A New Reason to Hate NJ – No Gas Rewards
As if I needed another reason to hate living in NJ beyond the inflated house prices, worst in the nation real estate taxes, and population density, now I find out that I can’t get the gas rewards with my credit card either!
This all started because I got a new credit card which I love. You can read my earlier post but the gist is that you get 5% back on gas purchases, 2% on groceries, and 1.25% on everything else. Phenomenal card right? Not if you live in NJ.
Like any other red-blooded hippie capitalist, I of course audited the first statement I got from VISA. It seemed to have accurately credited me with $2.24 for my $112.26 in grocery purchases. However, it failed to recognize any of my $137.14 in gas purchases. This resulted in $5.02 in missed rewards. I was not pleased and immediately called PenFed to get it fixed. To my chagrin NJ is the only state that treats gas purchases made at the pump the same way as paying inside a store at the register. Because the credit card companies cannot delineate a difference, they cannot give their cardholders the appropriate reward.
I do not have a solution to this issue, but I would love to hear anyone else’s ideas/comments.
** Follow-up: A similar audit of my Perfectcard revealed that it gets it right so this is a PenFed issue and not fully a “I hate Jersey” issue. I will be using the Perfectcard going forward for gas purchases in NJ.
Mega Millions Lottery – Odds, NPV, Sucker bets, and Hope (Barack Obama)
Today’s drawing for the Mega Millions Lottery is for an estimated $220 million (or $134.6 for the cash option). The odds of winning are…well….low. I mean it is a lottery. The odds of picking all 5 balls plus the powerball are 1 in 175,711,536. As you can see at Durango Bill’s website, you’re more likely to die in a car wreck driving to the store to buy your ticket than actually winning it. Additionally, the NPV of your $1 investment rarely creeps above 60 cents no matter how you do the math. That means as soon as you buy the ticket you’re virtually assured of a loss whereas that same $1 in a money market compounded over time will always generate a positive return on your capital. Is that at all sobering? I bet not.
Lottery is a sucker’s bet and most of the suckers know it, at least to some extent. I think the lottery is more about hope. There’s been a lot of talk about hope lately thanks to Obama and for all the hope that he seems to be spreading for free (or at great cost depending on your party affiliation). I think the desperation behind lottery ticket buyers requires a special kind of hope. It’s the hope that means you won’t have to give up your Hummer, 60 inch flat screen, and 5 bedroom house that you couldn’t afford to begin with so you’re up to your ears in debt. Because these are the people that buy lottery tickets. And, it’s the hope that you won’t have to work that 2nd job or the extra shifts at the factory to pay for the rent in the dilapidated apartment you feel lucky to have where tonight’s dinner is the store brand of instant mashed potatoes because that’s all there is and you’re just getting by to keep a roof over you and the kids. Because these too are the people that play the lottery and hope to win. And, it is a fleeting hope and almost certainly a false one. Because everytime they draw those numbers and they aren’t your numbers the hope is lost. And the only way to get it back is to buy again.
It’s insidious. And the government gets you either way. Assuming you win and take the cash option, the government’s going to be taking roughly $55 million for themselves in taxes. And please don’t give me crap about supporting education through the lottery. You want to support education? Volunteer to teach a kid to read. Volunteer to teach for one hour one day a year about the values associated with personal finance. Offer to sponsor a teacher’s school supplies so he/she doesn’t have to use their own paycheck for materials.
I have hope. It’s the hope that none of you ever play the lottery or that you stop playing today and put that money in the bank or education or some other cause you believe in. I have hope. It’s the hope that you never feel so desperate that the lottery odds feel like the best chance you’ve got to make it in this world.
Found Money – Am I a thief?
I’m a big believer in giving lost money a home (in my own pocket). I remember vividly as a ~9 year old going to the dime store down the street from my grandmother’s house. One day I noticed that there was a large cache of pennies in a storm drain. I looked around, found a stick and an old piece of chewing gum, and spend the next 20 minutes unabashedly pulling out change (yes, I guess I’ve always been this way). I of course spent none of it and took it back to grandma’s richer than when I left. I almost always pick up change these days though sometimes I’m reluctant to do it around clients (esp. new clients). I have been known to go back for it later though 
A friend once made the argument to me that the money was not mine so I should just leave it there. He and I both are very strong adovcates for private property rights. He intimated that the owner may come back for it. Now with the random penny in the grocery store parking lot this may seem a little far-fetched, but it is possible I suppose. I noted that I had a greater reluctance to pick up change on private property than on public property because even though a grocery store parking lot is a fairly public place it is owned or leased by the grocery store and thus the money technically belongs to them I would think (if the true coin-dropper is unable to be located). Should I be turning this money in? I think that would be weird. “Um hi, yeah, I was um in the parking lot and I found this penny that’s been run over like 50 times and um it must be yours, right?” I can see them pressing the secret button to alert security now.
