What was Kansas thinking?

In just about every state you visit, you are greeted at the border by a friendly sign (sometimes quite elaborate signs) and a fancy rest stop. For those passing through the state, you have a great selection of restaurants, convenience stores, and sometimes outlet malls to keep you fed and happy along the trip. Everything about the experience screams "welcome!"

Except, I learned, Kansas.

No, it's clear that Kansas wants you to drive through it as quickly as possible and be miserable while you're there. This is the only reason I can see why Kansas would take the only major freeway that goes through it, turn it into a toll road for which you must pay $10 to get through the state, block off every exit with the exception of the tolls, offer no turn-offs or parking areas, and absolutely refuse to let you make any u-turn (missing your precious exit would surely cost you 3 times the toll fees and add about 2 1/2 hours to your trip).

Could it get any worse than driving an hour without a stop or a bathroom? Sure...because of the few "rest stops" that are on this toll we discover that Kansas is apparently sponsored by McDonald's, because other than prepackaged potato chips, McDonald's is the only food available for the entire journey through their state. I'm glad we packed our own lunches.

Avoid Kansas. Obviously they don't want you there anyway.

Note to builders: Please stop

2 years ago I was shopping for a house. We looked into a brand new subdivision in a the suburbs that was being built by KB. We found one we liked, worked it all out, put down a deposit, and "designed" it at the KB Store. It was not fun. If you've never done it before, selecting the options for your house at the KB Store is kind of like being the only customer in a Best Buy on Christmas Eve with 25 rabid commission-paid employees.

Who knew it could cost $600 extra to have a certain color of brick.

After further research, a miserable experience, and additional exploration of the area, we decided to bail out. We walked away because we decided buying a brand new cheap KB house surrounded by other cheap KB houses that all looked the same probably wasn't a good idea. It was the best decision ever.

I drove into that neighborhood to see how it was doing. Not surprisingly, "my" house already looks like a garbage dump and is for sale. Fifty bucks says its a foreclosure. Half of the other homes are also for sale, or "For Lease". If KBs apparent "take the money and run" strategy wasn't bad enough, they're still building houses. I have no doubt we'll be reading about KB and other home builders complaining at the loss of profits soon, and seeing some CEOs resign with multi million dollar severance packages.

Until then, they'll continue to build cheap houses, take more shortcuts on top of the shortcuts they already take, and flood the market with matchstick homes that will fall apart in 10 years, if not the day you move in. No one will want to live there, no one will buy them. These suburbs will be the new slums, taking on the ambiance now reserved for backwards rural trailer parks. At best, the land will be worth more than the house and they'll just be demolished, to be replaced by newer cheaper versions. Throw-away homes, bought and discarded like cheap plastic toys from Walmart. And in the wake of it all, families with foreclosures and bankruptcies.

If you ask me, subprime defaults are only the tip of the iceberg of what is to come in the US real estate market.

Happy Easter!

Easter is only, what, 7 months away? I feel the need to buy a giant inflatable Easter bunny for my front lawn.

But alas, it is Christmas that causes the gift-grubbing credit card swiping frenzy, so we get to be bombarded with it 3 months early. All the stores are stocking for Christmas. They've emptied the Halloween shelves at Target. Their garden section has been gutted in Home Depot. All the decorations, ornaments, fake trees, and inflatable Santa's are ready for sale.

Christmas in October anyone? If you ask me, retailers are frightened. They want to extend the holiday shopping season as long as they can because they fear that all the media hubbub about tightening credit standards and foreclosures is going to keep people glued to their wallets. I don't blame them. That's exactly what they should be doing.

"Consumers have the same number of people on their gift lists, and they tell us they have pretty much the same budget every year," Cohen said.

The question is whether the credit crunch and the collapsing housing market will affect how much discretionary income they have.

Cohen expects a spike in the sale of gift cards, which are a convenient way out for shoppers frustrated by a lack of hot items. About 39 percent of respondents said they intend to buy gift cards this year.

Well, don't companies usually release their hot Christmas items around this time? Maybe we haven't seen any hot new items come out because Christmas is still 3 months away. Just a thought. The only real big item we've seen out has been the iPhone, but what kind of lousy gift is that? "Merry Christmas, here's a $150 monthly payment you're stuck with for 2 years."

At the same time, he said gift cards could hurt retailers because they don't promote an impulse purchase on the part of the gift buyer.

