Control Your Cash: Making Money Make Sense

A Guest Post From A Dog

admin — Wed, 16 May 2012 11:16:43 +0000

Occasionally we run guest posts. If you’d like to submit one, see our requirements here. Today’s is written by one of the very few submitters capable enough to meet all our criteria, Froofy the Dog.

He already writes better than most Carnival of Wealth submitters

Hi, this is Froofy! My brain can do the following, and not much else:

-remember which people I can trust
-know where my food and water are
-allow me to whimper so the people mentioned above will open the door and let me out when required.

Yet even I know that you’ve got to be some kind of lower vertebrate to take to heart half the tripe I read that’s passed off as personal finance advice. (Yes, I occasionally read. That contradicts what I wrote earlier, but I want you to suspend your disbelief, at least until the end of the post.) These self-styled experts and bloggers repeat the same incessantly dumb stuff and think that a) it’ll make a difference if executed, and b) anyone’s going to act on their awful advice anyway. Here, I’ll list some of the most offending personal finance mantras I’ve come across. I’ll use point form, the preferred method of communication for dimwits:

Create an emergency fund.

What’s an “emergency”? Yes, I know, it’s a relatively simple word, but what, specifically, could it mean in this context? Give me an example, humans.

Medical bills?
Car accident?

Wow, you folks are unimaginative. Then again, you cite the same emergencies repeatedly because there just aren’t that many occurrences that can legitimately qualify as “emergencies”. That’s if you define an emergency as something that requires you to draw down funds that you’ve set aside for such an unfortunate occasion.

Let’s examine the examples above.

You can buy health insurance. Yeah, I know, it’s too expensive. Waah, waah, waah. Get off that doughy posterior of yours, eat better, and maybe your premia will decrease.

Besides, if your finances are so tight that you consider insurance to be expensive, why do you want to sock away money in an inert account anyway? Shouldn’t you be growing that money instead? Explain this to me. I’m just a dog.

Okay, #2. Car accident. You have insurance for that, too. In fact, it’s required.

I know what you’re thinking. What about an unforeseen expense that insurance doesn’t cover, something like a cylinder head assembly that needs replacing?

This is easy. You withdraw the $3000 or so that that’ll cost out of one of your investments. Dropping $3000 is something you’d obviously rather avoid doing, but when the time comes, you’re going to have to do it anyway. To quote business author Harvey Mackay, you’re supposed to dig your well before you’re thirsty. That’s not a retroactive argument for creating an emergency fund. Rather, it’s a retroactive argument for putting your money somewhere it could grow.

Confused? I usually communicate in barks, so you need to work with me here.

When someone recommends an “emergency fund”, they mean a highly liquid account – one you can take money out of easily. Most of the time, that’s going to mean a savings account that earns either no interest or minimal interest. This is stupid. If you’ve got the discipline to sock away $5000 or whatever and not touch it, good for you. But it also means you’ve got the discipline to amass $5000 and actually, you know, do something with it. Five large is a down payment on a condo. A cheap one, anyway. Or it’s a substantial piece of a real estate investment trust. Or it’s 223 shares of Hewlett-Packard, which is trading at close to a 52-week nadir. They recently switched out CEOs, can’t possibly make any more dumb acquisitions anytime soon, and probably should have been selected by the folks behind Control Your Cash in Financial Uproar’s stock-picking contest. Not sure why they didn’t.

When you create an emergency fund, you’re saying, “I want my money to stagnate.” If I get lucky, something costly will happen and it’ll all be worth it. Dang, Mark Twain wasn’t kidding. You people really do love to rationalize.

2. If you can’t handle credit, freeze your cards in a block of ice.

Come on. You’re screwing with me, right? This is like a personal-finance version of the hidden-ball trick, isn’t it?

Why do you have credit cards if you’re not going to use them? Oh, for emergencies? See above. To build credit? Don’t you have to occasionally use them, then?

I know a guy, a Dobermann. Nice fella. From Germany, which is why he uses the additional “n”. His owner tried to quit smoking once. Well, several dozen times. He’d buy cigarettes, then get his girlfriend to hide the packs in the house. Why you’d possess something and not use it, we couldn’t tell you. Flirting with lung cancer seems at least a little more straightforward than trying to fool yourself into being tobacco-free. If you’re afraid that being able to access your cards means you’re going to go on a spree and end up thousands of dollars in debt…well, have you tried being an adult? Try it and see how that works.

3. Create a budget and stick to it.

How does this one work, exactly?
Let’s say you get a call from a friend on the 30^th of the month. He asks if you’d like to meet him for lunch. At a restaurant, which presumes you’ll be spending some amount of money.

What do you say? “Sorry. Went a little crazy at Chili’s last Monday – I ordered an appetizer and an entrée. Long story short, I reached my allotment for the month (Expenses: Food & Entertainment category) and can’t meet you. Unless you want to pay for me, or perhaps you’d rather I just order water while watching you eat.”

You’ll lose a friend, and you’ll deserve to.

Budgets are for business entities. They have to have them. Businesses have multiple decision-makers pulling in different directions, and not everyone can have their way. The research & development team would love to have an extra few hundred thousand to experiment with, but the CFO has owners to answer to and finite resources to manage. The factions have to reach a compromise, thus every department gets a budget.

But you’re not a company. You’re one person, with no one else to answer to. Try this: spend necessarily. Don’t squander your money. Make a conscious decision every time you take out your wallet. Don’t freak when you’re in line at the supermarket and you find that that 60¢ bag of cilantro put you over your self-prescribed limit. Life’s too short. And are you really going to spend time fixated on a spreadsheet, categorizing your expenses for the sheer fun of it? Come on. Unless you’re naturally inclined to do so, you don’t. Stop kidding yourself.

Those 3 useless pieces of advice just perpetuate bad habits among people who were never going to change anyway. You don’t need an emergency fund: you need assets. You don’t need to save yourself from yourself: you need to grow up. And you don’t need a budget. You just need to stop spending stupidly.

That wasn’t so bad, was it? (It wasn’t.) Told you we were smarter than cats.

Carnival of Wealth, Tim Duncan Edition

admin — Mon, 14 May 2012 12:33:09 +0000

And he's a mime, too! Here he is doing "Stuck In Center Alignment On Control Your Cash"

Why can’t everyone be like the big man? Year after year of quiet excellence, and no desire to share his personality with the world at large. Consistency and aptitude still count for something, right?

We could give a damn who wins the NBA title; not that we’re not fans, rather that we have no emotional investment nor rooting interest in something that only tangentially affects us. But it’s hard not to pull for the stoic giant who forever redefined the power forward position. Would that everyone on the planet knew what they were good at, and didn’t waste their time trying to be something else. Besides, he could use one more ring for the thumb.

There are blog carnivals. There are personal finance blog carnivals, and most of them are horrible. Cut, paste, present. You can read one of those if you want – it won’t take long – or you can stay here and at least be entertained and possibly learn something. Doesn’t that sound better? Of course it does.

The Carnival of Wealth. A week’s worth of posts from around the personal finance realm. Some are great, some are not. None are average, or they wouldn’t be here. Submitters, go here. Readers, sit back and ingest:

Week after week, Ken Faulkenberry of AAAMP Blog has an uncanny ability to submit his post seconds before we decide we’re going to start writing the CoW. That’s why he’s usually at the top, and remains so this week. Ken argues that you do well in a bear market by losing less than everyone else does. That isn’t technically true, but his point is undeniable – understand the difference between a secular bear market and a cyclical bear market. You can start by guessing which we’re in now.

