The problems with airline loyalty

Golden Chains

So by now, I’ve talked about the problems inherent in certain retail loyalty programs. Programs like Starbucks Rewards and Amazon Prime seem like a good deal, but can often force you in making decisions based on the idea that you’ve “already paid for it”, rather than any good financial decisions.

But, as you know, one of my hobbies is traveling. I’m very fortunate to have had the ability to do this, both because of intentionality on my part and a lot of fortuitous situations, such as having worked jobs that see fit to fly me places.

And due to my relatively frequent traveler ways, I’ve developed a certain affinity for certain perks.

This is dangerous. I’ve helped to get people upgraded to first class before, and always warn them that all of their other flying experiences are going to suck a little worse from now on. It’s hard to taste comfort (if not real luxury) and then go back.

When you fly enough with a particular airline, you get what is know as “Elite Status” with them. This can net you perks, such as expedited check-in and boarding, as well as financial benefits too, such as checked bags.

On Alaska Airlines, where I have “MVP Gold” status, I can cancel or change any ticket without penalty at any time, even “nonrefundable” tickets, even on the day of travel. The ability to make “speculative” bookings is worth a lot to me, as I suspect it would be to you.

But the loyalty comes at a cost. The desire to qualify (and requalify) for these benefits can alter the decision making process, and can cause one to spend more money. Which is of course, exactly what the airlines want.

I’m not immune to this. As I found out when I went to book a flight to Chicago.

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More confessions of a nerdy kid, or I dare you to get excited

Hands in the air

Last time, I talked about the pleasure of the anticipation of purchasing…a modem for my computer. This was back in middle school, a time of general emotional trauma for all.

I was a bit young for my grade, and so perhaps wasn’t as attuned to the standard level of self-consciousness required to be an eighth grader. It’s not that I wasn’t desiring to be more accepted and popular than I was (as I had quite a long way to go in that category), but in other ways, I was serenely unconcerned with appearances and how I came across to my peers.

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Confessions of a nerdy kid, or the pleasures of saving up for things

Computer chips

I was a super nerdy kid. If you doubt this, this story will confirm it.

When I was in middle school, I became very interested in Bulletin Board Systems (or BBSs). These were computer networks that allowed you to communicate with others in real time. You called the (local) BBS using a computer modem, and communicated via a text-based terminal window. Once connected to the network, which could have anywhere from two to a few dozen phone lines connected, you could play online (text-based) games like trivia, download and upload files, or just chat together.

These were real communities. One BBS in particular, ONIX, which you can still access to this day for free, had yearly picnics, where we would all get together in a park to and see people beyond their online nicknames. It seems adorably quaint in the age of YouTube comments, but it’s how it was, at least until the internet came around.

ONIX BBS

ONIX, my first online community

In order to get online, one had to have a modem. And with my family’s aging home computer, a Tandy 1000 EX, a modem was difficult and expensive to come by.

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How to decide whether to keep a credit card with an annual fee

Lounge lights

I mentioned that there is only one reason to keep a credit card that carries an annual fee: The benefits you get from holding the card that you would have paid for anyway must be greater than the annual fee.

Let’s take this (strong) statement piece by piece.

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Conferring with the enemy (Part 5): Finishing the deal

Fire breathing

All posts in this series:

 

Last year, I told the story about how I had held my breath (or perhaps my nose) and went in and applied for a credit card in order to net enough frequent flyer miles to fly from Boston to Dublin on Aer Lingus, using British Airways miles.

I did this in concert with taking my mom to Europe. After all, using miles to fly yourself for cheap is great, but using miles to fly someone else for cheap might just be the best way to use frequent flyer miles.

That trip has long completed. However, when thinking about the trip and my write-up of it, it occurs to me that I never talked about one of the most important aspects of the whole transaction, one that you would definitely not want to forget about.

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What pennies taught me about the problem of private interest in government

Metallic

I long for the days where it seemed like we fully funded the federal government to do its job or serving its people and keeping private interests in check. I think so much good could come from another set of New Deal projects, where we were able to fund infrastructure and other public benefits.

Alas, we now have largely narrative that status that the government is wasteful and needs to be starved of funds. (By the way, this makes no sense.)

And nowhere is this more apparent, seemingly, with the lowly U.S. one-cent coin, or the penny.

