Free Garmin Nuvi GPS, Oursourcing, and the Role of Speculators

Here are some links that I found interesting this week.

Free Nuvi with TD Ameritrade deposit (The Financial Engineer) - Open a taxable account with TD Ameritrade, transfer $50,000 and receive a Garmin Nuvi 660 GPS (~$330). I can use a Nuvi. Very tempting to do an in-kind transfer and just hold the positions there for a year. Link to offer.

Economics of Shared Living: Estimated Savings From Having Roommates (My Money Blog) - Renting a larger place with roommates saves money.

OC Register to outsource some editing to India (Business Week) - How do you like your local newspaper edited and laid out by people in India? We should know by now even the traditional white collar jobs are subject to direct competition from abroad.

In Praise of Speculators (My Two Cents) - After bubbles are over, the society is left with some great things, built with speculators' money. Are speculators good or bad?

Misery Index, Zappos and Expensive Loans

I'm catching up with some reading because I've been busy with work lately. Here are some interesting articles I liked:

Hedonically-Adjusted, Well-Spun, Nominal Misery (The Big Picture) - Are the reported inflation and unemployment numbers artificially low compared to what were reported years ago? Maybe. But what can you do about it?

Credit/Debit/ATM Cards and Foreign Exchange (FlyerGuide Wiki) - All you want to know about spending money and getting cash when you are in a foreign country.

Why Zappos Pays New Employees to Quit And You Should Too (Harvard Business) - Zappos sells shoes online. I've always had great service from them. Although their prices are not always the lowest, unless they are much more expensive, I always choose Zappos. Great service is worth a few bucks.

The End of Entitlement (Newsweek) - Be prepared to deal with the new economic reality.

Why Is This Legal? (Credit Slips) - How do we strike the balance between consumer choice and consumer protection? Should expensive loans be illegal? What about other expensive stuff? Should we regulate prices?

In 2028, 1.40% EE bonds will earn 50% in one day (Savings Bond Advisor) - The 1.4% EE bonds are a rip-off. Why is this legal?

Farmers Market and Brown Eggs

I don't know why I missed out for so long. I visited the farmers market in my town for the first time last weekend. What a pleasant experience! There are a lot of vendors selling produce. The fruits and vegetables don't look as neat as those in the grocery stores but they taste a lot better. You are buying what's in season, not fruits stored in a warehouse for six months. And you can shop different booths and compare quality and prices. When I shopped from grocery stores, I just go to one and buy everything there. It doesn't make sense to drive to different stores for different things. At the farmers market, everybody is at one spot.

One thing I'm not sure of is that whether the vendors are actually farmers or are they just small resellers who buy from the farmers and sell at the farmers market. Does anybody know? I guess it doesn't really matter that much because even if they are not real farmers I'm still getting fresh local produce. Just curious.

One vendor was selling eggs. Large white or brown eggs for $2.50 a dozen. It's a good price. If I didn't have enough eggs in my fridge already I would've bought some brown eggs because I thought brown eggs are better than white eggs and he was selling them for the same price. I never really knew what the difference is between brown eggs and white eggs. All I knew was that brown eggs are more expensive in the stores. So I searched on the Internet. It turned out that it's just the breed of the hen. Some breeds lay white eggs and some breeds lay brown eggs. Other than that, there is really no difference. According to the American Egg Board,

"Shell color is determined by the breed of hen and is not related to quality, nutrients, flavor or cooking characteristics. Since brown egg layers are slightly larger birds and require more food, brown eggs are usually more expensive than white." (FAQ #3, Learn More About Eggs)

So why did I think brown eggs are better all these years? Because they are more expensive. You get what you pay for, right? This again falls into selling hope. Only because something costs more to produce does not make it more expensive in the stores. The consumers have to perceive some additional value. If consumers don't perceive any benefit, they will never pay more for it. If consumers don't pay more, egg farmers will not raise the larger birds which eat more food and lay brown eggs because the farmers' profit margin would be smaller. If consumers are all well informed, there should be no brown eggs in the market. That's why branding is so important in the business world. It creates difference when there is none.

