Category: PF Blogs

How the Visa/MC Settlement Affects You

Credit-cards Lotus Head On Friday, there was a massive settlement in a seven year-old lawsuit between Visa, MasterCard, the banks that do business through them, and retailers. The retailers will get $7.25B in compensation for what was, essentially, a complex price fixing scheme.

But it is not the epic sums due to change hands that is causing the buzz. As part of the settlement, Visa and MC will for the first time allow merchants to add a surcharge to the bill for credit card use. This is a big deal, apparently. The Consumerist led with that facet of the deal. Reuters and AP mentioned it at the top. A clever report at Forbes was entitled $6 Billion Visa Settlement Frees Consumers To Pay More.

The president of the American Bankers Association (a.k.a. the head lobbyist for the banks that are paying serious money to the retailers) was quoted in the Times “Let’s be clear — retailers, not consumers, benefit from today’s resolution.”

I disagree.

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Inheriting Money in America

John D and Son Consumerism Commentary carried a post yesterday by its founder Flexo, who seems to be changing his nom-de-blog to Luke Landes, which is more alliterative and almost sounds like a real name. Should Rich Families Leave Their Wealth to Their Children? is a reflection on one of those topics that would be a recurring theme, if only we were comfortable discussing it.

It boils down to an important financial planning question. Are you saving so that you can have enough to live a long and happy retirement or so that you can have a long and happy retirement and then leave a little something to the kids? Or maybe even more than a little something?

If you poke around the mainstream personal finance literature, you will find that leaving money to the kids is rarely discussed or even mentioned as a possible savings goal. Indeed, there is a vein of personal finance literature that emphasizes how important it is to not give money to your grown children.

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How to Beat Inflation

Wise Bread just ran a post on How to Understand and Protect Yourself From Inflation. I often think pieces on inflation are obvious. But perhaps I am just showing my age.

Since 1984 (when I graduated high school) inflation has averaged about 2.9%. And it has been pretty stable, falling outside the 1.1% to 4.6% range onlyChicklet-currency twice. (0.1% in 2008 and 6.1% in 1990.) That is almost 30 years of smooth sailing, a period when inflation was an easily ignored background hum.

Indeed, inflation of 3% is not something you usually notice directly. Prices for things change all the time, some up, and even some down. Only when the government totals it all up do we find out prices were up 3% on average.

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Ode to The Wealth Report

Turns out, that post from the WSJ’s Wealth Report that suggested that the rich work harder, which I discussed last month, was the last ever Wealth Report post.

I will miss it. Although not the largest producer of grist for my mill, it contributed its fair share. And I never did quite figure out who its intended audience was. Apparently, the blog aspired to being something for theKeyboard a-Michael Maggs wealthy to read. I am betting that is what the WSJ editors, salivating over potential ad revenue, had in mind. But in practice it had more of a gawking tourist in Richistan tone.

It inspired posts from me such as The Truth About the Economics of Investment Help and Millionaires as Role Models. I even got a little mileage out of the Wealth Report’s shocking revelation that people who make $300K do not feel rich.

Alas, no more.

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Are High(er) MPG Cars Worth the Money?

The Consumerist headlined a post the other day It Could Take Years For Some Fuel-Efficient Cars To Be Worth The Savings On Gas. The title was enough to annoy me.

It seems that some car makers produce higher MPG versions of their already fairly fuel-efficient offerings. And, of course, these special versions are a bit more expensive. Assuming that all a consumer is interested in is money (and not greenness) the question is whether or not that additional cost is justified by the savings on gas.Japanese_car_accident

And there is an accepted and well justified right way to answer that question and others like it. Basically, and I will get to details in a moment, you consider the extra cost as a potential investment with a projected return and compare that to other investments you might otherwise make with the money.

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