Entries for February 2008

My first reaction to the headline on a recent Christian Science Monitor article—"Is Eating Out Cheaper Than Cooking?"—was one word: no. It's hard to imagine how restaurant dining, with tips and often inflated food prices, could cost more than a home-cooked dinner. And yet the article suggests just that.

My second reaction was a sense of déjà vu. Back in 2002, the Wall Street Journal caught a lot of flak for defending the same point—that cooking at home can easily cost more than eating out. That article, "Why You Can't Afford to Eat at Home," cited $20 bottles of champagne vinegar and $10 mushrooms to make its argument. Add a new set of All-Clad cookware, and you're out $900 more.

Here's my interview on proper office etiquette with Judith Bowman, author of Don't Take the Last Donut. She explains how to handle awkward office conversations, what to wear to get ahead, and the kiss-vs.-handshake debate. You can also hear the Alpha Consumer tip of the week. Listen now or download iTunes and RSS.

After I wrote about identity fraud that is perpetrated through the U.S. Postal Service, a reader said his friend's angry ex-girlfriend changed his address without his knowledge. I found it hard to believe such a feat was possible. If fraudsters could change people's addresses at will, then it could cause all kinds of problems, including missed bills, identity fraud, and major headaches.

Luckily, it's not so easy to mess with the mail. I asked Doug Bem of the U.S. Postal Inspection Service to explain how address changes are monitored. His words should be reassuring to people with angry exes in their life. He says:

Alpha Consumer readers recently debated eBay's new policies, which raise fees on items that sell but lower them for those that don't. Many readers, particularly high-volume sellers, expressed frustration and anger over the change.

I discussed the debate over the weekend on WTOP; you can listen here.

And if you are among those participating in the boycott and are looking for eBay alternatives, consider these three.

This morning, I heard Sen. Ron Wyden, an Oregon Democrat, flesh out his and Sen. Barack Obama's proposal to create a five-star rating system for credit cards during a conference at the Center for American Progress Action Fund. If a card issuer changed its terms for unfair reasons, it would get a low rating, but if it gave consumers sufficient time to switch cards, it would get a higher one, he said. Wyden compared the concept to the five-star safety ratings for new cars, which he said created extra incentives for car makers to create safer cars.

But a few minutes later, Jonathan Orszag, senior managing director at the economic consultancy Compass Lexecon, criticized the concept on the grounds that consumers are a diverse group, and one person's five-star card might be a one-star to someone else.

I, too, have wondered how the rating system would reflect different consumer preferences and habits. For example, someone who pays off the balance each month should look for a card that offers rewards, while someone who carries a balance should simply go for the lowest interest rate. So what would the government—under Wyden's proposal, the Federal Reserve—rate a card with a high interest rate and no rewards?

Plus—to paraphrase Ralph Nader before he was a presidential candidate—for some debt-ridden consumers, credit cards will be unsafe at any rate.

Today marks the launch of America Saves Week, a nationwide initiative designed to raise awareness about the importance of saving. To kick it off, the Consumer Federation of America and American Savings Education Council released a survey showing that— no surprise here—savings rates are closely tied to income levels, with households earning over $75,000 saving much more than those earning less than $35,000. Just over half of survey participants said they were saving at least 5 percent of their income.

The initiative's website offers videos, savings strategies, and success stories. Stephen Brobeck, executive director of CFA, says just developing a savings plan can go a long way toward helping people actually sock away more money.

• Check out this week's Carnival of Personal Finance for tips on online banking, navigating Costco, and saving.

Last weekend, my friend Karen was robbed at gunpoint while traveling in New Haven, Conn. Her wallet, which included her Amtrak ticket home, was stolen, along with her credit cards and identification. When she called Amtrak to replace her ticket (she had her reservation number), she was told that it was impossible and that she would have to purchase a new ticket. When she explained that she had no cash or credit cards because her wallet had been stolen, the customer service representative rudely told her to call her parents and have them buy her a new one.

Karen's experience made me wonder: Why doesn't Amtrak offer the same kind of E-tickets as airlines? At the very least, why couldn't it cancel the old ticket and issue her a new one?

I called Karina Romero, Amtrak spokeswoman, to find out. She says Amtrak is simply unable to replace lost tickets. "Our tickets are like money," she says. "We can't reprint them like airlines can." When I told her about the "call your parents" comment, she acknowledged that it was inappropriate and said that Karen must have caught the customer service representative on a bad day.

Bad day or not, this level of customer service seems a bit lacking to me. Readers, have you had better (or worse) experiences with Amtrak?

In a letter to its customers this week, the U.S. Postal Service warned about identity theft conducted via the mail. While the mail is related to only a small fraction—2 percent—of identity theft cases, John Potter, the postmaster general, says he wants to reduce that number to zero.

Tips for keeping your identity safe include shredding all financial documents before tossing them, leaving your Social Security number at home, and never giving out personal information through the mail to unfamiliar companies or people.

The Federal Trade Commission says that identity thefts sometimes occur when thieves fill out "change of address" forms for unsuspecting victims and then collect information from bills that arrive at the new address. If bills or credit card statements don't arrive on time, be sure to contact the companies sending them. You can find out more at the FTC website dedicated to stopping identity theft.

