Archive for April, 2009
After researching this post, I’m embarrassed to say how much we spend on groceries every week. Let’s just say that it’s much, much more than what some of the frugalists out there are dropping at the local supermarket.
Seriously, I was SHOCKED at some of what I found. People are actually feeding a family of four for under fifty bucks a week. Do the math. That’s less than two bucks per person per day. Amazing.
Now, the menus these folks are using aren’t particularly exciting. I’m an unrepetant carnivore and most of them don’t contain much meaty goodness, either. Those who are looking for ways to shed pounds won’t be that thrilled, either. You’d think that cutting costs dramatically would result in some kind of belt-tightening near-starvation, but that’s not what happens. Instead, you end up with a lot of rice and breads. Carbs rule.
I also have a few concerns regarding the overall healthiness of the El Cheapo menu plans. No, nobody is going to fall deathly ill or anything. There just isn’t as much fruit and vegetation as your average nutritionist would probably recommend.
That being said, this is some VERY interesting stuff for those who are trying to find a way to keep their expenditures down. For most of us, following these systems could result in thousands of dollars in annual savings. For those who are taking a beating during this recessionary period, these plans could be a financial lifesaver. Plus, even if you don’t go hardcore on the price-chopping plan, you can still learn a few handy tricks that you can transfer into your own overall food buying habits.
Hillbilly Housewife was able to get by on about $45 per week in a pinch back in 2006. According to her most recent calculations, the cost of feeding a family of four would be around $70 per week. That’s still pretty impressive. I don’t know about “hot dog and veggie stir fry over rice” as a supper, but at least you can have some iced tea with it.
Unemployed and Feeding a Family… This blog outlines a strategy that will feed a family of four for just under a c-note per week. There dropping $20+ more than Hillbilly Housewife, but that extra money seems to result in a slight upgrade in the meat department.
$30 per week… This site explains that you could do all kinds of wonderful things if you were only spending $30 to feed your family every week. Gee, you could buy a new dress or save for some other luxuries. Sounds compelling until you see the solution. They advise taking advantage of the Angel Food program, which supplies bargain groceries built around organized menus for less than $30 to those in need. Personally, I don’t really think anyone who just wants to save some dough to go on vacation should be leveraging the efforts of church volunteers. Seems a bit creepy and wrong to me, though the program doesn’t have restrictions on participation. I’m including it because you can look at what they’re doing to get ideas about holding down costs and because those who do have a need to utilize charity right now might benefit from it.
Anjie feeds four for less than $30 per week. I haven’t run the numbers on this. It might be a little dated and you may have to shell out more to compensate for inflation. However, this is an impressive example of how people can hold down their food costs.
I also discovered a message board where people are sharing some cheap, cheap, cheap recipes. If you want to slice and dice your grocery costs, it’s worth checking out. If you aren’t ready to get quite that intense, this list of money-saving tricks from The Simple Dollar is pretty functional and a lot less radical.
I’m still reeling over the way some people are able to exercise this kind of cost control. It’s absolutely amazing. If you start running the numbers… Well, it could be life-changing if you’re willing to follow through with it.
Although I freely admit my addiction to mind-numbing television programs, I still carve out a chunk of time to do some good old-fashioned reading. Mrs. Lampsen is a voracious consumer of the written word and the Lampsen children have libraries that rival those of most small, private universities.
All of those pages stuffed with well-turned phrases don’t come free. And even though I’d love it if we supplemented our burgeoning collection of books solely via deep-discount library sales, we apparently crave the new stuff too much to make that happen.
When you combine that demand for pages with my personal predilection for bargains, you end up being a Borders Rewards member.
Members were given Personal Shopping Days, which enabled those who had spent $50 in a month to apply a 10% discount on all purchases made on a specific day in the following month. Gift cards were the exception. Customers also received a credit equal to 5% of their store purchases made through Nov. 14 in a special Holiday Savings account. That credit could then be used on purchases made from Nov. 15 through Jan. 31. The only caveat was that customers had to have at least $10 in their account — which meant they had to have spent a minimum of $200 to qualify.
