I don’t have to tell you that I’m not a typical personal finance blogger: I don’t recycle my toilet paper rolls, and I use dryer sheets exclusively in the manner in which God intended, viz. to scent and soften mine and my family’s clothing as it gently tumbles in my natural-gas-guzzling dryer. To add insult to injury, I gleefully wash my clothing with Tide in my full size laundry machine, and have never even once attempted to use coffee grounds to “stop the bleeding.” So, as you might imagine, it’s not strange for me to read something in a personal finance blog that confuses or perplexes me. This happens so often, in fact, that I have a folder in Google Reader devoted to “Personal Finance Blogs That Often Confuse Or Perplex Me.” Really. I do.
You thought I was just being hyperbolic, huh?
The thing is, neither Guzzo The Contrarian nor Frank Curmudgeon are in my “Personal Finance Blogs That Usually Confuse And/Or Perplex Me” folder in Google Reader. As a matter of fact, they are both in the Google Reader Folder called “Good Personal Finance Blogs,” and that is in spite of the fact that Guzzo uses a [praise Allah!] summary feed!
Summary feeds will be the death of me.
Yet both of them have featured posts about how they hate debit cards in recent memory, and this fact alone is causing me to question my whole life’s epistemology.
Guzzo says it’s because he assumes htis is a means of the bank making money of its customers, which, touche, but isn’t that what credit card companies do, too? I know that, in theory, if you use your credit card and pay off the balance in full each month, this will not happen (provided you don’t have an anuual fee), but you would only have to miss one deadline, or not have enough to pay one time, for this to not be true. The odds are, you’ll end up paying interest fees at some point if you use a credit card. That’s how they stay in business. There are people who haven’t yet, but I think the people who never have and never will are very few and far-between. Frank’s complaint is that there’s no good reason to use a debit card, because if you overdraft, the bank will just charge you a huge overdraft fee, rather than denying the charge, so it could potentially end up being a more costly endeavor than running up credit card debt. I will acknowledge that debit cards would be better all around if there were no such thing as these exorbitant overdraft practices that banks have developed, but that’s like saying you shouldn’t write checks because if they bounce, they will cost you money.
Guzzo cites a joint NYT/Frontline piece on how banks use debit cards as a means of getting you to pay overdraft charges. So you overspend on your debit card, and they cover the overdraft, and then charge you an exorbitant rate for the “service” of doing this. Banks are scumbags. That’s what they do. Besides, isn’t this a problem with the concept of overdraft protection and its associated charges or keeping accurate banking records, rather than a problem with debit cards in the abstract? If you are tracking your money carefully — and I have to assume that Guzzo is — then this kind of overdraft charge should not ever happen. It has never happened to me, and I’m not even very careful. I use cash for much of what I do, and I also keep a general idea of how much money is in my account so that this kind of thing doesn’t happen. People who are more organized than I am even write these kinds of things down — infact, isn’t that what people did back in the olden days when we wrote those things called checks? Do you have a problem with the concept of checks and overdraft protection, too?
Other than the overdraft charges — which I think consumers really have to accept responsibility for, anyway — I don’t see how we are paying money for debit cards, exactly? I don’t pay a fee for using a debit card. The only time I’ve seen a fee is when you go to some nickel and diming gas station like Arco, and they’ll charge you 40 cents for using your ATM card. And that’s pretty much cheaper than any finance fee you’re going to find at a credit card company, but they don’t let you use your credit card at Arco anyway. At least with a debit card, there is in theory a finite number attached to how much one can overspend. At some point, they’re going to stop taking your card. If I were to use a credit card, I could run a tab up into the high five digits before anyone cut me off, and this was true back when I was a *graduate student* in *English*, too. I’d much rather risk a few hundies in overdraft protection fees than five figures of debt at a high APR.
The thing is, Frank and Guzzo — god love ‘em — are two of those annoying people who don’t understand why debt is so bad for some of us, because they were born with an ability to treat money responsibly. For them, it is far more likely that they might make an error about how much cash (exactly) is in their account at any given moment than it is to run up their credit card bills unnecessarily. I envy them. But the reason that people are using debit cards more and more is because of that balance system that is in place — overdraft fees are outrageous, but they are still better than dealing with massive credit card balances. Some of us just cannot take the risk.
