It’s hard to grease your palm with those gloves on

It’s December, therefore it must be time to read lighthearted but poignant “news” stories about how much it would cost to buy all the gifts given during the 12 Days of Christmas. Again. This wouldn’t be so bad if the same news outlets didn’t do the same piece every freaking year. And we’re pretty sure you can find some lords willing to a-leap for next to nothing.

That, and the other story about how much you should tip the service workers in your life. There’s always a recommendation to tip “your doorman” a certain amount. The New York-centric journalists who recobble these stories every year forget that well over 99.9% of Americans don’t have a doorman. CNN would provide a more helpful service if they told you how much to tip your emergency room check-in nurse, or the guy who installs your satellite dish, each of whom is a more central figure in most people’s lives than a doorman. Or an “elevator operator”, another totally relevant service worker in post-1950s America.

Welcome to the Carnival of Wealth, the greatest blog carnival in the history of the format. Personal finance blog posts in an easy-to-digest whole. Here we go:

Batting leadoff this week is Ken Faulkenberry at AAAMP Blog. Ken appeals to both hemispheres of your brain this week, telling us that there’s no greater risk to an investor than losing your principal. Ken believes there’s a good chance that if you invest more conservatively, you might increase your returns. But you won’t know until you read his post. (And try to ignore the homonym confusion. The man has an MBA.)

JB at Young & Thrifty says if you’re young and professionally mobile, you don’t need to buy a house. Say you close on a fixer-upper bungalow in Anchorage, complete with 30-year mortgage, and then get offered the job of your dreams in Key West. Now what? More closing costs, that’s what.

Why aren’t you just doing everything Paula Pant at Afford Anything does? Cut-and-paste her life onto your own and you’d be debt-free, building passive income, traveling the world and not destroying your life by having children. This week she graces us with a story about how she bought a rental property at 25% below asking price, spruced it up for a mere $6,000, and made it look so good that even we and our discriminating tastes would be happy to call it home (if we, you know, lived in Atlanta and wanted to rent.)

Paula’s cap rate is a hair under 12%, and that’s not even close to her highest-performing property. (She has 3.) She did some simple calculations to determine what rent she should charge. She got a fantastic rate on an interest-only loan from a private lender because, hey, her credit is good. In our book we bang on the concept of a “spread” – borrow money at x%, receive a return of x+y% and you’ll build wealth no matter how dumb you are. Paula discusses “arbitrage”, which is essentially the same thing (and, as she describes it, her favorite word.)

See how one good decision sets up the next several? If the rich get richer, it’s because they deserve to. Paula could have lamented her life station, decried the job market and lashed out at the world. She could have said “I hate math, it’s so hard! Especially since I’m a girl!” and not bothered figuring out the likely cap rate before buying the property. Instead, she’s buying assets, selling liabilities, and living about as exciting a life as one can lead without benefit of psychotropic drugs.

Hey, CYC!

Yes?

Did you trademark your gimmick of talking to yourself via italicized questions? 

No, it’s not copyrightable. Why?

Paula does it. Better than you, in fact. 

That’s OK. The great ones can borrow.

Speaking of buying houses, a new entrant: House Mouse, “a site with the aim to make home buying simple.” This week’s post is about how you can deduct mortgage interest from your federal tax bill. The deduction is supposed to give you incentive to buy a house (well, to finance a house) and turn us into a nation of non-renters. (JB at Young & Thrifty shakes his head. Then again, he’s Canadian.) We welcome House Mouse aboard, and remind its staff that they’re probably looking for comments from people who’ve had their interest piqued, not peaked, but it’s still early. Here to help.

Governments have certain legitimate duties – defending the country, providing courts of law, and not a whole lot else. Everything beyond that – making cars, selling insurance, running a television network and about a million others – is an intrusion onto that holiest of holies in a free society, the individual taxpayer’s wallet. From David De Souza at TaxFix UK comes a post showing where British taxpayers’ hard-earned dollars go; almost all of it in places where government functionaries have disenfranchised the private sector.

Harry Campbell at Your PF Pro buried the lede, and it’s a pretty shocking one. He claims that buying vacation days from your employer can have financial benefits.

Good God. We don’t go looking for this, we swear:

I only get 10 days of vacation a year… so (getting the option to buy more) definitely peaked my interest.

Ever visited Pikes Pique? You can see downtown Denver from there. Also, we used to use Quaker State motor oil at CYC World Headquarters, but that Pique brand is something else. It offers pique performance. Sheesh.

