One radio advertisement I heard over and over again during the holidays was for International Star Registry, a company that offers the ability to “name a star after someone” for a low fee of $54.00. In addition to having the star’s new name “registered at the US Copyright office,” you get a certificate. For $54, all you get is a certificate, some star charts, and a map of your star circled in red. Pay a little more and you get a nicer frame. You can also get various charms and bracelets with your star’s official name and your name too.

It’s cute but the name isn’t official… check the fine print at the bottom of the page: “International Star Registry star naming is not recognized by the scientific community. Your stars name is reserved in International Star Registry records only.” It might be worth $54 to be able to name a star a particular name, so that every time someone mentioned it in the news you’d get a little shout out (”Look, John Smith is going supernova!”), but to have it only written down in some company’s book? C’mon.

$54 (plus shipping and handling) would be so much better spent on something else. Heck, despite my aversion to gift cards, I’d prefer a gift card to anywhere over a star named after me!

I must have heard this commercial two or three dozen times the week or two before Christmas and these guys have been in business forever, makes me wonder…

(in all fairness to people who did buy this and happen to read this, you do get a nice frame and it is a cool idea, but you aren’t getting a star officially named after you!)

(Photo derived from vorty)

We don’t use Netflix because we don’t watch a lot of movies but a lot of our friends do. One of the things I notice quite a bit, and something that my friends freely admit, is that my friends don’t watch a lot of movies either and they will have the same movies for weeks at a time.

I recognize that Netflix isn’t about watching as many movies as you can. Part of Netflix’s appeal is in their extensive library of movies, movies you would never be able to find in a Blockbuster store like indies and foreign films. However, if you’re one of the Netflix subscribers who is really into the cost benefit analysis game, there’s a website called FeedFlix that will do all that for you without any additional help. You don’t have to sign up or anything, you just have to paste in one of your RSS feeds into their box and a wealth of personalized usage information appears.

I don’t have a Netflix account so couldn’t run myself but I asked my friend Jeremy at GenXFinance.com for one of his feeds and he obliged, here’s his usage:

According to Feedflix, Jeremy holds DVDs for about 5-6 days and each rental costs about $3.96, which puts him in the 67th percentile. Since the data only seems to find December, there isn’t much historical data to play with but if you’ve had it for quite some time then you might be able to see some trends. You might even want to pause Netflix during those slower periods.

Some caveats about Feedflix:

• It seems to be a bit inaccurate, Jeremy said that his wife easily returns more than 1 DVD a week and that they’ve had service for longer than December, which is the only month that appears.
• It doesn’t take into account movies you watch streaming across the web, which is how Jeremy watches most of his movies. (through his XBox 360).

Give it a whirl, let me know what you think!

It’s the first roundup of the new year and I think many have dubbed this the Year of Frugality. If they haven’t, then I just did because we’re going to have a lot of economic and financial challenges this year and the best way to combat them is to tighten up the purse strings so you have some spare cash to handle any emergencies. The wiggle room in a lot of budgets has gotten a lot smaller. To help with that, Ive decided to make this a frugal roundup, pointing to some posts that I think can help you save a few dollars this year.

First, Lazy Man shares a few tips on how to save money on television, movies, music, and books, the four basic food groups in your media consumption hierarchy.

It’s a little cold to be changing car oil right now but my friend Fred doesn’t seem to mind. He recently changed the motor oil in his Dodge Caravan and gives both instructions and a cost benefit analysis. I change the oil on my own car myself mostly because it’s faster than going to a place like Wal-Mart (who, according to some reports, uses sub-par oil anyway). I don’t want to be spending $60 on a quick lube place either. The only change I’d make to his list is the oil drum, just take it to a mechanic and they will let you dispose of it there (they are required to by law).

Saving money is one thing but here are a few ideas from Nickel for earning extra money. Of the thirty-three he lists, I’m sure you can find something in there you can do to earn a little more money.

