Skip to content

Apex Money Posts

Why are credit card interest rates so high?

Hello hello, Apexians. I’m writing to you from the windy waves of Shasta Lake in northern California. Kim and I have been here for a couple of days, basking in the sun and the water with her brother and nephews. We’ll be here for another 24 hours before heading home.

But while we’re at the dock refueling, I have just enough time to write up this Monday installment of Apex Money. Here are a few of my favorite recent money stories. I think you’ll like them too.

Why are credit card interest rates so high? [A Wealth of Common Sense] — “There have been some slight dips over time but credit card borrowing rates remain firmly entrenched at double-digit levels. And while interest rates have been falling around the globe in recent years, credit card borrowing rates have risen. There are a number of reasons people point to for the stickiness of credit card rates…”

Peers’ income and financial distress: Evidence from lottery winners and neighboring bankruptcies. [Federal Reserve] — “We examine whether relative income differences among peers can generate financial distress. Using lottery winnings as plausibly exogenous variations in the relative income of peers, we find that the dollar magnitude of a lottery win of one neighbor increases subsequent borrowing and bankruptcies among other neighbors.”

The joys of compounding. [The Rational Walk] — “Gautam Baid’s new book, The Joys of Compounding, is destined to become a must-read investment classic. Baid does an excellent job of taking several steps back from financial analysis and relating how his life story shaped who he is as an investor, how seeking a broad-based education and the ‘worldly wisdom’ that comes from it formed his intellectual foundation, and only then describing how this has translated into financial independence through intelligent investing.”

Your relationship with self-worth and money is complicated. [Financial Best Life] — “Your relationship with money should be about your financial goals and feeling good about your choices. If you have what you need, love your job, and have found happiness, then what other people think should not matter. The reality is that it can be hard to maintain that mindset and other people can affect our emotions.”

Normally I’d include some sort of fun video, but not today. Sorry. Our cell service out here on the lake is so poor that I don’t want to risk not getting you your links by taking too much time to find fun stuff on YouTube. (And the same might be true for Tuesday’s links!)

I’ll be back tomorrow with more great stuff! See you then.

How money forever changed us

Money is such an interesting phenomenon. If you want to look at the strictest definition, it’s an agreed upon store of value and a medium of exchange. You work, you get paid, and that money has purchasing power everywhere you’d want to spend it. So simple, yet so complicated.

What do you spend it on? After you satisfy your basic needs, you start looking at entertainment, signaling, and all the other fun things money can buy.

But at its core, money is the same. It’s what you do with it that makes all the difference.

But have you considered how the existence of money has changed us? One person has:

How Money Forever Changed Us [More to That] – “It’s interesting how money is accepted as an inevitable force in our lives, yet when we take out the concept and wrap it in unfamiliar packaging, it seems weird and dumb.” This first post is long but full of fun illustrations and the last quarter of the post is where it starts getting really fascinating (when you see “Materialism isn’t about the accumulation of goods. It’s about the fulfillment of possibilities.” then you will have reached the good stuff), please enjoy it!

Speaking of things money can buy, ever wonder how baseball cards are authenticated?

How the world’s most expensive trading cards get authenticated [Popular Science] – “When a card arrives at our office, we first make sure it’s real, then assess its condition on a scale of 1 to 10. Because copies have sold for millions at auction, the Wagner used to be a popular target for forgeries. These are easy to spot: Up close, modern printing patterns look much different than the old methods. It also helps to have in-depth knowledge on what the collectible should look like. For example, a 1948 Leaf Bob Feller, one of the greatest pitchers of all time, always has a sort of out-of-focus look. If you’re not an experienced grader, you might examine it and say, “Oh, it’s blurry. It’s not real.””

I quit my job at the start of the pandemic to launch a company. Here’s what I’ve learned in the first 90 days. [The Profile] – “Today marks exactly 90 days since I started working on The Profile full time. Here are the 10 biggest things I’ve learned in the last three months.” She saved the best insight for last, make sure you read #10.

