Dear Cheapskate Relatives : I don't Want Your Crappy Handmade Gifts

Dear Cheapskate Relatives,

I do not want to receive your poor quality handmade gifts for Christmas.      I'm sorry but your craft work is not really something I want.   The out put of your hobby is not something I desire. 

I know that you may have  read somewhere that giving a handmade gift is a good way to save money during the holidays.   That could be a good idea if you were actually able to make handmade stuff that anyone wanted.   Mostly thats just trite advice that gets copied and pasted and repeated back and forth from one advice column to the next.  I don't know if those people giving that advice actually think most people can make good gifts or what.  

Wouldn't want it even if I was named Bruce.

Let me ask you this... would you honestly like to receive any of my craft projects as a gift?   I know you wouldn't.  So why do you think I'd want you giving me your craft projects.   If you're honest with yourself you'll know that I don't really want that stuff. 

I appreciate you may be cheap or simply broke.   Thats fine and I don't hold it against you.   If you don't have the money or simply don't want to spend the money then its all right by me if you don't give me anything at all.    But please don't punish me by giving me a poorly made hand crafted gift I don't want just cause you don't have the money or simply don't want to spend it and don't want to feel guilty about not giving me a gift. 

If you want to be a cheapskate then thats OK.  WE know our family is full of them.   Just give me a cheap gift or something free or simply give me a card you print out on your computer for free which I'll just discard.   Please don't give a gift that takes you a lot of time to make and that I don't actually want.    If you don't want to give me a gift at all then thats just fine.   Honestly.  If clinging to all your money desperately is more important to you than spending some of it on your relatives then just be honest with yourself about that    Thats what being a cheapskate is about... caring more about your money than other things.

Hand made laptop sleeve?  No thanks.*

I have particularly low sympathy for you if you have debt problems.   The fact that you're up to your eyeballs in debt wasn't any of my doing.   I don't see how I should be punished by being forced to act like I enjoy getting your hand made junk as an excuse for a gift.  I didn't force you to buy that new truck that you are having trouble affording and I certainly didn't have anything to do with you getting all that credit card debt.  Not that I don't understand or have sympathy for your situation.  You know I've had a pile of debt in the past too.  But you know my debt never resulted in me giving you my hand crafts for Christmas.

If you were better at making stuff by hand then maybe I'd feel differently.   If you could cook as well as my sister then some nice home cooked baked goods might be a good gift.   Or if you could knit like my cousin then a hand knitted blanket like the one she gave me might be great gift too.   But we know you can't make that stuff.  

Thanks,
Jim

ps. ok you may have guessed that this isn't totally serious.
pps. except the one relative of mine who should know who they are

Photo images by funkomavintage and by Lisa Brewster
*Honestly that hand made laptop sleeve is pretty nice looking. 
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Credit Unions versus Banks : Not Exactly Win versus Fail

One of the recent trends I've seen is bashing of mega banks on one hand and blind gushing praise of credit unions on the other hand.   The way people talk you'd think that credit unions are miles ahead of large banks in terms of service and offerings.

Surely credit unions do a better job as a whole in the area of customer support and many large banks have poor service.   If you generalize its easy to conclude credit unions are better.  But.. its not as if credit unions are perfect and never have flaws.   I myself quit a credit union years ago cause they started charging stupid fees that banks didn't charge.  Kind of ironic that is the exact reason many people are switching away from banks today.  

According to a large survey of over 6000 customers done by  PrimePerformance the satisfaction levels with banks is lower than credit unions, but not by a huge amount.   They found :
" 88% of customers at Credit Unions and Small Banks were satisfied with the service they received; only 1% of Credit Union and 2% of Small Bank customers were dissatisfied. Large Banks and Wells Fargo both ranked in the middle with 78% of customers satisfied and 4% dissatisfied. 74% of Bank of America customers were satisfied, with 4% dissatisfied."

As a group credit unions and small banks are 10% ahead of large banks.   Thats significant.  But we're talking about a 10% gap in satisfaction not a 90% gap.    There are still 12% of credit union customers who are not satisfied.    Thats a pretty significant minority don't you think?   I mean 88% is a B grade not an A+.  

You also have to consider that not all credit unions are created alike.  As a large group the satisfaction levels are high but there are certainly going to be individual credit unions that have lower customer satisfaction than large banks.   There are thousands of credit unions with different management and widely varying quality levels.   The average credit union may provide better service than the average large bank but that doesn't mean that every credit union will perform better than every bank.

If you look at the detailed study from PrimePerformance you can see something interesting in the regional break downs.   In the Southwest region including Arizona, New Mexico, Oklahoma and Texas the credit unions don't have as many happy customers.  Credit unions in the Southwest US states have lower satisfaction ratings than large banks and small banks.  Southwest credit unions had a 83% satisfaction rate there versus 92% for small banks and 85% for large banks.    In the Western states the credit unions also fell behind small banks.   There credit unions had 85% satisfied customers versus 89% satisfied customers at small banks.   