It's an interesting economic phenomenon. Businesses can sell something at a higher price with absolutely no additional value to the consumers. Or they can create some perceived value (like branded prescription drugs versus generics) and sell at a higher price. What other examples can you think of? Vitamin Water?

By the way at farmers market I saw arugula for the first time. I read some references to arugula and Obama in Newsweek but I didn't know what it was. Now I know.

How Do You Find Good Home Improvement Contractors?

This is a question for my readers who are also homeowners. Help me out here. How do you find good contractors for home improvements and repairs?

I know the standard answer is "ask your friends and neighbors." But how do they know if someone is good? I've used a few different people for different things for my home but if someone asks me, I will have to say "I'm not sure" because I have no basis on which to evaluate their quality of work or whether their prices were reasonable. For each kind of work, there are perhaps hundreds of service people in my local area. For example my garage door opener broke a while ago. I found somebody on Yahoo! Local. He fixed it and charged me $120. It's working now -- that I can tell. But did he use a cheap part that's likely to break again in a year or two? Could another person have fixed it for $60? I have no idea. Yes you can get estimates from a few people for comparison, but how do you know if the few people you get estimates from are not all well above average? To borrow an analogy from investing in mutual funds, if you only look at prices from Merrill Lynch, Smith Barney and Putnam, you may think you are paying a fair price. You will never know you should invest with Vanguard. And if materials are involved, how do you know if you are comparing apples to apples? How do you know if the low bidder is not short-changing you with shoddy materials? I feel like I'm totally in the dark when I hire service people for my home.

I know there are a few places people rate and post reviews on service providers. Angie's List is one of them. Even there the providers typically don't have many reviews. Should I hire someone based on only 10 reviews? I question whether the reviewers are qualified to give a review if they are in the dark just like I am. It's like blind leading blind. I also have a problem with having to pay Angie's List in order to read reviews. I'm so used to people sharing information for free. That's what the Internet is about, right? That's why I sometimes looks on Yahoo! Local and Yelp.

If you are a homeowner, how do you find good service people and how do you know if the price is fair?

Notes From an Overseas Vacation

I didn't post to my blog last week because I was on vacation in another country. It was really refreshing even though the weather wasn't 100% cooperative. Now, here are some random personal finance related notes from my vacation.

Exchanging money. The best way to get the local currency is still using the ATM card, as long as you don't pay a foreign ATM surcharge. Banks and money exchange services post two rates -- a "buy" rate and a "sell" rate. The lower "buy" rate is used when you exchange US dollars into the local currency. The "sell" rate is used when you exchange the local currency back to US dollars. My Fidelity mySmart Cash account does not have any surcharge for using the ATM card overseas. Visa charges 1% extra on top its wholesale exchange rate, which is better than the retail rates posted by the bank branches. The all-in exchange rate I received from using the ATM card was close to the "sell" rate posted at local banks and money exchange counters. If I exchanged my US dollar bills at a bank, I would get the "buy" rate which is 2-3% less.

I charged a hotel bill to my American Express card. American Express charges 2% for foreign transactions. But because American Express also gives me a rebate for using its card, it evens out to a wash between the exchange rate surcharge and the rebate.

Crazy prices for convenience. Although I was in a developing country, I wouldn't know it if I just looked at the prices. Hotels know it well. They've got you on their premise and you don't have many choices. If you want convenience, you'll have to pay dearly. $4 for a small bottle of water in their restaurant. $25 per person for a breakfast buffet. $1 a minute for *local* calls. $25 a day for Internet access in your room. $10 per day per person for using their gym. All these services are optional. The prices are disclosed up front. If you don't like the prices, you don't have to eat there or use their Internet access or gym. But it still leaves a bad taste in my mouth. They may call you guests but they really see you as trapped profit generating subjects. What are you supposed to do? Bob Sullivan in his book Gotcha Capitalism suggested that before you make a reservation, you should call the hotels you are interested in and ask about their prices for the services you will likely use, such as parking, Internet access, fitness gym, breakfast, etc. You then add up all the prices and compare the bottom line between hotels. It's too bad you have to go the extra mile like that.

