"I'm Bored. I'll Go Shopping"

I can’t even remember how many times I have said that! During the last year though, thanks to blogging about money and frugality and consumerism and what not, things are a lot more under control. Here are a few things I learnt along the way about dealing with the bored-shopping syndrome.

Recognize the pattern.
Do you go shopping because you have to buy something or just because you are bored and want to kill some time? The first step to control the expenditure is to recognize the behavior!

Budget for it.
Once you admit to yourself that you sometimes shop “just because” you can be prepared for the next attack by budgeting for it ahead of time. In your weekly/monthly budget, make sure you set aside some money for “indulgence”. Remember though, just because you have an “indulgence fund” doesn’t mean you have to go shopping. If you don’t have a spontaneous shopping attack, let the money roll over to the next month’s budget.

Don’t exceed your budget.
It is OK to go indulgence shopping as long as you don’t over do it. Now that you have an indulgence fund, make sure you always stay within the limits allowed by the fund. If you think you will be enticed by the items in the store then leave the credit cards at home and only carry as much cash with you as your indulgence fund allows.

Keep a list of items you need.
During the course of the week, when you need something (eg., run out of makeup, the room freshener ran out, pillow not really comfortable, etc.) add it to a written list. When the shopping attack strikes instead of going to the mall and looking for things you can buy, start out with some of the items on the list and take it from there.

Buy gifts in advance.
I can spend hours looking for the perfect gift. So when I head out for a bored shopping trip, I try to remember if any birthday or anniversary is on the horizon. I enjoy looking for unique gifts that are customized to a person’s taste and bored-shopping trips are great times to go pick up some of these items. Recently a friend of mine got married and both she and her husband are big party throwers. So I spent a couple of trips putting together a “cocktail basket” equipped with everything from the margarita shaker to a martini mister to a cocktail recipe book to cocktail glassware etc. I doubt I could find a pre-packaged gift like that anywhere and even if I did, I doubt I would be able to fit it into the budget I had.

Hit the clearance racks.
When I have to go shopping and recognize it as an attack of the bored-shopping syndrome, and I can’t think of anything particular to buy, I tag those trips as clearance shopping trips. Any store I go to, I go directly to the clearance aisles. Only if I find a dramatic deal will I actually buy something. I enjoy deal hunting and finding a great deal that is within my budget really makes the whole trip worth it.

Finally, pick up an all-consuming hobby.
Ever since I starting blogging, I have hardly had the time to feel bored and as such my got-to-shop attacks have dramatically reduced. Every now and then, I still “need” to shop, but the damage is a much limited :)

Do you go shopping “just because”? What are your tricks to limit the damage?

Student Debt, Entitlement Attitude and Other Thoughts

I came across an interesting report titled Living With Debt: A Life Stage Analysis of Changing Attitudes and Behaviors by Lending Tree and this particular paragraph caught my eye

Like young families who view consumer credit as a reward for their hard work, college students similarly justify their elevated lifestyle demands as a reward for unpaid “work” in school. Significantly, this generationally perceived social “right” or entitlement to material goods is no longer tied to one’s current level of income or to a realistic budget that includes a savings component. Moreover, it is reinforced by college administrators and loan providers who assert that higher education is the most important investment that students will make. According to this perspective, students can and should enjoy their college social life since they will obtain a great job and salary after graduation.

The reason this paragraph stood out for me was that it could easily have been written about me while I was in grad school! As I have mentioned before by the end of two years in grad school, between our education loans, credit card debt and auto loans, we had piled on a whopping $42,500 in debt! I did my undergrad back in the home country where everyone around me was equally broke and we did not have access to credit cards. So it was normal to be a “starving student”. However, in grad school, not only was credit easily available, there was this prevalent attitude among all my friends that we would soon graduate and get high-paying jobs. So there is no need to be “starving students” anymore. In addition, both the better half and I and most of my friends had worked for a couple of years before deciding to go to grad school. And sure enough, after about a semester of struggling with the reduced income of the student life, we bounced right back into our earlier lifestyles by supplementing the difference in the income on credit. We justified that we deserved it, since we had given up well paying jobs to pursue a grad degree that would land us in better paying jobs!