Then, the head honchos at the book giant decided that the economic downturn and the excessive popularity of the program made it untenable. Basically, they were giving away too much and they didn’t feel as though a recession was the best time to continue to largesse. The spot-tested a scaled-back program at a select group of stores and discovered that they could improve their numbers without being as generous with the Borders Rewards plan.
Of course they couldn’t get rid of the whole thing. So, they scaled it back instead. Borders Rewards is still alive and kicking, it just isn’t as great as it once was. Here’s what they’re doing now:
For every $150 spent on qualifying purchases at Borders, Borders.com, Borders Express, or Waldenbooks, Borders Rewards members will earn $5 in Borders Bucks, issued the first week of the following month and valid until the end of that month. Plus, any amount you spend on qualifying purchases that exceeds $150 rolls over until you reach your next cumulative total of $150. There is no limit to how many Borders Bucks you can earn!
You can see the difference. It’s actually pretty substantial. You can still save some dough by being part of the club, but it isn’t quite as nice as it once was.
Now, I’m not saying that’s a reason to abandon the Borders’ ship. If you liked the store when they were giving you more freebies, you’ll still like the store. You’ll just spend a little more money. And I’m not sure whether or not you’re really going to get a much better deal by taking it over to Barnes & Noble. Besides, at least check you had to shell out $25 of your own cash to join the B&N program and if you’re like me you get a bit squeamish about paying for what’s supposed to be a customer loyalty program.
Who knows whether or not Borders will upgrade Rewards once we come out of this economic funk, but right now things aren’t what they used to be at the bookstore.
On the bright side, they still do their educator deals if you happen to be a teacher and their discount tables always seem stuffed with decent stuff at cut-rate prices. There’s also a strong indication that they’re interested in re-improving the program.
Before we start talking specifically about the American Express Membership Rewards program, please indulge me while I point out a few things that folks should understand about every credit card customer loyalty program.
The rewards are never all that awesome. They can be nice, but the only way they’re going to be dramatic is if you’re spending a fortune while using the card. If you’re not a high roller, you’re not going to get high roller rewards. Calibrate your expectations accordingly.
There is always fine print. Always. Points expire. There are limitations on transfers. There is invariably something confusing, weird or otherwise annoying about points programs. Part of that is that the card companies need to protect themselves from loophole-searchers who’ll find a way to take (over)advantage of every opening. Part of it is laziness and subpar customer service that seems inextricably linked to being a big company. Think about it, if you call to figure out your balance and when your last payment posted, you end up on hold and talking to two different people. That’s a call that’s all about them getting money from you. Why would you expect a better experience when you want something from them?
No matter how great a program is, you’re going to find people who thinks it’s a rip-off or a scam. You could get a free foot massage just for looking at a credit card and some bozo would complain about the scent of the pepperming oil used.
Likewise, no matter how rotten a program is, you’re going to find people who are willing to tell you that it is the most awesomest, super-spectacular, OMG-I-Can’t-Believe-It thing on the face of the planet. They’re also generally making money off of getting people to sign up or they’re otherwise affiliated with the company running the plan.
Okay, those are words to live by. Trust me. But what about the American Express Membership Rewards program specifically? It’s not too shabby. You accumulate points almost every time you bust out the Amex. You can even get points for buying a loaf of bread and a can of sliced pears at the grocery store. Use card, get points, simple.
The redemption is pretty nifty, too. They have a ton of options and their pretty flexible in terms of letting you move points to the program of your choice (though you might be limited to moving them around once).
Most people seem pretty happy with the Amex program. The loudest group of critics seem to be people who get angry after they can’t access their points (which, unlike many programs, basically don’t expire) because their accounts have been closed. If American Express cancels your card, any points you’ve accumulated are going to vanish right up Karl Malden’s nose.
So, should you be swiping the Amex everywhere in order to secure some rewards? No. Of course not. You should be paying cash and being as financially responsible as humanly possible. That being said, if you are going to use your Amex, you might as well keep track of your points and use them to your advantage.
