AskDong

I didn’t mark it on my calendar, and I wouldn’t have known if I didn’t read some of my favorite blogs such as BripBlap, and Lazy Man And Money. Today is Blog Action Day. Shame on me on forgetting. Personal Finance and Environmental friendly consumption go hand in hand and it would be disservice if I didn’t take a little time to write about our personal responsibility to world we live in.

Here are the things I’m perosnally striving to be better at:

• Shop with reuseable bags. I often forget to bring mine.
• Do a better job of turning off the lights when I leave for work. Energy use during the day is both more expensive, and has a greater impact on the environment as dirtier generators are used to meet that load.
• Eat more vegetables in lieu of high production cost meat. I’m never going vegetarian, but I could probably do with eating more veggies both for my health and the environment.
• Give more money towards environmental causes, especially scientific research.

And most importantly we should take personal responsibility for our actions, and understand there is a very real cost to not only ourselves but the generations yet to be born. The biggest problem with caring for the environment is that as individuals we do not see the direct cost of the damage we cause. Not only is this damage sometimes done far away as in the case of mercury tainted shellfish, but sometimes it takes decades for the effect to be noticed as is the case with global warming. It’s too easy to hide in our shell and pretend that what we personally do has no effect since it’s just a drop in the bucket. Every drop counts.

In some regards I’ve become a bit of cliche of myself when it comes to my friends. Not only do most of friends know what my personal spending habits because they know me, they also read this blog. I think some of my friends think of me as the resident frugalskate - not cheapskate as I like to think I’m not cheap (though I could be wrong). I’d be happy with this label if it were more true. There are still many places I’m quite wasteful. Regardless, letting my friends know what mine financial value system is good on a multitude of levels.

How much and where we spend money has much to do with our friend and acquaintances. I’ve never heard anyone make a disparaging remark because someone was frugal. It’s being cheap and selfish that’s frowned upon. While Dick Cheney may not think of thrift and conservation as a basis for energy policy, it’s definitely a sound basis for personal budgetary policy. If you have good habits, your friends should know what your good habits are. And if your friends have better habits than you then they should serve as role models.  Keeping up with the Jones doesn’t have to be a bad thing if the Jones have good spending habits.  The problem is too often our neighbors have bad habits. Strive to be the neighbor with the good habits. Drive the late model used car, and let your friends know how much you saved on insurance, repairs, and outright cost.

One reason I suspect that so many people struggle to keep up with the Joneses is that they often don’t realize what financial peril the Jones might actually be in. Too often friends only share good news but not the bad. We’ll talk about the great deal we got on a television, but we fail to share the fact that we melted like Velveeta in front of the last auto dealer. I’m a big believer of financial transparency, good and bad, amongst friends. I’m sure I sound like a broken record at times, but I enjoy pitching financial sense, but I also try to be careful acknowledge many of my own shortcomings. Nobody wants to listen to a know it all. It’s not about telling friends and family what do, but sharing what you’ve learned.

The one area where I find frugality often in conflict with friendships is the actual act of socializing. So often social activities can revolve around spending money. Dinner out can be expensive. The markup on alcohol at a bar is close to 300% at least. I do think spending time with friends should be priority. This is another area where being open with your financial priorities can pay dividends. Good friends are not intentionally trying to help spend your money - they’re just trying to spend time with you. If they know you’re on a budget, they’re more likely to suggest more thrifty alternatives. However if you’re the one who is the most budget conscience, the responsibility to suggest alternatives does fall on your shoulder. Instead of going out to dinner, suggest a potluck. Instead of watching a game at bar, suggest watching the game at your place. Inviting friends over, and buying a 24 pack of beer is generally still substantially cheaper than getting drinks out at a bar. Remember, however trying to keep within a budget is not cart blanche to be take instead of give. Generosity does not have to come from spending money, just time and thought.  You just have to be more creative.

Be Frugal, Be Proud, and encourage your friends towards good financial habits.

Before I get into the topic of the week. I want to plug my RSS subscription. Get AskDong in your email, or your RSS reader.

Now, we return to the regularly scheduled programming.

Given that I just brought a TV last week, I thought I’d collect other posts from others about Televisions, and watching TV in general.

• JLP is looking on Advice on TV. His budget is clearly higher than mine.  I can’t really help him out since I didn’t look at TV in that price range.
• LazyMan pondered cutting the cable. I did this a couple years ago, but now I’m addicted to the DVR that comes with the Sattelite TV service I have.
• Why stop at just watching TV?  Jim at Blueprint for Financial Prosperity tells us how to get on the audience of different shows.
• Blogging Stocks tells us Vizio is on track to sell 3 million flat panels. Looks like the company I brought my tv from is doing pretty well for themselves.
• According to Best Buy, we don’t know what we’re doing with HD. I believe both I and the consumerist do
• No Credit Needed will be watching Dave Ramsey on TV. Say what you will about Dave Ramsey’s math, but he’s helped a lot of people, and now he’s hitting Prime time.
• Flexo Upgraded his living room with HD-DVD. I’m holding off on upgrading. I don’t even have a progressive scan DVD. Though the HD on the TV really does go to waste when the only HD signal I have is from the antennae.
• Golbguru describes his relationship with TV through the years. Looks alot like mine - maybe we dated the same TV.

