Monthly Archives: December 2010

Best of the Rest

Written by in Best of the Rest
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Please check out my post at Currency, After College, Keep Living Like a College Kid. I advociate keeping the ame lifestyle you’re used to for an extra year or two before upgrading everything.

Here were my favorite posts for the past week. If you like personal finance, you’ve got to read these:

Neal at Wealth Pilgrim presents 3 weekend jobs that pay $50 an hour. This isn’t just a list of things that require a ton of work and are unrealistic. There are things you can actually go out and do. Once you’re trained, they sound like easy work that can help boost income a significant amount.

Jim at Bargaineering had some GREAT articles this week, including Buffett’s million dollar bet, which details how Warren Buffett pays taxes at a lower rate than his receptionist. It sounds funny, but the tax rates are set in such a way that those with the most money pay taxes at the lowest rate. It’s a good thing he’s pledged almost all of his money to charity!

I read PT Money‘s article this week on how he sends paper checks with ING Direct. I use ING as my primary bank, but I do still have a Bank of America account, even though I hate them, because it’s just too damn convenient. But I gotta give mad propts to PT for as he says being “crazy enough to roll with just an online checking account.” Quite impressive.

Redeeming Riches shows us how to use social media to save money. There are a few examples, but the first thing you should do when you need something is reach out to the people you know! They are the people most willing to help you and if you saw someone who needed help that you could easily provide, wouldn’t you be happy to do so? Don’t be afraid to ask!

Also this week, I was included in the Carnival of Personal Finance hosted by Mighty Bargain Hunter with most post Why You Should Donate More Money to Charity.

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Should We Use Gift Cards on Everyday Items?

Written by in Saving, Spending, Spending Wisely
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Around this time of year, almost everyone gets a gift card or two. Sometimes it’s to stores we don’t visit and sometimes it’s to places we love and would shop at anyway.

Let’s say you received the choice of a $50 to either Brookstone, where they have lots of cool gadgets, or a $50 gift card to your neighborhood supermarket, where you shop regularly.

Which would you choose?

Some argue that taking the Brookstone card is better because it’s supposed to be a gift and it’s not meant to simply be used on daily items we need to replenish, but that it should be used on something we wouldn’t buy for ourselves. That way, it feels like a present, which is the point of having a gift card in the first place!

With a supermarket gift card, we get to spend money on the things we need and as people who care about personal finance, reducing our grocery spending for a month (and throwing the extra money into savings) can be a big deal!

I would rather take the supermarket gift card. I know I will use it. I can spend it on the things I need rather than on the things I want. While gadgets are nice sometimes, it really is just adds to clutter and becomes something we forget about fairly quickly.

What if you could take cash?

Cash is better than the Brookstone card, but having it in my wallet would be too enticing. In a supermarket, there aren’t too many options for buying things we don’t need. At most, it’s a few dollars for the name brand vs. the store brand. With cash, we are constantly enticed to buy things we don’t need.

I recently received a $100 gift card to a store similar to Brookstone in that it’s not a store I typically shop at. Instead of finding something I probably don’t need, I plan on selling my $100 gift card, probably for $80-$85 dollars. Sure, I’m leaving $15-$20 on the table, but at the same time, I’d much rather have $80 of something I want than $100 of something I could live without.

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How We Bought (and Negotiated for) Our Car

Written by in Money Stories, Negotiating
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The following is a post by staff writer Crystal at Budgeting in the Fun Stuff. Her blog covers living expenses, saving for your future, and the fun stuff along the way.

When I asked my husband what personal finance experience sticks out in his mind, he immediately said “buying my car.” That was indeed a memorable deal. I’m also happy to talk about it since I was amazing, lol.

The Beginning

It all started when my husband decided that he needed a new car. Specifically, he wanted a small SUV that could easily handle all of his school supplies as a science teacher and sports officiating equipment at the same time. I physically cringed at the idea of owning an SUV since gas 2 1/2 years ago was reaching $4 a gallon around here!

Thankfully, he saw a Prius in our Kroger’s parking lot and was able to get a great look at its storage room in the back. He was hooked. That’s when I started looking into cost.

The Toyota Prius did not cost as much as I first guessed, but it was only a few thousand cheaper than the small SUV’s that were on our list. I never thought that I would ever need or want to buy any vehicle that cost more than $25,000, but he did need room and we do use his car for the majority of our driving. So I said nothing and continued looking up prices online.

