Folklore Thursday

November 18, 2010
Online shopper

Someone's about to give her credit card number to Overtsock.com

You know what’s special about today? Nothing. Just like there’s nothing special about the Monday after Thanksgiving (MAT), either.

Think about this for a second, thinking being something still encouraged here at Control Your Cash if not in most other places. Cyber Monday doesn’t exist. Well, it exists as a concept, but cash registers don’t ring any more loudly on MAT than on any other day of the year. One noteworthy thing about this particular urban legend is that we can pinpoint its origin.

Even on the surface, “Cyber Monday” makes no sense. Why would people go out of their way to shop on what is, occupationally, one of the worst days of the year for doing so? Employees return to work on MAT after the only guaranteed 4-day layoff of the year. Workloads are particularly heavy that day. MAT’s the one day on which it should be especially difficult to slack off and spend one’s time shopping online.

The beauty of shopping online is its convenience, right? After hours, at home, in your underwear or less, sitting on the couch, one foot on the coffee table and the other in a bowl of Doritos.* Why would you buy online on MAT when there are dozens more convenient days to do so?

Here’s the story that started this nonsense, courtesy of CNN.

(That’s the same esteemed news organization that brought you, among other pieces of easily disprovable tripe, “Cloned baby born”. Video, audio, pictures, or even second-hand accounts of the birth forthcoming. Just not in the first 8 years and counting.)

(Isn’t it amazing how little time it can take for a headline to look ridiculously dated? Five years, in this case. “After Black Friday comes Cyber Monday”. Too bad CNN wasn’t there to write “Electronic Mail to Supplant Post Cards As Popular Means Of Communicating”. Then again, maybe they did. We’ll check the archives.)

Check out the details of the “Cyber Monday” story. It says “77% of online retailers said their sales increased substantially last year on the Monday after Thanksgiving.”

You need to read everything with a critical eye. Except for our blog posts, they’re the unshellacked truth. Why? Because no one ever quantifies anything.

“Sales increased”. Over what? The day before? The hour before? The previous Monday? The story doesn’t state any origin from which sales increased, so we have to guess. In journalism school, this is called omitting crucial details, and it’s a senior-level course. There are two reasons for a journalist to omit crucial details. The less common one is to advance an agenda: the more common one is because the idiot writing the piece is too stupid to recognize a crucial detail.

On average, MAT occurs on the 332nd day of the year. Presumably, for the 77% of companies who gave an answer that the poll questioners were looking for, they’d sell more merchandise over 332 days than they would over 331. Not only is this so obvious that it hardly counts as an observation, but the qualifier “substantially” in the original story is up to the discretion of the questionee, not the questioner.

So, no Cyber Monday doesn’t exist. Shop online next Monday, but don’t think you’re getting any better or worse deals than you’d get on August 16 or March 3.

*Writer’s conception. Our house is not like this.

**This post is featured in the Carnival of Personal Finance #284:Thanksgiving Preparation Edition**

Filed Under: Consumer Debt, Credit Cards, Personal Finance, Shopping Tagged With: , , , , , , ,

Or Go Read Man Vs. Debt Instead

September 9, 2010

You're going to need one of these

Why can’t you be like other sites?

It’s the one complaint about Control Your Cash that we receive most often: where are the first-person stories about your struggles with income and debt?

1) There are several thousand other blogs that already memorized that riff and can play it by heart. We wouldn’t be bringing anything original to the party. Besides, this isn’t a place for self-indulgence. We don’t give a damn about the details of your finances*, and don’t expect you to care about ours. Or anyone else’s but your own.

We used to think that other people’s Facebook photos were the Ultima Thule of human boredom. But they’re captivating compared to hearing a personal finance blogger yammer about how he’ll now pay off his student loans 3 nanoseconds faster thanks to this handy new money-saving method he discovered for making your own duct tape. Also, the Sunday paper is full of coupons for your next grocery shopping trip.

2) No struggles to speak of.

Oh, does that sound condescending? Then would you feel inadequate if Danica Patrick told you she has no trouble negotiating traffic at 160 mph? How about if the chick from Evanescence said she could easily hit notes in the whistle register?

We’ve spent our adulthoods doing the prudent, common sense thing and seeing where it leads. So far, it’s working. At least more so than buying pet clothing and paying for tax refund anticipation loans might have.

You want commiseration? Start drinking or become a sex addict. Meetings in the church basement, Tuesdays at noon. No crosstalk, please.

Good. Now that we’ve got the children out of the room, join us for something worthwhile. Two things we try to do here:

-explain financial concepts that people presumably want to know about, or should, but don’t.
-show how not being financially idiotic can pay tangible rewards. And occasionally, show instances where you might think you’re doing the smart thing but aren’t.

If this sounds dictatorial, it isn’t. No more than your 3rd grade teacher was when she explained how multiplication works. Look, there’s no secret to gaining wealth. The mantra, again:

Buy assets, sell liabilities. Do this often enough, measure the results, and if you do nothing else you’ll get rich in spite of yourself.

Financial self-sufficiency is nowhere near as simple as “spend less than you earn”, but it’s not as complex as you think, either. That wedding you’ve been fantasizing about since you were a little girl? Unless it involves only you, the groom, a justice of the peace and a visit to IHOP afterwards, it’s a liability. Sell (i.e. don’t buy) it. The matching funds your employer offers for your 401(k), which will give you more tax-free income when you retire in exchange for a few seconds of incremental effort today? That’s an asset. Buy it.