Alright, now the submitters are just screwing with us. At least “pique” and “peak” sound exactly alike. Teacher Man at My University Money writes about how college students can save money on food, and spelled pizza “piazza” 3 times. “Piazza” is not a typo. It’s not a phonetic approximation. Nor is it some variant Canadian spelling (cf. favour, offence, centre etc.) It’s a retired future Hall of Fame catcher, and the Italian word for “square”.

The grammatically capable Liana Arnold at Card Hub to the rescue. If you have a prepaid credit card because you applied for American Express platinum and they laughed at your single-digit FICO score, that’s one thing. If you have a prepaid credit card just because you want to improve said score, cancel it now. Get a secured card instead. It’ll help you build a credit history*, and it won’t line the pockets of manipulative celebrities like Russell Simmons and Suze Orman.

Neal Frankle has a special treat for you this week. The handsome and forthright founder of Wealth Pilgrim has a guest post from one of personal finance’s legitimate titans. It’s entitled “Why You Are Not Rich Yet”, and regarding both form and content, it fits perfectly with Wealth Pilgrim’s demanding standards of excellence.

It wouldn’t be a CoW without PKamp3 at DQYDJ.net, who reminds us (well, not literally “us”, but rather “those of you who don’t understand how cash flow and wealth-building work”) that getting your debt as low as possible is not the ultimate objective of personal finance. Some people think that mortgages by definition are bad, because they involve borrowing a lot of money at a positive interest rate. These people don’t have to borrow to make their rent payments, and they’re also making their leveraged landlords rich.

Mark Twain said to put all your eggs in one basket, and watch that basket. Dividend Growth Investor has a more diverse investment strategy, but still acknowledges the importance of watching the basket(s). Whether you’re a dividend investor or one of some other stripe, don’t check your portfolio’s value every day, but don’t check it once a decade either.

Say your bank screws you over. You can sue it, right? If only. John Kiernan at Wallet Blog points out that if you have an account at any of the 100 largest banks in the country (or many of the smaller ones), there’s a decent chance you signed away your rights and left mandatory arbitration as your only recourse. Even better, should it get to that point you wouldn’t even unlimited discovery – the bank can conceal information from you until it’s time to present it to the arbitrator. And if you think the arbitrators are impartial…well, that’s adorable.

Finally, Free Money Finance bought some smoke detectors.

Check out our latest on Investopedia, too. And join us back here tomorrow. It’s never the same site twice!
*Assuming you use it wisely, but do we really need to say that? 

That’s some mighty fine street theater, kids. Now snap out of it and buy our book. After all, it is Cyber Monday and we’ve got an urban myth to perpetuate. Link below, because WordPress won’t let us put it in the photo caption.

(Amazon link to our book. Or just buy it in the right column, whatever. In fact, the latter is better. A bigger cut for us, and we’ll include the e-book.)

Here at Control Your Cash we never, ever want to be part of that incestuous clan of personal finance bloggers who spend undue time patting each other on the back and telling each other what a great job they’re doing. You know where to find such, if you want: in the comments section of pretty much every other personal finance site in existence. That mutual bootlicking is overdone, and contributes nothing of benefit. Even worse, it tells the non-bloggers – i.e., the overwhelming majority of you – that there exists a clique that they’re not a part of. We don’t pull that kind of nonsense here, which is why we disabled comments months ago and have yet to regret it. If you want to say something to us, keep it brief and tweet at us @CYCash.

Still, there are a few other personal finance sites that we think are awesome. One in particular is Timeless Finance, whose founder once told us politely but unambiguously that he wasn’t interested in submitting to the Carnival of Wealth. But he came around. They always do. Which is why we’re leading off this week’s CoW with his inaugural submission.

When other personal finance bloggers write about frugality, it usually ends up saving pennies per hour. When Joe Wood at Timeless Finance does it, it saves him $134 per hour. All the homemade detergent and double coupons in the world can’t accomplish what Joe did when he recently got a boastful flight retailer to essentially comp his and his girlfriend’s trip from Toronto to Edmonton.

What were we thankful for last week? Our Canadian submitters, whose schedules saved this from being a thin carnival indeed. Mich at Beating the Index is back with a detailed analysis of the merger of 2 energy semi-titans: Spartan Oil and Pinecrest Energy. Mich sees the new company rivaling notorious income stock Crescent Point, which has profitable oil plays through the Great Plains/Prairies (depending on which side of the 49th you’re on.)

