The Rage Diaries

Start-a-spat Sunday: Do money-saving tips really help?

So the SF Chron ran a big package in their home section yesterday ("Readers' Tips on Generating Income," "Readers' Advice on Handling Household Money," "Keeping House on a Budget") and I got all cranky because a lot of these are no-brainers like "Create a household budget and live within it." Create a budget, you say? Then don't overspend? Who's been sitting on these financial secrets?

I get that a lot of media outlets are taking advantage of current events and audience interest. I get that people are edgy about their personal net worth, and are probably looking for new ways to economize before they get to that last, distasteful step of living within their means. But I do wonder if there is anything left under the sun to say about where to cut costs. And I do wonder if some of these articles are overselling their utility -- when I skimmed "Your One-Day Financial Makeover" (Real Simple, Dec 07), I realized that there was nothing in there I was not already doing.

So the topic for today: Do "how to save money" features really tell you anything new? Or are you better off saving your time and skipping them?

What's in your wallet? Plenty, as it turns out.

Big lenders — like American Express, Bank of America, Citigroup and even the retailer Target — have begun tightening standards for applicants and are culling their portfolios of the riskiest customers. Capital One, another big issuer, for example, has aggressively shut down inactive accounts and reduced customer credit lines by 4.5 percent in the second quarter from the previous period, according to regulatory filings.

Lenders are shunning consumers already in debt and cutting credit limits for existing cardholders, especially those who live in areas ravaged by the housing crisis or who work in troubled industries. In some cases, lenders are even reining in credit lines after monitoring cardholders who shop at the same stores as other risky borrowers or who have mortgages from certain companies.

-- "Consumers Feel the Next Crisis: It's Credit Cards," NYT, Oct 29, 08

Emphasis mine. So, your credit is only as good as your shopping habits or mortgage lender? This story seems a little scanty on details. I want to know which stores raise red alerts, and which mortgage companies cause the alarm to go off.

I also went and checked the Capital One numbers for myself. I think the numbers tell a much more interesting story.

Start-a-spat Saturday: Yard Sales ... yes or no?

It is difficult to read today's NYT article, "As Yard Sales Boom, Sentiment Is the First to Go," and not feel pangs of sympathy for people who are selling everything because they've lost their job(s) and are probably going to lose their house(s). See:

“People want things for half, and I don’t blame them,” observed Mr. Farnsworth, 65, adding that only one couple that morning had not dickered on the price [of his belongings]. His own house, appraised at $375,000 three years ago, is worth $200,000 today. He has resorted to holding garage sales “to help make payments on a house that’s worth less than what I owe,” he said, the irony not lost on him.

Do yard sales actually make money, or are they the financial equivalent of rearranging deck chairs on the Titanic? We've always approached our annual garage sale with the mentality that it's not a profit-making venture. It's the opportunity to declutter and -- get this -- other people will pay to haul our stuff away. Amazing! But not terribly lucrative.

So: yard sales ... yes as a money-making venture? (Hey, any money is better than no money ...) Or no? (You shouldn't have gotten all that crap in the first place.) Go.

As a matter of fact, you CAN get that latte

The demonization of the latte has been a pet peeve of this column, going back to 2006, when some financial-help gurus and their media enablers tried to convince unenlightened renters that all that stood between them and the American dream of home ownership was their penchant for froufrou coffee. (And a subprime mortgage, we suppose.) Now, of course, the message is different: Skip that latte and retire in style! "If invested, the savings from brewing coffee at home and 'brown bagging' lunch over the span of 25 years would be staggering," chirps a story in the Colorado Springs Business Journal.

-- "Hard Times," The Deal, Oct 17, 08

Hey, Yvette Kantrow and I have something in common!

