Carnival of Wealth, Only 14 Shopping Days ‘Til Christmas Edition

December 10, 2012

 

Whatever the fabulous Lauren Graham got paid for licking that disgusting man’s ear, it wasn’t enough

 

Buying stuff for Christmas is ludicrous, as we point out every year, but if you do insist on buying gifts, here’s the first of what will be several discreet but annoying plugs for our book in today’s CoW. (Also available on Kindle, of course.)

The CoW. It stands for Carnival of Wealth. It’s personal finance blog posts, ranging from the sublime to the unreadable. A lot of entries this week, so let’s get started:

Gripping writer, Certified Financial Planner® and relentless if obsessive champion of the mentally substandard Roger Wohlner at The Chicago Financial Planner says you should roll your 401(k) over to an IRA when switching jobs. Read the word “option”, do a shot. Also, performing repetitive actions with no payoff is surely a sign of some sort of cognitive dysfunction, isn’t it?

(UPDATE, 9:28 a.m. PST: He’s still not done.)

Do most personal finance bloggers get paid by the word? It’s amazing how many sites (or if you prefer, “site options”) need an editor. If wordiness is your thing, the 2nd half of this double shot of verbosity comes from Harry Campbell at Your PF Pro. He lives in San Diego, recently used a car-sharing service, and has exciting adventures to share with us.

Big Cajun Man at Canajun Finances reminds you that credit card balance interest doesn’t take vacations. (Or as they call it north of the border, “holidays”.) He spent at least 2 minutes writing the post, the least you can do is read it.

A new entrant? A new acronymic entrant, no less. ACYCWTTAOST. (That’s “A Control Your Cash welcome to The Art of Simple Trading.”) TAOST joins us in the middle of their series on trading rules, starting with #5: “Become a Loser”. Some of you are already there and presumably waiting for #6. Seriously though, TAOST suggests that winning leads to complacency more than losing does. We learn from our mistakes. To quote Charlie Brown, “…that makes me the smartest person in the world.”

Speaking of acronyms, the ingenious PKamp3 at DQYDJ.net reminds us of something most of our masters in Washington have yet to figure out: wealth ≠ income. A tax on the latter does not necessarily impact the former. Even that overrated and hypocritical multibillionaire Warren Buffet* calls for a higher income tax for no better reason than to accede to perceptions. (As Rush Limbaugh pointed out, Buffett isn’t calling for any kind of wealth tax. Any idea why?)

Ken Faulkenberry at AAAMP Blog is the kind of guy we would want dictating our nation’s tax policy. This week our fellow small-government acolyte explains what sustainable competitive advantages are and how important they are when looking for companies to invest in.

We like investing. We like kittens. Do they go together, or will this be like combining sex with sriracha sauce? Let’s find out with this post from Megan Russell at Marotta on Money, an old CoW entrant with a new site. The post is less about kittens than it is about minimizing capital gains taxes, and we swear to God if we hear someone use “gift” as a verb one more time we might have to drown a couple of kittens to illustrate our anger, but this post stands on its own.

(Post rejected because it came with the following “tease”, written by its author:

One financial topic covered on virtually every personal finance blog is how to save money at the grocery store. That makes complete sense since it is where we spent a good chunk of our money each month.

In other words, “I’m going to write about something that I acknowledge has been run into the ground.” That’s great work.)

Somebody good? How about a sequence of good posts? Starting with Andrew at 101 Centavos, who demonstrates in undeniable detail what we’ve been railing about in general terms since the day we started this blog: your education needs to pencil out. Or even more fundamentally, you can make good money without spending 4+ unproductive years in a classroom. As usual his post is gilded from title to closing sentence, but this excerpt got the biggest share of our attention:

Harvard University’s graduates are earning less than those from the South Dakota School of Mines & Technology after a decade-long commodity bull market created shortages of workers as well as minerals. 

Harvard grads make about $54K/year (when they get an offer), while bright-eyed future geologists come out with almost $57K.