Adding this sense of entitlement to the unbelievable ignorance about how credit really worked spelt disaster and it took us more than two years of completely stripped down lifestyle to get rid of our debt. Here are a few things I wish I knew then.

Separate the good debt from bad debt.
Some of the debt that we incurred, for example the education loans that we had to take out, was necessary and was in fact an investment into our future. In that sense, it would qualify as “good debt”. Since we did not go to private universities, this loan was a reasonable amount and was in fact justified based on the return on investment. But the trip to New York city that I charged to my credit card so I could visit some of my old friends or the number of gifts I took with me when I visited my family – now, that was certainly an example of “bad” debt. If I wanted to travel or buy gifts, I should have saved up for it instead of charging it to the credit card and burdening my future self to pay it off. Before accepting more credit, think if it really an investment or a dead load!

Stop being a sheep!
Everybody around me was doing the same thing. Not just people in my friends circle, but pretty much every other person on campus that I knew seemed to charge everything to credit cards. So, it didn’t even occur to us to question the complete lack of rationality of our actions. By the time we took our heads out of the clouds, the damage was already done. Stop to think – just because everyone jumps off the cliff, will you?

Take your head out of the sand.
Both the better half and I were raised to believe that debt is bad. And so when we started piling on debt, we hid it from our family. That should have triggered us to think that maybe what we are doing is not right. We should have just got our head out of the sand and seen how terribly wrong we were in the way we were handling our finances. Are you trying to hide your finances from others (other than for privacy-related reasons)?

Know how much debt you are in.
Our debt was spread out across several different accounts. So we saw it as $500 on the Citicard, $1200 on the Discover etc., but never really summed it up and saw exactly how deep we had dug ourselves in the debt pit. Also, when we looked at our debt, we completely ignored the education loans since we did not have to start paying them until after we graduated from school. The total was quite whopping! Do you know how much you really owe?

Know how long it will take to pay off the debt.
What finally triggered us to realizing the mess we were in, was when the better half started working and we started to make our first real effort to clear up the debt. Month after month, it seemed like our checks were dumped into a bottomless pit. We kept only that much of the paycheck we needed for meeting the basic necessities of life and directed the rest towards debt, but the total debt amount hardly seemed to change. I wish before we piled on the debt, we had realized how much time and effort it would require to eventually get rid of it! Use this bankrate.com calculator to see the effect of just paying the minimum amount on your credit card debt and you will surely be shaken into some action! For instance, if we paid only the minimum payment on the $42,500, it would take us 40+ years to clear up the loans, during which we would have forked over an additional $20,000 in interest payment!

If you are a student and carry any debt I hope you will learn from some of the mistakes we made and avoid making those mistakes yourself. Believe me, that iPhone that you charge on your credit card may feel cool now – but not when you have to work from 9am to 8pm every day for several months just to pay it off! I am not saying you should deprive yourself of all the good things in life. Go right ahead and indulge yourself as much as you like, as long as you can truly afford it!

Message from sponsor: You can Compare Loans here.

Putting My Money Where My Mouth Is

If you are a regular visitor to this blog, then you have probably heard me complain that schools don’t do nearly enough to teach kids the value of money. Well, last week an opportunity to do something about it presented itself in the form of an email from HC, the author of the blog One Big Mortar Board. HC proposed that we PF Bloggers participate in the Blogger Challenge by the charitable organization Donors Choose that hooks up donors with public school teachers. HC picked four projects that are focused on spreading financial literacy among young kids. Now it is our turn to make it a success.

The goal is to raise $1500. If we are successful at this, we can aim for a stretch goal of $2400. That covers the four projects that were originally suggested by HC. There are four more projects in the pipeline, if we manage to exceed the stretch goal as well. I sure hope we will !

I made my contribution yesterday. I hope some of you readers will consider participating in the challenge as well. Even $1, $5 or $10 can go a long way in making this campaign a success. If the projects from this challenge can change the financial perspective of even a few students, then the money donated is money well spent!

Here are the other bloggers (that I know of) who have made a pledge so far -

• HC @ One Big Mortar Board.


