401ks, 529s .... when bad investment choices defeat the whole point

I'm in the process of setting up my 401k with my new job, which is going slowly since my new employer is also in the midst of moving its 401k services to a new vendor. I'm not sure yet what the new-new vendor's investment options will be like, but when I set up my fleeting enrollment in the new employer's old vendor's system, I was surprised to find few attractive options. The choices were limited to less than a dozen funds, many with high fees. Ug.

I'll post in more detail about 401k stuff when I finally get registered and settled with the new-new vendor, but the problem of limited choices reminded me of one of the most troubling aspects of the (thankfully, now apparently dead) privatize-Social-Security scheme: if mutual funds were used as a key savings vehicle for the plan, it would force a huge amount of money into a savings system that isn't particularly efficient or advantageous for investors.

This is the same problem that seems to be a very nasty catch in the well-intentioned 529 college savings plans, designed to let parents set aside tax-deferred dollars to educate their sprogs. The plans are set up state-by-state and vary widely. However, they've increasingly come under fire for carrying indefensibly high fees and being touted with insufficient disclosure. In some states, the ones with the poorest 529 plan investment selections and highest fees, the plans probably aren't worth using despite the tax advantages.

So, since this is an area I have no personal stake in whatsoever (the cats need no higher education to fulfill their duties, being cute and catching bugs around the apartment) and therefore know little about: Any parents out there want to recommend useful college-savings mechanisms? Upromise has made it through the dot-com meltdown and seems to get reasonable reviews ... anyone have a vote on whether it's useful or a gimmick?

More on when bad debt goes, well, bad

A few good points came up in response to my debt-expiration-dates post, and I've done some more research to expand on it a bit.

-The FTC allows negative information to linger in your credit report for up to seven years. After seven years, you can request its removal. From an FTC FAQ on how the seven years is calculated: "Generally, the period runs from the date that the event took place." So, seven years after a debt was due, creditors generally lose the ability to put a black mark about it in your credit report. They may or may not also lose the right to sue you, depending on the nature of the debt and your state's statute of limitations. The credit-reporting statutes and the lawsuit statutes are completely separate.

-There's a big neon-flashing caveat to the limitations -- it dates to the period of "last activity" on your debt account. Making a payment, or agreeing in writing to do so, can reset the clock by moving your account back to active status. Tread carefully before paying or agreeing to pay anything on old debt. (Of course, you may still have a moral obligation to pay off an old debt. These policies only cover your legal obligations.)

-Some types of debt have no statute of limitations and never expire. Among them are student loans, past-due child support in most (possibly all) states, and most taxes.

-The Fair Debt Collection Practices Act is actually pretty strict in regulating how collection agencies can approach consumers. For example, they're barred from calling outside "reasonable" hours, defined as 8am to 9pm. You can also force them to quit communication. If you notify a collector in writing that you want them to stop contacting you, they have to, except to notify you of specific remedies they're invoking. Forcing communication to stop does not mean they have to end efforts to collect the debt, but it does mean they can't keep up a barrage of calls and can only contact you further if they're filing a lawsuit or taking other remedy measures.

Our descent into the stock-market inferno

David recently called me with terrifying news: "I'm going to exercise my stock options!" My response -- you have stock options!?!

Turns out his company, A Giant Madison Avenue Ad Conglomerate, chucked a handful of options at staffers about five years ago. They've recently vested. Although Giant Conglomerate's shares are trading dead flat to where they were five years ago, David's options carry a strike price of about half the current value -- so, if he exercises the options and cashes out, he'll see a profit. (A fairly tiny profit. Like, a rounding-error-on-Google-shares size profit.

Since neither of us has ever mucked around with the tax implications of anything related to stocks, I promptly wigged out. "Exercising stock options" is irrevocably linked in my mind to complicated tax situations and debacles with the AMT. "Whatever you do, do not exercise and hold the options!" I fretted at David.

I don't pretend to have looked in any detail at the minutia of how it works, but my understanding is that when you exercise options, you're taxed on the 'profit' of the difference between your strike price and the market price -- even if you end up holding onto the shares and not realizing any actual-cash profit. If, as happened to so many during the dot-com smashup, the shares you own then tank, you still owe on what they were 'worth' on your exercise date. So why would anyone exercise shares and not immediately sell them? If your options are expiring but you want to gamble on the shares going higher, you can buy and hold. It can also result in a lower total tax burden if you hold the shares for more than a year, shifting the gains into the capital-gains category (which can come with a lower tax rate than you pay on your regular income).

