For the past few months, our pockets were given a small break at the gas pump.  Gas prices actually inched its way down to a national average of about $3.50 per gallon.  However, as Hurricane Ike moved its way through the Gulf of Mexico, it temporarily shut down major offshore oil and gas refineries.  Due to the temporary halt of production, there is less supply of refined gas. On top of that, the demand for gas has also gone up because there is a greater need for gas in hurricane ravaged areas.

Less supply and more demand means higher prices. In only two days, the average has jumped to about $3.80. A station in Tennessee is selling regular unleaded of $5.19! According to analysts, this spike in price will fall as soon as the refineries are back up and operating at capacity.  That will take a few weeks.  So what can we do to ease the pinch?

Basically… the only thing we can do is to stretch our gallon of gas as far as it can go.

To accomplish this, you could buy a fuel efficient vehicle.  But if a new car in not in your budget (it is definitely not in mine), then you can use some of the tips and tricks of the hypermilers.

What is a hypermiler… you say?  A hypermiler is a person who engages in hypermiling. LOL

Yeah real funny blogger lady, so what is it really…

Alright, alright, I thought it was funny.

Ok so what is it:

Hyper – excessive, above and beyond, giving more… Mile – 5,280 feet… Put it together and you got “giving more than 5,280 feet” – hypermiling or getting the maximum fuel mileage from your vehicle.

Wayne Gerdes, the father of the hypermiling movement, professes to get 59 miles to the gallon from his car!  And how does he do it… well here are a few hypermiling tips:

1 – Don’t just get in the car and drive. Inspect your car.  Make sure that the tires are properly inflated, make sure the oil is clean, get rid of extra weight that can cause a drag. Then get in and drive.

2 – Use brakes sparingly. Accelerating and decelerating adversely affects fuel economy.  Slowly coast to a stop sign or red light and then brake.

3 – Leave the lead foot at home. Speeding can wreck havoc on fuel efficiency.   Most cars are at peak efficiency at 52 MPH, give or take a few miles.

4 – Be alert. Watch the cars that are near you, but also watch the cars that are ahead of you.  This way, you can make a plan about how to weave in and out the following traffic… this is something you can do to avoid breaking and maintain that 52 MPH speed.

These tips seem simple enough, but most times hypermilers are labeled as extremists… and reckless drivers.  Hypermilers are often criticized as having a one track mind – increasing fuel economy… (regardless of the danger that it poses to other drivers).

Some hypermilers are accused of coming to rolling stops or swinging narrow curves at a high speed… all in an effort to conserve fuel.

I would not suggest to anyone to try out any of the radical hypermiling tactics.  But some of the more practical ones are doable.  Many hypermiling techniques can be used to get us past this spike in gas prices… but they can be used to help save fuel and money once the spike has fallen.

I purchased my first home 9 years ago.  It was an exciting and scary time for me and my family.  I had always dreamed of owning my own home.  Most people think of it as a great financial investment.  While that is true, I never thought of it as an investment in the monetary sense of the term. I viewed it as an investment in improving the quality of life for my family.

At the time, my son was 5 years old… and while living in an apartment was ok… it was time for him to have his own yard so he could run around and play with the dogs.  It was time for me to have my own patch of grass so I could experiment with gardening.  It was time for the DH to have his own space… a little outdoor workshop so he could channel his inner Bob Vila.

You know a place to call our own… a home with the white picket fence so I can raise my 2.5 kids and a dog. Well I don’t really have a white picket fence… it is more like black wrought iron.  I don’t have 2.5 kids… I have 2. And I don’t have a dog… I have a poodle and a terror (also known as a Jack Russell Terrier).

Anyway you get the point… the all American dream!

But buying a home is a big decision.  There are so many things you need to consider.  Which subdivision?  How many square feet?  How many bedrooms?  Which school district?  And so on… and in addition to making those choices, there is also a lot you must learn.

Buying a home exposes you to a world of other little issues that you never had to worry about before… adjustable rate mortgages… fixed rate mortgages… interest only mortgage… and other fancy mortgage loan products, PMI, home warranties, property taxes, homeowner’s insurance, home maintenance, neighborhood associations… this list could extend for pages, I will stop here because you get the idea.