But they are great when the gift card is redeemed, because many people buy something with the gift card and end up spending more to cover the difference. Or a balance is left on the card, which the company can steal with clever fees. Or the card will be lost and never used.

What bothers me most is that I love Christmas. But when you start Christmas 3 months early, bombard us with decorations and holiday music (and keep calling it "holiday season", people are going to be utterly sick of it by the time December rolls around. And what happens when people get sick of Christmas? It stops meaning anything to them, they stop celebrating it, which means sales go down, and the whole deck of cards the marketing industry has created collapses.

I say we protest. Put the credit cards away. Make your own gifts, celebrate quietly with your family, and no Santa's on the front lawn until December.

Why doesn't this company want my business?

I was reading a post on Consumerist and came across a comment from one of their registered members about an unfair cellphone policy that resulted in a loss of business for the company. The short of the story was that he had 2 lines, moved one line, and could not retain his other line with them. He was being cut off and charged an early termination fee. This was their "policy", though it was not even in his contract. He will never do business with them again. They didn't care.

Am I surprised? No...there is a good reason why I believe companies, utility companies in particular, are too large and cannot be trusted.

• 1) When I call SBC, I am not talking to SBC. I am not talking to anyone who gives a rats behind about the company, whether I am retained as a customer, or their ultimate health as an organization. I am speaking with some guy getting paid low wages who only cares about his own job.
  
  "Retention" is only important to him if he has a quota or gets some kind of immediate reward or bonus. If he gets neither, or he has already maxed out his rewards for the pay period, he does not care if you cancel or not. The company could be losing a good customer for life - it doesn't matter, because you really never talk to anyone in the company that cares.
  
  
• 2) Their contracts are a joke. Do you think it matters what is in your contract when you sign up for a cellphone? The only reason the contract exists is to empower the provider. Further, they can break, add, or change the contract at any time with no penalty. They can charge you whatever they want, for whatever reason, or cancel you...or provide lousy service. Even if something is not stated in your contract, they can do it.
  
  Why? Because your only recourse is a lengthy legal process that they know 99% of their customers are not going to deal with. Thanks to new popular arbitration clauses, even the 1% of them that do will only win 5% of the time. If your cell provider charged you an extra $50 for some reason and refused to refund it, what would you do?
  
  Take them to court? The filing fees alone would exceed the balance. Would you not pay it? Then it will go on your credit report - and a collector isn't going to care what your contract says, they will just go back to the company for verbal verification.
  
  
• 3) There is no liability. What can you do if some CSR doesn't hit the right button? Will the next CSR listen to you? Will they believe you, or will they think you are yet another customer calling in trying to pull a fast one? If it isn't on their little computer screens, it doesn't exist. You are at the whim of the CSR and their supervisors. See #1.
  

Companies have too much power over consumers, and we have too little resources to fight them. Indeed, for just about any dispute it comes down to whether you want to fight it on principle - because it will probably cost you more in the battle than to just relent and pay them.

When should you get rid of your car?

No Credit Needed has a problem that made me think a lot about our relationship with automobiles. In this specific case, a transmission may need replacing - among other things - at a tune of $2,000 on a 7 year old van with 135k miles.

Some of the comments from his readers made me pause. A good many of them considered such a car to be unreliable, and the solution to be to buy a newer one. Here is a van that probably cost $25,000 new, and 7 years later it is unreliable and needs replacing? The math doesn't work well in my head. Over $3,500 a year for transportation. We must be out of our minds to buy these things!

When the automobile was invented, an owner of such a machine could take it apart and put it back together again. They took time to learn how it operated and how to fix it. Today most people can't even change a tire (and not the actual tire on the rim, just bolting it to the shaft!).

This is a recipe for utter disaster. An expensive machine, bought on credit, constantly depreciating, needing more maintenance as it gets older, without any knowledge of it beyond how to operate its controls in the most basic way, and utterly reliant on an industry (mechanics) that benefit from mechanical failures and lack of consumer education.

Now a repair is due...yet when we consider whether to go forward we do not think of how much we paid for it, $25,000, we think of what it is worth now, say $8,000. A $2,000 car repair looks huge. Yet this is something that cost us $25k, needing a repair of a mere 8% of it.