But I have no interest in gambling on Giant Conglomerate's shares climbing, and given the tiny sums at stake here, trying to game the tax rates would save us about enough to buy an extra box of cat food. So my vote was firmly cast in the "exercise and dump" category.

My next fret was about the logistics of that -- would we need a brokerage account? An accountant? I just write about stocks, I've never tried to do anything so silly as selling them ...

Fortunately, David's company is apparently prepared for having a workforce with no clue about these things, and has an arrangement struck with the financial institution handling the stock-option deal. Employees can arrange for their options to be exercised and sold simultaneously, with the tax withheld. We'll just get a check for the net amount, and presumably some paperwork for the IRS next year around tax time.

I haven't seen any of the paperwork on this -- David and his company are handling it. It still feels rather nebulous; I'm viewing the whole thing as a rather novel experiment. Now if only my company would start talking about spin-offs and IPOs, it'd really feel like 2000 all over again. Maybe I too will eventually get some of these newfangled stock option things.

Seeking those low balance transfer offers

When I've taken advantage of offers like Providian's 'low lifetime APR on transferred balances,' they've all been offers that sought me out rather than the other way around -- those 'you've prequalified!' flyers that arrive by the pound in my mailbox. The rates on those offers seem to be better than those dangled for fresh prospects hitting various card-lenders' websites. But if you're not getting sacks of decent offers in the mail, is there any way to seek out good rates? I'm throwing this out to the floor -- I don't know the answer.

Bankrate maintains a chart of low-rate cards, but none are particularly fantastic rates. Google Ads, of course, is all too happy to kick up hits for 0% APR offers, but I rather worry about the idea of picking a lender based on "L0W R@T3!!!!!!!" ads.

Two caveats to watch if you're going to transfer a balance to save on the APR. 1) Most lenders charge a transfer fee. The standard seems to be 3% of the balance, with a $5 minimum and $75 max. That can still be a good deal if you're transferring a large sum you'll be paying off over time, but it's good to know in advance if you'll get hit with the fee. 2) Think carefully about time-limited offers. Right now, when I log into my Providian account, it's dangling a 2% APR till next October on transferred balances. But come November 1, the rate shoots up to Prime + nearly 10% -- making it currently a 17% APR. Ow. It's tempting to say 'oh, I know I'll have the balance paid before the rate goes variable,' but I found that my timetable for that sort of thing slipped a lot. I vastly prefer paying slightly higher APRs for a life-of-the-balance offer.

Actually, two more caveats: 3) If you transfer a chunk of money to a card with a low-rate offer, don't use the card for anything else. Your monthly payments go first to paying off the low-rate principal -- while that $100 you charged for the new purchases racks up a sky-high new APR rate. Another lesson I learned the expensive way. I was paying nearly as much in finance charges each month for a $200 purchase as I was for a transferred balance about twenty times that. And 4) try not to make the mistake I did of missing a payment and watching your rate skyrocket. Sigh.

Debt expiration dates

Many years ago, I made the brief mistake of subscribing to the Science Fiction Book Club to score some free books. This quickly got annoying, as they would send me their monthly selection every few weeks unless I remembered to send in an "aiee, no, don't send!" slip. I would then have to return the shipped book. Not infrequently, they would fail to log my return. I cancelled my subscription as quickly as I could.

My final return never got logged, and about a year after I ended my subscription I got my first collection letter. In classic collection agency-letter form, this was followed by a barrage of increasingly nastier missives, vaguely suggesting dire consequences if I didn't make right my debt. Said debt was around $18. I figured they would eventually go away, and they did, but it was a few years before the letters dried up entirely.

Cleaning out some old mail a few weeks ago turned up one of those letters, which got me wondering: What's the statute of limitations on debt? Surely, at some point, creditors lose the right to come after you with sharp, pointy lawsuits and credit-record nastygrams.

And lo and behold, they do, thanks to the Fair Debt Collection Practices Act. The law mandates how collection agencies can contact alleged debtors, and also forbids chasing debt that's beyond the statute of limitations. Those vary by state, but Bankrate has a nifty chart that offers a good starting point.

The surprising key to credit-card satisfaction

Sorry for the unexpected hiatus. I am the world's worst business traveler -- it always takes me days to recover afterward, and I get incredibly unproductive until the post-travel/jet-lag-blah passes. I have no idea how salespeople and whatnot stand doing it constantly.

