freakonomics | Online Savings Blog

Suze Orman Q&A: Your Financial Questions Answered
09.22.08 | Savings Links | 1 Comment | by junger

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Suze Orman, author of Women & Money: Owning the Power to Control Your Destiny and a number of other books, sits down with the Freakonomics blog to answer a number of reader-submitted financial questions.

There are a ton — literally, a ton — of questions about dealing with lots of student debt. Perhaps the Freakonomics readers are mostly academic, graduate-school types.

This one is my favorite question:

Q: In 25 words or less, what’s the best financial advice either 1) you have received or 2) you give out now to others? Bonus points if you answer in haiku format.

A:

Can you afford it?

Unpaid credit card balance?

One word, friend: denied!

Suze Orman Answers Your Money Questions - Freakonomics
Milton Friedman vs. Your Wife: Who Gives Better Financial Advice?
07.01.08 | Money | 0 Comments | by junger

Freakonomics author Steven Levitt posts today about the best personal finance advice he ever received:

When I was a first-year assistant professor at the University of Chicago, my friend and department chair, Jose Scheinkman, relayed the advice Milton Friedman had given him 20 years earlier, “Don’t save too much.”

The logic was simple: An academic’s salary rises steadily over time, as do outside opportunities — like writing popular economics books! The right reason to save is so you can even out your consumption. When times are good, you should save, and when times are bad, borrow.

Most likely, I would never be as poor again as I was starting out. That meant I should have been borrowing, not saving. I didn’t follow the advice as fully as I should have, partly because my wife insisted we save — she is not quite as good an economist as Milton Friedman.

Of course, most of us would agree that saving is important all of the time, but especially when you are starting out.

The best comment to support that, posted by donw, channels another pretty smart guy:

Your wife (and Albert Einstein) - COMPOUND INTEREST!

The earlier you start, the more you'll have.

Plus, your wife always wins every argument anyway.
Is Chrysler's $2.99 Gas Worth It?
05.13.08 | Consumerism | 3 Comments | by junger

Have you seen Chrysler's ads for 3 years of $2.99 gas when you purchase a new car?

Autoblog has the details:

With gas prices rapidly approaching and exceeding $4 a gallon across the nation, Chrysler is offering up a deal that just might make people who are averse to the looks of cars like the Chrysler Sebring and Jeep Compass think twice. Between now and June 2, anyone who buys any new Chrysler, Dodge or Jeep vehicle will be able to register for a "Let's Refuel America" card. Once the customer registers a credit card with the program, they will receive a new card that they can then use at participating gas stations to fuel up their new car or truck. When the card is used, the credit card that the owner has on file will be billed $2.99 a gallon for either regular gas, E85 or diesel fuel. Chrysler will pay the difference. The best part is the price is locked in for THREE years.

Obviously, this isn't as good as it sounds. Nothing in life is free — everything has a catch. Especially something has "too-good-to-be-true" as this.

Freakonomics weighed in, saying it's a brilliant move by Chrysler because consumers overreact to the price of gas.

I believe consumers systematically exaggerate the importance of gas prices to their budgets. The typical American just doesn’t spend that much money on gas.

The way we buy gas — every week or two, with the prices staring us in the face as we stand at the pump — makes price fluctuations far more visible than for other goods. Someone who signs up for this program will think about Chrysler and how they are paying part of the cost of the gas every time they fill up. I suspect that will increase the brand loyalty of people on the program.

I don't know about you, but I wouldn't be persuaded by this offer. Maybe I'm in a different boat than you, because I work at home and only have one car (that gets great gas mileage).

Would you buy a Chrysler to get $2.99 gas for the next 3 years?

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