And that reminds me of one more observation I’ve made about these programs… They are rarely, if ever, a reason to prefer the use of any particular card. You should make your credit card buying decisions based on fees, interest rates, etc. Don’t make the call because one card is willing to give you a slightly better membership program. The limitations of the rewards programs preven them from generally being THE REASON to make a card decision.
The American Express Membership Rewards program? It looks pretty good. You can leave home without your American Express and survive, but if you’re going to use it, take advantage of the goodies.
Are you a gadget freak? Are you one of those chronic CD, DVD or video game accumulators?
If so, you probably know at least a few kids who wear blue polo shirts and khakis to work. I’m talking about the personnel at America’s favorite big box electronic store, Best Buy.
And if you spend some dough at Best Buy, you’ve probably encountered the Best Buy Reward Zone program. Are you participating? If not, you might want to consider it.
The whole thing is pretty simple. Every time you drop a buck at Best Buy you get a Reward Zone point. Those points translate into coupons you can use to save money at Best Buy.
There are a few other perks. You can get some free paper if you buy your ink cartridges there, for instance. Plus, they will regularly offer special in-store deals for Reward Zone members.
So, everything sounds good so far. What’s the catch?
To tell you the truth, there isn’t one. It’s a pretty straightforward little customer loyalty plan. It doesn’t cost you anything to join, so even if you don’t use it you aren’t out anything for being part of the “club”.
Now, that doesn’t mean that everyone absolutely adores the program. Even though it’s free to join and carries no risk you will find people who don’t really like the whole thing. Their issues? Well, they claim that the certificates and coupons come slowly. Some people also argue that some of those kids in the polo shirts don’t really understand the dynamics of the Best Buy Reward Zone system an tend to provide incorrect or incomplete information at sign up. The biggest gripe, however, is the expiration of rewards.
When you get your bonus from Best Buy, they won’t let you sit on it for years. You have 90 days from the date of issue to cash in. And, since Best Buy can occasionally be slow to deliver, you might only have 60 days or so to actually put your rewards to use. Predictably, plenty of people who either didn’t read the fine print or who were incorrectly advised by Best Buy staff have tried to use expired points bonuses. When they find out they can’t, they get a little frustrated.
As you might expect, people occasionally encounter some customer service difficulties when they try to get things ironed out, too.
Overall, though, those gripes aren’t a reason not to join. It’s just evidence that the program could probably be a little better.
Now, there is a second component to the Reward Zone program that doesn’t get the Lampsen “thumbs up”. You get a point for every buck you spend as a member. If you sign up for the Reward Zone MasterCard, however, you can get two points per dollar and a few other added niceties. The problem? You’re signing up for a credit card that’s closely tied to a large retailer and that doesn’t offer the world’s greatest terms. I’m not an advocate of toting too much plastic unless you have the kind of steely determination necessary to avoid the risks of credit over-extension.
Don’t confuse the Best Buy Reward Zone with the Best Buy Reward Zone card, though. You don’t need to have the card to get some langiappe from Best Buy.
My perspective? I agree with CompareRewards.com. It’s free and it might help you out a little if you shop at Best Buy regularly. So, why not? I wouldn’t use the program as a reason to prefer Best Buy over a competitor with significantly lower prices, but it’s a nice little bonus for those who make regular stops at the store.
Yesterday I wrote a little post about the Wyndham Rewards program. In it, I think I made it pretty clear that I don’t have anything against these hotel customer loyalty/encouragement programs, per se, but that I’m not the target audience for them. I’m a “comb through the bid sites to find a deal for pennies on the dollars” kind of guy.
But that’s because I’m not a constant hotel guest and because I do tend to use hotels primarily when engaging in recreational activities with Mrs. Lampsen and the wee Lampsens. We can be a little more flexible than the jet-setting, up-and-coming executive who has to take meetings in city after city, day after day.
In other words, I’m beginning to think that these reward programs might be AOK for the business traveler who doesn’t wants a little more than a cot and a hot because the road is “home sweet home” and the office rolled into one.
And with that in mind, I hereby recommend the Marriott Rewards program and other similar programs with other hotel chains for folks in that high-mileage demographic. You might as well get something for your patronage.