However, of all the issues, I think the biggest one that you should understand before you sign on the dotted line is: How much house can you afford?

They say that your mortgage loan should be no more than three times your annual household income.  So if your household income is $60,000… then your mortgage loan should be in the $180,000 range. But depending on your part of the country… $180,000 can equate to merely a shack (California) or a mini mansion (Mississippi).

But even this 3 times your income rule is relative.  If you have a low interest rate… 3 times your income may be fine… but if you have a high interest rate or get one of these questionable mortgage loans… 3 times your income many not be enough when payments begin to balloon.

Besides the mortgage payment, you’ve also got to take into account the other expenses of owning a home.  A safe estimate is that other expenses will run about the same as another mortgage payment.

Utilities such as electricity, gas, water… $400 a month

Lawn maintenance… $75 a week

Those communication services we can’t do without, phone, high speed internet, cable/satellite… $200 a month

Property taxes… take a pick… this can range anywhere from $1,000 to $8,000 or more per year depending on your state and country laws and the value of your home.

Regular maintenance… cleaning air ducts, shampooing carpet, power washing the exterior to remove mildew, applying fertilizers, spraying for insects, weatherproofing outdoor furniture… and on and on.

And of course… you’ve got your occasional emergencies… plumbing backs up, air conditioner goes out, Hurricane Gustav blows half the shingles off the roof but you’ve got to meet a $5,000 deductible before the homeowner’s insurance kicks in (this is the little emergency I recently encountered).

Then you’ve got the one time expenses… furniture, appliances, and curtains… don’t forget about the curtains.  Some people may not realize how expensive it can be to put up window treatments in every window of a house.

Use a good online calculator to figure how much house you can afford, but don’t forget to consider all the other expenses that come with home ownership.  That will help you understand how much house you can really afford.

About the card

The Hilton HHonors® Platinum Credit Card is issued by American Express.  It is a reward card that allows you to earn Hilton HHonors points that can be redeemed for stays at any Hilton Family Hotel.

The basics

• Variable APR of 14.99% for purchases, 2.9% introductory purchase APR for first 6 months
• 19.99% for cash advances
• When initiated within 30 days of opening the account, 2.9% APR on balance transfers for 6 months
• No annual fee
• 20 day grace period on purchases
• Late fee:  $19 for balances under $400, $38 for balances of $400 or more
• $35 over the limit fee
• 3% fees on cash advances ($5 minimum and no maximum)

The perks

• Earn 10,000 Hilton HHonors bonus points with your first purchase
• Earn 2,500 Hilton HHonors bonus points for each of your first four stays at any Hilton Family Hotel
• Get 30,000 Hilton HHonors bonus points  when you spend $5,000 in the first 5 months of opening the account – that’s in additional to the regular points you earn
• Get 5 HHonors bonus points for every eligible dollar you charge at Hilton HHonors hotels worldwide
• Get 5 HHonors bonus points for select everyday spend categories (supermarkets, drugstores, gas stations, restaurants, the U.S. Postal Service, and wireless phone services)
• Get 3 HHonors bonus points for every dollar you spend on any other purchases
• Automatic enrollment in Hilton HHonors at the Silver VIP elite level
• 15% bonus on all HHonors points earned at participating HHonors hotels
• Includes travel insurance of up to $100,000 accidental death or dismemberment
• Account management tools include online account access year end summary that allows you to sort charges by merchant, category, and date.
• Comes with emergency services such as card replacement and Global Assist.  Global Assist will help with medical, legal, financial, lost luggage, and more when you travel more than 100 miles from home

You will like this card if like spending time at Hilton family hotels… Hilton, ConradTM, Doubletree, Embassy Suites Hotels, Hampton Inn, Hampton Inn & Suites, Hilton Garden Inn, Homewood Suites by Hilton, and Walford-Astoria Collection hotels.

You won’t like this card if you are unable to pay the entire balance of the card at the end of each month.  At 14.99%, interest charges can add up quickly.

Credit card review

The Hilton HHonors® Platinum Credit Card from American Express allows you to earn points that are redeemable for free stays at Hilton family hotels every time you make a purchase.  It takes between 7,500 and 10,000 point to earn a one night stay.  And when you take advantage of the easy to earn bonus points, you can rack up 50,000 points in no time… that is enough for at least a five night stay.