Anyway, I return with a rant. When choosing credit cards, I typically look at the fine print about rates, terms, grace periods, etc. Something it never occurred to me to investigate: how annoying is the lender?

My Amex In NYC card has been my main pay-off-each-month card for about 18 months. For several years, I've also had a Providian Visa, which I got to take advantage of the 4% lifetime ARP on transferred balances. I transferred over my credit card debt, paid off a chunk each month, stuck the card in a drawer, and ignored it.

Everything went smoothly until last September, when I was distracted (it was another damn business trip, naturally) and forgot to make a payment. Whoops. I remembered about a week after the due date and promptly sent it off, but by then, the damage was done. Providian whacked me with a $40 late fee. I called, complained, and got it removed, but the really nasty part was that the late payment triggered an APR jump. My 4% rate shot to 20% -- with no formal notice. I found out about the penalty when I saw the sky-high charges on my next statement. I called again to complain, this time about the lack of notice that I'd triggered a rate increase. I also politely threatened to yank my balance off the card if they didn't put my rate back down. They refused, and I went shopping for another transfer offer. Crankily. My balance was low enough that the higher APR wasn't actually costing me that much; I was more annoyed by the shoddy customer service and the principle of the thing.

So, for once, I took an interest in the credit-card offers jamming my mailbox. Chase sent one offering a 0% balance transfer through 2007. I took it, and transferred my Providian balance. (I decided not to cancel the Providian card, though, to keep the free FICO score access.)

The problems with Chase started with my very first statement. I had scoured the fine print of their card offer for catches, but managed to miss the big one: they offer a 0% APR, but charge a transfer fee on balances moved over. I maxed it out and got hit with a $75 charge. Grrrrrrrr. Also, the dangled 'no APR till 2007' promise didn't pan out -- they instead only set my 0% APR period for about three months. Another little fine-print catch: they can change the terms of their offer at any time. Grrr again.

When we got our tax refund, I paid off my credit-card debt and left my Chase and Providian cards with $0 balances. I haven't yet cancelled the Chase card, but I'm highly tempted. My old cards spoiled me. I was unprepared for Chase's constant hard-selling tactics.

The first call was the one that caught me most unaware. A Chase agent rang to 'confirm some information about your account.' It was a few weeks after I'd opened the account, so I figured I'd go along with it. 'Is this your address?' Yes. 'Is this your correct phone number?' Yes. 'OK, Ms. Cowley, I'm enrolling you in the credit-protection plan ...' Wait -- what? I had never agreed at any point in the call to any new 'services' -- I thought I was just confirming information for their records. I emphatically said no, no new services, do not enroll me in anything, and hung up. The agent had a thick Indian accent, and seemed not to follow when I said I hadn't agreed to anything like that. I got the impression he was following a script, and had either missed a step or been instructed that if you get a few minutes into the call, just keep barreling along.

Since then, at least once a week I get a phone call from Chase agents (always from offshore call centers) trying to talk to me about my account. Now, if I'm unluckly enough to answer the phone, I immediately say I don't want any new services and hang up.

Chase also blankets me with mailed offers, of the particularly insidious 'cash this courtesy check to start your new services' variety. One recent one included a $10 check, which would sign me up for a $120/year plan offering 'discounts' at Disney World. I can think of few things more insanely priced and useless.

Luckily, I'm not at all tempted by $10 checks, but such marketing tactics seem deeply deceptive and unethical (though probably legal). Had I known Chase pulled this crap, I would never have gotten their card in the first place. I never expected credit-card companies to be warm and fuzzy corporate Samaritans, but this is skeezier than anything I've experienced with other companies.

So, for any considering Chase cards, be warned!

Rebuff the upselling, score perks anyway

I'm in Vegas this week for a software conference, and my company kindly shelled out for me to stay in style at the conference hotel, the
Venetian. (Motto: "More gilt per inch than Trump's most lurid imagined fantasyland!") When I checked in, the clerk promptly asked if I'd like to upgrade to a larger room. Larger!? Ha ha, no. The basic room is already bigger than my first NYC apartment. Next question: Would I like to upgrade to a room with a view of the Strip? Again, no.