Somewhere along the line we forget how much we paid (probably because we never wrote a check, we just made little payments), and its value is judged not by what it is worth to us, but what it is worth to everyone else. This leads us to terrible financial decisions, like trading in a vehicle for chump change (market value) simply because it needs an expensive repair.

This is not even considering the dependency we have on mechanics. Our lack of knowledge is our enemy here. We are dependent on the trustworthiness and honesty of the mechanic, something we cannot judge unless we have had experience with them. And that experience could be costly.

I just can't imagine buying a living room set, spending $25,000 on it, and then buying all new furniture for $25k again in 5 years. If the couch needs reupholstering, we don't say "Well this job will cost $1,000 and I can only get $3,000 out of this set at a garage sale, so I should just buy all new furniture!" - no, we say "$1,000 is worth it, this furniture cost $25,000!". We expect value out of the things we buy, why don't we expect it from our cars? And when repairs do come up, why do we ignore what we originally paid when evaluating whether the repair is worth it?

Don't like late fees? Try paying your bill

Are you upset that credit card late fees are staggering and out of control? I'm not. Sure, I've carried a balance in the past. I even had some significant credit card debt. But I've never paid a late fee. Why? Because I pay my bills.

Right now, the late fee on a Discover card is $15 on balances up to $500 and $39 on balances over $500. For billing periods after Oct. 1, the late fee will be $19 on balances up to $250 and $39 on balances over $250.

I understand that late fees for these cards are pure profit for these companies and they are ridiculously high, but you only get charged when you don't pay on time. With all the buzz surrounding these fees there has to be a huge number of people paying their bills late.

That’s a real stiff penalty to pay for being as little as one day late...when consumers mail in their payment seven to 10 days in advance and they still get hit with a late fee, something is really wrong.

The problem here is that there is no way to verify when your bill arrived. Yes, I have sent letters out first class that took over a week to arrive. It is somewhat unrealistic also to believe that when you send your payment via regular mail that it will be processed on the same day that the company receives it. Though large, these companies probably have many thousands of bills arriving per worker employed to process them each day. If your bill lands in someone's box at 3PM when they have a pile of payments waiting to be processed, it makes sense that it wouldn't be posted the next day. Do I think it's right? No. Do I think consumers can protect themselves fairly easily? Yes! Direct electronic bill payments are the only way to send a secure payment and have a receipt of that payment. Your alternative is to send everything by certified/receipt request mail, which of course costs quite a bit more.

How would you describe an interest rate of 28 percent to borrow money through your credit card

Why on Earth are you borrowing cash from your credit card? Further, the rates they charge are clearly listed on each bill that arrives in the mail. If you don't like paying 28% interest to borrow cash, don't do it. It's that easy.

Rather than blame the credit card industry for their crooked ways, take control. Want to avoid late fees? Pay the bill. Want to avoid high interest charges? Don't use the credit card. Don't want to pay 30% to borrow cash? Don't borrow cash. Stop feeding the beast. The only ones who can stop this madness is us: the consumer. Otherwise we are left to the regulation of the government. Like a parent disciplining a young child, it will only behave when mommy and daddy are watching (or when they think they'll get caught). And who do you think pays for that strict regulation? Is it free? No. You pay for it. Taxes.

This one nearly killed me:

If you do not have any liquid assets, consider tapping the equity in your house, through a home equity line of credit. This really makes sense if you already have an established line of credit.

What an idiotic suggestion. You are going to eat away the equity of your home and risk losing it in order to get cash? That isn't the solution. The solution is to stop borrowing money. How many of these people facing foreclosures (and crying fowl) can't refinance or sell because the value dipped below what they borrowed? How many are because people sank their other debts into home equity loans? You have a spending problem. You have a living-outside-your-lifestyle problem. Borrowing money is only going to make things worse and extend your misery because, sooner or later, you are going to have to repay it. What makes you think your situation will be any better then? You'll just have to borrow more, and extend it further. See where this is going? See where the perpetual cycle of debt leads? Utter dependency on an industry designed purely to efficiently bring more money in than it sends out.

This is a scam, perpetuated by rampant consumerism to feed off the ignorant. There is only one way to use a credit card and if you are paying late fees and interest charges, you aren't using it correctly. Government regulation is not the answer. Consumers educating themselves and making wise financial decisions are the only things that will bring the beast down.

Credit card holders affected by subprime - good!

