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Old 11-18-2011, 07:16 PM   #41
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Originally Posted by Nords View Post
Milevsky's been a fan of annuitizing a portion of a portfolio, especially in his "Are You A Stock or A Bond?" book.

Here's a four-year-old paper:
New thoughts on the draw down phase

And Otar's retirement analyzer is a strong proponent of annuities for those whose portfolios are subject to market risk.

The trick is that after portfolios got savaged by the 2008-09 bear market, anyone declaring "Game Over" and shopping for a SPIA found out that interest rates were at record lows too. Someone favoring this method would have to keep a sharp eye on pricing as soon as the bear market took hold.
Oh very cool. Read the post and pulled the pdf down to read soon.

Thanks Nords! Guess I needed to search for SPIA instead of die broke.
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Old 11-18-2011, 08:06 PM   #42
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Quote:
Originally Posted by Hamlet View Post
It's a violation of the merchant's agreement with the credit card companies to have different prices for cash versus credit.
If that is true, how do you explain this?


Hello Credit Cards
I'm not following you, haha. That link says:

Quote:
Pay with cash or debit card and it’s the same price.And if you think that’s good, there’s more! You’ll also have the option to pay by credit card.

... pay however you want. Cash one time, debit card the next—or even use your credit card if you want.

* The 45˘ fee refers to the convenience fee currently charged for debit card transactions at most ARCO and ampm locations.
OK, they don't specifically say that credit cards are a different price than debit/cash. But the only fee they refer to is the debit card fee.

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Originally Posted by MichaelB View Post
It may be a violation for the merchant to add a surcharge for the card but there is no problem with giving cash discounts.
I'm pretty sure the merchant agreement from the CC places restrict cash discounts too, as it would be the same effect. I'm pretty sure their lawyers are more clever than that.

edit/add: I stand corrected - a few google hits show that , with some stipulations, cash discounts are allowed:

http://www.merchantcouncil.org/merch...e-customer.php



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Old 11-18-2011, 09:46 PM   #43
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As for annuities, I won't even think of one until I am in my 80's. At that point, I can re-assess. If I am in good health and interest rates are more favorable, I might consider one but if not, then that idea is out of the question for me.
Btw at the age of 80 if you do a charitable gift annunity you get 6.5% of the balance back each year. Plus the excess of the gift over the NPV of the annuity is deductible. So in addition to looking at an insurance company one could consider this route, which also helps your favorite charity in the process.
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Old 11-19-2011, 10:46 AM   #44
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Originally Posted by ERD50 View Post
I'm not following you, haha. That link says:



OK, they don't specifically say that credit cards are a different price than debit/cash. But the only fee they refer to is the debit card fee.



I'm pretty sure the merchant agreement from the CC places restrict cash discounts too, as it would be the same effect. I'm pretty sure their lawyers are more clever than that.

edit/add: I stand corrected - a few google hits show that , with some stipulations, cash discounts are allowed:

Charging Customers a Fee to Pay with a Credit Card



-ERD50
Well, at at least some stations in WA, they are different. It says so in the small print on the pump at the ARCO where I sometimes buy gas. Their website is conveniently not telling the whole story. They emphasize that they no longer have a debit card fee, and say nothing about the fact that they do have a credit card fee. Should I believe a careful bit of their corporate speak, or my lying eyes?

As I remember, before this change they had a debit card fee, and did not take credit cards at all.

Ha
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Old 11-19-2011, 11:36 AM   #45
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One thing I dislike about using credit cards in this way is that it ends up increasing the costs of goods long term. As a group, we would be better off if everyone who could pay cash did so, since the fees that the card providers charge merchants are larger than the cash back deals we get.

