Archives for July 2011

9/10 of a Penny Wise and Pound Foolish

Here’s a fun idea for a drinking game: gather your alcoholic friends around the TV at 6 pm or 11 pm (or if you’re truly committed drunks, 7 am.) Turn on the local news. Anytime an anchor uses the phrase “pain at the pump”, do a shot. If the same phrase appears as a graphic, do 2 shots.

The standard wisdom is that not only are the gas companies setting their prices criminally high, but that it’s crucial that we as consumers take whatever means necessary to economize. It’s thus a moral imperative to find the cheapest gas we can, wherever that might be.

This cultural obsession with recording and comparing gas prices has led to the proliferation of websites devoted to posting prices- Gas Buddy, Gas Price Watch, etc. Even MSN recently got in and took the concept mainstream. Each site helpfully prompts you for a ZIP code and then tells you where you can go to save a few pennies a gallon.

Here’s what’s happening with gas prices in the ZIP code that contains Control Your Cash’s world headquarters.

(Yes, we have a local retailer named “Terrible’s.”)

The cheapest gas on the map is at Location 1, in the southeast. Say we’re stuck in the inconvenient northwest, where retailers are gouging us with expensive $3.85/gallon gas, and we want to take advantage of that sweet bargain-basement $3.79/gallon gas on the other side of town.

To accentuate the point, let’s assume we drive a car that sips fuel judiciously. So we get in our theoretical 36 mpg Honda Civic and drive to the 7-Eleven, ready to fill the trusty coupe’s 13.2-gallon tank. But wait. The needle’s only at the 1/4 mark. Should we drive around the block a few dozen times and thus save even more?

Let’s say we act rationally and don’t. That means we buy 9.9 gallons, and save 6¢ on each one. For a total of 59¢. Easy street, here we come.

And it was only 5 miles out of our way, 10 miles round trip, which means we burned .27 gallons to get there. Or $1.07. Net loss 48¢, not including the 20 minutes or so it took to drive there and back. Even if you value your time at a mere $8 an hour, that’s another $2.67 you’re out for a total of $3.15 just to hunt for cheap gas.

You see? That military-industrial complex has its fangs in so deeply, that they’ve now got it costing us $3.15 just to shop for gas, let alone buy it!

The problem is obvious – there just isn’t that much difference between cheap and expensive gas in the same locale. It’s not like we chose an extreme example to illustrate this. We didn’t go looking for the part of the country that filled the bivariate conditions of having the smallest discrepancy between low and average prices, and the maximum distance between them, only to happen to find that place in our backyard.

Gas Price Watch and its ilk seem to have enough regular readers to stay viable: it boasts 173,382 “member spotters”. If that many contribute to Gas Price Watch, then at least as many must use it, right?

What a waste of resources, brainpower, bandwidth and more.

In the extremely unlikely event that your neighborhood station is selling gas for $6/gallon while one half a mile away is selling it for $4, then fine; go out of your way to buy the cheaper stuff. But under any set of real-world circumstances, you’re mildly crazy if you don’t simply fill up where and when it’s convenient.

**This article is featured in the Totally Money Blog Carnival #27, the Titanium Edition**

**This article is also featured in Totally Money Blog Carnival – Trivia Edition – July 18 2011**

Happy 235th, baby – Carnival of Wealth edition

"Yo, Button, you got a pen?" "Elbridge, check my waistcoat."

It’s America Day! Real simple, before we get started with this week’s Carnival, 5 reasons why this country kicks so much posterior:

1. Republicanism. Ultimately, we elect people to represent us. Not their party (like in Canada), not themselves (like in Togo.)
2. Federalism. You don’t like what’s happening in your particular corner of the nation? Move somewhere with more agreeable laws. There’s a reason our major political subdivisions are called “states” and not “prefectures” or “provinces”.
3. Guns. The idea of a citizen being able to protect herself against aggression from those physically more imposing than her is reprehensible in most parts of the world.
4. Diversity. Not that human resources racial sensitivity nonsense, either. Real diversity. From a cultural perspective, Maui, Alaska, New England, Central Texas and the Wasatch are as unalike as any 5 European countries. The pigmentation of those places’ residents isn’t as important as their divergent lifestyles. Distinct regions, but all under one flag.
5. A military that puts the Wehrmacht, the Mongol Hordes, and the 18th century British navy to shame. Peace through superior firepower, and no imperial ambitions (unless you consider Guam and the Virgin Islands to be an empire.)

Technological innovation, geologic beauty, attractive people…the list doesn’t stop. Include another in the comments if you wish. In the meantime, onto the Carnival:

Kicking things off this week is our new favorite non-Control Your Cash personal finance blogger, Financial Uproar. As FU himself puts it, “I’m so scared that you guys are going to mock my post that I can’t remember what it’s about. Oh wait, yes I can. It’s about industries that may grow because of a growth in poor people.”

Like a perfect bowling score, a perfect portfolio is an impossible thing to amass. Mike Piper at The Oblivious Investor offers the proof.
(Wait, you mean people bowl perfect games all the time? Never mind.)

Michael Donelly at Another Way tells you how to buy a car without leaving money on the table. As we say here at CYC, always look at the transaction from the other party’s perspective.

The consistently consistent Neal Frankle at Wealth Pilgrim poses a critical question that most of us either can’t or can’t be bothered to answer: What’s in your mutual fund? If you don’t know, you might as well be investing in exacta boxes.

Credit cards are evil!
No, they’re just inert tools. Not unlike guns (see above). Nathan Richardson at Complex Search explains how to use cards to your advantage.

On the other hand, if you’re retarded and have amassed credit card balances, you might regard credit cards as evil after all. Jeff Weber at Smart Balance Transfers explains the best way to close the barn door once the horse has gotten out.

In among the drunken weekends, drunken weekdays, and awkward sexual encounters, should college students save for retirement, too? Joe Plemon at Personal Finance by the Book gives the answer.

Do you make all the money you need? Sure you do. If you don’t, read this wisdom from The Amateur Financier on how to supplement what you make.

Do what you love? Hate what you do? Amass money while sacrificing time? Jonathan at Blogging Your Passion explains why following your passion is the only way to live. And if your passion is TPS reports, so be it.

The 4th of July. Or as they call it in Canada, “Monday”. Big Cajun Man at Canajun Finances celebrates the non-holiday by measuring the value in renovating your house.

If you’re already paying out the nose on a 2-year contract for your iPhone, you need to save elsewhere. Michal at Phone Reviews Plus lists 5 apps that will ostensibly save you money.

David De Souza at Tax Fix offers an infographic this week rather than a blog post, one that illustrates “Personal Income Tax Rates Around the Globe”, and by “globe” he means “Western Europe and 7 other countries.”

Okay, this is odd. We never get submissions from the UK, and this week we have two? Coincidence? Look, chaps, we left the fold 235 years ago and we’re not coming back no matter how much lemon curd and treacle you offer us. Go work your charm on Bermuda or Kenya. In the meantime, consider it an example of American largesse that we’re running Oliver Myer’s post on remortgages vs. home equity lines of credit at How Much Can I Borrow?

Crikey, another one? Sian Meades at Totally Money has a .com domain, but talks about watching Wimbledon on the telly in this post about the advantages and disadvantages of freelance work. She also claims that as a freelancer she misses going to office Christmas parties, which strains credulity. Christmas parties are the primary reason this humble blogger quit the 9-to-5 world to become a freelancer.

Phil at PT Money is more candid in his description of the transition from wage slave to full-time blogger, which recently celebrated its 1st anniversary.

How many 60%-off spa treatments can one woman undergo, anyway? Briana Ford at 20 & Engaged discovered the answer, and shows how daily deal sites like Groupon and Living Social might have outlived their usefulness earlier than anyone expected.

Are you better off than your parents? The unthinking answer is the same one you’re supposed to give to “Are there poisons in our drinking water?” and “Is there an epidemic of child prostitutes in our society?” Darwin’s Money looks at the indisputable facts and reaches a different conclusion.

A: Depends on the relative interest rates.
Q: Is it better to save or repay debt? Consumer Boomer asks the question.

Speaking of rates, do you know what your credit card’s interest rate is? You don’t need to, because the only details you really need to know about your credit card is its limits, its rewards if any, and what day your payment is due. But for completists who care about such things, Colin Robertson at The Truth About Credit Cards explains the difference between nominal rates and APRs.

At Best Dividend Paying Mutual Funds (talk about a blog name that rolls off the tongue), Maxim Kazawy measures dividend mutual funds’ fundamentals and gives us the results. Pay attention to this rather than those ridiculous Charles Schwab charts.

Like dropping money into a toilet every month and only getting to reap the rewards if you die? Then term life insurance is for you! Tom Drake at Canadian Finance Blog explains the details.

(There hasn’t been a single post to goof on so far in this week’s Carnival. This is unprecedented.)

The always happy Jim Yih at Retire Happy Blog is back again, this time with an important post on disability insurance. Do you know if you’re covered? And for how long? These are the questions you must ask before you apply for that promising new job as a bear wrangler.

How do you convert a 401(k) to a Roth IRA? It’s probably either more or less complicated than you think. Tom at Stupid Cents explains how, and why you might want to.

Ever wonder what it would cost to insure the Batmobile? Yeah, us neither. But someone named CI Comp at Car Insurance Comparison asked the same question regarding the General Lee, James Bond’s Aston Martin, and other real-but-fictional cars.

If you thought banking was one industry where it was impossible to eliminate the middleman, think again. Investor Junkie introduces us to Lending Club, a peer-to-peer service that lets you borrow from (and lend to) other people without having to deal with some pasty functionary at your local Wells Fargo branch.

How about some nausea with your long weekend? My Journey to Millions uncovers a horrifying truth. You know those insider trading laws that put criminal masterminds like Martha Stewart in prison (in her case, for adding a mere $50,000 to her substantial fortune)? Well, guess who’s exempt from such laws? We’ll give you a hint: there are 535 of them, and they work in Washington, D.C.

From the “infomercials thinly veiled as blog posts” portion of our program, Madison at My Dollar Plan gives us her favorite rotating cash rewards credit cards.

Part of being a couple is having joint bank accounts, right? Not for Money Cone and spouse. Find out why some people keep their accounts separate and reconcile joint expenses periodically.

Tight Fisted Miser explains how working hard and saving money aren’t enough to make you rich: you need to invest too (again, sorry to ruin the ending for you.) No word on how much money T. Fisted saves by not using the handy comma key on his computer.

You didn’t learn about building wealth in school? Actually, we should phrase that as a declarative sentence: You didn’t learn about building wealth in school. Of course you didn’t, nobody did. But Kevin at Invest it Wisely did the next best thing: reviewed a new book that teaches you what you need to know about investing but never learned.

The relentless Free Money Finance understands how to use credit cards: be a free rider, and take advantage of the cash rewards programs that issuers use to sucker in people whom the issuers know won’t pay their balances in full every month. This week, FMF shows us his favorite rewards credit cards.

Sell when the market is up? Or hold onto your blue chips, no matter what? Boomer & Echo provide some valuable details on when you should reassess and rebalance your portfolio.

Given that our economy is in the toilet (relatively speaking), and has been for several years, Americans have finally realized they need to tighten their belts and begin personal austerity programs.

Yeah, right. We’re leveraging ourselves more than ever and taking on even greater consumer debt. John at Wallet Blog has the depressing story. We’re screwed.

Stop drinking. Eat better. Exercise. Put down the cigarette when switching lanes (not that you should be smoking anyway.) Basic, easily implementable advice that tens of millions of us refuse to heed. Yet we still bitch about health care prices, and can’t seem to detect any cause-and-effect relationship here. Dr. Dean at The Millionaire Nurse Blog explains how a milligram of prevention can be worth several megatons of cure.

That’s it. Thanks for stopping by. Rejoin the Carnival at Personal Dividends next week, and a delightful Independence Day to you.