How Credit Cards Cost Us More Money

 (Photo credit: Wikipedia)

Some of us grew up in the days before credit cards were terribly prevalent. Forty years ago, you might have had a department store credit card, or perhaps a credit card for a gas station. Visa and MasterCard were around, but they didn’t have the kind of widespread acceptance they do today.

While the days of cash may be dwindling, some new research is shedding light on just how this shift has affected consumers. The method we choose to use for payment has a significant impact on what we choose to buy. Some new research from Professors Promothesh Chatterjee and Randall Rose of University of Kansas and University of South Carolina respectively suggests that this impact is significant, and even affects how we remember a purchase after the fact.

Cash means a focus on cost

In the study, customers who were primed to use cash for a given purchase came out as much more concerned about cost than they were concerned about benefits. For example, here are some of the observations in the study

• Cash customers responded more quickly to cost-related words.
• Cash customers had greater recall of cost-related aspects after the fact.
• Cash customers exhibited recall problems with benefit-related words.
• Cash customers often choose less expensive products, even those with inferior benefits.
• Cash customers were more likely to identify a wide range of cost factors beyond just price, such as installation or delivery costs, warranty costs, and even delivery time.
• Cash customers experienced more of the pain of payment. Every time a transaction takes place, money goes away while the consumer watches.

As you might expect, the opposite is often true when it comes to those customers who use credit cards.

Credit cards mean a focus on benefits

Those customers who were primed to use credit cards weren’t nearly as focused on costs as cash customers. Here are some observations from the study about credit card customers:

• Credit card customers responded more quickly to benefit-related words.
• Credit card customers had greater recall of cost-related aspects after the fact.
• Credit card customers exhibited recall problems with cost-related words.
• Credit card customers often chose indulgent or high-image products.
• Credit card customers made more cost errors than cash customers.
• Credit card customers experienced less pain of payment, because the process of consumption is decoupled from the payment process.

What this means, at least in part, is that customers using credit cards came out of the study as being much less concerned with cost than they were with what the given product could do for them.

Choosing the right payment method at the register

What does this mean for older Americans? Really, it reinforces something we probably already know: using credit cards can cost us more money. This is true not only because of the interest or fees we often face with credit cards, but because of the way paying with a credit card affects our choices as consumers.

If you want to make smart financial choices, let payment method be a factor in how you shop.

David Rodwell is an experienced writer who covers everything from business to personal finance. Check out his site CreditCardProcessing.net for similar articles.

When Mutual Fund Management Changes Is It Time To Sell?

Asset Allocation on Wikibook (Photo credit: Wikipedia)

Mutual funds come in many different types and styles. With over 5,000 different mutual funds out there, knowing the right one to choose is difficult. When you finally make the choice of a mutual fund you have the concern of when will be a time to sell it. What percentage of decline are able to endure. On the upside, when do you sell it to take profits. It's can be confusing.

Recently, Howard B. Schow, 84, a well-regarded manager of Vanguard mutual funds such as the $30.1-billion Vanguard Primecap, died of natural causes April 8 at Huntington Hospital in Pasadena. Schow's years at Vanguard started when he landed the contract with Vanguard to run its new Primecap fund. Schow was at Vanguard and work along side Jack Bogle for many years.

Schow's management style cited the importance of patience to go along with savvy stock picking. "We don't go for 20% or 30% gains," Schow said. "We go for triples, quadruples, octuples. But that takes years." "A lot of doing well is drudgery," he added. These quotes come from a rare 1994 interview with Forbes magazine, the publicity-averse Schow cited the importance of patience to go along with savvy stock picking.

Now that Schow's influence on the company is gone, how will this affect the performance of the mutual fund if any. Should the investor jump ship or hang in there and see what happens?

According to Forbes.com, there are eight reasons to dump a mutual fund. Forbes advice is that there does come a time when selling is a good idea because even though buy and hold is recommended, it's not forever.

Portfolio Rebalancing.
In your mutual fund portfolio you have an asset allocation that conforms to your risk tolerance and long term investing plans. Some mutual funds do better than others and gain a disproportional percentage of the portfolio. Selling off the gainers and rebalancing the entire portfolio, through purchases and sales, puts your investments back into the asset allocation that your plan calls for.

Mutual Fund Changes.
Here is where Howard B. Schow's passing on can be a reason to sell the investment. Will his investment style continue on now that he is gone? He has been a manager for so long and his day to day influence even to the end could possibly influence the fund for years to come. But eventually his successors will flex their muscles and run things the way the want to, it's inevitable.

Investor Growth.
A novice investor usually starts out investing in mutual funds. They feel other forms of investing like stocks, bonds, real estate, and collectibles is to complicated while mutual funds are relatively simple. As the investor increases in experience, there is an urge to try out other types of investing.

Life Cycle Changes.
While in the accumulation phase, the investors prefers stocks as a big part of the portfolio. But as the investor's needs change they may want less volatility so they move away from equities. The investing goals may change causing a shift out of the market to more fixed and safer investments. Moving to safer products or college savings plans does restructure the portfolio.

