It's Just Money

Saw this ad for a popular online broker recently

I was cruising around Yahoo Finance today when I stumble upon this ad...

So, here's my gripe.  What exactly are they advertising?  Here are my best guesses.

Couples Fighting Over Money

I received this email from a reader:

Last night I decided that my fiancé' and I had the last fight about money we will have.  (Well, it I can help it, it was.)  We are getting married this coming May and look at money  a little differently.  I am very uptight about spending money on certain things.  i.e. eating out.    It's crazy, I know.  I grew up kind of poor and started to work at an early age to pay for everything I have.   I think that my uptightness comes from that.  Now, we both have decent jobs and make pretty good money.  However, I am still uptight.  I do not want to carry this uptightness into our marriage and I really want to change.

PLEASE HELP!    I know that many marriages end because of money issues, and I don’t want that to be us.

Any advice on how to give my uptightness with money the good heave ho?

I have a fairly lengthy response to this, but please, please please help this young woman out with additional advice.  Especially from those who have "been there."

My response...

Are we wasting our time or worse, our money, with frequent flier miles and credit card points?

Every month I give my miles, points and rewards update.  Often, I get comments commending the impressive number of HiltonHonors points, or MBNA WorldPoints that I have amassed.  But is it something worth commending?

I had a conversation with a friend recently, who professed, "if you want to be rich, look at what the rich do."  Good advice.  No argument here.  She continued, "millionaires don't worry about frequent flier miles and credit card points."  Essentially, as she saw it, the miles, points and rewards programs are marketing tools (true) to encourage customer loyalty and get you to spend more.  18% more to be precise.  The former I agree with.  There's a reason my Hilton Honors American Express card is my card of choice.  The points created customer loyalty.  The latter may or may not be the case.

How do they get you to spend more money?  Well, two ways.  First, you justify purchases in your mind because you are earning points or miles.  Obviously, you're not going to go out and ring up thousands on the charge card just for the points.  But if you are on the fence about a purchase, it may be the tipping factor.  Second, given two choices, you may opt for a more expensive option for the points.  Sounds ridiculous, but I assure you people do it every day.  "We're only going to be there one night, and the Hilton Garden Inn is only twenty bucks more than the Holiday Inn Select.  Besides, it's nicer and we get the points.  Ahh, what the heck.  Let's stay at the Hilton."  Bingo.  Some points, which probably won't get you a tenth of a stay, just cost you twenty bucks.

Of course, my response was that I'm going to save hundreds of dollars (maybe over a thousand bucks) on my honeymoon by using my Hilton points.  I understand the potential traps, but I'm aware of them and make an effort not to get suckered.  But am I really the sucker?  It this a case of overconfidence, as I wrote about in my Boglehead "Mastering Your Emotions" review?

Is my friend right?  Do millionaires avoid the use frequent flier programs and credit card rewards (being careful to pay the card off every month, of course)?

What Financial Questions are Taboo?

It goes something like this:

Setting: an spacious 2 bed, 2 bath apartment with modern amenities in an American urban setting.
Person #1:  "Hey, what a great apartment.  How did you guys find this place?"
Person #2:  "Well, as you know, we have been looking for a while.  It was time to upgrade from the University style 'housing in a box.'  This place just made so much sense for both of us.  Our commutes are shorter, we can walk to some great restaurants and shops.  We're so excited about the neighborhood."
Person #1:  "I can see why.  What a great location.  How much are you paying, if you don't mind me asking?"
Person #2:  "Well...  We prefer not to share things like that."
Person #1:  "Oh...  Right.  Of course, no problem."

<Awkward Silence>...

How much do I say?

When my sister's husband has become an overspender, how do I help her?

As with all family drama, it's a long story.  I'll do my best to summarize, but I may ramble.  To be fair, he's not going crazy and getting them into deep doo doo.  But he's pushing the envelope, forcing them to live paycheck to paycheck, and wanting more, nicer and fancier status symbols.

