While We are Holding You Hostage - Update

A couple of months ago I wrote a post about how American Express "held me hostage" when I called to activate my new credit card. Essentially, when you dial the number to activate your card, after you key-in your new account number you hear a recording saying "While we are activating your card, we would like to let you know about the latest in inane and useless products you have absolutely no need for, that will only cost you an arm and a leg..."

A consumer hearing this message is bound to think that there will be some additional action he may need to take following the drivel, or perhaps he will receive some confirmation message saying that the card was activated. The hapless consumer listens to the meaningless crap and is essentially held hostage for the length of this commercial.

Well, I got a new American Express card in the mail (the old one was a temporary card), and this time when I called to activate I refused to be held hostage. As soon as the mindless marketing pitch started I hung up.

Guess what? Card still works. "While we are activating your card", means nothing. Your card is activated as soon as you key in your account number. You can safely and happily hang up the phone.

Yet Another Fight with Citibank

We missed our credit card payment again and Citibank socked us another $86 in late fees and financing charges. Once again, it's Citibank's fault and I am tired of it.

Citibank "upgraded" our card. Previously we had a Citibank Dividend Card and they "upgraded" us, without our request or action, to a Dividend World card. The new card has absolutely no advantages over the old one, as far as I can tell. When the "upgrade" was performed we got a new card in the mail, with a new card number.

What Citibank didn't do, is move our statement e-mail alert to the new card. So, here is a summary: Citibank decided we needed a new card, moved us without asking us to this new card, did not move our e-mail statement alert to the new card, and when we consequently missed our payment (because we did not get alerted to the new statement) charged us $86 in fees and penalties. Is that incentive enough for them to "upgrade" people's accounts?

Here is what we will do. We are going to call Citibank and get them to revoke that idiotic fee. If they refuse to do so, we will close not only the account in question but also the other account we have with them.

I will keep you posted on our discussions with the bastards. Can you tell that I have had enough of credit card company antics?

Recommended Articles

After a couple of days off, here are some of the articles I recommend this week from the Carnival of Personal Finance and the Festival of Frugality. The Carnival of Personal Finance this week had a Doctor Seuss theme. My god, it must have taken MBH forever to put that thing together. Multiple kudos!

Moolanomy offers a post about how inflation, taxes and the eroding value of the Dollar are impacting the real value of our investment. You can't do much about inflation, but you can do something about taxes and the value of the Dollar. Investing in tax efficient index funds, and holding onto your investments rather than trading will do a lot to reduce your tax bill. To protect yourself from the falling Dollar, diversify internationally.

The Online College Blog has a post about the best 25 online MBA programs. To which I must respond: are you kidding me? Why would anyone want to get an online MBA? An MBA is a degree which most people get to advance their professional career. It is not typically considered a program that people take for academic interest alone. If you are indeed planning on getting an MBA, let me teach you the first lesson for free: return on investment. Don't undertake a project that is bound to have a negative return. Very few employers give any weight or value at all to an online MBA degree. Now, if you are planning on using the knowledge you gain to start your own business, maybe that would be a different matter. But if you have your eyes set on corporate America? Save your money and your time. If you are serious about getting an MBA, take a look at this website.

Financial Reference complains that laws can distort incentives and wreak havoc on free markets. Boy, do I agree. In this day and age companies routinely and efficiently lobby into law incentives, programs and regulations that give them an unfair advantage over the competition. Such incentives include subsidies, outright restriction on competition, contract awards and so forth. If there is a problem with the free market it's that it is far less free than it needs to be. Unfortunately, the specific example given in the article is a really bad one: yes, if you are violating parking regulations (even by 10 minutes) you should get a ticket. If there is a rule on the books it needs to be enforced. That does not mean that the rule itself is appropriate.

Millionaire Mommy Next Door has a post after my own heart: she advocates renting as a way of building personal wealth. I agree. By spending $24,000 a year to rent our place in Silicon Valley rather than buying a house for about a cool million, we are able to let our diversified portfolio grow, without sinking the bulk of our assets into bricks.

The Financial Blogger has a post about how having a second child is not that expensive. Maybe in wonderland. It's true that the incremental cost of the second child is lower than that of the first. Yes, you can re-use the stroller, the crib, some clothes and so forth, but the truly big costs are still very much there: education, health care, housing and pretty much everything else. Numbers 2 & 3 came to us as a single package and had a big ol' bill attached to their tiny baby butts. Love them to pieces, but those little buggers are expensive.