• Flexo @ Consumerism Commentary.


• Mapgirl @ Mapgirl's Fiscal Challenge.


• Single Ma @ Single Ma's Fabulous Financials.


• English Major @ An English Major's Money.

Together, we can make a difference!

10 Steps Using Which Even a Lazy Person Can Be a Millionaire

A million dollars is a lot of money. And generally the perception is that you have to work very hard to have a million dollars to your name. You need to pick up new degrees, new skill sets and work 100 hours per week. I agree. All that certainly helps. But if you are a content soul that finds life is most enjoyable when you can just go to work in the morning, come back in the evening and hang out with the family or veg out in front of the TV/Internet, then here is some good news for you. Follow the steps below, and you can still be a millionaire without overarching yourself or burning yourself out. All it takes is some patience and some change in everyday habits.

Part 1 has a summary of steps that you can skim through if you are in a hurry. Part 2 has a detailed example that shows it can really be done with as little as $200 per month and practically no effort. By the way, if you are looking for a get-rich-quick scheme, you should probably stop reading now. This here, is an outline of the good old time tested slow-and-steady approach.

Part 1: A quick summary of steps

1. Start early

Put the power of compounding on your side. The earlier you start the more time your money has for compounding. When you can have interest earning interest, you would be surprised by the way in which little amounts of money can turn into large fortunes.


2. Don’t ever turn down free money

Be it your employer offered 401K match, employee stock purchase options that offer immediate 10-15% returns, bonus for using one realtor versus the other when you buy a home, cash back on credit cards etc. I could go on and on, but you get the picture.


3. Make savings automatic

We are human and if things were left to us to do everything on our own, we would still all be stuck in the Stone Age. Just as we trust everything else in life to automation, put your savings on auto mode too. Make sure that every month, before your paycheck is delivered to you, a part of it is deposited into a savings account.


4. Invest wisely

If your money sits in your bank, then over the course of time due to inflation, it actually shrinks instead of growing! So choose your investment vehicle wisely, preferable something like the stock market or real estate which can offer you a growth percentage that is much more than the inflation rate. And a quick reminder – don’t get too greedy and gamble away your money on high risk investments.


5. Plan for everyday expenses

Be sure that you have planned for your everyday expenses in such a way that small variations will not force you to abandon your above savings plan. People use all sorts of budgeting with different degrees of granularity. Pick the one that works for you.


6. Be prepared for unexpected expenses and emergencies

The steps above can help you start building a nest egg. But, life has a way of throwing curve balls at you just when you start to get comfortable. And at such occasions, if you have to dip into your nest egg, you wipe out the benefits of compounding and your nest egg will never get a chance to grow exponentially. So make sure you have a separate fund to deal with all sorts of small and large unexpected expenses and emergencies.


7. Live below your means

Make sure you manage to live within your means. This doesn’t mean that you start depriving yourself and not indulge in any of life’s fine things. It just means that you prioritize your indulgences and give into only those whims that offer you the most pleasure and are things you can afford. Before you spend your money think if it is something that will bring you or your family joy or if your are just doing it to show off to your friends and relatives.


8. Avoid consumer debt at all costs

If you have a great offense but your defense sucks, you will still not be able to win many matches. Same thing applies to your financial plan. Unless you beef up your defense against consumer debt such as credit cards debt, auto loans etc., you will find it hard to reach your financial goals.


9. Stop the money leaks

Look at your personal life – do you have any weak spots that are causing money leaks? These could be harmful addictions such smoking, alcohol, drugs etc. or harmless ones such as addiction to buying the latest CDs, books, shoes whatever. If it is something you do compulsively and is draining your bank balance, you should look into plugging them or at least getting them under control so the little leaks don’t turn in to gushing money drains.