The Marriott program is one of the grand-daddies of the industry. It’s been around for over twenty-five years and it was one of the first of these systems that exanding point-earning opportunities beyond the hotel running the program. Before Marriott Rewards, the idea of getting credit with one company for staying somewhere else wasn’t really getting a lot of traffic, apparently.
Here’s how it works. You stay at the hotel. You get points. You cash in said points for room rate reductions, free stays, airline frequent flyer miles or other assorted swag. That’s the core, anyway.
The thing is, these programs are so dressed up with doo-dahs and extras that they eventually become unimaginably detailed and complex. That’s because there are so many different promos and so many different options. The flexibility (which appears to be tremendous with Marriott Rewards) makes it difficult to determine its actual value.
So, how could I possible recommend signing up to join up with a messy, complicated knot that you can’t untie? Here’s my thinking…
First, the Marriott program has stood the test of time. Over 25 years. If you stink too miserably, you generally can’t hang on for over two decades. Over that time, you’ll find a lot of people who love it, as evidenced by conversations on frequent traveler forums and elsewhere.
Second, there’s no real downside to joining. You don’t spend any money to sign up and the worst thing that can happen is that you don’t get much, if anything back. Look, if you’re going to be high-tailing it all around the world and living in hotels that fall under the Marriott Rewards umbrella anyway, you might as well try to score a little bit of something.
Third, people actually do get the hook up. A little cursory research discovered that people get the miles, the hotel stays, the upgrades, etc. It might not be as fast, cheap and easy as the marketing would lead you to believe, but it does happen. Oh, and it looks like Marriott will shell out some bonus points upon occasion for anyone who happens to be a breathing member and they run other promotions.
Fourth, it’s not all about cashing in points. There is a host of other perks associated with joining. Easier check-in, better base rates, etc., etc., etc.
Finally, it looks like Marriott has some level of dedication to creating a loyalty program that matters. They’ve dispatched their agents into the world of online discussion boards and forums to find out what would make members happier. They also seem to take the value of the program and its potential to make life at least a little better for their customers.
So, if you’re going to be staying with Marriott or its sister facilities, go ahead and sign up.
What’s the worst that can happen?
I can’t remember the last time I booked a room by actually talking with anyone directly affiliated with the hotel in question. When the Lampsen clan travels, we tend to spend precious little time in our hotel space, so we’re not the most discriminating consumers. As long as basic cleanliness standards are maintained and the location is within reasonable proximity of our recreational targets, we make do. That’s why I’m more likely to book a deep discount room via William Shatner’s outfit than I am to get on the horn to call some hotel company’s reservation line. If you’re willing to roll the dice, it’s hard to beat Travelocity, Expedia, etc.
Not everyone shares my perspective, however. Some folks have higher expectations for accomodations and aren’t willing to gamble with their vacation beds. I can understand that.
Those who do exercise more discretion might want to look into the Wyndham Rewards program.
The Wyndham program is your standard hotel customer loyalty program. If you stay at a participating hotel, you earn points for every night (or frequent flier miles, for that matter). You can later cash those babies in for just about anything under the sun. Whether you want a Home Depot gift card or a free night at a participating property, your wish is Wyndham’s command. They’re also known to do other promotions, including sweepstakes contests for members.
But the point thing isn’t the whole story. There are other perks associated with the program. Days Inn, part of the Wyndham family, explains:
Membership has many benefits:
- Receive free room upgrades*
- Relax with early check-in and late check-out*
- Enjoy a free snack and drink
- Earn points that can be redeemed for free night stays and other rewards
- Or earn airline miles with one of our participating airline carriers
- Convenient online booking
- Easy online account access
Those little extras could be pretty darn handy for someone who travels a great deal and when you consider the fact that it’s free to join up, it’s fairly inviting.
You’ll notice that I mentioned the “Wyndham family” of properties. It’s a big family. You don’t need to stay at a Wyndham to use your membership. The collection of participants includes Baymont Suites, Microtel Inn, Ramada, Hawthorn Suites, Howard Johnson’s, Wingate, TravelLodge, Days Inn, Super 8 and Knights Inn. There are probably others. You get the idea. There are many different hotels that are covered in your reward membership.
