May 2011 Archives

Thanks to Miss Thrifty for hosting the 311th Carnival of Personal Finance, a weekly, traveling compendium of the best personal finance items from around the blogosphere. In the carnival, Miss T. links to my item from last week on the interesting no-interest deal obtained by Republican presidential candidate Newt Gingrich from Tiffany's.

While summer doesn't begin until late June, it already feels like it in most parts of the United States (especially here in Texas). I don't know about you, but I'm already dreaming of my summer vacation. It's not planned yet, but I'm not too stressed out about it. I've been saving for a trip little by little every week, and I have enough Continental frequent flier miles to get me a round-trip ticket to pretty much anywhere the airline flies.

Before you get too lost in thought about your next vacation, read on for my roundup of my favorite posts from the past week from the personal finance blogosphere.

I'm happy to see that My Personal Finance Journey -- host of the 310th edition of the Carnival of Personal Finance -- likes Smurfs. Or, perhaps more accurately, my blog post from last week titled "A new player in the Smurf game: a parental wallet."

I rise, not to throw glitter on him, or to excoriate him for ill-chosen words, but to defend Newt.

Newt Gingrich's campaign for the Republican presidential nomination has gotten off to an ill-footed start, with the aforementioned glitter-dump by a gay activist and a chewing out by an Iowa conservative over unflattering comments about fellow Republican Rep. Paul Ryan's budget plan.

Then, this past Sunday, Bob Schieffer, host of CBS's "Face the Nation" program, grilled Gingrich over disclosures he had owed a "revolving charge" account with Tiffany and Co. somewhere between $250,001 and $500,000.

A Washington Post factchecker gave him the unflattering "three Pinocchios" for his explaination of how he paid for it. But what he said was entirely plausible.

If you lose thousands of dollars in the game Monopoly, you may very well wind up bankrupt. However, all financial ruin abates when you put the pieces away, with no harm done to your actual assets. That's not the case with an investment in graduate school.

I'm about to borrow $150,000 to pay for my legal education, and I'm doing it far away from the safety of a game board. I know I stand to lose a lot more from this transaction than a utilities or a railroads card.

The United States government just hit its debt ceiling this Monday, May 16, according to the Wall Street Journal. This means we have hit the limit for how much we are legally allowed to borrow, even from within government branches. While there is certainly concern that the walls will come crumbling down, Treasury Secretary Timothy Geithner says he can have something worked out if we can have the deadline pushed back to August.

The scary thing is that nobody quite knows what will happen if we do go above that ceiling since it has never happened before. There aren't set rules for which government programs get put on hold or cut off first. Financial failure could cause a global financial crisis, hurt the U.S. dollar and allow future investors to charge us a higher interest rate.

I hope you'll read on for my roundup of my favorite personal finance blog posts from the past week. I'm kicking things off with one that really helps break down the debt ceiling situation in a way that's easy to understand.

For a long time, I've been a fan of the cartoons in "The New Yorker" magazine.

One caught my eye back in 2000, when I was new to writing and editing personal finance stories.

In the cartoon, Dad's sitting on the couch with his son, as Mom stands in the background, fear in her eyes. A computer is in the other room. "It's very important that you try very, very hard," Dad says to his son, "to remember where you electronically transferred Mommy and Daddy's assets."

Eleven years of electronic progress later, many of us are carrying around smartphones and tablet devices. With them come new and even easier ways for our children to drain our bank accounts -- accidentally, through games aimed at children who lack a firm grasp on the difference between real and imaginary money.

Get turned down for a promotion? Feel like it's you against the world? If so, you're more likely to soothe your soul with a credit card purchase than a cash purchase, according to research published in March 2011 in the "Social Psychological and Personality Science" journal.

According to the study's authors, Nathan C. Pettit (Cornell University) and Niro Sivanathan (London Business School), the more you feel threatened, the more likely you are to avoid further pain by paying for a desired item with easy credit instead of precious cash.

Did you know that friggatriskaidekaphobia means a fear of Friday the 13th? Here is a startling statistic from the Stress Management Center and Phobia Institute in Asheville, North Carolina: "It's been estimated that [U.S] $800 or $900 million is lost in business on this day because people will not fly or do business they would normally do." The organization also estimates that 17 million to 21 million people in the United States suffer from this phobia.

Here's 10 $20 bills, and a $5 bill. Take them. They're free. You want them? Apparently you don't.

In a time when saving is in vogue, it would seem that $200 is a sizable enough sum not to disregard. Yet the average household that participates in loyalty programs fails to redeem $205 of $622 in rewards each year, be it airline miles or points accrued from shopping and credit card use.

I can thank my mother for helping me become the tightwad that I am today. I'm not alone.

As a new CreditCards.com poll shows, the family member identified the most for influencing our financial habits and money management prowess is dear ol' Mom. The poll of 1,004 adults found that more than a quarter (26 percent) chose mom as the chief influencer of their money handling skills. Dad was second with 21 percent.

The CARD Act has resulted in many consumer-friendly changes that impact how credit card issuers and banks operate. In response, many of these issuers have taken actions to recoup lost revenue by reducing or removing reward programs and charging extra fees.

Chase recently ran a test in which consumers in Illinois who weren't Chase customers had to pay a $5 ATM fee when withdrawing money from one of their ATMs, and Texas customers had to pay a $4 fee. This week, The New York Times said that Chase recently ended this test period and has reverted back to the regular $3 ATM fee. A reason wasn't given for the end of the pilot, but I'm hoping that enough people stopped using them them that the bank got the message and knew they needed to lower their fee again.

For great advice on credit, debt and personal finance, please read on for my top 10 favorite blog posts from the past week.

I've never applied for a cash back credit card, but I suddenly have one -- at least for the next few weeks.

My Bank of America airline rewards card has unexpectedly morphed into a cash back credit card through the end of June. During that time I'll receive 3 percent cash back on purchases made at gas stations, grocery stores, drug stores and restaurants.

It's an interesting tactic to try to entice more spending on a card I usually only use a couple times a month, when I hit those rare locations where American Express cards aren't accepted.

Seems like an intriguing way to drum up business at a time when credit card usage across society is in decline.