Did you know you can buy caves?

The Cave Kingpin Buying Up America’s Underground [Outside] – “John Ackerman has spent millions procuring a majority of the known caves in Minnesota, which add up to dozens of miles of underground passageways and likely make him the largest cave owner in the U.S. He collects and charts them in the name of preservation, but his controversial methods have created many opponents.”

I have a favor to ask – can you think of someone who would enjoy this? Please forward it to one person and it would make my day!

What could post-lockdown life look like?

We’ve been home for over three months now and with a few exceptions, things have been going OK. Everyone in our household has remained healthy, no one has gotten sick (knock on wood), and we’ve been managing fairly well.

Every once and a while, I blow off some steam on Twitter:

Other countries are at different points in their lockdown and it’s interesting to see how life has changed for them, as it gives us a hint at what things may be like for us after this is all over:

“There Is Hope!” Dispatches From Asia-Pacific On The New, Post-Lockdown Normality [Mr Porter] – “As elements of normality return here, it’s easy to feel a confusing sense of guilt. My friends in these (now, very distant) places can’t meet, their children can’t play, their businesses can’t trade. And while the crisis in Asia feels economic rather than existential, perhaps our day-to-day can this time be a harbinger of hope rather than doom. Four men from across the Asia-Pacific region shed some light on lessons learnt, practices found and promise seen as their communities move into a new, post-lockdown normality.”

Just when you think it was all roses, here’s an article that gives me a little pause:

The Looming Bank Collapse [The Atlantic] – “The reforms were well intentioned, but, as we’ll see, they haven’t kept the banks from falling back into old, bad habits. After the housing crisis, subprime CDOs naturally fell out of favor. Demand shifted to a similar—and similarly risky—instrument, one that even has a similar name: the CLO, or collateralized loan obligation. A CLO walks and talks like a CDO, but in place of loans made to home buyers are loans made to businesses—specifically, troubled businesses. CLOs bundle together so-called leveraged loans, the subprime mortgages of the corporate world. These are loans made to companies that have maxed out their borrowing and can no longer sell bonds directly to investors or qualify for a traditional bank loan. There are more than $1 trillion worth of leveraged loans currently outstanding. The majority are held in CLOs.”

Hmmm… read the whole thing. It gets in deep into the weeds but useful to understand.

Finally, more signs that maybe there’s going to be a second dip in the market:

The Rich Cut Their Spending. That Has Hurt All the Workers Who Count on It. [The New York Times] – “The steepest declines in spending during the coronavirus recession have come from the highest-income places.” The NYT article is behind a paywall so I shared a version on Pocket, but it does a bad job of parsing the charts so just scroll past that beginning part to reach the article. Here is the original if you have a subscription.

It’s almost Friday! Cheers to you if Friday means something different than any other day! 🙂

Don’t invest in things you don’t understand

I opened a Robinhood account a couple of years ago but never did much trading on the platform, so my familiarity with their service was limited to a little poking around. I’m not a fan of day-trading stock (I’m bad at it) so free trades weren’t much of an incentive for me.

What I didn’t know was how easy Robinhood made it to sudden drop into options trading. Options trading can get really risky because it’s leveraged – each options contract is the right (or obligation) to buy or sell 100 shares of the underlying stock. There are situations where your potential loss is theoretically, though unlikely, infinite.

That’s what happened to Alex Kearns, a 20-year old, who took his own life after, on paper, it seemed he lost $730,000. What makes it even more tragic is that he most likely didn’t actually lose that much. The trade he was doing had two somewhat offsetting parts and only one of them was reflected in his balance – but either way, it’s a really sad story.

The lesson here is that you need to understand your investments.

Robinhood increases guardrails on options trading in the wake of a customer suicide [CNBC] – “Robinhood is making multiple changes to its platform, including making it more difficult to access to its options offering, in the wake of a customer’s death last week.”