Almost everything in your financial life fits into one category or the other – if not individually, then cumulatively. The bachelor’s degree in women’s studies is a liability. The interest-bearing student loan to pay for it is a meta-liability, and an obscene waste of money. The used DSLR camera that you can pick up from a highly rated eBay seller and is indistinguishable from a new one that’s twice as expensive? That might not be an asset by our definition, but the difference in their prices is. Buy the camera, assuming you’ll use it.

If you want patently obvious advice and feel-good pabulum, Google “personal finance blog” and you’ll find it. If you want to be challenged and inspired, stay here. Read the archives. And let us teach you how as much as you’re willing to digest about how money works (and how it doesn’t.)

*Dang. That should have been the subtitle for the book.

**This post is featured in the Carnival of Wealth #5**

Filed Under: Bad Examples, Consumer Debt, Education, Making Smart Choices, Personal Finance Tagged With: , , , ,

It’s only money. Tens of thousands of dollars of money.

May 13, 2010

Sasha Obama, taken the day Digging Out From Our Mess got out of the red.

We spend so much time online looking out for fellow travelers, people who encourage you to spend your money, invest it wisely, and take ownership, that we never dreamed there was an online subculture of financially irresponsible people and their enablers; people who pay nominal attention to increasing their net worth, and who think that intending to get out of debt trumps actually doing so.

We recently discovered Digging Out From Our Mess, a blog posted by the female half of a couple who have an autistic kid, a normal kid, four credit card balances, two student loans, and $71,930.29 in consumer debt. Is this cause for shame? Possibly, but not when you can brag about it!

The anonymous 30ish woman behind the blog qualifies that total, admitting that her and her husband’s cumulative debt load does not include a “retirement loan”. We’d never heard that term before, and you probably haven’t either: Google only returns 628 results. It turns out that a retirement loan is an advance on a 401(k). Yes, a woman in the prime of life is borrowing now to avoid incurring penalties on a forced retirement plan that the law prevents her from touching until she turns 59½. But if you’re going to borrow against your 401(k), why even have it in the first place? Borrowing against it defeats the purpose of “forced saving”. We’re guessing the author also carries life insurance, although she’s coy about any weekly lottery ticket budget she might have (every ticket a potential winner!)

We’ll resume attacking her in a second, but in the meantime know that if you attempt to touch your 401(k) before you turn 59½, for anything other than emergency medical expenses, you’ll pay a 10% penalty.*

Anyhow, Mystery Blogger is proud that she’s 6% of the way to getting out of debt. (There’s a graph that illustrates this on her website. DON’T VISIT IT.) This means she’s en route to getting out of debt in her early 50s. Excluding the retirement loan, of course, which she’ll have to start paying back shortly thereafter. She recently posted that she spent $1000 to send her kids to camp for the summer, and is upset that her mother, maybe mother-in-law, it’s hard to remember which, didn’t contribute.

$1000 is close to 1.4% of her family’s ostensible consumer debt total. She could have moved her debt arrow that much closer to the end of the graph. When you’re only at 6%, that $1000 makes a visible difference. Yet she chose to put her money in something fleeting instead.

Incur debt, cry about it, go public with your halfhearted attempts to reduce it, then do something that increases it, while hoping that someone else might subsidize it. In which universe does that make sense? (We’re finding out that it does make sense in the world of international finance, but that’s a different and more ominous story.)

Alright, we give you permission to visit Digging Out From Our Mess, but only to witness this exchange in which Mystery Blogger defends herself and her methods against a humble Control Your Cash sniper. Mystery Blogger is the financial equivalent of the fat woman who loses 3 pounds and is so proud of her accomplishment that she has to share it with everyone and act as an authority on the topic of weight loss, even though she needs to lose another 77. Congratulations, you went 10 minutes without a cigarette. Here’s your Medal of Honor.

Once again, and this will be far from the last time: the only way to build wealth is to buy assets and sell liabilities. It’s elegant, it’s symmetrical, it’s simple and it never fails. Your kid’s summer indulgence is a liability. You should sell (i.e., not buy) it. A 401(k) is an asset. You should buy (i.e., contribute to) it. A loan you borrow with your 401(k) as collateral is a grenade. You should throw it at the Viet Cong.

It’s at times like this that we wish Tim Berners-Lee had majored in women’s studies instead of giving people like this an outlet. Maybe the Chinese have the right idea about censoring the internet, because Digging Out From Our Mess is far more obscene than anything you’ll find on 2 Girls 1 Cup, LiveLeak or Lemon Party.

If you’re $78,000 in debt, log out of BlogSpot, back away from the keyboard and spend that time at a second job.

* If you don’t have a 401(k), and you qualify, get one. Yes, it’s something you can’t enjoy for years, but it lowers your tax obligation. It’s a way of giving the federal government a few ounces of flesh instead of the requisite pound. Plus, most employers offer matching contributions up to a certain level. If your company is willing to exploit its own tax situation by giving a few dollars to your retirement rather than a few more to Uncle Sam, let ‘em.

Note: We didn’t bash the autistic kid, we bashed the mother. Relax. If anything, she should hand the autistic kid the keys to the checkbook and the bank passwords. He couldn’t do much worse than her.

Filed Under: Bad Examples, Consumer Debt, Making Smart Choices Tagged With: , , , , , ,
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