Turns out the only rooms available at the moment all had Strip views -- so I got for free the "upgrade" I'd just declined to pay for. Rental car companies pull this scam all the time. I always book economy cars. (I'm short; I don't need legroom.) Inevitably, the first thing I'm asked when I arrive is "would you like to upgrade to a full-size?" Trick is, many car companies don't even bother actually stocking economy cars any more. More than half the time, when I turn down the full-size upgrade, I get a full-size car anyway for the economy price.

Insurance is another area where rental-car companies famously try to slip in lucrative, unnecessary add-ons. If you have your own auto insurance, you're generally covered for anything that happens with a rental car. If you don't have personal insurance, you still likely have some coverage on your credit card -- many offer policies that cover loss and damage, as my Amex does.

But here's something particularly insidious I hadn't known about before. Two weeks ago, I rented a car from Hertz for a quick day trip to Long Island. While filling out the forms, I noticed a small sign on the counter (very small) mentioning something legalistic about Hertz's optional CDW (collision damage waiver) covering damage beyond the insurance level mandated in NY. Googling turns up the info that New York requires rental car companies to cover collision damage on all rentals -- making Hertz's add-on CDW coverage in NYC even more ridiculous than usual.

Because we really needed another Byzantine credit scoring system

I'd been out of the loop. "No post on the new VantageScore yet?" my sister asked. Er, VantageWTF? Thank god for Google News.

Apparently the Credit Data Triumvirate -- Experian, TransUnion and Equifax -- banded together to unveil VantageScore yesterday, a new credit-scoring model to compete with FICO. VantageScores will range from 501-990 (higher is better), versus the 300-850 scale FICO uses.

What else is different? No one can tell. The Triumvirate is being even less forthcoming than FICO creator Fair Isaac about how their scores are calculated. The promotional propaganda says VantageScore was created "to address the market need for a common sense approach to credit scoring." Like hell. VantageScore was created to address the Triumvirate's crankiness about all the money Fair Isaac collects for holding the keys to the FICO kingdom.

A Fair Isaac spokesman told the LA Times that the Triumvirate "have all had their own credit scores that they have tried to sell against us, and they've been wildly unsuccessful. This is them trying to take another crack at our fortress." Investors suspect it will be a successful crack. Fair Isaac's stock dropped 7 percent yesterday.

So what does this mean for consumers? In the short term, not much. FICO is entrenched in the credit-granting process. The Triumvirate plans to market VantageScore to mortgage firms, credit-card companies and other lenders, and they'll need to individually persuade FICO users to switch. That certainly won't happen swiftly. If VantageScore does catch on, it's likely to exist in parallel with FICO for a long while, with lenders scrutinizing any cases that kick up wildly different results from the two models. VantageScore's backers claim their algorithms (the details of which I have not seen any public comment about) will better predict the credit habits of "thin-file consumers," those with a scant paper trail (like young adults). It's possible they've built a better mousetrap, but the idea of one black-box credit scoring model replacing another black-box model does not fill my consumerist heart with joy.

Consumers won't be able to get their hands on their VantageScores for at least another few weeks, says the Washington Post.

I'm curious if consumers will be required to pay for access to their scores, as they are with FICO. I just rang the Equifax media contact listed for VantageScore queries to ask; I'll report back when my call gets returned.

More financial paperwork: your social security statement

I'm part of the generation that considers Social Security something mysterious and mythic -- I gather it's supporting a large chunk of the population in their old age and infirmity, but it's nothing I'm banking on in my own retirement planning. Still, it's interesting to have some idea of how it works and where you stand on earning benefits. That's where your annual Social Security statement comes in.

The full story of Social Security's intricacies would require a thesis to explain, but the quick gist is that to earn retirement or disability benefits, you need to accrue "credits" for working. For 2006, you earn one credit for each $970 of wages or self-employment income. You can earn a maximum of four credits per year, so it takes at least 10 years of work to accrue enough credits for retirement payments. Those years don't need to be contiguous, though -- you can earn a few credits, have no income for few years, and pick up again with no problem.

Your annual statement shows how many credits the SSA has on record for you, which is useful to check against your own work records. It also estimates your expected benefits for retirement or disability, and the survivors' benefits that would be available to your family if you die. A sample statement, with explanations, is available at the SSA website.

The SSA automatically sends out statements annually three months before your birthday. If you feel the need to see one sooner, you can also request it online, although the statement will still come to you via snail mail. David's turned up recently, and we realised we haven't seen one for me in a long time. Because we bounce around a lot, I rang the SSA to ask about changing my address in their files. It turns out they pull address information from annual tax filings to the IRS -- so, if you're filing taxes, the SSA should find you and get your statement mailed out properly.

