Carnival of Personal Finance #214

This week the carnival appears at Poorer Than You with a US Presidents theme. That’s not a group particularly known for handling personal finances well. I think the only two that accumulated serious money outside of politics were Washington and Bush the Elder. But several of them are pictured on our money, so I guess it’s a natural connection anyway.

Five_Presidents Darwin’s Finance contributed a post that warms the dark cockles of my cold heart, Median vs. Mean: Know the Difference or Risk Being Manipulated. Actually, there are quite a few concepts you should know or run the risk of being manipulated, but median and mean are a good start. I do have one issue with the post, though. Darwin says that "average does not always equate to mean." I suppose anything is possible, but the word "average" is defined as arithmetic mean. You can look it up.

My grim view of things was further reinforced by Modern Gal’s When Personal Finance Jumps the Shark. Too much of PF advice is repetitive drivel. (And yes, I am old enough to remember that episode of Happy Days.)

In the it’s-harder-than-you-think department, Realm of Prosperity shared 8 Things That Do Not Affect Your Credit Score. Except that it’s really only 7. #3, an overdraft on your checking account, will likely increase the ratio of outstanding debt to credit lines.

Continuing with the crazy eights, we have 8 Reasons Credit Cards Beat Debit Cards from Bargaineering. Bizarrely, he leaves out the reason at the top of my list, the free float (interest-free loan) you get between when you buy something and when you pay your credit card bill in full.

Speaking of credit, from The Sun’s Financial Diary we learn that the Commonwealth of Virginia has started a new program to loan its employees up to $500 at a modest 24.99% interest. How thoughtful of them. I wonder what the media reaction would be if a company, e.g. WalMart, was similarly thoughtful.

And our last credit themed highlight is a long and thorough College Student’s Guide to Credit Cards at the Dough Roller. Just in time. Given that this financial kegger will come to an end in February, when marketing on campus becomes more restricted and issuing cards to those under 21 becomes illegal, I’m betting it will be an intense fall semester of college card marketing.

Creating the Perfect Faith shared analysis of Sex and the Wallet. Regular readers of BMA will recall that I have several times been disappointed by post titles that implied a discussion of the monetary aspects of sex and failed to deliver. This time I was not disappointed. Condoms are cost effective. Stay away from expensive lingerie and invest in rechargeable batteries for your "toys." It’s a good and practical post, but I think it misses the larger point. The best things in life may not be truly free, but they are a very efficient use of your entertainment/recreation dollar. (And what it they weren’t? What are you saving up for? A flat screen TV? Get real.)

Finally, as some of you may be aware, it is a Federal law that no person old enough to remember Fonzi waterskiing is allowed to use Twitter. I was okay with that, until I discovered from My Life ROI that you can use Twitter to get a Job. Suddenly, the reason for my continued unemployment becomes clear. As soon as my daughter gets back from camp I will have her explain the post to me.

10 Comments

  • By gpr, July 21, 2009 @ 10:45 am

    Given that this financial kegger will come to an end in February, when marketing on campus becomes more restricted and issuing cards to those under 21 becomes illegal,

    I think you are seriously underestimating the creativity and ingenuity of marketing people.

  • By ElizabethG, July 21, 2009 @ 10:57 am

    Thanks for the link. Indeed, I think financial reporting has hit a new low. In my mind, I keep replaying the old skit (SNL?) where they talk about the financial institution where you can get two nickels for a dime, or four quarters for a dollar…

  • By Rob Bennett, July 21, 2009 @ 11:43 am

    If we were starting with a clean slate, there is not one person who would advocate Passive Investing, given what we know from the academic research of the past 28 years. Our entire problem is that people who work in the money field feel that it is a mortal sin to admit a mistake. Those who are incapable of admitting mistakes are incapable of learning anything new.

    We have reached a point at which the only way in which we can move forward is to experience an economic crisis so big that people will become sufficiently concerned about the survival of the system as a whole to become open to the idea of admitting mistakes made in earlier days.

    Watching this all play out in real time cannot help but inspire sadness. The other side of the story is that the opportunities on the other side of the black mountain are truly amazing; lots of people have been learning lots of exciting stuff over that entire 28-year time-period. Once we get to a point where we feel free to talk about the realities, we can go to places that few dream about today. So pain does serve a purpose.

    Rob

  • By Bruxelles89, July 21, 2009 @ 12:01 pm

    I think your euphoria at discovering a true sex-enomics post has blinded you to the bad math hidden inside. I realize it’s clearly an innocent mistake, but 24 condoms for $16 doesn’t work out to $1.50 each as written. In fact, each condom only costs $0.66, making them much cheaper than birth control.

    Again, I realize that this was an innocent transposition of the numbers (24/16 vs. 16/24) but I was sure you would have checked the math.

  • By Jim, July 21, 2009 @ 3:17 pm

    I knew there was some force keeping me away from Twitter. I had no idea that Fonzi was involved. But it all makes sense now.

  • By Ann, July 21, 2009 @ 3:33 pm

    Re average not always being same as (arithmetic) mean: Some statisticians like to follow the convention of reserving average to denote the sample statistic and mean to denote the population quantity, and write sentences like this one: “The sample average gives a point estimate of the population mean.” But Darwin wasn’t referring to this particular convention, which deserves to be better known and appreciated.

  • By mwarden, July 21, 2009 @ 5:20 pm

    Frank, “average” is not the same as “mean”, so your criticism is misplaced. The mean is only one measure of average, which is defined as the central tendency of a distribution. The central tendency of a skewed distribution is normally described using a median, as you are aware, but this *is* a measure of the average! Wherever you saw that average=mean is incorrect.

    Two other forms of average that are sometimes used are mode and range, although I see little point in them.

  • By Frank Curmudgeon, July 21, 2009 @ 6:29 pm

    Bruxelles89: I am deeply humiliated.

    Ann: I’ve never seen that particular convention, and it would have driven me nuts if I had. Mu and X Bar work fine.

    mwarden: I looked it up in two dictionaries. Both mentioned arithmetic means. See, e.g., here. I do myself sometimes use it to signify geometric mean when I talk about investment returns, but I think that using it for median is just a mistake. Obviously, there are contexts in which no mathematics is implied, e.g. “She’s an average looking girl” but a statement such as “The average house price in the US is $X” is unambigous.

  • By mwarden, July 22, 2009 @ 8:49 am

    Frank,

    I was not disputing that “average” *can* refer to “mean”. Even the link you provide has definition #4, which indicates a category of measures, not a specific one.

  • By Dr. Faith, July 27, 2009 @ 12:36 pm

    Thanks for taking the time to review my post on your blog. I really appreciate it. =)

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