Here’s an example of what not to submit to the CoW. It’s someone’s middle school essay on investing in oil and gas. Someone going by the name “Lynn Jackson”, writing at One Cent At A Time. “Lynn” explains what you need to do before buying shares of, say, ExxonMobil:

You will be faced with evaluating different companies for their experiences, success rates, and their fits with your needs.

Using “needs” as a noun, -1 point. “Lynn” continues:

In turn, these companies will want to get a lot of information about you to assess your suitability. You will need to work with a lawyer, because this weight of investment requires a considerable amount of regulation and compliance.

Huh? A post written for the most novice of investors, claiming that a company you’re interested in buying a piece of will keep a dossier on you? There were 2 comments on this post last we checked, and neither commenter challenged “Lynn” on this falsehood. If you’re looking to do a hostile takeover, then yeah, this post might be valuable to you if you can get past the unspeakable liberties “Lynn” is taking with the English language. “Lynn”, we’re trying to delight readers, not scare them away.

Good Lord. Speaking of middle schoolers, this next one opens with the last resort of every 12-year-old who has a report due Monday morning and it’s now Sunday night: a dictionary definition!

Purpose – what does this word mean to you?
The dictionary defines purpose as ‘The reason for which something is done or created or for which something exists’

That’s from Savvy Scot. Have at it.

Someone at UPromise wrote an advertorial for Jason at One Money Design, and allowed him to put his name on it. Or maybe he really did write it himself. No way to prove it. Either way, he got paid. Oh, did we forget the link? Oops. Remind us to go back and insert it.

Does anybody proofread anymore? We’re not talking about an occasional typo slipping through. We’re talking about a post so replete with errors that it makes us want to find the college admissions officer who greenlit the submitter’s application and give her a Breathalyzer test. Sean at One Smart Dollar lists (bloggers love lists) 8 jobs that don’t require a degree. The funniest part of this post is that out of the millions of college dropouts who went on to wealthy and productive lives, the 2 Sean cites by name are Mark Zuckerberg and…Ryan Seacrest. Yes, with the right brand of hair gel and sufficient shiny teeth, you too can be a barely closeted no-talent. But don’t despair, because

While college can cost thousands of dollar, the cost to take a few classes to before a real estate broker is much less.

Read that aloud for full effect.

Keep in mind that being a real estate broker is not a 9-5 type of job.

Fine as far as it goes, but he follows that up with a Control Your Cash favorite – the utterly superfluous sentence:

Real estate brokers often work nights and weekends.

If you don’t read your own stuff, why should the rest of us?

(A post titled “How Many Keywords Should You Run On A Page?” Yeah, we can’t wait to run that.)

Did we run a submission last week on checking your credit score? You mean we missed a week? That won’t do. If the most overwritten topic in personal finance is “creating your emergency fund”, “checking your credit report” is a close second. We’ll let Squeezer at PF Success handle it from Oh God, we don’t even have it in us to write interesting comments on the inanity of this particular repetitive blog topic anymore.

Should we just tank at this point? If we run the worst carnival on the internet, do we get the 1st pick in next year’s carnival draft? Let’s try.

Complex Search lists 10 reasons the housing market won’t recover anytime soon. Most of the reasons are valid, even though the post is wildly self-contradictory. Opening line:

We’re all pulling for the housing market to recover.

Start of the next paragraph:

If you’re considering buying a home because you want to live in it for 30 years, this market is perfect for you.

So we’re not “all” pulling for the housing market to recover. Some of us want prices to stay low. You just said as much! Even better, this post was written by John Haller, the self-proclaimed founder of Fidelity One Credit Corp, “a socially responsible company.”

“We’re socially responsible” is like “I have a great sense of humor.” If you have to say it…

Socially responsible? Guess what Fidelity One specializes in. Car title loans! You can’t make this up.

At least one person’s going to send us an email this week saying, “Why do you have to be so critical?”, to which we’ll respond, “Click on the links in the CoW.”

And just like that, PKamp3 from DQYDJ.net has to come in and ruin everything. Original topic? Check. Readable English? Check. A little humor and lots of expertise? Check. And he slew at least one dragon of conventional wisdom, too. PKamp3 says you can’t look at a stagnant market level over a certain period and say you’d have been better off keeping your money in a mattress. Why? Because dividend reinvesting, that’s why. PKamp3 backs up his points with irrefutable data, too. Damn him. And we were doing so badly, too.

What’s this? Another good post? Now you’re just rubbing it in. Stephanie at Nerd Wallet shoots down a gimmick from C1 Bank. Buy a CD, get a Mercedes. Of course there’s a catch, and of course the smart folks at Nerd Wallet are happy to bring it to your attention. This post is so comparatively good, we’re not even going to point out the tired “car loses value the moment you drive it off the lot” mantra.

(sigh) From Liana Arnold at CardHub, an honest and critical review of the 3 latest travel rewards cards from Bank of America. Again, rewards are everything. Credit limit is close to everything. Interest rate is nothing. (Not “interest rate is zero”, but “interest rate is nothing.” Download our book if you think that’s a distinction without a difference.)

Now we’re in danger of squeaking into the playoffs.

And again. John Kiernan at Wallet Blog wants you to just buy a freaking house already, alright? Mortgage rates have a lower bound (zero). They’re rapidly approaching it. God, the universe, John Kiernan and the Control Your Cash principals all want you to buy a house. Just do it.

Andrew at 101 Centavos is back. He embodies all the traits we love here at Control Your Cash: strong opinions, original research, the ability to write without stultifying…he’s basically the opposite of a mommy blogger. This week he writes about institutional investors’ reluctance to include Walmart in their portfolios.

Did you know that only 31% of Walmart stock is held by institutional investors? You didn’t, and you probably don’t know what to make of that number because it’s meaningless without a frame of reference. According to Andrew, 60-80% of a typical stock that trades on the New York Stock Exchange is held by institutional investors. So we figured that maybe Walmart’s low number is a result of the company’s enormous market capitalization: there’s so much Walmart to go around that Ma and Pa Investor can’t help but own 70% of it. Andrew proves that that’s not the case, and explains why brokerage houses are largely insane.

(Seven Essential Navigation Tips for New Boat Owners? From something called BoatInsurance.org? That’s more like it.)

On balance, that was awful. Here’s your money back. The good news is we’re on Investopedia, all the freaking time. And you can follow us on Twitter (@CYCash). And we’ll have something of our own creation here on Wednesday. Stay tuned.

Expose Yourself For Fun And Rewards

admin — Fri, 11 May 2012 11:55:57 +0000

She's smiling because she's AB-. That'll get you $20 a quart.

A company is struggling, and the struggle has no quick resolution. (How) can you profit off this situation?

Case in point, and a real-world example. We needed an polyurethane iPad Smart Cover, which is made by Apple and sells for $40. It’s the only accessory we could find that hit the multiple criteria of a) being made especially for the product it’s supposed to accessorize and b) coming from a trusted manufacturer (Apple itself). There are plenty of knockoffs available, but we’re not interested.

While we’re certain the Smart Cover does what it’s supposed to, we still wanted to take a look at it rather than just read the description on Apple.com. So we headed to Best Buy, America’s dominant electronics retailer since the demise of Circuit City. You can touch and play with the iPad Smart Covers there. We did.

Then we bought one on eBay for $23. With free shipping and no sales tax.

Here’s an immutable law of commerce that we’re already seeing regular examples of and will continue to for the next few years: Businesses that operate as showrooms, rather than as businesses, are at a huge disadvantage. Look at the position retailers such as Circuit City and Borders (and now Best Buy, and others to follow) have put themselves in. You can walk in off the street and examine the merchandise at your leisure. The employees range from obsequious to unobtrusive, but none of them are going to give you the hard sell. (Imagine a car dealership operating the same way. More specifically, imagine walking around the floor looking at new models and responding to every salesperson with “No thanks, I’m just looking.” The car dealership would kick you out within minutes. Maybe electronics retailers and bookstores need to place their staff on commission.)

