Personal Finance 
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Welcome Marketplace Money Listeners!

Welcome, welcome, all of the great listeners of Marketplace Money! A few weeks ago I had the great pleasure of chatting with Tess Vigeland of Marketplace Money, Lynnae of BeingFrugal.net, and Steve of Brip Blap. After some production to make me sound smarter and more eloquent, it made the show for this weekend (and on quite an auspicious day no less) much to my wife’s delight!

About Me & BFP

In the interview, we all talked about why we started writing about personal finance and you can read more about me and this site in general in the About page.

One of the fun topics I write about is a series I call the Devil’s Advocate series. In this fun series I argue against conventional wisdom in the hopes that it will help illuminate why conventional wisdom is even conventional. I’ve tackled subjects like how you shouldn’t invest in the stock market or why you shouldn’t get married (my wife loved that one) and even why you shouldn’t do 0% balance transfer arbitrage offers. And, if you’re curious to read about our home buying journey, I’ve chronicled the whole homebuying process for the internets reading pleasure!

And that happens to be one of the topics we discussed on the show, whether borrowing money from credit cards and doing 0% balance transfers is worth it. I like to look at all the clever ideas and tricks people employ to get a little more out of their dollars (also the motivation behind starting the Festival of Frugality) and one of those techniques was balance transfer arbitrage. Considering the turmoil in the credit markets, no fee 0% offers are now nearly extinct and I’ve moved onto looking at just finding the best savings account to put my money in while the markets calm down (and I’ve picked up gardening!).

Please Subscribe!

I hope that you enjoy your time here and consider subscribing to receive free updates of the site. You can do so with your favorite RSS reader or get posts piped directly to your email each day. I update at least twice daily (you’ll only get one email a day) and I don’t use the email for anything other than to send out these updates (oh, I giveaway stuff too and email subscribers are automatically entered). You can sign up by entering your email below and clicking the submit button.

And if you ever want to reach me, you can email me at the address in the upper right or use this handy contact form. Thanks!


 Your Take 
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Your Take: Are We In A Recession?

Gray's Papaya: Recession Special!It used to be that the measure of a recession was two consecutive quarters of negative GDP, something that we haven’t done yet. However, with all the bad financial news (enormous national deficit next year, 1 in 171 homes being foreclosed, record unemployment, stock market woes, financial companies taking massive writedowns, domestic car manufacturers tanking, etc), it’s sure feels like a recession despite the official measures telling us otherwise.

(As an aside, the two consecutive quarters rule is really a trailing indicator. You’re in a recession when the GDP is contracting but you don’t label it a recession until after two quarters, so you live it before you label it. Makes the term kind of useless, doesn’t it?)

I’m curious to know whether you think we’re in a recession. I posed the question to Chris Farrell, Marketplace Money’s personal finance guru, and he said:

I am in the camp that believes we are in a recession. Yes, government statisticians recently reported that the economy is expanding at a 1.9% average annual rate. And it takes the National Bureau of Economic Research–the official arbiter of when and if the U.S. economy is in recession–between 6 month to 18 months after a downturn begins to label it as a recession.

Still, the job market is weak, and getting worse. Layoffs are hitting more industries. Home prices keep spiraling lower, and we haven’t seen bottom yet. The credit turmoil in the financial system is spreading, most recently reaching the credit card market. Consumers are strapped for cash, with higher energy and food prices sapping budgets. Exports are one of the few bright spots in the economy.

What’s more, official history is being revised downward. It’s intriguing to note that when the government revises previously published statistics the figures are usually worse than initially reported. For example, the fourth quarter of last year was recently revised down to negative growth: -0.2% from the previous 0.6%. Mike Mandel, chief economist at Business Week, has been making a strong case over at his blog that the consumer spending figures are too high.

It feels like a recession. It looks like a recession. And eventually I think it will be labeled a recession.

(Photo: bobjagendorf)


 Your Take 
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Your Take: Company “Wellness” Too Invasive?

The first company I worked for had a dedicated department, of maybe two or three employees, focused entirely on “employee wellness.” They offered services like body fat analysis but didn’t go as far as this company in requiring them. Personally, I think the motivations are good but I can see how people would think that’s invasive.