Also, like many government agencies, the Social Security Administration is in charge of all sorts of bizarre, semi-random tasks. Such as compiling lists of the most popular baby names each year. (2004 winners: Jacob and Emily. The records go back to 1880, when the top names were John and Mary. Stacy has been plunging like a stone since its popularity peak in 1973.)

A very elaborate way to scam credit card companies

A number of personal-finance bloggers like to play arbitrage with
zero-percent balance transfer offers from credit-card companies. The basic idea: Credit card lenders are strafing people with offers for limited-time 0% APRs on balance transfers. You accept, take out the biggest balance transfer you can get (generally something in the $5,000-$20,000) range, and tell the lender to transfer the balance from another card where you're not actually carrying a balance. That creates a massive credit on the second card. You call that second lender, tell them to cut you a check for the refund, and take that money and park it in a high-interest savings or money-market account like ING Direct's (current promotional rate: 4.75% APY). You set up automatic payments to zap over monthly minimums to the card with the massive balance. When the 0% APR expires, you pay it off. Meanwhile, you've gained several hundred dollars risk free from the interest you've earned.

I think it's a silly game to play. There are practical considerations. StopBuyingCrap.com tracked what doing this did to his FICO score over the course of a year -- since you're running up huge liabilities, FICO freaks out. (His score bounced around between a 612 and a 751). If you're late with a payment, your 0% APR disappears. If you use the card with the balance for anything else, you start owing finance charges: When you have a low-rate balance transfer on a card, and then use it for a new purchase, that new purchase becomes the very last thing that your repayment dollars are applied to.

Still, in the right circumstances, you can pull this trick off and make money with it. I still think it's pretty silly. PRBlog.com likes to muck around with this. In "The Value of A Great Balance Transfer Deal," he breaks down the math behind one of them: an $11,000 balance transfer from Citibank at 1.9% APR will net him $600 after tax over three years. This game strikes me as a hell of a lot of work for $200 a year. The only reason I can see for doing that is that you're a finance geek and enjoy the work. Which is a perfectly fine hobby, but there must be more lucrative investment schemes out there, if you're willing to devote that kind of time and attention to detail ...

For those who do want to fuss with extracting the very best possible rates on money socked away in savings, though, my friend Stephen pointed out an excellent resource: a Bank Deals blog. The site tracks and compares rates on money-market, CD and savings accounts ... for fun. Yow. Still, yay for financial geeks!

Minimum Visa/Mastercard charge requirements not allowed

NYC is home of the small grocery shopping trip. I don't have a car and am limited to the groceries I can carry on my own. That, combined with my own scheduling scatteredness, means I do near-daily grocery runs for whatever items I need for that night's dinner. Which means I make a number of grocery trips where I'm buying just one or two things and spending something like $6. No problem if I have cash; big pain if I haven't hit the ATM recently, since nearly every small deli/bodega I shop at has those "sorry, $10 minimum on credit card charges" signs.

Turns out minimums are a violation of Visa and MasterCard's merchant agreements. If you want to charge your 75-cent candy bar, you're technically entitled to. MSNBC covers this in a recent "Ask the Consumer Man" column. Some Googling turned up further confirmation, including an NY Better Business Bureau page on the issue.

In actual practise, I don't know that I'll challenge the policy at places I shop regularly. Kicking up a stink may or may not work, and is unlikely to endear me to the shop owners. But the pharmacy I hate, but occasionally stop in at anyway because it's close, which claims a $25 minimum on credit-card purchases? There, I may make a scene next time I'm caught short-cashed.

Because the best price point is free

Another in my very infrequent frugality series: Microsoft is giving away completely free USB thumb drives. (Offer good in the U.S. only. Sorry, international readers!) Loaded with Microsoft propaganda, of course. Since they can be pretty useful devices, I figured I'd pass it along. My sister was quite astounded this weekend when I introduced her to her first flash drive, which we used to transfer MP3s between computers. (I was impressed -- her circa-1999 iMac had no problem with the drive and required no drivers.) Thumb drives seem to be the tech tchotchke of choice these days; I tend to get piles of them in press kits. Still, it's nice to have an alternative to small-capacity-and-breakable floppy disks!

(The answers to Microsoft's questions are '2' and true to all the rest.)