Mistakes.
Sometimes you just pick the wrong mutual fund. You may find that the fund is too volatile for their tastes. You could also have too many investments for one type of asset allocation and you want to adjust to simplify your portfolio.

Something Better Comes Along.
This doesn't refer to chasing the high flyer's or fad mutual funds. If you can find an investment that is doing something in a way that is better than what you have now, maybe you should consider moving to it. Finding mutual funds that are doing what you need to have done in the style you need it done in a way that will increase your return and save you money .

Tax Reduction.
Mutual funds held in taxable accounts, might be down substantially from their purchase price. They can be sold to realize capital losses that are used to offset taxable capital gains and thus lower taxes.

Keep in mind the sales charges, short term trading fees and taxes when you want to sell. If any of these factors don't apply then all the better reason to sell.

Google Offering Free Websites For Business Owners

Google wants to help small businesses setup a website and get online. They are doing this by partnering with Intuit's online website building expertise. They will give you your own web address, help you build a great website, and host it completely free for one year.

Google believes that small business is vital to America's economic future. They see that 27.5 million small businesses create two-thirds of all jobs and contribute half of the total U.S. GDP. Nowadays you are invisible to customers if you do not have a website. Google wants to introduce small business to the benefits of the Internet and are willing to give a website away for one year to prove it.

Their "Get Your Business Online" promotion starts at their GYBO.com website. There is a map, you just click on your state and you will link to your states "GYOB" website. Some states do not have their free website offer ready yet. So leave your email and you will be notified when it is.

What is needed to get started?

To get started you need a Google email account. It's easy to get one if you do not have one. Don't worry, they also need your credit card to only establish your identity. They will not charge you for anything. If you already have a domain name then you can use it on your new website. If you don't, you will need to pick one and it will cost you nothing.

How do I edit and build my new site?

You go over to the Intuit login page with you username and password.

(www.intuitwebsites.com) They take you by the hand and walk you through the entire process.

I don't know a thing about building a website?

No problem. The new website comes with 30 days free email support. Plus the website buiding process is dead simple. If you need help after the 30 days you can upgrade to the Business Lite package ($7.99 a month) to receive individual phone support. Once your first month is complete, you'll still have ongoing access to the Intuit Community and Online Help Center.

To get started click on this link GetYourBusinesOnline.com

6 Cheap Places To Retire Abroad

When making plans for retirement many people choose the regular places like Florida, Arizona, or North Carolina. These are great places but you are limiting yourself. Maybe it's time to consider finding a retirement destination abroad.

If you are considering such a dream, you will have to do a whole lot of research. If you are a bit of an adventurer you may find overseas living intriguing. As you do your research you will find many web sites, media outlets, authors, and bloggers who can help you find what's best at a reasonable price.

I have put together a list of a few countries that came up repeatedly, as great places to live.

In the European community there are several places you already know about and a few you would be surprised at as choices.

France.
Here you will find the food and culture center of the world. France was rated as superior in the 2010 International Quality of Life Index. Their health care is also rated as very good. On the downside they do have high taxes, a difficult bureaucracy, and high prices. So it's better to find yourself a place outside the larger cities.

Turkey.
Though on the edge of the European landscape, they consider themselves more Western than Middle Eastern country. Soon to become part of the European Union they are one of the top growing economies in the region. You can find retirement destinations in the mountains or at the seashore. Places like Altinkum Property are well suited for retirement or vacation living.

Italy.
Who could argue about Italy being a great place to retire to. You have the great food, culture, and the Mediterranean weather is very attractive to visitors. The best bargains are in the southern areas and again staying in the country side is going to save you a lot of money. Like most metro areas you will be paying a premium for city life.

In the Central and South American countries you have your pick of warm and tropical destinations.

Mexico.
Being the closest destination to the U.S. and already popular with retirees for its money saving standard of living, Mexico is a great choice. In Mexico, you will find modern and up to date health care near big cities. Many retirement and vacation communities have been providing a relaxing life under a warm sun and tropical weather for many years.

Costa Rica.
A small country in Central America that is already the home to many people that have chosen the laid back life style. It has a good economy and a stable government that encourages the foreign dollar to its shores. Retirement income and real estate profits are untaxed, combine that with lush beaches and country side living, you have a perfect destination.

Panama.
Another small country that wants to attract the foreign investor and retiree. The currency is tied to the U.S. dollar, there are retiree discounts, and favorable tax treatment on income and new homes. Mostly a rural spot with no major metropolitan areas, so traveling for major health care may be necessary. The weather is also warn and tropical.

This is only a short list of all the possible destinations to retire at. You need to consider other obstacles to living abroad like language, government stability, and living standards. These and many other things need to be considered for such a big move. 

Living overseas is going to give you the adventure of your life. It takes a certain mindset to leave you home country and live abroad. Maybe after a while you may become homesick. There is much to consider in living overseas. 

Do your research and take a vacation to your destination and see if it is all you thought it would be. Good Luck.