Treasury to release names of some businesses that received PPP loans [Axios] – “The Treasury Department and Small Business Administration plan to release the names of businesses that received $150,000 or more in Paycheck Protection Program loans, the agencies announced Friday.”

File this next one away because some day you may need it:

How to fight an outrageous medical bill, explained [Vox] – “Five patients tell us how they pushed back — and won.”

Happy hump day!

Same as it ever was

Same As It Ever Was [Collaborative Fund] – “Things that never change are the most important things to pay attention to. Change gets most of the attention, because it’s exciting and surprising. But things that stay the same – how people behave, how they think, how they’re persuaded – is the real meat of history.” Make sure to read all four.

Re-Stacking Your Benjamins: Saving, Investing and Managing Debt in Uncertain Times [Stacking Benjamins Podcast] – Joe Saul-Sehy and OG from the Stacking Benjamins show did a two-hour community townhall discussing how to manage your money during the pandemic. They had on a few great guests from Fidelity Investments, TIAA, Morningstar and T. Rowe Price. I haven’t watched the whole thing yet but I always find these entertaining and educational so I plan to listen to it in parts over the next week.

How Heelys Rolled into Millions of Dollars – And Then Crashed in an Instant [Mel Magazine] – “A down-and-out middle-aged man struck gold with those ubiquitous wheeled sneakers. Suddenly, the stock tanked, the company was stripped for parts and the founder vanished. What happened?”

This Enlightening Map Shows the Literal Meaning of Every Country’s Name [Culture Trip] – “Have you ever wondered what the name of a country means? What it REALLY means? This map has the answer. It shows the historical meaning of each country’s name, as far back as their earliest literal translations go.”

See you tomorrow Apexian!

40 isn’t old if you’re a tree

I remember when my dad turned forty. We got him a little troll with a shirt that said “40 isn’t old if you’re a tree.” As a kid, I didn’t get it but he seemed to enjoy it.

This year, I turn forty and, well, I get it now. 🙂

Pedal To The Metal: How To Build Wealth In Your 40s [Banker on Fire] – “Much as I hate to admit it, there will come a time when our glorious twenties and happy thirties will be well behind us.

If you are fortunate enough to have focused on personal finance matters early on, you may be entering the next decade with a sense of optimism and self-satisfaction.

For others, it may be an overwhelming desire to reach back through time and punch your younger self in the face.

Why-or-why didn’t we make the right decisions back then? Oh, just how helpful it would have been to have the benefit of two decades’ worth of saving and compounding…”

A short and sweet post that captures some of my personal thoughts on buying time:

The one thing you can’t buy is time [iRetiredYoung] – “That leads on to something else they say, which is that the one thing you can’t buy is time. There’s an argument this isn’t completely true, money can give access to better living conditions and healthcare, both of which contribute to enhanced life expectancy. But in general, we know what the saying means and have probably held it to be generally true.” Congratulations to 25 years!

This next and last post of the day is from 2017 and if you’ve ever heard of the term ‘hygge,’ this article (while not mentioning that one) discusses a few other terms similar to hygge:

The ‘Untranslatable’ Emotions You Never Knew You Had [BBC Future] – “From gigil to wabi-sabi and tarab, there are many foreign emotion words with no English equivalent. Learning to identify and cultivate these experiences could give you a richer and more successful life.”

Enjoy the day Apexian, try desbundar with abandon, and I hope to see you tomorrow!

How to save money on a tight budget.

It’s Friday, Apexians! It’s the weekend! But before you head out, let’s take a look at few great money stories we’ve liked recently.

Ten ways to save money on a tight budget. [Millennial Money Man] — “If you’re looking for ways to save money on a tight budget, the first thing you need to know is that there’s no magic pill that will immediately change your financial life. Learning how to save money is a series of conscious decisions no matter how much money you make. It’s a combination of reducing your expenses, eliminating your debt, increasing your income, and changing the way you think about money.”