10. Build up equity, set up streams of passive income etc.

Finally, in addition to the money you are saving make some provisions for yourself as you retire. Buy only as much home as you can afford and pay towards equity instead of rent, so someday in the future you can have a roof over your head without paying either rent or mortgage. Set up a stream of passive income to help you retire early or enjoy additional indulgences while you get there. While setting up additional income streams will in general need you to do some additional work, there are a few lazy options like investing in dividend yielding stocks or funding an energetic friend’s upcoming startup :)


11. Bonus step: Eat and live healthy

This is really not obvious, but if you don’t take care of your health today, then as you grow older, a lot of that money you are saving will go toward paying your medical bills. Try to eat a balanced diet and incorporate some exercise in your daily routine. If you can go to the gym, great. If not then choose walking instead of driving, stairs instead of the elevators etc. Small changes can pay off huge dividends in the long run – both in your and your bank balance’s ability to live long and healthy lives.

That’s all it takes to make a million dollars. Those of you who are skeptical and don’t believe that you can do it (for any number of reasons), let’s work through an example and see if I can convince you.

Part 2: An Example

Step 1 says start early. Let’s say you start at 25. If you can start earlier – that’s great. If you are starting a little later, make suitable adjustments to the numbers in the following steps (which as you can see have a lot of leeway) and you should still be able to make it.

Step 2 says not to turn down free money. I am sure over your lifetime you will find a zillion different ways to get some free money. But for this calculation here, let’s focus on the 401K match from the employer. For ease of calculation, let’s say you save $100 every month in your 401K and get a match of $100 from your employer. These numbers are obtained assuming a salary of 40,000 a year and an employer match of 3% - if you earn more salary or can get a better match, you should increase your contribution.

Step 3 says make savings automatic. Say you set up an automatic deduction from your paycheck and put away $100 every month towards savings. Remember this is just an example. Depending on how soon or late you start and how your personal financial situation is, you should be able to tune that number to suit your needs.

Step 4 says invest wisely. I don’t want to give out investment advice but if you want a lazy way out, pick a reliable, diversified mutual fund or ETF such as a target retirement fund. These funds are usually a diversified mix of funds with the aggressiveness balanced based on your risk tolerance which in turn is calculated based on how close to retirement you are. Let’s assume that there is no severe recession or gotchas in our lifetime and we can get the average 8% returns over the long run, which is about what the stock market has been able to give over the past 20 years or so.

Using this calculator, you are already at a little over million dollars when you retire at 65! By just saving $200 per month and availing $100 from your employers 401K match you can become a millionaire!

Steps 5 and steps 6 will make sure that you can meet the financial requirements of your every day life without having to dip into the nest egg above that is on its way to a million dollars. Note that the main reason that just $300 per month allows you to become a millionaire is that you allow for the interest to earn interest in a continuous cycle. Having a budget and an emergency account is crucial to let your nest egg snowball into a fortune.

Think of steps 7 through 9 the protective casing they use for selling eggs in the grocery store. Your nest egg is fragile and there are a zillion things out there that can crack it. Living frugally, avoiding debt and plugging money leaks can offer some protection and cushion to make sure there isn’t an unnecessary pressure that will crack your nest egg.

Finally step 10 and the bonus step is that make sure that when you do retire as a millionaire, you can continue to enjoy the life of a millionaire :)

Remember that the example above assumes you can only save $200 per month beyond your everyday obligations and building the emergency account. If can manage to save more, imagine how much money you can have and how much sooner!

Will Consumers Warm Up To The Credit Freeze Laws?

Last week the Consumerist had an article mentioning that Transunion will let you freeze your credit report so you may protect your credit from imposters. Recent laws in this direction go a step beyond and require all the credit bureaus to let you freeze your credit report. In Texas the law went into effect on September 1st. Since then I have had it on my “TO DO” list to look up more information and consider the possibility of freezing our credit reports. During the past couple of days, triggered by the Consumerist article, I finally got around to investigating it further. And the more I read about it, the less inclined I am to take any action :(

Quoting from the Consumer Union website here is how it works –

A security freeze lets consumers stop thieves from getting credit in their names. A security freeze locks, or freezes, access to the consumer credit report and credit score. Without this information, a business will not issue new credit to a thief. When the consumer wants to get new credit, he or she uses a PIN to unlock access to the credit file.

