When I returned from Peru, my inbox had nearly 1000 messages to be processed. That actually wasn’t so bad — I was expecting more. Still, as you might imagine, it takes days to answer 1000 messages, and I’ll be working on e-mail until Thanksgiving, I’m sure. (I’ve finished the easy emails and have the inbox down to 378 messages now.)
Some of the e-mail contained great stories and tips from GRS readers. You folks also sent me a ton of links to financial articles around the web. Today’s edition of Spare Change is devoted to these reader submissions.
First up, Kris sent me and amazing story from Business Insider. Ben Milne, who is only 28 years old, has built Dwolla, an online service for processing financial transactions without a credit card. Naturally, the credit card companies (who stand to lose tons of money) aren’t happy about it — but consumers should be.
Next, friend of GRS Mark Gavagan pointed to a New York Times story about how a financial pro lost his house. The article (which was written by another friend of GRS, Carl Richards from Behavior Gap), describes the author’s personal experience with the housing bubble — and what he learned from it. It’s a fascinating read.
Next, Jeff pointed to an article at The Startup Toolkit in which the author describes how his father taught him cashflow with a soda machine. Not every GRS reader wants to be an entrepreneur, but for those that do, this is a fun story.
Finally, my grade school chum Andrew forwarded a short, dense piece from The Economist about the concept of slow finance, the notion that investors should exercise caution and look for companies with sound financials instead of those that are taking risks to grow quickly. How novel! And yet it is…
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The article about the financial pro who lost his house really was fascinating. The statement about feeling “safer in a crowd” was interesting.
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Re DWolla, I’m not sure if this is going to benefit consumers as much as it is going to benefit (small) businesses. My local coffee shop has complained to me about the costs of my reward credit card, and he has a good point. However, that fee they charge him, means I get a couple percentage back, and I have the ability to charge back, and I’m protected from someone stealing my card, and I double the manufacturer’s warranty.
Visa really just crushes small businesses because they don’t have the clout to fight back. The reason they don’t have the clout to fight back is because Visa is so good to consumers.
Ultimately, I use a credit card when I shop at REI, and I use cash when I buy my coffee.
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“The reason they don’t have the clout to fight back is because Visa is so good to consumers. ”
Businesses seem to always put the guilt trip of “Big mean visa is charging 2% per transaction!” on the customer, but meanwhile they get tons of extra business in the first place thanks to Visa. They don’t fight Visa because they know this. So I tend not to feel bad about using my card.
A simple test of having store A as cash only and next to it, store B as having the credit card option, you can guess which business will do better.
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I appreciate learning about these “off the beaten path” resources. I look forward to checking them out. Additionally, I enjoyed reading a magazing clip in the hair salon yesterday about how you and your wife divide up your financial resources. Fascinating that you don’t share your incomes.
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Wow! 1000 emails! That’s success.
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You had 1000 e-mails to be processed?!? I wonder how long you will take to catch up…
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I think “As apart of this” should be “As a part of this”.
I like the Richards article, but I’m not clear about the “losing his house” part. Didn’t he voluntarily sell it?
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If anyone goes to Dwolla to sign up, please let me know if you had this happen: They want you to sign in via Facebook, and when you click on the FB icon, up pops a “request for permission”. And the request asks alot. Like being able to post on Facebook as me, and accessing info on people who share with me.
That’s asking too much and is a deal breaker for me. Otherwise I think Dwolla appears to be a great business.
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I signed up the other day and just completed linking up two checking accounts. I haven’t had cause to test the service yet, but signup was painless.
I didn’t sign up through facebook – I saw that message about permissions too, and so I just signed up with a username. I never play facebook games or use any facebook apps for the same reason, even though I imagine that 95% of the apps wouldn’t abuse the privilege…
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Having read the article, I have to wonder of the “Financial Pro”, I have to wonder if the author has truly learned anything. It seems he has, but even as he finishes, he seems to still be on the fence.
One would think that as someone who tells others how to work their finances, that person would have a bit of a clue. Why would you not read and do your own work on whatever it is you are getting into?
But then it seems so very easy to get caught up in keeping up w/ everyone else in your cohort. I just do not understand following the herd off the edge.
I’ve learned that if the majority is moving in a particular direction, it is probably safer to move in a different direction. Evolutionarily this would not be sound, but in modern society, it seems to often be the better choice.
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I also wonder if the house-losing financial planner really learned anything. He said “we have almost paid off all our debt” but probably isn’t including the mortgage debt that was written off. Also he made statements like “I had to move” but you never have to do something. Everything is a choice – you just may not be willing to accept the consequences of choosing differently.
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I read the article about the financial planner who “lost” his house a few days ago and was not impressed. I thought the comments on the article were, for once, extremely interesting. One thing I did take away from the article was that financial planners must be chosen carefully for they are usually unschooled and unprepared for the field (i.e. he applied for a security job on his way to the top). Reminds me of a women who called into the Dave Ramsey about her pile of debt and tearfully confessed that she and her husband were Financial Peace instructors at their local church.
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(i.e. he applied for a security job on his way to the top)
It’s even worse than that. The job he applied for was in securities. He didn’t even know what the word meant, and assumed he was applying to be a security guard.
And they hired him.
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I, too, read the financial planner’s article and comments last week. The comments were especially thought-provoking (and generally far better than some of the ones that Glenn of “To Simplify” received after his story was published).
The comment that really hit me was the person who accurately pointed out that the writer really hadn’t LOST anything. He put no money down, pulled cash out repeatedly to fund his lifestyle choices and then cried when he was “forced” to sell. Boo-hoo. He probably received far more ca$h from his house than he “lost”. If he had been a renter, he still would have made monthly payments, but gotten no tax write-offs, no tax-free cash-out re-fis and had nothing when he moved out. What’s the difference? And to think that some people may actually purchase his book based on this exposure. Sad.
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I really liked the article about teaching cash flow by using the soda machine.
Saving, budgeting, and money management are great lessons, but a lot of people neglect to teach entrepreneurial skills to kids, and I think that omission is a glaring error. We want kids to be productive citizens, and building successful for-profit and non-profit ventures is a prime example of productivity.
Entrepreneurship is about taking action to solve problems and provide value to others. Those are basic skills that most kids have and develop, but the idea of starting your own business is daunting and foreign to many people–which is odd, because starting and running a business doesn’t have to be complicated. It takes hard work, but it’s not rocket science.
Teaching entrepreneurship is important because having your own business can give you financial freedom, greater flexibility, and the skills to be financially independent, rather than relying on a job for income. I think most parent would agree that they want their kids to be independent rather than dependent.
I started my consulting business nearly 5 years ago, and it’s truly changed my life as well as my family’s. I’ve seen my kids shift their thinking about what they want to be when they grow up, and now they’re talking more about what kinds of businesses they want to have. That perspective is an amazing gift to be able to give my children.
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Wow. Would anyone really use that financial planner? He rationalized walking away from his debts as a mere contractual obligation? His “behavioral gap” shows that he would just as likely favor his personal security over that of his clients, and rationalize it away.
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