Building a dream. [The Retirement Manifesto] — “We’ve just celebrated our second anniversary of retirement, and we’ve learned what motivates us in retirement. As our focus on Purpose becomes more clear, it’s become evident that building a dream to support these passions will provide benefits for years to come. To fully achieve our dream retirement, it’s time to take some action. It’s time for us to build a dream.”

What’s your magic number? [The Rational Walk] — “If you ask most Americans how much they need in order to achieve financial independence, the response will almost always be given in terms of the level of wealth that they aspire to accumulate. However, thinking about the problem in this manner has a number of deficiencies…When aiming to achieve a goal, it is important to focus on what the goal actually is, and that goal is not being able to look at a net worth figure but to fund expenses and to be relieved of having to trade precious time for income.”

For today’s video (from the Wonders of the World channel on YouTube), here’s the five-minute story of Dan Price, who built himself a dugout home in Joseph, Oregon for $75. He lives a life of extreme frugality.

I find this story fascinating (although the video’s use of stock video footage is very jarring). Joseph is a remote farming/ranching town in northeastern Oregon. I’ve spent some time there. (In fact, I just spent Memorial Day weekend in Joseph!) This gives me a feel for where Price lives — and how he lives.

If you’d like to learn more about Price, here’s his website and here’s his YouTube channel.

Okay, that’s it for this week. Jim will be back on Monday with more of the best from the world of personal finance. Enjoy your weekend!

How is the economy recovering?

Howdy howdy, money nerds. It’s Thursday, and we have some cool stories about money to share with you. Today’s email is pandemic-themed (although not heavily so). Let’s dive in.

During the pandemic, a small town in Washington has been printing its own currency. [The Hustle] — “Fournier’s central idea is pulled straight from Tenino’s own history. During the Great Depression, the city printed sets of wooden dollars using that exact same 1890 newspaper printer. Within a year, the wooden currency had helped bring the economy back from the dead.” [This isn’t as wild as it might seem. The U.S. didn’t have a standardized currency until just after the Civil War. Instead, there were lots of local currencies like this.]

Gardening is associated with greater happiness of urban residents. [Princeton University] — “As civic leaders and urban planners work to make cities more sustainable and livable by investing in outdoor spaces and recreational activities such as biking and walking, Princeton researchers have identified the benefit of an activity largely overlooked by policymakers — home gardening.”

“What I learned from trying all 81 MasterClasses.” [SF Gate] — “I found that the classes are worth the time, but the real question for most people is the price. Even though I’ve revisited more writing courses since the end of my quest, I don’t think there are enough to keep my attention for more than another month.”

How is the economy recovering? Watch the dentists. [The New York Times, so possible paywall] — “Dentist offices tend to be stable businesses that stick around for decades, unlike restaurants that open and close frequently…If you need your teeth cleaned or a cavity filled, the dentist is the only option. This makes them, in the eyes of some economists, the perfect barometer for gauging the country’s recovery from the shock of the pandemic.”

My girlfriend is a dental hygienist, so I’ve been able to watch second-hand how her dentist’s practice is struggling to cope with the coronavirus. It hasn’t been easy. And you know what makes it worse? Asshole clients who want to get all political because the office has basically become a hazmat zone. It’s not really a choice. And besides, this is one of the most at-risk professions out there. Even if you’re a virus denier, don’t be a dick when you go to the dentist this summer. It’s tough enough for the employees already.

Okay, that’s it for today. I’ll be back tomorrow to see you into the weekend. Take care!

The importance of having backup plans.

Welcome to Wednesday, Apexians. Glad to have you hear. As always, we’ve collected some great recent articles about personal finance that we hope you will find as interesting as we do. Let’s get right to them.