In California credit unions do better than banks in broad satisfaction survey as well.  But if you look at the detail in a PrimePerformance survey on California market specifically you'll see the top rated credit union there actually had more customers with problems than several megabanks.   The percent of customers with problems or complaints in the past 12 months was 18% at Golden 1 Credit Union.   That was beat by Bank of The West and Union Bank both at 12% as well as Wells Fargo and U.S. Bank who had 17%.  To be fair, Golden 1 Credit Union did better in all the satisfaction ratings so they have more happy customers.  But its notable that they do have more customers who've had problems than many large banks.   Maybe the credit union customers are more forgiving of problems.

Of course I'm not arguing that credit unions are bad.   There are a lot of good credit unions out there that do a great job.   As a group they have higher satisfaction than any of the major mega-banks.     My point is that credit unions aren't infallible and their performance isn't really miles better than a typical large bank.  Individual credit unions may very well be worse than the large banks in their customer satisfaction.  Even the credit union with the highest satisfaction rating in California has nearly 1 in 5 customers with problems and complaints.

Bottom Line : Credit unions may do better than banks as a whole, but credit unions aren't all awesome.
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Is High School Worth It?

It seems that one of the topics du jour lately is to ask "is college worth it?".    If you're going to question whether or not college is worth it then why not question if High School is worth it.    I think the same logic applies generally.  If you're going to rationalize why college is a waste of time and money then can't you also rationalize yourself out of wasting 4 years in High School?

It seems that the prevailing opinion nowadays is that high school is so watered down and lax on standards that it is useless.   We bemoan  that our kids can't read or write and the USA lags every nation in the world on every kind of academic test.    Ok thats an exaggeration but it seems to be the kind of attitude people have about the quality of K-12 school in the USA nowadays.   But it begs the question : If we all agree that HS is horrible then why even bother going?

If you look at the statistics it is clear that people with high school diplomas make more money and have lower unemployment on average compared to people with out a diploma.    But those are just averages and everyone can come up with anecdotal evidence to counter such averages.    Doesn't everyone know someone without a HS diploma who has done well for themselves?    I know at least a couple people who never officially finished HS but who are doing fine financially and have higher incomes than average college grads.

I bet you that we can also find a super rich millionaire or billionaire who didn't finish high school.   Just a little research and I find an old Forbes article that cites two billionaires who never finished high school.   J R Simplot who made a fortune on potatoes and Micron and Alan Gerry who made his money off his company Cablevision.   Both dropped out of high school and ended up billionaires.

So here are the main points against a high school education:

• The education isn't really valuable.
• You can learn that stuff easily on your own elsewhere.
• If you don't do HS then you can get get a 4 year head start in the workforce and get paid to work that whole time which puts you 4 years ahead.
• Everyone knows someone without a HS diploma who is doing fine.
• There are even billionaires which act as evidence that you don't really 'need' a HS diploma.

There you go.  Everyone should drop out of high school, right?

Before you answer that let me assure you that I'm not serious.   I'm making this argument to try and illustrate why I think the 'is college worth it' argument is sometimes irrational.    Look at the bullet points above.   All these arguments are made about why people shouldn't go to college.   If you're going to ignore higher wages and lower unemployment as the key benefits of a college degree then why not argue that HS should be avoided as well?    I mean if the argument applies to college then why doesn't it also apply equally to high school?



If you are a poor student and don't put in effort, if you are a super talented one in a million entrepreneur or if you choose to study a field that nobody wants to pay well for or that has excessive supply of aspiring employees then further education may not be your best choice.   But for most people further education is absolutely worth while.

Here are the key reasons why high school and college are both worth it :

Education is what you make of it.    Yes you could fail to learn anything in high school or college and walk away with a meaningless diploma or degree.  But if you apply yourself then you can gain a valuable education.

Higher income and higher employment levels make college and high school better value in the long run for most people.   Making significantly higher income over the bulk of your working career will make up for spending an extra 4 years getting the education.

Anecdotal evidence of people who buck the trends or the exception to the rule billionaire isn't a good argument against something.   There are always exceptions but we don't run our lives based on rare exceptions.

Why I Don't Like Giving Friends a Ride to the Airport

It is common etiquette to give your friends and family trips to the airport when they are going out of town. Its taken as a given that if you drive a friend too & from the airport that they will return the favor thus saving you parking costs. I disagree with this idea and I avoid offering to give people rides to the airport. For me its simply not worth the time and effort to drive people to the airport.

