Spare change: Credit card edition

Get Rich Slowly - Personal Finance That Makes Sense.

Spare change: Credit card edition

This post is from staff writer April Dykman.

They got me during my freshman year of college.

I was walking back to my dorm, just an unsuspecting university student, and a guy with a clipboard approached. One quick application and a t-shirt later, and I had a Visa credit card and a $1,000 credit line.

I never meant to be irresponsible with it, but a few purchases here and a few purchases there, and before I knew it, I was close to hitting my limit. Only I had no idea. When the first bill arrived, it was almost two times higher than I’d expected.

Thankfully, I had a part-time job and could pay it off. Only I never really did. I’d pay it off, then run it up again, unaware at the time of how much the interest charges were really costing me. They seemed small and relatively harmless. And didn’t everyone use credit cards?

As longtime readers know, it wasn’t until a few years later that I finally broke the cycle and got serious about paying off my cards and never carrying a balance again.

Because of my experience, I was particularly interested in a report that said that fewer young Americans are using credit cards. And that brings me to the first link in this credit cards edition of Spare Change…

More young Americans living credit card-free

The number of consumers ages 18 to 29 who don’t have a credit card has doubled since 2007, according to findings from credit score company FICO. In addition, credit card debt in this age group has dropped from an average of $3,073 to an average of $2,087 per person.

So what’s the reason for this trend? The article cites three reasons:

1. After watching older generations get hit hard by the recession, young Americans are choosing debit over credit.

2. Aggressive marketing of prepaid debit cards to young people.

3. The CARD Act makes it harder for consumers under age 21 to obtain credit cards, since it requires a co-signer or proof of adequate income.

And while debt is going down, credit scores are going up among this age group. Last year 11.2 percent had an excellent FICO score (760 or higher), up from 8.6 percent in 2005.

Stay-at-home spouses get credit

Stay-at-home spouses who don’t earn an income were dealt special challenges when the CARD Act was passed.

According to the regulations, only a person’s individual income or assets could be considered by credit issuers. This means that 16 million stay-at-home spouses couldn’t apply for or obtain credit in their name, even if they had access to income earned by the working spouse.

But thanks to a new amendment, the rules have changed.

“Stay-at-home spouses or partners who have access to resources that allow them to make payments on a credit card can now get their own cards,” said CFPB Director Richard Cordray in a press release. “Today’s final rule is an example of the Bureau’s commitment to working with consumers and financial institutions in order to ensure responsible access to credit for American families.”

Does this credit card make me look fat?

If you often buy junk food on impulse, could your credit card be to blame?

There is a connection, according to research published in the Journal of Consumer Research.

Researchers looked at six months of 1,000 households’ shopping habits. They found that shoppers who paid with plastic (either credit or debit) bought more unhealthy food than those who paid in cash. They also did a controlled experiment, offering two groups the option to buy healthy and unhealthy foods. The first group was told that they could use any payment method, the second was told they could only pay in cash. Again, the ones who paid with plastic bought more junk food.

The researchers concluded that “consumers experience less pain when they use less vivid and emotionally more inert modes of payment,” making them more likely to succumb to impulse buys.

Based on my personal experience with credit, especially as a college freshman, I know it feels far less painful to pay with plastic than it does to pay in cash. Slapping down a card is quick and easy. Sometimes my mind even wanders as I’m paying, and I find myself checking the receipt later just to be sure I was charged correctly! But paying in cash is another story. Counting out several $20 bills really makes me think about what I’m buying, and whether it’s worth all those $20s*!

*I was going to say “Jacksons,” but like ankle-length pants and pixie haircuts, I’m not sure I can pull that off.

What about you? When did you get your first credit card? How do you pay for most purchases?

Why my garden won’t replace my CSA subscription

Get Rich Slowly - Personal Finance That Makes Sense.

Why my garden won’t replace my CSA subscription

This post is from staff writer Sarah Gilbert.

I told the checker at the grocery co-op where I shop that I didn’t need a receipt. “I don’t want to keep track of how much I’m spending on my garden,” I told him. My modest cart had carrots and apples and popcorn — staples! — and tomato, lettuce, basil and lavender starts. The reason I don’t want to know: I’m worried it won’t pencil out.

If I had to guess, this year I’ve poured $500 in plants, seeds and compost-enriched dirt into my garden. Lots of it won’t yield much this year (every few years, when I have available money, I invest in perennial bushes and trees, like blueberries, apples and currants; this was one of those years), but then again I’ll probably get something like $200 or $300 worth of figs and raspberries alone. Those were planted years ago.

What I’m not so sure about is my vegetable garden. With several heirloom tomato plants producing 10 or 20 pounds of $4-per-pound tomatoes apiece and those very pricey herbs, I’m sure I’ll get a few hundred dollars’ worth of produce. I still am eating tomatoes I canned last year from my garden (and they’re absolutely amazing, very flavorful and pretty to boot). What’s more, I’m less likely to waste things like herbs and lettuce. Instead of buying a whole head or bunch from the farmer’s market, I can pick just what I need for dinner.