Taxes included in prices. I really like how other countries show the prices. The sales taxes are included in the price on the tag. What you see is what you pay. There is no surprise. The United States and Canada are the only two countries I know that add extra sales tax at checkout. If the sales tax is mandatory, why not include it on the price tag, like the way gas prices are displayed at the gas stations?

No evidence of consumers clamming up. I read and heard in the news media about American consumers being hit hard by foreclosures and high food and gas prices, but I didn't see any evidence of their clamming up from my casual observations. Most of the tourists at the place I went came from the U.S. The flights were full. I saw many happy middle class American families at the airport, in the hotel lobby and pools, at restaurants, on the streets wandering about, and at tourist attractions. Perhaps there are fewer tourists than before, but there are still more than plenty. Don't believe the doom and gloom. American consumers are still kicking alive and well.

Free Digital TV Over the Air

Don't laugh. I finally got TV in my home. I have a TV, the physical device. I use it for watching DVDs. I just haven't had TV programming in the last few years. I canceled my cable subscription because I found myself not watching at all for weeks on end. Occasionally I wanted to watch something like the Oscars or the Olympics. I also missed the PBS programs although I don't understand why they keep having Robert Kiyosaki and Suze Orman on their personal finance shows. Because I live far from the broadcast towers, the signal quality from an indoor antenna isn't very good. So I didn't bother.

A couple of months ago I read on the Bogleheads forum that you can get a coupon from the government for a digital TV converter box if your TV doesn't have a digital tuner, because broadcast TV will move to all digital in February 2009. You can ask for up to two coupons, each worth $40. It took them two months to send me the coupons. I went to Circuit City and bought myself a converter ($60 plus tax, minus $40 coupon) and an indoor antenna. I hooked them up and voila, I got TV! I receive about 20 channels, not counting the ones which broadcast in languages I don't understand. For the channels I receive, the signal is crystal clear. There is no static or distortion. I guess that's the benefit of digital broadcasting. But out of the major network stations, I only get Fox, not ABC, NBC or CBS. I'm not sure whether it's because they are not broadcasting in digital yet or their signals are still too weak for me. I'll go to Radio Shack tomorrow and try some different antenna.

Free digital TV over the air gives me one more reason for not dealing with a cable company.

TFB's Stumbles: Week Ending March 14, 2008

It was another eventful week in the stock market. The Fed offered to lend up to $200 billion to banks and Wall Street firms on Tuesday. It gave an undisclosed amount of emergency funding to Bear Stearns on Friday. According to this Bloomberg article, it is "the largest government bailout of a U.S. securities firm." It's time to re-read Roger Lowenstein's book When Genius Failed: The Rise and Fall of Long-Term Capital Management.

I've been busy buying stock funds. I'm thinking of over-rebalancing beyond my 60/40 stocks/bonds allocation. I think this is the time to tap the batteries I've been charging for so long.

Meanwhile, here are the interesting articles that I came across this week.

Why I Love My Prepaid Cell Phone - Prepaid cell phone works great. I spend less than $10 a month with my prepaid cell phone.

Is Google Bashing Finally Peaking? - I remember the $700 a GOOG share days not so long ago. Whoever goes to the top will have to take the shots. In the 1990s it was Microsoft. Everything they did was evil. Is Google any better now?

Who's To Blame For The Subprime Mortgage Mess - Do you blame the supply or the demand for bad loans? The demand. For if there were no demand, there would be no supply.

Reasons Why Your HELOC Can Be Your Emergency Fund - Using HELOC as emergency fund is fine but you have to be sure you *can* access the HELOC when you really need it. If you lose your job, the bank can refuse to let you borrow against the HELOC. When the economy gets bad, the bank can revoke your HELOC. I wouldn't play games with my safety net.

Have a great weekend!

TurboTax and TaxCut 2007 Compared Side By Side

Because I'm switching from TaxCut to TurboTax this year, I have a unique opportunity to compare the two desktop tax software side by side.