Of course, not everyone is in love with the reward program. One gripe, which is common to almost all point-based customer loyalty offerings, is the fact that accumulated points can expire if they’re not used in what the terms of the agreement consider a timely fashion. In the case of Wyndham, that would appear to be eighteen months. So, if you’re master plan was to generate a big point total over the course of two full years, you should probably recalibrate your scheme’s details to comport with the program rules.
Would I choose a Wyndham property over a similarly-appointed alternative that was cheaper based on the rewards program alone? Probably not. Maybe, if I was really accumulating a sizeable chunk of points, but otherwise… Nah.
However, if you absolutely LOVE a particular Wyndham variation it makes sense to join. Likewise, if you’re staying at a Wyndham property on a regular basis because it happens to be the only legitimate option or due to its perfect location for your needs, it makes sense to sign up. You’re going to be there either way, you might as well get a little lagniappe out of the deal, right?
Me? I’ll keep low-balling my bids and hoping that I end up with a hotel that isn’t frequented by too many hookers, cockroaches or drunken Shriners. I’m a gambling man. If you’re not, consider whether the Wyndham reward program is a good fit for your travel tendencies.
Did you buy a Sony product? Then Sony loves you. Sony adores its customers so much that it decided to create a special rewards program designed to lavish freebies and deep discounts on its regular customers. There’s no such thing as a free lunch, but there may be a free Blu-Ray or a free memory stick in your future if you maintain brand loyalty.
That’s a little tongue in cheek, obviously. I’m sure Sony is happy for your business and it does operate its reward program in hopes of encouraging to keep buying from them. The program is not, however, a way for any normal person to stock up on gobs of Sony swag.
Here’s how the reward program works, in a nutshell. You apply for a special Visa card, the Sony Rewards card. If you’re approved, you can use that credit card just like any other card in your wallet. If you use it to buy Sony stuff, you earn points that you can later cash in for discounts and/or free items.
Sony makes the whole thing a little heartier by adding other ways to build your point total if you have a card. They’ll have special offers where you can secure extra points and it appears as if there’s some kind of deal going on where you can watch Wheel of Fortune and find ways to bump your totals and/or win a prize. I’ll be honest. I didn’t pay too much attention to that. I can’t stand Pat Sajak and Vanna White has always seemed a little creepy to me, even when she was in her 1980s prime.
So, should you apply for that Sony Rewards card and get on the fast track to earning a free Vaio or what? I tend towards “no”. Here’s why:
First, it’s another credit card and I think we all know the kind of personal finance troubles unnecessary additional credit cards can produce. Feel free to ignore that concern if you’re ultra-responsible, capable of paying your bills in a timely fashion (preferably in full), and have a superhuman power to resist the temptation to accumulate stuff you don’t need. The rest of us need to think about that stuff, though.
Second, the point system itself is primarily designed, it would appear, to give kickbacks to big-time customers. If you aren’t spending a lot of dough with Sony you aren’t going to get much out of this. That’s especially true when you realize that you have a brief window in which to accumulate points. They expire and drop off your account after a year.
Third, the “exchange” rate isn’t that hot. Sure, it’s nice to get something “for nothing” (cue laugh track), but some Sony Rewards members have groused about the crummy ratio of points to dollars spent and the fact the points don’t pack that much buying power.
That’s why I didn’t rush to fill out an application an it’s why it doesn’t seem like a must-do from where I sit.
There are probably some people who’d love the whole thing. If you’re a Sony addict who spends a boatload of money on Sony products and wants even more of them, this could work out for you (assuming you have that whole previously-mentioned credit card thing under control).
I have some Sony stuff. Some of it I really like. I tend to buy more gadgetry and electronics than I need, too. Nonetheless, I wasn’t all that impressed with the Sony Reward program.
Whaddya think about that, Miss Vanna White? Huh?
