Entries for July 2008

Congratulations to Jim of Blueprint for Financial Prosperity for winning the third edition of the Alpha Consumer Challenge! His best cheap date idea—to cook and play board games—won by 1 percentage point. He will receive Break Down Your Money: How to Get Beyond the Noise to Profit in the Markets by Fox Business Network reporter Tracy Byrnes.

I asked Jim to share a few things about himself and his site:

I interviewed Cathy from the Chief Family Officer blog for the Alpha Consumer Podcast, and she had all kinds of suggestions for ways to save money on daily expenses. She also recommended these websites:

• ebates.com
• MoneySavingMom.com
• afullcup.com
• fatwallet.com

On the podcast, you can also pick up the latest Alpha Consumer Tip of the Week on recovering from financial disaster. Listen now, download in iTunes, or subscribe via RSS feed.

Dear Alpha Consumer,

I have about $70,000 in student loan debt and right now it's on deferral. I intend to pay it off, but I'm exploring all my options. Can you talk about debt forgiveness? I'm a writer and haven't found any debt forgiveness programs that apply.

The reason you haven't found any is probably because there aren't any. Loan forgiveness programs are few and far between, and the ones that do exist apply mainly to people working in public sector jobs such as law enforcement or social work. (Read more about the federal government's policies here.) People with disabilities are also eligible for various forgiveness programs.

Over the weekend, I spoke with WTOP about saving money at weddings. (Top tip: Just don't go!) Listen now, download in iTunes, or subscribe to the RSS feed.

Just when many consumers are trying hard to stick to budgets, some companies are doing whatever they can to persuade us to ignore those frugal plans.

Last night on television, I saw a Discover Card ad that began, "We are a nation of consumers. And there's nothing wrong with that," against a backdrop of plasma televisions and iPods. Oh, really, there's nothing wrong with that? With the personal savings rate hovering around 0 percent and the average American carrying $16,635 in debt (excluding mortgages), I would argue that there's a lot wrong with that.

With gyms costing upwards of $50 a month, exercise can be pricey. Here is a guest post from Kyle James of Rather-Be-Shopping.com on how to stay in shape on the cheap:

Three years ago, I was at my annual physical, and my doctor told me I was 45 pounds overweight. Of course, I already knew this, as the mirror does not lie! But I was the king of procrastination and kept telling myself, "I will start working out next month." Next month would come and go, and, still, I did nothing.

The ideas for cheap dates are in, and it's time to vote: Who do you think has the best idea for a frugal-yet-romantic night out? The winner of this Alpha Consumer Challenge will receive Break Down Your Money: How to Get Beyond the Noise to Profit in the Markets by Fox Business Network reporter Tracy Byrnes. (Votes will be accepted through Tuesday.)

Here are the finalists, picked from many great submissions:

Over the weekend, I spoke with WTOP about debt settlement and how to know whether it's the right choice. Listen now, download on iTunes, or subscribe to the RSS feed.

Also, remember to submit your best cheap date idea to the Alpha Consumer Challenge by Thursday at 9 a.m.

In theory, living together is romantic—no more schlepping clothes and toothbrushes back and forth between homes. But in reality, it can quickly turn into a financial nightmare, especially if you and your partner have different spending habits and, in the worst case scenario, end up breaking up after sharing furniture, a house, and perhaps even a dog.

To help you decide if you're ready to take your relationship to the next level, take this Alpha Consumer quiz. (You can find more tips on getting along financially with your new roommate here. You can also take previous quizzes on whether you're ready to get married or have a baby.)

It's the time of year when weddings can start taking up more time (and money) than any other weekend activity. I know I'm not the only one with a fridge covered in invites; Banker Girl and Budgeting Babe have also been discussing how to handle the multiple commitments.

Here are some ways to cut down on those wedding costs:

• Just say no. It may sound harsh, but sometimes it's the best solution. Ask yourself, will I still be friends with this person in 10 years? If the answer is no, then consider responding with a polite decline.

Has the current economic squeeze killed date night? I don't think so. We just need to get more creative about it.

The third edition of the Alpha Consumer Challenge asks you to describe your most creative, money-saving strategy for date night. Do you shun $20 movie tickets for some Netflix action? Or overlook the newest hot restaurant for your favorite recipe at home? Some indulgence is OK—there's no need to spend $0—but submissions will be judged based on their originality and frugality. While $50 might be a lot for dinner, I'll be impressed if you can plan a weekend getaway on that amount.