One thing that I like about this card is that you can always earn triple points.  With most point reward cards, you only earn one point per dollar spent, but with the Hilton HHonors® Platinum Credit Card by American Express you earn 3 points per dollar spent… and 5 points for most everyday purchase like gas and groceries.

Another great thing about the Hilton HHonors® Platinum Credit Card is that there is no annual fee to be a card member.  Most American Express issued cards charge an annual fee of between $50 and $100.

All in all, I think it is a good card.  Its only limitation is that you can only redeem the points for stays at Hilton family hotels.  But with more than 3,000 participating locations nationwide and beyond, there is likely to be one at your next travel destination.

Overall rating

I give it 4 out of 5 stars.

Apply for the Hilton HHonors® Platinum Credit Card from American Express here.

Bear Sterns was founded in 1923 by Mr. Bear and Mr. Sterns.  The trading company eventually grew into a multi billion dollar, international corporation that employed over fourteen thousand people and specialized in a gambit of corporate finance and investment services.  Several times the company had been honored by Forbes magazine as one of American’s most admired companies.

Boy, how things have changed… America’s most admired company is admired no more… actually it’s exists no more.  Bear Sterns is yet another former financial warrior that has succumbed to the mortgage crisis of 2007.  As of May 30^th, the company was acquired by power player, JP Morgan Chase for only $2 dollars a share.  This equates to just over $236 million dollars – nearly a fraction of Bears Sterns market value a year ago.

Throughout the entire year of 2007, the now defunct Bear Sterns was thrown hurdle after hurdle.  Aside from the billions of dollars in losses resulting from lending in the subprime mortgage market… Merrill Lynch seized nearly a billion dollars of Bear Sterns assets.  The assets were used as collateral in a bail out loan… a loan for which the company could not repay.

Also before the acquisition, the company had been sued by investors and the Federal Trade Commission.  Last week the FTC suit was settled for $28 million. EMC Mortgage, a subsidiary of Bear Sterns, was the named defendant in the FTC suit.

EMC Mortgage was the subprime/alt A mortgage lending arm of Bear Sterns and serviced nearly a half a million loans with balances totaling $86 billion dollars. Subprime lending is when banks loan money to those with bad credit.  Alt A lending is when banks loan money to those bordering on bad credit.)

So what is EMC guilty of? A bunch of dirty tactics which involve deceiving and defrauding mortgagees… FTC Act Violations, Fair Debt Collection Practices Act Violations, Fair Credit Reporting Act Violations and Truth in Lending Act’s Regulation Z Violations.

FTC Act Violations

The FTC Act makes it illegal to use unfair or deceptive practices in business.  EMC disregarded this act by charging unnecessary fees.  They charged late fees, inspections fees and other fees without provocation.  They also were careless in ensuring that the amount due as shown on mortgage billing statement was actually the amount due.

Fair Debt Collection Practices Act Violations

Debt collectors have been known to play dirty.  They would call at midnight, 2 am and 4, they’d swear, falsely threaten to take legal recourse that strong arm people into paying, lie about being a debt collector… all kinds of stuff.  EMC engaged in similar ploys.  But the Fair Debt Collection Practices Act exists to protect consumers from such abusive debt collection practices.

Fair Credit Reporting Act Violations

The Fair Credit Reporting Act entitles consumers to a free annual credit report.  It also spells out what must be reported to credit agencies and how long negative items can appear on a credit report.  EMC reported that consumers owed a debt, however it failed to report when a consumer disputed a debt.

Truth in Lending Act’s Regulation Z Violations

The Truth in Lending Act requires a lender to fully disclose terms and conditions of a loan. EMC charged its borrowers a loan modification fee, rolled the fee into the principal balance and never disclosed to the borrower that they were doing so.

I think it is horrible that EMC chose to prey on the American people.  What is even worse, the people they preyed on were those who could least afford it.  Subprime and Alt A borrowers were duped once with all of these creative mortgage products… no interest loans, teaser rate adjustable mortgages, and so on.  Shame on EMC for sticking it to consumers a second time… charged unauthorized fees, not disclosing all fees and being a bullying debt collector. And what is so disappointing about the whole thing… EMC was a subsidiary of Bear Sterns… American’s most admired company.