The old business model isn’t just old, it’s counterproductive. Using a retailer/marketplace like Amazon or eBay, plus the wireless provider of your choice, you can walk into Best Buy, look at the items available, buy them from someplace else, then discreetly leave the store. If you really enjoy irony (as distinguished from coincidence), you can buy the items from Amazon or eBay with a phone that you bought at Best Buy. If you’re feeling really daring, you can do it with a floor model display computer.

There’s no obvious solution to this, either, short of Best Buy drastically lowering its prices. Either that or the company could get out of the retail electronics game, and operate exclusively as a seller and installer of large appliances and car stereos. When Best Buy hires us as consultants, that’s what we’ll suggest. Until then, our ideas are merely opinions.

As a customer, your options are plentiful. As an investor, you can make money here: you just have to be resourceful about it. Imagine a market so relatively free that it lets you sell stuff you don’t own.

BBY seems like a perfect example of something worth selling short. This is vastly different than selling a house short. You borrow the stock, hope it loses value, then buy it, then return it to the lender at the original price.

Sound like too much work? Heck, it’s an opportunity. The holder of BBY obviously thinks it’ll appreciate, so it’s only fair that there be a mechanism for profiting off daring him to be wrong.

The compact explanation is as follows. BBY is currently trading at around $20. Say you borrow $20,000 worth of shares, which you can hopefully figure out is 1000 shares. You wait 3 months, and the price has fallen to $16. You then buy $16,000 worth of shares, sell them to the entity you borrowed the original 1000 shares from, and pocket $4,000 (less borrowing charges.)

But instead of following the predicted downward trend for those 3 months, Best Buy gets a patent for a perpetual motion machine. Or finds an oil patch underneath its corporate headquarters (which would be noteworthy, seeing as it’s in a Minneapolis suburb.) The stock shoots up to $60, and the lender wants his 1000 shares back. That’s going to cost you, Ace. $60,000, to put a nice round number on it. You’ll be out $40,000 for your little exercise in semi-sophisticated trading (again, plus borrowing charges.)

What about the actual specifics of short selling? It starts by opening a margin account. E*Trade*, for instance, will let you open a margin account with a minimum balance of $2000 if you already have a regular account with them. When you use a margin account, you’re borrowing E*Trade’s money. You can’t run away from them if you come up short. They know where you live, and they have your money.

So say BBY falls in value, but not by as much as you’d like. After your arbitrary 3-month period, the borrowed money comes due with the stock sitting at $19.53. How much would you make?

This isn’t hard to figure out, and you can probably do it in your head. $470, right?

Go back and read the post again. From the top. E*Trade (or anyone else, other than a particularly dupable family member) is going to charge you interest. Your net profit for that imperceptible decline in the stock price is 0.

Never make an investment without knowing the interest rate you’ll be charged on any money you borrow.
Never make an investment without knowing the interest rate you’ll be charged on any money you borrow.
Never make an investment without knowing the interest rate you’ll be charged on any money you borrow.

Should we say it once more, underlining this time, or did you get the message?

Brokerages start with something called the “base rate”. E*Trade set its at 4.14% a couple of years ago, and it’s remained untouched since. If you have half a million dollars in your margin account, you get to borrow money at the base rate. (Put a million in your account, and they’ll take 25 basis points off the base rate.) But the less your ability to repay, the higher the interest rate you’re charged. That’s why unsecured credit cards charge so much, which you shouldn’t be paying interest on anyway. With that $2000 minimum balance in your margin account, you’ll pay a 430-basis-point premium on the money you borrow. 8.44%. You’re almost better off borrowing on that credit card. Almost. Here’s the list of interest rates, segmented by size of account balance:

Making money’s a pain, isn’t it? For a beginning-to-intermediate investor, better to find something undervalued and buy it long than search for something overvalued. The worst thing that a stock you perceive to be undervalued can do is fall to 0. A stock that you think is overvalued, but isn’t, can rise so high that you’ll lose your margin account, your house, your 401(k) and the respect of your friends and family. Now, who’s up for some trading?

*Technically, the name is supposed to be in all caps. They should consider themselves fortunate that we’re deigning to indulge even one of their typographic fantasies by spelling the company name with an asterisk. The asterisked name spawned an asterisked comment, adding to the confusion, a confusion that this asterisked comment can’t hope to resolve.

Preventative Maintenance, Your New Best Friend

admin — Wed, 09 May 2012 11:05:41 +0000

WARNING: Never mind the graphic images. Once this gal’s voice enters your head, it ain’t coming out anytime soon.

When your humble blogger was a Cub Scout, his pack watched an anti-smoking film that contained his first exposure to tracheotomy. The video featured a guy smoking a cigarette through a hole in his neck, which was followed by a helpful if nauseating cross-section diagram that showed how surgeons somehow detached the patient’s windpipe from his blackened larynx and had it connect to the outside world at a point of contact somewhere near his Adam’s apple. If the description nauseates you, you should have seen the video.

The happy result is that no one in that church basement ever lit up a cigarette.

Which of course is a lie. Most of those kids ended up becoming high school classmates, and several turned into pack-a-day smokers. One of the adults in charge of the Cub Scout meeting smoked during the video, never reasoning that a) maybe it’d have been better to have instead smoked after the kids went home and b) him lighting up in front of everyone sent a louder message than did the recorded image of a cancer patient.

This is a personal finance website, and this isn’t an anti-smoking screed: hell, the more you smoke the more elbow room the rest of us eventually enjoy. But there’s a point to be made.

Look at our cover girl, Terrie, 51. Doing a 180º isn’t going to make a difference at this point. She can lead the healthiest lifestyle imaginable: eat a whole foods diet, drink nothing but ionized water, run 5 miles every morning (notwithstanding that she now has the lung capacity of a web-footed salamander), and it won’t matter. Nothing’s going to regrow the hair, or the lower jaw, or the throat flesh. She’s a casualty waiting to happen, and might even be dead by the time you read this. People who are dumb enough to smoke, largely don’t care.

For another example, this one from personal knowledge, here’s a family friend who smoked himself to death. His house had more full ashtrays than ours has electrical outlets. The end came a few months after the picture was taken, but 3 years after he’d had the first lung removed. (They don’t remove a second lung.) A fresh start, such as it was, and this was how he expressed his gratitude to the surgeons who prolonged his life.

The same problem of exacerbation applies to finances, too. Making a $900 payment on the credit card you owe $19,489.34 on means next to nothing. It’s like coughing up something black one morning, seeing the face of God in the mucous, then deciding that from this day forward that you’re only going to smoke menthols.

Lot of help that is, jerkface. I already have a $19,489.34 balance on my VISA card. (But only $8,593.32 on my MasterCard! Why can’t you look at the positive instead?)

Depending on your attitude, you’re going to find the following advice either patronizing or useful: You won’t get your hand bitten off the 20^th time if you don’t put it in the leopard cage the 1st time.

Yeah. Habits start off annoying, and eventually become effortless. Whether it’s 20 minutes of yoga every morning, taking your dog for his daily constitutional, even something as mundane as brushing your teeth; you do it because you should, and soon enough you don’t think twice about it, to the point where omitting the repeated behavior becomes more of an inconvenience than performing it does.

You see what we did there? Substitute something negative (smoking, beating your kids, financing everyday purchases) in the list of habits in the preceding paragraph. If you habitually incur credit-card debt, or habitually squander a fixed ratio of your salary on gambling, it’ll feel awkward to start not doing so.

