When I was younger, I used to play Sid Meier’s Civilization all the time. One of the best parts of the game was trying to build one of the Seven Wonders of the Ancient World because it gave your civilization a distinct advantage in the world. My personal favorites were the Lighthouse (it gave your ships a farther range and they wouldn’t get lost) and the Hanging Gardens of Babylon (I believe each one of your cities now had a Granary), but fun part was being exposed to these wonder in the first place.

Since then, there have been more “Wonders of the World” like the Natural Wonders of the World, 7 Wonders of the Modern World, so why not create a Seven Wonders of the Personal Finance World? Hokey, I know, but it’s my opinion that, if you can, you should “visit” every single one of these wonders.

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Credit card companies are just like every other business. There are essentially three concepts to understand when dealing with a business, especially credit cards:

• They exist to make as much money as possible,
• They have relatively well documented rules and operating procedures,
• They’re willing to break #2 in pursuit of #1.

So, to that end, here are 7 unwritten and often forgotten credit card tricks or “secrets” (I hate the term “secrets” because how much of a secret can they be if I know it?) that may save you a few bucks someday. If you don’t learn a single secret or you have a secret of your own, please let me know! Secrets are better when you tell everyone!

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With the growing number of identity thefts, given the age of computers and our comfort with electronic commerce, a lot of identity theft insurance companies have been hitting the news lately. Are they really worth it? Is identity theft so prevalent that you would actually need insurance to protect against it? I personally know at least one person who has suffered from identity theft and it cost them quite some money and a lot of their time, easily two or three months of headache and hassle, to clear everything up. Looking at the numbers, is it worth it to pay a company like Lifelock $99 a year for up to $1,000,000 in identity theft insurance? (Many companies and banks offer identity theft insurance but Lifelock appears to have the most bang for your buck from the ones I’ve seen; a bank such as Wells Fargo offers a mere $10,000 in protection for close to $160 a year)

Not entirely sure. According to the FTC, in 2006, the worst state for identity theft was Arizona with 147.8 victims out of every 100,000 persons, or 0.15% chance of being a victim of identity theft. It is also estimated that each victim spends approximately $1,500 and 175 hours to clear their good name. If you estimate that each hour costs $30 (for an annual salary of $60,000), then the total cost is approximately $6,750. Thus, the average annual expected cost of identity theft per person, as measured by probability of being a victim multiplied by cost, is $10.13. Thus, a service like Lifelock is not “worth it” in the strict financial sense.

I poked around the Lifelock website to what they actually offer and they tell you, plain and simple, what they do and the fact that you could do it for yourself for free (I add how in the parenthesis):

1. Tell each of the credit bureaus to set fraud alerts on your accounts. (You can do this yourself by calling the bureaus and requesting it)
2. They tell the credit bureaus again every 90 days. (Again, you can do this yourself)
3. They request your name be removed from junk mail lists. (You can do this free yourself at OptOutPrescreen)
4. They request free copies of your credit reports. (You can do this free yourself at AnnualCreditReport)
5. If your identity is stolen, they will spend up to $1,000,000 to help you get it back. This is the only thing you can’t do yourself… well you can self-insure but you won’t have $1M backing you up.

The most interesting thing about the site is the fact that the CEO, Todd Davis, plasters his social security number, 457-55-5462, all over the site. Assuming that is his social security number, that’s a pretty bold thing to be doing and a strong “money where your mouth is” type of statement that I can admire. Of course, that alone isn’t a reason to try the service, doing a calculation like I did earlier, which showed this particular $99/yr service is not worth it, is how you should be making your decision. That being said, putting your social on the web like that is certainly a great marketing ploy.

(Another company that offers a very similar service is TrustedID but it’s $12.95 a month, making it a less attractive offer; but I mention it in case you wanted to get a better feel for the industry. They lack the catchy marketing ploy of plastering their CEO’s social security number on their site.)

Verdict: Identity theft insurance isn’t worth it when you look at the numbers but sometimes it’s about peace of mind. As for me, I won’t be getting it anytime soon unless the probability of identity theft goes up significantly.

One of the things I’ve been looking at lately, given the upcoming wedding, was how to optimize our insurance policies because, as we all know, multi-policy discounts are one of the best ways to get a discount. Two auto insurance policies with one insurer generally costs less than two separate auto insurance policies with two different insurers. In actuality, only the medical and auto insurance policies can be optimized because you don’t really share any others. Anyway, I was taking a look at our options and here’s what I came up with.