Today's guest post is from AnnaMaria Turano, coauthor of Stopwatch Marketing: Take Charge of the Time When Your Customer Decides to Buy. She explains how to outsmart the marketers:

Being a savvy shopper means measuring the "success" of our shopping by more than just the cha-ching of the cash register. In our stressful lives, how we spend our time and energy should be as important as how we spend our money.

Based on studying consumer shopping behaviors across a number of categories (from buying padlocks to purchasing mattresses), I have three tips for how you can be a savvier shopper and better manage your resources—the time, energy, and budget you spend shopping.

A recent conversation got me thinking: Will any of our money-saving moves in response to the economy stick, even if we return to flush times again? For example, some people may have discovered they enjoy cooking at home more than going out to restaurants or buying fewer clothes to clutter up the closet. I started riding my bike to work, partly because it saves me about $70 per month in commuting costs, and now that I'm in the habit, it's one of my favorite parts of the day. Even without the savings, I would still do it.

What about you—have any changes you've made for economy reasons turned out to be keepers?

I interviewed Jose Garcia, coauthor of Up to Our Eyeballs: The Hidden Truth and Consequences of Debt in Today's America for the latest edition of the Alpha Consumer Podcast. He explains why he thinks consumer debt is climbing and what should be done about it. You can also hear the Alpha Consumer Tip of the Week on lowering your summer air-conditioning bill. Listen now, download in iTunes, or subscribe to the RSS feed.

Dear Alpha Consumer,

I sold my van to a so-called friend before I moved out of California. She couldn't pay the whole $1,000, so I agreed to let her pay in four installments of $250, with the first payment when I gave her the van in March.

The check she gave me bounced. It is now almost the end of June and I still haven't received a penny.

It sounds like a cheesy sitcom scene: Man goes into coffee shop. He orders his favorite drink, a triple shot of espresso over ice. Barista declines; he says the drink goes against company policy because pouring espresso over ice ruins the quality of the coffee. Man gets angry. He leaves a tip with an expletive scrawled across it.

That's not even the end of the story. The owner of the coffee shop, Murky Coffee, then writes an open letter to the customer explaining why the barista behaved properly. (It did not enlighten me, though, as to why espresso and ice should not mix. Here is an excerpt: "OK, we don't do espresso over ice. Why? Number one, because we don't do it. Number two, because we don't do it.")

Spoiler alert: The following post reveals plot twists in Season 3 of Weeds.

In Season 3 of Weeds, recently released on DVD, Mary-Louise Parker's character inherits life insurance and pension payouts from her husband, who died suddenly. Even though their marriage, which was kept a secret, lasted only a short period, the money went to Parker's Nancy Botwin, and not his ex-wife of 11 years.

This development struck me—and the ex-wife—as unfair. Why does a six-month marriage trump more than a decade of shared living (and a marriage that created a son)? Shouldn't that ex-wife get at least some of the money?

The Budgeting Babe is hosting the Carnival of Personal Finance this week, and she's picked some great posts to highlight. My favorites include musings on how to handle career frustrations, thoughts on dealing with pricey wedding planning, and advice on selling your stuff.

Over 20 years after it was originally published, the bestseller The Mary Kay Way is hitting the shelves again, in an updated version. The book outlines the "timeless principles" that Mary Kay Ash used to lead her eponymous cosmetics company. (She died in 2001; the book contains a forward from her grandson.) The book stresses the importance of making other people feel important, listening, following through, and having enthusiasm.

So much of what she says applies as much to the consumer world as it does to the entrepreneurial world. Consider these lessons:

After I wrote about Nan Mooney's new book, (Not) Keeping Up With Our Parents, in which she argues that today's 20- and 30-something professionals are financially worse off than their parents, I received a lot of feedback from people who vehemently disagreed. One reader, Don Sherwood from Boulder, Colo., dubbed me the "whiner in chief" for even writing about the book. Others said it's up to individuals to simply save more and spend less. (A spirited debate can be seen in the story's online comments.)

My editor, Jim Pethokoukis, also disagrees with Mooney. He explained in an E-mail:

After reading my article on new efforts that financial companies are taking to woo women, one of my colleagues told me that she finds it condescending. She says she doesn't feel intimidated by financial information and is perfectly capable of managing her own 401(k) without any special hand-holding.

Another reader said Arika Larson, owner of Women Be Wise, a financial planning company based in San Jose, Calif., "needs to get a grip and a better idea of what some women care about," because it's not necessarily marriage and babies, as Larson suggested.

I've also found myself offended by some female-oriented financial tips in the past, although I still enjoy reading about women and money, because I do think we face different kinds of issues. What do you think? Do women and men need separate financial advice, or is it offensive?