An honorable mention this week goes to Cheap, Healthy, Good for their amazing post: 11 Things Dwight K. Schrute Has Taught Me About Food and Frugality. I laughed myself silly.

Got Passed Up for Promotion - Now What?

A few weeks ago I received an e-mail question from one of my readers. The reader felt that she was unjustly passed up for promotion, and was wondering what her next steps should be. Here is the full, unedited text of the e-mail:

"First of all, I just want to say that I really love your blog and the topics that you talk about, your posts are always very practical and applicable.From your blog I know that you are in management and I was wondering if you might be able to give me some insights on a situation at my company.

I am an engineer in my 20s at a company with recent layoffs. After the layoffs, all but one of the senior engineers within my group were laid off. This made me the person with the longest tenure at the company within my group. At this time, our direct manager also resigned from the company.

During goal setting discussions with management, I have been consistently told that I was the best engineer on the team. There are metrics to back this up. I also received a company award for outstanding performance from management. During the performance review we had around May, I also received the highest performance rating number. So it really surprised me when two individuals from my group were recently promoted to senior engineer over me. I have longer tenure at the company than they do, perform better on all levels, and actually know more about the company's processes etc. It is not even strange for these individuals to ask me questions on how to do things during the course of the job week. One is probably in the late 30s and the other is in the 20s.

I thought that promotion was the reward for performance but I'm starting to smell a rat here...so to speak. My performance is documented and it definitely exceeds theirs, so could it be that I am being passed over based on my race, age or gender? Do you think that it would be reasonable for me to go to our group Vice President to inquire what was the criteria for these promotions and why was I not considered given my performance etc? Thanks for your time."

Interesting situation. I responded to the reader directly shortly after receiving her e-mail, but I think that my answer may be of general interest to my readers. Here is what I suggested:

"Thank you for the e-mail and for the kind words.

I understand from your e-mail that you are concerned that you may have been discriminated against. There is really no way for me to know whether this is the case, however, if your assessment of your performance and of the performance level, experience and skill sets of the engineers that were promoted is correct, it seems that you may have a reasonable basis for concern. I have a few of suggestions:

1. Understand the risks - generally speaking, if your company suspects that you may looking into possible grounds for discrimination based legal action, it will immediately re-trench and develop a story to cover itself from a legal perspective. This might go as far as creating documentation to show that you were not an appropriate candidate for promotion, or worse.

2. Understand the remedy you want - what do you expect to gain by bringing up your suspicions in discussions with the VP? Is there a possibility that you too will now be promoted to Senior Engineer? Or is the discussion purely academic? I would suggest figuring out what you are asking management to do, before you initiate any discussions. Ask yourself whether this is a realistic remedy to ask for. Is this something that the company can reasonably give you?

3. Look to the Future - getting passed up for promotion is tough. It really hurts your motivation and impacts your self image. Believe me, I know, I have been there. Having said this, it is rare that companies will reverse such promotion decisions after they have been made. In my experience, the way to address promotion issues is long before a decision is made. For example: when my boss moved to a new position two years ago, I walked into his boss' office and made it abundantly clear that I considered myself his obvious replacement. I was ready with all the relevant support for my statements, including my performance reviews but also a list of successful projects, a list of my accomplishments and so forth. It is not clear to me from your e-mail whether you were proactive about seeking the promotion, or whether you were assuming that it would happen based on the really good feedback you were getting from management. In any case, the aggressive, proactive approach often works best in these matters.

4. Alternatives - if you genuinely feel that you were discriminated against, consider whether you would like to take legal action. If this is indeed the case, I also suggest you consider whether a company that discriminates against its employees is a good employer to work for in the long term. Whatever you decide, do not look back. The worst trap you can fall into is self pity or bitterness. Either of those would essentially derail your career.

Looking forward, my advice to you is this: go to your VP. Speak with him or her and be very candid about your disappointment at the fact that you were not chosen for promotion. Do not speak ill of your fellow employees that were promoted, simply make the positive case for yourself. Solicit constructive feedback from the VP, ask why management did not select you for the promotion, and what you can do to take your performance to the next level. Managers truly appreciate employees that solicit feedback and that are genuinely interested in getting better. Maybe you will find that management had some sort of valid reason for their decision, who knows? Keep an open mind.