“It doesn’t seem to be too hard to get a job in mining,” said Jaymie Trask, a 22-year-old chemical-engineering major who was offered a post paying more than $60,000 a year at Freeport- McMoRan (FCX) Copper & Gold Inc. “If you work hard in school for four or five years, you’re pretty much set.”

When your high school senior daughter talks about going to Mount Holyoke to “learn” drama, print out Andrew’s post, soak it in wet concrete, let it dry and hit her on the head with it until she realizes the error of her adolescent ways.

Ooh…look who’s in his 2nd week of repentance after months of steadfast refusal to join the CoW party! Joe at Timeless Finance has realized the error of his ways, and brings us yet another brilliant post (complete with a GIF of Vince McMahon at his McMahoniest.) Some seriously indebted and overeducated (see previous entry) dingbat – December’s (Financial) Retard of the Month frontrunner, in fact – took time out from questioning other people’s fiscal decisions to obtain a credit card with a $700 annual fee. Not only is she an imbecile, but the 50 and counting comments below the post reinforce why.

So mandating that Americans buy health insurance, coupled with letting 11-year-old tax cuts expire, is going to damage the economy? Wow, it’s not as if anyone with a rudimentary understanding of economics couldn’t see that coming. (“Rudimentary” is something the chief executive aspires to.) Don at My Dollar Plan explains how to find a soft patch of mahonia shrubs to land on when we all go over the fiscal cliff, and how to avoid the jumping cholla cacti. God, what a depressing topic. And it’s not as if we couldn’t have avoided this. But yeah, Ron Paul was the crazy one.

How about more gold? Even if she couldn’t write, and she can (magnificently), Paula Pant at Afford Anything would still serve as a superb example of what to do with your money and how starting with ordinary means means nothing. The peripatetic Paula vowed to hold off globetrotting for 2012 and instead invest. Not just invest, but invest every penny she made. She’s 3 weeks away from finishing her task, and presumably 22 days away from visiting Iceland or Gabon or St. Helena or somewhere.

You want to learn about money, but you don’t know where to start? Financial professional Neal Frankle at Wealth Pilgrim recommends you go slowly. Don’t read every financial blog out there, because the rush of information will overwhelm you. (That, and 99% of them are detritus.) Neal recommends you spend no more than 15 minutes a day reading blogs, maybe an hour a day reading personal finance books (here’s one to get you started), and no time at all staring at your feet and waiting for the Earth to turn.

Darwin at Darwin’s Money has lice, in a manner of speaking. And thinks “lice” is singular, but we’ve done enough remedial grammar instruction today.

Fun fact for American readers: How many banks are there in Canada? 5. Teacher Man at Young & Thrifty knows that there are advantages to a system with few players and little overextension. Canada’s conservative banks have been buying up distressed U.S. assets, too. And not a moment too soon. (Do a little research and find out what the acronyms stand for in TD Ameritrade and BMO Harris.) We Americans should have given Canada’s Big 5 the charred remnants of Goldman Sachs and Lehman for pennies on the loonie when we had the chance.

Michael at Financial Ramblings reminds you that if you’re looking to invest in dividend stocks, the date (or frequency) of payment should be the least of your concerns. Some people believe that a quarterly 2¢ dividend is better than an annual 8¢ one, for some reason.

Odysseas Papadimitriou at Card Hub makes some staggering credit predictions for the coming year. The fiscal cliff won’t splatter us all? Square and Isis won’t completely supplant whipping out our trusty MasterCards? We agree with most of his predictions, and have our fingers crossed on the one about credit becoming more available.

A few weeks back, John at Wallet Blog introduced us to the concept of credit card companies forcing binding arbitration on cardholders. (Again, read your agreement.) This week, John explains how we’re at the point where the courts or Congress might have to get involved. Agreeing to arbitration not only means ceding your class-action rights, but putting your fate in the hands of an arbitrator whose “impartiality” is best contained within quotation marks.