Penny

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Technology isn’t the answer to our finance problems

Hula hoops

I believe we live in a techno-uptopian societ. By this, I mean that “technology” is seen as the answer to whatever ails us.

How else to describe the over-inflation that is Silicon Valley (and its cousins Silicon Alley, Silicon Forest, and other similarly branded technology centers)? Where is all of the venture capitalist money ($7.9 billion in the third quarter of 2015 alone) going?

We used to build space shuttles. Now we build apps.

Because technology and apps are seen as a solution to everything, it stands that the solution to our money problems can be fixed with an app too.

But this is incorrect, and it’s not hard to see why.

Really, when you hear people expound on how “technology makes our lives easier”, we need to look critically at who is saying that and what they mean. So ask yourself, when you hear this kind of argument, is it from someone who has something to sell you? The phrase “never ask an insurance salesman if you need insurance” comes to mind here.

And more to the point, what do we define as “easier”? The Merriam-Webster cabal defines “easy” as “not hard to do; not difficult; free from pain, trouble, or worry“.

Free from pain, trouble, and worry sounds pretty good to me, I’ll admit. But there are some disadvantages in just reducing the difficulty in things.

So here are some ways in which technology making things easy for us doesn’t actually make things better.

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How to transfer an IRA to Vanguard

Photo courtesy of ka2rina

Many years ago, when I was first learning about investing, I decided to start my own IRA. At my coworker’s suggestion, I set up the account at Scottrade. Over the course of two years, I put a little bit of money in it, and then sort of left it alone.

In hindsight, I guess I thought that getting an early start on self-directed retirement was more important than paying off my debt. (I don’t believe this anymore.)

One thing I’ve always liked about this account is that it is a Roth IRA, so all my contributions will be non-taxable upon withdrawal. What I put in, I will get out.

Believe it or not, I’ve left this money in this account for over a decade. I’ve never exactly forgotten about it, but I haven’t done anything with it either. I guess I thought the process would be cumbersome and annoying. I pictured needing to fill out a bunch of forms, and maybe even having to stop by my local Scottrade office. I figured it would be as easy as signing up for CenturyLink internet service (which don’t get me started).

But, in the spirit of taking ownership of my retirement accounts, I recently initiated a transfer of this account to Vanguard.

Thankfully, the process was simple easy, and almost entirely automatic. Read on to see how I did it, and how you can too.

Scottrade to Vanguard

Very proud of the ship-as-arrow thing I did here. Pride in graphics achievement, folks.

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It’s 4 AM: Do you know where your retirement accounts are?

Porto Alegre at night

I just remembered that I have a gift card with money on it that I haven’t yet spent. The gift card is for Williams-Sonoma, a nice place for sure, but looks like I’ll be able to afford only a pot holder or half a pair of tongs.

Tongs

If you have to ask, you can’t afford it.

I’m not alone in not spending my gift cards. According to Barron’s, $1 billion in gift cards went unredeemed in 2015. And that’s down from $8 billion in 2007!

I think with that kind of money, we could go to Williams-Sonoma and afford a whole pan.

But it’s not just gift cards that people are forgetting about. People are also forgetting about entire retirement accounts!

It’s not difficult to do. People will change jobs an average of around 5 years, so if you’ve been working for over a decade, you’ve likely accumulated a few retirement accounts.

And when you switch jobs, retirement accounts from your old job are probably the last thing on your mind.

But I’d like you to rethink that. Because even though a forgotten account is still yours (and is still recoverable, unlike, say, a lost gift card) it still behooves you to keep track of your retirement accounts and keep them active.

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Day trading, or forgetting what money is really for

Stock price on computer

I was in college during the “dot-com” boom. My lab partner, a cocky dude to be sure, said he spent a lot of his days day trading. And he seemed to be doing well enough, though he never elaborated. While I don’t know if he had any particular qualifications or experience in the field, I can wager a guess.

And when the market imploded the following year, I can wager an ever larger guess as to what happened.

Perhaps because of this, to this day when I think of day trading, I think of the hubris of the late 1990’s  and early 2000’s, when all you needed was a website to be valued at over a billion dollars. (A business plan? That could come later.) I didn’t think people did day trading anymore.

But I’m starting to hear it crop up again in conversation. Apparently it’s hard to keep a bad idea down.

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