Pop money ethics: Part 1

business-ethics

All Financial Matters posted about a new money and ethics survey at CNN. The survey was conducted by Money Magazine, and after each question you can compare your own money ethics with the participants’ responses as well as commentary provided by Money Magazine‘s group of “ethicists” after each question.

Over the next couple of weeks or so I’m going to post a series of responses to the survey, including my on comments about the ethicists’ analysis. If you haven’t taken the quiz yet, hop on over to CNN and take it, and then come back and see what I have to say. Leave your own thoughts in the comments.

Question 1:

You’re remodeling a bathroom and the tile guy offers a 20% discount if you pay in cash. It is clear to you that he will not report cash payments. Would you most likely:

  • Pay the full amount check (14%)
  • Take the discount and pay in cash (65%)
  • Refuse to do business with someone who cheats on his taxes (21%)

Right from the start, the question is rigged. Maybe I’m just naive, but I doubt very highly that most people would tell a customer that they were planning to do something illegal, unless they were a good friend or extremely sure the person wouldn’t say anything. Anything more relies on assumption, which should be avoided in nearly all situations requiring moral judgment.

If the presumption of illegal intent is based on the large discount for cash payment, then one would do well to remember that there are number of reasons why a business person might prefer cash payments: To avoid the potential for bounced checks; avoid credit card fees; because he really, really needs the money and doesn’t want to wait for the check to clear, etc.

In addition, the third option is extremely biased. “Cheats” is an extremely loaded word and should have been avoided.

Anyway, the ethicists said:

Happily, we live in a country where citizens are not obligated to report to the state the misdeeds they suspect others of committing. Still, knowingly profiting from someone else’s cheating on their taxes is wrong ? as wrong, for example, as getting a discount for letting the workmen install stolen tiles. In either case, the tile guy is stealing, and being a party to it is abetting a thief.

This is just plain irresponsible analysis. Consider the following scenario: You’re walking along the street at night and are stopped by a mugger, who tells you at gunpoint to give him your money. You happen to have prepared for this scenario by sticking some of your money in your sock, so you happily hand over your wallet and continue on your way.

According to Money Magazine ethicists, you just stole from the mugger. You see, what they fail to realize, whether intentionally or just because they blissfully believe what the government tells them, is that when the government levies taxes, they are stealing from you. Not reporting income to the government is no worse than hiding money in your sock to foil a mugger.

I wonder who these ethicists are taking money from ? they should have to pay it back.

$1,000 in bonuses in 10 months

money-bonusAbout 10 months ago, I started a focused approach to taking advantage of various deals and promotions offered by companies, mostly financial institutions. I didn’t really know what to expect, but I knew that some people made a decent amount of extra cash from such bonuses.

This week while updating my tracking spreadsheet, I realized that I have reached a milestone. In approximately ten months, I have received over $1,049 from various bonus offers and similar deals. In addition to time spent filling out online applications and completing other tasks (such as making trades or diverting some of my direct deposit money), receiving this sum cost me a mere $21.14.

In honor of this accomplishment, I would like to highlight a few memorable deals.

ShareBuilder ? $170 ShareBuilder frequently offers bonuses for opening new accounts, and I took advantage of three of these promotions last winter for a total of $150 in cash and gift cards. Plus, I received $20 for initially enrolling in ShareBuilder through eBates. Because the deals required me to make a trade, I purchased shares of PowerShares Water Resources ETF for the same amount as each bonus I received. With dividends and capital appreciation, the amount is now worth about $225 (+24%).

Hedge Street ? iPod Shuffle ($79 value) + $0.10 Hedge Street specializes in futures trades, and I have to admit I thought long and hard about this one before I did it. Fortunately, someone posted a little howto in the FatWallet forums showing how to spread the trades for minimum risk. The bad news is, I did it wrong; the good news is, because I did it wrong, I actually made $0.10 on the trade. Booyah! I had intended to sell the iPod on eBay, but after two scam attempts, I decided just to keep it, and I now use it regularly.

Obopay ? $85 Obopay is a payment service whose signature feature is that you can send payments using cell phone text messages. For a time, they were offering a $25 signup bonus. Because they allowed customers to sign up for three accounts (so long as they were associated with different phone numbers and e-mail addresses), I was able to receive this bonus three times. In addition, I used my first account to refer the other two with a referral bonus of $5 each. I closed my Obopay accounts in mid-June because they talked about raising the fees.

