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A daily look at what we buy, how we spend, and the companies that do right - and wrong - by their customers.

Personal Finance - All posts in category Personal Finance

  • Jan 9, 2012
    10:10 AM ET

    Confessions of a Shopaholic: 3 Ways to Curb Spending

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    Kit Yarrow is a professor of psychology and marketing at Golden Gate University in San Francisco and author of “Gen Y: How Tweens, Teens and Twenty-Somethings Are Revolutionizing Retail.

    A friend recently wanted to get her spending under control, so she decided not to buy anything except groceries. Four weeks later, she clicked on an email link for a three-hour-only sale and purchased a pair of shoes. It was all it took to get her clicking again: This started a spending binge that resulted in even greater debt than what she had when she started her plan to stop. Mall occupancy is up, according to a report Monday, and it’s increasingly easy to shop online with the recent surge in sample sales sites. Here are three psychological tools to help shopaholics in 2012:

    1. Rebrand Yourself, Discard Self-Hating Labels

    It’s not always helpful for anyone to label themselves as a “problem spender.” A better method is to identify with the strength and resolve they have in other parts of their lives and to label previous over-spending as a mistake they will choose not to make in the future.

    It’s a powerful mental shift away from defensiveness and reactivity toward personal power and control. My friend shared responsibility and control with her boyfriend. Because of this, satisfying her boyfriend became the goal, rather than altering her spending. We see this in dieters who sneak treats when their spouses aren’t looking. A better method is to state your intentions and ask others to respect your new frugal lifestyle.

  • Jan 3, 2012
    12:24 PM ET

    Last Year’s 5 Biggest Consumer Snafus

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    It’s difficult to choose the top/worst scandals of 2011 for consumers. There were corporate data breaches, wireless customers left incommunicado, and ill-fated new fees such as Bank of America’s $5 debit card charge.

    SmartMoney.com asked a range of experts for the five biggest/worst snafus of 2011, the affects of which will still be felt by consumers in 2012. In no particular order, here they are:

    Bank of America’s $5 Debit Card Fee

    Bank of America announced in September that it would plan to charge a $5 monthly fee for use of its debit cards. Customers revolted. Over 40,000 people joined credit unions as part of a protest that began on Facebook, according to the Credit Union National Association, bringing around $80 million with them. BofA killed the $5 fee in November, saying it had listened to its customers. “The bank was betting that the other mega-banks would follow, making debit cards a thing of the past,” says Odysseas Papadimitriou, CEO and co-founder of CardHub.com. “That did not happen.” However, it’s not over yet. Experts warn the banks will search for other ways to make up the 50% reduction in interchange fees merchants pay when purchases are made with debit cards.

  • Dec 28, 2011
    3:25 PM ET

    The Top 5 Data Breaches of 2011

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    When hackers break into social networking sites, medical records databases or entertainment companies, experts say it’s consumers who often end up paying the price.

    Systems such as Sony’s gaming network, which was breached this year, have become increasingly attractive for cyber criminals, especially now that video gaming accounts contain such valuable personal details, says Adam Levin, chairman and founder of Identity Theft 911, an identity and data risk management company. “The Sony breach last April merely underscores something obvious: Gaming networks and similar sites are delicious targets.”

    Breaches cost organizations millions of dollars, which tends to trickle down to consumers, says Evan Brown, an associate in law firm Hinshaw & Culbertson. “It is inevitable that the costs will be passed on,” he says. Apart from investigative costs, he says, many companies that are the target or victim of a data breach offer credit monitoring services to affected individuals.

    The number of personal files being compromised is also on the rise, though the amount of actual cyber crimes this year is lower than last year. Some 30.4 million records were compromised in 2011 in 535 separate breaches, according to the Privacy Rights Clearinghouse. That’s up from 12.3 million in 2010.

    Not all breaches involved sophisticated hackers. Those at Sutter Physicians Services in October and military healthcare program Tricare Management Activity in September were the result of the theft of hardware and software, respectively. They underscore the importance of not forgetting the low-tech protections like encrypting files and not leaving back-up disks unattended, Brown says.

    Others didn’t involve social security numbers, but did have implications for password security. “Capturing a customer list containing thousands of email/password combinations represents a potential threat to online bank accounts and other web-based services,” says Steve Fox, senior security auditor at IT security business Coalfire.

    Pay Dirt asked a range of security experts for the worst breaches of the year. Here they are in no particular order:

  • Dec 14, 2011
    10:58 AM ET

    Even Shopping Pros Make Mistakes

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    Kit Yarrow is a professor of psychology and marketing at Golden Gate University in San Francisco and author of “Gen Y: How Tweens, Teens and Twenty-Somethings Are Revolutionizing Retail.

    Holiday shopping is full of “coulda, shoulda, woulda.” As in, “I could have gotten if for less if I’d waited.” Or, “I should have bought it last week, now it’s sold out.” Or how about: “I would have bought a gift card if I’d known it was going to cost so much to mail it.” It seems like most people have to be a retail expert to get through the holiday shopping season without regrets.

    Believe it or not even the experts get tripped up by shopping mishaps: overbuying, procrastination, impulsive purchasing and falling prey to promotions. It might be a comfort to know that even though retail pros know better, the holiday rush can get the best of anyone. Here are some pitfalls that even the experts have made:

    1. “I got too excited by free gifts in Victoria’s Secret.”