About the card

The Gold Delta SkyMiles® Credit Card is issued by American Express.  It is a reward card that allows you to earn Delta Sky Miles each time you swipe.

The basics

• APRs: 14.99% for purchases, 19.99% for cash advances
• When initiated within 6 months of opening the account, 9.99% APR on balances transfers for the life of the loan
• Annual fee: $95 or $40 for some qualified cardholders
• 20 day grace period on purchases
• Late fee:  $19 for balances under $400, $38 for balances of $400 or more
• $35 over the limit fee
• 3% fees on cash advances ($5 minimum and no maximum)

The perks

• Earn Double Miles on eligible supermarket, drugstore, hardware store, home improvement, gas station and US Postal Service purchases
• Also earn Double Miles when use the card to pay your cell phone bill and to make Delta purchases
• Earn one mile for every other purchase
• 20,000 bonus miles after your first purchase
• Request 2 additional cards with your application and get 5,000 bonus miles
• Annual fee is waived for the first year
• Earn bonus miles with Miles Boosts when you spend more than $15,000 a year
• No blackout dates or seat restrictions
• Includes travel insurance of up to $100,000 accidental death or dismemberment
• Account management tools include online account access year end summary that allows you to sort charges by merchant, category, and date.
• Comes with emergency services such are card replacement and Global Assist.  Global Assist will help with medical, legal, financial, lost luggage, and more when you travel more than 100 miles from home

You will like this card if you are frequent flyer who prefers Delta flights.

You won’t like this card if you are unable to pay the entire balance of the card at the end of each month.  At 14.99%, interest charges can add up quickly.

Credit card review

The Gold Delta SkyMiles® Credit Card from American Express allows you to earn free Delta Sky Miles every time you make a purchase.  However, there is a limit on the amount of miles you can earn.  Eligible spending is capped at $100,000.  I don’t know about you, but doubt I would make $100,000 in credit card purchases. So even though there is a maximum… it is liberal one.

I really like the year end summary.  That may not be important to some, but for a budget conscious person like myself…  the summary is a huge plus.  The year end summary allows you to easily track your spending.  And sorting by category can make it easy to see where you are spending too much.  I have a card that provides these year end summaries.  I was quickly able to identify the area where I needed to cut back… my vices were dining out and clothes shopping.

There are some things that I don’t like about the card.  First and foremost… the $95 annual fee!  Secondly… 14.99% interest is kind of high.  Finally… the reward options are limited to only Delta flights.  What if you want to fly to a location that Delta does not serve?  The miles you earn on this card are not transferable to another airline.  There are many other miles reward cards that don’t restrict your flight to a particular airline.

Overall rating

I give it 2.5 out of 5 stars.

Apply for the Gold Delta SkyMiles® Credit Card from American Express here.

The high price of gas has been affecting all of us… big and small… huge corporations and little ole you and me.  For you and I… we have to fill a 10 maybe 20 gallon gas tank at the most.  But imagine the hit if we had to fuel a few jet engines several times a day.  The cost could run into the tens of thousands of dollars… and possibly more.

Well this exuberant fuel cost is common place in the airline industry.  And of course they find ways to pass these costs down to the consumer.  $15 dollars to check your first bag, $25 for the second, $100 for bags 3, 4, and 5… $200 for number 6!!

But just recently Jet Blue tacked on yet another fee.

Anyone who flies knows how uncomfortable airline seats can be.  You don’t have enough room to stretch your legs, you are forced to rub elbows (literally) with your neighbor, the awkwardly shaped head rest exists only put a crook in your neck… just a miserable experience all around.  The only bit of comfort we get is a salty bag of peanuts (that’ll cost you about $2 or 3 bucks on some flights), a two ounce cup of soda, and a 3 by 4 inch barely fluffy pillow… a pillow that now costs $7 bucks on board Jet Blue flights!

$7 bucks for those scanty airplane pillows?  Yes, you heard it right… seven dollars! (ok well a blanket comes with it, but still…this nickel and diming is getting ridiculous) That equates to roughly two gallons of gas in my part of the world.