This is a good lesson in credit card use. Unfortunately, if you carry a balance, you will be affected by the mortgage crisis. Apparently banks that also have mortgage divisions are hiking interest rates to keep profits high.

Capital One, which is among the largest credit-card issuers in the nation...said it was raising rates because it could and because of unspecified economic conditions

Shocking! A company whose only interest is in making money off of the money you borrow decides to use the clearly defined terms to make more money to offset its losses elsewhere. Hilarious is that the customer mentioned in the article seemed upset about this. Why? You agreed that they can change your rate whenever they want and you borrowed money from them anyway. If you don't care what they charge you, fine. I imagine most people do care.

This is the same kind of whining that came about when they raised the minimum payments. The immediate logical response? Good! Raising the minimum means that any idiot paying the minimum will be in debt for a little shorter time.

Now I have some sympathy for someone who is deep in credit card debt and struggling to become debt free. They made a mistake, are paying for it, and hopefully will learn for it. Of course if you are neck deep in credit debt and you charge a single dime to that card, my sympathy evaporates.

Here's the thing about credit cards. You borrow their money for a month and pay it back, you get charged nothing. That is the only way to use credit cards, unless you like playing with fire and you're borrowing money to invest in the market. Any balance you carry you will pay interest and you will pay whatever rate they want to charge you.

If you are paying interest on your card, cut it up. Now. You do not know how to use them.

The advertising bombardment

Ads are everywhere. They are so pervasive that most of the time we register a product, brand, or message without even paying attention to the ad itself. I am a firm believer that if you want to cut a very large chunk out of your spending, the first thing you should do is stop reading magazines and turn off the TV.

It takes a long time of being unplugged into these consumerism machines before you realize just how insidious they are. Open a magazine and you will likely find more pages of advertising than actual content (remember, you paid them to subject yourself to this). Worse, many of the ads are often disguised as articles. Even some of the genuine articles themselves focus on what products you should buy.

I spent about 2 hours watching television recently, which is more than I've watched in the last 2 months. What struck me most is how very little content is on television anymore. Flip between the channels and you will encounter an advertising bombardment on a mind boggling scale. Liquor ads (that have little to do with liquor and all to do with projecting an image), kids toy ads for electronic gizmos hawked to toddlers as educational, overpriced jewelry on entire channels dedicated to shopping. It's endless. And it's all television is anymore. It's one giant advertisement to get you to spend more of your money. And the shows? Look carefully and you will spot your favorite actor drinking a bottle of Fina or driving a brand new SUV (despite the character being a poor single mom).

Worse, we pay money for more channels of advertising! My opinion? Shut it off.

For more ways to save money, No Credit Needed is hosting a "33 Days and 33 Ways to Save Money" collaboration.

See also: Cable TV gone too far? and Throw out your TV and save.

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Bad news always comes in threes

First, my wife is laid off from her second part time job. Second, my car breaks down on the way to work. And finally third, our cat poops on the floor.

This morning.

Here is how we dealt and are dealing with these problems. First we list them by urgency, come up with a plan, then execute said plan.

• Priority 1: Cat poop on our floor. Above losing a job and the car breaking down, the most urgent situation is that there is now a pile of poo on our carpet. This problem is two-fold. One is that the poop is there, which has now been cleaned up. The second is the smell is there, which may attract the cat back and send guests into a coma. What we need is a good disinfecting cleanser and let it soak in. When cats poop, they pee, which means we have pee soaked into the under-padding. Will do this evening.
  
  
• Priority 2: The car. I believe this is going to be a relatively easy fix, but unfortunately it had to be towed back to the house and put to sleep in the garage for the day. My estimated cost for parts will be $100. At least that is my projected maximum costs. If it is greater, I may have to delay the repairs. I will go into phase one of the repairs this evening. Projected labor: 1 hour plus travel time to the auto parts store.
  
  
• Priority 3: A job loss. This one can't be remedied quickly, but we are already looking in the paper for a replacement - even if it is a temporary one. This could go either way, it may be resolved fairly quickly or may take a bit of time.
  
  
• Other Additional Costs: Flowers for wife. Nice ones. First she lost her job (albeit her second part time one) and second, she called AAA - with whom she has membership - and added me to the club so I could get a tow. It actually was cheaper than me just calling a tow truck, especially since I called 3 and couldn't find anyone to come out to get me. She took care of it by phone while I was sitting on the side of the road playing "Snake" on my cellphone.
  