Neal Frankle isn’t Canadian, but he is back with a new and vital post on Wealth Pilgrim (which boasts a fancy new logo, too.) He’s writing to the 90% of you who hate your jobs and by extension, a significant portion of your lives. Yeah, you can’t leave. You have too much vested. Your family depends on your paycheck. You don’t want to risk your fortunes in an unforgiving job market (i.e. are scared.) Any rationalization you want. If, on the other hand, you’re willing to listen, Neal has an out for you. He explains that you don’t have to despise your contributions to the Gross National Product and all the time and effort associated with doing such. Life doesn’t have to suck, and acknowledging the truth of that assertion is the first step.

A post so good that it deserves no commentary. PKamp3 at DQYDJ.net has cold reality for the dimmer among you who insist that health care is too important to be left to the market.

Go ask our Canadian friends what it’s like to wait 10 months for elective surgery. Those who aren’t crossing the border for routine appendectomies, that is. PKamp3 makes an argument that we’ve been making for years – if health care is so vital that only politicians can be entrusted to deliver it, then why don’t we nationalize food, which is even more critical?  (It’s a facetious argument. Please don’t take it on its surface.)

A new submitter this week, Nick at Making It In Today’s Economy, has a $25 monthly unlimited data and voice plan. How did he do it? Read the post, most of which involves paying for a phone upfront instead of getting a “free” or “discounted” one from a provider. (We wrote about this a while ago. The prices have changed, but the strategy still applies.)

Some wags at The New York Times think that you only need to save up to 16% of your earnings to guarantee yourself a cushy retirement. And there’s nothing you can take to the bank quite like a number concocted by a journalist. Free Money Finance says 16% is, well, a start. Make incremental differences in several realms, and you’ll be rich before you…well, not before you know it, but before you otherwise would have been.

New submitter Moyo Mamora is competent, debonair, and inspiring, and if you don’t believe us, then read his self-penned description underneath his photo on his site. Moyo wants you to spend less, and shows some fairly straightforward methods for doing so.

If there’s anything more fascinating than the kitchen setup of Harry Campbell at Your PF Pro, we have no idea what it would be:

As longtime readers may already know, I’m gradually upgrading the appliances in my kitchen to stainless steel.  The only items that still need to be updated are my electric range oven and dishwasher.

Here at Control Your Cash, we have a Bosch 300 series oven. Isn’t that exciting? Wait until you hear about our vegetable crisper, too. Also there’s a Brita filtration system, an off-brand toaster and…there appear to be a couple of cat toys on the floor, too. No, wait. One of them was a scorpion. A dead one, fortunately.

Michael at Financial Ramblings thinks health savings accounts are dandy. You don’t have to choose one through your employer, either.

We have our own reasons for hating minimalists (“Stuff is less important than experiences. Even if that stuff eases or enriches your life. I’m so much better than you for rationalizing this way.”) Andrew at 101 Centavos has his own, and they include a new candidate for CoW Line of the Year:

Ditch the TV and spend more time doing meaningful, soul-nourishing activities like blogging about ditching the TV.

This indirectly hearkens to the CYC mantra: Buy assets, sell liabilities; otherwise known as the only way to build lasting wealth. It isn’t Buy nothing, sell everything. That’s the Mother Teresa wealth-building scheme, and you should see how she lived.

2/3 of the Evolution Finance troika rounds out this week’s truncated but not diminished CoW. First, from Liana Arnold at Card Hub, mobile gift cards. Yes, standard gift cards are technically mobile as it is, but she means gift cards that purely digital. Liana says that one drawback to digital cards is that “a physical card is more appropriate when exchanging gifts in person”, which indirectly brings us to our 2011 recommendation for the ultimate Christmas gift.

John Kiernan at Wallet Blog introduces us to a company, CloudeyeZ, that claims to monitor the sale of stolen credit card data. In real time, no less. Get your card stolen, or your number and signature compromised (as you do whenever you buy something in a retail store), and CloudeyeZ could give you the opportunity to find out about it as it’s happening.

Did you know we’re on Investopedia, too? Every single day, it seems. We’re also on ProBlogger. And we’ll be back here with a new Anti-Tip every day, new posts Wednesday and Friday, and a new CoW Monday. Chow for niao.

Oh, you think that’s his granddaughter? How delightfully naïve of you.

Every now and then we devote a post to a particular person. In this case, an Austrian businessman. Founder of the company that manufactures the greatest handguns ever made. A man who fended off a murder attempt in his 70s by using a mallet, rather than one of his namesake firearms. And since last year, husband of a woman half a century his junior. What have you done with your life?