And to end it all, I felt it appropriate to mention a post I wrote that listed 100 money saving tips. Originally focused on the holiday, how to save money so you can afford the gifts you want to get others, it’s just as appropriate any other time of the year.

(Photo: billywarhol)

None of these books are new, they’ve been around for years and they’ve been considered by many to be the best personal finance books out there. The topics they cover will vary and their approaches will be sometimes very different, but each has value and as a student of personal finance they all have something to offer to a reader. Many of these books will sound familiar and I challenge you to make an argument that one of these books shouldn’t be on a list like this.

General Personal Finance

You can’t describe this category without listing the book I consider to be the defining book in this cateogry - The Richest Man in Babylon by George Clason. This book was written in the 1920’s and is a fiction story that teaches simple personal finance lessons. It’s a tiny little book that you could probably read in less than two hours and the lessons it teaches are simple. There are several other books that are like this, teaching basic personal finance concepts, such as The Wealthy Barber by David Chilton, but this one was the first and most celebrated.

Another ground-breaking book that deals with general personal finance was The Millionaire Next Door by Thomas Stanley and William Danko, first published in the 90’s. The reason it was ground-breaking was because they showed how many millionaires actually lived. So many of us see the flashy lifestyles of celebrities and sports figures, thinking that’s how millionaires live. Stanley and Danko interviewed millionaires and discovered that most do it by spending less than they earn and by being smart with their money. When this book was released, it really surprised some people and I think it was exactly the type of wake-up call people needed (and still need today!).

Finally, the last cornerstone book in general personal finance has to be Your Money or Your Life by Joe Dominguez and Vicki Robin. This book is lauded by many a personal finance blogger and it’s very popular because it helps you re-examine your priorities. Instead of living to work, they help you re-prioritize so that you’re working to live. If you do feel like you’re trapped in the constant struggle between working, bills, and expenses, this book can certainly help you sort everything out.

Bonus book: A book that I haven’t read yet but is also well recommended is Napolean Hill’s Think and Grow Rich, which also happens to be free and in the public domain. I haven’t read it yet, doing so now, but it was written during the Great Depression so it might be helpful during our economic malaise.

Managing Debt

I haven’t read it but so many people have told me about Dave Ramsey’s The Total Money Makeover. I’ve been very fortunate never to have fallen into the credit card debt hole but after I wrote my post about how Dave Ramsey’s Snowball Debt payoff method was brilliant, I’ve gotten several emails from readers telling me it has worked for them when other methods failed. If you are in debt, check out Dave’s book (at the library!) because it goes into much more than debt repayment, it’s an entire overhaul of your financial life.

If Dave Ramsey hugs you, then Larry Winget slaps you in the face. Depending on which type of motivation you respond you, Larry Winget’s You’re Broke Because You Want to Be: How to Stop Getting By and Start Getting Ahead is either perfect or will make you feel depressed. While I haven’t read Ramsey’s book, I have reviewed You’re Broke Because You Want to Be and I thought that it was a good book but might be a little too tough. It has a lot of very useful information and it has an answer for any excuse you could possible have about debt.

Investing

No list of investing books would have any credibility if it didn’t include these two most important texts: Burton Malkiel’s A Random Walk Down Wall Street and Benjamin Graham’s The Intelligent Investor. The basic gist of A Random Walk is that a blindfolded monkey can select stocks as well as a professional. The random walk refers to the actions individual stocks prices can take in the short term and Malkiel recommends index funds the entire way. Benjamin Graham’s The Intelligent Investor, on the other hand, is the seminal text of value investing, where you buy stocks in down and out companies with a long view in mind. If it’s any comfort, Warren Buffett was Benjamin Graham’s protégé at Columbia University.