Finally, Charles at Wallet Hub teaches you how to buy a house. It’s basically Chapter VII of our book, distilled into a handful of helpful paragraphs. (You see? This is the concision we’ve been begging for from our wordier submitters.)

That’s all we got. Check us out on Investopedia, and we’ll see you back here tomorrow.

*Everyone else misspells it, what makes us so special?

Filed Under: Carnivals Tagged With:

Our $616 Windfall Could Be Yours

December 7, 2012

 

It’s 2012. Why are we still getting mail?

This summer we wrote about the inefficiency of the live event ticket market. The primary sellers – TicketMaster and their ilk – have attempted to maximize profits by not only tacking on dubious charges and fees, but selling tickets as much as 10 months in advance of the show date. That gives said ticket distributors a chance to enjoy your money even earlier. A bird in the hand, etc.

We can’t emphasize this enough, which is why it warrants a 2nd post – buy your tickets as late as possible. (See? We can be repetitive, too! All the greats do it.) You people who claim “I like to collect experiences, not things”, whatever that means, especially should take heed here.

Like that of a lot of goods in the last decade, the market for tickets has changed drastically. The original problem was that it was a pure monopoly, or at least had most of the characteristics of one. You bought your tickets from TicketMaster, or whomever, or you missed out and panicked on the day of the event, which involved going to a scalper at the venue. And for anyone who’s ever done it, buying from a scalper feels slightly less seedy than patronizing a pot dealer or a veiny prostitute.

You don’t have to do this anymore. There’s a better way. As business author and envelope maven Harvey Mackay puts it, “There’s no such thing as a sold-out house.” Here’s how you get tickets for that basketball game/Lady Gaga concert/flea circus without tying up your money unnecessarily.

Wait until the last minute. Not literally the last minute, but close enough. Tickets go on sale this week for a concert that doesn’t take place until April? Major League Baseball released its schedule and you plan to see the Diamondbacks play the Dodgers in the final homestand of the season? Relax. Have a soda. Go for a walk. Fly to Argentina, marvel at the Andes for a few weeks.

Then, 3 (or better yet 2, but it’s hard to get there without practice) days out, hit

  • StubHub
  • eBay
  • The underrated superstar here, Craigslist.

You know how you can lose all sense of discretion when you’re enthralled by a live event, playing air drums along with Neil Peart or cheering a football team onto victory against a division rival? There it is again, that cursed right brain getting in the way and ruining our lunch. Cutting loose during an event is fine, even encouraged, but you still have to be icy and logical during the process of buying your ticket. OMG RAVENS-STEELERS GOTTA BE ON THE 50-YARD LINE NO MATTER WHAT NO MATTER WHAT I SAY is no way to commit what could be a few hundred dollars to what’s only going to last 3 hours or so, tailgating excluded.

Slow down and remember – you’re buying something extremely perishable. Getting excited about buying a car, and risking overpayment because you’re afraid it’ll be gone tomorrow, is dumb. But behaving the same way regarding an event is even stupider because…

On balance, it’s almost always a buyer’s market. Unlike the tickets in the seller’s possession, the cash in your pocket will still be worth something tomorrow. Use that leverage.

But I have to see Chris Brown! It’s the last show of the tour, and he might be in prison a year from now.

Again, slow down. You don’t “have” to see anything. And they’ll play the Super Bowl next year, too. They always do. It’s fun to think that your life becomes more meaningful if you inconvenience yourself to see a concert or a game that you think holds special meaning. Maybe it even does. But if it does, that doesn’t mean you should overpay for the privilege.

If you’ve never used StubHub, it’s straightforward. And credible, after eBay bought it and made it a wholly owned subsidiary. eBay still maintains its own ticket marketplace for some reason, and lets you see availability and prices on both sites side-by-side:

 

 

So that gives you a starting point. Another thing to remember, and this is critical:

Asking prices mean nothing.