My company didn’t require you to participate in their programs but they did provide incentives for doing so. The medical insurance provider was called Lumenos and they offered a program in which you were given $1,500 a year to cover your medical costs. If you didn’t use the funds, it was rolled over into the next year. If you did and your costs exceeded $1,500, you covered the costs up to $2,000 (an additional $500), and then traditional health insurance would kick in (10% co-pays, etc.) beyond $2,000. It worked fantastically well for young professionals who, in general, have little in the way of medical costs. They incentivized participation in wellness programs by offering medical coverage money. Fill out a health survey and get $20. Participate in this program, get $25. It wasn’t required, you didn’t really get “paid,” but it boosted participation and got people thinking about wellness.

I think requiring it would’ve caused a backlash.

Either way, wellness programs are boosting the bottom lines at businesses by cutting medical costs. Everyone knows preventative care is cheaper than treating illnesses or conditions on the other end, everyone including prescription drug and treatment companies (fire away!). This was the topic of a Marketplace segment a couple weeks ago and they found that at Gilsbar, costs are lowered when you introduce preventative care measures. Here’s a quote from the segment:

Doug Layman (executive VP at Gilsbar): Our health plan costs are 6 percent lower than they were five years ago. Our prescription drug costs, which everybody complains about, is 45 percent lower than they were five years ago. And 85 percent say their benefits package is better today than it was five years ago. Yet we’re paying less, and we have happier, more productive people.

That’s one of the reasons why countries with nationally subsidized health care programs pay far less than we do – preventing something is cheaper than curing something. It’s a big joke that Americans pay the most for health care yet don’t find themselves with the best care (in fairness, I’ve heard the argument against that is that our best of the best is far superior to other countries but the “average” care received any one member of the population is below other countries).

Getting back to the wellness programs, does your company offer something like this? If so, do they require anything or is everything optional? What would you think about being forced to do a body fat analysis? What if you had to pay more based on the status of your health?


 Personal Finance 
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Weekly Roundup: Interviews

This week I had the pleasure of chatting with Tess Vigeland of American Public Media’s Marketplace Money show, BeingFrugal.net’s Lynnae and Steve of Brip Blap for an upcoming segment on personal finance bloggers. It was a lot of fun and an honor to participate in a show that I listen to every week (I listen to the Morning Edition and daily show every day, Money is only on during the weekends) and a lot of fun to chat with Lynnae and Brip Blap . I don’t know when it’ll appear but I’ll keep you all posted.

Why not start the roundup right with a couple posts from Lynnae and Steve? Steve’s latest post is about work life balance. We deal with it here as well, my wife has a 40 minute commute that artificially inflates her “at work” time by an hour and a half each way. Fortunately her office is moving to a new facility five minutes away, but for many the answer isn’t that easy.

Lynnae has a great vacation tip for her Tightwad Tuesday series: rent a vacation home. You pay a little more but you get a lot more than if you go the regular hotel route.

Interviews!
I also had a little three question interview with Shark Investor in which I bared my soul, shared all the secrets I knew, and gave away money. I actually didn’t do any of that but I did answer three questions and had a good time doing it, go check it out. :)

Preparation Is Crucial
What separates the people who are financially successful and those that find themselves always mired in debt? Preparation. Money Saving Mom is a blog I just discovered that I absolutely love. Besides compiling all the great couponing deals in an easy to read manner, she’s also what I consider financially successful. I have no idea what her bank account balance is but it’s not important because of how she responded to a negative comment on her site. A commenter lambasted her about van and how she should just buy a new car. She could buy a new car, but she hadn’t planned or prepared for it… so it’s not going to happen. “But here’s the deal: while we have money in our bank account, we don’t have money saved or allotted for a new vehicle or even a used vehicle.” That thinking separates those that are financially successful and those mired in debt.

Do Not Mix Business With Friends
A post on Alpha Consumer caught my eye this week, it was a sad story of a friendship gone wrong in a business transaction. If you want a legal perspective on the case, Kim called on Kathryn Dickerson, a partner at Smolen Plevy, a Vienna, Va., law firm.

If you want my opinion, it’s that if you mix friendship with business, be very clear in expectations and get everything in writing to avoid conflicts. I’ve heard many a story where friends thought there was an understanding… until there wasn’t, because nothing was written down and memories fade.

Unlimited Usually Doesn’t Work Out
We, as human beings, are really bad at predicting usage and so this Consumerist article about NYC Unlimited Metrocards, which is highlighting a NYTimes article, isn’t that surprising. We usually overestimate how much we plan on using something and so the a la carte option, of paying as you go, may usually work out better than the unlimited option. Ahhh we are so predictably irrational!

Here are a few other great posts in the blogosphere you should check out:

Have a great weekend everyone!


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