House Resale Fees are a Good Thing

On Saturday The New York Times discovered yet another example of evil business fleecing wholesome Americans. Resale Fees That Only Developers Could Love opens with the usual tropes.

Rebecca and Trent Dupaix of Eagle Mountain, Utah, spent a year searching for their dream home. The couple, who have five children, considered 15 to 20 houses before finding “the one.”

But four months after buying the “rock-and-stucco home” the dream turns to a nightmare when

the Dupaixs discovered that their sales contract included a “resale fee” that allows the developer to collect 1 percent of the sales price from the seller every time the property changes hands — for the next 99 years.

Incredibly, the resale fee arrangement was apparently not disclosed to the Dupaixs, something that is either outright fraud or spectacular incompetence on the part of the title company and whoever ran the closing. It can be inferred from the article that the Dupaixs did not have a lawyer.

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How to Bet Against Your Marriage

Happy with your current spouse but concerned that you may not make it to death do us part? It is not an unreasonable fear. According to government data, compiled by, of all agencies, the Centers for Disease Control, about one  third of first marriages end in divorce before their tenth anniversary.

Don’t worry. To paraphrase Apple marketing, there’s a derivative for that. You can now buy divorce insurance. Pioneered by a new on-line outfit called WedLock, it is available in 46 states and the UK.

Here’s how it works. You pay monthly premiums for four years. If you get divorced after that, you get a check to help ease your pain and pay expenses. (Sadly, you cannot bet against the marriages of others.)

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Frugal Friday Back to School Edition

As we all know, the frugalosphere is a seasonal beast. August brought, of course, the usual spate of back to school tips. Most were obvious and ordinary, although Coupon Shoebox did suggest that “If your child is old enough to be earning some money, or if you provide an allowance, you can consider letting him or her buy one or two supplies.” They will thank you someday.

Also possibly seasonal, perhaps brought on by the high temperatures that put us all in thrift store shorts and tank tops, was more than the usual amount of discussion of the intersection of frugality and weight loss.

Wise Bread explained Why Going to the Gym Is a Waste of Money, Time, and Resources by disclosing the little known fact that exercise does not help you lose weight. They cite an article in Time which uses “solid-sounding research and academic experts.” This is good news for the frugal, who need no longer struggle with the conflict between the desire to sweat through “no pain no gain” at the gym and the desire to sacrifice the monthly expense of a membership.

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On Money and Psychology

[Today’s Thursday re-run first appeared June 15, 2009.]

One of several recurring sub-themes here at Bad Money Advice is that some givers of personal finance advice, particularly the mass market gurus, say things that can only be justified assuming an irrational audience incapable of acting in their own best interest.

So, for example, when Suze Orman tells her readers that they should absolutely never borrow from their 401k account to pay off a credit card balance, I give her a hard time for giving terrible advice based on the assumption that her audience has no willpower and will merely run up the credit card balance again.

But when I criticize the gurus for giving bad money advice that is, in fact, bad psychotherapy, I do not mean that everybody ought to be able to behave in a perfectly rational manner around money. Quite the opposite. We are all merely human, not uber-logical Vulcans. We act sub-optimally around money (and everything else) for a variety of emotional and behavioral reasons.

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Summer Housing Anxiety

Late August had more angst and gloom about the housing market than usual. Had I been blogging last week, I would have written about it on the last Wednesday of the month, my usual housing market slot. (The Case-Shiller Index numbers come out on the last Tuesday.)

The proximate cause of the wave of pessimism were two reports on the low levels of house sales in July. The National Association of Realtors revealed that existing home sales were down 27% in July from June. And sales of newly constructed houses fell 12.4% to a new all-time low.

The New York Times reported this with the headline Housing Market Plunged in July, Fueling Anxiety. Anxiety may indeed be being fueled, but the housing market, at least the one most of us care about, did not, as far as we know, plunge in July.

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