Next, tell the VP that while you understand and respect the decision that was made you consider yourself a worthy candidate for promotion and expect to be on the short list next time. A clear declaration of intentions - without ultimatums - would serve your purpose best. From your e-mail, I am unable to tell how big your company is, but if it is large, you may also want see if you can find another suitable position within the company."

Can you suggest other ways to deal with the situation? Would you have answered the question in a different way? What would you have done under similar circumstances?

As you can tell, I am always happy to receive e-mail questions from my readers. Please keep them coming. If you would like your anonymity maintained when I answer your questions on this blog, or if you prefer to receive a private e-mail answer, I am glad to do either or both.

Carbon Tax - It's Time!

Today is Blog Action Day, and in honor of this concerted effort of thousands of bloggers worldwide, I am dedicating my post today to the environment. Like (almost) every post on Money and Such, I will be talking about the environment in the context of personal finance and the economy.

Regular readers of money and such know that I am a fervent supporter of free markets. Free markets have a lot to do with the environment. In fact, it can be argued that most of the environmental problems that we are facing today are actually economic problems. How so? If people had to pay for the full and true costs of their actions, they would make different economic decisions. Let me give you an example:

If a company is thinking about building a new coal power plant, they are taking into consideration the cost of building it, the cost of shipping coal to the plant, the cost of operating the plant, the cost financing the construction, and many other such costs. However, they are not taking into account the cost of the acid rain that they may be causing; they are not taking into account the impact their carbon emissions may be having on temperature, rainfall and weather patterns in other parts of the world, and so forth. Why not? Simply because they do not bear these costs.

It's not that these costs are not real. These costs are very real and have been repeatedly demonstrated to exist. The reason the company is not considering such important environmental implications is a trivial but critical one: someone else is paying for these specific costs. While the company will be earning the return from generating and selling the electricity from the polluting power plant, others will be paying for much of the harmful side effects. Costs paid by third parties are known as externalities, and should be eliminated.

If we want people to make the correct economic decisions, they must have complete and correct information on which to base their decisions, and in economics there is only one kind of information that counts: the price.

To get back to our example: the company that is planning a new coal power plant is not doing so because they have a particular sentimental attachment to coal. No siree. They are building a coal power plant because they sincerely believe that this is the best way for them to make money. That's a good thing. This is the way that the capitalist system works. If you want them to take a different approach, all you have to do is give them the right information about the true cost of their activities, and fortunately, this is very easy to do: charge them a fee which is equal to the costs that other people will bear as a result of the company's electric production operations.

If said company now has to pay an extra 10 cents per kilowatt to offset the cost of the harmful carbon emissions, the acid rain and the pollution to local streams and destruction of habitat, they may find that building a coal fired power plant is no longer economically justified. It may now makes more economic sense to invest in cleaner, less impactful forms of power generation, such as solar, wind and, yes, possibly even nuclear.

Don't get me wrong here. I am not talking about imposing penalties or excessive fees to give people an incentive to switch. All I am talking about is assessing a fee equal to the actual cost needed to offset any harmful effects from one's activities. I am talking about paying for the damage you actually do.

Taxing carbon emissions can be the first step towards ensuring that polluters pay for the true cost that their pollution imposes upon society. This a socially progressive and just tax that will impact pretty much everyone in society. If you drive a car, you will have to pay such a tax. If you use electricity from the grid (unless you are purchasing renewable power), you will have to pay this tax. If you purchase a gallon of milk at the store, you will have to pay this tax. This tax will be all around you, it will become a part of life. Guess what, pretty much everything we do in the modern economy generates carbon emissions. Once we all start paying for those emissions, and for the harmful effects that they cause, we will have a big, monetary incentive to reduce our carbon use.

Finally, I am not suggesting that we must immediately pay for the full cost of our carbon emissions. Such a sudden change will no doubt impose an unacceptably high cost on the world economy. However, we can start with this tax today and gradually phase it up to its full level over a 20 year period. This will allow people to adjust and phase out their use of harmful carbon and will allow industry plenty of time to adjust.

The market is a very powerful tool for innovation and societal good. If all true costs are reflected in the market prices we pay everyday, the magnitude of our environmental problems will decline dramatically. Environmental problems are not a failure of free markets, they are a symptom of markets that are operating without adequate information about the true price of commodities. Free markets, armed with complete information, are a powerful tool for solving the critical enviromental problems that humanity faces today. Hopefully someone in Washington is listening.