Some interesting links I’ve been reading lately (rich people, vapid people, funny CEOs)

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Natasha Mitra: “I love to consume. Consuming is my specialty.” Wow. Conscious spending be damned, I can’t imagine anyone more uninteresting and vapid.

How to get started investing with just a few dollars. Jonathan Clements of the Wall Street Journal is one of the best personal finance writers today.

Splitting the check amongst a big party is never fair. A situation I encountered more in college, but still sometimes today.

Personal responsibility is the cornerstone of financial literacy. I don’t agree with all of it, but it’s an interesting perspective on personal finance.

The single best article on why real estate is not the great investment people think it is.

New Schwab checking account that made me fall out of my chair. Wow. If this writeup of Schwab’s new checking account is true, goodbye Wells Fargo. “4.25% interest, no monthly service charges or minimum deposit requirements. Customers can use a debit card at virtually any ATM and Schwab will automatically rebate the fees. Paper checks and electronic bill payments are free.” If anyone has opened this account, please leave a comment.

New York Times article about how companies raise prices for bigger food portions. Fascinating economics. In a hilarious quote recently, Andrew Puzder, CEO of CKE Restaurants, which owns Carl’s Jr. and Hardees, shared his thoughts on healthy eating. “My opinion is that the media is the main supporter of healthy eating. We’re certainly not hearing it from our customers,” he said. “And [surveys] show that while consumers say they want to eat healthier, what they actually want is a big juicy burger.” Hahahaha.

The richest people in America, and I don’t mean by money.

You can read/subscribe to thousands more links I’ve collected and annotated at http://del.icio.us/ramitsethi/

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30 Comments

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  1. While the Yahoo Finance article is a great explanation of why your house is not the great investment you think it is, it doesn’t have anything to say about other forms of real estate investment.

  2. The New York Times story about portion size was interesting. My wife and I don’t eat out nearly as much as we used to, but here is a tip we developed to combat the large portion sizes.

    We would ask our server for a take home box before the food ever made it to the table. As soon as the meal arrived we would stash half of it in the box and save it for a meal the next day. You don’t eat too much and your $14 pasta now covers 2 meals now making it $7 per meal.

    Just an idea that has worked well for us.

  3. That’s a fantastic idea.

  4. Ah, but in the case of Ms. Mitra, she’s an associate at the Carlyle Group in NYC (you can Google her), Princeton grad, and probably makes a LOT of money, being a top-tier investment banker. Granted, if she had just said “I love to shop, and I’m good at finding things I love,” it wouldn’t have made her look quite so vapid.

    Remember your I-love-shoes girl? The one who spent a lot of money on shoes just because they made her happy? Same deal.

  5. I know, I’m torn (that’s why I said conscious spending be damned). I agree that the way she said it is probably why I feel like vomiting. It’s just hard to swallow someone’s self-described expertise as consumption.

    I wrote a little bit about this in my ebook chapter on producing vs. consuming.

  6. Ramit, first off I love your blog. I have found your explanations easy to understand and even easier to put into practice. I do have one complaint though. The Real Estate link above was obviously very biased. I am a 24 year old Real Estate agent and would NEVER recommend people using their personal residence as an investment tool. The examples the article uses could be applied to an sector of investing: buying at the wrong time, buying in the wrong area (or sector), over paying, cashing out and using the proceeds for fun instead of investing. If somebody cashed out their stocks or any other type of investment to pay off debt or take a trip, the consequences are the same. That fact is, it all comes down to personal responsibility. I have seen people make hundreds of thousands of dollars in only a few years using the type of leverage you can only get in real estate. If someone is irresponsible, they will fail in any investment strategy, not just real estate.

  7. Yeah, the shoes girl is a little nauseating too I have to admit but the way she described her expertise as consumption says more about her than if she’d said “Dude, I love clothes”.

    Not to mention Hilton-esque fashion trend she seems to represent makes me utter a little guffaw every time I see those “housefly” glasses.

  8. But I should point out that it’s great articles like the “richest people in America” that keep me coming back to this site, not emaciated New York fashion queens. Thanks Ramit.

  9. That Schwab account isn’t all that special. My local community bank (with 4 branches) is offering 5.05% with no min balance requirements and $25 of ATM fee reimbursements each month.