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Part of the fun of setting up the Festival of Frugality is that I try to read each of the festival posts and at least hit up a few of the posts being linked to when they catch my eye, thus far I haven’t seen too many off the wall tips but every so often you see a few that really don’t make much sense!

So, for your reading enjoyment, here are some ridiculous tips and my thoughts about them. Some of these are from past festivals and some are just tips I’ve heard over the years:

• Buying two-ply toilet paper and pulling the sheets apart – Ignoring the fact that you can just buy singple-ply toilet paper, the time it takes and the “risk” involved in using single ply is too high to make this really worth it… right?
• Buying one entree and splitting it, buying dinner and asking for a take-out box to split it immediately – I understand that meals have gotten bigger and bigger but seriously, if you want to save money, cook for yourself!
• Skip on insurance – Some insurance policies aren’t worth it but all those folks who argue that you don’t need the big insurances (auto, health, and homeowners/renters) are fools. Sure, if nothing catastrophic happens, you’ve saved yourself a few bucks… but if something does happen, you could be out a lot of money. The funny thing about accidents and disasters is you don’t see them coming.
• Tip less than the customary 15% – If you get good service, why punish the server by saving a few dollars and short changing them on their duly earned money? If you want to save this money, don’t go out to eat!
• Dumpster dive for stuff – I’ve taken a television out of the trash (it was in an apartment and someone left a TV by the garbage chute, which was fifteen feet my from my apartment, but I would still calling me fishing it out of the trash despite not having ever set foot there) but I’ve seen suggestions that you take food (and coupons and other assorted items) out of a dumpster. Dumpsters are dangerous (ever see the signs, don’t play in or around the dumpster) because people throw all their crap in their, sharp crap too, chemical crap, and you don’t really need other people’s garbage that badly. If I was a dumpster diving advocate, I’m not anymore.

Gems from Consumerist Commenters

• BOHEMIAN: Save your bar soap slivers and putting them all in the mesh bag you get onions in. I take my old bar of soap and smash it into my new bar of soap, but saving the slivers so you can reconstitute it with other bars? That’s a little too much.
• MAMEDENNIS: Driving 30 miles to save twenty cents – for groceries, for gas, etc. I know plenty of people who do this and it’s ridiculous! It’s not like media hasn’t smashed it into your head that gasoline is expensive not to mention your own personal time.
• RECTILINEAR PROPAGATION: “Taking flowers from funeral homes to give to your wife.” I think the ridiculousness of this one is pretty obvious.
• CHICAGO7: Expanding on the original splitting two-ply TP, Chicago7 has this to say – “Save on toilet paper – use your hand!”

What are some of the ridiculous frugal or money saving posts have you heard? What about some that you may use yourself that others have called ridiculous? Share share!

Today, I’m going to tackle one of the most seemingly unsurmountable pieces of personal finance advice out there: you should have an emergency fund. Before you read on further, this is a Devil’s Advocate post, which means I’m going to try to argue the other side even though I don’t believe it. So… before you read on, let me be absolutely clear … you should have an emergency fund, but if you want a few reasons why you shouldn’t… here they are.

First off, let me go over what I consider an emergency fund. It’s money you set aside for a real bad rainy day in a bank account, whether its a high yield online savings account or just a regular old savings account at your local bank; it must be in an account where the principal is protected. Putting it in a brokerage account, that’s not an emergency fund because the principal could evaporate on a really bad stock market day. So, why don’t you need an emergency fund…

Most Emergencies Are Small…

or if they’re big, they’re really really big. So, in most cases the emergency fund you have will either be way too much or not enough to handle the emergencies of life. If I were to guess the number one emergency that pushes someone to dip into their emergency fund, I’d say it would have to be for auto repair. Even if you follow the most aggressive recommendation of three months, a few hundred bucks for an auto repair probably won’t do too much damage to the emergency fund so your money would probably be better served in a brokerage earning market appreciation rates than whatever minimal rates you’d get in a savings account.

Credit Cards Can Get You By

If you go by the rule that you need 3/6/9/12 months of salary, you probably have that much on your credit cards. In fact, when you do face an emergency, it’s probably a good idea to pull out the plastic first even if you have the emergency funds because you can probably get at least 1% in points from it.

You Have Insurance

You probably pay hundreds of dollars a month in auto, home, life, and medical insurance; so why do you need thousands of dollars saved away for emergencies? Bust a tooth? Use dental insurance. Flooding in your house? Home insurance. Crash your car? Auto insurance. While it certainly makes sense to have a few dollars saved away, having a year of your salary sitting in an account earning a sad rate of return is simply not a strong financial decision.