The two products being compared are TaxCut Premium 2007 Federal + State and TurboTax Deluxe 2007 Federal + State, both for Windows. Both let you prepare the federal return plus one state return. Both do not include eFile. I tested using the same data on two different days a week apart. My tax return isn't overly complex but it does include a good number of elements. I have

• salary on W-2
• self-employment income (for my $150 ad revenue from this blog)
• interests, both taxable and tax-exempt
• investments: dividends, both qualified and non-qualified; short-term and long-term capital gains distributions; sales with short-term losses; foreign tax credit; capital loss carryover
• non-qualified stock options exercise and ESPP non-qualified dispositions
• mortgage interests
• property taxes
• charity donations
• IRA contributions
• Alternative Minimum Tax (AMT)

So I think it's a good test.

Installation: Typical software installation experience. No problems. Although I noticed that TaxCut installed a PDF software pdf995 without asking. That's not nice.

Update: The software that came on the CD for both program is just a stub. It's incomplete because by the time they shipped the software, the IRS forms were not finalized yet. You have to get the latest update and perhaps updating a few more times before you file the returns. Updating was pretty smooth for both programs. Just follow the prompts.

Launch: TaxCut requires logging in as an administrator. TurboTax does not. I already mentioned this before. This is the reason I'm switching to TurboTax. Both programs show the software registration screen but you don't really have to register. Just skip directly to a new return.

Import last year's data: Both imported my file from last year (in TaxCut format). TaxCut has an advantage here because the data format is its own. TurboTax still imported most of my data. The only thing it missed was the state tax I owed last year. It didn't include it automatically in the taxes paid number. Instead it asked me whether I paid state tax for 2006 in 2007 with the box defaulted to unchecked.

Import W-2, 1099, etc.: TurboTax offered to import my W-2 and 1099s from payroll providers and financial institutions. I didn't use that feature due to privacy and data security concerns. TaxCut did not have this feature. Importing probably will save some time if it's done accurately. I didn't mind typing them. It wasn't too bad.

Interview and Data Entry: I don't see any major difference between the two. Both ask a bunch of questions. Both present the W-2 and 1099 tax forms almost exactly as the printed form. There isn't any ambiguity for where the number should go. Both have a topic list which lets you jump ahead or jump back. The topic list also shows you the completed steps with checkmarks. Both programs let you open a form directly. TaxCut did one thing better. When I entered tax-exempt interest, it asked me right away how much of it is also exempt from state tax. With TurboTax, I had to split the single 1099 into two separate 1099s -- one exempt from state tax, the other one not. Clumsy.

Finding Deductions: Both programs bundle a deduction finding module. I didn't use or test either one.

Built-in Help: I am familiar with the tax ramifications of my transactions. I didn't really use or test much of the built-in help in either program.

Refund Calculation: My returns from both programs turned out identical, except for rounding a dollar here and a dollar there. TaxCut rounds every entry to the whole dollar. TurboTax keeps the cents on the worksheets and then rounds the total to the whole dollar for entering into the form. No big deal either way. The result being identical didn't surprise me. That's the way it should be. The software is like a fancy calculator. Given the same inputs, the result should always be the same.

Time Consumption: Both programs took me about 1.5 hours from start to finish.

Conclusion: Both TaxCut and TurboTax handled my moderately complex tax data and produced identical returns. Neither was significantly faster or easier than the other. I've seen reviews saying TurboTax is superior and TaxCut is crap or vice versa, but my actual testing does not support that allegation. I'm glad my switch from one program to another wasn't too painful.

Free Soda Refills for Life?

I was at a McDonald's the other day. I saw a sign like this by the soda machine:

"Free refills are on the same visit only. Please do not bring in an empty cup for refills."

I was shocked. It never occurred to me that bringing in an empty cup for refills was an option. McDonald's large cups are plastic. They probably last forever. Save a McDonald's soda cup and get free soda for the rest of your life everywhere you go. Nah. Even without the sign, I don't think that's right. The unspoken deal is that you eat there, you drink your soda, end of story. What makes people think they can just come in and get free soda? Because they ate a McDonald's meal 3 years ago? Because McDonald's has a high profit margin on the soda they sell? That's not being frugal. That's theft in my book. What do you think? Do we really need signs for everything?

TurboTax Deluxe 2007 Free Download

[Update on Feb. 9, 2008]: Intuit took down the link. No more free downloads.