    All you need to have to qualify is an ACH/Direct Deposit into the account each month and at least 12 debit card transactions processed as credit cards.

    This isn’t a teaser rate either, they’ve committed to it for a long time. I’m opening my account this weekend.

  10. Ramit, thanks for the post.

    A few points about the Yahoo link on why your own house isn’t a retirement nest egg.

    •The financial calculations don’t measure the cost of ownership vs. the cost of renting. Sure you have all those costs owning but you would also have lots of costs renting. All landlords pay taxes, insurance, repairs, etc so those costs get built into your rent.

    •Buying vs. renting should be more of a decision of seeing how much house you can get for similar rent and mortgage payments. Right now in most markets you can get much more renting, but that isn’t always the case.

    An excellent article (NYT though so gated) is http://www.nytimes.com/2007/04/11/realestate/11leonhardt.html?ex=1180238400&en=0287e490faf1ccea&ei=5070
    Do try the tool that let’s you compare buying vs. renting.

    •The real danger is buying more home than you need or can afford in the assumption it will go up. Whether buying or renting, how much you spend is much more of a lifestyle choice. Where you can really help in your retirement is using the extra money you would have spent buying or renting a larger house to save for retirement.

    Keep up the posts, Ramit.

  11. Another thought on this, Ramit ! (Clearly uninspired at work…)

    I went back and looked at the other Google results for Natasha’s name and was surprised to see just how much negativity there was about that Look Book interview (she was even ridiculed on Gawker).

    People really latched onto the aforementioned “I love to consume” comment, but there are a lot of people who “consume” the way she does. Look at all the LV/Dior/Gucci purses you see on people and then imagine how many of them have Natasha’s earning power. So where did she go wrong?

    The truth is I can’t figure out whether people are being so unforgiving about the fact that she “consumes” the way she does or because she presented herself poorly – or was presented poorly.

    If people are upset about the price of her bag and the fact that she normally buys things like that, then they are simply upset that a luxury goods market exists, perhaps on what they believe are ethical or moral grounds. Or they can’t partake in that kind of spending and are upset that some people can and readily do.

    I agree with you in that she could have been less direct to avoid sounding like she was bragging, but I also seriously doubt that what we saw on the page was the entire conversation she had with the reporter. If it was indeed edited for length, you can count on the fact that the reporter exploited the juiciest, most emphatic statements.

    Sorry about getting a little sidetracked in my exasperation with human nature. But in the general spirit of financial prudence, “Bad Natasha! $3,500 for an UGLY bag?!”

  12. The main question I have on the Schwab checking account is how do I deposit checks with them. I have direct deposit with my employer but my side work is all paid by folks using paper checks. I checked around on the site but didn’t find anything yet. May have to put in a call…

  13. As I looked at the “Richest People In America” article, I was struck by the look in the people’s eyes — happiness.

    Thanks for sharing, Ramit.

  14. For the check-splitting, check out BillMonk — http://www.billmonk.com/ . My friends and I use them so that we don’t have to worry anymore about paying for lunches or dinners out together.

  15. It surprises me that with all the negative things going on in the world that people are more concerned with how much their purses cost. At some point peopel are going to have to wake up and realize that the day will come when the gravy train will stop and if you haven’t done anything to prepare for your future you will be suddenly on the losing side of life. Most of the people that I deal with have already run themselves into the ground by the time that I become aware of them. I usually refer them to a very good financial website that many people have had luck with. It is http://www.My411Financial.com They deal with bad credit, foreclosure, bankruptcy, debt consolidation, credit reporting, loans and they even have a section for frugal living for people who are trying to get back on the right track and just need a soft place to land. I would rather have a few possessions and lots of money in the bank than a lot of junk and no money. But that is just me.

  16. The Richest people in America article link is very inspiring…makes you wonder what have you done lately to make this world a better place?

    Thanks for sharing it.

  17. Leveraged sell-out has an post on mitra. Hilarious.

    http://www.leveragedsellout.com/2007/05/fwd-a-suitable-girl/

    Michelle Singletary(washpost) and Clements(wsj) are two of my favourite finance writers.

