The Writers Coin

I was watching the morning news last weekend and an interesting debate broke out  between the panelists about the ailing economy.

For so long, credit has been handed out like free t-shirts. It’s part of the reason we eventually got ourselves into this huge financial mess: easy, irresponsible credit.

Couple that with the US having a negative savings rate, and it adds up to some irresponsible behavior from institutions and from citizens.

Now the latest data is showing that people are starting to become smarter with their dough—they’re saving more of it instead of spending it. Which is good, because, well—just ask any personal-finance writer out there: you want to spend less than you make.

That’s our first commandment.

But with the economy wearing cement shoes as it is right now, it needs people to spend money—to buy things, to keep the gears turning.

Where do you draw the line between being financially responsible and doing your part to help the economy?

This is what’s known as the Paradox of Thrift, and it’s one of the issues the panel on the news started to discuss. From the Wikipedia article:

If a population saves more money (that is the marginal propensity to save increases across all income levels), then total revenues for companies will decline. This decrease in economic growth means fewer salary increases and perhaps downsizing. Eventually the population’s total savings will have remained the same or even declined because of lower incomes and a weaker economy.

Here are a couple other good reads on the Paradox of Thrift:

• Bad News, and the Paradox of Thrift
• Paradox of Thrift: RIP

There are some good points on both sides of the argument, but I’m inclined to go with what makes more sense and what we as individuals can control—so I’m all about saving as much as you can. Put it in the bank so the bank can loan to the people that want to spend, that way money isn’t just sitting on the sidelines.

With the personal savings rate finally seeing a small increase, the last thing we need is some old economics theory to say to us: “No no no, you had it right the first time—STOP SAVING!”

What’s your take?

This post was included in the Festival of Frugality over at Broke Grad Student.

We’re back for another week of humorous money posts. Since I felt so guilt last time around for playing God and deciding what was funny and what wasn’t, I wrote a post about begging that I would send in to the carnival—you be the judge whether it merits being included or not.

Anyway, to kick things off, here is one of my favorite recent commercials: they’ve taken a boring product and made me laugh. A lot.

So this week we have even fewer posts to include in the carnival, so I’m going to have to change the way I do this. I tried getting the word out there a little more and that obviously didn’t work. Instead of making it 7–10 days between carnivals, maybe I’ll do 2 weeks+ or something. That way we can have a real listing of funny posts.

While I’m at it, do your part and tell the world to submit the funniest stuff they have!

Now back to the show:

PatrickCML presents New Stock Market Terms posted at Cash Money Life. I typicall hate glossaries—they’re dry and boring. But here is one that rings true and is entertaining at the same time.

RC presents Top Ten Ways To Aggravate Your Spouse or Significant Other With Your Frugality posted at Think Your Way to Wealth. Here is an old post that goes for that David Letterman zing.

WC (me) presents Money Saving Tip: Street Begging posted right here on The Writer’s Coin. After I wrote it I felt a little guilty—it’s not really a funny thing to be reduced to begging, but whatever. We need all the posts we can get here.

An interesting fact: 80% of the submissions I got were actual PF articles that dealt with real issues. Read the carnival info people!

Hopefully we’ll be seeing more posts next time around…

PS. This post wasn’t submitted but I stumbled onto it and like it, so I’m adding it to the carnival—it’s good to be the king.

Dilbert Unemployed at Consumerism Commentary. When even Dilbert is in trouble…times are really bad.

I was watching Good Morning America yesterday morning and a very disturbing story about credit cards came on.

It featured Kevin Johnson, a responsible credit-card user that had recently seen the limit on his American Express Blue card go down by $7,000. What could possibly cause AmEx to lower his limit when he pays his card in full every month, has a 764 FICO score, and owns his own business?

The answer? Behavioral analysis.

Turns out credit-card companies are using psychology to determine who is worthy of their credit and who is not. The story went on to say that behavioral analysis was probably the factor behind the lowering of Kevin Johnson’s limit.

But what changed about his shopping behavior that merited this huge drop in credit?

The answer: Kevin Johnson had recently visited a Wal-Mart that he doesn’t typically go to, and the reason AmEx gave him was:

“Other customers who have used their card at establishments where you recently shopped have a poor repayment history with American Express.”

So this is what we’ve come to: now you can be punished for other people’s behavior if you shop at the same places they shop.

By Hagerstenguy

As some of you know, I’m itching for a new computer and I’ve set out to do it without spending a single cent of my own money. That means I’m saving up all the money from my alternative income and I’m also selling things I don’t need anymore.

That means selling some books. Which is going pretty well, I might add. But the other day something happened and I started to wonder if maybe I’m going too far.

I live in a high rise, and in the laundry room there’s a little shelf with a whole bunch of books that people leave there for other residents to “enjoy.” (some of you probably know where this is going)

Anyway, since I’m on a mission to scratch together $1,000 for a new PC, the other day I walked in there and instead of seeing books I saw dollar signs: most of the books are crap: David Baldacci books that go for 30 cents on Amazon. But others are hardcover, first-editions worth around $20. So I grabbed a few and took them with me, all the while looking over my shoulder wondering if this would qualify as “enjoying” or not.

The books in the laundry room are meant to be used like an informal library, although I’m sure most people just leave books down there that they don’t want to throw away (that’s what I keep telling myself, anyway). Instead of chucking them, they’d rather have other people give them a go.

And a “go” is what I’m giving them.

Part of me wonders if this is OK or not. I mean, I’ve seen books show up down there and a week later they are gone, never to reappear again. So someone has either done what I’m doing (I’m always late to the party) or they’ve just taken the book and made it their own—keeping it, lending it away, giving it away, etc.

The entrepreneurial part of me thinks I should set up a formal system for people to bring down ALL the books they don’t want anymore. I’ll do the selling for them and then I can figure out a portion of the profits to give back to people—almost like my own little business. This would be a lot of work though. And when the current system is working out so well, why change anything?

So far I haven’t sold any of the books I nabbed from the laundry room/book depository, but I know I can’t have a sidewalk sale around this neighborhood because it has the potential to upset the people who left their books down there. And the potential for hilarity to ensue.

Have I gone too far in my mad quest for a new computer or is this totally acceptable? I’m curious to hear what other people have to say about this. Do you think I should formally start a service to get people to actively give me their books (it’s a big building) and make even more money that way?

Comment away!

There is a follow-up post that clarifies some of the details of this post and addresses some of the comments people have left behind here.

This post was included in the Money Hacks Carnival over at Your Money Relationship. Check out the cool “Office” theme he’s put together!