I saw this on FatWallet and I thought I should pass this along. You can download a free copy of TurboTax Deluxe 2007 for Windows or Mac on Intuit's website. Here is how:

1. Follow this link (link removed, no longer working).
2. Click on the Downloads tab on the top.
3. Click on Buy Now under the Deluxe version.
4. Follow the screen prompts. They ask you to register with your e-mail address, name and address, but you don't have to give out your real personal info.

This is desktop software, which I think is better than TurboTax Online. The Deluxe version includes Federal and 1 State. E-File is not free, but I'm not going to e-file anyway.

If you are interested, hurry, before they take down that link.

[Update on Feb. 29, 2008]: Related posts:

• Tax Software: Online or Desktop?
• Tax Software: TurboTax, TaxCut, or TaxAct?
• Tax Software: E-File or Mail?
• Goodbye TaxCut, Hello TurboTax
• TurboTax and TaxCut 2007 Compared Side By Side

Goodbye TaxCut, Hello TurboTax

I figure you all have read enough about the stock market yo yo these days. It's time for something else.

I wrote a mini-series on tax preparation software last year:

1. Tax Software: Online or Desktop?
2. Tax Software: TurboTax, TaxCut, or TaxAct?
3. Tax Software: E-File or Mail?

While my opinion on online vs. desktop or e-file vs. mail didn't change, I decided to switch from TaxCut to TurboTax this year.

I was going to continue using TaxCut like I did in the last few years. I ordered the software from Staples and I even thought I got a decent deal. Together with Microsoft Money, Norton and McAfee anti-virus software, my total cost after all rebates was going to be less than $15. Because H&R Block increased their price, the deal wasn't as good as last year when I was paid $40 after all rebates, but I thought $15 was good enough. However, after I installed TaxCut, I saw a big change this year. It requires the user to log on as a Windows administrator to run the application. This is nonsense. A user needs administrative right to install the software but the user shouldn't need administrative right just to run the software. H&R Block developers clearly took a shortcut. Writing software that runs under a limited user requires more testing. So they decided to save some money and let their customers deal with the security risk. That's not acceptable.

I decided to take them up on their 60-day money back guarantee. While I may be able to get around the problem by using "Run As ..." I think a company must feel the consequence of screwing its customers. I wrote a short letter letting H&R Block know why I'm returning the software. If enough customers protest, I hope they will think twice before they do crazy stuff like this again. A few years ago, Intuit bundled the nasty C-Dilla DRM software with TurboTax. There was an outcry from the users. Many customers defected. That was the year I switched over to TaxCut. Intuit lost me as a customer. Now H&R Block sent me back to them.

[Update on Feb. 21, 2008]: There is a follow up to this post, TurboTax and TaxCut 2007 Compared Side By Side.

Habit Changing Is Hard

I've seen many stores selling those environment-friendly reusable shopping bags made of cloth or thick plastic, but I've seen very few people buying them, and even fewer people actually using them. I think bringing your own shopping bag is a great idea.

Most of the shopping bags are used for no more than 5 minutes. They hold stuff already in their own packaging. We take them to our car. Then we take them from our car to our home. That's it. Some of these bags are recycled. That's good, but it will be better if fewer of these are produced in the first place. The 3 R's in waste reduction are "Reduce, Reuse, Recycle." I think we put too much emphasis on Recycle and too little on Reduce and Reuse.

I'm glad to see some stores encouraging the practice of bringing your own shopping bags. I went to a grocery store the other day and brought with me a paper bag I saved from the previous trip. I got a 5-cent credit on my receipt. Five cents is nothing. If I buy groceries once a week, I will save $2.60 a year. If I invest $2.60 a year at 10% return for 40 years, I will have ... never mind. It's a good gesture though.

I started bringing my own shopping bags to the stores lately. I have to admit it's easier said than done because habit changing is hard. More than half of the time I still run into the stores without them. If I'm not already in the checkout line, I make a point of going back to my car and getting my bag. I think I'm doing better. I hope it will become natural after a while and I won't go into a store without a bag in my hand.

My Flexible Spending Account Sent Me a Debit Card

As if I don't have enough cards in my wallet, the vendor for my employer's health care Flexible Spending Account (FSA) sent me a MasterCard debit card. I'm supposed to use it for items eligible for reimbursement from the FSA.