The number of 50-year-olds who overcame decades of financial stupidity to build lasting wealth is virtually zero. Gaining realization is something the younger and more impressionable folks do. So can you change? Probably not. But if you’re sincere about wanting to, the patented secret method is to simply do it. While financial trouble isn’t easy to dig out of, it’s at least possible to do so – unlike turning black lung tissue into pink.

If any of this resonates, or hits uncomfortably closely, congratulations! You’re a test case. Downsize. It’s only temporary, anyway. The luxury townhome you’re renting and can barely afford? Suck it up and take on a roommate. Don’t think of your lifestyle being cramped, think of the few hundred dollars a month you’re now receiving and weren’t before. Same goes for the Target “retail therapy” and peer pressure group dinner dates at restaurants you’d never frequent on your own.

No one wants to lay the foundation, but everyone wants to live in the penthouse. You can’t get there without the necessary intermediate steps. Building wealth, employing leverage, compounding your net worth – none of that works unless your net worth is positive in the first place. Otherwise you’re just making a bad situation worse.

You can cut expenses. Not like that kook at The Simple Dollar who counts the thousandths of pennies it costs him each time he opens his fridge, but rather in large and impactful ways. You can find masses of cash in your portfolio that are just sitting there instead of being put to work – e.g. the savings account that you could easily turn into a money market account or a mutual fund. What the hell is stopping you?

Carnival of Wealth, Ode to Joy Edition

admin — Mon, 07 May 2012 11:59:32 +0000

"Fine, here's my g.d. autograph. You're not a collector, are you?"

Vienna, 188 years ago today. Ludwig van Beethoven “drops” his latest, and ultimately his last, the Symphony No. 9 in D minor. If this isn’t the greatest piece of music ever written, it’s definitely in the top 7. Beethoven himself conducted the premiere, marking his first on-stage appearance in 12 years. The audience was speechless when he began, and remained so throughout the performance.

If you read methodically enough, and click on every link, today’s Carnival of Wealth should take you 66 minutes to get through. So go back to the top and start again, but not before clicking this link. The words and the music will sync perfectly, far better than The Wizard of Oz and The Dark Side of the Moon do. (Ode to Joy starts at 46:00 if you can’t wait.)

Ah yes, the Carnival of Wealth. A week’s worth of personal finance blog posts, distilled for your pleasure. Entrants submit here. Now let’s get started, the 2nd movement is about to begin:

We love heresy here at Control Your Cash. Not the sedevacantism kind of heresy, but something a little more on-topic. Ken Faulkenberry of AAAMP Blog thinks strategic asset allocation – that is, concentrating on the investor’s objectives rather than the opportunities available – is bunk. The man earned an MBA from USC; read it.

Madison Du Paix of My Dollar Plan recently refinanced Chez Du Paix, and is now applying for credit cards “to make some money!” 12 of them, no less. She claims she’ll earn $1,525 in signup bonuses, which wasn’t clear from the provided links. The only bonuses we found were for rewards, not cash, and were contingent on how much money you spent. Also, some of these cards came with giant annual fees, as high as $175 (albeit waived for the 1st year).

This deserves a more critical eye. 1st, these links are all sponsored, which a diligent blogger would have mentioned. 2nd, they include such juvenile sales pitches as

No annual fee for the 1st year – a $95 value!

We’ve talked about anchoring on this site before, but come on. That’d be like us saying, “We could set up a $40 monthly paywall on Control Your Cash, but we didn’t. You just made $480 this year!”

Another card Ms. Du Paix touts as offering a “$250 cash back bonus” really offers a $100 bonus, plus another $150 if you spend $5000 in your 1st 3 months.

It’s easy to manipulate numbers to take advantage of the innumerate, and the folks at Chase know this. Get a credit card with no annual fee and cash rewards (or rewards for items that you already buy, and don’t have to change your behavior to accumulate.) You can’t make a legitimate $1,525 from filling out credit card applications. Maybe in Shangri-La you can, but not here.

Are dividends the Cabbage Patch Kids of the early ’10s? Boomer and Echo look at some major Canadian corporations that have recently increased dividends, and try to determine whom those stocks are suitable for.

Free Money Finance lists 30 simple steps you can take to overhaul your finances. Yes, because people in need of financial overhauls are notorious for following directions, especially 30 at a time. Well, maybe if they receive said steps in pairs. This week, steps 1 and 2.

A new submitter this week, Curtez Riggs (USA, Ret.) of Life After the Army. He asks why so many returning soldiers have such awful credit, then gives a 1st-person account of how easily it can happen. If you’re a civilian, you can get some use out of this post. If you’re in the military, you can really get some use out of it. Read now.

Scott at the hopefully titled One Smart Dollar thinks there are certain items (paint sprayers) you should rent, while others (lawn mowers) you should buy. His litmus test?

A good rule of thumb is to look at the item.

How about that. What he means is, figure out how often you’re going to use it. He’s right. Home Depot and Lowe’s let you rent big-ticket items, and you’re crazy if you need one for a single big job and decide to buy the item outright.

Shawanda Greene of You Have More Than You Think is back from a long absence (2 whole CoWs or so) with a magnificent post about – well, we’ll let her describe it:

As a single, currently childless, woman, it bugs me that motherhood is a lifestyle choice that warrants special treatment in the workplace. It just ain’t right.

Congratulations, you spread your legs and got inseminated. Even better, you made the world incrementally louder, whinier, and more indulgent. Here, enjoy these perks that the zero-impact members of society don’t get to enjoy.

Also on our list of irregularly appearing yet noteworthy contributors is Nelson Smith of Financial Uproar, who writes about whole life insurance. Like us, he treats this useless product with the contempt it deserves. How contemptible is whole life insurance (and the people who sell it)?

uglier than Rosie O’Donnell making out with Ellen DeGeneres

No argument here, and one great thing about us disabling comments a few weeks ago is that no one can tell us that Ellen DeGeneres is actually quite beautiful and we shouldn’t be so closed-minded.

Mich at Beating the Index returns with a vengeance, offering his usual amalgam of deep research and practical advice regarding Canadian natural resource companies. This week he breaks down Arcan Resources. It’s an oil company whose stock Mich finds attractive, if you’re willing to wait for it to spend the next year resolving debt issues.

J.P. at Novel Investor gives us a refresher course on bonds, and how their prices and yields are more or less inverses of each other.

Go the search box and type “university” or “education”. It’s one of our biggest peeves here at Control Your Cash, the idea that the math works out on a heavily financed degree in a useless field. Teacher Man at My University Money references the latest incident of entitled brats whining about the unfairness life has thrown them; the Quebec student “strike”. (Don’t you have to be employed to be striking?) Basically, students who already pay low out-of-pocket tuition that’s heavily financed by taxpayers are whining about a $325 annual increase. Look at the pictures of the protesters, and you won’t find a civil engineering or chemistry major in the bunch.

For a different if not opposite perspective, W at Off Road Finance is a computer science major who’s actually gone to the trouble of determining how much colleges spend on what they provide, and what those colleges offer in return to their customers. W’s right – too many consumers of higher education ask “What do I want?”, and don’t ask “How much will it cost?” or “Will I be getting my money’s worth?” Imagine doing that with any other commodity.

The brilliant Mike Piper at Oblivious Investor writes about a 4-letter acronym you’ve likely never heard of – the SIPC. It’s the Securities Investor Protection Corporation, and it has your back if you get screwed by a crooked broker.

James at Short Road to Retirement reviews a book, Michael Dever’s Jackass Investing. The author debunks a number of myths, and the ones James references are spot-on. Is the book worth it? Beats us, we didn’t read it. But there’s a link to a free copy.

Stephen at Nerd Wallet lists the 5 most common investing mistakes. The 1st 4 are indeed common, but the last one caught our eye: “Investing too early”.

