Discounts on gift cards via eBates

The eBates website that I mentioned the other day lets you buy gift cards and gift certificates from certain vendors. You can use this to get a discount on gift cards.

They have a page listing merchants that you can buy discount gift cards from. The list includes Borders with a 8% discount, Zappos 5%, Sears 4%, Old Navy 6% and others. THey also give a discount of 4% for GiftCertificates.com which sells gift cards and certificates for many vendors.

The GiftCertificates.com website has a variety of merchant cards. Amazon.com, American Airlines, Crutchfield, The Gap, Marriot, McCormick and Schmick (cheaper via Costco for 20% off), REI, Regal Cinemas, and many others. However with the GiftCertificates.com site some of the cards do have fees. The fees could eat up the discount. For many of them the fee is $1.00. If you're buying a $100 certificate then thats 1% and you still come out ahead 3%.

The best deal from eBates is the Borders gift cards at 8%. The Amazon cards via GiftCertificates is also a decent deal at 4% with no fees.

Net worth update : Oct. 2008 = -$17,638

It was another negative month for Net worth. I'm down $17,638 for October. I track my net worth as Freeby50 at NetWorth IQ.

Again most of the drop was losses in the stock market. Plus our house value dropped a bit too. We also had some extra expenses this past month for a short vacation and some entertainment expenses. But those expenses are not reoccurring and come out of our annual discretionary spending budget.

What is the most you should borrow for college?

With college costs running $13,589 a year for public university or $32,307 for private schools it is rare to fund an education entirely out of pocket so many students end up taking on some debt. Some students end up taking on more debt than they can handle paying off after they graduate. That raises the question: How much student loan debt is too much?

From the FinAid.org site they said this: "A good rule of thumb is that your total education debt should be less than your expected starting salary. If you borrow more than twice your expected starting salary you will find it extremely difficult to repay the debt."

They base this on how much loan payments will be and how much of someones income is reasonable for someone to have to put towards student loan payments. If the payments eat up too much of your income you won't be able to handle them. This is the same kind of idea as not buying a house thats more than you can afford.

In addition they have calculator to help give you some guidance on how much student loan debt you can reasonably handle. Student Loan Advisor - Undergraduate Students
For example lets say you want to be a journalist. The advisor recommends that you not take out more than $29,555 in total student loan debt. They say for a journalism major: "It is recommended that you borrow no more than $7,388.75 per year (for four years), for a total educational debt of $29,555.01 . If you borrow more than this amount, you may find your monthly loan payments too burdensome." The way they calculate the recommended maximum loan is based on the expected salary level of the profession and loan terms of 10 year period and 8.25% interest rate. You can throw most majors into that advisor and get guidance on realistic debt levels for the career.

There are also graduate student versions: Student Loan Advisor - Masters Students and Student Loan Advisor - Doctoral Students

So if you're headed to college soon or planning on it in the future consider how much loan debt you should take on. Following the rule of thumb of taking student loan debt of no more than your expected salary is a good idea.

Misleading failure rates on small businesses

It seems to be common knowledge that 80 or 90% of small businesses fail in the first year. I've heard this statistic enough times that it seems as if it must be a fact proven multiple times and written in stone somewhere. But the problem is its not really a fact.

I mentioned a while ago that Matt at YFNCG posts in Statistics Shmatistics about the wide variation in statistics cited about failure rates of new small businesses.

In his article he cites several sources with statistics on the small business failure rate that are all over the place.

Matt cites sources with failure rates as high as 95% and as low as 25%:

“Nearly half of small businesses fail within a year…90 to 95 percent of small businesses fail within five years.” - Acording (sic) to this wisegeek.com article, the stats come from the Small Business Association, but they don’t say what reports were used or who in the SBA reported them."

versus

"In an article on Small Business Trends Scott Shane presents stats from his book that show only 25% of businesses fail after the first year and 50% are still going strong after year 5."

I just found another source myself from Dr. Gregory B. Murphy a professor at the college of business at University of Southern Indiana where he explains why the numbers might be so far off:

"Conventional wisdom regarding small business failure rates is based on the assumption that if a small business can be identified as new in a given year and cannot be identified five years later, it’s a failure."

So if the business is in a list one year and not on the list the next year they count it as a failure.

"Just because a small business is no longer listed in a given source doesn’t mean it is no longer there. A number of sources that list small businesses are based on compiled yellow pages. Other sources require the small business owner to pay a fee and/or provide company information to be included in their listings. So what happens if a small business is no longer listed in a source because the owner no longer wants to pay the listing fee or provide the requested information? You guessed it. If that source is being used to track the small business, it probably will be counted as a failure — even if nothing else about the business has changed."

So part of the problem may just be poor quality data.

Other reasons why the 'failure' rate data isn't necessarily good is what they call a failure:

"If an entrepreneur successfully starts and grows a business and then sells it to another company at a nice profit, should that business be counted as a failure because it no longer exists as a separate entity? Clearly not. If a near-retirement professional starts a consulting company to cap off his or her career and does so successfully and then retires, closing the business four years later, should that business be counted as a failure? Ironically, very successful small businesses may be mistakenly labeled as failures."

So if you sell a business then it could end up in the 'failure' bin. Clearly that's not right.

The high numbers in the 80-95% range don't even pass a sanity check. Think about how many businesses you know of in your town. Consider all the restaurants, bars, barbers, furniture shops, car dealers, and all the other small businesses. Then think about how many of them went out of business in the past year. Is it anywhere near 80-90%? I'd bet its almost always not nearly that high.

If you hear someone say that 80 or 90% of businesses fail in the first year then take it with a grain of salt.