The pitch from the FSA vendor is that I won't have to file reimbursement claims for items I charge to the debit card. But I'm still required to save every receipt. They can come back and challenge me for the eligibility of the purchase and I must then send them the receipt showing what exactly I bought with the card. Using the card is only going to complicate matters. Because the card is good only for FSA eligible expenses, if I buy a 12-pack of soda together with a prescription at a drug store, I must pay for the drugs with the FSA debit card and pay for the soda with cash or a different card. It's also only accepted at stores which installed a special computer system which distinguishes FSA eligible items from non-eligible items. If I charge the co-pay for a doctor's visit to the FSA debit card, and the insurance company later tells me I haven't met the annual deductible yet, I still have to file a paper claim to the FSA but I also have to explain to them that the co-pay is already reimbursed but the deductible isn't. What a mess.

I'm afraid this is just an attempt from the FSA vendor to capture the merchant fees from the purchase. The FSA debit card came with no PIN. All transactions must be processed as "credit."  If I use their card, I won't receive the 5% rebate from drug stores or the 1.5% rebate from elsewhere on my own credit card. Thanks, but no thanks. I cut up the FSA debit card without even activating it.

Related post: Why Banks Push Debit Cards

Better Gift Cards

It's holiday time. Many stores are pushing gift cards and gift certificates. I heard a radio ad for a lottery gift card! You give someone a gift card so they can buy lottery tickets. Isn't that insane? The lottery has long been said as a tax on the poor. You give someone a gift so they can pay more taxes? Makes no sense.

I wrote about gift cards last year. I still think a check beats a gift card in many ways. There is value in the freedom to spend the gift amount anywhere someone wants. When you lock that down to a particular store, especially to a high-priced store, you lose that value. Also, a check encourages savings -- you deposit a check. A gift card requires spending -- you buy something with it.

I said last year if one must give a gift card, an Amazon gift certificate probably comes up as the next best choice because Amazon sells many things at good prices. Once a gift certificate is added to an Amazon account, it will be selected as the default payment option when you buy something the next time. It will be spent first. You won't have this forgotten or misplaced gift card breakage problem.

I have a couple of better ideas this year. I don't see either of these implemented yet. If any company ends up doing these, please remember this is prior art and send me your royalties. :-)

1. Bill Payment Gift Certificate. You buy a gift certificate from a bill payment provider, like CheckFree. They give you a code which you give to the recipient. The recipient redeems it and applies it toward any bills.

Benefits to the gift giver and the gift recipient: no waste on gifts. If someone helps pay my bills, that's a big gift.

Benefits to the bill payment provider: membership growth; fee revenue from businesses accepting bill payment.

2. Mutual Fund Gift Certificate. Fidelity or Vanguard, listen, here's how this gift product will work:

- An account holder designates one or more shares of a mutual fund from their existing holdings as a gift for someone else.

- The mutual fund company sends a nice letter or card with redemption instructions to the purchaser or directly to the recipient.

- The recipient enters their brokerage account info (same company or elsewhere). The shares will be transferred into the recipient's account internally or via DTC. If the recipient doesn't have an account anywhere, they can open one with the same company and have the annual fees and minimums waived for one year.

Benefits to the gift giver and the gift recipient: a gift that increases in value over time.

Benefits to the mutual fund company: attract new customers.

What do you think? If these gift cards are available, will you be interested in buying one? If you received a gift like these, will you be happy?

A Different World

I'm traveling on business again. I read this interesting letter from a reader in the US Airways Magazine. I added the link so you will see what he's talking about.

"On my US Airways flight, I would typically call my situation "unfortunate" -sitting on the runway for over an hour waiting for take-off. However, I opened up your magazine and started reading. I fell in love with the Mercedes-Benz CLK63 AMG Black Series that you wrote about so cleverly in the front section of your magazine. After reading, I knew this was my next car. As soon as we landed, I got to my hotel, called up my local dealer, and placed a deposit on the vehicle. After reading and talking to the salesman, I seemed to know more about the car than he did. I’m hoping I’ll be the first person in my area to own the new Black Series - too bad for everyone else who missed it in the magazine. So thanks for the heads-up. I’m excited about getting the car. I’ll be able to tell my friends and neighbors how I found it when they come over for a ride.

