (or buyer protection, which a few commenters have mentioned), but maybe there is one. I also find that since I am traveling full time, I'm not in my home country and pay through the nose for debit and ATM fees. This is just one more reason why CCs work better for me personally.
Great post. Credit Cards also offer extra protection on purchase. My Visa also offers liability insurance on car rentals as well as Extended warranty on huge purchases. As long as you are responsible with credit, it is always better than using a debit card.
Sure, that may be what the EPA says, but Consumer Reports says differently, at least for pregnant women. Since I've been either pregnant or breastfeeding continuously for the past four years, I go with the more conservative advice. I do love tuna and treat myself with it occasionally, but rarely these days.
Excellent article...I agree with all your points. I charge everything...why not get something back for money I'm already going to spend? The protection is far superior as well...last year I had a credit card stolen, and before I even realized it was gone $1,000 had been charged to it. At the time, that was more than I had in my checking account, so had it been my debit card it would have been a HUGE pain. Oh not to mention I had $90 taken out of my wallet as well...that was gone forever and it was after that I capped my cash on hand to ~$40 and began charging everything. Cash and debit cards are for people who can't use credit responsibly.
the miles dont have to be used for airfare. they can be converted to cash or gift cards.
Excellent article...I agree with all your points. I charge everything...why not get something back for money I'm already going to spend? The protection is far superior as well...last year I had a credit card stolen, and before I even realized it was gone $1,000 had been charged to it. At the time, that was more than I had in my checking account, so had it been my debit card it would have been a HUGE pain. Oh not to mention I had $90 taken out of my wallet as well...that was gone forever and it was after that I capped my cash on hand to ~$40 and began charging everything. Cash and debit cards are for people who can't use credit responsibly.
Credit cards are the way to go to maximize your money to its full potential. Why not earn rewards and cash for things you're going to buy anyway right?
-Raymond
I've used the buyer protection a total of 5 times on both AMEX and Visa...it was low hassle and the companies handled all the work..and in EVERY case, I got my money back. Try to to that after paying with a wad of cash. I've also never paid any interest on any of my credit cards and this year will make about $500 cashback. I agree that you DO need to be disciplined in your money spending...what is wrong with our society that we can't control ourselves in our spending and try to "fool" ourselves by only carrying cash? That's what a budget is for...if I see something I like that I haven't budgeted for, I don't get out the credit card. We also don't buy anything other than true necessities throughout the year and purchase special items on holidays and birthdays only. Aren't we all adults with some self control?
I do agree with you about deceptive pricing practices. One of the most egregious examples recently was the way certain gas stations price gas. Customarily the buttons on a pump for the different grades of gas from regular to premium, run left to right. This one station reversed the customary order so I found I had pumped myself a tank of premium at 20cents a gallon more than my regular. I purposely stay away from that gas station now.
And variable pricing without rationale is a turnoff as well. As a businessman the practice will quickly cost you in terms of customer base. Word does get around.
Variable pricing will work with the right rational. If someone gets a break on pricing because of being a regular customer or buying in volume, that is acceptable. If you use Ebay, the market sets the price dependent on interest in the particular product, and that is obviously acceptable.
As far a airline ticketing goes, check out Kayak.com.
I'm with you on what's a fair price.
On the other hand, if the guy in front of me buys a notebook for $9, and when I get to the register the price is $14, I might very well say, "Forget it--I'm keeping my money," even if I might very well have paid that much if I hadn't just seen someone get it cheaper. I think that's human nature, and it's why companies tend not to vary prices that way, even though I'm sure they would, if they thought they could get away with it.
As far as not complaining, I think it matters what you're complaining about. I don't complain about prices being too high (I just don't buy things if they're not worth the price). I do, on the other hand, complain about inscrutable pricing schemes (such as the airlines), where you can't actually get a reliable price quote. I also complain about deceptive schemes, where you think you've got an agreed-upon price, only to find some extra costs get added on later.
For the majority of homeowners who have a relatively low rate on their mortgage, investing the money instead of taking on a 15 year mortgage should lead to greater wealth creation. If the rate on my mortgage is 6.25%, my after tax cost is going to be lower, assuming that I file long form and am above the standard deduction. For arguments sake, lets say my after tax cost of my mortgage is 5.625%.
Now, lets say my mortgage amount is $200,000. My principal and interest payment would be $1,231.43 per month 30 year fixed at 6.25%. A 15 year loan at 6% would be $1,687.71 per month. The after tax cost of this rate is lower than 6%, but because less interest is paid each year, the spread isnt as large as is true in the 30 year example. You do get less of a tax deduction with a 15 year loan. More importantly, what if instead of paying the extra $456 on your mortgage each month, you were to invest it instead? Over 20 years, I would say that averaging 7.5% on this is quite conservative and more than realistic.
In 20 years, this would equate to over $250,000. The other tremendous advantage is that the money would be liquid. This is important if things in your life go very wrong (job loss, serious illness) or if things go very right (investment opportunity).
Paying off your mortgage early is certianly not a bad idea. It just isnt the best idea for many of us.
Also, never sign up for bi-weekly mortgage programs. You can do the same exact thing by dividing your monthly principal and iterest mortgage payment by 12 and adding this amount to your payment each month. It does the same exact thing and doesnt cost you a dime to set up, and their are no transaction fees!
Mortgage Accelaration plans: These are NOT for everyone! You must have 1. Good credit 2. Some equity 3. A relatively high average balance in your checking account each month.
Also, if anyone tells you that you need to refinance your first mortgage to do this, they are ripping you off. Same goes for the network marketing firms that charge the outrageous fee of $3,500 to do this. They will tout this "software" that will guide you thru the program. This software is completely unneccesary. We offer this for $995. If you are not in a state that we are licensed in, maybe I can direct you to a firm that will help. Again, most people are better served to invest and use arbitrage, rather than this program-but if you are really debt adverse, this might be a good program for you.
