The Pocket Change Investor #37
The Secrets to Getting Ahead - Even if You Have a Pile of Credit Card Bills, Hefty Mortgage Payments, Loans Out on a Clunker or Two, and a Bad Case of the "I'm Tired of Living Payday to Payday" Blues.
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Happy Spring!

Greetings and welcome to our third free on-line issue!

Thanks to all of you who have forwarded our newsletter to your friends. We've been thrilled by the response.

What we've not been so thrilled about is the economy. There's lots of talk out of Washington and in the mainstream press about how business is improving. But is your economy improving? Whatever your political persuasion, it's no secret that most of us could use a bit more money and a lot less debt.

That's where we come in! This issue's lead story is Practical Tactics: Save Money, Eliminate Debt, and Live Better on Less. We offer some of our favorite tips on tax refunds, late payments, 401(k)s, student loans, property taxes, produce, scams, computers, and more.

To read the whole issue, click here, or click on the various links in this letter for specific articles:

  • One Reason Why Jobs Are Disappearing. Our resident non-consuming advocate, as Marc likes to be called, meets Bedrooms-in-a-Box. Need I say more?

  • A Dozen Ways to Safeguard Your Financial Privacy. Increasingly sophisticated databases are presenting a real threat to our financial privacy. It's time to fight back.

  • Traveling the Economic Highway, by Adam Eisenson. You're flying down the road, making great time, when all of a sudden, traffic stops. Remember the 90's when the stock market was flying? Then all of a sudden, BAM! Treat your finances as carefully as you navigate the nation's roads.

  • Sensing Car Trouble. The strange noises or smells emanating from your car can help you diagnose problems. Here's the crib sheet so you can figure out what a particular sound or odor might be. Knowledge is power.

  • Book Corner. This issue's recommendations include important works on: why two-income families are having such a hard time; how drug manufacturers look the other way when abuse interferes with their profits; and what you can do to minimize the damage divorce does to children.
On a personal note, one nice thing about the long northeast winter is the opportunity to visit our nine grandkids, who range in age from nine down to almost two (and, oh yeah, their parents). Here's the latest picture of the little ones all corralled together.

Now that winter is almost over, we're itching to get our 2004 garden going. Over the years, we've learned plenty of practical tactics for making gardening easier and more fun.

May some of the ideas we share in this issue of The Pocket Change Investor bear fruit for you in the coming months. Please let us know! And again, many thanks for recommending our e-letter to your friends and relatives.

Marc and I hope you have a great spring!
Nancy
Nancy Castleman

Practical Tactics:
Save Money, Eliminate Debt, and Live Better on Less
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For more practical tactics, see our book, Invest in Yourself: Six Secrets to a Rich Life.

By Marc Eisenson            

When it comes to furniture, ever notice how there always seems to be a BIG sale going on at the stores? The pitches may vary from week to week, but the "hooks" are pretty constant:

  • "This is THE best time to buy!"
  • "No interest, no payments!"
  • "Hurry ... this HUMONGOUS sale ends today!"
  • "Donít miss this once in a lifetime opportunity!"

Suggestion: Miss this opportunity. If you need furniture, take your time, shop around, and consider your other options.

How about good used furniture? By and large, furniture was once made better (out of real wood, not glued together sawdust). Today's mass produced stuff is typically far more expensive than the pre-owned, pre-antique alternatives.

The New Age of Manufacturing
If used furniture doesn't work for you, there's another choice. Recently, I had the pleasure of helping to assemble furniture for each of my three children and their families. It's always fun to work with them on projects, and it's a special kick when one or more of our grandkids pitch in. But really, a Bedroom-in-a-Box?

This assemble-it-yourself craze just amazes me. In addition to desks, dressers, night stands and a headboard, we also assembled a 100 square foot Shed-in-a-Box.

Now don't get me wrong, I'm a great believer in do-it-yourself. I would love it if everyone became more self-reliant, and were able to undertake projects that are costly to have done by someone else. But paying as much or more for items that used to come assembled can be less of a learning experience and more of a nightmare.

Whether it's a desk, bike, new grill, wheelbarrow, bookcase, toy, or small building, once the box gets home, it's time to struggle with a thousand unidentifiable parts and a confusing book of instructions! That is, if you can get the box from the car to the house. (The boxes we unloaded were heavy ... very heavy!)

It took two of us five solid hours to put together one desk. I'm an engineer by training, and it was the third such desk I worked on. Still, it was a confusing, complicated project.

Time vs. Money vs. Labor
While finally finishing was satisfying, I find myself marveling about how we're taking on the greatest cost faced by many manufacturers: labor. And not only manufacturers. We check ourselves out in supermarkets and department stores, and up in these here parts, pick our own strawberries, blueberries, and raspberries at local farms. Is our contribution toward the elimination of paying jobs what the talking heads on TV are referring to when they speak about "increased productivity?" Whose productivity?