He has two siblings who both make quite a bit more money than he and my sister, and spend accordingly.  They have the Lincoln Navigators, the plasma TVs, newly remodeled kitchen, etc.  The Brother in law had always been very non-materialistic.  He was a ripped jeans and t-shirt kind of guy.  He drove a many years old Nissan Sentra all through his twenties.

At one point, around the time they were planning their wedding, he started to become materialistic.  Part of it is easily attributed to the fact that he was working in a business/sales office environment for the first time.  He felt compelled to put on the show.  His clothes became more expensive, and his taste in cars got more expensive.  In a Gordon Gekko moment, he told me that he thinks greed is good because wanting nice things motivates you to work harder.

Best and Worst Money Moves

This is a meme (I think I'm learning what that word means) started by Jim at Blueprint for Financial Freedom.  Let's start with the worst, so that we can finish on a positive note.

My Worst Money Move

Man, I wish it were that simple.  One single worst?  I think it might be easier to make a top ten list.  Actually, I think I will do that.  But let's make it top three, and I'll elaborate on #1.

Are frugal, personal finance minded individuals less ambitious?

This questions was prompted by a recent conversation with a friend.  His theory was that greed is ok, good even (been watching a little too much Gordon Gekko) because it motivates you.  He explained that he likes "nice things" and will work hard to get them.  If that's considered greed, so be it.  But I think he missed the point.  It's not a question of greed, which to me conjures images of hoarding, rather than lavishly spending.  It's a question of materialism.  He didn't say that he wants a lot of money, so that motivates him to work hard.  He said that he likes "nice things."

But if he is motivated to work harder, be more ambitious, advance his career to gratify his materialistic desires (as well as practical ones), is the opposite true?  If I have low materialistic desires, am I less motivated to work hard and advance my career?

Why Americans Don't Watch the World Cup, and What It Has To Do With Personal Finance.

There's a quote in White Men Can't Jump.  Billy Hoyle, played by Woody Harrelson, says to Sidney Deane (Wesley Snipes), "You'd rather look good and lose than look bad and win."  It was said in a racial context, but that part is not important.  I think it applies to most Americans, regardless of ethnicity.

There's another quote, common in sports, "Offense sells tickets, but defense wins championships."  The meaning is simple.  Walk off home runs, high flying slam dunks, Hail Mary Touchdowns, knockout punches, and "GOOOOOOAAAAALLLLLL!!!" puts people in the seats, and keeps them tuned in to the TV.  But tactically, championships are won with great pitching, goalkeeping, defense, defense and defense.

It's the same reason that this year's NBA playoffs were considered among the most exciting in years.  High scoring teams, Phoenix, Dallas and Miami all went far into the playoffs.  Prolific scorers Kobe Bryant, LeBron James, Dwayne Wade and Dirk Nowitzki all participated in the post-season.  Last year's NBA finals drew historically low television ratings.  Not surprisingly, it featured two "boring" teams in San Antonio and Detroit, who played fundamentally sound ball, and solid defense.

The Monthly Mentality

Laura Rowley is clearly one of the best columnists on YahooFinance.  Not a tough feat when you're being compared to Robert Kiyosaki, David Bach and Suze Orman.  Actually, Suze's writing isn't bad, I just can't stand to watch her on CNBC.  Anyway, Laura wrote a column this morning that is completely, absolutely on the money.  It is titled How the Monthly Mentality Messes Up Your Wealth.

Read the article yourself, but the essence is this.  Most Americans have stopped looking at how much they are paying, how much they are borrowing, or what the rate is.  They just want to know one thing: "How much a month?"  That single question will prevent you from ever becoming wealthy.

Lifestage Conversations

When you are in college, most of your conversations are about what you are going to do with your life, whom among your friends will be most successful, and girls (or guys).

Sometime soon after college, the conversations tend to be more about how broke you are, how much student loan or credit card debt you have and girls (or guys).

Pretty soon, you start talking about investing in stocks, mutual funds, your 401k, saving to buy a house and girlfriends (or boyfriends).

Before you know it, you are taking the benefits meetings seriously, talking about escrow, 80/15 loans, and your fiancee (or fiance), and of course, the high cost of weddings.

That's about where I am.  What comes next?  As far as I can tell it goes something like this...