Larry Wilkinsen
Wellesley, MA"

The MSRP on the Mercedes-Benz CLK63 AMG Black Series is $136,000. Mr. Wilkinsen bought it just from reading a short article in a magazine. People like me do their "research" for weeks if not months, before buying a Honda. We apparently live in a different world. But I'm glad he bought the Mercedes. Our economy needs consumers like him.

Salute to the American Consumers

If you read financial stories in the media you must have come across the talk of a forthcoming recession, like this article on Bloomberg, Recession Hits U.S. Profits; Economy Might Be Next. The lead paragraph reads

"U.S. corporate profits are in a recession, and the entire economy may not be far behind."

I went shopping last weekend. There was not a thread of any sign of a recession there. The mall was packed. It was busier than ever. It seemed to me there were more people this year than last year. The traffic started backing up on the freeway a mile from the exit. It was tough to find a parking spot. I finally found a place far far away from the mall entrance.

At a warehouse club, it was the same thing. Checkout lines were longer than usual. People also had more stuff on their carts. I contributed my share too. My cart was full. I spent $275. My usual tab is more like $60.

I have to give it to the American consumers. Thank you, for propping up the economy through thick and thin. You have not been intimidated by the media and by the Wall Street crying babies. You keep buying more stuff no matter what. Subprime crisis? "It's their problem. I'm not selling my house so I don't worry." says the strong-willed American consumer. Stock market down? "What are you talking about? Take a look at my emerging markets fund. Didn't they say the stock market always goes up in the long run?" Frugal? "It's not the American way."

If all consumers become frugal, our economy will be in deep trouble. Businesses won't be as profitable. People will lose their jobs. Social Security will be in deeper deficit. The stock market will go down. The 401k's and 403b's will lose money. American consumers, our economy needs you. Be strong. Keep on buying. Only YOU can keep our economy from going into a recession.

Bought Nothing on Black Friday

The day after Thanksgiving is also known as the Black Friday. Stores open extra early and offer special sale. However I bought nothing on this day. I unknowingly participated in the Buy Nothing Day not because I'm boycotting anything, I just didn't feel the need to buy anything. I don't get the concept of "saving" money by spending money on things I don't need. $250 off a wide-screen TV is good if I need a wide-screen TV. If I don't, it means nothing. When I need it, I'm sure the price will be even lower.

What did you buy on Black Friday? Did you get a good deal? I hope you didn't have to line up early outside the store in the cold.

What To Do If Your Health Insurance Says Your Treatment Is Not Covered

Last Friday, I happened to pick up a copy of the Wall Street Journal somebody left on the train. There was an intriguing article on the front page -- How U.S. Health System Can Fail Even the Insured. There's also an online video for the same story.

It's a long story but the story line is familiar. A Mrs. Barbara Calder has a rare genetic illness but she had to jump through one hoop after another to get her health insurance to cover the treatment she needed. I'm going to use this case as an example to show what to do if your health insurance says the treatment you need is not covered.

Here's a timeline of the events. I'm marking my comments with [TFB].

July 2006 - Mrs. Calder suspected that she had Ehlers-Danlos Syndrome (EDS), a rare genetic illness which can be life threatening. She had health insurance through her husband's employer. She called the insurance company about seeing a specialist. She was told she needed a referral from another doctor.

August 2006 - She received the referral to a specialist who charges $650 for a consultation. She verified that the specialist was in the insurance company's network. Before she made an appointment, she called the insurance company again to confirm coverage but this time she was told the service wouldn't be covered.

[TFB] You got the required referral and the doctor was in the network. So just go. Whether the service is covered or not can be sorted out later. The agents answering the phone are not the ones who process claims. They can be wrong. Whether a claim is covered or not depends on the ICD-9 codes the doctor writes on the claim form. Before you see the doctor, you don't know what the codes will be. Even if the claim is initially denied, it can be appealed. Health is more important than money. Go get the diagnosis. Have the doctor bill the insurance. Worst case you will have to pay $650 yourself. It's not astronomical.