Bank accounts ? $390 Banks frequently offer bonuses for opening new accounts and referring other customers. Not much more need be said.

What’s in store for the future?

Now that I’ve built up some momentum, I’d like to set a goal for the next year. I think it would be reasonable for me to aim for $1,500 in these types of bonus deals between now and the end of July 2008. As of now, I have about $450 already started in pending deals ($370 of that the criteria has already been met, I’m just waiting for the payments), which puts me on a good footing.

But I will have some difficulties, as I now have bank accounts already open with many of the big financial institutions that offer the best bonuses. Also, the conditions for deals seem to be getting more complex, with companies more frequently requiring longer commitments, larger deposits, direct deposit, debit card usage, and/or other qualifying actions.

So, here are some things I need to do to meet my new goal.

  • Search out more local deals. I’ve received some flyers for bonuses from local banks and credit unions, but have yet to take advantage of them.
  • Close accounts I’m not using, so I can take advantage of future deals for new customers. (Many banks consider you a new customer if you haven’t had an account in six months or a year.)
  • Look for other types of deals, such as credit card bonuses, trial services, purchase deals give me more cash back than I paid for, and the like.

Let me know if you have any tips on good deals, and I’ll post them here. Also, here are some sites that I use regularly to look for deals.

In which a collection item is successfully removed from my Experian credit report

Wherein I am hospitalized and the woes arising from my indisposition

Nearly two years ago now, my appendix burst and I had to go to the hospital for an emergency appendectomy. I spent four days in the hospital and another week or so at home. About a month later, I started getting calls from the hospital saying I owed them $1,400 for the pleasure.

At the time, my wife was not working and our youngest daughter was less than a year old. I explained this to a kindly young lady in accounts receivables, made a small initial payment and set up a plan to pay $25 per month on the balance. The maiden was very nice, and said the hospital’s only request was that I increase my payment amounts after a few months as I was able.

An account of collection and how it came to be reported

collection-agencyFast forward a few months. In August 2014, I missed a payment, so in September I sent in two payments together. However, they didn’t arrive until after the payment date, which put me 30 days late from my August payment. In that short period, the hospital sent my account to a collections agency.

Unfortunately, I was not as wise then as I am now. The collection agency, gross and uncouth fiend that it is, called my home and spewed its poisonous, loathsome spittle at my wife. She fled! them and told them to call me at work or on my cell phone, and hung up. However, they caught me one day when I was working from home, and after a very heated discussion with the wretch on the other end, I did two things that I have since learned you should never do:

  1. I admitted that the debt was mine.
  2. I agreed to make payments.

The depths of debt, and a description of the unfaithfulness of lesser men

Over the next few months, through the Christmas season, I paid high tributes to this collection agency, a rotten and unyielding slaveowner. Then, in February, I paid the balance of it off with part of a bonus I received.

And then, whence I believed that I had been delivered from the heavy yokes encumbering me for six months, I discovered that the collection agency had reported the account to two of the three most fearsome credit beasts in the financial world: Experian (EXP) and TransUnion (TU). Ooh, I was enraged. I tore my clothes and poured ashes on my head, after which I had to wear sackcloth (or something purported to be sackcloth). The worst part is that they didn’t report it when the account initially arrived on their doorstep ? they reported it after I had started paying them.

So in March I called that vile collection company and, using honey-like tones and sychophancies of all manner, I confirmed that they had received my final payment and that my account no longer was in arrears. With a full strong voice, I then relayed that the company must send word to the credit beasts and clean the scent of my blood from their claws. The collection agency’s page said the beasts would be notified immediately, and that their appendages would be well washed by the following month. Yeah, right; a month later, both my EXP and TU reports not only still showed the account, but it indicated a balance of nearly $500.

Wherein I begin a quest of reparation and face sundry dangers, pitfalls and fierce beasts

So, I searched far and wide to see what champions I could raise to my cause. A friend pointed me to the CreditBoards.com forums, which has an amazing amount of information about how to fix and improve your credit. I found a sub-forum dealing specifically with medical collections, and started reading.

Boy, was I impressed. I had never realized, until those weeks I spent scouring the CreditBoard forums, how many laws there are relating to the proper reporting of medical- and credit-related information. Being a libertarian, I generally don’t think that more regulation is a good thing, but I have to tell you, when I saw the legal tactics described (and presumably used) by some of the boards’ members to improve credit scores, I was duly impressed.

