Sunday, May 27, 2007

I look at the newspaper . . .

I am an inveterate clip filer. I can't help it. I have newspaper clippings that go back 35 years. There is something about a well written news story, be it just the 5 W's written like it used to be, or today's more "I" oriented perspective. I savor the information that is brought to my eye by my own choice. I usually read a paper from front to back, keeping track of the stories and reading them as I go. It's my version of multi-tasking. What happens though is that over time I end up with a stack of newspaper sections, and sometime magazines, that I have read and bookmarked in my mind but haven't clipped yet.

So here comes my first post on "Print Clips". And as they say on Dancing With the Stars, in no particular order:

The Fed plans new rules for credit card firms says the headline of this article in the Business section of the May 24th LA Times. The Federal Reserve has proposed several new rules affecting credit card disclosures to customers: A 45 day notice rather than the current 15 on interest changes, Key terms must be printed in bold, bar the term "fixed rate" unless the rate is guaranteed and disclosed, Require new charts on monthly statements that explain the interest charges and fees, Require the creditor to Highlight the amount of time it would take to pay off the balance if only minimum payments were made, and Require creditors to disclose the effect of their payment allocation practices on interest rates. If ever a personal finance issue was important this is it. Contact or write Sen. Carl Levin the author of the bill, Stop Unfair Practices in Credit Cards if you have any thoughts on this talking point.

The 6 New Rules of the Rich is the title of this article I found in my financial engineer's office the other week. It comes from an issue of Men's Health for March 2007 by Oliver Broudy. Rule #One: Your brain wants you to remain poor. Apparently, our genetic makeup, that one we acquired in those cave living days, has taught us to value the present much more than the future. That's one reason why it's so hard to save. The trick to this rule, use it to override the impulse by giving yourself present day rewards for continuing to save. Rule #Two: Dealing with things one at a time can cost you money. The idea here is that without the comparitive value of the overall cost of something we tend to spend first and think later. Maybe that's another reason why index funds are so worthwile. Rule #3: Cutting and running can make you rich, in other words, though we don't like to admit it, sometimes taking the loss and moving on is the right choice. The thing about saving or investing with an automatic deduction from the paycheck is that when we get the paycheck our mind sees the result as a loss which we apparently all have an aversion to. Rule #4: You'll make a smarter decision about tomorrow if you do it today. I love this term. Hyperbolic Discounting. It's another way of talking about the art of procrastination. The credit card companies love it too. Rule #5: Your older self should always get a cut. This one is neat because it reminds me of Robert Kiyosaki's, "pay yourself first" dictum. Rule #6: You'll save more if you spend more (intelligently). You'd think this would go without saying but think about your own spending habits and you may see exactly where this one is going.

Well, that's it for today folks.

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