This guest entry comes from Scott Bilker, founder of DebtSmart.com and author of Talk Your Way Out of Credit Card Debt:

When was the last time you looked at your credit card's annual percentage rate, or APR? You may think you know what the bank is charging you for the use of its money, but you might be surprised to find that terms have changed, and you're now paying as much as 18 percent to 20 percent, or more. The U.S. average is around 12 percent, and I believe that is much more than you have to pay—especially when you've been a good customer with that bank.

So what do you do if you discover that you are paying too much for your loans? Well, quite simply, make the bank lower your rate. Sound impossible? More than half of the time, I've been able to make my banks lower their interest rates. The trick is to have the right deal-breaker.

I recently spoke with Felicia Taylor at Retirement Living TV about complaining in the right manner. Tips include calling the company directly, staying calm, and avoiding automated phone systems.

Rob Walker, author of Buying In: The Secret Dialogue Between What We Buy and Who We Are, is back for a final day of answering questions from readers who participated in the first edition of the Alpha Consumer Book Club:

From Ryan Taylor of Millionaire Money Habits: It seems everyday consumers have more and more ways of "branding themselves" with the products they use, wear, and associate with, and organizations have an opportunity to capitalize on this with the viral, word-of-mouth phenomenon that exists with Facebook, YouTube, and the like. This also poses a challenge, as word-of-mouth advertising can't really be controlled as much as other forms of marketing, or can it? Is there a way to launch a "word of mouth" campaign and get people talking about your product?
Hmm, yeah, well, I think there are a number of fairly specific examples of that in the book. So, sure, it's possible. It's also hard. But guess what? Advertising, selling, marketing—it's always been hard.

A few skeptical readers wrote to tell me they thought I didn't do enough research on MyGallons.com before writing about it and potentially driving new customers to it. They pointed me to a Los Angeles Times story, the Consumerist, and the Better Business Bureau, which gave the company an F grade.

"I'd check into the viability of this company before offering some free press," scolded Norman Mok of the Armchair Economics blog. Mark from Texas wrote in to say that he signed up for MyGallons.com and then quickly canceled his membership after learning about the Better Business Bureau rating.

Readers sent in many great questions for Rob Walker, author of Buying In: The Secret Dialogue Between What We Buy and Who We Are, the first selection of the Alpha Consumer Book Club. He answers them today and tomorrow:

From Meg Marco of the Consumerist.com: As you point out in your book, consumers often join their identities and even sense of self with brands (such as with Apple). When consumers reach out with complaints to companies whose brands they've incorporated into their sense of self, they're operating in a state of emotional pain. When a brand fails them, they seem to feel as if they've failed, too. What effect do you think this level of emotional participation has on a company's customer service responsibilities? If companies are adept at selling "ideas about products," do they need to work hard to maintain that special feeling once the honeymoon is over? Or has all the hard work been done?
This is a great question—and one I wish I would get more often from, say, marketers and business owners.

I recently spoke with Jim Jorgensen, radio host and author of a forthcoming book on women and retirement, for the Alpha Consumer Podcast. He has some smart ideas on how to save enough during working (and nonworking) years to ensure a well-funded retirement. You can also pick up the Alpha Consumer Tip of the Week on saving money around the house. Listen now, download in iTunes, or subscribe to the RSS feed.

Dear Alpha Consumer,

My husband and I were planning on filing for Chapter 13 bankruptcy because our house is going into foreclosure. Now, he has left and says that he is going to file for a divorce. I have custody of two grandchildren and am a full-time student. I have a job interview tomorrow, but I don't know what to do about saving myhome. What are my options since we are now separated? Should I still file the Chapter 13 with him or file something separate? Please help—I am running out of time.

That is definitely a pickle you have found yourself in. And while it's not exactly cheerful Fourth of July holiday fare, I have been receiving an increasing number of E-mails from people hitting rock bottom (financially speaking), so let's talk about your options.

A reader calling herself "Grannie Jones" sent in this money-saving tip about learning to mend your own clothes:

Back in the good old Sixties when I was a young bride, I learned that you can save a bundle if you learn to sew. I don't mean making a tailored suit or pinch-pleated drapes. Just simple sewing and repair work will save you time and money that you would otherwise spend going to a tailor or replacing clothes that are ripped, too long, or too short, or have missing buttons. In our little town in southern Oklahoma, it costs $6 to hem a pair of pants. It probably costs a lot more in New York City.

In addition to the more romantic aspects of marriage, walking down the aisle also leads to a union of finances. Before deciding whether or not to tie the knot, you may want to consider the long-lasting ramifications it could have on your bank account. Take this Alpha Consumer Quiz to help determine your level of nuptial-readiness: