Kris and I are in the middle of a long weekend of food and friends. Every autumn is like this, and we love it. We’re starting earlier than normal this year, and I hope that’s a harbinger of things to come. (This has been one of my favorite summers, and I’d love to continue this “lucky” streak.)
This morning, we’re both in the kitchen preparing food for various gatherings. I made my famous clam chowder the other night. This morning, I’m making two loaves of the easy-and-cheap homemade bread I shared last summer. Kris is baking cookies. Once everything is in the oven, we’ll head outside to pick the last of the apples and blackberries. I feel so Little House!
While Kris and I are enjoying life in the big woods — er, big city — here are some recent money articles from around the web:
A lot of people believe they’re immune to advertising. A lot of people are wrong. I’ve been meaning to write a review of Dan Ariely’s Predictably Irrational, a book that demonstrates just how easily our minds are manipulated. I haven’t found the time, but Jeff Atwood over at Coding Horror recently posted his own review, which describes 9 ways marketing weasels try to manipulate us. One of the foundations of my financial philosophy is that smart money management is more about mind than it is about math; this review is an illustration of that principle.
The most recent issue of Newsweek has a feature article on Wall Street’s new gilded age. “A year after the crash, a few financial giants are back to making millions,” the article notes, “while average Americans face foreclosure and unemployment. What’s wrong with this picture?” I’m a raging capitalist, but this sort of stuff makes me angry. If we’re going to have capitalism in the United States, let’s have capitalism. But if we’re going to bail out the banks, then let’s bail out the citizens, too. As it is, this is just further evidence that we live in a corpocracy and not a democracy.
Speaking of “raging capitalism”, Chris at The Art of Non-Conformity has a great article that makes the case for the $100 business. “I think most small businesses can be started for less than $1,000, and many of them for $100 or less,” Chris writes. “I know this in part because I’ve done it several times, but I also know countless other people who’ve had the same results.” I’m a firm believer that many people could help their financial situations by following advice like this.
Finally, I’d like to begin highlighting money “carnivals”. A carnival is a collection of the best articles from a variety of sites. A new blog hosts each carnival every week. Exploring these can be a great way to find new ideas about money. Here are this week’s carnivals:
- Mary at Simply Forties hosted the Carnival of Personal Finance #222
- CJ at Wise Money Matters hosted the Best of Money Carnival #16.
- Mike from Four Pillars hosted the Carnival of Money Hackers #82
- JvW at The Good Life on a Budget hosted the Festival of Frugality #195.
- Kyle at Suburban Dollar hosted the Carnival of Money Stories #10.
- KC at Climbing from Debt hosted the Carnival of Debt Reduction #209.
- Penelope at Pecuniarities hosted the Carnival of Pecuniary Delights #24.
I loved compiling that list; it felt like I was cataloging back issues of my favorite comic books. Have a good weekend, everyone! Spend time with family and friends, and don’t forget to be grateful for everything you have.
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I’d like to add a great article I found this week,
Jeff at GoodFinancialCents, 4 Ways to Save For Your Kids College Education – http://bit.ly/tTMPh
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ahum!! how can your clam chowder be famous if I haven’t tasted it before? Best send clam chowder to all GRS readers and let us decide on if it is famous or not.
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Ha!
Actually, that would be a lot of fun. Kris and I could hold some sort of harvestfest and everyone could make a pilgrimage to Portland. We could share the produce from our gardens and our home-made food. We could make our own special foods (such as my chowder).
On a related note, as I just tweeted, my neighbor (a real “millionaire next door”) just returned from his summer in Alaska. He brought us 30+ pounds of halibut and salmon! He’s home now until after Christmas, I think, and then he heads of for a few months in New Zealand, where he’ll work on farms for folks.
I have high hopes that I’ll be able to spend a week or two in Alaska with my neighbor next summer. Fingers crossed.
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“If we’re going to have capitalism in the United States, let’s have capitalism. But if we’re going to bail out the banks, then let’s bail out the citizens, too. As it is, this is just further evidence that we live in a corpocracy and not a democracy.”