Ultimately, what you want is to strike a balance between having no emergency fund and having too much earning a low rate. Certainly, since this is a Devil’s Advocate post, I think that having an emergency fund is a very strong financial decision (despite what I said in the last reason) and one that everyone should definitely start once you can.

This DA suggestion comes by way of Foobarista, whose neighbor recently had their furnace fixed “for free.” A home warranty is a warranty on the appliances and mechanical systems of your home, such as a furnace, and is most often offered for the first few years of a home and most people suggest that you don’t get it because of its cost. When you consider what can possibly break in your home and how much the deductible is, there aren’t going to be many things breaking that the warranty will cover. It will, however, become useful if something catastrophic happens which is the point of insurances anyway, right? So, why should you get a home warranty?

You’re Likely Cash Strapped Right After Closing

It’s very likely that you won’t have a lot of cash on hand right after closing because you’ll put as much as you can towards the initial downpayment, so it’s crucial that you get some sort of protection if there’s a larger than marginal chances something bad could happen. Now, if all of your appliances are brand spanking new and the building is brand new, you can probably skip on the warranty. If you have a 15 year old water heater or a 20 year old HVAC, you might want to consider the relatively small cost of the home warranty as a hedge against a bad situation. Now, a busted water heater or failing HVAC isn’t a hazardous situation (you can work around both of those), but imagine if your roof collapsed or if you discovered termite infestation missed by the inspector – now you’re talking dangerous situations you need to have resolved ASAP (assuming the warranty covers it). Different warranties cover different things, so if you do get one, be sure to double check what it covers.

Peace Of Mind Is Priceless

You might say that this is what the insurance companies want you to believe, that you’re not buying insurance but instead buying peace of mind and you’d be right – it’s what insurance companies say but it doesn’t make it untrue. Some people worry more than others and for those folks, insurance buys them peace of mind and likely a few more years in their life, don’t discount that. Peace of mind is a wonderful thing when you don’t have it and if you can get it on the cheap, by all means get it!

Remember, this is a Devil’s Advocate post so the conventional wisdom says you don’t want a home warranty (the deductible is killer! $100 deductible is huge when your payouts are counted in the hundreds) so do your research, I just wanted to offer up the other side for debate.

On your typical renters or homeowners insurance policy, if someone comes into your house and steals your television, you’re covered. The insurance company will either give you money for the value of the television or give you its replacement value (purchase price minus depreciation) and while that is a headache to deal with, your television is covered. That isn’t the case for jewelry and so we’ve decided to get a jewelry rider on our homeowners insurance policy to protect the jewels that I’ve showered my betrothed with.

Erik interjects (from the comments below but they’re very important) and corrects me on the fact that jewelry is covered, the limit is just usually low such that a rider is necessary to fully insure them:

… there IS coverage for jewelry that is stolen. Usually, your policy puts a limit on certain categories of personal property like jewelry, guns, cash, business property, and other special items. Like on my policy, it covers jewelry up to $1000, but only in regards to a theft. God forbid, if you have a huge fire in your home and you had jewelry damaged, then it would be covered up to the full amount of your coverage C limit. Because this limit is so small for jewelry theft, that is why everyone should schedule their expensive jewelry onto their policy, but don’t go thinking that your jewelry isn’t covered at all on the policy.

I thought the appraisal process would be akin to the home appraisal process where the lender wanted their own appraiser doing the assessing. Not so with jewelry. See, with a home appraisal, the lender wants to know the value of the home with respect to the area that its in. They already know the stats (square footage, bedrooms, bathrooms, etc.) and they’re just getting them in context, which is a big part of the value of a home. With jewelry, they don’t know anything and they’re just looking for a certified jeweler to record the information because if a loss occurs, they will look to that appraisal document to assess a current value. What the jeweler appraises the jewelry for is unimportant, except to determine a ceiling really.

Another interesting note for those of you who are recently engaged and thinking about getting insurance, I was able to get the jewelry rider on my homeowners because my fiancée lives at the same address as I do. If she didn’t, it’s technically her property and she would have to get a rider on her policy (if she had one) or she would have to have to get personal property insurance and get it linked to my account.

I found out that you can get insurance without having the jewelry appraised but you can’t file a claim without the appraisal documents. So, this weekend we plan on finding a jeweler to do the appraisal, which will cost something around $50 or so I imagine (I’ve done no research on this except read this little post), and then we’ll get ourselves that rider.

Diamonds better be forever.