That sounds great to me! Currently this law is in effect in all but 11 states. (States that do not have this law are Alabama, Alaska, Arizona, Georgia, Idaho, Iowa, Michigan, Missouri, Ohio, South Carolina, and Virginia).

On more detailed review however, it seems like this may be yet another law that offers lip service to the consumer but in reality makes him jump through so many hoops that probably no many will actually use it :( The exact details of the law vary from state to state. However, looking through the overview, it seems like in most states, unless you are a victim of identity theft already, you need to pay anywhere between $5 to $20 to each credit reporting company for each operation such as placing the freeze, lifting the freeze temporarily or removing it all together. In addition, the response to your requests is not immediate and there is a possibility that you will have to wait while your credit report thaws (so to speak) when you try to lift the freeze. Whats worse, it is not really frozen from everyone. It is possibly a small price to pay to protect yourself from having to go through the harrowing experience of identity theft, but over a term of several years, those fees could really add up and moreover, I am not at all thrilled about the delay in being able to access my credit or selective access to my credit!

From the Instructions for using Texas’s security freeze law fact sheet,

Can a creditor get my credit score if my file is frozen?

No. A creditor who requests your file from one of the three credit bureaus will only get a message or a code indicating that the file is frozen.

And

Can an employer do a background check on my credit file?

No. You would have to lift the freeze to allow a background check, just as you would to apply for credit. The process for lifting the freeze is described above.

I would assume for the zillion other places where we use credit checks (e.g., apartment leasing, insurance, getting a store card etc) also, these would be true.

But…

Can anyone see my credit file if it is frozen?

When you have a security freeze on your credit file, certain entities still have access to it. Your report can still be released to your existing creditors or to collection agencies acting on their own behalf. They can use it to review or collect on your account. Other creditors may also use your information to make offers of credit. Government agencies may have access for collecting child support payments or taxes or for investigating Medicaid fraud. Government agencies may also have access in response to a court or administrative order, a subpoena, or a search warrant.

What?? I have marked the part that bugged me the most in bold italics. So my credit is hidden from creditors and employers, but the credit mongers still get to access my credit information and can keep bombarding me with offers??? That just doesn’t sound right.

In addition,

Do I have to freeze my file with all three credit bureaus?

Yes. Different credit issuers may use different credit bureaus. If you want to stop your credit file from being viewed, you must freeze it with Equifax, Experian, and Trans Union.

To protect my credit, does my spouse’s credit file have to be frozen too?

If Texas is a community property state, then yes.

Based on Texas fees, that means I have to spend $60 to put both the better half’s and my credit on freeze. And every time we want to unfreeze it, its another $10 per person, per credit bureau. I can almost hear the leak in my wallet go drip, drip, drip.

But here’s the part that made me decide that this is probably not worth it. From the website,

The freeze goes into effect five (5) business days from receipt of the consumer’s letter (by certified mail) by the credit reporting agency.

How long does it take for a security freeze to be lifted?

Credit bureaus must life a freeze no later than three (3) business days from receiving your request.

To me that feels like snails pace! In a world running at the speed of light, who wants to wait for three business days to lift the credit freeze?

There is one more thing that needs to be considered. Freezing your credit prevents someone from obtaining credit in your name, but it does not prevent someone who has already got hold of your information from cleaning out your bank account and piling up a mountain of debt on your existing open credit accounts. Consumers should be aware that while freezing the credit can offer some benefits, it is not a be-all end-all solution.

So frankly, I am not sure if this law will really be helpful to me – a consumer. I would love to put a freeze on my credit and protect me and my family from being victims of identity theft. But I don’t know if the 3 days needed to lift the freeze will mean I will lose out on some good offers. Maybe its my recent experience that is making me so skeptical. I found out just before the end of last month, that my credit union was offering a very low promotional low APR till the end of the month for auto refinancing. I immediately made a phone call and switched my loan. It saves me quite a bit of money in the long run. Something like that would not be possible if I place a freeze on my credit. In this particular example, I would have to first contact my credit union to find which credit reporting service they will use, and then contact that agency to lift the freeze. After the credit reporting agency receives the notification it would take them 3 days to lift the freeze. That is too much time, and by then I would probably no longer be able to avail the low rates. In addition to the hassle, the pesky fees really bug me. Frankly, I have no idea where and how my credit gets used and not really sure if I want to agree to shelling out $10 here and $12 there every now and then, because I went and put a freeze on my credit!