Generally speaking, I’m of the mind that you should just not ever use credit cards. This is what works for me personally, but I know that other, more responsible people–people less prone to abusing anything they can get their hands on–are able to use credit responsibly. For those people, I provide you with this list of things you might want to think about putting on your credit card, based upon new research about how credit companies assess your purchases and assign you a credit score. That’s right–Big Brother is watching not just the dollar amount of your purchases, but also where they are made, based on a recent article in Marketplace, the highlights of which are below.
Traffic tickets. People seem to not like people who speed. Actually, let me amend that: we tend to look down on people who speed and get caught, so if you pay for your ticket or court fees related to your ticket with a credit card, this may apparently be construed as signifying you are a larger credit risk than somebody who doesn’t get tickets, or doesn’t pay for them with something that creates a paper trail. Why do we care? Well, it’s not unheard of for this kind of thing to be used to put you in a less-appealing pool of borrowers by your credit company, leading to higher rates and less perks. Not that they really need an excuse to do that. But if they’re looking for one, they might just use this.
$0.99 stores. American Express has been criticized recently for lowering customers’ credit limits based upon where they shop, and like it or not, it is apparently not illegal (yet) to discriminate based upon where you like to buy your laundry detergent. While buying at a bargain store could be an indication of financial responsibility just as easily as it could indicate financial distress, it doesn’t really matter: you don’t want it showing up on your statement. Credit card companies are skittish, illogical entities: if they think you’re about to lose your job, they will start messing around with your credit limits to protect against future losses, even when you’re just trying to get a better deal on housewares.
Lottery tickets. Lottery tickets should just not be purchased at all, in my opinion, but if you’re going to buy them, know that they are purchased overwhelmingly by people with no money. As a result, credit card companies see lottery ticket purchases–particularly if they are made on credit cards as a desperate act. In my mind, it’s just a dumb act, but perhaps that’s not something you want your credit card companies to know about you, either.
Cash advances. Here’s another one that just shouldn’t happen to begin with: cash advances are things that are going to keep you financially unstable and should be avoided at all costs. You should do whatever you can do to avoid taking a cash advance, because once you get started it’s easy to keep doing it, and pay 400% interest each time. But yeah, if you do plan to take one, I suppose you wouldn’t want to buy one on a credit card, because that’s like a cash advance on a cash advance, no? You’d be paying interest ten different ways, and trying to figure out why anyone would do this is starting to make my head hurt, because isn’t a credit card kind of like your own little portable cash advance place that you carry in your pocket? Anyway, don’t do it, because companies will (correctly) assume you don’t have the money to make your payments, and this is bad news for you.
Taxes. You can put your IRS bill on a credit card, but that doesn’t mean that you should. You don’t want anyone thinking you owe money to the IRS, because that’s bad news for everyone: the IRS is the entity that gets paid before everyone else, every time, so creditors want to see that you can pay them their due without using credit.
Alcohol & Porn. Alcoholic sex addicts are not always good at making their credit card payments. And everyone knows that anyone who buys alcohol or porn on a credit card is just a few drinks or spanks away from financial ruin. So try to keep your excesses on the DL, and the authorities won’t mess with your credit limit.
People, we’re on vacation this week at this quaint place that doesn’t have wireless internet. This makes it hard to do new blog posts, and also there are these things called “family time” and “relaxation” that keep getting in the way of blogging progress. So today we’re in reruns–I’m bringing back a classic post for the benefit of people who might have missed it the first time around. This post originally appeared on December 8, 2008. Enjoy. Again.
Now that you’ve been working on your debt snowball, you might be wondering how we can get this whole debt-repayment process moving a bit faster. One of the easiest ways to do this is to look around your house for things to sell. On Friday, I outlined some tips for selling books, DVDs and CDs on Amazon, and today I’m going to give you some tips on how to use eBay to your best advantage when trying to sell off household goods.
Always consider shipping costs when listing an item on eBay. Not only do you need to have a shipping cost listed with your item’s auction, you need to keep an eye on price and ease of shipment with all items you list for sale on eBay. Learn to appreciate the value of selling small, light items–it is on these items that you will make your highest profits. Maybe you have a valuable piece of furniture you’d like to sell, but eBay is probably not going to be the best place for this kind of sale. Even if you use the ‘local sales only’ feature on eBay, the fact is that the market shrinks considerably when you are dealing with large items that will require the buyer to pick up the item or pay exorbitant shipping costs. Consider Craigslist or local consignment stores for these types of sales.