I got email from HSBC the other day about the “Dash Sweepstake” promotion they are running between 10/6/07 and 11/30/07. The prizes are as follows:

• One $20,000 Grand Prize
• One $10,000 1st Place Prize
• Four $5,000 2nd Place Prizes

Each customer gets an entry for each $250 increase in funds (not attributed to interest), and for each week of maintaining the balance increase. I realize it’s probably a bit foolish, but I’ve decided to maximize my chances. I had some money in another savings account (Citibank) that I had once considered transferring over to HSBC. Now, I’m going to go ahead and transfer that money in $250 increments daily until 11/30/07. There are basically 36 Business days left on which I can transfer money. The total of 9600 I transfer will give me approximately 40 additional chances to win. 1 for each transfer for 36 and 1 for each week for another 4 chances I keep my balance up.

So what are my chances? Depends on the number of customers of HSBC has. My best guess is that the company has about 500k direct customers. According to this article they had about about 350k in January of 2007.  I’m sure they’ve grown since they, so 500k I believe is a reasonable estimate. My approximate chance of winning  is .008% (40 out of 500,000) - not very good odds.  My expected value if $4.20.  For those unfamiliar with expected value, it’s basically the probability of an event multiplied by the value of the event. If there were only 1 grand prize winner, my expected value would simply .008% X 20,0000 = $1.60. However because there are other prizes, I can add up the expected value of those other outcomes which totals $2.20.  $4.20 is not all that great.

HSBC is making out running a promotion like this instead of offering higher rates if all customers behave like me (both by keeping my money in and adding to it).  The truth is I’m actually losing out in interest. At Citibank I get 5% vs 4.5% at HSBC.   I get 5% via Citibank’s Ultimate Money Market Account when I make two bill pays with the linked checking account which I regularly do.  I’ve been expecting them to lower the rate ever since the Fed lowered rates, but they haven’t.  As a result of transferring over $9000 to HSBC, I’ll be out about $3.75 in interest.  Effectively, my potential winnings pays for my lost interest.

There’s some debate on the security of online account aggregators. Some like Trent at the Simple Dollar isn’t so sure how safe Yodlee, Wesabe, or Mint might be. Others like myself are not so worried about security. I’ll be the first admit, I’m just not a very a paranoid individual. Maybe I should be. Security when it comes to your finances is incredibly important. I’ve been using Yodlee for over 5 years and feel pretty safe, but that’s not to say that the security issue has been completely licked. Others who don’t share my disposition are justified in being worried.

However, I do think I have some grounding to feel relatively secure. I think there are many reasons if you’re already comfortable using online banking, credit card, or brokerage services one should be comfortable with account aggregation. Personally I use both Mint and Yodlee. However both are supported by the same back end technology furnished by Yodlee. So if you trust Yodlee, you should trust mint.

When actually evaluating security of an account aggregator there are actually a couple different things to look at. I think the most important question, and the more fundamental question, is to ask what would someone have access to if they got hold of my online information. I have accounts with the following financial services.

• Citibank
• HSBC
• ING
• ETrade
• Ameritrade
• Bank of America
• Capitol One
• American Express

If someone were to get access to my account login information, they would be able to log in to my account. However, logging into my account doesn’t actually allow a perpetrator to do that much as one might initially expect. The financial institutions are smart enough not to allow you to make easy transfers out. Transfers are generally setup as transfers in, and account information is required.  Without my account numbers, a potential perp could easily pay my bill, make trades, and transfer money between my accounts. Transferring money into outside accounts is not something they can readily and directly set up with just my login information. This is the primary reason I feel safe, though there is a loophole for this which I’ll get to.

The bigger issue is not online access to my accounts, but the security at the financial institutions. More people use online banking services than account aggregation. If you trust your bank or credit card, I don’t think you’re too far away from trusting an aggregator. Aggregators are not too different from a mailbox.  It’s like I’m getting all my financial statements sent to the same mailbox (which most people in the physical world already do). I think it’s much easier to break into my mailbox than it is my online account. If there is a security issue, it’s in the form of statements both physical and online. Many of the financial institutions do display account number information on the physical statements and PDFs they sometimes have available online. With the account number information a criminal could set up transactions, but even then these type of transactions takes time to process , and if I’m monitoring my accounts would hopefully tipped off on such a transfer. I would also think that banks would notice such fraud and be able to put the appropriate freezes on.

Still even though I feel pretty safe that there isn’t all that much direct damage that could be done, I do realize that my privacy is at risk. Anyone who got access to my account in Yodlee would know a hell lot more about me than I probably even know about myself. I imagine there would be enough information to lift my idenditity and I certainly don’t want that. I’m willing to put some faith in the security that Yodlee has instituted. I think the most effective hacks are not exploiting technical shortcomings but people shortcoming, i.e. a stray laptop with information. While I still have concerns, the convenience of services of Yodlee and Mint outweigh my worries for me. For others the worries outweigh the convenience.