I feel your frustration. But two points. One, as far as bailing out citizens, what do you think of mortgage modifications or “cash for clunkers”? Two, and more importantly, we didn’t bail out banks because we are beholden to banks. Rather, we bailed out the banks to save our economy from a repeat of the Great Depression. A “bailout” of citizens (whatever is meant by that) is not necessary to accomplish the same thing. Bailing out citizens would just be spending money needlessly so as to appear that we are being “fair”.
But to be fair myself, I think you’re angry that the banks have earned big profits (not that there’s not bailout for citizens). There is some indication that this may change in the medium term. But even if things don’t change, good financial news from big banks is a sign that things have turned around, and should be applauded, no? Aren’t you falling into a psychological trap (not unlike advertising) by being angry about it?
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Have to put that advertising book on my wish list…that stuff is fascinating! I think a lot of people who avoid advertising confuse it with “immunity”…I haven’t watched a TV commercial in almost seven years, but I’m sure if I did, I’d end up doing something financially stupid eventually.
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@Brian (#5)
You’re right, of course.
It just frustrates me that the banks don’t seem to have to suffer any consequences for their bad behavior. I’m all for good financial news, and I actually profit from the banks’ good results (because I own stock in them), but at the same time it bugs me that they get a “do-over”. I’m not even really that angry — it’s just another thing for me to shake my head at.
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Thanks for highlighting the Carnival of Money Hacks.
I agree it is frustrating that the banks/car companies/anyone with a strong voice in DC is getting bailed out while the rest of us don’t get squat!!
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I shouldn’t read your blog on an empty stomach! Now I’m starving!
The book on marketing irritates me, perhaps because it seems to make no distinctions between store-level choices vs. manufacturer choices, vs less reputable marketing techniques employed by fringe snake-oil salesmen. All are tarred with the same broad brush. Yes, marketing is selling to people, and to some extent that inherently involves overcoming the reluctance of a customer to purchase your product. And yes, some techniques, particularly at store level, have been refined by insights gained through psychology. And yes, of course some unscrupulous marketers will try to scam you out of money. But the vast majority of marketing is not being done by a bunch of “weasels” trying to screw poor helpless consumers out of their money. That business model makes no sense, as an ultimately dissatisfied consumer will do more financial damage through word of mouth than the initial sale provided in income.
Most marketing instead is geared towards optimizing the match between consumers and solutions. Consumers have problems that they want to solve, and products are marketed to show that they are the best solution to that problem. Psychology is used much more as a means to improve the process of matching potential customers and specific products than it is to convince unwilling customers to buy something they truly don’t want.
The example of the deluxe model breadmaker being put next to the regular model stood out to me as a particularly flawed analysis with perhaps a little corporate amnesia. If the regular model was failing to sell, very few retail stores would then expand the shelf space to accommodate a second–higher priced, no less–SKU of the same product. Unproductive products are a drag on stores–they want to get rid of them, rather than committing MORE space to them. Most likely, the regular model was selling reasonably well, so they introduced a deluxe model to provide a “better” option for customers wanting one. In the meantime, the idea of having a breadmaker was probably just catching on with the general public, so the sales of the regular model took off as people looked for the cheapest entry point for owning a bread maker. It’s not a case of “perceived value”–one reason that people want deluxe versions is that they actually perceive that they get proportionately more value for the extra money.
The fact of the matter is that if you–the consumer–aren’t looking to solve a specific problem, then no marketing in the world will convince you to purchase a product, regardless of how weaselly a marketer might be. If that were possible, then they’d be routinely selling ninja bikes to elderly women or diapers to young frat guys. The key to the situation isn’t that people offer products for sale or try to make them desirable. The key is that you have to clearly define which of your problems *need* to be solved, and what level of solution you truly need (and can truly afford).