Be careful with fragile items. Though there is a good market for pieces of art and other fragile items on eBay, you have to be careful with selling this type of stuff, just ask anyone who has had to deal with breakage! The best bet with these items is to insure heavily or, again, look to a local selling option to avoid the headache.
Use 7-day auctions. Different ebay sellers have different strategies, but my experience is that the longer the item is up, the more time you have to attract sellers and drive up the price. There are people who say that setting your auctions to end on a Sunday night is a good strategy as well, since more people seem to be online and looking to buy on those days.
Communication is key. Letting your buyer know what is going on is the easiest way to keep them happy. After a successful auction, email the buyer and let them know when they can expect their item to be shipped, and via what method, etc. Remember to always receive your payment before shipping anything.
Do your market research. Some things don’t sell well on eBay for some reason–an example, generally speaking, is fine jewelry. Similarly, some things sell very well for a certain time, and then the sales die off. We can only offer conjecture as to why this is–sometimes it has to do with availability on the regular retail marketplace, as is the case with the sales of Ugg boots and Wiis for inflated prices before Christmas. Other times, it has to do with buyer confidence–there are some things people want to see up close before they commit to buying (again, this may be the case with the jewelry example). You should always look up an item on eBay before you attempt to sell it–find out what it is going for (price point), how many are on the market already (the competition), what the interest in the item is (are there any bids?). All of these factors should be considered in listing–in some cases, these numbers will guide you in setting a price, and in others, they will tell you whether it’s worth it to list the item at all. Other things that market research can tell you include: 1) should you sell an item as a set, or individually; 2) will the item get more if sold in a lot with other like items?; and 3) what is the best category for an item that could be listed several places?
Use low start-off prices and avoid using reserves. This is a largely psychological issue, but for some reason buyers feel like they’re getting a better deal when items start low, even if the end price is the same. For the same reason, I would often list items with a start price of 9.99 instead of 10.00, even though it seems like a superficial difference–there is a reason people have done this in advertising for years. My rule of thumb was to start off a low priced item at $1.99 or $4.99, depending upon the basic idea of what I expected to get for it. A higher priced item might start off at $9.99. Only in a very extreme situation would I inflate the initial price–let the market do its work in driving up the price (if you’ve done the research, you should be more comfortable with this). Similarly, only in a very extreme situation would I use a reserve (like a very valuable piece of jewelry or something, which I probably wouldn’t be selling on eBay anyway), because it turns buyers off and costs more to list.
Provide clear, high-quality pictures of the exact item you are selling. People like to see what they are buying. Don’t make them wonder–take a good quality picture and put it in your ad. Do not take other people’s pictures, or pictures off the web.
Right or wrong, feedback is king. There are a bunch of crazy feedback mafia types out there these days, I’ve heard, who will withhold feedback and/or threaten bad feedback if you don’t bend to their will. I’ve never personally encountered such people, but if you’re communicating well with your buyers and providing good products as advertised, you should be OK on this front. Make sure to leave feedback and try to please your customers–your rating does affect people’s confidence in buying from you.
Do your best to estimate a fair and reasonable shipping cost. One trick for getting more money per item on eBay is to inflate the shipping cost, and people have been doing this since the beginning days of eBay. Now that shipping costs are listed right next to the item price, it’s much more difficult for sellers to take advantage this way. Do your best to estimate what a fair shipping price will be. You should include materials (if any) in the shipping cost, and let your buyers know that the price includes these incidentals.
Utilize free shipping supplies whenever possible. The post office has standard sized priority mail boxes that go for a flat rate regardless of weight. These can be used for free when using priority mail–but you can also get a supply of them to use for your own regular parcels–just cover up the priority mail stuff with a brown paper bag (shhh!) or a priority mail Tyvek envelope (also free) that you’ve cut open and wrapped around the box. If you are questioned by any postal employees, don’t say you got the idea from me, though.