Welcome to another Carnival of Wealth, what’s supposed to be a weekly personal finance blog carnival but often mutates into something else. We try to feature interesting blog posts from around the world, but the tastiness of the stew we make is conditional on the ingredients we receive. Let’s get started and see if we can keep things palatable:

PKamp3 at DQYDJ.net (for the acronymically challenged, that’s Don’t Quit Your Day Job) tore into collateralized debt obligations last week. And he’s not done. This week, he looks at a Nobel Prize-winning model that attempts to predict the prices of CDOs. The model ended up affecting the market more than the traders did, and havoc ensued. Improper valuation – thinking that there are empirical quantities than supersede freely agreed-upon prices – will be the death of us if exospheric deficit spending doesn’t kill us first.

If that’s too much for your cerebrum to handle, how about this misguided post from someone calling herself Suzanne Cullen at AuPair.org? We have to admit, these Indian remote assistants are getting more creative with their pseudonyms. First, everyone was Rajiv Malhotra and Indira Chatterjee. Then they went overboard in the other direction, every submitter a Bob Smith or a Judy Jones. Now, they’ve finally embraced less common but still unmistakably English names. Anyhow, this week “Ms. Cullen” lists 10 Tricks To Get Your Child To Eat Anything. Which has nothing to do with money, but don’t let that dissuade people from submitting.

(Another one, this one titled “How To Communicate To Your Nanny She’s Done Something Wrong”. Sorry, we only indulge one clueless submitter per week.)

(Two more. Good God.)

Harry Campbell at Your PF Pro says that if you’re a 9-to-5 ham-and-egger, you should open a health savings account. Harry has one, and a corresponding rationalizing attitude:

I’m trading a little extra money in my paycheck for free money as long as it’s spent on medical expenses.

You need to read the entire post, but that line wasn’t taken out of context. Money, as in dollars in your paycheck, is of constant utility. Money specified for medical expenses is not. This is a 21st century version of company scrip. Harry’s argument is similar to the one the Cuban government uses to tout its homeownership program: Any citizen who wants one gets a free house, as long as he buys the material and builds it himself.

Dollar-cost averaging is far superior to lump-sum when putting money in an Independent Retirement Account, right? Joe Morgan at Simple Debt-Free Finance responds with a surprising “no”. (Assuming that the market declines, and/or that your time frame is long.)

(Another garbage post, this one from something called Fast-Bad-Credit-Loan.net. This site has every hallmark of awfulness – an incompetent writer, the default WordPress template, below-res photos, nightmarish punctuation, a URL with hyphens in it, the word “needs” as a noun…if it weren’t for that au pair post this one would have been our Bizarro showcase of the week. Instead it just gets a parenthetical comment.)

Enough. Could we please have something good, or at least something related to money and how to handle it intelligently? Fellow Paulite Ken Faulkenberry at AAAMP Blog to the rescue. You know what the most important objective in asset allocation investing is? Preserving your capital, according to Ken. A bear market will steal your food out of the canister you suspended between 2 trees, growl, scat, then slash you for sport, and the scars will take years to heal. (Hey! We think we just figured out where the expression “bear market” comes from.)

A new submitter this week, or at least, a relatively new one whose previous submissions we don’t recall. Unnamed author at Enhanced Dividend Investing says we’re going to enjoy years of lousy market returns, therefore dividends will become more important than ever. This post goes from basic to intermediate within the space of a single paragraph, and features plenty of homonym confusion, but his arguments are sound and his pessimism about the market justified.

Finally, the Evolution Finance trifecta. It starts with Odysseas Papadimitriou at Wallet Blog, who explains how not just banks but plenty of other large businesses are adopting predictive analytics. Does your behavior indicate that you’ll probably default on your loans? Are you a big enough deal on Twitter that your consumer complaints are worth responding to? Are you dumb and/or poor enough that your doctor’s office needs to call to remind you to swallow the Prilosec instead of rubbing it into your eyes or letting it ferment at the pharmacy? We don’t know, but somebody does.

Charles Davis at Wallet Hub reminds us that although home prices (and just as importantly, mortgage rates) are at historic lows, it’s still not a buyer’s market in that buyers are still the ones who have to jump through lenders’ and sellers’ hoops to qualify and get approved to buy. Charles explains what you have to do before you can pull the trigger. (Explained in greater detail in Chapter VII here.)

And from John Kiernan at Card Hub, how hurricanes affect the economy. To the extent that you can create a model that attempts to reenact reality minus Hurricane Sandy but with every other variable unchanged, at least one academic calls it a $30 billion storm. Or maybe a $50 billion storm. The greater the range, the more likely it contains the precise value.

Did we mention we’re on ProBlogger? And Investopedia? Yahoo! Finance and Forbes on occasion, too. We’ll be back here with a new post Wednesday. Friday, too. We don’t take Thanksgiving off, not even the Canadian one.