What Next?
One day in the not too distant future, will I find myself buried in a million parts as I try to help someone I love assemble their new Car-in-a-Box?

Speaking of cars, have you noticed that every day is also THE best time ever to buy that new car?

"Okay, so you've heard it before: America, the country that made 'right to privacy' a credo, has lost its privacy to the computer. But it's far worse than you think. Advances in smart data-sifting techniques and the rise of massive databases have conspired to strip you naked. The spread of the Web is the final step. It will make most of the secrets you have more instantly available than ever before, ready to reveal themselves in a few taps on the keyboard."

Q: Which Magazine Carried this Warning?

A. Privacy Times
B. Mother Jones
C. Forbes
D. Wired

A: If your final answer was that bastion of capitalism, C. Forbes, you're right! And if the folks at Forbes are this worried about privacy, the rest of us better be worried, too.

1984: Here at Last ... with a Twist
In high school, we all read George Orwell's 1984, and feared the day would come when the government would know our every move. It seems our fears were misplaced.

Driven by marketing strategies and databases chock-full of our personal information, the role of "Big Brother" is now being played by white-collar corporate America. Banks troll for the most profitable customers, insurance companies seek grounds for denying coverage, and list brokers sell our personal info to anyone willing to pay the price.

In binary bits and bytes, corporations update our profiles every time we bank, pay bills, file medical insurance claims, charge something, or visit a Web site. Supermarket scanners record everything we buy. Cell phone companies can instantly locate anyone whose phone is switched on. Electronic toll-booths, On-Star, and other traffic-monitoring systems busily track the movements of our cars. In short, many big brothers are watching - and carefully recording the most private details of our habits, hobbies, hang-ups, and health.

And then there are the computer-savvy identity thieves who ripped off over $437 million in 2003.

What's a Person to Do?!
When shady characters or sophisticated marketers want to dig up your secrets, they can find a way. But why make the job easy? There are lots of actions you can take to help protect your privacy:

1. Check privacy policies before divulging personal information. Sweepstakes forms, warranty cards, and Web site questionnaires/registrations all solicit information that can enrich your "profile." Birth dates, annual income, addresses - even the breed of dog you own - can be valuable. Don't want that info used? Don't share it!

2. Keep your name off marketing lists. Although registering with the Direct Marketing Association's Mail Preference Service is often touted as the easy solution to junk mail, it's only a partial fix. To fully stop it, get our booklet, Stop Junk Mail Forever, which tells you exactly who to contact and what to do from here on to keep those unwanted pitches and promos out of your life.

3. Pick up the phone. Consider removing your name from the lists that credit bureaus sell to credit card marketers. It's easy. Just call 888-5-OPTOUT.

4. They hide, so you must seek. Always carefully scrutinize credit card and bank statements, phone bills, etc., looking for unfamiliar charges. Call right away if you find a problem, and follow the instructions the service reps give you for how to straighten things out.

Be smart, and carry a minimum of cards on you - separate from your wallet. When you use a card, focus on what's going on, and put the piece of plastic away asap. (The FTC offers a lot of good advice, including tips for avoiding credit card fraud.)

5. Once a year, at least, get your credit report from one of these three bureaus:

Make sure your credit report includes only authorized activity, but don't panic if you find a mistake. You'll be in good company. Errors serious enough to deny credit occur on three out of every ten reports! Since it often takes a while to get the corrections made, get on the case right away - especially if you think you might want to get a mortgage or car loan any time soon. (Late in 2004, new regulations will allow you to get one free report every year. Until then, your credit report could cost up to $9.)

6. Rip up, don't recycle pre-approved offers for credit cards. Do the same with any other piece of mail that includes financial info. Garbage pickers know that people routinely toss out private documents that contain their Social Security numbers, bank accounts, and other top secret, but highly saleable data.

7. Don't give out your Social Security number to anyone who doesn't have an absolute and legitimate need for it. And never give out personal information unless you've initiated the contact. Identity thieves, often posing as bank or government representatives, ask for account numbers or other information, allegedly to verify this or that. Remember, people who are legitimately calling about your accounts have access to your records.

8. Don't know? Don't trust. Use your credit cards only at Web sites you know and trust, and which have a secure server. Although it's true that liability for misuse of your cards is generally limited to $50, who wants the hassle of dealing with an Internet pirate?

9. Peter Piper picked a pip of a password. Pick passwords that aren't obvious, which means don't use your middle name, a pet's name, or a birthday. That will put one extra layer between your records and someone up to no good. Many experts recommend that you ask to have special, additional passwords placed on your credit card, bank, brokerage, and phone accounts.