I know that refusing such a favor is probably seen as selfish if not outright offensive by some people. Its what friends do for each other right? Well bear with me and let me explain my logic:

For me personally a big reason I don't like the idea is that our airport is on the other side of town. To drive from my side of town to the airport is around 30 miles and at minimum takes 45 minutes. But to allow for traffic and depending on time and day of the trip you should really allow 60-90 minutes to make sure you get there in time. Driving a friend to the airport requires two complete round trips.

Lets compare the two options.

Cost of Driving yourself:
Time: 1 person x 2 hours = 2 hrs
Gasoline: 60 miles = $5 in gasoline
Parking: $10 / day

Cost of Driving a friend:
Time : 1 person x 4 hours + 1 person x 2 hours = 6 hours
Gasoline : 120 miles = $10 gas
Parking : $0

Difference:
Driving a friend saves $10 / day in parking but costs $5 more in gasoline and 4 extra hours of someones time.

Is 4 hours + $5 worth saving $10 a day? It depends on how many days you'll be parking at the airport.

Here is the savings per hour based on # of days
1 day : $1.25 / hr
2 days : $3.75
3 days : $6.25
4 days : $8.75
5 days : $11.25
6 days : $13.75

In other words if you take a 1 day trip then the airport parking would be $10. You'd spend an extra $5 in gas so the net cash savings would be $5. You'd be spending an extra 4 hours of time to save that $5. So on an hourly basis you're saving $1.25 / extra hour spent for a 1 day trip. For most people 4 hours of their time is worth more than $5 and they could find better things to do to generate more savings. For a very long stay it gets more worth it to drive someone to the airport. But for me and my friends our typical trip is in the 2-5 day range.

Of course the exact savings will vary from one situation to another. This whole argument only works if you live far from the airport. My mother in law lives only a few miles from the airport so in her case it is much easier for her to pick someone up from the airport. She can let a friend or relative park at her house and then spend 20 minutes each way to ferry them to the airport. Thats only 40 minutes total in time plus a few cents of gasoline. Since she lives so close to the airport, in her case its almost always worth it to make the trip to drive other people to and from the airport. The closer you live to the airport, the more sense it makes to give people lifts to and from the airport.

The key reason I don't think making trips to take friends too and from the airport is worthwhile in my case is that we live so far away from the airport. The time and extra gas cost to drive across town is significant in my situation. Plus to be honest I really don't like fighting cross town traffic.

How can you say 'no' to your friends?

Of course if your friend asks you for a trip to the airport it is not always easy to refuse the favor. Its considered the duty of a close friend to drive someone to the airport. You could risk offending your friend by appearing selfish. Just to assure you all that I'm not a socially incompetent jerk: I wouldn't just plain refuse to drive a friend to the airport. It really depends on the situation. Most of my friends can afford airport parking. In those cases I might ask them if they think its really worth it for me to drive them. I would politely point out that it would take an extra 4 hours of my time and about $10 of my gasoline and ask them if they think thats really worth it to save them the parking fees. They may readily agree with me that its not worth spending hours of my time to save them the parking cost. In other situations if my friend is not doing well financially then I will go ahead and give them a lift in order to save them the cost of parking.

Everyone has to make the personal judgment if giving a friend a ride to the airport is the 'right' thing to do given the situation and the nature of the friendship.


Other Frugal Alternatives:

Park in discount parking lots near the airport. These are privately ran parking lots that are near major airports and have a shuttle from their parking to the airport. It will generally take you a bit longer to park at their airport and get to the terminal but their parking is a decent discount over airport parking lots. One lot at our airport charges $7 a day and is about 10 minutes from the airport. So by spending an extra 20 minutes you can save $3 a day.

Take Public transit. Taking mass transit to the airport is a bit of an inconvenience and might take an extra 30-60 minutes each way at worse. But the cost is only a few dollars per person each way. If one of my friends were to give me a hard time about not wanting to drive them to the airport then I'd offer to buy them a round trip transit ticket.

Airport Shuttle vans or taxis. Depending on where you live you might be able to get a shuttle van or a taxi to the airport for less than the cost of driving yourself and paying for parking. Here a taxi or shuttle would cost me about $100 round trip which is not very practical. However they might be more reasonable in your area and would be worth checking into.


You should not let a frugal concept ruin a friendship. But maybe you and your friends or family should discuss it and look at if driving each other to the airport is the most practical option.


Photo by Matti Mattila

A Lot of People Waste Money Going to College.

I want to preface this article by being clear that I think a college degree is usually one of the best financial moves that you can make. A college degree can be worth a lot. However, going to college isn't necessarily a good move for everyone.

We probably all personally know people who either aren't utilizing their degrees or didn't graduate from college. One of my friends went to a private college and ended up with significant loan debt. He got a liberal arts degree and has not yet found work that actually required a degree. My sister went to college for a couple years and quit. A cousin of mine went for maybe a year before dropping out. In my family we have 5 people from my generation who went to college and only 3 of us graduated.