  
• Other Short-Term Consequences: Will probably hear "I told you so" several times after being reminded how many times I said "We don't need to add me to your AAA, it's not worth the money!"
  
  
• Other Consequences: Possible residual cat pee smell and seeing wife's face when I tell her about said cat incident.
  

Want to go broke? Build a pond

I am exaggerating, but I never knew a pond could be so expensive! When my wife and I moved into our house, we set about redoing our backyard. We literally had a clean slate; the whole yard was mostly dead grass and mud pits. Our first project was building a small pond, which is 5x6 kidney shaped. Around it we extended our patio with natural stone and added beds around the entire yard. 2 years later we have just started adding foliage. It's been a long project.

Unfortunately, our pond has been a real money pit.

As it turns out, some drainage problems resulted in a lot of mud from a failed and unfinished elevated flower bed to wash into the pond. So for several months it has been completely clouded. We only see the 3 big fish and half a dozen babies they spawned when they come up to feed. So, this winter we are going to have to empty it all out, clean it, refill it, put the fish back in and start over. Let's not forget the huge string algae problem that developed over the summer.

Otherwise, the pond has been really expensive while we have tried everything imaginable to clear it; from chemicals to scrubbers to water changes to vacuums. Nothing has worked!

Online security questions - ugh

Am I the only one who finds online security questions completely annoying? As near as I can tell, the only purpose of these security questions is so that I can lock myself out of my own account.

First, many of them are case sensitive. So inevitably even if I know the answer, it doesn't recognize it.

Then most of the time the questions are all things that I don't even remember. Mother's middle name? Hmm, how is it spelled? My first cat? I can't remember the name of my first cat! Well, I can remember the name of a cat, was it the first? Or does the first one I remember count as first. Sure, but what if I remember some other cat 2 years from now when I actually need to answer this question again?

Others, like the ones I'm trying to figure out, are so ridiculous that no thief could know the answer. Because there isn't a chance in hell I'd remember it either. What were my wedding colors? My bosses first name at my first job? My spouses nickname (gee, isn't it lucky that everyone in the world only has one nickname for their spouse?). The name of the first foreign country I visited? Um...Nebraska maybe?

I'm trying to fill out these security questions, and I have to answer 3. Yes, 3! But all the questions I don't have a clue what the answers are! I could make something up, but that just means I'll get myself locked out of my account some time in the future.

Please, online people, a user name and password is sufficient. If I forget my password, I'll call you.

Does "my house" = "my money"?

A comment in one of my articles reviewing a mortgage product got me thinking hard about the way we view our homes. What does a house represent? Sure its our homestead, where we raise our families and build memories. But is it an investment? Is it an asset or liability? Is it an ATM machine? Anonymous wrote:

in the 30 yr, I have to apply for HELOC 2nd or refinance again to get that money (MY MONEY) back!" Thus, I HAVE TO PAY (MORE MONEY)TO GET MY MONEY BACK!

What struck me about this was this idea that the HELOC was allowing us to get back "our money".

Is a house a source of cashflow? Let's look at that for a second. A house worth $200,000. You own it, you may or may not have a mortgage on it (so technically the bank owns most of it), you have (hopefully) "equity" in it. A HELOC is a "Home Equity Line of Credit".

If I buy a house, I've purchased something. The only way to really get my money back is to liquidate it. To sell it. Real estate is an "investment" because unlike just about everything else you buy, its value usually appreciates. So where do equity lines of credit fall in? Well, based on the value vs what I owe on the home, I can take out a loan using my equity as collateral.

How, may I ask, is this any different than going to a pawn shop and taking out a loan with a Rolex as collateral? Is that really "my money"?

It's a fallacy, I think, to regard your equity as money. It's not; it's simply the value of something you own. The only way to cash it out is to liquidate it. Anything else is simply a loan, a loan granted to you based on the presumed ability for you to pay it back because you have a large asset that you can liquidate.

However real liquid assets (cash) sitting in the bank earning interest does not equal a loan, where you pay interest. In fact, by taking out loans on your house instead of saving money and using that as your purchasing power and/or emergency fund, you are killing whatever "investment" your house might represent.

Borrowing money does not build wealth. A house is not an ATM. It is not "your money". When you take out a loan, any loan, you are paying someone else for the privilege. How is that "my money"?