.
Its not clear that the fees execeed the costs of handling cash for a small business. It starts with the banks charging .1% on cash deposits of over some amount like 10k/month. Then you have the costs of counting the cash several times (and the machines to help do it). Add then the security costs of added surveillance equipment, time safes, and added insurance costs for the workmans comp for staff etc. In particular I suspect most convenience stores (often called stop and rob) would be happier if they did not accept any cash and were credit/debit only.
I recall hearing that when the navy went cashless on some ships 5 fte's were freed up in the process to do other things, suggesting the high cost of cash that is not well documented.
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Old 11-19-2011, 01:23 PM   #46
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i seem to recall that on of the initial arguments for debit cards was the lower transaction costs. Clerks, salespeople, tellers, etc. spent less time counting cash and returning change. Also, there would be less need to hire those the back office people who count the cash at the end of the day. And, of course, there is less chance of tapping-the-til if all it contains is a paper trail of debit card transactions. Supposedly, this would save stores a bundle!!
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Old 11-19-2011, 01:28 PM   #47
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Originally Posted by haha View Post
Well, at at least some stations in WA, they are different. It says so in the small print on the pump at the ARCO where I sometimes buy gas. Their website is conveniently not telling the whole story. They emphasize that they no longer have a debit card fee, and say nothing about the fact that they do have a credit card fee. Should I believe a careful bit of their corporate speak, or my lying eyes?

As I remember, before this change they had a debit card fee, and did not take credit cards at all.

Ha
Hope that makes it here. I bought gas about a week ago at ARCO and they charged me a $0.35 debit card fee. That was down from the usual $0.45 it had been. I don't think they take credit cards yet. Maybe they're testing out a new scheme in a few locations?
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Old 11-19-2011, 01:34 PM   #48
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Alas, way to many of are already living very near the 'broke' point. I know several people, fired in their late 50's, unable to get a decent paying job, and rapidly going through their retirement savings. Not so good.
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Old 11-19-2011, 01:43 PM   #49
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I also know of a number of people in their 50's and 60's who still rent an apartment, often sharing it with somebody else. They work semi-skilled jobs that pay in the area of 15-20 dollars an hour. Enough to live on but not enough to save much. Often they are financially ignorant and never realized what they were giving up when they decided not to fund an IRA in their 30's, even if just a few hundred dollars a year. (Why do people think an IRA must be fully funded or not at all?) Often if the had a home they borrowed on it for vacations, cars, or to add-on to the home. Now they are down the tubes - the home lost. Had they simply not borrowed more on the home, and paid off the mortgage, their situation would be much better today.

Very sad.
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Old 12-24-2011, 04:51 AM   #50
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(snip) I looked up Die Broke on Amazon and the review includes the following:
Quote:
Die Broke is organized into two sections: the first lays out the principles for dying broke. Pollan bases his whole argument on these four maxims: quit today and work for yourself, not your company; pay cash, melt your credit cards, and don't even think about using your ATM card; don't retire, retirement is a relatively new concept created during the Depression, instead plan to work all your life, and; die broke, after all, you can't take it with you. (snip)
Anyway. That statement from Don, that he got from the AMZN description is misleading. I thought about posting an update on that old thread to clear that up... but didn't do it.

But.... since it seems that others took it to be fact... here goes.

That little writeup on AMZN (IMO) is very inaccurate.

The author has written many books (labeled Die Broke with other words following it in the title pertinent to the topic at hand). In that book that was cited in the other thread... That item (maybe a paragraph) is in the introduction of the book which is really a backgrounder about the author and his philosophy. The book has little to nothing to do with that type of life decision... continue to work.

But even that little statement has some sound reasoning behind it if you read it. Although it is not my choice.

Is the book a good book? I thought it was pretty good. Covered many topics (brief educational descriptions with some insight and advice). (snip) But, if one has deep knowledge in some of those topics, the advice would seem to be very basic.
I recently read Die Broke and I don't think Don's quote from the Amazon review is misleading at all. IMO, it's a pretty good summary of the first third or so of the book, in which the author explains and promotes his philosophy based on those four maxims as an alternative to retirement based on reaching a particular age or amount of financial resources. (The other 2/3 is the short explanatory articles.) He devotes a whole chapter to each maxim, explaining what he means by it and why in his opinion it is better than some other way of looking at the matter. For full disclosure, I should say I read the entire first section but only skimmed the second part.