Perhaps I should impose a waiting period based on valuation such as 1 second per cent so that I would just wait a second if I found a penny but would wait 8 minutes and 20 seconds if I found a $5 bill? If noone showed to claim it then I could keep it. What if it’s an office setting meaning the likelihood of finding the rightful owner could be much higher? What’s the ratio of # of employees to value of found money that needs to be in place before I should start asking around?
For now I’ve settled on giving the money a home in my son’s 529 plan. I just consider it random donations from the public at large to someone whose work may benefit said public sometime in the future (but I still write it off the contribution on my state taxes
Any thoughts (besides me spending way too much time thinking about this)?
Cross posted here
How much do I need to save in order to properly fund my retirement?
There’s an interesting discussion over on savingadvice.com aboout the amt. you actually need in order to retire with enough to live on. As you’ll see opinions vary. Check it out if you get a chance. You’ll see me posting…
Prosper Peer to Peer Lending as a method of boosting returns beyond money markets or should I be cashing out
I have been a lender on Prosper since June 2006. Prosper itself has been around since about October of 2005. When I started, there were about 48,000 members. Today, there are almost 700,000. I think my joining when I did would probably qualify me as an early adopter. During this time, there were few accurate methods to gauge the appropriate default rates of borrowers (reminds me of a certain subprime fiasco) and so many folks who bid on so-called high risk loans found themselves with almost a total loss on many of their loans (default risk turned out to be much higher than many estimated). I joined Prosper strictly on a speculative nature and put in $1000 (of play money) to see if I could help some folks out and get an out-sized return on my cash.
$1000 essentially lets you bid on 20 loans as the minimum bid is $50, and I decided that diversification would help me limit my losses. My results to date:
35 loans funded
9 loans defaulted due to delinquency or bankruptcy
3 loans paid off in full
22 loans current
1 late loan clearly headed for default
That means that over a quarter of the time that I’ve loaned out money, I’ve lost almost all of it except for a few payments receive for each prior to default. This is clearly not for the faint of heart!
However, my stats are pretty misleading (intentionally – I’m telling a story here The average rate on my defaulted loans is over 26%. By way of comparison the average rate on my current loans is about 18%. Any borrower desperate enough to take on that kind of rate (26%) should give the little voice inside your head a lot to scream about. But, this was play money, and I accepted the risk. For a time. About the beginning of 2007, I realized many of my loans were tanking, and I vowed to rein in my wild west lending habits by utilizing newly provided Prosper information on the background and behavior of borrowers to dictate my lending. I began bidding on AA and A rated loans. Since the beginning of 2007 I’ve funded 12 loans. 10 of these are A or AA rated (and 2 are already paid off). The other 2 are D rated (I slipped), and 1 of those has already defaulted.
So, here’s what I’ve found out in my year and a half journey on Prosper… You can make out-sized returns on the equivalent of a 3 year CD, but you must be willing to take on risk (and sometimes lots of it). Currently, I’m still down about $177 from my original investment. However, I’m still funding loans with the principal, interest, and late fees. And, if I had $1000 of play money now, I would certainly consider dropping it into Prosper for some AA and A rated loans. By the way, for other Prosper lenders, my search strategy demands the following:
AA rating with at least 10.2% interest or A rating with at least 10.9% interest, no DQ’s and no PR’s, DTI below 20% and verified bank account.
I also run a screen on loans with over 30% interest that are over 50% funded for when I’m feeling naughty.
NOTE: Because it is a painful topic I did not discuss the Prosper discussion forums in which I was an active member for many months only to see it totally decimated by the powers that be within Prosper. Many folks gave countless hours towards providing incredible information for both lenders and borrowers, and I’ll simply say I’m sorry to see it go.
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