Readers: Have you experienced an increase in your credit card fees or interest rates over the past several months? As we recently reported, some companies have been tightening their credit. We’re looking for consumers who have experienced this firsthand. If you’re willing to share your experience, please E-mail alphaconsumer@usnews.com.

After explaining how to deal with requests for money from family members and other financially awkward situations, Jeanne Fleming and Leonard Schwarz took on a new challenge: answering questions from U.S. News readers. The authors of Isn't It Their Turn to Pick Up the Check? were asked how to deal with casino winnings, child support, and alumni donations. A copy of their book went to—drumroll, please—the Alpha Consumer reader who asked how to deal with a sibling who was shunning his financial responsibility to his aging parents. Here are readers' questions and Fleming and Schwarz's answers:

• Casino winnings. Friends recently visited with us at our home in Las Vegas. After a night of gambling (and an unlucky streak), our friends ran out of money. As we were leaving the casino, they borrowed $10 from me to take a last fling on a slot machine. They immediately won a $15,000 jackpot. Following this windfall, they didn't offer to share the jackpot or even repay the $10 I gave them. Am I wrong in expecting a share of the winnings, since they never would have won the money without my loan?

For a recent article on the art of complaining, I looked into the best ways to lodge complaints against companies. The most important lesson was actually lodging them in the first place—many customers don't, and that's why they end up being overcharged or unsatisfied.

I asked the managers of two popular company complaint websites, Greg Brummer at Planet Feedback and Max Spankie at My3Cents, who receive thousands of complaints from readers, about common mistakes and their advice for getting the results you want. Here's what they had to say:

Barack Obama and Hillary Clinton have both called for credit card reform. Their plans are similar in philosophy, but they differ in the details. (Neither Sen. John McCain, Mike Huckabee, nor Rep. Ron Paul has issued credit card reform proposals.) Clinton's proposal creates a new government commission to focus on credit card abuses and caps interest rates, while Obama's comes with a five-star rating system and a new consumer bill of rights.

You be the judge:

I am a sucker for aspirational ads. I stop to stare at images of women out on early-morning jogs, office workers looking glamorous while tapping away on hand-held devices, and Tiffany diamonds. That is why Starbuck's new campaign, featuring coffee drinkers who reward themselves with nonfat, sugar-free lattes, caught my eye.

After doing some research, I found that some customers (and a barista, for that matter) objected to the ad campaign's use of the word skinny to describe the drinks, for fear it might offend. (Read my article on the campaign here.) I like the ads, except for one thing: I was appalled to hear a woman on one of the radio spots confess to drinking three iced skinny lattes a day. That adds up to about $45 a week. I'd rather "reward" myself with more cash in my wallet. To vote, go here.

Suze Orman has made her book Women & Money available free through this site until 8 p.m. EST today. Happy Valentine's Day!

In response to my criticism posted yesterday, author Alan Corey blogged his defense of his money-saving techniques, which include using the same popcorn bag to get free refills for three months and claiming dropped cellphone calls to get free minutes.

He says he gets plenty of fan mail from readers, and it's only pesky journalists who are critical. Being unethical, he says, requires a victim, and his behavior didn't hurt anyone. Readers, I'd love to know what you think. Would you reuse the same popcorn bag for months?

For an upcoming article, I interviewed Alan Corey, author of A Million Bucks by 30: How to Overcome a Crap Job, Stingy Parents, and a Useless Degree to Become a Millionaire Before (or After) Turning 30. Corey tells quite an impressive story about racking up a million dollars in assets before his 30th birthday, which he did largely through smart real estate moves.

He emphasizes the often extreme ways he saves money, which include eating oodles of ramen noodles and taking advantage of free food at art gallery opening nights. I'm all for saving money, but some techniques struck me as, well, completely unethical. He says he reused the same popcorn bag for three months to get free refills, collected free cellphone minutes by claiming to have experienced dropped calls, and picked up umbrellas at lost and founds by claiming to have left his own behind.

Corey was happy to defend his use of such techniques. He says many restaurant owners want to get rid of the numerous umbrellas they have collected in their lost and found piles. He also says he would take the worst umbrella in the bunch and that he recommends returning it to the same or another lost and found. As for reusing the popcorn bag, he says the theater doesn't specify that the free refills are for only one showing. "I never felt like I was being secretive or deceiving, but creative," he says.

When I asked Patty Park, senior publicist for Random House, whether the publisher was endorsing such techniques, she said, "We're not saying his advice is for everyone...Readers are welcome to take or leave his tips as they wish," she says.

• Readers: Do Corey's techniques cross the line?

If just asking a question could put money in your pocket, would you do it?

According to Linda Babcock and Sara Laschever, authors of the new book Ask For It: How Women Can Use the Power of Negotiation to Get What They Really Want, many women miss out on higher starting salaries, store savings, and other benefits because they fail to make simple requests.

The power of "asking for it," they say, can result in everyday lower prices, as well as a significant increase in lifetime earnings. In fact, Babcock recently told me that while she was out shopping for jewelry, she asked for a lower price and ended up making the purchase at a 20 percent discount.

