PUMPING YOUR MONEY AWAY

My thanks to the American Automobile Association (AAA), though the gratitude can only be described as belated.  They just released a research study which found that American motorists are—and have been for decades—wasting over two billion dollars annually by buying premium gasoline for vehicles that don’t require it. 

Exactly who’s to blame for this thoughtlessness is hard to figure out.  A part goes to service station managers who, as I recall from the past, suggested that filling up with their higher priced gas was “better for my car.”  Add to the list of culprits whoever issues auto drivers’ handbooks.  My 2004 6-cylinder Jaguar instructions read: “The preferred fuel should have an octane rating of at least 95, though some countries have only 91 octane.”  Even my modest 2012 4-cylinder Nissan Altima booklet states: “Use unleaded gasoline with a Research octane number at least 91.”  And then, of course, whoever named the higher octane fuel “premium,”—probably a PR exec in the petroleum industry—kicked it off by making it sound as though it’s in some way superior.

Quite simply, premium gas is normally 91 octane, whereas midgrade is 89 and regular is 87.  The only difference relates to the combustion speed, with the higher the octane rating, the slower it burns.  As all are now unleaded, pollution is no longer a factor.  Base your decision on which to use solely by performance.  In the 1950s and 1960s, when auto engines carried higher compression ratios, slower burning helped prevent engine "knock."  Because of the lower compression ratios of today's cars, most function satisfactorily on the 87-octane fuel.  The test is simple to conduct.  With the lower octane gas in your tank, accelerate up a slight grade in drive gear.  If you experience no unrelenting "pinging" of the engine, then save yourself the cost of the more expensive fuel.  And just so you’ll know, my two vehicles function well on the cheaper 87 octane fuel.  I’ll bet for most of you it will be the same.

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If you enjoy this weekly Straight Talk by Al Jacobs, you’re invited to check out my monthly Financial Newsletter, as well as my new book, The Road to Prosperity

Click onto http://www.onthemoneytrail.net/

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CHARITABLE GIVING MISUNDERSTOOD

 

CHARITABLE GIVING MISUNDERSTOOD

There seems to be no shortage of articles depicting the uncharitable nature of our two major presidential nominees.  Here’s one critical of Hillary Clinton.

Mother Jones reports: Clinton’s tax filings show that she and Bill Clinton donated just over $1 million to charity last year, 96 percent of which went to their own foundation and four percent to fund a golf tournament.  This is pretty darned incestuous: taking a deduction for contributing to the employer of your daughter and expense payer of your husband.

Nor does Donald Trump escape unscathed.

Donald Trump, widely believed to be the wealthiest American ever to run for president, is nowhere among the ranks of the country's most generous citizens, according to an Associated Press review of his financial records.  Trump has said he donated $102 million worth of cash and land to philanthropic and conservation organizations over the past five years, but he has provided little documentation for these contributions, and tax filings show Trump has made no charitable contributions to his own name since 2008.  Trump has not released his tax records. Such documents would likely provide a clearer picture of his giving.

The real problem is that most persons reporting—or in most cases misreporting—on the charitable natures of the wealthy are sadly out of their element.  Should you want to know what sort of charities Bill Gates or Warren Buffett support, you’ll not find them on their personal tax returns.  Persons whose net worth is measured in eight or more figures generally conduct their giving through private foundations, as do both Mr. Trump and Mrs. Clinton.  It’s the tax returns of these foundations, which are filed annually and available for public scrutiny, that illustrate the charitable natures of their founders. 

There are many reasons you may find disfavor with both nominees, but the numbers which may or may not appear on the Schedule A of their Federal Tax Forms 1040 is not one such reason.

