Trolling the Blogoverse: Cinco de Mayo Edition
Posted by texasmoose on May 5, 2007
Here’s my take on some of the posts at the latest Carnival of Personal Finance…
The first editor’s choice post talks about the default option for 401(k) plans. While I am a big believer in personal choice, I think that having automatic enrollment be the default option for a 401(k) plan is a good idea. The Financial Buff has a good discussion of the power of the default option with a related post from Money and Such on setting up this option for the 401(k) at this company.
People don’t always do things that are in their best interest, such as saving for their retirement. The problem is that sometimes people do not consciously make a bad decision; it may be that they don’t even know that there is a decision to make, or they don’t know that there are other options that they can choose from. This is why the default option is very important. In situations where people don’t understand their choices, the default will be what most people accept because (1) they don’t know, and (2) they will think that the default is an adequate “choice.” However, in allowing people to make choices, it is also necessary to make sure that people are educated about their choices. Informing people about that the default option will ensure that even those that accept the default know what they are getting into, and would allow those that truly do not want to participate to have the ability to withdraw from the plan.
On a personal note, I would have benefited from have an opt-in default. I didn’t even know about the 401(k) plan where I worked for over 2 years (!) until a co-worker casually mentioned that he had to account for his contribution each month. Once I got the information on the plan, I immediately signed up, but missed out on several years of saving and any potential growth in the investment. I don’t remember if I was told about the plan when I was hired (it may have been in the big orientation packet) but I’m pretty sure I would have signed up had I known about it.
Cash Money Life has information about a financial scam that uses what seems to be a loophole in the verification process of automated clearing house transactions. Here’s also a Washington Post story on the scam with a little more information. A quick Google search seems to turn up many stores about an airman at Patterson AFB that got scammed, but no other stories. Since there are no other stories of victims, I’m not sure if this is a new urban legend (nothing on it at Snopes yet) but it never hurts to keep track of your bank statements and inquire about any suspicious transactions.
Lots of other posts about investing, real estate, saving and managing money, but these are the ones that caught my eye.