Colour-shifting ink, watermarks, and a really obscured motto

New $10 bills are rolling out today, featuring more colour and the catchy slogan "We T[splot]N People."



Now if only they would start making the bills out of plastic instead of paper, David could stop griping out how our colourless paper money doesn't feel like real currency. Whereas when we go to Australia, I feel like I'm playing with Fisher Price My First Money(tm).

Frozen assets

Over the weekend, my sister and I were talking about financial matters. She said she'd come up with a way to control credit-card impulse spending: she froze her card.

I assumed she meant she'd had the issuer halt new purchases. No. She literally froze the card.



"When I want to buy something, I have to spend a few hours thawing the card," she said happily. "And then I usually decide it isn't worth it."

I think we should pass a bill requiring Congress to give this a try, as a deficit-reduction measure. And then pass another bill authorizing the construction of a really, really big freezer. I'm thinking we could repurpose West Virgina for the cause.

The only love money (lots and lots of it) can buy

Free Money Finance has been regularly blogging about the cost of having a pet, which he at one time calculated could run as high as $48,000 over a pet's lifetime. Unless you're housing a pet elephant, that number is absurd, but the idea of a cat or dog coming with a five-figure price tag isn't.

Our cats are young, healthy, and so far relatively inexpensive. We go through about $10 a week buying litter and dry kibbles. (Frugal cat that she is, River actively dislikes wet food. Kea loves it, but also loves even better whatever we have for dinner. The sneaky little thief gets so much in the way of table scraps, frequently stolen right off the plate of whoever let their guard down for a second, that I feel no obligation to buy much wet food for him.) It's about another $100-$150 each for annual vet checkups ... which puts our annual, routine pet expenses in the $800-$1,000 range.

But multiply that out across an average cat lifespan (say 15 years), and your per-cat cost can easily hit about $9,000 -- and that's before you run into the big expense, serious vet bills for aging pets. My dad fielded a $2,000 bill for surgery for my childhood kitty, Max, when he developed a hyperthyroid problem. I know of almost no pet owners that escape such giant medical bills as their pets grow into senior-citizen pets.

(Even small pets aren't immune to the giant-vet-bills risk. My sister and I once spent Christmas Eve at an emergency vet clinic with her hamster. The critter had somehow managed to put one of his teeth through his cheek. I think it cost around $100 in vet bills to fix up the $6 pet.)

We'll probably end up spending about $15,000 on our two kitties over the course of their lifetimes. Of course, I think they're worth the money. And hey -- cats or dogs are still a lot cheaper than kids!

Blogrolling and feeds

I'm finally starting a blogroll of other personal finance blogs I enjoy reading. Links are going up in a sidebar. It's a small collection for now; I'll expand it as I come across others that catch my interest. PFblogs.org is an aggregator I've used to browse through a bunch of them.

One specific-to-personal-finance-blogs problem I'm hitting, though, is sheer add-cluttered ugliness. The granddaddy of personal finance blogs seems to be PFBlog.com. I checked it out a few times, but my eyeballs kept shutting down in horror over the ad bars in the middle of posts. I suppose that's a good way to maximize AdSense revenue. It's also a good way to scare off readers. There is pretty much no content I consider so valuable I'm willing to slog through that kind of clutter for it. (I suppose I could get around the problem with a syndicated feed, but enh. Too Much Hassle. I'm a dinosaur that prefers to read content on its original host site.)

Other websites and blogs can certainly be ad-laden, but this seems unusually prevalent with PF blogs. Which, I suppose, makes sense; finance-oriented bloggers are pretty likely to want to profit off their blogs, and to do it in a way that delivers maximum financial results. But I'm a journalist at heart. I want my blog read, and I'll happily give up some incremental revenue if it'll make life easier on my readers. (This is why I am a comparatively impoverished reporter rather than a rich media baron. I could make a lot more money if I were more entrepreneurial. Being entrepreneurial would make me want to reach for hemlock each morning when I woke up, however. Fundamental personality/job mismatch.) Right now, I'm leaning against AdSensing this blog; if I ever do add advertisements, though, they will be banished to the corners of the layout, far far away from the content. And I would only do it if there were some significant advantage in doing so. $10 a month in AdSense revenue is a stupid reason to mess up my readers' experience.