Huh? Isn’t earlier unequivocally better? Not if you don’t know what you’re doing. And as the author points out,

There’s no sense in beginning construction on an investment portfolio if you’re $10k in the hole.

It’s amazing how many people – hell, how many CoW submitters – don’t know that. Forget about your “emergency fund”, or even your 401(k), when you’re drowning in debt. Get up to sea level first.

By far our most verbose contributor is Todd R. Tresidder of Financial Mentor, who banged out 5235 words on paying off your mortgage early. How did he do it? Repetition, plus he repeated himself, saying the same things over and over again, multiple times. Here’s our one-paragraph summary:

Add a set amount to your payment each month, with explicit instruction that it’s to go to the principal (mentioned in detail in The Greatest Personal Finance Book Ever Written.) Failing that, pay biweekly, or refinance, or shorten your term, or – and this is awesome – move to a cheaper house.

Given how long his post is, we’re impressed Todd R. found time to quietly contemplate life while sitting in a casual pose by a stream.

Liana Arnold at CardHub shares the details of Living Social’s affinity credit card. Her bottom line (which she got to considerably more quickly than our previous entrant)? Stay away unless you’re a Living Social addict. And if you’re a Living Social addict, there’s a world beyond coupons. Embrace it. (That’s our editorializing, not Liana’s.)

Kids, are you looking forward to making money this summer? Well, John Kiernan at Wallet Blog shows you how government can suck the fun out of it. Learn about withholding limits, tip reporting, and the endless fun of filling out W-4s. It only gets better as you get older.

So we’ve decided that maybe the most entertaining/educational post of the week should go last from now on. We’ll probably forget this by next week. But for now, PKamp3 at DQYDJ.net declares, “Asking people to divide themselves into categories before determining the best style of investing for them – this can only go well!” He’s only semi-joking, but he does force you to think about how much of your mindset is emotional and how much is driven by cold calculation. Plus PKamp3 references the enigmatic Rob Bennett, whom we ran a guest post from a while back.

Wait. Sorry, PKamp3, but you’ve been usurped at the last second. The horrifying and otherwise largely indescribable Wizard Corpse has returned, asking the seemingly relevant question, “How was you (sic) Ipad (sic) made?” Seriously, this post and its site are worth stopping and staring open-mouthed at.

We leave you on that note. Come back tomorrow for another Anti-Tip of the Day, Wednesday for another original post, Friday for yet another, Monday for another CoW, and check us out on ProBlogger and Investopedia. Godspeed.

Work From Home! (You Can’t Possibly Think This Is Legit)

admin — Fri, 04 May 2012 12:44:25 +0000

As a model, the woman in this "work from home" ad is far too hot to actually work from home

If you still watch conventional old TV, as opposed to Hulu or something similar, you’ve seen the ads. Generally speaking, the further removed you are from the major networks and from primetime, the more the ads promise.

Work at home. Work from home. Make $6000 a month, putting in just a few hours a day. Or if you prefer, make unlimited money. Obviously this is too good to be true, but exactly what are these companies offering beyond a vague promise at financial freedom? What do they require you to sell?

Your humble blogger recently donned his protective headgear and dived into one heavily promoted site representative of the genre, Internet-Wealth-Builder.com, because multiple hyphens in a URL are a sure sign of an upstanding business.

The landing page requires you to enter your name and email address before proceeding. Once you do, you’re led to a different URL, that of something called the Monitium Marketing System (pronounced “moe-nih-tee’-um”, like it matters). A 10½-minute video starts automatically, which makes one wonder whom Monitium is trying to appeal to: people who are too impatient to commute to a job every day, but who are willing to sit through a interminable series of graphics?

Both the video and the supporting copy are relentlessly vague. The company offers

one of the best business models available for today’s entrepreneurs, a business model with low risk, low overhead, great tax advantages…

What’s not to love about that? How about the next 5 words:

and a low start-up investment.

Financial Retard of the Fortnight

admin — Wed, 02 May 2012 11:33:34 +0000

This isn't the subject of today's post. This is a guy with the same name, who got nailed on weapons charges and whom the good folks at BustedMugshots.com went to the trouble of photographing.

…In which we’re so incensed by a news story that someone else wrote, we have no choice but to comment on it.

Most financial truths are obvious: spend less than you earn, don’t waste your money, note where it’s going, economize where you can, et al. Those truths are so obvious that we barely mention them on this site. Let the other, less imaginative sites handle that.

We’re more interested in unconventional, even iconoclastic truths. There’s one that comes up time and again, that’s so important we’re thinking of putting it right up there with our mantra, Buy Assets, Sell Liabilities.

On balance, higher education doesn’t pay off.

You don’t need our declaration to make it official. Think about your own life and those of those who surround you. The English literature graduate pouring coffee. The M.A. in philosophy who’s making $30,000 as a research assistant. The criminal justice major who can’t make ends meet selling real estate, which doesn’t even require a university education.

Most worthwhile jobs don’t. Some do, of course. But for every research physicist or medical dosimetrist who spent good money studying the hard sciences, there are multiple people who spent comparable money studying something less challenging and with less demand in the marketplace.

Oh, here we go again. Don’t you understand that education has an importance beyond dollars and cents?

Okay, then why isn’t it free?

It’s free in Australia.

No, it’s funded by taxpayers in Australia. Let’s rephrase the question: Why don’t college professors work pro bono, if it’s only about enriching young minds?

For the latest example of someone putting his faith in the wrong place, meet the grossly overeducated Andrew Slocum. He’s a junior high school librarian. Last year, at the age of 36, the married father of a 4-year-old spent $10,000 on an “advanced teaching certificate”. Whatever its other merits, this piece of paper qualified him for an annual $3000 raise; in the same way that having a penis qualifies him to be an Army Ranger. The certificate didn’t guarantee him anything.

An advanced teaching certificate is not to be confused with, say, a bachelor’s degree in corporate finance. The latter is a requisite for a career that the degreeholder wouldn’t otherwise be able to enter. The former allowed Mr. Slocum to do the same job he always did, with a possible salary increase simply for holding the piece of paper itself. The certificate had, and has, zero intrinsic value.

Unless you count the $10,000 it cost.

(Without the increase Mr. Slocum was hoping for), he reckons his family would be losing $60,000 over the course of their careers.

Only in academia can a $10,000 investment pay -6 times itself and still have people defending it.

Mr. Slocum has spent his entire adult life in schools, which is of course where he spent his entire pre-adult life. Education for its own sake is the ultimate comfort zone. “I’ve endured 16 years in a classroom. Now that I can go anywhere I want, I think I’ll…spend my life in a classroom.” Mr. Slocum had it out at a school board meeting.

He talked of his sacrifices: vacations, hard-earned cash and perhaps the most valuable — time with family and friends.

Oh, you whiny little princess.
Another fundamental truth: life, especially your financial life, is about results, not effort. Who’s a bigger net contributor: the guy who spends 80 hours a week digging postholes in the hot sun and then filling them up, or the woman who spends 4 seconds unlocking the doors to Target every morning so people can buy what they need?

All of it was for naught, Slocum said. Although he received his education raise this school year per the district contract, Slocum said he’s been wary about spending any of it. Instead, he’s been saving it, just in case he’d have to give it back.
Slocum is still saddled with $25,000 in student loan debt from his undergraduate and master’s degrees.

You really can’t make this stuff up. Multiply Mr. Slocum’s case by tens of millions, and you’ll have a better idea of where North American society is headed.

He earned the undergraduate and master’s degrees more than a decade ago, and is still carrying a balance equal to 5 months’ salary. 5 years ago, he decided to reproduce, because having a child you can’t afford is a great way to get back on track.