Online shipping.Kerry was kind enough to add the folowing tips to the comments when this post originally appeared. I’ll add them here to make this post EVEN BETTER than the first time around:
You can order Priority Mail shipping materials (boxes, envelopes, etc.) for free through eBay, and have them delivered to your door. It’s also wise to print your postage online through eBay after the item sells (and is paid for), because it’s fast, and you don’t have to go out in the snow, and it automatically sends the buyer a tracking number. You also get free delivery confirmation (good for you AND the buyer), and a discount on the shipping price. I use the full-sheet labels for them (Avery makes them, but the Office Depot brand is cheaper and just as good). You cut them in half, put half on the box (because it has the address and postage and delivery confirmation barcode), and keep the other half (which is your proof of mailing, and also has the tracking number in case the buyer says they didn’t receive it).
eBay has also changed its pricing recently to encourage fixed-price listings instead of auctions (they’re trying to compete with Amazon, which I think is a bad plan, but whatever). Once you have a really good idea of what your price point should be for your stuff, they’re a good deal. If you’re less sure what something should sell for, though, an auction is still a better bet IMO.
Thanks, Kerry!
Schedule your mail pick up.Becky also added to the conversation by offering this advice on scheduling your post office pickups:
And I’m seconding Kerry’s info about using the online shipping. It is so, so much easier to automatically pay for and print the label in Paypal, and THEN schedule a carrier pickup for the mail person to come get the package. That way you never never have to go to the post office, which is a total pain with little kids. You gotta hand it to those ebay folks–they really have streamlined the whole process.
Just Like The Number Where 2+2=Six. A blog about life in the family Six, party of four.
PERSONAL FINANCE?!
You might be wondering why I'm not talking about 401Ks and new methods of making your own laundry detergent. Click here to read about the evolution of this blog.
MONEY MODELS
Display ads are not the only game in town: check out these innovative models for monetizing your blog that mommybloggers are experimenting with right now!
SUBSCRIBE
Subscribe to the ABDPBT Personal Finance RSS Feed to get new posts delivered to your feedreader.
OR . . . subscribe to the ABDPBT
FULL RSS FEED to get updates from all four ABDPBT blogs.
BLOG AS A JOB?
Are you one of the eleventy billion people who starting blogging because they wanted to get rich quick? Well, I have good news, and I have bad news . . . learn more in my series on blogging as a business.
SPY ON ME
Looking for something to read? Wondering what I'm reading? Perhaps it's time to start Spying On My Google Reader to find out about the coolest stuff I've read lately on the internet.
ABDPBT GLOSSARY
New here? Not sure what one of the references I made is about? It might be time to check the ABDPBT Glossary. To translate, you might want to check out the ABDPBT Glossary page, or just look for links within the text with folders next to them to see what various terms mean.
OTHER ABDPBT BLOGS
ABDPBT
The blog that launched a thousand angry emails.
ABDPBT Tech
Tech for mommy bloggers. Or bloggers who aren't mommies, but hang out with them. Or Dads. Whatever.
ABDPBT Commodity Fetishism
This is where I post stuff that I think is cool. Maybe you will think it's cool, too.
FULL ARCHIVES
If you'd prefer to peruse the ABDPBT Personal Finance archives by month, you can check them out here:
ABDPBT Personal Finance Archives
Best Fixed Rate Sometimes a fixed rate mortgage is safer in the long run. Find the best fixed rate online.
The Big Business of Poop
These days, mommyblogging isn't just about poop. Read below to discover how some parenting bloggers are turning their blogs into viable business models.
A Confederacy of Something Or Other: My Much-Anticipated Broad Summit Post-Game Analysis: This is the one where I talk about how drinking wine with crazy straws is probably not a professional thing to do. Some people agreed with me. Others thought I was an instrument of patriarchy. I'm thinking about getting that engraved on something. Or maybe printed on a t-shirt.
Dooce
Love her? Hate her? Want to be her? Of course she gets her own category -- she's the original mommy blogger businesswoman. And you can learn about all of Dooce's exploits, successful and otherwise, here.
P-Dub
Don't let the "Aww, shucks!" attitude fool you: Ree Drummond, aka The Pioneer Woman is a smart cookie and a shrewd businesswoman. You can read about her latest projects here.
Design Mom
She is quietly, tastefully, teaching us how to take the world by storm. Catch up on all the great things that Gabrielle Blair, aka Design Mom, has up her sleeve here.
TWEET THIS