I've also been put off by the huckerish tone of several personal finance blogs, and of personal-finance writing in general. It annoys the hell out of me that most of the field's "experts" are Personalities with Branded Lines of books, seminars, audio tapes, financial organizing systems, frozen dinners, etc. Several people recommended the book Smart Women Finish Rich to me. The title put me off immediately. I gritted my teeth and picked it up anyway. I've only made it through a few pages so far. They contain some solid, useful advice. The useful bits are broken up by constant references to the author's seminars, which makes me want to fling the book into our (unfortunately non-working) fireplace. I want personal-finance writing that makes me feel like the author's primary interest is in conveying solidly researched information, rather than in hooking me into his personality cult and selling me more "personal finance product."

Which is a longwinded way of saying that I will attempt to only link blogs that are solidly informative, and that don't strike me as primarily a vehicle for the blogger's grander dreams of Making $$$ Through Blogging.

(Also, I currently have XML and Livejournal feeds set up for Birds & Bills. If anyone wants any other feeds, feel free to request 'em and I'll get them set up.)

Sometimes, it's the little things

I am kicking myself for not thinking of this sooner: Get a separate wallet pouch for storing affinity cards.

I had pretty much stopped taking advantage of store membership cards, purchase stamp/punch cards, store credit cards with discount offers, and whatnot because I can't keep track of them. I feel particularly silly for not thinking of this sooner because I already carry multiple wallets. I've always used two: one zip pouch for bills, coins and most-important plastic like my driver's license, primary credit card, and subway card; and a second zip pouch for the zillion other bits of plastic I have, like phone cards and little-used credit cards. Adding one more pouch for affinity cards seems a useful way to keep them accessible without further cluttering my primary wallet.

(Also, totally unrelated but too funny not to mention: "H&R Block gets its taxes wrong.")

Plastic matchmaking

Credit cards can be insidious. If you're on a bare-minimum budget or have wildly variable paychecks, I think they're a bad idea. I just recently killed off the last of my college credit-card debt, and I suspect I ultimately paid as much in interest charges as I did on purchases. For several years it was a very good idea for me not to have access to any plastic other than my Visa check card.

However. If your monthly budget is working relatively smoothly and you're not inclined toward massive impulse spending, credit cards can be not only convenient but fiscally prudent. Lenders are fighting like crazy for business, and now that no-fee cards are the norm, there are some fun offers available.

At my previous job, I was issued a green corporate Amex for which I paid the bills directly. Personal use of the card was encouraged, since the company got some sort of kickback benefit on funds slushed through the corporate cards. Between business and personal spending, I ran thousands of dollars each year through the Amex. Eventually I realised that I was having no problems paying the bills on time, and that I should check out rewards programs and whatnot that would give me a benefit off all that credit-card spending.

Amex wanted $75 or so to hook my corporate card to its Membership Rewards program. I wanted something free, so I started browsing offers. For any still clinging to a classic green Amex, or any other fee-bearing card, SmartMoney has a nifty article explaining why you're being screwed.

My dad swears by his cash-back Discover card, and cash-back cards have an obvious appeal. They also have an obvious drawback: cash is the most expensive rewards currency for lenders to deal in, and they naturally want to minimize payouts. All the restrictions, caps and fine print associated with such cards made my head hurt. Still, for those who want to go that route, there are some helpful guides available to the various offers, including Credit Card Goodies list of cash-back rewards offers. Amex Blue Cash seems to be leading the list of cards various bloggers are recommending right now. MyMoneyBlog has a pile of posts about various cash-back cards.

Mile cards are popular, but I already have a million frequent-flier miles I have trouble using. Again, too much hassle.

So I decided to take a look at my spending, figure out where big chunks of my money go, and look for rewards cards targeting those areas. My theory is that since goods and services don't have the same hard costs as cash, credit-card companies will be more generous with those rewards. And hey, if I'm going to take my $100 cash back and spend it on books, I might as well get $100 in books credit directly.

Because books and food/entertainment are my biggest discretionary spending categories (beyond travel, and I already ruled out miles cards), I focused on those areas. Amazon's Visa card terms didn't dazzle me (basically, a $25 Amazon certificate for every $2,500 in spending on the card), though in retrospect, they seem to be par for the course. The average across most companies seems to be rewards valued at around $100 for every 10,000 in accrued points (usually accrued at the rate of $1 in spending = 1 point).

So I ended up getting Amex's In NYC card, which has no annual or rewards-enrollment fee and offers points redeemable for theatre, dining and music gift certificates in the city. For me, it's been a great deal. I don't understand Amex's formula, but I seem to be accruing points much faster than $1=1, and so far I've cashed in points for free spa services (which is the only price point at which I can afford such things) and several $100 dining vouchers.