This new $7 pillow charge has gotten a few folks a bit annoyed.  And rightfully so… those skimpy pillows hardly help to prevent the crook in your neck.  But the thing I don’t get is who came up with this bright idea?

Of course charging seven dollars for a pillow is going to cause some bad press.  But didn’t Jet Blue’s PR folks realize that before they made this big announcement?

Don’t get me wrong… free enterprise is a beautiful thing.  I am all for businesses improving the bottom line.  But if I were the Jet Blue people, I would have went about it a different way.

Ok let’s say I am Jet Blue. Gas prices are killing me, so I need to figure a way to mitigate the losses.  After thinking of several ways, I pick the easiest… stick it to the consumer.  I do some calculating… 129 plus 10 divided by 19 squared, carry the three, take the natural log and round up to 7.  Alright so $7 is the magic number.  Now I gotta shift it to the customers.

So do I come right out and tell the customer something as preposterous as “I need $7 for that pillow, please Mr. Had A Long Day, Had One Too Many Drinks, Wife Is Sleeping Around, Kids Hate My Guts.”  No, I don’t say that… that might set someone off.

Or at the very least… Reporters start reporting, Bloggers start blogging, Bad PR starts rolling in… all about this $7 pillow fee.

What I would do is… slide it under the radar by jacking up the ticket price by $7.  Will anyone even notice that the $542 ticket is now $549… I seriously doubt it.  Then I would put a spin on it.  I would give every passenger a lovely airline pillow and blanket kit, free… courtesy of me, Jet Blue.  So you see, now I look like the good guy… is Delta or American Airlines giving away free pillows?… No.  But here at Jet Blue we do… and we do because we value our customers!

Problem solved… I got my seven dollars, you got your pillow, no bad press, plus a lil good press for giving away free pillows… and no one is the wiser to the whole plan.  No, it is not deceit, is it a play on words… marketing, PR, whatever you wanna call it.

Hi Everyone,

Here are the carnivals that we participated in this week. Enjoy!

- Carnival of Personal Finance #167 (Highlights from the Beijing 2008 Olympics Edition) was hosted by Broke Grad Student and you can find our post entitled The Economics of Minimum Wage listed there.

- Finance Fiesta #13 (The Triskaidekaphobia Edition) was hosted by Master Your Card and you can find our post entitled Hello Saks, Here I Come! listed there.

- Money Hacks Carnival #27 (The Financial Dilemas Edition) was hosted by Personal Finance Buzz and you can find our post entitled Roth IRA: Wrought Your Way To A Brighter Retirement listed there.

- Festival of Frugality #140 (The Frugal Quotes Edition) was hosted by Fire Finance and you can find our post entitled Budget or Bust listed there.

About the card

I prefer cash reward cards best when compared to all of the other different types of rewards card programs.  Cash rebate cards offer the most flexibility.  You are not limited to miles, gift cards or points that can only be redeemed for certain items.

When friends and family ask me what I want for my birthday, Christmas, Mother’s Day, etc., my response is always the same… Show me the money!  With cash, I am allowed to decide how to spend it.  The premise remains the same with cash rebate reward cards.

The Discover® More(SM) Card – Clear is cash reward card which is issued by Discover.  This card affords me the same freedom.

The basics

• Purchase APRs between10.99% and 18.99% depending on your credit history
• 23.99% APR on Cash Advances
• No annual fee
• 25 day grace period on purchases
• Late fee:  $19 for balances of $250 or less, $39 for balances over $250
• Over the limit fee:  $15 for balances of $500 or less, $39 for balances over $500
• 3% fees on cash advances ($5 minimum and no maximum)

The perks

• Intro 0% APR on purchases for the first six months
• 0% APR for 12 months on balance transfer made in the intro period
• 3% balance transfer fee under this offer ($10 minimum and $75 maximum)
• .25% cash rebate when you spend up to $1,500 on general purchases
• .5% cash rebate when you spend between $1,500 and $3,000 on general purchases
• 1% cash rebate when you spend over $3,000 on general purchases
• Up to 5% Cashback Bonus® gas, restaurant and other qualified special purchases
• Get Cashback Bonus® when you redeem rebates for gift certificates at eligible retailers
• Earn unlimited cash rebates
• Complimentary insurance when you pay using your Discover® More(SM) Card – Clear –  $25,000 coverage in car rental insurance and $500,000 in flight accident insurance

You will like this card if you are looking for a good rebate card with a low APR and you plan to charge more than $3,000 a year.