Note: I never count my “labor” as part of the cost of a garden. I enjoy working on the garden, even the weeding and the digging, and I think of it as a duty necessary for my health and well-being, like reading a book or taking a long shower or going on a run. If I make decisions which calculate the cost of my work into the equation, I feel like my life is right out of a science-fiction book: I’d be a perfectly efficient producer-consumer — and thoroughly dull.

Because I haven’t ever had the guts to keep track of my inputs — likely because so many of my inputs are wasted or get eaten by birds or transplanted badly and I end up feeling guilty — I don’t know for sure what my outlay is in a regular season, and how much I end up buying at the farmer’s market or the co-op.

Using a CSA

You know about CSAs, right? Community Supported Agriculture: pay up front at the beginning of the season and get a portion of the harvest each week, usually from June through October. They can be a fantastic way to get really high-quality produce that’s raised with organic principles by a local farmer (the holy grail for many of us) for a reasonable, and fixed, cost. Last year I used a CSA, and for about $550, I got everything from rosemary and thyme to tomatoes and plums. Our farmer had a big variety of harvest, so I might be using three pounds of potatoes one week, or a couple of small cantaloupes on another. I got a lot of lettuce.

I love lettuce and salads, but I have a confession to make: I’m terrible at using it. I almost always end up letting half of my planted lettuce go to seed. I get leaves for sandwiches and make about one or two salads per week, for myself; only two of my boys eat salad, and they don’t eat much. I loved getting herbs but I didn’t use them nearly at the rate I was getting them. Parsley was one of the CSA offerings almost every week; and parsley grows as-if-wild in my garden. I could open a parsley CSA all on my own. And I’m not a big tabbouleh-maker. I used it once or twice, as an afterthought.

There were plenty of other mishaps; I never ate any of the kohlrabi, because I was too busy to get creative and use it. One week my share got left in a cooler on my front porch (a borrowed cooler whose owner had forgotten to pick it up) and I didn’t realize until the gorgeous apples were the only thing not slimy and molded. I tried peeling and eating them, but the mold smell had soaked into the flesh.

I never got even half enough fruit; we eat a lot of fruit in my family, and I like to can and make fruit desserts like crumbles and pies. So many weeks I’d buy $30 or $40 in fruit in addition to the CSA delivery. (Our farmer would also let us purchase additional produce, like tomatoes or plums or walnuts, on some weeks, for a very good price, and I took advantage of this several times, too.)

In the end my great bargain, $40 or more of produce each week for about $25 per week cost, ended up not quite penciling out. I did eat a lot of great produce, and I loved my farmers so much I didn’t mind what ended up as a not-great financial arrangement for me.

Tracking my produce

Starting this year (this week!), about the same time most CSAs start doing drop offs, I’m going to track the produce I buy at the farmer’s market and the co-op. There are lots of things I don’t grow (or not very well, or not in sufficient quantity for my family). On Sunday, for instance, I bought:

• $4 in potatoes (I don’t want to dig potatoes until later)
• $3 in spring onions
• $3 in spinach (I forgot to plant any!)
• $2.50 in broccoli (my broccoli always ends up full of aphids)

With apples for my apple-crazed five-year-old, and some strawberries I plan to pick up Wednesday, I’ll probably spend about $25 in produce this week. My big goal this year is not to waste produce that I either buy or pick, and to do as good as job as I can of harvesting most of my ripe produce before the slugs get it.

Vegetable gardens have a variety of hard-to-quantify benefits

I also believe that productive and well-cared-for vegetable gardens have a lot of fringe benefits, from the global feel-good to the practical, like:

• Barter. My fig trees and raspberry trees, as I’ve mentioned, are prolific! I trade figs and raspberries for everything from use of friends’ cars to graphic design to bike maintenance.
• Home value. This is the most practical; especially here in Portland, the value of an established mix of perennials and cared-for vegetable garden space is pretty high. I am going to survey my real estate agent friends, but I’d guess $20,000 or more on the value of a home.
• Convenience. Going out to the garden to pick lettuce for salads or herbs for your marinade, well, that’s my definition of convenience food. Sometimes I am hungry for something sweet and I realize, oh yeah! and reach out and snack on raspberries. I make my own mint tea from the many descendants of the two plants I bought.
• Maintaining health of your ecosystem. My 10-year-old is sometimes a little afraid to walk through my garden because of the thousands of pollinators that are buzzing around. Lack of nutrition is a contributor most scientists who’ve studied bee colony collapse disorder agree upon; growing my variety of vegetables, fruits, herbs and beneficial weeds, like clover and borage and calendula, is a small measure to counter the disastrous trends.
• Well-being, environmental education, sense of self-worth. I’ve said it before, but I’ll say it again: working in the garden feels good and keeps me emotionally and physically healthy. It gives me a literally hands-on method of teaching my kids about biology, the environment, the cycle of the seasons, and how to love good whole foods. It makes me feel that my work is having actual obvious benefits. It just makes me happy.

Do you think you spend too much on your vegetable garden, or do you think, like me, that there is no such thing?