I also have to recommend The Little Book series which include several books on investing. They each cover a different part of investing and different scenarios, but they’re all written by very accomplished authors and written very well. My favorites are The Little Book of Common Sense Investing by Vanguard’s John Bogle, The Little Book That Makes You Rich by quantitative investment expert Louis Navellier, and The Little Book of Bull Moves in Bear Markets by Peter Schiff (in part because we are in a roaring bear market).

Finally, I have to give a nod to David Bach’s The Automatic Millionaire because it teaches one very important lesson - set it and forget it is one of the most powerful lessons in retirement investment planning. Save in your 401(k) and IRAs by making automatic regular deposits and you’ll be happy in retirement.

Frugality

The Complete Tightwad Gazette by Amy Dacyczyn is the book on frugality. If you were to ask any frugal blogger for their list of the top three books on saving money and frugality, this book would be in that list with no exceptions. This is also one of the most actionable books on this entire life. When you read a book like the Wealthiest Man in Babylon or the Automatic Millionaire, you come away with solid personal finance information but nothing you can actually do. The Tightwad Gazette is the polar opposite, you can make it through a handful of pages without getting an idea of what you can do to trim. Want a hint of what’s inside? Money Saving Mom listed ten painless ways to save $100, pulled from the book.

One of the easiest ways to be more frugal is to simplify your life. One of the easiest ways to simplify your life is to get a book that has over a thousand ways to simplify all aspects of your life - The Joy of Simple Living by Jeff Davidson. This is another one of those extremely actionable books where he goes through room by room by room, giving suggestions on how things could be simpler.

Behavioral Economics

This category isn’t one that is often discussed when looking at personal finance books but I think behavioral economics is something we should all be familiar with. Behavioral economics refers to “research on human and social, cognitive and emotional factors to better understand economic decisions by, say, consumers, borrowers, investors, and how they affect market prices, returns and the allocation of resources.” The book that introduced me to this type of economics was Freakonomics by Steven D. Levitt and Stephen J. Dubner. I don’t really know how to describe Freakonomics other than to say that the authors took a bunch of interesting economics stories that applied to everyday life and tied it together into a book. You’ll read about cheating teachers and cheating Sumo wrestlers, you’ll read about impact abortion has had on crime, and a dozen other interesting stories that will do nothing but pique your interest for more.

From there, you can’t miss two other books that I’ve read and enjoyed - Predictably Irrational by Dan Ariely and The Undercover Economist by Tim Harford.

Predictable Irrational seeks to explain why we, as supposedly rational people, make such irrational decisions. The best example is how customers often behave economically irrationally whenever free is introduced to an equation, people often go after the “freebie” or “add-on” when it doesn’t make rational sense to do so.

The Undercover Economist is slightly different, it explains, among other things, how you can glean information from situations where you don’t think information can be gleaned. The best example I can remember is one where Starbucks began offering fair trade coffee at a higher price. Starbucks charged a higher premium for that coffee than what it agreed to pay for fair trade coffee. In other words, Starbucks was profiting from fair trade (it wasn’t simply higher by the net increase in fair trade versus non-fair trade coffee). The information it provided was invaluable in that it identified how likely Starbucks customers were willing to pay more for their coffee - it showed how elastic the price truly was.

Those are the books that I think would make a fantastic library for the personal finance enthusiast. I’m absolutely certain I missed some great books out there, so if you have a favorite that I didn’t list, please leave a comment so I can be sure to check it out!

Tim Clark, author of The Prosperous Peasant (my review), has a blog called Soul Shelter and he posted a guest article last week where the author’s friend Dave, a multi-millionaire from the dot-com boom, bought an espresso machine for $945. At first I reacted the same way as the author, “It must be nice to be able to afford a high-end, fully automatic espresso maker, I mused aloud.” But as the article continued, I saw the logic.

“OK, consider this: One double latte costs three dollars at a coffee shop, so your outside coffee-drinking habit comes to six dollars a day for you and your wife. That’s $2,190 per year in after-tax dollars,” Dave extrapolated. “Assuming you’re in the 27 percent tax bracket, that means you have to earn $3,000 before taxes to pay for those lattes. That’s more than a month’s wages for a substitute teacher here in the state of Oregon.”