So, we’re in a recession. We’ve been in recessions before. We know what a recession is, definitionally, but that doesn’t really give us any idea of why we have them. What are the causes of economic recession?
Quite frankly, the answer to that question will depend upon who you ask!
David Cornish blames unrestrained capitalism and exessive greed.
Gaynor Borade sees a link between oil price spikes and the onset of recession.
Tejvan Pettinger argues that tight fiscal policy and fast, unsustainable growth have both led to recession in the past.
Stormy Brain explains why so many people are happy to blame the Fed for recessions.
A Washington University news article maintains that experts blame excessive consumer debt for our current economic downturn.
Love a Recession has three lists of potential causes. The “mainstream” outlook, the authors personal opinion and other potential causes. The range from speculation to underwhelming consumer confidence to Satan. Take your pick, right?
Love to Know has an article with the title, “Causes of Economic Recession” that doesn’t even bother to list a single potential cause of recession. Instead, it maintains that it’s “difficult to predict the causes of economic recession”.
Another vote for high oil prices in this video.
How about government spending overseas, inflation and the fear of a recession. Maybe FDR was onto something with that “the only thing we have to fear…” thing, huh?
Those crazy kids who don’t mind being associated with Lew Rockwell blame excessive government regulation. No. Really.
Are you getting the gist of this yet? NO ONE REALLY KNOWS WHAT CAUSES A RECESSION.
That doesn’t stop them, however, from pretending as if they do have an answer. Not so coincidentally, the causes they uncover are often linked to specific governmental programs of which they don’t approve on other grounds, too.
In other words, if someone tells you that George Bush caused the recession, that someone probably doesn’t have a “W” bumper sticker.
If someone tells you that the recession is a direct results of government policies designed to promote minority home ownership via subprime lending, you can probably guess how they’d feel about that policy even if we weren’t in a recession.
For every so many people who blame deregulation for the recession, there is at least one person out there who will take the contrarian view that regulation caused it.
As far as I’m concerned, you can spin the wheel and embrace whichever pet “cause” it stops on, because your causal analysis isn’t going to amount to a hill of beans anyway.
The more important consideration at the moment is the fact that we’re in a recession and we might wanna think about how to get out of it before too many more people end up losing their jobs and/or homes.
Which is why I’m proposing the Big Omnibus Recession Elimination Solution (BORES). Basically, it boils down to developing alternate energy sources to reduce the price of foreign oil and our exposure to price spikes while we engage in less restrictive monetary policy and encourage increased consumer spending (but not debt). We do this while cutting foreign aid to our allies and banning speculative stock trading. We’ll deregulate all business by drafting better regulations that will make us more recession-resistant, even though we’ll recognize the inevitability of recessions as part of the business cycle. Oh, we also need to find a way to defeat Satan.
That’s BORES. And that’s what you end up with if you start believing the various single (or even “one or two”) issue explanations of the underlying causes of economic recession.
If you do an “exact match” Google search for “how to survive a recession”, you’ll find over 35,000 different websites prepared to give you an answer. You can now add Personal Finance Analyst to that list.
But I think my answer is going to be a little different than most of what’s out there. The bulk of those sites talk about utilizing frugality as a hedge against recessionary forces, finding credible investment opportunities in a down market, making yourself “untouchable” when the HR people start wandering the halls with pink slips in their hands, and other similar tidbits of advice.
I’m sure much of that wisdom is valuable. There are undoubtedly some good recommendations for weathering the economic storm and you might as well familiarize yourself with as many of them as you can.
But I’d like to take a slightly different approach. And we can start by taking exception with the underlying notion that you need to know anything more than you did two years ago to survive a recession. You don’t.
That’s because a recession isn’t going to kill you.
Your 401(k) statements might make you light-headed and queasy, but that shrinking number on the bottom of the page will not give you a malignant brain tumor. You may find yourself looking for a new job, the printer you use to churn out a few copies of your resume isn’t going to put a .45 slug between your eyes.
You’re going to survive. Recessions aren’t pretty. They can be miserable events that cause untold human suffering and that turn lives and economic futures upside down. The recession is a serious problem. But it isn’t terminal. You’re not going to die because of an economic lull.