Again, poor and struggling people are poor largely because they choose to be. Mortgaging your future to cough up $10,000 for an enhancement in your education that might pay off is a retarded bet. Especially when you’ve already flushed $25,000+ down an education hole that’s got you in the position where you are today.

Somewhere within a couple blocks of Mr. Slocum’s house is a long-haul truck driver who makes comparable money and doesn’t have that educational albatross around his neck. One (more expensive) neighborhood over is a low-voltage electrician who tangibly improves people’s lives, and who instead of spending $10,000 on a useless certificate, spent it on a down payment for a second house. Which he now rents out for more than the mortgage payment, uses as a tax deduction, and passively finances his vacations with.

Mrs. Slocum, a $38,652-a-year teacher, encapsulates her family’s dilemma far better than we could:

“(The school board is) basically penalizing us for pursuing higher education. What kind of message does that send to the kids?”

Oh, that’s a rhetorical question? We answered it above. In bold.

“This is the first time I’ve felt embarrassed to be a teacher because I have to beg for the salary I deserve,” (Mr. Slocum) said, addressing School Board members.

News flash: whether you’re a butcher, drilling rig supervisor, baker, librarian, or candlestick maker, you don’t deserve a damn thing. A smart person would know that. An educated person wouldn’t necessarily.

Coda: The story mentions that to secure the $10,000, Mr. Slocum had to raid his son’s college fund. That might be the best thing that could happen to that kid.

Carnival of Wealth, May flowers edition

admin — Mon, 30 Apr 2012 12:30:34 +0000

Next time, try flying

Welcome back to the Carnival of Wealth, the only personal finance blog carnival you need to be reading. A weekly roundup of the best and worst personal finance posts of the week. (Submit here if you’re interested.)

Fun facts about the Mayflower:

She took 66 days to cross the Atlantic.
2 of its 102 passengers died en route. (Wait, that’s not a fun fact at all.)
It landed with 101 passengers. One passenger gave birth on board. She named her kid Oceanus, which is fantastic.
Despite there being hardly any room (there were also 25-30 crew members), some people brought their pets.
45 passengers died the following winter.

Puts that bad taco you ate on board the Carnival Dream in perspective, doesn’t it?

Alright, shall we get started? Let’s:

Green Panda Treehouse asks a (hopefully) rhetorical question: should you stick with one job for your career? The answer, of course, is yes. You should also vote for Eisenhower, see the new Martin & Lewis movie, take the streetcar to the Brooklyn Dodgers game (I hear they have a Negro patrolling second base now) and buy your wife that dress from Gimbel’s that she’s been going on and on about. Ladies love shopping, you know.

It never fails to surprise us how many people can break down every plot point of Mad Men but couldn’t tell you the difference between a Roth 401(k) and a traditional. Not that everyone should be as into personal finance as we are here at Control Your Cash, but the latter will affect your life far more profoundly than the former. Roger the Amateur Financier gives a 5-point method for increasing your financial literacy. We’ll reduce it to one point: spend $7 on this.

In that same vein, the tireless Ken Faulkenberry at AAAMP Blog explains mutual fund expense ratios. How much of your mutual fund payments are going to the manager’s 3-martini lunches and 4-line-of-coke nightclub visits? Understand that if your mutual fund’s value stays unchanged, you’ll still be losing money.

(Post rejected because apparently, discerning the difference between plurals and possessives isn’t all that important to some people.)

Teacher Man at My University Money knows the difference, he just wasn’t sure what side of the “s” the apostrophe goes on. Or maybe he was sure, but wrong. Anyhoo, he explains how to apply for scholarship money if you’re an incoming college student.

Can we add another tip? If you plan to study anything other than the hard sciences, do yourself and society a favor and withdraw your application. Go to a trade school instead, and become a productive citizen. Better yet, join the Navy.

Some guy got a Costco membership and wrote a boring story about it. Do you really care what he buys pine nuts for? (A: Pesto.) We figured you didn’t, and thereby saved you from reading about it.

A new entrant this week, who styles himself Chase DuMont, Rainmaker. Seriously. Never mind his self-appellation, Mr. DuMont appears to be the real thing. A Penn State business grad who now makes his home in Beijing, he’s written possibly the longest post we’ve ever run. It’s on why you shouldn’t rely on (too much) outside funding to start a business, and he’s absolutely right. (We speak from experience.) And his grammar is flawless, which will almost always get you included in the CoW.

Also, having a participant dubbed “Rainmaker” gives us an excuse to offer a musical interlude:

Treat your ears and buy this album (Dance of Death) and the 3 others Iron Maiden have released since Adrian Smith and Bruce Dickinson rejoined the fold (Brave New World, A Matter of Life and Death, and The Final Frontier.) Easily their best stuff, and the bar was pretty high to begin with.

Marie at Family Money Values spends more time on content than she does decorating the standard WordPress template that her blog came with. This week she explains how to cut expenses if you happen to own a rental property. Which you should, if you can, because it’s a great way to earn passive income without relying on the vicissitudes of the stock market.

Oh, for the love of Pete. Michelle at See Debt Run is yet another mommy blogger (that’s 5,438,239,102, by our count) who thinks she’s the first person in history to crank out a child and can’t wait to tell you what it’s all about. Here are some utterly unremarkable thoughts she had and assumed would be worth sharing with you:

Being a parent is one of the most rewarding experiences ever. I love my children completely and unconditionally.

That’s the kind of penetrating insight we expect here at the Carnival of Wealth. Good for you, Michelle.

Even though I wanted to be kinder to the environment and pamper my baby’s bum with soft cotton and not silica gel filled plastic pants, I was overwhelmed by the finality of (my mother buying me $300 worth of cloth diapers)

At Control Your Cash, we have, ahem, cats. (Deliverable to the highest bidder!) They’re infinitely more rewarding than any child could be, and have yet to call from the county jail at 2 a.m. asking for someone to come down and bail them out. That being said, if we ever, ever, dared to write a 2000-word post debating the merits of Fresh Step vs. Litter Perfect, or referred to their hindquarters as “bums”, or thought that you’d find such tripe interesting, or wrote “I love my cats completely and unconditionally”, we’ll buy every last one of you a copy of Trent Hamm’s latest book. Oh, she also managed to jam in a paid link. SEE IF YOU CAN SPOT IT:

There are tons of cloth diapers online. We went with a brand, Alva Baby, with excellent reviews that only cost about $6 per all-in-one set, which includes an adorable, soft, sizable snap cover and one absorbent insert. We spent about $80 and picked out some cute, girly colors and designs.

Again. Carnival of WEALTH. Not Carnival of Infant Feces.

Nobody knows anything, as Andy at Saving to Invest proves. Half the experts he cites say we’re in a bull market, the other half say bear. Andy has a few tips for preserving or maintaing any wealth you have in securities. Now if we can just get to tell people to act on his advice, instead of merely “consider(ing)” it, we’ll have something.

If you can get past the writing style (English for ESL students), Darren (no last name provided) guest posts about value investing at Faith & Finance. A brief history of the concept, of its patriarch Benjamin Graham, and of Graham’s intellectual progeny. Not just Warren Buffett, but others.

Barbara Friedberg of same Personal Finance lists 57 Habits to Build Wealth. Well, 58 but she listed “drink water” twice.

If she’s going to list them, we’re going to critique them. Most are valid, some are curious. Like “54. Own a pet.” It might be rewarding, it might be kind, but it’s not going to build wealth. Also, “3. Get a college education” and “40. Get an advanced degree” will destroy wealth, not build it, unless you’re more specific about what you’re going to study.