I don’t spend $3 at a coffee shop each day but he and his wife do. I don’t spend $2,190 per year in after tax dollars on double latte’s, but he and his wife do. I don’t have to $3,000 before taxes to pay for coffee each day, but he and his wife do. For him, the $945 espresso machine makes perfect sense even after you factor in the cost of milk, beans, etc. It may not make sense for me, but for him it makes perfect sense.

This is basically the reverse of the monthly payment math trick. The monthly payment math trick is where a salesperson tricks you into paying more for something by justifying it in terms of monthly payments. If I were to argue that he’s making a bad decision, I’d be falling for the trick in reverse by focusing on the $3 a cup cost versus the $1000 espresso machine. When you do the math and find total cost, his logic is sound. You could argue that he shouldn’t be spending $3 on a double latte every day but then you’re not talking money anymore, you’re getting into personal preferences.

The bottom line is that you should always be doing the math. A commenter, Hank, said that his mantra this year is to “just do the math.” When you do the math, the answer is usually pretty clear. In this case it’s crystal clear, once you get past the $945 up-front cost. The other comments for this post are pretty good too, I think many of the commenters know each other so it makes for some lively debate.

What are your thoughts on the purchase?

(Photo: asurroca)

If you’ve seen any conspiracy theory movies involving Freemasons or other secret societies, you probably remember numerous references to the Great Seal of the United States on the reverse of the one dollar bill. Stories about secret societies make for great movies but real life is probably less glamorous (it always is!). I thought it would be interesting to look at the seal, as many have done beforehand, and explain a little of the imagery.

The image on the left, with the pyramid, is considered the reverse (back) side of the seal. The image on the right, with the eagle, is considered the obverse (front) side. In 1776, Congress established a three-person committee to design the Seal, but they never completed the task. Over the next six years, two more committees were formed until a final design was assembled by Charles Thomson, secretary to Congress, in 1782.

Obverse Side

The most prominent part of the Seal is the bald eagle, representative of liberty and freedom. In his talons are an olive branch (the strong right talon) and a bundle of thirteen arrows (the weaker left talon), with the eagle always looking towards the olive branch. The olive branch represents peace while the arrows represent war, thus representing the fact that the power to declare peace and war were the right of Congress alone. The thirteen arrows represent the thirteen colonies and strength in unity. On the eagle’s chest is a shield with thirteen red (6) and white (7) stripes supporting the blue, signifying that it is the states (stripes) who support the federal government (blue). “E pluribus unum” (Out of many, one) is written on the ribbon clutched in the eagle’s beak, reinforcing the idea that the federal government comes out of the authority of the states. Finally, the constellation of thirteen stars breaking through the clouds signifies that this new federal government, with thirteen states, should take its place among the other sovereign nations.

Reverse Side

The reverse side is less exciting but has several bits of imagery worth checking out. First, of course, is the pyramid that dominates the Seal. The pyramid represents strength and duration, much like the great Pyramids at Giza still remain. The pyramid has thirteen levels, though that was explicitly called out in the original design. Atop the pyramid is the Eye of Providence, or God, to watch over. Over the eye, there is the Latin phrase “Annuit Cœptis,” which loosely translates to “favors undertakings.” It referred to Providence, or God, favoring the undertakings of the United States. The other Latin phrase, Novus ordo seclorum, translates to “New Order of the Ages.” Finally, the Roman numeral MDCCLXXVI, at the base of the pyramid, translates to 1776.