Robert Smith
City Federal Mortgage
I attended an investor meeting last night with a guest speaker from United First Financial peddling the MMA software. As some of you have concluded, the product is pure snake oil. The notion that it is some powerful collection of complex algorithms able to save users money through interest cancellation techniques is simply false.
Rather than struggle with spreadsheet analysis to reach this conclusion, one need only look at the ground rules offered by the salesmen. It only works if you pay more money into the ALOC/HELOC then you take out. That difference, or positive cash flow, isn't accumulating anywhere as savings, instead its being used to pay down the money you borrowed from the ALOC/HELOC to make principle payments on your primary mortgage.
The initial results seem impressive because rather than making small additional principle payments on your own, which would eventually have the same affect, the program has you borrow larger sums from the ALOC/HELOC for those principle payments then uses your own positive cash flow to pay them off.
The software does little more then tell you when your ALOC/HELOC balance is approaching zero so you can borrow another chunk for a principle payment to your primary mortgage. Really, since you have to input all the data yourself, it doesn't tell you anything you couldn't already have deduced, very easily, on your own.
Finally, for those considering the United First Financial product or others, keep in mind that banks aren’t going to let you cheat them. They’re perfectly happy with you borrowing money to pay down other borrowed money. And they don’t care if you pay off your mortgage early because they will use that extra principle payment money you’re giving them to get a higher return somewhere else – something you could and should do yourself rather than invest in snake oil.
Interesting article about the obvious differences between generic and big name manufacturers. I have an issue to put to light, however.
I must say that is rather irresponsible to advise your readers to "If it fails, you take it to a store that carries it and politely explain your problem and ask if there is a way they can help you."
As someone who toiled in retail during college, I can say that you were hated by my ilk. Why in god's name would you think its cool to come into retail stores and blab about your problems instead of working through the manufacturer. That you expect retail employees to do the work of packing and shipping your box to the manufacturer through the exact same process that consumers have to use is evident that you are not qualified to give good advice on consumer advocacy or money saving strategies.
There are some FANTASTIC ideas in this post. However, as a cook who wants to avoid trans-fats, I would hope that there was an alternative to shortening. Would a 'light' olive oil work as a substitute in the crust, or would butter be a better alternative?
So tell me how many times have you used the buyer protection on your card? I would bet for 90%+ of people it's never.
I have a Chase UAL Visa DC. I believe Citibank offers an AA one. There's plenty of other award earning debit cards. You're being foolish if you think you're not paying fees on foreign credit card transactions. They may be lower than the debit card fees but you're still paying them.
If I wanted to read advertisements, I'd read the paper. I'm now canceling my RSS to this site.
We spent 20 years as small boat cruisers. In the cruising community, candied ginger is THE preventative for sea sickness.
We handed it out to all or nervous guests, even for short trips.
Sounds neat and I'd try it. What have you had great success with?
You can only drink so much of it because it can have a diuretic or laxative effect (not a good thing either). I love the bands because they take no preparation - just ready to work when you need them!
My red ink has had to be re-filled (they did it for free) but it just ran out again. I barely use my printer and the other two colors are fine.
Also, I just paid to have the black re-filled. I did a couple of shiny, photo quality prints and the new black ink rubbed off the photos. The HP ink didn't.
Just an FYI.
Assuming you put a layer of insulation so the inside doesn't melt, why couldn't you use a cooler?
Couldn't agree more. Why use cash? It smells funny, takes longer when used in a transaction, offers zero protection, and offers nothing in return. Nowadays, if you use cash, you liken yourself to the old ladies of the 90s who would whip out their checkbooks whilst everyone behind gasped and moaned.
The definition of a fair price (at least mine) is what someone is willing to sell something for and what someone else is willing to buy that something for. Straightforward, simple.
When prices rise too high (an opinion), then people will either choose or be forced to buy less of that item. Perfect example: gasoline. The price keeps on rising because demand does not go down. Until people perceive they can't afford it anymore, the price stays high.
Best advice: quit complaining about being taken advantage - if something is priced too high, don't buy - or change your lifestyle to accommodate the price.
HI Guest: Yup - since all my bills are consolidated to the credit card, some months can have eye-popping balances. However, as long as you're living within your means and budgeting properly, then whether you are paying 5 different bills that add up to one big total or just one big bill, you're still doling out the same amount of money!
And I also agree with the other comments about CC companies not liking the likes of me too much: I'm not making them any money. But they give me that choice, and until they take it away, I'm happy using my credit card responsibly and paying it off in full each month.
re: Anonymity - using a credit card each month does certainly impede on my anonymity. However if big brother is really watching me, he has many other tricks up his sleeve to keep tabs on us and I'm not doing anything wrong anyway. So.....maybe it's callous of me, but there you go.
re: Debit cards - I haven't seen a debit card yet that offers frequent flyer miles (or buyer protection, which a few commenters have mentioned), but maybe there is one. I also find that since I am traveling full time, I'm not in my home country and pay through the nose for debit and ATM fees. This is just one more reason why CCs work better for me personally.
Thanks, all!
...or ginger tea, or if you don't have that on hand, a ginger beer!
Great post. Credit Cards also offer extra protection on purchase. My Visa also offers liability insurance on car rentals as well as Extended warranty on huge purchases. As long as you are responsible with credit, it is always better than using a debit card.
Sure, that may be what the EPA says, but Consumer Reports says differently, at least for pregnant women. Since I've been either pregnant or breastfeeding continuously for the past four years, I go with the more conservative advice. I do love tuna and treat myself with it occasionally, but rarely these days.