If I weren't a fancy-restaurants junkie, other cards would make more sense. But with so many options, there's a good card out there for pretty much any financial profile. Finding yours can be a great benefit.

(Young and Broke recently mentioned a card I hadn't heard about which sounds really intriguing: American Express One, which funnels 1% of purchases into an interest-bearing savings account. That could be a nifty way to jumpstart an emergency fund.)

Generation 'my monthly loan payments will be what!?!?'

I started this blog because I didn't see a lot of personal-finance writing out there aimed at twentysomethings, people who are more worried about paying off student loan and credit card debt than about diversifying their stock portfolios. One book I keep running into is Generation Debt: Why Now Is a Terrible Time to Be Young, by Village Voice columnist Anya Kamenetz. Salon has an interview with her up today.

I'll have to check out the book. It's an issue I have mixed feelings on. I have plenty of friends who have been caught in the kind of economic turmoil Kamenetz describes, of low-wage, no-benefits jobs and little chance to grab hold of any kind of corporate ladder. On the other hand, I also know plenty of people like me, who moved from college into fairly stable corporate jobs, get treated decently, and have never been laid off. (I also worked at a dot-com, a company with poor management and a dicey future. I saw the writing on the wall and left before the layoffs started.) And then there's the next level up, of my college companions who went into i-banking or high-end consulting and landed starting salaries that would make anyone's head spin.

It's easy to tut-tut about "mistakes" people make. The one thing I did in college that locked me in for a fairly stable future was intern like crazy. I knew I wanted to go into journalism; I knew journalism jobs turn on clips and experience; I knew those would matter more for my future career than grades or other academic credentials. That made it much easier for me to work in a field where jobs can be hard to come by. (Though not so hard as advertised, in my view, if you're willing to work in trade or other niche areas of the media world.) I still believe strongly that anyone with the foresight to do some planning and the willingness to consider a range of jobs can come out of college with bright career prospects, in nearly any field, no matter how competitive. I also think my future would have been a lot trickier if I hadn't been lucky enough to know off the bat what field I wanted to go into.

I'll agree, though, that there are some distinctive challenges facing our generation, starting with rising college costs and too-easily-available credit. Yes, personal responsibility means it's your own damn fault if you sign on the dotted line for money you can't immediately repay, but I would also like to see strong curbs on how heavily credit card lenders can push cards with sky-high limits on those with paltry paychecks.

College costs are the more insidious problem, because the numbers involved are so scarily high. It's utterly absurd for liberal-arts colleges to be charging annual tuitions higher than what their average graduates will be making in post-graduation starting salaries. Again, yes, there's a personal responsibility angle, and yes, people can choose to go to public and other lower-cost institutions, but even those are falling prey to tuition creep. I don't know what the answer is on that front. I'm just very grateful I don't have kids' college tuition's to worry about.

I honestly don't know if we have it worse than our parents. My sense is that we have less security but more flexibility. That's a great trade for those who make good choices and catch lucky breaks, and a bad one for those whose missteps or misfortunes take them to the edge of the cliff.

Your good name: Priceless. Insuring it: $25.

Apparently identity theft is the new fad fear. An assortment of companies are offering ID theft insurance policies, generally charging $25 to $50 a year for policies that cover the cost of long-distance phone calls, lost wages and legal fees associated with untangling a stolen identity case. This week, the AP and the Washington Post have chimed in on the trend.

I've never been a victim of formal identity theft, but I've twice had my bank account/debit card hacked, once in a particularly odd (but, apparently, increasingly common) way -- someone was able to create a copy of my ATM card, complete with its PIN number, and use it to withdraw money. Sometimes this is done with phony ATMs and modified front-ends, but it can also happen at totally normal-looking machines that are running stealth skimming software.

Recovering my missing cash was a pain, involving hours on the phone and time off work to trek over to various police stations to fill out reports, but I don't see that having insurance would have been terribly helpful. Claiming reimbursement for the (relatively small) financial costs of the incident would have been just one more bureaucratic chore to slog through, at a time when I had quite enough red tape to deal with. For a full-fledged ID fraud case, the horror stories you hear about people mistakenly arrested because crooks with arrest warrants are using their names, it might come in handy, but those cases still remain lightening-strike rare.