The Purchase

By the time he had a free evening to test drive a Prius for the first time ever, I knew exactly what they were selling for ($26,000-$28,000), the Kelley Blue Book values of the 2008 models (about $26,000), what price I would be shooting for when he decided to buy ($26,500), and the APR we could get from my old credit union (4.5%). I thought I was fully armed.

I was not prepared for the fact that the 2008 Prius had a 200 person waiting list at that point. We were just lucky that a local dealer even had one to test drive. Sadly, it was a fully loaded model that they wanted $32,000 for after all the fees. It was also the ugliest reddish brown color that I had ever seen. It was supremely icky.

Once I figured out that they wouldn’t even negotiate due to high demand, I was ready to go. The salesmen scrambled to come up with something we might be willing to buy. They lucked out and found a 2007 silver Prius in the used car lot next door.

It was awesome. It had the same design, a few extras (like a back-up camera), and was still sparkly and clean despite it’s 30,000 miles. That was the rub. I had not researched used cars. I had no idea what it was really worth and Mr. BFS did not want to leave without that car. Of course, we should have left at that point and come back after doing a little research, but that wouldn’t have made such a good story, would it? :-)

The Negotiation

Yes, we stayed. I offered something laughably low in that high demand environment – $16,000. They countered with $26,000. I rolled my eyes and suggested they actually work with me and offered $18,000. They came down to $24,500. I said I could absolutely go no higher than $21,000 (honestly, I would have gone for $23,000). They made their “final” offer of $21,500. All of that took about 2 hours and we finally were sent to the Finance and Insurance department.

That guy was awful. He tried to sell us on a 7% interest rate and a $2400 extended warranty. The Certified Pre-Owned beauty was already well-warrantied for another 70,000 miles, but I wanted to see if the interest rate had any wiggle room. I asked how low he could go on the APR if we bought the warranty. He knocked it down to 4.1%. I then asked for him to remove the warranty from the works. When he went back to adjust the APR, I explained that I knew that the APR wasn’t actually effected by warranties and that I’d like it to stay at 4.1%.

Needless to say, we didn’t make friends with that guy, but we did leave with a great rate at the time for a used car. :-)

Results

When we finally were able to drive our “new” car home, I was dying to see how good of a deal I really made. When I frantically typed in all the relevant data into Kelley Blue Book, I was happily surprised to see that I paid $500 less than its “going rate” and a quick look at our credit report and a check-in with our credit union showed that our APR was pretty awesome too. I felt like I won the lottery until I realized we just signed away at least $23,000 in car costs and interest rate charges. Yuck.

In the end, we paid off the Prius by mid-2010 and ended up spending $23,400 total. It is still driving just like new and makes 50-52 miles per gallon, so I’m more than satisfied overall. My husband loves it and even said, “Cars are more fun to drive when they are affordable.” He has no idea how many hours I put into that, lol.

Tips for the Future

Here’s what I would keep in mind for my next car purchase:

  • Research the price, options, and APR for new AND used just to keep your options open.
  • Everything is negotiable, even APR and warranty costs. Keep that in mind.
  • Financing options have broadened dramatically. Seek a payday loan instead of other alternatives with their ridiculous interest rates.
  • Don’t let your spouse ever say the words “Oh, I really like that one”. :-)
  • Sometimes luck is better than skill, hahaha.

Have you ever gotten lucky on a big deal? Do you have any car buying experiences to share?

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Ranking the Rankings

Written by in Money
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No ranking system is perfect. One of the most popular ones in the world, the BCS designed for college football, is criticized constantly with people calling for a playoff system instead (which I completely agree with) of the current combination of human polls and computer rankings.

Within the personal finance world, there are several ranking systems. Each has it’s own merits and each has it’s downsides, but there seems to be one metric that outweighs the others.

One of the most popular rankings, the godfather of personal finance rankings, is the Wisebread rankings. It lists hundreds of personal finance blogs, and recently changed from ranking blogs based on Alexa ranking, to be a more comprehensive ranking system including many other factors, including Klout, a metric of social engagement.

However, at the same time, it uses some questionable metrics. Most noticeably, it uses PageRank (PR), Google’s ranking system. When updated, it is the premier ranking that advertisers care about. Search engine traffic comes almost entirely from Google, so metrics can judge, but what Google thinks is what makes the biggest difference.