We’ve been through recessions repeatedly. We went through one so bad it wasn’t just a depression, it was The Great Depression. Here we are. We have pulses.
It’s true that some people could be mired in extreme poverty and that the additional economic stress of a recession could result in some tragic horror stories. I understand that and I would never make light of it.
For most of us, however, the recession is an extreme inconvenience. It is not life-threatening.
You’re going to survive this recession with or without additional outside advice, but I’ll offer my recommendations just in case.
Breathe. Relax. Survive. Play a board game with your kids. Plant a few flowers. Appreciate your wife’s beef and noodles, even if you’re buying a cheaper cut of meat to make it. Maintain perspective.
Read all of those other “how to survive a recession” pointers and recommendations. Learn what you were doing wrong before and what you can do better now. Pick up a few tricks for softening the blow the faltering economy might be landing to your gut.
But don’t freak out.
Freaking out will get you nowhere. You don’t need to cash out everything you have, convert that money into gold and hide it under your box spring. You don’t need to stock up on ammunition for the day when the zombie armies of the economically depressed wasteland kick in your door.
It’s going to be okay. We’ve gone down this road before and we’ll go down it again. It’s a crappy road and the trip can totally screw up a lot of your plans. It will not, however, kill you. Your survival is not at stake.
When I was a kid, Papa Lampsen made me work around the house and yard in exchange for an allowance. I was forced to sock away a portion of that nominal payment into a savings account. I could carry the rest of it around in my pocket. If I ran out of money before my next “payday”, I didn’t buy anything.
At some point, Papa Lampsen advised me to go get a job. I did. Every two weeks, I’d go to the bank with my measly paycheck. A percentage of it went into that savings account. The rest went into my pocket. If I ran out of money before the next payday, I didn’t buy anything.
Simple. And it worked.
But now we’re a decade into the 21st Century and the idea of kids using actual cash money is apparently completely unrealistic and/or unsafe. The 21st Century solution is kiddy plastic.
We have just enough grip on common sense not to give kids a Discover card with a $5,000 limit and to set them loose in the local shopping mall. Well, most of us do. Instead, the fine people at Visa offer an alternative that many people apparently find reasonable. It’s called Visa Buxx.
Basically, it’s a preloaded debit card. You toss some cash on it and hand it over to the munchkin (ages 13+). The kid can use the card like a regular Visa until he or she spends all the money deposited into the account. The parent has control over the account and access to all records via the Internet. Visa Buxx will tell you when and where your kid is spending money.
Those offering Visa Buxx make it sound like such a great idea. It’s “just like” a real card, but you can’t screw up your whole life with it. That doesn’t come until they start signing your little bundle of joy up for the real deal ten minutes after you drop them off at State U. The parent has control over the account and you can use the tracking information and purchase records to sit down with your child to discuss money management.
I would need to sit in a silent room with a pen and paper for three days to think of anything more unnecessary than Visa Buxx. The last time I checked, the stores kids “need” to visit take cash. And it really is just about impossible to spend more cash than you actually have. Trust me, I’ve tried. Mama and papa can still have heart-to-hearts about money management without Visa’s handy online user interface.
But it isn’t just the lack of necessity that turns me off. It’s the fact that there is a very real downside to this handy piece of kiddy plastic. Consider the following:
The issuers will beat the heck out of you and your kid with fees. One bank’s version of Visa Buxx is subject to no less than fifteen different fees and charges. Others aren’t quite as oppressive, but you’re still losing money on the deal.
Visa Buxx appears to be a way of desensitizing young people to making credit purchases. An interesting New York Times article explains why these parent-approved cards might just be a stepping stone to eventual consumer debt. And we all know how well that credit card debt thing has been working out for people.
There’s nothing magical about converting presidential portraits into a credit card clone. Your kids don’t need Visa Buxx to function in society or to learn about how spending works in the real world. I rarely say this, but I think Papa Lampsen was onto something back when I was a kid.
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- Bill Johnston: For Mac I strongly recommend to use iBank or Quicken with Numeric Notes.
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