This is a common occurrence. A lot of people go to college but many of them do not graduate. 68.6% of the population goes to college out of high school according to the BLS. When I graduated high school about 80% of my graduating class was headed to college. Thats a lot of people going to college. Unfortunately many of those people will end up wasting their time and money in college.

According to WSJ, only 60% of students of 4 year schools graduate within 6 years. At less competitive schools the graduation rate is even worse dropping as low as 34.7% at non-competitive schools.

If you combine those two statistics that means that 68.6% of the population goes to college and only 60% of those graduate so 41.1% of the population attends college and graduates but 27.4% of high school graduates attend college and do not graduate.

With 68% of the population going to college and 60% of them graduating that means that 40% of the population will end up with a college degree. There are not enough jobs out there that really require the skill level for a degree. Many of the people getting college degrees today will end up in jobs they could have gotten without a degree.

If you or someone you know is on the road to college then it would be smart to stop and make sure that college is a good financial move. A college bound person should honestly ask themselves : What are the chances that you'll graduate? What do you plan to do with your degree? Will you be able to make a decent living based off your degree? If you don't have a good plan for college that will lead to a reasonable income level then maybe college isn't the right move just now. Whether or not college is a good financial move depends on the details of your financial situation, what career field you're going into and what your personal motivations are for college.

Of course the financial benefits of college are not the only benefit. Going to college is a learning and growing experience that is worthwhile in itself.

AIG bonuses aren't that big of a deal

I'm going to take a devils advocate stance on this topic and say: AIG bonuses aren't that big of a deal.

On the face of it the bonuses seem outrageous. How dare they give out MILLIONS in bonuses while the company is bleeding money and taking a government handout!?

The bonuses have had a ton of press in the past couple days and theres lots of politicians angry over it. ITs warranted anger for sure, but focusing on these bonuses isn't going to get us anywhere.

While I don't think throwing $165M in bonuses at people who don't deserve it I also think these bonuses are not that big of a deal in the grand scheme of things. Theres some good reasons why its not that big of a deal...


1. The amount of the bonuses are almost TRIVIAL compared to the amount of money we've pumped into AIG.

Lets look at a bar graph showing the $165M in bonuses versus the $180B in federal aid to AIG:



Whats that you say, you can't even see the bonuses? Trust me its there. The bonuses are just so small compared to the total $180B in bailout funds that its not even visible when put in that scale.

What did AIG do with that $180B? We barely know. Yet we find out what they did with $165M and we all spend half a day venting about it. Lets keep things in perspective folks.


2. The bonuses aren't that much compared to total AIG employee compensation. Lets all keep in mind that AIG is a big company and they employ about 116,000 people. They do have to pay those people still to keep the company functioning. If we assume that the average pay is $50,000 per person then thats $5.8 billion in wages annually.

Comparing the $165M in bonus money versus total AIG wages:


This time we can at least SEE the bonuses versus the pay rate.

I'm only estimating the pay levels at AIG. I'm pretty sure that this estimate is in the right ballpark though. I tried skimming AIG's 2007 annual report for information on their payroll expenses but I came up empty there. I looked at Glassdoor.com and found some salary info for AIG employees and it ranged from under $40k at the low end to well over $200k at the high end. If anyone has data on total wages paid by AIG please let me know.

3. Bonuses are a normal part of pay.

At AIG and many other large companies the bonuses paid to employees annually are a normal and standard part of compensation. If dig a little more into the compensation reports on Glassdoor.com for AIG you can see that most people there got cash bonuses. Usually the bonuses ranged 2-10% of the pay. Upper executives had higher bonuses rates of 15-20% of their total. At my job everyone gets annual bonuses and they e

4. The bonuses were part of an existing contract.

The actual retention bonus contract is posted at the US House site. Note that the contract went into effect December 1 2007. SO its not as if this bonus was slipped in at the last moment after the fact. Its a long standing agreement and a contractual obligation by the company to pay it.


To sum up: The bonuses aren't that big of a deal.

I don't think the bonuses are exactly warranted or fair. But a lot of time work for pay isn't fair. I'm sure you've got a coworker who barely shows up yet still gets paid for it. Thats not fair, but it happens. The employer can hardly demand a refund. The government could actually tax the bonuses or do other things to recover some of that money. I'd really like to see the government should sue the executives at AIG who are responsible for the failures to recover any money they can.

I think we should all be 1000 more annoyed that the government had to pump $180B of our money into AIG in the first place. AIG as a company needs to die. It should be cut up into pieces and sold off. But lets quit venting about the $165M in bonus money. Thats just a drop in the bucket.