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If you enjoy this weekly Straight Talk by Al Jacobs, you’re invited to check out my monthly Financial Newsletter, as well as my new book, The Road to Prosperity

Click onto http://www.onthemoneytrail.net/

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PRESTIGE AT A PRICE

The title of the article, with the picture alongside, certainly attracts attention: “The hottest new plastic on market is metal.”  What is displayed is JPMorgan Chase’s most recently offered credit card, described as “The high-end, high-reward Chase Sapphire Reserve Card.”  Apparently the promotion is working, for the demand has been so overwhelming that the manufacturer ran out of its metallic alloy materials after just a few days.  As you might guess, its virtues are being extolled over the internet and the Millennial Generation seems to be clamoring for it.

This particular credit card is touted as a “high-end, high-fee, high-reward card with a satisfying heft and impressive thunk when you toss it onto the table to pick up the check.”  Apparently this description has enabled it to become the hottest card on the market just two weeks after being introduced, despite its equally hefty $450 annual fee.  Like so many of the crazes which feed on word of mouth and social media sites, this promotes the illusion you can enhance your public prominence and financial stature by the display of an overpriced commercial appendage.

What seems to be ignored by a large segment of the public is the actual justification for possessing a credit card.  My belief is that a credit card has a single purpose—a convenience when neither check nor cash is handy.  Ideally there should be no cost to the user.  This means no fee, annual or otherwise, should be assessed.  In addition, when the monthly statement arrives, the full cash balance due is paid before the date any interest is charged.  If there’s some sort of provision whereby a rebate is credited against charges incurred, that may be an enticing frosting on the cake, but it should in no way be a factor in deciding whether to obtain or retain the card.  Just so you’ll know, such rebate provisions are usually inserted for a single purpose: to encourage the user to run up charges they wouldn’t otherwise do.

A final thought: This offering by Chase is merely one more inflated status credit card.  American Express issues the Centurion Card, known as the “black card,” which is aggressively pushed to susceptible millionaires and celebrities.  It’s all part of the prestige game, where such items as Rolex watches and Tesla autos are hyped as being reserved for the superior citizen.  You need none of these.  In reality, a Timex keeps equally good time and a Nissan Altima provides similarly fine transportation. 

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If you enjoy this weekly Straight Talk by Al Jacobs, you’re invited to check out my monthly Financial Newsletter, as well as my new book, The Road to Prosperity

Click onto http://www.onthemoneytrail.net/

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MARKETING AMERICAN STYLE

 

An ad popped up in this morning’s local newspaper.  No need to identify the vendor or the newspaper; these sorts of advertisements are all pretty much generic.  The pitch is from a firm selling rugs.  The introductory sales line in large and striking color announces: “Up to 75% Off.”

Since the 1920s marketing has been taught as a profession in universities throughout the nation.  Apparently the sales industry discovered how the emotion-triggering buttons could be pushed to induce otherwise rational persons to purchase things they don’t need at grossly inflated prices.  From the many ads I’ve viewed over the years, it’s clear that an alleged reduction in price is one such button.  This I discovered from a Li’l Abner comic strip in the 1940s when Mammy Yokum declared: Anythin’ fo’ half price is a bargain, irregardless o’ how much you pay fo’ it.”

And while our brains are still in gear, give a thought as to how a rug—or any product—can be offered for sale at 75% off.  The odds are it’s either a last-remaining relic of an old inventory being used as a “leader,” or an item so grossly overpriced that the reduction brings it down to a reasonable market value.

That leads us to the logical question: Is the ad deceptive?  Of course—and by necessity.  When peddling merchandise, the marketers must use every device at their disposal to push these wares.  You may criticize the sales techniques used as well as the gullibility of those who are taken in by it, but you must acknowledge one important reality.  By necessity, all marketing schemes must be cynically devised.

For those of you who appreciate good humor, you’ll enjoy a Dilbert cartoon which appeared September 13, 2007.  The pointy-haired boss is lecturing his employees; he instructs them as follows: “We can’t compete on price.  We also can’t compete on quality, features or service.  That leaves fraud, which I’d like you to call marketing.”

 

 

Al Jacobs, a professional investor for nearly a half-

century, issues a monthly newsletter in which he

shares his financial knowledge and experience.

You may view it on http://www.onthemoneytrail.net/