The Boston Diaries

The ongoing saga of a programmer who doesn't live in Boston, nor does he even like Boston, but yet named his weblog/journal “The Boston Diaries.”

Go figure.

Monday, January 14, 2008

Money money money … money

Today's theme is shaping up to be money, as I sit here paying various bills and what not.

First contestant on the Price is Right item up for consideration is this lovely reminder from a bank I don't use much anymore:

Our records indicate that your account remains overdrawn in the amount of $31.84.

Please make arrangements to deposit the neccessary funds to correct this situation. If your account is closed due to an overdrawn balance, we may send a report to ChexSystems, Inc., an account verification service, stating that the account was closed because of unsatisfactory handling. This may result in you being unable to establish an account in any financial institution for up to five years, even after you repay the debt. If you have any questions concerning this matter, please contact Customer Service at the number listed above. Thank you.

P.S. Don't forget the vaseline [That was uncalled for! –Editor] [Really? This is a bank we're talking about. –Sean] [On second thought, you're right. –Editor]

Now, how did I end up $31.84 in the hole? Well, that particular bank charges me for the priviledge of storing my money (in an interest bearing account no less!) and allowing me to write checks against that account. And apparently, the last fee whacked enough out of the account to cause an overdraft fee, so if I don't take care of this, then because of their actions, I'll be penalized for five years.

Why they couldn't just stop paying interest is beyond me. The account couldn't have been costing them very much. I mean, I wasn't even using the bloody thing.

Vampires—the whole lot of 'em.

And that ChexSystems, Inc.? It appears to be nothing more than a commercially supported black list for the banking industry.

It's stuff like this that just might cause me to turn into a raging Socialist. Power to the People! Ban the Man! Hey, where's my beret?

Money money money … money, Part II

The second item for today. Don't worry, it's pretty short.

In the power bill is this friendly letter from Lake Worthless Utilities:

Dear Lake Worth Utility Customer,

To help address a growing challenge of delinquent accounts being encountered by the Lake Worth Utility system, the City recently adjusted customer security deposit levels …

Dear Lake Worthless Utilities,

Your growing challenge of deliquent accounts is due to you charging twice as much as the State mandated monopoly you XXXXXXX idiots!

Hmm … it appears I ran out of vaseline.

Money money money … money, Part III

Third item today, which ties into the Money is Debt video I linked to the other day. He may call it How To Make Money From 0% APR Balance Transfers, but I would call it “How To Abuse 0% APR Balance Transfers”.

In reading it over, it appears to work like this:

  1. Sign up for a credit card that allows 0% APR for balance transfers for at least a year or so.
  2. With some creative accounting, you transfer the credit card limit into, say, a checking account that pays interest (and no fees, hopefully). So, if the credit card limit is $10,000 you now have a bank account with $10,000 at no interest for up to a year.
  3. Pay the monthly minimum, but keeping the rest of the money in the bank.
  4. Just before the interest rates spike upwards, pay off the remaining balance. You should have some left in the account, due to the accrued interest. That would be “profit.”

So, if you manage to find a $10,000 limit credit card with 0% APR balance transfer, and manage to transfer the $10,000 to your bank and collect the interest while paying the minimum, you can earn about $450 over the span of a year. That doesn't sound like much, but what if you had 75 such cards? That's over $34,000 a year profit (it's a bit more than the $33,750 you would expect because you earn more interest from a larger sum of money), for not much else than keeping track of credit card bills.

And if keeping track of 75 credit card sounds like too much hassle, there are people juggling more than that out there.

I don't know if I should be amazed or appalled by such shenanigans. There's no real work going on there—no real value being added to the economy. You're just shuffling paper (or electrons) hither and yon and end up with more “money.” Talk about your house of cards.

Money money money … money, Part IV

Fit the Fourth.

One of the most persistent is that of the broken window one breaks and this is celebrated as a boon to the economy: the window manufacturer gets an order; the hardware store sells a window; a carpenter is hired to install it; money circulates; jobs are created; the GDP goes up. In truth, of course, the economy is no better off at all.

Via Jason Kottke, Ten Recurring Economic Fallacies, 1774–2004

And a chronically sick person contributes more to the GDP than a healthy person, but only an economist would tell us to get sick.

And with that (which you should read), today's theme is at an end.

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[The future's so bright, I gotta wear shades]

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