Fun Facts

1. The obverse side of the Great Seal is used to emboss the design onto Treaties and other official documents and stored in the Exhibit Hall of the Department of State.
2. Benjamin Franklin wanted a wild turkey instead of the eagle, but that never made it into the final design.
3. The Secretary of State is the official custodian of the Great Seal.
4. In the original design submitted by one of the Great Seal committees, the eagle was a phoenix. The phoenix represented how the United States rose from the ashes of the Revolutionary War against England. The phoenix, however, never appeared on the official Seal.
5. The Seal didn’t appear on the dollar bill until 1935.
6. The shield on the Seal has 6 red and 7 white stripes while the United States flag has 7 red and 6 white stripes.
7. On many flags and seals with shields, the shield is often supported by other figures. It was important that the shield be supported by the eagle, indicating the United States ought to rely on itself for support.
8. God is refered to as Providence in the closing sentence of the Declaration of Independence: “And for the support of this Declaration, with a firm reliance on the protection of divine Providence, we mutually pledge to each other our Lives, our Fortunes and our sacred Honor.”
9. Novus ordo seclorum, New Order of the Ages, comes from the fourth Eclogue of Virgil. Virgil was a very famous Latin poet and the Eclogues were one of three of his major works.
10. The obverse side of the seal is very similar to the Seal of the President of the United States. There are some minor differences but the general imagery is the same with one exception. Until 1945, when President Truman signed Executive Order No. 9646 and specified the design of the Seal, the eagle faced right and towards the arrows.

Hope you enjoyed the trivia!

(Updated 1/5/09) High yield savings accounts are the rage these days, with people pouring billions of dollars into banks and certificates of deposit. A few years ago, the only online bank with a high yield savings account was ING Direct. The first time I saw them I was a little apprehensive - an entirely online bank? But they were FDIC insured and all turned out well. Since then, dozens have popped up to offer high yields because they run leaner than traditional brick and mortar banks. No branches, no tellers, no managers, no paper statements - all result in higher yields.

I’ve compiled a list of the best of the best FDIC insured (now up to $250,000 through December 2009) banks below.

High Yield Savings Accounts Rates

* Everbank offers 3.76% promotional rate for the first 3 months, then 3.09% thereafter.

As a New Yorker and a product of television in the 90’s, I got a heavy dose of Seinfeld. If you watched any television in the 90’s, chances are you saw a fair amount of it too. Whether you were a fan or not, one of the show’s many topics leeched out of TV land and into normal society - the Costanza wallet. For those who don’t know what it was, it was the receipt-packed wallet that was so full, George Costanza had to even it out by sticking napkins in his other back pocket. If I didn’t clean out my wallet every once and a while, it would certainly grow to a size that rivaled Costanza’s. (by the way, if you need a rubber band to hold your wallet together, you have way too much stuff)

That being said, the holy grail of wallets now is that of a thin wallet. A wallet that doesn’t burst at the seams and carries only that which you absolutely need on a daily basis. Let’s be honest, you don’t really need to carry all those cards, receipts, and a fat stack of cash every day. Why not invest in a thin wallet?

Why You Need A Thinner Waller

By carrying less, you force yourself to plan. Thinking about going to lunch this Friday at your favorite restaurant? Better plan for it by putting that frequent diner card in your wallet. Need to buy a shower curtain at Bed Bath & Beyond? Snatch up one of those 20% off coupons. By thinking about what you’re carrying, you’re forcing yourself to plan your spending. By forcing yourself to plan, you reduce the number of impulse decisions. By not carrying everything, you give yourself an excuse to avoid making those impulse decisions. In the end, you save a little bit of money in the process.

Thin wallets might help your back. I’ve never had a wallet that was as wide as Costanza’s so I can’t claim that carrying a thin wallet will help it, but it’s certainly more comfortable. There are times when I feel like I’m sitting on a small book, so I take it out and stick it in my jacket. A thinner wallet really is more comfortable to sit on.

Thin wallets can fit in your front pocket, making them more secure. When we went to England, I pulled a lot of non-essentials out of my wallet. There’s no reason to bring extra credit cards (I brought the Capital One card I deemed the best international credit card and an American Express) or any of those frequent dining cards either. With a thinner wallet, I could easily put it in the front pocket of my jeans, a harder pocket to pick.