    Play it cool when it comes to big promotions. Retail analyst Jennifer Black, president of Jennifer Black & Associates, spends a lot of time in malls in the course of her research. “I get caught up in the fever like everyone else,” she says. On Black Friday she found herself at Victoria’s Secret “buying things I didn’t need just to get the free gift with purchase.” As SmartMoney.com reported, free shipping is another area that isn’t as it always appears.

    2. “…and in-store samples tempt me to buy even more.”

    Also, beware in-store demonstrations. Kimberly Palmer, author of “Generation Earn,” recently got taken in by some free and tasty samples. Palmer says she recently left Williams Sonoma with a pricey bottle of olive oil that was “not exactly a necessary purchase.” She says, “I usually end up splurging on a few last minute in-store purchases that are entirely unnecessary.” Here are other ways retailers try to warm up their customers during the holidays.

  • Dec 8, 2011
    10:22 AM ET

    Will Probe Cut E-Book Prices?

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    American regulators this week confirmed that they have joined forces with the European Union in an investigation of e-book pricing – but experts say the inquiry’s impact on prices may be limited.

    Government intervention may encourage the market to act first, experts say. “E-book prices are already pretty low,” says Michael Norris, senior analyst and editor of book publishing for market research and forecasting firm Simba Information. “The market can decide if a book is overpriced.” Seth Rabinowtiz, partner at management consulting firm Silicon Associates. “The government action will encourage the market to find a lower margin solution on its own,” he says.

  • Nov 23, 2011
    9:00 AM ET

    Uncle Sam Wants You – To Spend

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    Don’t blame the parents. Instead, blame Uncle Sam.

    As shoppers and retailers get ready for Black Friday, a new book says Americans could learn a lesson from more prudent first-world countries like Germany. In “Beyond Our Means: Why America Spends While the World Saves,” Sheldon Garon, a professor of history at Princeton University, says Americans are actively encouraged to spend.

    Americans live large – literally. Garon says that the average size of the American house has risen from 980 square feet in 1950 to around 2,500 square feet today. “There’s only so much stuff you can put in a small house,” he says. Larger homes mean higher heating bills, more cars, fuel and renovation costs. Pay Dirt spoke to Garon about America’s need to shop.

    Pay Dirt: Do Americans spend more than rest of the world?

  • Nov 21, 2011
    2:54 PM ET

    Do Bad Parents Lower Credit Scores?

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    In debt this holiday season? Blame it on the parents.

    That’s the conclusion of a new survey by online broker TD Ameritrade. Parents can have a huge impact on whether their children are “dreamers,” those who are less likely to save, or “doers” – defined as those who have a 401(k), 403(b) or an IRA and are more likely to behave more like a saver than a spender, live within their means, have a budget and follow it, track household expenses, automatically deposit money from their monthly income into savings, and pay off credit card debt as soon as possible.

    Some 74% of doers reported having parents who not only taught them the importance of saving for the future, but also led by example, compared to 64% of dreamers.

    Parental guidance also influences whether one saves or spends. Around 57% of doers reported that their parents frequently talked to them about earning money and saving it, compared to 46% of dreamers — and 78% of doers consider themselves to be savers rather than spenders versus 33% of dreamers.

  • Nov 21, 2011
    2:09 PM ET

    What Congress’s Inaction May Mean for Your Finances

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    The apparent failure of Congress’s supercommittee to reach a deal on the deficit could give many employees the equivalent of a pay cut next year.

    One of the issues on the table for the debt panel was whether to extend the payroll tax cut, which increased employees’ take-home pay by 2 percentage points this year. If Congress fails to take action by year’s end, consumers would feel the impact on several levels, experts say. First, their take-home pay will decrease.  The amount may not seem like much to some — the benefit tops out at around $2,100 per year for anyone making $106,800 or more — but after a year of using that money to cover expenses or to boost savings, a cutback would require families to draw up a new budget for 2012, says Stuart Ritter, a certified financial planner at T. Rowe Price.

  • Nov 10, 2011
    9:30 AM ET

    Bad Credit — Good Hire?

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    A higher credit score doesn’t necessarily make a better hire. Employers shouldn’t judge candidates on the basis of whether or not they pay their bills on time, according to a new study which suggests there is no link between bad credit and poor job performance.

    Many organizations use credit scores as an employment screening tool, “but little is known about the legitimacy of such practices,” according to a report by researchers at Louisiana State University, Northern Illinois University and Texas Tech University due to be published in the Journal of Applied Psychology.

  • Nov 8, 2011
    1:24 AM ET

    6 Investing Tips — Translated for Consumers

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    Are you worried about your shopping decisions in the run-up to the holiday season? You’re not alone. Sales are not always what they seem and stores use lots of marketing tricks to keep you shopping, which means people need to consider when/where is the right time to get the best deal in much the same way investors do.

    And not all special offers may be bargains. A 16-ounce pumpkin-spice latte at Starbucks costs $3.79 – 10% more than a regular 16-ounce vanilla flavored latte even though it’s billed a promotion by Starbucks. The Wall Street Journal on Monday gave pointers for investors: “How to Rest Easy in a Crazy Market.” Starbucks did not return calls seeking comment.

    For consumers, it’s the same, but (slightly) different. Here’s a translation of those same tips for consumers:

About Pay Dirt

  • Pay Dirt examines the millions of consumer decisions Americans make every day: What to buy, how much to pay, whether to rave or complain. Lead written by Quentin Fottrell, the blog examines these interactions, providing readers with news, insight and tips on shopping, spending, customer service, and companies that do right – and wrong – by their customers. Send items, questions and comments to quentin.fottrell@dowjones.com or tweet @SMPayDirt.