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Alright, I HAVE to jump in this time. First, @Brian and J.D., being upset with a bank is like being upset at a wall, both are inanimate objects. Americans have a right to be angry. Agriculture subsidies meant for small farmers go to huge agribusinesses instead. All the people who made massive profits on their commissions from writing bad loans got to keep that money. Insurance companies like AGI who were supposed to mitigate our risk decided to indulge in their own risky behavior, raked in huge bonuses and then got rewarded for bad decisions with our tax dollars. One of the reasons health care is so expensive in the U.S. is because administrative costs are over 25 times higher in percentage terms compared to Canada .. because we pay a middleman(Insurance companies!).
The poor and middle class get robbed on a daily basis but it’s legal. If you were interested in a position that offered you a lifetime retirement, no social security taxes, free health care for life and personal power for only working 2 to 6 years (Are you thinking congressman or senator yet?), don’t you think you would cater to your employers, AKA major campaign contributors? We have a right to our anger. The blame is ours, our parents and their parents… we let it happen. This country needs major reforms on so many levels it’s sickening. I imagine Jefferson is spinning in his grave!
@Nancy,#8, You are correct, there are plenty of ethical people working in marketing. Too bad capitalism rewards the unethical better than the ethical too much of the time. Dan’s book just exposes some of the ways that the less informed are taken advantage of, it’s up to us to become aware and fight those measures. Hunger is a “problem” we all have. Grocery stores take advantage of that.Is that ethical?
They will say that it is, because they have a responsibility to their shareholders to maximize profits. As long as we embrace the philosophy that says, “Greed is good”, the poorest and least informed of our citizens will continue to suffer.
No one has all the facts or answers. I just know that as long as it’s acceptable for the highest compensated person in a company to make over 100 times the wages of the least compensated, change will be slow in coming. Ignorance is NOT bliss. It’s hunger and poverty. It’s people becoming addicts, self-medicating their depression. It’s dropping out of school because you know you are already ill prepared for college and your family needs your minimum wage help.
This is a blog about bettering your financial life.
I appreciate your efforts J.D. You are helping most of us. Sorry about the rant, but it IS the “Rants and Raves edition”. Hopefully my comments will spark discussion and thoughts on how we can all improve the situation.
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Wow…I have to agree to the rants, this country is messed up in regards to corruption and fairness. I was suckered into the stock market by financial sales people telling me that I would get an 8% rate of return on my investments. I got negative 1% over 15 years. Anyhow, have a nice day
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I found the link to the article “9 ways marketing weasels try to manipulate us,” very interesting, and you can plainly witness the effects of it, especially number 9 (Leverage Pricing Bias). If anyone reads the comments to JD’s Tuesday entry, Slash Your Grocery Bill With Store-Brand Products, they will clearly see where Leverage Pricing has worked its magic on even the savvy crowd of GRS readers. The lesson in this case is that price does not always equate with quality, although folks will try to find a way to rationalize why they choose to pay more for certain things rather than lower-cost goods and/or services, even if there isn’t a logical reason to do so.
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Spending this beautiful autumn weekend with family in Michigan, and I just took an apple cake out of the oven. Bought the apples from the farmer yesterday. So I’m feeling your “Little House” statement.
I hope your fall continues to go so well!
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My wife and I started a wedding planning / coordinating business (LLC) this month in Virginia for < $200. It might be even cheaper if we didn’t live in the richest (and highest taxed) county in the state.
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Woa wait a second, most businesses can be launched for less than $1,000 or even $100? I need to network with some of you who have done this! I (as many people) would love to start some sort of small business this year to make cash on the side.
Anyone else have successes with launching a business with little to no cash?
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JD. We are so lucky to live in the beautiful pacific nw. We are just coming up to the best season of the year in my opinion. I have enjoyed following your blog for the past two years. About your upcoming europe trip; have you considered river cruising? I know you mentioned a Rick Steves tour, but you might check our Avalon Waterways for their trips. We just returned from a great trip up the Rhine River. The perfect amount of sightseeing and intimate ship size.
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