  18. [...] couple of weeks I have been writing on attractive savings accounts from FNBODirect and Citibank.  Ramit introducedan attractive new checking account from Charles Schwab.  Again, another competitor to the high [...]

  19. How about the boys spending $10,000 for a T.V? Isn’t that nauseting too?

  20. I opened up a Schwab account, you deposit paper checks by mailing them in.

  21. I think some people are missing the point of the Real Estate article. Certainly some people who know what they are doing can do very well in real estate investment, no matter what the market is like. THIS article is about how a house is not guaranteed to be a good investment. I am 24 and a lot of my friends are chomping at the bit to buy a house, even if there’s a good chance they’ll move in a few years, or there’s no way they have 20% down, or they have to use an ARM to afford the payment. A lot of people assume buying is better than renting if you can afford the monthly mortgage payment, but that is definitely not the case. So few people take into consideration closing costs, maintenance, and the possibility that (OMG) the house might actually depreciate with the recent market turn.

  22. My wife and I have an agreement on purse shopping. She’s not allowed to buy a purse that costs more than the amount of money she would typically carry around in it.

    It’s a great system. She doesn’t buy ugly overpriced bags and I don’t have to wonder WTF she was thinking for purchasing something so damn ugly and expensive.

    Side note: I feel the same way about watches. There’s plenty of ways to get the time other than by wearing a Rolex. Hell, most people have cell phones these days that have internal clocks anyway.

  23. here’s another rich guy…check out his blog: http://www.richestpeopleinamerica.com

  24. I just opened the Schwab account, and I must say, everything looks great. The high rate and ATM reimbursements are the only thing that could have pulled my money away from ING Direct. I’ll report back after a month of using it, making sure they’re actually reimbursing ATM fees.

    As far as depositing paper checks – I manage it by keeping a free checking account with Wachovia, depositing paper checks there, then electronically transferring the money to my Schwab account. It takes a day or two, but it’s worth it because I don’t really feel comfortable mailing an endorsed check…

  25. Ramit, I have been using the Schwab Investor Checking Account for about two months. So far it has been a really positive experience. Here are my observations so far.
    - The ATM fees are reimbursed at the end of every month.
    - The bill pay feature also works really well.
    - Quirks include:
    – You have to establish a brokerage account to open the investor checking account
    – Money transferred from other banks to the Investor Checking account lands in your brokerage account, and you have to move it to Investor Checking yourself
    – The bill pay feature handles payments a bit differently than my other bank. For example, when you select a pay date in the Investor Checking Account, Schwab sees that as the date that the check should arrive at the enitity you are sending it to. My old bank used the pay date as the date that the check was to be mailed.
    – Logging in is also a bit strange. You have to log into the brokerage account to get to your bank account.

  26. I agree with Shawn’s thoughts on the Schwab account above, and wanted to emphasize that the representatives (and the concierge, oooooh fancy!) have been down-to-earth, personable, helpful, and don’t read from a damned script. They’re acting like Real, Live Humans, which in all of my dealings with banks and investment firms, is a rare treat.

    I’ve also found two unexpected perks:

    1. I’m finally getting some of my friends to sign up for a high interest account. With HSBC or ING or Emigrant, there was lots of feet dragging and “but, I’ll have to transfer stuff out again just to pay bills?” and so forth. But since this is a checking account, it’s been easy to convince people to at least consider it, since they’ll get an ATM card and can pay bills easily.

    2. Since it’s automatically linked to a brokerage account, there’s a chance that young people who don’t have much financial experience will be less spooked about learning about Investments. I can see how, with the brokerage account so closely aligned, it will be simple to tell my friends: “Look, you already have a checking account here, and your emergency fund, why not try an index fund? Or seeding a Roth? C’mon, just click right there, and read about it. Try a couple bucks in there, see what happens in 20 years.”

    Ah, convergence. Delicious.

  27. The following is an email I sent to Ramit about one of the links he has in this post. Ramit asked that I post it as a comment here so that everyone who visits could read it just in case they might find it of interest. The full content of that email follows.