September (?) 2006 - Unhappy about the insurance company telling her the consultation would not be covered, Mrs. Calder showed up unannounced at the office of the HR Director at her husband's employer. She had an argument with him about her insurance coverage. Later, an executive at the employer's corporate office in a different state was also involved.

[TFB] This was totally unnecessary. Managers at the employer don't make health care coverage decisions.

October 2006 - Her husband was laid off. They suspected it had something to do with her condition but the company denied. They decided not to take COBRA because they couldn't afford the $1,200 a month premium.

[TFB] Paying $650 for the consultation out of the pocket would be a lot cheaper than losing a job or paying for COBRA.

December 2006 - Her husband found another job but the new health insurance doesn't start until 3 months later.

[TFB] Still waiting just to save that $650? Health is more important than money.

July 2007 - She finally saw the specialist and got a confirmed diagnosis. The specialist prescribed a drug but the insurance company refused to cover it. They wanted her to use some cheaper drugs first. The doctor also recommended a test to see if her condition was the type that could result in sudden death. She called the insurance company about the test. Because she didn't know the exact term, the insurance company misunderstood and told her that the test would not be covered.

[TFB] If you need the drug, pay for the first prescription. Let your doctor tell the insurance company why you need it. Then your next prescription will be covered. Your first prescription will likely be reimbursed as well. If you need the test, go get the test. Fight it only *after* they deny the claim.

August 2007 - Her husband took another job for better pay. The new insurance had another 3-month waiting period. She became uninsured again because she thought COBRA was not worth it.

[TFB] If you keep skipping COBRA and have breaks in coverage like this, your pre-existing condition might be excluded by your next insurance company for one year. See Department of Labor's FAQs on HIPAA.

November 2007 - Her health deteriorated. She still doesn't know whether her illness is the more serious type because she never took the test. She's worried about her children because the illness is hereditary. She wants to move to Belgium because Belgium has universal health care.

[TFB] How is it fair to have Belgian people pay for your health care? The U.S. health care system isn't perfect. You just have to be willing to pay something out of your own pocket, most likely only for a short while. If the service is medically necessary, it will be covered eventually.

Cost of Driving One Mile

Today is Veteran's Day. I'm able to take the commuter train today because many people are off today. I'd like to take the train more often but there is very limited parking at the train station. I sometimes drove to the train station and had to drive away because there was no parking. Taking the train is not only good for the environment, but also good for the pocketbook.

How much does it cost for driving one mile? The cost of gas is only a small part. If gas is $3.00 a gallon and you get 25 miles per gallon combined city and highway, that's 12 cents a mile. You have to also include the cost of the car. If a car costs $20,000 and it lasts 200,000 miles, that's another 10 cents a mile. Add in financing, insurance, cost of oil changes, tires, brakes, repairs, the tab goes up and up. The IRS sets the vehicle mileage reimbursement rate at $0.485 per mile. By my calculation, it's pretty close. For the sake of simplicity, let's just call it 50 cents per mile driven.

For my 24-mile roundtrip commute, if I drive, it costs me $12 per day. The cost of taking public transit is much less. If I have to drive 5 miles to a store, the roundtrip alone will cost $5. I think if one has to pay the cost of driving out of their pocket after each trip, people will drive a lot less.

iPhone or XO Laptop, Which Is Cooler?

If you want a cool gadget for $399, would you buy an iPhone or two of these XO Laptops, one for you and one for a child in a developing country?

The XO Laptop is a cool product from the One Laptop per Child project. It is designed from the ground up as a rugged, inexpensive laptop for children in the developing countries. The goal is to get the cost down to $100 each. It's not there yet, but today you can donate one for $200. Starting in November, you can pay $400, give one to a child in a developing country, and get one for yourself. 

It's a cool machine. It has a high resolution screen, wireless networking, web browser, e-mail client, RSS reader, word processor, ..., all open source software. It uses very little power, so little it can be charged by human power using a crank, a pedal or a pull cord. If I crank up one of these on a plane or in a meeting with customers, I'm sure it will turn a lot more heads than an iPhone. I've got to get one for Christmas.

If $200 or $400 is more than you can give, OLPC Foundation is also taking smaller donations.

What do you think? Is XO Laptop cooler than iPhone?