How To Slim Down Your Wallet

Have I convinced you? If so, here are some tips on how to slim down your overweight wallet:

• Get a smaller wallet: This seems obvious but it’s often not the first thing people think of. The less space you have, the less stuff you can carry. You can always jam pack the billfold area with receipts but with fewer pockets, you carry fewer cards. Your former fat wallet may not take kindly to being thinner, much like rapid weight loss leaves a little extra, your wallet may have become irreparably stretched to the point that fewer cards means the ones that are left slip out.
• Clean it out regularly, like every day: Whenever you get home, open your wallet and clean it out. By keeping it clean, you ensure it will have a nice long thin life. Once you get into a habit you won’t consider it a chore (it can’t take more than a few seconds).
• Carry less cash: Carrying a lot of cash might make you feel powerful (it’s a proven psychological fact) but it’s riskier. If you lose cash, there’s no recourse. Credit cards offer protection (and cash back). They also take up less space.
• Carry only those credit cards you need: You don’t need more than a couple credit cards, the rest is just a waste of space. This is where you need to decide if you prefer the maximum cash back, or a thinner wallet. This is also where you can do a little extra planning too.
• Skip photos: I’m sentimental and keep a photo of my wife and I when we were “my girlfriend and I.” I still have it but you might consider removing the photos you have, how often do you look at them? This may be risky to admit, but I don’t look at it all that often.
• Recycle receipts: If you reconcile your receipts, you should put them in a pile next to your computer and not leave them in your wallet.
• Get keychain reward cards: A few years ago, stores began to put your reward or loyalty card’s barcode onto little tabs you can attach to your keychain. Use those instead of the card itself and save some extra room in your wallet.

The mythical thin wallet has many strong suits and very few weak ones, give it a try for a week and see how much better your back feels!

(Photo: shareski)

The Big Mac Index is the Economist magazine’s fun little twist on what economists call Purchasing Power Parity. Purchasing Power Parity is the idea that a particular amount of any currency should buy the same amount of “stuff” in every country and that, should it not, the currency should regress back to the mean of being able to buy that same amount of stuff. In this little analogy of Big Macs, the MacDonald’s Big Mac is the “stuff” and a dollar’s worth of Big Mac should be equal to a dollar’s worth, in another currency, of Big Mac, in that other country. When it isn’t, then you have an overvaluation or undervaluation of currency. It really helps people understand the otherwise complex topic within exchange rate theory.

Well, it’s not the only one, though it’s certainly the most well-known since it was the first and because MacDonald’s is so ubiquitous. There’s the popular Starbucks latte test, the Coca-Cola index, the sushi index, and my favorite one of them all, the Steakhouse index. Mmm… steak.

(Photo: jimmy_macdonald)

Doom and gloom are on the menu and you have to order something. Fortune tapped eight brilliant minds to ask for their outlook on our dismal economy and none gave a positive answer. There are some big names on this list like PIMCO’s Bill Gross and Oppenheimer’s Meredith Whitney, definitely give this one a scan because they give some very detailed answers. This isn’t a fluff piece.

Now that you’ve been scared, here’s a Money Magazine piece with financial advice from six financial advisers. These won’t be names you’ve heard of before but under each picture is how long they’ve been advising, the assets their clients hold, and what they may be known for. When others are panicking, stay level-headed.

Gary Bonner sent me two great articles by Victor Hanson: The Hysterical Style and Ten Random, Politically-Incorrect Thoughts. They’re both good reads too.

Here’s a bonus link for this week:

Finally, for those with a less than stellar fraud detector, Ben Popken of The Consumerist penned an article for Reader’s Digest this month, How to Avoid A Scam. “When times get tough, the cons get cagier. The latest scams, shams, and devious flimflams to avoid.” Check it out.