10. Spread the wealth. If you don't want financial institutions to be sharing information about you with their affiliates, consider keeping your accounts "unaffiliated." In other words, don't use the insurance company your bank just bought - unless your bank can assure you that it will not share your private info, even with its subsidiaries.

11. Been the victim of identify theft? Take action asap. For starters, go online for some good advice from the Privacy Rights Clearinghouse and the FTC.

12. Keep up on the latest privacy news. The following organizations will clue you in on what's happening, and what you can do about it:

Tip: Forbes, The Economist, and BusinessWeek are also excellent sources for privacy news.

Traveling the Economic Highway
   By Adam Eisenson*

You're flying down the road, making great time, when all of a sudden, traffic stops. Remember the 90's when the stock market was flying? Then all of a sudden, BAM!, the party was over.

Protect yourself from financial accidents by recognizing that the economy moves much like traffic does. Consider these similarities:

  1. People are surprised and often angry when traffic suddenly stops ... or when their income and savings screech to a halt. Yet anger won't break up a traffic jam or switch the market from bear to bull.

  2. No one can truly predict when a traffic jam will take place or when the economy will go south. But if you're a safe driver and a cautious spender, it shouldn't matter.

  3. When a traffic jam ends or the economy heats up, it's tempting to make up for lost time, or wealth, by taking dangerous risks. Don't do it!

  4. Careful commuters plan ahead. They listen to traffic reports and use their own common sense to modify their routes when trouble looms ahead. Careful investors do likewise.

  5. Even after taking precautions to avoid trouble, drivers still hit sudden jams and investors know to expect unanticipated downturns. That's why it's so important to build in a buffer. With extra time and more space between cars on the road, and an emergency fund in the bank, unexpected conditions won't leave you sweating (quite as much).

  6. A powerful engine in a sporty red car is no guarantee of a speeding ticket, but it does make a lead foot more likely to catch the attention of a wary cop. Spending a leisurely afternoon mall walking, doesn't guarantee budget-busting impulse purchases, but it sure makes them more likely.

  7. After the speeding ticket, the accident, or the market crash, it's too late to undo the pain. Caution on the road and with your wallet are the secrets to getting to your intended destination quickly, safely, and with a bit to spare.
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*Adam Eisenson, a fourth grade teacher, is the author of The Peanut Butter and Jelly Game, a picture book that helps children in grades K - 3 think about the difference between needs vs. wants, and about the virtues of careful spending. He's also a freelance writer, the father of two boys, and Marc's son.

Sensing Car Trouble*

Editor's Note: We share the following in the hope that it helps to keep a few more clunkers like ours on the road.

Smells like Trouble
Some car problems are under your nose. You can detect them by their odor:

    The smell of burned toast - a light, sharp odor
    • Often signals an electrical short and burning insulation. To be safe, try not to drive the vehicle until the problem is diagnosed.
    The smell of rotten eggs - a continuous burning-sulphur smell
    • Usually indicates a problem in the catalytic converter or other emission control devices. Don't delay diagnosis and repair.
    A thick acrid odor
    • Usually means burning oil. Look for signs of a leak.
    The smell of gasoline vapors
    • After a failed start may mean you have flooded the engine. Wait a few minutes before trying again. If the odor persists, chances are there's a leak in the fuel system - a potentially dangerous problem that needs immediate attention.
    Burning resin or an acrid chemical odor
    • May signal overheated brakes or clutch. Stop. Check the parking brake.
    • Allow the brakes to cool after repeated hard braking on mountain roads.
    • Light smoke coming from a wheel indicates a stuck brake. The vehicle should be towed for repair.
    A sweet, steamy odor
    • Indicates a coolant leak. If the temperature gauge or warning light does not indicate overheating, drive carefully to the nearest service station, keeping an eye on your gauges. If the odor is accompanied by a hot, metallic scent and steam from under the hood, your engine has overheated. Pull over immediately. Continued driving could cause severe engine damage. The vehicle should be towed for repair.

Sounds like Trouble
Squeaks, squeals, rattles, rumbles, and other sounds provide valuable clues about problems and maintenance needs. Here are some common noises and what they mean:

    Squeal - A shrill, sharp noise, usually related to engine speed:
    • Loose or worn power steering, fan, or air conditioning belt.
    Click - A slight sharp noise, related to either engine speed or vehicle speed:
    • Loose wheel cover.
    • Loose or bent fan blade.
    • Stuck valve lifter or low engine oil.
    Screech - A high-pitched, piercing metallic sound; usually occurs while the vehicle is in motion:
    • Caused by brake wear indicators to let you know it's time for maintenance.
    Rumble - a low-pitched rhythmic sound:
    • Defective exhaust pipe, converter or muffler.
    • Worn universal joint or other drive-line component.
    Ping - A high-pitched metallic tapping sound, related to engine speed:
    • Usually caused by using gas with a lower octane rating than recommended. Check your owner's manual for the proper octane rating. If the problem persists, engine ignition timing could be at fault.
    Heavy Knock - A rhythmic pounding sound:
    • Worn crankshaft or connecting rod bearings.
    • Loose transmission torque converter.
    Clunk - A random thumping sound:
    • Loose shock absorber or other suspension component.
    • Loose exhaust pipe or muffler.