Our favorite is “18. Drink alcohol infrequently.” The CYC principals both teetotal, not for any moral reasons but because alcohol is a fertile breeding ground for bad decisions. It also costs money, which Barb was alluding to. Yet it’s interesting how even a seemingly obvious recommendation – don’t drink – can’t be explicitly stated in our alcohol-fueled culture. It has to be tempered, qualified. You can’t possibly tell people to stop drinking, that’s unrealistic. Just tell them to, y’know, curb it a little. You’ll still be squandering money, just less of it. You’ll still be numbing brain cells, just fewer of them.

God. What preachy douches you are.

No. We aren’t. Nothing in that paragraph was a value judgment. Read it again. It’s all objective.

Hmmm…Theresa Torres at Credit Donkey wrote a post (complete with fancy infographic, and code allowing you to “embed on your own site”, for some reason) telling people to pay something more than the minimum monthly payment on their credit card balances. But she doesn’t say to pay the balances in full. Again, the “smoke low-tar cigarettes” advice. Should we run the post? Ah, what the hell.

The prolific Laura Edgar at Nerd Wallet is back as always. Her posts are consistently informercialtastic, but not without content. Still, we’d much rather read a long post about why a Wyndham Rewards credit card is awesome (or in Laura’s analysis, awful) than see an out-of-place link in the middle of a paragraph about diapers. You know, like the Pampers you should let your precious little angel soil. That’s Pampers, brought to you by the good folks at Procter & Gamble.

Free Money Finance wrote 5 tips on how to succeed in the workplace. They’re exactly what you’d expect – work hard, be likable, etc., but #4 is awesome. Be attractive.

He’s 1000% right. There is no better advantage in this world than being pulchritudinous. Even the ugly among you can do something. You can at least get in shape, buy decent clothes and get a more flattering haircut. That won’t change the face God gave you, but it’s a start. It’s less work than developing your brain, too. Dumb people can’t get smart, but homely people can get good-looking. (Just ask Sarah Brightman.) Do you think an idiot like Tara Reid or Chelsea Handler would be as successful as she is without being somewhat easy to look at? Do you think portly schlub Newt Gingrich ever had a hope in hell of winning the Republican presidential nomination against a stud like Mitt Romney?

Some uxorious twit just had to chime in on FMF’s post, probably with his Gorgon of a wife standing over his shoulder. Here, we’ll repeat it:

FMF: I know you’re just trying to give people tips that will realistically help them, but as a man who respects his wife and thinks she is beautiful without makeup, I have to go off on a tangent…
Maybe instead of telling women to paint their faces, you could advocate against that type of misogynistic nonsense. Even if you had just addressed makeup in the same way as plastic surgery, that would have been a good start.
The suggestion to wear makeup is also counterproductive in this context, because the stuff is expensive enough that even if wearing it did help to increase your income, you have also increased your expenses. In addition, you increase your long term health-related expenses by smearing the toxic sludge on your face.
Our society thinks its so much better than those “backward” societies who force women to cover their faces, and then we turn around and do the same thing.

Yes, rouge = a burqa. Check out the link, at least for FMF’s brilliant takedown of this clueless and unrealistic commenter.

John Kiernan at Wallet Blog hates prepaid cards and the people who pimp them, as do we. (Because Lil Wayne and George Lopez are whom you should turn to for financial acumen. We’ve already discussed Suze Orman. And if you think we’re going to spend 5 seconds researching to find out where the apostrophe goes in Lil Wayne’s name, we aren’t.) But John thinks regulators need to step in and put a handle on the fees these card issuers charge. We disagree. As always, read the freaking agreement. If you’re too stupid or lazy to read it, and you get screwed, you had it coming and are lucky they left you anything at all.

Three more home runs and then we’re done. We can always count on PKamp3 at DQYDJ for meaty analysis presented in a form lay people can understand without having it unnecessarily dumbed down. This week, diversifying your portfolio via the Kelly criterion. This post is so good it’ll make you forget that doggerel from the mommy blogger above.

No one knows anything like Mich at Beating the Index knows the Canadian natural resource market. This week he discusses the Viking Oil Trend, west-central Saskatchewan’s (although from the map, it appears to be south-central Alberta’s) answer to the Bakken Formation. A little inside baseball, but definitely worth taking your time and digesting to see which companies have the upper hand on exploring this rich region.

Finally, Liana Arnold at CardHub discusses the statute of limitations (actually, statutes of limitations, one for each state plus D.C.) for unpaid credit card debt. Don’t want to pay VISA? Wait them out! And good luck in court, you deadbeat.

That’s everything. Thanks again for coming. New post Wednesday, new Anti-Tip of the Day every day. Check our 6-part series on ProBlogger, our frequent goodness at Investopedia, and follow @CYCash on Twitter. ‘Til then.

Now Trent Hamm’s Just Daring Us To Name Him Financial Retard of the Month

admin — Fri, 27 Apr 2012 11:26:13 +0000

There's GOLD in them there textile fibers!

By far our favorite punching bag here at Control Your Cash is Trent Hamm, the hyperfrugal crazy person who runs The Simple Dollar. 14 times a week, he writes about compulsive, creepy, maniacal methods for shaving undetectable amounts off your expenses. Meanwhile he writes next to nothing about how to increase your revenue, which is swell because we don’t need the competition.

In previous posts he’s recommended bypassing the toothpaste aisle at the drugstore so you can collect the ingredients to make your own inferior version, and also told female readers that they should never spend more than $3 on a swimsuit. When a commenter pointed out that $3 swimsuits don’t exist, Trent helpfully suggested that women swim in their underwear. Yet people still continue to read this corn-fed monster of impracticality, and not always for the undeniable comedic value. That he has any audience at all is testament to the axiom that stupidity begets stupidity. Also, people = sheep.

By the way, Trent Hamm didn’t suggest homemade toothpaste brewing as a fun craft project for the kids on a night when the TV and the internet are down. He suggests it as a legitimate way to save money. And dozens of his devotees cyber-chime in to nod their empty heads.

One of his latest money-saving tips is so bizarre, so utterly immersed in minutiae, so microscopically unhelpful, that we had to let it sink in for a few weeks before choosing the right way to poke fun at it. Here, we’ll let Trent take it away:

Several months ago, I was curious about how much heat was lost when I opened up the oven to inspect a dish cooking in there. I put an oven thermometer in the oven, waited until the dish I was cooking was almost finished (a casserole cooking at 400º), then opened the oven door for about ten seconds to inspect it.
During those ten seconds, the thermometer dropped almost 20º. When I closed the door, the temperature slowly returned to 400º, but during that period, the oven had to put in some extra work to return that heat.
How much? It’s really difficult to exactly calculate that without a meter running specifically for the oven. My best estimate, using a lot of math and thermodynamics, is that you lose about 2¢ worth of energy every time you open the oven door.
My solution? I turn on the oven light when I’m cooking anything in the oven. That way, I just lean over and check what I’m cooking without opening the oven door.

Where to start? With his discovery of the oven light? It’s not quite the game-changer that Leif Ericsson landing in the New World was, but it’s close.

How about that! Those forward-thinking engineers in the appliance industry researched the problem and put a light, a source of illumination, INSIDE the oven. Combined with a glass window that sits between the interior of the oven and the outside world, that means you can look at your food as it’s cooking.

Trent? You know we’ve sent men to the moon and back, right? That was 43 years ago.

Now that we’ve made fun of his stunning appreciation for the glaringly obvious, let’s not forget Mr. Hamm’s bread-and-butter: the cheapness that would put Hetty Green to shame.

It costs 2¢ to open the oven door. Even if you’re opening the oven door for no better reason than to warm up the kitchen a little…well, you don’t need us to tell you that 2¢ isn’t going to bankrupt anyone who can afford an oven, electricity, and food. We wonder how long it took him to calculate the 2¢ figure, and whether he could have spent that time earning money instead.