That first section has everything to do with life decisions like continuing to work. When he says "don't retire" it appears to me that he means it quite literally: keep working until nobody will hire you. That is the maxim I found myself disagreeing with the most. The idea of working until you have enough to support yourself indefinitely and then leaving the workforce to volunteer, or pursue an avocation, or just to live a life of leisure, does not seem to enter his thinking at all. Based on his description of his clients, that he's writing for an audience with much stronger "type A" tendencies than I've ever had, and that's why it rubs me the wrong way. He seems to be saying "Don't leave the workforce when you decide you are psychologically and financially ready to go, stick around until you are forced out!" Frankly, I don't find that an attractive prospect, and, ISTM, it's also contrary to his repeated statements that you shouldn't base your identity on your work. If you aren't identifying with your work and ability to earn, why cling so hard?
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Old 12-24-2011, 12:41 PM   #51
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He seems to be saying "Don't leave the workforce when you decide you are psychologically and financially ready to go, stick around until you are forced out!" Frankly, I don't find that an attractive prospect, and, ISTM, it's also contrary to his repeated statements that you shouldn't base your identity on your work. If you aren't identifying with your work and ability to earn, why cling so hard?
I think this attitude comes from his philosophy that you should be spending now. I haven't read the book in a while but I remember him talking about gifting money now while you can see your children enjoy it instead of waiting to pass along your nest egg when your dead.

I think this really comes down to the old debate, how much (money/spending/traveling) should you enjoy now and how much should you defer.

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Old 12-24-2011, 01:54 PM   #52
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Threshold Earner

Die broke looks like:

Are you a "Threshold Earner"? - davdin's blog

A threshold earner is someone who seeks to earn a certain amount of money and no more. If wages go up, that person will respond by seeking less work or by working less hard or less often. That person simply wants to “get by” in terms of absolute earning power in order to experience other gains in the form of leisure—whether spending time with friends and family, walking in the woods and so on. Luck aside, that person’s income will never rise much above the threshold.
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Old 12-24-2011, 02:29 PM   #53
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I think this really comes down to the old debate, how much (money/spending/traveling) should you enjoy now and how much should you defer.
It's also a reminder, IMO, that different people find different "values" with their money. Some people derive the most benefit by spending it. Some people most enjoy giving it away. Others still get their "pleasure" from money in the secure feeling they get by stashing it all away.

Of course, there's nothing wrong with a healthy mix of all three if one can easily afford to make those choices.
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Old 12-24-2011, 02:43 PM   #54
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Die broke looks like:

Are you a "Threshold Earner"? - davdin's blog

A threshold earner is someone who seeks to earn a certain amount of money and no more. If wages go up, that person will respond by seeking less work or by working less hard or less often. That person simply wants to “get by” in terms of absolute earning power in order to experience other gains in the form of leisure—whether spending time with friends and family, walking in the woods and so on. Luck aside, that person’s income will never rise much above the threshold.
Being a "threshold earner" sounds like just my cup of tea, but the opposite of the two work-related maxims in Die Broke. A person who takes "Quit Now" and "Don't Retire" completely literally would always be looking for a better (i.e. more remunerative) job, only cutting back when forced to by ill health and/or unwillingness to hire on the part of prospective employers.

Of the other two ideas, "Pay Cash" is already partly implemented. I do use a debit card, but have been credit card averse since long before I read the book and plan to be completely debt-free after retirement by selling my current house and using the proceeds to pay in full for a place to live. "Die Broke" by an increased emphasis on annuities rather than self managing my portfolio is an idea that could grow on me, especially since there's nobody I particularly want to leave a big estate to. I don't think I would want to annuitize all my assets, though. I might need or want to buy into a continuing-care or assisted living place at an advanced age, and need a large sum of money for buy-in.
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Old 12-24-2011, 03:50 PM   #55
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i guess dying broke is ok as long as I don't leave my kids a pile of debt from having to care for me. i would like to leave them something, even if it is no extra cost for maintaining dear old dad in his last few years. A little extra cash to remember me is fine also.
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