    Hello Ramit,

    Let me start off by saying I’ve never written to a financial blogger before but a recent post of yours got so far into my head that I just had to reach out to you. I’ve been reading your site for a long while and I really enjoy it, so much so that it’s become one of my daily reads. You’ve helped me a great deal over the last six months or so by pointing me to interesting articles and, of course, writing some fine articles yourself. However, an article you recently linked as being “The single best article on why real estate is not the great investment people think it is.” has caused me to break my silence and write you this email. I’ll understand if you simply throw this long, boring and possibly rambling email in the trash, but after reading the article twice I feel I need to point out a few things to you that bother me about it.

    To start off, I agree that while the average homeowner might like to think of their home as an “investment” the author is correct to point out to these people that the home a person lives in for 30 years should not be called an investment. However, where I disagree with the author is in almost everything else he says in the article. To wit; the author doesn’t explain the difference between INVESTING in a home and OWNING a home so that his audience can actually change their point of view and actually become investors instead of owners.

    Let me try to explain.

    The author first makes the assumption that you (the general you, not you in particular) are buying a home as an investment, but then the author turns around and says that you’re going to live there for 30 years, which defeats the idea of investing. When you invest in a home you are either renting it out for more than the monthly outlay or you’re “flipping.” If you’re flipping then your ownership timetable should be as short as possible, usually less than 12 months, because the longer you hold a property the more you have to pay which lowers your potential for profit. The true real estate investors motto is, “Buy to rent.” or “Buy it, fix it and sell it.” not “Buy it, live in it for 30 years, sell it and pray it’s enough to retire with.”

    Not once does the author explain this important difference between investing and owning within the article.

    If the author were to explain to the owners who thought their home was a long-term retirement vehicle this difference (investor vs. owner) then maybe the article would have merit. But as it stands I feel that the author is only planting fear and misinformation about real estate investing to his readership. This article seems to deliberately confuse the two concepts, or at best unintentionally misuses them, and thus continues to confuse the homeowner and/or novice real estate investor into equating buying a home with investing in a home.

    Even the authors examples are hopelessly biased. The article states almost from the beginning that most people only live in a home for seven years, but afterwards EVERY example given is dependant on the homeowner staying in the same home for 30 years. So, which is it? 7 or 30? Investor or owner? It almost seems that with this article the author is actively attempting to scare people away from buying a home in the first place by making home ownership as unattractive as he possibly can.

    Using the authors’ math on the average cost of home ownership makes sense on the surface, but ONLY if you’re going to live in the home for the entire term of the 30 year mortgage. That makes you an owner, not an investor. Where is the cost analysis of the investor who buys a depressed property, fixes it up for a (relatively) small sum and then sells it at a profit less than a year later? Or what about the investor who buys a rental unit and then rents it out for more than the cost of the mortgage and monthly upkeep?

    Obviously, an investor would never pay 30 years worth of home ownership costs, which means the investor CAN make a tidy profit by selling if their home DOUBLES in price after 3 to 5 years (according to the “30 Years Of Home Price Increases” chart.) Admittedly, some locations don’t appreciate as well as others (Houston), but any savvy investor would realize this and invest in only those places where they felt they could get a good return on their money.

    Furthermore, I take issue with the authors insinuation that by purchasing a home and becoming an OWNER (not an INVESTOR) you will suddenly be unable and/or unwilling to invest in retirement accounts, IRAs, stocks or bonds for the next 30 years. As if you, the new homeowner, would suddenly be unable to do anything with your money except make your mortgage payments each month.

    And finally, this article is written by a man who has published a book on how to make money INVESTING in the RENTAL real estate market. Of course he wants people to rent instead of own. How else will he make money? :-)

    I’m sorry for rambling on like this, and I hope you won’t ban me from your site for it, but I really do value your insight into the world of finance and needed to point out why I took such an issue with that article that you seemed to like so much. To make it fair, I’d be very curious to hear your thoughts on one of my favorite real estate investment books, “Find it, Fix it, Flip it” by Michael Corbett (http://www.amazon.com/Find-Fix-Flip-Millions-Estate-One/dp/0452286697/ref=pd_bbs_sr_1/104-1144467-9261559?ie=UTF8&s=books&qid=1174109014&sr=8-1).

    Or you can just tell me to shut up. :-)

    Best,
    GeekMan

  28. [...] more competitive because there is another large brick and mortar company joining the race.  Ramit introduced an attractive new checking account from Charles Schwab.  Again, another competitor to the high [...]