Throughout your life, how many times have you opened an oven to check on a dish before it was ready? Does 100 sound about right? If you have, that’s 2 WHOLE DOLLARS you figuratively flushed down the drain. You could have used that money to buy several servings of Trent Hamm’s homemade laundry detergent. Instead, you just tossed it away like it grows on trees. Nice going, you wasteful pig.

Nor does Mr. Hamm show his “math and thermodynamics”, presumably because he thinks the rest of us will flee at the sight of an equation or two. Then again, given his readers’ intelligence, that presumption might be the most rational thought Trent Hamm has ever had.

But wait. Light bulbs don’t power themselves. So where’s he getting the money to turn the oven light on with?

The light bulb uses less than a cent of energy per hour of use …”

Well, that’s a relief. Measuring the difference between the two, you can replace your daily regimen of oven-opening with one of light-keeping-on and be on your way to economic self-sufficiency in no time.

Mr. Hamm isn’t just taking his obsession over minute amounts of money to its nadir, he could be indirectly responsible for the deaths of millions. Why, he’s openly encouraging his readers to die of trichinosis:

If your recipe says “Preheat the oven to 400º” and then later says “Bake for 30 minutes,” don’t preheat the oven at all. Instead, put your food in the oven, then set the temperature to 400º. Then, add about half of the preheat time to the cooking time. Why? When you open a preheated oven to put in your dish, it’s no different than opening the oven to check the food near the end of the cooking time. You lose that 2¢.

(Italics and boldfacing ours.)

“Damn it, don’t you people understand? Those 2¢ increments are valuable! You wasteful reprobates probably keep your toasters plugged in when you’re not using them, too.”*

And if that doesn’t beat all, this will. Here’s another excerpt from The Simple Dollar archives, from February 26, 2009:

There’s also a group of what I would call “frugality extremists.” These are the Ziploc bag washers, the people who will gladly invest quite a bit of time to save a dollar or two. I find these people and their ideas interesting, but not necessarily applicable to my life.

Got that, everyone? Washing a Ziploc bag is going over the line, but calculating that it costs 2¢ every time you open your oven door to check on what you’re cooking is completely normal. Trent Hamm, you’re magical. Since we have to pick a Retard of the Month 12 times a year (a calculation which required lots of math, not so much thermodynamics), promise us you’ll never change.

*Of course, he’s written about this too.

Nothing Is Your Fault Or, Student Loans Are Killing Our Economy, Part CXXV

admin — Wed, 25 Apr 2012 11:25:23 +0000

This picture was taken in 1992, right when the loan balances were at their highest. No word on how much the wedding cost, or if the betrothed paid for it out-of-pocket.

We’ve got a fantastic investment idea for you, one that you’re a fool if you don’t take advantage of. It’s a no-brainer, really. Refusing this investment would be like turning down matching funds from your employer for your 401(k). In fact, it’s even more fundamental than that. Refusing this investment would be like turning down a raise. “Do you want more money?” “No, I’m good with less, thanks.” Saying no to this investment would be like simultaneously spitting on the flag and tearing up a Bible. (Note: On the first draft that showed up on the page as “tearing up a Buble”, which would be awesome. Thank you, Mr. Qwerty, for putting the “I” and the “U” keys next to each other and making such comedy possible.)

And if you need more incentive, the President himself does it.

The investment? Student loans! Yes, they come with a mandatory interest payment, but who cares? Investment! In your future! (As if you could have an investment in your past or your present.) Keep repeating buzzwords as necessary!

If you needed any further proof that our economy is doomed and that you should save yourself and your loved ones first, read this quote from the chief executive himself:

We only finished paying off our student loans off about 8 years ago. That wasn’t that long ago. And that wasn’t easy–especially because when we had Malia and Sasha, we’re supposed to be saving up for their college educations, and we’re still paying off our college educations.

To recap: the President of the United States has a B.A. (from Columbia, which is not inexpensive) and a law degree (Harvard, which is less so). He started attending Occidental College in 1979 before transferring, and received the law degree in 1991. He financed at least one of the degrees, and paid back the loans in 2004.

So it took him somewhere between 13 and 25 years to pay off his education. Let’s split the difference and call it 19.

Also, while paying off the loans, he and his wife decided it’d be a good idea to take on more expenses – in the form of a couple of children. Those children, by the way, now attend an elementary/middle school that costs them a combined $64,920 to attend every year (includes hot lunch).

Let’s take the last part of that quote again:

We’re supposed to be saving up for their college educations, and we’re still paying off our college educations.

“We’re supposed to be saving up for their college educations”, as if it’s a moral imperative on a par with “we’re supposed to feed and clothe them.” No one even questions the value of this anymore: going to college is at least as important as anything else you can think of.

The above quotes come from a speech to, appropriately enough, a bunch of college kids (at the University of North Carolina); none of whom spent the previous weekend passing around the bong and sleeping through lectures. President Obama didn’t get into the financial details of his and the First Lady’s loans, but we do know that they took somewhere around 2 decades to pay off.

But that’s OK, because a college degree enables you to earn more money, right? It should be obvious that whatever increase in salary these borrowers enjoyed because of their educational status, it was more than negated by the price of the loan. 19 years is practically half a regular working life, and it’s being spent committed to paying down the debt incurred to ostensibly enrich that life in the first place. How much further could we take this? Would it be OK to work for 42 years, and spend 41 years paying off student loans? Why not? Investment (in your future)!

Some of you wags are bringing up objections. We can hear them already. Let the debunking begin:

1) “He was a law professor. An intellectual. The smartest man alive, in fact. What was he supposed to do, drive a truck?”

So by virtue of being smarter than someone who began working sooner and accumulated no debt in the process, the smart person…incurs obligations that take 2 decades to pay off? Fine, you lead 1-0.

2) “Well, he ended up as President. Therefore incurring student loan debt was the right move.”

By that logic, you can defend everything he did before the 2008 election. Snorting coke while organizing the community? +1. Attending a church presided over by a lunatic preacher with insane opinions? Another +1. Kids, put down the shovel and instead pick up the mirror and the straw. Then join the Westboro Baptist Church. Ticket to success, right there.

Finally, for fairness and balance, let’s include another quote about tertiary education from another man running for president:

When I went to school, we didn’t have a federal student loan program, and I was able to work my way through college and medical school because it wasn’t so expensive.

Never mind. Those are clearly the ramblings of a crazy person.

Seriously, why was college so much cheaper when Ron Paul was studying?

1. College hadn’t been rammed down our throats as mandatory. It was perfectly acceptable to brag that you were going to learn a trade after high school.

2. The government wasn’t involved.

The costs are allowed to skyrocket because you can keep kicking the can down the road. When no one has to pay the bill for decades, why even think about it? The same applies to healthcare: not post-2014 healthcare, but healthcare as it’s currently constituted. When a 3rd party – the government, an HMO – gets between the provider and the payor, who knows (and who cares) what things cost? It’s not your problem. “My insurance is handling it.” Sure, insurance is supposed to reduce individual risk, but it increases collective risk. Give 100,000 people the same policy, same coverage, same premium and same benefits, and many of them will take risks they wouldn’t have otherwise. At that point, why not smoke and/or ride a motorcycle unhelmeted? Again, it’s not your problem. It’s someone else’s.

Furthermore, if you declare bankruptcy, the courts won’t discharge your student loans. From the lender’s perspective, this is great. If you can fog a mirror and have a Social Security Number, they’ll lend you the money.

But if the government got out of the picture, and the lenders risked losing money, they might start asking tough questions: like, “How will you pay this back with a B.A. in women’s studies?”

Would the government get out of the picture? A lot depends on who’s in charge, and what his own experience is.

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