You won’t like this card if you do not plan on charging more than $3,000 a year.

Credit card review

I like the Discover® More(SM) Card – Clear by Discover.  Well, for one, it is a cash reward card.  That means I get cash back on the items I buy everyday.  And I get even more cash back when I purchase gas or go out to the movies.

Secondly, the credit terms are liberal for a reward card. Most reward cards charge higher interest or fees for their reward cards.  But the Discover® More(SM) Card – Clear terms are comparable to that of non reward cards.  The interest is only 10.99%.  There is a 25 day grace period.  Plus, cardholders are not charged an annual fee.

The card also offers an unbelievable 12 month 0.00% APR introductory rate on balance transfers.  This is a huge plus… especially you are paying a high rate on another card balance.

However, there is one thing I am not so keen about.  In order to get the 1% cash rebate, you have to make more than $3,000 in annual purchases.  If not, then you’ll only earn as little as .5% or even .25%.

Overall rating

I give it 4.5 out of 5 stars.

Apply for your Discover® More(SM) Card – Clear here.

Extreme Makeover Home Edition… have you seen it?  It is the cousin to Extreme Makeover (People Edition).

Anyway, the premise of the show… they select a family that has a very sad and heart wrenching story (disabled children, poor living conditions, too many children, you name it, they’ve shown it).  The show pays off the family’s mortgage.  Then a team of architects, plumbers, designers, electricians, builders, and hundreds of other volunteers demolish the family’s existing home.  After that, the team rebuilds a luxurious, mammoth-sized, fairytale like dream home in its place.

The fantasy home, all of its contents, and usually other gifts like scholarships, cash, cars, etc. are bestowed onto the family… scot-free! This copious gesture serves to uplift the family and to help them better cope with their unfortunate circumstances.  Well… at least for the time being…

Recently stories have been surfacing about how some Extreme Makeover Home Edition families have been losing their mansions!  So they no longer have their extravagant made over house, but they also no longer have the shabby house that it replaced.

Case # 2382G – The Harper’s

Patricia and Milton Harper of Lake City, GA, married 24 years, three children, the wife – a homemaker, the husband – works in the home security business.

Their tragic story: They lived in the projects of New York.  They lost a child that choked to death while eating his food.  The incident motivated them to seek something better.  They decided to work hard, save up and finally moved to Georgia and purchased their first home.

The house, however, was a doozy.  Every time it rained, raw sewerage would back up into their house. The horrid conditions forced the family to live in their van.  The van was totalled in an accident. Long story short… they got dealt a bad hand.

Three years ago, Extreme Makeover decided to help them out.  Nearly 1800 people took on the task of overhauling the Harper’s house. And what an overhaul it was? 6500 square feet, 5 bedrooms, 7 bathrooms, stone fireplaces (with an “s”), a music room, a theater room, an office… a castle! On top of the house, they also received nearly a quarter of a million dollars in cash.

How’s that for a gift?

But apparently the Harper’s fell onto hard times.  Back in May, they put the house up for sale… asking price, $950,000.  The house did not sell back then.  However, due to some unfortunate circumstance, the house will be up for sale… or rather up for auction on August 5^th.  The house is being auctioned off as a result of a foreclosure.

This auction comes as the sad and final end to an unbelievable story.  But I am left to ponder… who is to blame?

Most people are blaming the Harper’s.  Some have called them ungrateful… and even stupid.  While I feel that they are partially to blame… I also want to point a finger at the bank, Chase, and at the show, Extreme Makeover.

Here is my question to Chase… Why would you loan nearly a half a million dollars to a couple that survives on the income of a home security worker?  Seriously, did you really think they were going to be able to pay you back?

And to the Extreme Makeover folks… Ok, so you want to help a family that is down and out. Really, I applaud your philanthropy.  But have ya’ll ever heard the old Chinese proverb: Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime.  For an extra four or five hundred dollars, ya’ll could have thrown in a financial planning class as a part of the package.

Well that’s my 2 cents, for what it’s worth.