This is a corollary to it being a buyer’s market. A seller wants $900 for a pair of tickets with an official price of $100? Good for her. She can offer them at $30,000 if she wants, it doesn’t matter. Maybe some sellers do this in the hopes that some maldextrous buyer will accidentally press the “Buy” button and create the easiest windfall ever.

(Side note: The media attention surrounding the recent “hyperinflated” prices for Twinkies on eBay. A local newspaper reporter in CYC’s hometown claimed that Twinkies were selling for $250 apiece. They weren’t being sold at that price, they were being offered at that price. You need to look at the actual auction closing prices, which were more in the neighborhood of $2.50 per, to gain any useful information here. The exaggeration was 100-fold, but isn’t that what journalism is largely about?)

Watch one eBay ticket auction, participate if you must. Once it closes, you have the knowledge that turns the buyer’s advantage into an overwhelming one. You’ll know the crucial second half of the equation, and thus where supply and demand intersect. This places the sellers at an even bigger disadvantage.

Here’s a real-life example. We wanted to see Rush play our hometown a few weeks back. And if we were going to go, we wanted to be on the floor. The sticker price for floor seats? $154 each.

By the way, we didn’t get financially independent by making it a habit of dropping $308 for a few hours’ entertainment. Instead we hit a couple of eBay auctions, 2 and 1 nights before the show. Each time we were outbid in the final seconds, which told us a couple of things:

  • There’s some sort of demand for tickets. It’s not as if we could just swoop in and lowball on an item that no one else wanted.
  • Floor tickets were selling for about 10% below cost. Which meant they’d be getting cheaper, not more expensive, as showtime approached.

We were legitimately hoping to win the 2nd auction, but that’s the point. Don’t overpay, which means don’t overbid. We set a maximum bid before we started, and didn’t raise it, no matter how tempting doing so sounded as the clock ticked down to 0.

Then we headed to Craigslist, where buyers aren’t protected as well as eBay buyers are. You might get scammed on Craigslist, but most of the people who do are idiots and are practically pleading to be taken advantage of.

Go to NameOfYourCity.craigslist.org/tix. You can select tickets sold by owners, sold by brokers, or both.

You want tickets sold by owners. It that isn’t obvious, there are several reasons:

  • An individual owner has more incentive to sell his tickets than a broker’s employee does.
  • The former is easier to negotiate with, and probably easier to research (again, covering yourself when dealing with unknown players is critical.)

There were maybe 25 sellers hawking tickets on Craigslist. We eliminated anyone who didn’t advertise what section their tickets were in. (Why are they wasting our time, and why would they waste theirs?)

That left maybe 12, all of whom we sent the same email to. “Will you sell them for (10% below cost)?” (Unless some of the sellers had been already offering them for even less, in which case we’d offer something still less than that. But no one was offering them for so little.)

A few didn’t respond, a few said their tickets were already gone, and one liar claimed that if he didn’t get his asking price, he’d just eat the tickets. That left one guy, who said that we could name our price. Why? Because he was thousands of miles away, and had physical tickets in hand.

We improvised. We suggested he call the venue’s ticket office, explain that he couldn’t go to the show and wanted to transfer ownership to someone local, and plead his case.

And damned if the venue didn’t say yes. Even better, the poor guy had bought 4 tickets – twice as many as we needed. They emailed him a PDF of all 4, he forwarded it to us, and said “enjoy the show”. Your mileage may vary – of course, you can’t assume that you’ll find that one person in a thousand who’s willing to give away $616 worth of tickets that he’d already written off.

Did we sell the remaining pair (for something around 10% below cost) and pocket it, essentially getting paid $277 to go to a concert?

Did we sell the remaining pair and give the proceeds to the original owner?

Yes, maybe, no, that’s not the point. The point is that we never would have been in such a position had we repeatedly hit “Refresh” on TicketMaster.com on the day sales opened, until we could finally purchase a pair. Again, let other people be the profit centers – not you.

Filed Under: Capitalism, Making Smart Choices Tagged With: , , ,
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