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My Money Blog:

Thanks for all the diverse and interesting insights on teaching kids about money, I learned quite a few things myself. As I was trying to think back and remember what I personally learned - or wish I learned - about money in 6th grade, a couple of amusing stories came to mind. They may not be all that helpful to young folks (quite possibly the opposite), but I’ll share them anyway since I am curious to see if others had similar experiences.

Flips and Underage Gambling
The allure of gambling knows no age limit. For those that haven’t heard of it - I have no idea how widespread it was - “Flips” is a simple game where first one person flips a coin, and then the second participant flips another coin of the same type. If the coins match, either both heads or both tails, then the 2nd person wins both coins. If the 2nd coin does not match, the 1st person wins both coins. Quarters seemed to be the coin of choice. For a while I was regularly losing or winning a few dollars each day playing Flips, which was a lot of money to me at the time.

The main idea was for the 2nd person to be able to control Heads or Tails, with each us having a secret flipping “method” much like craps players have when throwing dice. As the game got more and more popular, people would start to create their own cheats. One kid…

My Money Blog:

If you have a Citibank credit card and are collecting ThankYou points, you are probably familiar with the various gift cards available at approximately a 1 point to 1 cent ratio, or 10,000 points = $100 gift card. You may even be familiar with the Fixed Point redemption option for travel. This not-so-publicized option allows you to redeem 20,000 ThankYou points for any domestic coach flight up to $400 in value (per Expedia.com). That’s nearly twice the value, with no blackout dates, no seat availability issues, no 14-day advance booking requirement. You do have to pay the taxes and fees, however, which can be up to $50 if there are multiple stops. (For details see the FAQ, click on Travel Rewards.)

It’s actually quite nice, and I have booked a ticket before this way before. The problem is, they have been gradually restricting which credit cards are eligible to redeem this options. The list went from virtually all Citi cards to the sad, lonely list below:

As of April 15, 2008, ThankYou Members with Smith Barney Accounts, Citibank Accounts, Expedia® Accounts and the following Card Accounts are eligible for Fixed Flight options: Citi PremierPass® Cards – Elite Level and Citi® ChairmanSM Cards. All ThankYou Members can book variably priced Travel Rewards online.

This only left me with either gift cards or the variable point flight option, which is not horrible but much worse in comparison. Essentially one point = 1 cent, so 20,000 ThankYou points would only cover a…

My Money Blog:

Many people, including myself, are worried about inflation. Is it just because of the current housing and stock market conditions, or are our bills really a lot higher than before? The inflation numbers that we usually hear about are based on the Consumer Price Index (CPI). Variations of the CPI are published monthly by the government’s Bureau of Labor Statistics, and they supposedly track the prices consumer pay for a basket of goods and services. For example, a greatly simplified basket may include a month’s rent, 10 pounds of steak, a tank of gas, and a laptop. As the price of this basket goes up, that’s inflation.

Why Does CPI Matter?

Payouts on inflation-protected investments like TIPS and Series I bonds are indexed directly to the CPI.
Social security payments, pensions, and inflation-indexed annuities all rely on CPI data to determine their annual adjustments.
The size of individual income tax brackets, personal exemptions, and the standard deduction are tied to movements in the CPI.
Low inflation numbers (especially when they are much less than GDP growth) make the economy seem healthy.

However, there is some controversy over whether the CPI is an accurate measure of inflation. As you can see above, there are many reasons why the government and large pension groups would like to see a lower inflation number. Lower inflation numbers mean lower payouts, a smaller budget deficit, and a happy stock market.

In 1995, the Boskin Commission study suggested that the CPI overestimated inflation by around 1.1%…

My Money Blog:

I’ve been noticing that multiple banks like Washington Mutual, Bank of America, and other banks have been offering me “free” Accidental Death & Dismemberment (AD&D) Insurance. Usually I get around $1,000 to $3,000 of complimentary coverage, just for being a valued customer. Awww, how thoughtful! At first glance, it sounds pretty good. That could cover a few funeral expenses in case I decide to go sky-diving again.

Of course, they are always “proud” to be able to offer you more coverage at a rock bottom price. Additional covered for you is only $1 per month for each $10,000 of coverage. But wait, that makes my $1,000 of free coverage worth…. 10 cents a month Hmm, they must value me a lot to spare $1.20 a year for me…

As you might guess, the price isn’t that great. And again it only covers accidental death, so it’s not as comprehensive as traditional term life insurance. But it does cover dismemberment, and somehow my morbid sense of humor was amused by the dismemberment payouts. I can just imagine some actuary researching on how many people lose a thumb and index finger on the same hand. Just a thumb? They’ll be fine.

100% Benefit
Death
Both Feet or Both Hands
Entire Sight of Both Eyes
One Hand and One Foot
One Hand and Sight of One Eye
One Foot and Sight of One Eye
Speech and Hearing

50% Benefit
One Hand or One Foot
Entire Sight of One Eye
Speech or Hearing

25% Benefit
Thumb and Index Finger on Same Hand

So, should I…