The problem with PageRank that it hasn’t been updated since March. Those of us that sell advertising based on PageRank and have good PRs are happy (no move is better than risking a move down), but newer blogs have no PR when they should be highly ranked. What good is a metric if it never updates (and we don’t know when the next update will occur, if ever)? Still, it should be included because advertisers are interested in this and if nothing else, it shows which sites have been doing well for an extended period of time. While it’s not ideal, PageRank should be included in any ranking solely because advertisers care.

Another questionable metric is produced by Compete.com, which offers a metric of traffic, but it’s calculations are severely flawed. Even though my traffic has increased dramatically over the past 6 months, Compete shows that until this month, my traffic actually dropped fairly consistently and that’s just not the case. In addition, it significantly misjudges my actual traffic. So it’s both inaccurate and hasn’t even tracked the direction of my traffic.

Finally, the Wisebread rankings don’t update regularly. I’ve been tracking it a lot lately and while some of the metrics have changed recently, the number of subscribers along with Klout score (both metrics change daily) have not been updated in some time. While knowing how many twitter followers someone has, it doesn’t give a good indication of where someone is at this point in time. What’s a ranking system if it isn’t constantly evolving? Almost all of my numbers are wrong, so it does not reflect what’s actually happening.

Another ranking system is the Money Crashers rankings. They came out with their rankings a few months ago, and while they don’t update regularly, they recently updated, so at least it’s moving more than the Wisebread rankings and they’re clearly working on improving it. Their inclusion of mozRank, which we’ll get to below, is a great step in the right direction. However, this ranking too has it’s issues.

Once again, they use Compete statistics. I have yet to find someone who says Compete accurately portray traffic stats. And another awful metric is the SEM Rush score, which calculates the estimated worth of a blog. Sounds cool, right? Except that I would never sell my site for the $2,500 it claims I’m worth. I was offered double that and turned it down several months ago. And while I believe that Bargaineering is one of the best sites out there, I hardly think it’s worth over $1 million as they say it is. (If it is, please sell it now, don’t pull a Groupon!) Clearly that ranking needs some major fixing.

Next, we have the Technorati rankings for Finance, which measures a site’s standing and influence in the blogosphere. It measures linking behavior and other data over a short, finite period of time. Technorati updates every day and there are constant shifts in the rankings. While there is little transparency, having a secret system helps in that there is no easy way to move up because we don’t know exactly which factors are most important. There is no ‘gaming’ the system.

It’s hard to find out exactly what metrics are included, but there are significant flaws with this system. How do I know? Well, if we look at the top sites in the Finance category, look who currently sits at number 8? I do. And guess what? While I take pride in my blog, I am so far away from being in the top 10 of any finance related category. Even if there was a ‘blogs named Sweating The Big Stuff’ category, I’m not sure I’d make it. While I appreciate the honor, I am undeserving. We can’t trust something that puts me above some amazing bloggers who have been doing this for years.

Finally, we have the Yakezie rankings. My favorite thing about them is the amount of weight put on mozRank, a metric similar to PageRank, but one that updates much more regularly. It updates at least once a month. Most bloggers agree that this is an accurate reflection of a blog’s influence and popularity, and it will be interesting to track the metric over a long period of time to see if it sustains it’s popularity. I have yet to find any detractors as it seems like it fairly judges a blog’s popularity.

The problem with the Yakezie rankings is that while it includes all sites that are part of the group, not all bloggers are part of it (though everyone is welcome (and encouraged) to join), so it’s hard to say where they would fall in the rankings. If it were comprehensive, more people would flock to it.

Having activity on the site be worth 50% of the ranking is a lot, especially since the group is about promoting others and this may encourage some to spend more time on one site when it could be better spent elsewhere.

For those within the Yakezie group, it definitely gets the job done. By including PR, it appeals to advertisers and having mozRank beside it shows whether those PR rankings are relevant or if they’re very out of date. Plus, the weight of the interactivity on the Yakezie site shows which people have been giving it their all and deserve to be recognized. Finally, the Alexa rank is a nice inclusion because it’s how the Yakezie got started and while there are ways to manipulate it’s rankings, for the most part it shows accurate traffic patterns.

If I could create a perfect ranking system, I would do away with all metrics that don’t update at least once a month and those that less than 75% of bloggers agreed accurately portray what they’re supposed to. Based on that, mozRank and Klout would be two of the most important factors, with Alexa not too far behind. While there are a few flaws in the system, for most it’s fair.

Readers, which ranking do you think accurately portrays the best personal finance blogs? Which specific metric is your favorite?

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