So, what do you think? Will you freeze your credit (if your state offers the option) or will you wait and watch to see how things go?

You can find out about the exact details of the law for your state here.

Free Round Trip Airline Ticket + $100 Gift Card to Apply for a Credit Card

As of last month, I have $55,000 in credit card arbitrage. I started to get worried that I am getting addicted to this game and getting too greedy. So I resolved not to apply for any more cards until the offers on the current cards expire and I need to move the money. But then I came across the offer mentioned below and could not resist the temptation. I fought hard for a week and finally gave in. Now I put the ball in your court :)

Details of the deal -

The card: AMEX Gold Business Card. (Don’t shy away from the term “business” just yet).

The offer: 25,000 Membership Rewards bonus points (redeemable for one round-trip airline ticket or $250 Home depot gift card or $125 Amex gift card etc.) + $100 tigerdirect.com gift card. Annual fee waived for first year.

The icing on the cake: Easy online application process with instant approval.

The URL: Apply here (not an affiliate link)

Acknowledgments: The credit for this deal goes to Leeskey711 at Fatwallet who posted this offer in this thread. There is tons of information in that thread to answer most of your questions.

The FAQ: Questions below summarize some of concerns related to this particular offer.

I do not own a business. Can I apply for a business card?

If you have a blog, sold something online or offered any paid services (eg. lawn mowing) that can be verified, then legally you qualify to be a sole proprietorship. When you apply for the business card, use your full name as the business name and the SSN as the tax id.

What about the annual fee?

With this offer, the annual fee for the first year is waived. From the second year, the fee will be $125. I think Amex will offer you another 10,000 points for continuing to use the card beyond the first year of fee-free service. So it is up to you whether you want to continue to use the card beyond the first year or to cancel it.

How will this affect my credit score?

From my understanding of this thread, (and someone please correct me if I am wrong), the business credit is kept separate from personal credit. Your personal credit history will still be pulled (hard pull) before you are approved for the offer. However, the criteria used for personal credit such as utilization do not come into play while being approved for business credit. I have read in the above FWF threads that for the particular AMEX offer mentioned above, approval is fairly easy. I am not sure how the credit score will get affected if you cancel the card before the one year of fee-free service is up though. Frankly, in our case, we don’t plan to apply for any major loans in the near future and so if we don’t use our good credit scores to take advantage of offers like these, I don’t know what good a high credit score is for. If you have a different situation (eg. plan to buy a house or a car in the next year or so), I would highly recommend that you do more research into this and see if it is still worth it for you.

Do you believe everything that you read in the Fatwallet Finance forums?

Honestly? Yes :) But that’s just me. If you don’t, then you should look around of more information until you come around too :) Initially, I didn’t believe much of what I read, and spent hours browsing on the web to verify anything that I read on FWF. Now I am not so suspicious. And ever since I switched to the “finance” forums from the “hot deals” forums, I have managed to make quite a bit of money (mainly from CC arbitrage), instead of blowing it on junk just because it was on sale. There are a few guys out there whose opinions I really respect. And the community as such is obsessed with these games, and makes sure that they point out when someone makes a mistake. Overall, I think it’s a more reliable source for information (especially for credit related stuff) than random browsing on Google.

OK. I am done gushing now :)

Coming back to the offer, both the better half and I have applied for a card each and received the instant approval. We have also received an acknowledgment mail from tigerdirect.com to verify our email address. Now I am off to dream about what to do with 50,000 reward points and $200 gift cards :)

PS: If you are curious to find out more about the “business card” related issues, I highly recommend reading this thread the credit for which goes to MikeR397 at Fatwallet.

A Brain Teaser and a Book Giveaway

As promised yesterday, here is the announcement for the giveaway of another fascinating new book. But before we get there, here is a quick brain teaser (excerpted from the book, reprinted with permission). Answer these questions based on what you already know (i.e, this is not a general knowledge quiz, so don't bother to go googling).