It is true that unexamined daily expenditures can add up, but there's a big difference between mindlessly opening your wallet every time your monkey brain demands a treat, and using a daily latte as a motivational tool for sticking to a disciplined spending approach everywhere else. I'm inclined to argue that now is actually when you should cling to your latte habit like it's a delicious, caffeine-soaked lifeline. Think of it as a way to ward off feelings of deprivation -- or a way to remind yourself of the necessity of opportunity cost. The latte story tells us only that there are no guaranteed quick and painless fixes if you're not fiscally fit.

Previous posts touching on this:

• Hey, we're not all spilling Starbucks on our dry cleaning
• Here's what happened when Ben had to cut expenses

Pick-a-fight Friday ... Coupons. Yes or no?

You can tell people are getting squirrely about money when personal-finance reporters and bloggers begin beating the coupon drum. This coverage is fascinating me; watching the media respond to consumer unease by flinging out coupon articles is like watching a sea anenome contract upon being brushed by a fingertip. It's this mindless, predictable reflex.

When even the media engines associated with more solvent demographics begin to beat the coupon drum, it's time to examine this reflexive coverage. The NYT, home to the deliciously out-of-touch Thursday Styles and Sunday styles sections, recently ran not one, but two items on coupon-bearers: "Time to Break Out the Valpak?" (in the Freakonomics blog on Oct 17, 08) and "Clipping Coupons to Put Food on the Table" (Oct 15, 08). And NPR ran "Economic Downturn Fuels Coupon Use" on Oct 14, 08.

What I find interesting in these "But coupon-clipping really works!" articles: nobody has ever addressed the study which found that coupon users spent 8% more than non-coupon users at the grocery store. I'd love to see if this is still true or not. ("The Coupons Are Actually Cutting You," Money, May 1, 05)

Also, few examine what the industries issuing the coupons get out of the deal, and how those rewards further affect the consumers' choices in the marketplace. MediaPost's "Coupon Tactics Get Interesting" (Oct 15, 08) buries the following insights in the article:

Not only do [email coupons] allow tracking of conversion, but it provides insight into brick-and-mortar basket composition that can then be evaluated against online baskets.

[W]ith single-use coupons, it does not take long to figure out who is posting your coupons to freebie sites. Once identified, you can create specific strategies for these influential consumers.

Geotargeting provides the opportunity to target specific store-level offers or to alter coupon values depending on how far a subscriber is from your retail outlet. The farther they are, the more incentive it takes to get them to make the drive.

In any event, I want to see what you think. So: Coupons. Yes or no? Make your case in the comments below.

Previously: I shrug in indifference at coupon clipping, and fail to incite any torch-bearing mobs, possibly because fuel is expensive and rarely availble via coupon.

Fiscal fitness -- October's theme ...

... might be summed up with this question: Are you ready to party like it's 1931?

In previous posts and comments, we've talked about some of the behaviors that our Depression-era grandparents never shook. Now, CNN's picked up on that with "Great Depression Holds Lessons for Surviving Tough Economy" (Oct 13, 08).

But why focus on the doom-mongering aspect? Let's turn the question around. Are you ready to use your brains and your self discipline to live well, within your means?

Also, are you ready to skip the jump, unless you want to see me ranting about unhelpful budget-type posts? Feel free.  Also also, for your convenience, previous Fiscal Fitness discussions:

• Which is better -- decluttering or stocking up?
• Is your stuff making you poorer?
• How are you affected by housing and residential costs?
• How do we cope with rising fuel costs?
• Love and money: how do you handle finances with your SO?
• How do you handle food waste and grocery shopping?
• Have you taken care of business re: death and taxes?
• Free stuff -- does it help or hurt your fiscal fitness?
• My time or my money?
• Where is my money going? And do I want it going there?

Really, it's more of a "dog buys man story"

The NYT reporters looked up from the orgiastic excesses of the Thursday Styles section long enough to notice that "Full of Doubts, U.S. Shoppers Cut Spending." The article does an okay job of looking at assorted consumer activity indexes and concluding that people are not spending as much. Here's the thing to pay attention to:

Consumer spending, which accounts for nearly two-thirds of the economy, grew modestly earlier in the year but fell in July and August on an annualized rate. When the government releases quarterly numbers this month, they are expected to show that consumer spending shrank 3 percent or more. That would be the first quarterly decline since 1990, ahead of the 1991 recession, and the steepest since 1981.