The idea is so disgusting that perhaps it will work: A new debt awareness campaign, sponsored by the Service Employees International Union and the League of Young Voters, compares "debt disease" to the sexually transmitted kind. The cure? Credit card condoms, of course. From the site:

Abstinence is the only surefire way to avoid catching Debt Disease. If you're concerned that you or your friends can't keep your credit card in your pocket, Credit Card Condoms could be helpful. Keep in mind: although Credit Card Condoms are 99.9% effective, they are only an aid for learning to live a debt-free lifestyle.

Debt disease is spreading quickly among college students, the campaign warns, and once you get it, you could have it for years. According to the site, 78 percent of college students have at least one credit card, and the average credit card debt for graduating seniors is $3,000. (You can see a U.S. News report on college debt trends here.)

To help get the word out, the campaign is holding a contest for the best public service announcement on the topic. The winner will get $5,000 for school expenses, and the video will be broadcast throughout the Internet. Sounds as though it could be viral.

It sounds so simple: To help prevent identity theft, leave your Social Security card at home. That way, if your wallet gets stolen, the thief won't be able to set up accounts in your name.

That was the advice of Ed Farrell, associate director at Consumer Reports' National Research Center, when I interviewed him on camera recently.

But one astute reader, Sheri of Washington, took issue with that advice, because she says retirees with Medicare cards need to carry the cards with them in case of medical emergencies, and those cards contain Social Security numbers.

When I suggested saving money by taking bubble baths instead of splurging on more expensive indulgences and hosting movie nights for friends instead of paying $10 for theater tickets, it unleashed a torrent of E-mails, many of which were critical about just how decadent Americans' spending habits have become.

"Since when did we become a society that needs common-sense advice spelled out for them?" wrote Stephen Johnson of Brandon, Miss. He says he and his wife own two cars, two motorcycles, and a home, all of which they pay for with their salaries, which adds up to around $5,500 a month, including his military pension and disability pay from his years in the Navy. He says they follow a basic rule: Live within their means.

If you've ever had a family member ask you for a loan or been asked to split the bill when all you got was a salad, then you are familiar with the awkwardness that can surround money and relationships. In Isn't It Their Turn to Pick Up the Check?, Jeanne Fleming and Leonard Schwarz offer strategies for dealing with the most cringe-inducing scenarios.

In addition to answering my questions below, Fleming and Schwarz offered to respond to readers' questions, which will be published in an upcoming Alpha Consumer post. As an extra incentive to share your own sticky situation, I will mail a copy of the book to the person who asks the most intriguing question. Send your questions to alphaconsumer@usnews.com or post them in the comments section below.

Not only do you have to worry about your heart while making dates online, but now your wallet is at risk, too. The Better Business Bureau reports today that complaints about online dating services are on the rise.

The most common gripe? Poor matches. Consumers said they were set up with people who did not meet their criteria, including some who were already married or who smoked despite their request for a nonsmoker.

Companies have over-charged me $1,100 during the past year. My health insurance provider rejected a $200 claim because it erroneously determined that I had visited an out-of-plan doctor. My flex spending administrator mistakenly said it would not pay for my $600 prescription eyeglasses. And my doctor performed an unnecessary diagnostic test, without asking or informing me, which landed a $300 bill in my mailbox.

Each year, millions of consumers are bombarded with these kinds of payment problems. One industry group estimates billing errors involving health insurance alone exceed $100 billion a year. It’s not just with healthcare. Consumers report that they often find mistakes on credit cards, cellphone bills, and government benefit checks. At the Social Security Administration, the inspector general found that between 1990 and 2006, over 90,000 Social Security recipients were underpaid a total of $120.4 million—some by as much as $25,000.

At the Consumer Federation of America's conference this week, I spoke with Ed Farrell, associate director at Consumer Reports' National Research Center, about how to stop identity theft, and with Jean Ann Fox, director of financial services at CFA, about avoiding high-interest bank loans.

A couple of interesting ideas have come into my in box over the past few days:

• James Q. Wilson, professor of public policy at Pepperdine University, argues that the next president of the United States should encourage marriage as a way of reducing poverty. "The new president should realize that poverty in the United States is primarily a problem confronting children and young unwed mothers," he writes. He says the Health and Human Services Department should launch a marriage-strengthening program. He doesn't mention anything about a government-run dating service.

• A new paper from Dan Black, professor at the University of Chicago's Harris School of Public Policy Studies (disclosure: my alma mater), to be published later this year in the Journal of Human Resources looks at the wage gap between well-educated men and women. Black found that, as a whole, well-educated women earn about 30 percent less than their male counterparts. But when looking only at men and women who speak English at home, a significant chunk (between 44 and 73 percent) of the wage gap can be explained by age, education, and major. When looking only at women with work experience similar to their male counterparts, the gap disappears even more.

But Black warns against jumping to the conclusion that wage discrimination has all but disappeared among the well educated. It's possible, for example, that women select fields that pay less because they expect discrimination in their original, higher-paying choices.