So, armed with the knowledge and experience of those who had successfully fought collection accounts before me, I prepared to head off to do battle with the credit reporting agencies, collection agency and, if necessary, that bastion of high medicine, the hospital itself.

To TransUnion I wrote the following letter:

Dear Credit Union,

My name is Zahir, and my Social Security Number is 666-66-6666.

I am sending this dispute certified mail #XXXX XXXX XXXX XXXX to ensure that you receive it.

Specifically, I am disputing account #XXXXXXX on my report #XXXXXXXXX dated DD/MM/YYYY.

Please advise me as to the name and address of the creditor, the date and type of service, and to whom the service was provided.

If you can obtain this information, I also would need the name of the person providing this data, and the manner in which it was provided in order that I may pursue additional legal remedies.

Sincerely,

Zahir

While TransUnion staggered, dazed and blinded by my stunning assailment, I thrust my hard, cold blade at Experian, using their online dispute mechanism to demand similar verification of this same account. I was not as sure that my blows against Experian would result in victory, as it was seemingly a much too easy process. However, I had nothing to do but wait for a response.

Wherein the second of my foes is fallen, and the first remains but in weakened form

My dispute to TransUnion arrived two days after I sent it, and the following day my Experian report displayed a small bit of text next to the disputed item: “This item currently under investigation.” During the next 35 days, no change occurred.

And then, suddenly, this morning, I received a short e-mail from auto.notification@experian.com stating simply:

The results of your investigation of information in your Experian personal credit report are now available for online viewing. For your protection, please review your results online within four days of the following date: 06/27/2015

Swiftly, and with much fear and trepidation, I followed the instructions provided to access my updated report. I scrolled down to see a blessd little message that read:

COLLECTION AGENCY
Account Number: XXX…. Outcome: Deleted

There was much rejoicing in the halls of my office.

During which we arrive at the conclusion of this particular tale, but without a final resolution, leaving you perhaps feeling unfulfilled, yet hopeful

And now, I have faith that simply time and patience will deliver unto me the second of my fearsome, yet mortal, enemies, giving me at last a radiant triumvirate of credit scores each above 700.

Epilogue, describing the slaying of the second beast, and providing closure to my tale

When I got home, I had an item in the mail from TransUnion. The package contained a letter informing me that the investigation was complete with the following result:

COLLECTION AGENCY #XXXXXXX DELETED

Thus, my quest is complete. Shearing off the tails of the slain beasts, I had them stuffed, mounted and placed in a file labeled “Credit Reports” in the cabinet next to my bed.

A personal case study in the psychology of spending money

So, I’m going to be in my good friend Speedo’s wedding this weekend, and my wife and I haven’t yet gotten a wedding gift for the lucky couple. While looking over the registry, I asked my wife how much she thought we should spend.

spending-moneyAs I should’ve known, her answer told me, once again, how differently we look at money. The surprising thing, though, was that our roles appeared to be reversed. Typically, I am the one who thinks we should spend less money on gifts, but this time around, the amount I proposed was double the one my wife had in mind. When she explained her reasons for the lower figure, I heard all the arguments I had used myself in other discussions.

  • We have a set amount that we try to stick to for gifts (with moderate success)
  • We haven’t spent as much as I had proposed for other people’s weddings
  • Our cash flow at the moment is a bit stretched at the moment for various reasons
  • We are already spending a bit more than we had planned to travel to the wedding (we’re taking two cars) and have to pay for a hotel and buy my tux

These are all convincing arguments, especially to someone who has used them before, so I really had to think about how I had come up with my figure. Through my introspection, I came up with the following things that may have occurred to me subconsciously:

  • We are actually better of financially now than we have been in the last five or six years (nearly our whole marriage). That’s not to say we don’t have debt ? we do. But I guess I have a bit of residual euphoria after using our tax refunds to pay off a large chunk of debt.
  • In addition, within the next couple of paychecks, our cash flow problems are going to be resolved as I start seeing the benefit of the 401k loan payoff and increase pay from a recent promotion. This is a dangerous situation because I find that I am tempted to charge things I normally wouldn’t put on my credit cards, “knowing” that I will be able to pay them off in a month or two.
  • I started to think about the future and the state of the US economy. I learned there is a great way to protect your retirement savings from any unforeseen events. Its called a gold IRA rollover, when you transfer your current 401k or IRA into precious metals. But, it was very difficult to select the right company. I settled on one of the best rated company according to the BBB and BCA, called Regal Assets. I highly recommend you reading this article as its the best Regal Assets review I’ve seen so far.
  • On a more emotional level, Speedo is one of my best college friends, and the one of only two that I keep in contact with fairly regularly. My wife argued that we haven’t spent as much as I’ve suggested even on family member weddings, but I guess I consider Speedo closer than many of my family.
    • Don’t get me wrong ? I love my family. Hearing horror stories about other families, I realize that my extended family is extremely fortunate in that we all get along well…. But while I love them and wouldn’t trade them for anything, I’m much closer to Speedo than many members of my family. That’s just the way it is, and I’m sure my family members all have closer friends than me.

Anyway, we haven’t settled on a final amount yet, but likely it will be somewhere between what my wife and I each proposed.

“Everybody’s good enough for some change…”

I was a mediocre fan of the band Live back when they were popular in the mid-90s, enough so that I have a couple of their songs on my iPod. One song in particular happened to play today (“Waitress”), and one line from it reminded of the importance of small-change transactions. It got me thinking about how small change has made a difference in my finances over the past year. Not all of them are positive.

Linkage – Many banks allow you to link to accounts at other banks, for transfer purposes. As part of the linking process, the originating bank will make two small deposits to your other bank account, which you then have to verify to complete the link. Some people take advantage of this process by performing all possible permutations of links to and from each account. Using this process, I have made an extra $45 over the past year, in many less-than-$1 transactions. I know someone else who has made over $75, and have heard stories about making much more.

%-back debit cards – Banks make money off of debit card transactions, and many of them encourage customers to use their debit cards more often by providing percentage-based cash-back programs. Most of these programs are similar to cash-back credit card programs, which aren’t very new. I’ve earned about $28 in the last year using with such programs without really doing anything different than I normally would do.

Mountain Dew – My beverage of choice costs $1.25 at the vending machine in my office. It costs $1 at the Wal-Mart down the road, which I drive past every day. Assuming I buy 3-4 bottles per week, I could be saving $39-$52 a year by buying it an easy quarter mile away. Yes, I said “could be” not “am.”

Of course, the question remains if I would really be saving any money buying it from Wal-Mart vending machines. With the price of gas these days, I probably would spend more than a quarter by turning off the main road, stopping the car, jumping out, buying some sodas, and then starting my car again.

I probably should just cut soda out of my diet altogether and drink water. That would save me at least $260 a year, and I would be the healthier for it. Short of that, I could probably save quite a bit by buying them in six-packs or something, but I’m afraid I’d be tempted to drink more because they are available, which would save me nothing.

Others? – I use cents-off coupons, pick up coins I see lying on the ground and take a penny regularly (which I usually try to leave again at the next opportunity). I don’t keep track of each of these things, but I’m sure they add up to significant amounts over the course of the year.

What about you? How has the small change accumulated in your financial life?

Where personal finance and individual freedom collide…

It seems like such a simple concept, but it wasn’t until last night when my wife said, “Everything is so much easier with money,” that I realized there are very few blogs dealing with the Reese’s-cup-esque relationship between money and liberty.

libertariansSure, libertarians of all stripes state general maxims about how the government has screwed us over by inflating the money supply, or by creating a central bank, or by generally regulating any and all aspects of money from how much you can carry on a plane to what may used to pay a debt. But in their diatribes against these undoubtedly troublesome and dictatorial nuisances, many libertarians fail to look how one can still achieve liberty through building personal wealth and finance. Undoubtedly, they believe this is possible (and preferable!), but the connection rarely is made.

Similarly, in the slew of personal finance blogs I’ve been keeping tabs on recently, there is rarely a clear relationship between the information and advice given and how it can increase individual freedom. Of course, many of them refer to “financial freedom” but I think there’s a distinction to be made between financial freedom and personal liberty, the latter being a broader topic but affected just as much by one’s personal finance as the former.

So, my goal with this blog is to bring together the two concepts. Undoubtedly, at times I will fail. But with any luck, I’ll strike a new vein of gold.

Enjoy!