The skeptic in me wants to know exactly how much of the nation's consumer spending has been powered by lines of credit as opposed to cash. This slowdown in the consumer sector may not be entirely due to people sliding more of their twenties under their mattress -- it could be due to them being less willing or less able to float purchases courtesy of their friends at Citibank.

However, absent any real numbers like "Approximately 40 cents of every retail dollar earned are, in fact, coming from credit cards" -- fine, blame it all on American shoppers and not, say, bank speculation gone sour. Which leads me to my next question: Are y'all cutting back your spending? Where and why? I'll share my answer in the comments when you do.

Belated fiscal fitness post from September ...

So last month was supposed to be focused on stuff -- what it costs to keep it, throw it out, organize or replace it. And then, well, other things claimed my attention. None of those things were stuff-management related, by the way.

But I'd like to wrap up that theme before unveiling October's theme, so let's commence the linkage and (I hope) a little discussion in the comments.

Now I regret my inabilty to accessorize ...

The women who used to invite all their girlfriends over to their fantastic homes for good wine and catered nosh on the pretense of selling merchandise to one another (Pampered Chef! Rolls of fancy wrapping paper for school charity!) are now inviting one another over to their fantastic homes for parties where everyone turns their gold into cash (ca$h!!) and winds up convulsing with giddy laughter over such treasures as wedding bands from bad marriages or those door-knocker earrings left behind by dearly departed Nana.

-- "The 24-Karat Party," WaPo, Sep 30, 08

I am not a jewelry person. So much not a jewelry person, in fact, that I completely forgot about needing to buy wedding bands until two weeks before the wedding. But these turn-your-jewelry-into-cash parties intrigue me, because they combine the appeal of decluttering -- which I totally get -- with the appeal of getting cash for your goods. Which, again, I get.

There is also something about selling your old baubles for cash that sounds so nineteenth century, like the last measures of a genteel but impoverished heiress. I wonder if the people who are selling their old bling feel that too?

Do you believe in the Costco effect?

[W]hen there are more bagels in my refrigerator, I consume more of them. I think that's human nature. Call it the Costco Effect.

People are often price-sensitive about an initial purchase. But after the money has been spent, there's a tendency to view the stash -- be it a pile of bagels or imported stout -- as manna from heaven. And that's why I've often wondered if shopping at discount clubs saves people as much as they think.

-- "Do Warehouse Stores Really Save You Money?" WSJ, Sep 26, 08

Neal Templin's column goes on to admit that while there's no formal research into the Costo Effect, a few economists suspect that people end up spending more money owing to their Costco habits. The theory goes: if you have more of something around, you consume more of it. Then you're thinking, "Well, I'll just get more," and before you know it, you've increased your consumption and the amount you're spending.

Personally speaking: my experience is the exact opposite of what Templin describes. Perhaps it's because of what we buy at Costo, but perhaps it's because of what we don't. For example, I don't get produce or baked goods or dairy there, because there's too much for two people to use. It would be wasteful to buy food that we know is going to spoil. We do get meat there -- but I tell you, the first thing we do when we get home is to split up all the portions, label them, and throw them in the freezer. There's no meat-binging, because it's not like we have four pounds of skirt steak just waiting to be eaten in the fridge. (Instead, we have eight individual portions in the freezer.) Phil gets beer there, but we keep it in the garage; he only brings in a bottle or two at a time to be cooled in the fridge.

Enough about us. Do you go to a bulk-buying club? Have you had to deal with a portion-control issue? How did you do it? What are the things you steer away from at those places so you don't end up eating a 96-ounce jar of trail mix by yourself?