Dan Ariely is a behavioral economist, which is to say he mixes human behavior, psychology and economics together to give us a deeper insight into why we do the things we do. Each week, he does a Q&A column in the Wall Street Journal but I usually catch it on his blog. A little while back, Ariely fielded a great question that I think you guys would be interested in.

Dear Dan,

I don’t care about cars, never have. But I’m a sales executive, and people tell me I should own a nice car (BMW, Mercedes, etc.) to enhance my credibility to both my customers and sales team. I can afford either but would rather save the cash and buy a Honda. Does it matter?

—Cody

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To help combat impulse buying, j_stack shared his tip on Reddit:

To curb my impulse online shopping tendencies, I use Amazon wishlist instead of dumping everything in my shopping cart. I leave the item in there for a month or two, and come back to it later to see if I really want it. I almost never still want the item, and if I do still want it, I’ll know it’s something I’d really like to have.

edit: If I decide I don’t love something enough to ever buy it, I’ll nix it from the list, but the stuff that I stay on the fence about for a while can sit in my cart for almost a year. Then it becomes my christmas list.

This is the digital equivalent of waiting a day before you buy something you like and it’s a good tip.

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With the release of the March 2013 CPI-U figures, we now know the variable interest rate on Series I Savings Bonds for the next six months starting in May and it continues to be low (but it’s an increase from the last six months – so that’s good right?).

The March 2013 CPI-U figure was 232.773 and the September 2012 CPI-U figure was 231.407 so we can calculate a semi-annual increase of 0.590% and we’d expect the variable component of the bond to be 1.18%. The only question is whether there will be any change in the fixed rate, which currently sits at 0.0%. With interest rates so low, no one expects that to change anytime soon.

That said, using the equation:
Bond rate = Fixed rate + 2 x Semiannual inflation rate + (Semiannual inflation rate X Fixed rate)
Bond rate = 0 + 2 x 0.0059 + (0.0059 X 0)
Bond rate = 0.0118

So we’d expect the interest rate on Series I Savings bonds to be 1.18% in May.

Every year, the IRS publishes a list of twelve tax scams they call the “dirty dozen.” It’s usually a mix of what you’d expect – a little identity theft mixed in with scams that prey on people’s inability to detect things that “sound too good to be true.” Taxes are complex enough that unless you spend a lot of time doing them, it’s easy to believe that an “expert” knows something you don’t. When that something could be a way to save money on your taxes, a lot of folks are willing to give it a try. If you hear about how the wealthy are putting money away in an overseas bank account because you read it in the newspaper, maybe the guy who showed up on your doorstep can do the same for you… even if you have no idea how it works.

Knowing the list itself isn’t all that useful because scammers are always going to find a way to rip people off. How they do it will change every single year. By the time something appears on this list, chances are the scammers have moved on. While it’s good to be aware of the techniques in this list (and some are so broad that they will always be on it… such as phishing and identity theft), it’s even better to understand tax law enough that you are never susceptible to these scams in the first place.

Today, we’ll just list off the twelve and what you need to know to avoid them.

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When I was younger and I just started working, I didn’t know how tax brackets worked because I would do my return in TurboTax and pay whatever I owed. I didn’t care much about tax brackets because, honestly, it didn’t really matter to me. So one day I look at the Federal tax brackets and was perplexed as to how they were set up (this was back in 2003 but in order not to confuse you, I’ll use 2013 tax bracket numbers in my story). I was making a great salary for a 23 year old, around $60,000, a year and I saw that I was firmly in the 25% tax bracket. When I went to do my taxes, I saw that my effective tax rate, as reported by Turbotax, was actually under 4%!

Why were my taxes so low? First, I started working in June so my wages were less than $40,000 (I had a small signing bonus and I also worked my last semester of college), and after the standard deduction and 401(k) contributions, my taxable income was around $25,000. That next year, I was given a raise of 4% and I saw that I’d still be in the 25% bracket but my effective tax rate was under 14%.

How could my tax rate be so much lower than my tax bracket?

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A few months ago, we started using a cleaning service to help clean around the house. We had them come in basically once a month for three hours to clean some areas we often neglect. When you clean your own home, you generally get the major areas – vacuuming carpets, sweeping floors, cleaning the bathroom and the kitchen. You miss some of the little things like dusting, wiping windows, and things that don’t accumulate dirtiness as easily. In doing so, we learned that a lot of people “outsource” cleaning because it’s a labor-intensive task where there is a small range in terms of expertise (and it’s fairly easy task).

It led me to think of other places where we might outsource some work in order to focus on things with greater importance.

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Here’s a good question for you sports fans out there – Do you owe your friend a beer if he takes you to a game? The basic gist is that someone (James) wrote in that he sometimes gets tickets to games from his employer and when he takes a friend, he expects the friend to buy him two beers. Drew Magary, always an entertaining and outspoken writer, responded that he shouldn’t expect it because James was getting them for free from work (and if the tickets are to see the Golden State Warriors… I would agree!).

Personally, I can see it from both sides. As the giver of tickets, I don’t think you can ever expect anything. You can’t give gifts and expect something in return, that’s just a bad way to go about life because, honestly, you’ll be met with a lot of disappointment. People don’t appreciate things that are free, they appreciate things they have to pay for.

As the recipient of tickets, you should buy your friend some beers. You don’t need to buy as much as the value of the tickets but some sort of thank you would be nice and a couple beers is cheap relative to many tickets. James cited $425 NBA tickets and while I suspect there are probably more $20 baseball tickets than $425 NBA tickets, it’s still more expensive than a $7 beer. The only exception to this is if you get tickets to a box where the food and drink are free… then you’re both making out like bandits anyway and griping about beers is like stealing ball point pens during a bank robbery.

What do you think? Do you owe a beer to a friend if he gets you free tickets? Do you expect a beer or some free food?

(Photo Credit: bryce_edwards)

What happens when banks buy banks? You get a mess of ABA routing numbers.

In a process that is years in the making, I’ve been consolidating more accounts I no longer need. This time, my Capital One Banking account is the one that is getting the ax. I opened the account years ago because of a Costco promotion that gave it a pretty good interest rate. When Capital One ended the relationship in the middle of 2012 and the interest bonus ended that calendar year, I decided I was going to close it. It’s March, I’m about three months behind schedule, but today I took the first step in cutting my ties – I added it as an external transfer to one of my other accounts.

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