Let’s lead with our video today. I know we just shared something from The Financial Diet on Monday, but let’s go back to that YouTube channel again. It’s a consistent source of high-quality video content about personal finance. In this case, here’s Chelsea Fagan with a 27-minute video about the six secrets she learned working for rich people.

“I am extremely invested in the concept of financial transparency,” Fagan says. “There’s basically nothing about the finances of my business or my life that I wouldn’t feel comfortable sharing — or don’t already share on Twitter — because I realize that one of the most insidious things about wealth is how keeping it secret can make you less accountable to the community that you live in.”

Trading sportsbooks for brokerages, bored bettors wager on stocks. [The New York Times, so possible paywall] — “The last time Americans showed any serious appetite for stock-market speculation was the tech-stock frenzy of the late 1990s. Since then, investors have embraced safer options, like set-it-and-forget-it index funds based on the premise that trying to beat the market is a waste of time. That started to change in earnest last year.”

The importance of having backup plans. [Financial Panther] — “I’ve now been self-employed for a little over a year and things are going pretty well. But of course, I’m not so naive to think that nothing can go wrong. Like any risk-averse lawyer, when I made the leap to self-employment, I did so knowing that I had a lot of backup plans in case.”

Implementing and refining the “Spend Safely in Retirement Strategy”. [Oblivious Investor] — “A couple of years ago, we discussed a paper [that] looked at an assortment of retirement spending strategies and evaluated them based on several different criteria. The authors then put forth a strategy that they referred to as the ‘Spend Safely in Retirement Strategy,’ which generally does a good job of satisfying the various (often competing) criteria…But the basic, two-step plan described above (and in the original report) leaves an assortment of open questions. And when it comes time to actually implement the strategy in a real-world situation, you must come up with answers to those questions.”

That’s it for today, my friends. I’ll be back tomorrow with even more info about how to master your money — and your life. See you then.

The levels of financial autonomy.

Why, hello, money nerds! It is I, J.D., your humble host. And your late host.

Jim and I generally aim to have each installment of Apex Money posted by 8 a.m. Pacific (5 a.m. Eastern) every weekday. And honestly, we both like to work in advance, which means being a week ahead. But due to lack of sleep Sunday night, I completely spaced curating links yesterday. Oops.

But it’s still Tuesday, so this installment counts as “on time”, right? Well, unless you get these by email, of course, in which case you wont see this until Wednesday haha. Anyhow, here are your links for today!

How much is enough? The levels of financial autonomy. [CityFrugal] — “The problem of not having enough money, at least for me, is a problem of perspective. I fixate on what I don’t have enough money to do – namely, quit paid work altogether and join the ranks of the financially independent – and ignore the freedoms I already have.”

How to make extra money in a small town. [Financial Best Life] — “A small town might not offer all of the same opportunities (or as many), as a big city, but that doesn’t mean you can’t find a lucrative side hustle or start a successful small business. Let’s take a look at some of the challenges and opportunities associated with working in a small town and some creative ways you can start making money. ”

How to rent a vacation home during the pandemic. [Consumer Reports] — “The country may be reopening, but the risk of COVID-19 remains. Until a vaccine is developed, this is a reality Americans will ‘have to contend with every time they step outside,’ says Amesh Adalja, M.D…This new reality extends to vacation plans. Over the new few months, many Americans will weigh whether a trip makes sense. ” [Related: A rural vacation destination worries it may be swallowed by the pandemic.]

And to wrap things up, here’s a video I’ve had open in my browser for a couple of weeks. It’s short. And simple. And you may have seen it before (it has more than 4,000,000 views on YouTube). It’s a 1974 interview with science-fiction author Arthur C. Clarke in which he makes the bold claim that by the year 2001, computers will fit on a desk and be able to do all sorts of stuff.

What do you think? Was Clarke correct? 🙂

Okay, that’s it for Tuesday. I’ll be back tomorrow — and I’ll be on time — with more great stories about personal finance.