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In every issue, we recommend and offer books that we think you'll find particularly helpful. They're well written, and full of concrete, timely advice, but often not readily available in bookstores. Not all are the kind you'd want to read, cover to cover, at one sitting. But we think they deserve your attention, nonetheless. Our Good Advice Book Store reviews other important titles - on debt management, personal finance, estate planning, real estate, health, family living, gardening, and so on.

The Two Income Trap: Why Middle-Class Mothers and Fathers Are Going Broke($26.00).
Elizabeth Warren and Amelia Warren Tyagi analyze what's sending today's two-income parents to the cleaners and show why "having a child is now the single best predictor that a woman will end up in financial collapse." Turns out, the culprit is not second homes, designer duds, and other forms of over-consumption.

It's the desire to protect and educate our children that has us bidding up the cost of living a middle class life - in a home of our own, in a safe suburb, where we can send our kids to a decent pre-school, then on to "good schools," and finally off to a college that might end up costing more than the house. All it takes is one or two unforeseen events, say an illness, pink slip, or "Dear John" letter, and millions of families end up in financial disaster. Warren and Tyagi offer solutions worth considering. Brilliantly argued. Highly recommended.

Pain Killer: A "Wonder" Drug's Trail of Addiction and Death ($24.95).
Barry Meier, an award winning New York Times reporter, tells the story of OxyContin, a powerful, FDA-approved narcotic that its manufacturer touted as THE less addictive alternative for pain relief. Once OxyContin hit the streets, it was found to be highly addictive, contrary to marketing claims. When some of its abusers ended up in morgues, there were dedicated doctors, abuse counselors, and government officials who tried to control the problem.

But there was also a multi-billion dollar drug company relentlessly promoting its product in ways that could only lead to more abuse. This book isn't a tale of good triumphing over bad, it's a powerful reminder of how difficult it is to fight against the evil twins of money and power, and how the twins often win, which in this case, makes it harder for the people who really need help managing pain. There's got to be a better way.

What About the Kids? Raising Your Children Before, During, and After Divorce (Now in Paperback: $14.95).
However difficult divorce is for the couple whose happily-ever-after fantasy is collapsing, it's way worse for their kids. For them, it's a trauma that often lasts a lifetime. While every situation is different, there's one thing most divorcing couples have in common: They have NO idea how to minimize the damage being done to their children, whether their kids are newborns or adults with families of their own.

After more than 30 years of studying and following the lives of divorced parents and their children, Judith S. Wallerstein and Sandra Blakeslee provide answers to all the questions that divorced and divorcing parents should be asking for their kids' sake. If this book had been written a few decades ago, we might have done a better job in our own family. Fortunately, it's never too late to learn!

Broke! A College Studentís Guide to Getting By on Less ($10.00).
Trent Anderson and Seppy Basili have put together a great little guide (both in size and content) for college students. It covers everything from budgeting, food, and school supplies, to traveling, sororities/fraternities, and other forms of entertainment. The suggestions for saving money come from people kids will listen to - their paisans - current college students and recent graduates.

Here's a piece of good advice that'll go down better from a junior at Notre Dame than it would from us or a parent: ďPay the entire balance of your credit cards every month. If you canít do that, mail your card to your parents to keep until you have paid it off. Trust me, it works.Ē This book would make a great gift for a student going off to college.

"The real measure of your wealth is how much you'd be worth if you lost all your money." -- Anon

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This issue of The Pocket Change Investor is dedicated to our niece, Arianna Eisenson, who will soon travel to Zambia as a World Refugee Academy volunteer in a camp for 30,000 Angolan refugees.

We take more than reasonable care to give you timely, accurate information. But before making major decisions, speak to your advisors.

Private consultations available. We can help you get out of debt, simplify your lifestyle, get up to speed on a newly diagnosed disease, develop a Web site, publicize a book, service, or cause, or start a home-business. Tell us how we can be of service to you in a brief email. We'll get back to you asap.

Editors and publishers: We're always happy for assignments! Let us know what you need and when.

Issue #37 ©2004 Marc Eisenson & Nancy Castleman 
Good Advice Press  PO Box 78  Elizaville, NY 12523