1. Driving due south from Detroit, what is the first country you will come to when you leave the U.S.?
      a. Cuba
      b. Canada
      c. Mexico
      d. Guatemala

Now think for a moment about how certain you are that your answer is right. Are you 100% sure? 95% sure? 90%? Or less?

2. Which country derives more than 75% of its energy from nuclear power?
      a. United States
      b. France
      c. Japan
      d. None of the above

Again, take a moment to think about how certain you are that your answer is right. Are you 100% sure? 95% sure? 90%? Or less?

3. Approximately how many microbes live in the typical person’s gastrointestinal tract?
      a. 100 trillion
      b. 100 billion
      c. 100 million
      d. 100,00

Once more, think about how certain you are that your answer is right. Are you 100% sure? 95% sure? 90%? Or less?

Did you answer Mexico for the first one? And how sure were you? 90%? 100%? Well, like most people who responded similarly in the original survey, you would be wrong. The correct answer would be Canada (the city of Windsor, Ontario). Don’t believe me? Check it out for yourself!

If you are like most people who participated in the original study, your answer for the second question was probably “None of the above” with around 70% accuracy. Again, you would be wrong, since France relies heavily on nuclear power to meet its energy needs.

Finally, for the third question among the people surveyed people most of them answered 100 million with 50% confidence in their answer. The correct answer is 100 trillion (best reference I could get).

The point of this exercise was not to ask you some trick questions and prove you are wrong, but to point out that it is human nature to feel confident about what we *think* we know. The very fact that I called it a "brain teaser" must have tipped you off that these are trick questions - yet, what was the percentage of confidence you had in your answers? This human psychology of thinking "I Know" plays a huge role in our financial decision. Unlike this trivial exercise, in real life the ignorance of our ignorance can result in severe financial misjudgment – be it investing decisions, retirement planning, estate planning etc. The book "Your Money and Your Brain: How the new science of Neuroeconomics can help make you rich", the subject of this month’s giveaway, does a great job of illustrating the concepts of psychology and brain activity in relationship to the way we handle money. It is an easy-read book (contrary to the image conjured up by the title!) chock full of such exercises, examples, surveys and study results which help realize some of our behavioral quirks and the silly mistakes we make which can cost us a lot of money in the long run. So, go ahead, leave a comment below and enter into the contest to win on of the three copies of the book being given away. And just for kicks (for our own informal survey) in the comment please jot down your answers to the above questions. And please be honest.

I'll go first. Here were my answers when I first read the questions -

1. c. Mexico (100% confidence - "what kind of a question is that – everyone knows that the answer is Mexico!")
2. d. None of the above (~80% confidence- "well if some country generated so much nuclear power, I would have surely heard about it?" )
3. b. 100 billion (25% - basically a 4-sided coin toss)

So stereotypical, I know!!! Yuck.

This should be fun :) The comment form will stay open from now through the end of October and I have three copies of the book to give away. Feel free to mention the giveaway to your friends as well and have them enter too so if you don’t win but they do, you can at least borrow the book from them :) And any help in spreading the word about the giveaway is much appreciated - it won’t affect the odds of winning, but hey, you never know when that good karma will come in for rescue :)

And like the earlier giveaway, a couple of quick reminders. I use blogger which does not require you to enter an email address when you leave a comment. So please either leave a link to your blog or your email address in the comment so I will have a way to inform you if you are a winner. Note that some of the blogger profiles are not public – so if you are linking to your blogger profile, make sure it is shared and I can view it and there is some contact information there. Note: You do not need to have a blog to participate. If you don’t have a blog and are not comfortable leaving your email address in the comments, please email me at ispfmail at gmail dot com and please copy the entire comment into the mail (but please make this the last option). In the previous giveaway I had several participants who signed off as "anonymous" and one of them actually won and it was lucky he left an email address in the comment – otherwise it would be a nightmare trying to contact him! Also, the books will be shipped only to US addresses. If you win and are outside the US, you will have to arrange for someone here in the US to collect the book on your behalf and ship it to you (sorry).

Good Luck, y'all.