What Matters: May 2002
No Excuses: E-consumers are Educated Consumers
By Bonnie Biafore '76
The analysis gene. You know the one. Anyone reading this article on the MIT alumni/ae Web site likely is hounded by it to research the most inane products in pursuit of the informed purchase. The brand and model we buy must precisely fit our requirements—which means we must unearth all the possible requirements in case we had needs we didn't know about.
Researchers scour the human genome for the gene sequence that causes this behavior. Nanotechnologists race to build the implantable chip that will transmit signals to…to…to…well, either download the data we need directly into our brains or save us from our cravings. Until then, what we need is an effective way to collect the data to fill our multi-dimensional decision spreadsheets. Comparison shopping hasn't been the same since the Internet and the World Wide Web went commercial.
The old-fashioned non-electronic way isn't fun. As my husband and I tracked down mountain bikes for the potholed country roads in New Jersey, the salesperson at Store A extolled the benefits of Brand X's telepathic hyper drive derailleur. Driving across the state to Store B, we learned about Brand Y's freeplebrax inline suspension, whereas at Store C, some guy with a nice touch of chain grease facial camouflage said that we HAD to get Brand Z because its micro-aligned vorpal welded frame produced a ride that we would not believe.
Products such as our mountain bikes often require a test drive, but many others don't. If your analysis is strictly cerebral, you can research on the Internet in the relative comfort of the chair at your computer desk. Some dial-up connections might test your patience, but you can always work on something else while you wait. Web sites hosted by industry organizations or funded by advertising often provide astounding amounts of unbiased information. You can bone up on a topic before facing a salesperson or forego the salesperson entirely and buy online. In addition, quite a few Web sites offer features you just can't find offline, such as no-muss no-fuss comparison shopping with information about products from many vendors or product reviews written by customers.
HSH Associates publishes consumer loan information and their Web site is a perfect example of the benefits of Web research. The HSH site includes articles, reports, and tutorials on topics such as:
- Adjustable rate mortgages and how they might save money over a conventional fixed rate mortgage
- What makes mortgage rates change
- How to eliminate private mortgage insurance
- Tips on refinancing your current mortgage
- Home equity and home equity lines of credit
- Reverse mortgages
- Environmental issues in your home
The free content on the site includes average loan rates, loan trends, and calculators. The Payment and Amortization Schedule calculator returns basic results like your monthly payment. The Credit Grade Calculator gives you an idea of your credit rating score and a Refinance Calculator figures the difference between your old and new payment and when you'll break even. HSH also offers a free downloadable calculator that calculates schedules for complex amortizations, prepayments, and biweekly payments, runs what-ifs, compares loans, and checks your savings and break-even point on a refinance. Finally, for only $10, you can buy HSH's comprehensive survey of loans available in your area. You can even receive their survey as a spreadsheet via email and sort loan by criteria to your heart's content.
Web research isn't limited to loans. You can handle every aspect of your personal finances online. Here's a quick list of sites that can help:
- The Quicken.com site is one of my favorite all-around personal finance sites with financial planning, online banking, bill payment, insurance, loans, taxes, and more.
- If you are looking for a financial planner, try the Financial Planning Association's planner search tool.
- You can't take advantage of comparison shopping if you're too far in debt. Myvesta offers publications, debt counseling, and payments plans. Their support folks can even negotiate with your creditors as you pay down your debt.
- Bankrate.com provides education on loans, ways to save, online banking, and more. Search for the best rates for loans, CDs, credit cards and just about anything else. Click links to obtain quotes or applications directly from the vendors.
- Not only does the CollegeBoard site help parents plan for the cost of college, it helps students find schools they like, register for tests, and even apply online.
- Yahoo! Finance includes messages boards, online clubs, and thousands of links to financial information. IF you are still on a dial-up connection, you should appreciate the dearth of graphics on the site.
- The Vanguard Group is still the best source for index mutual funds, which are one of the easiest ways to invest successfully (when you have a long investment horizon.) Their web site includes Vanguard University—excellent educational material although slanted toward mutual funds. It also includes a good financial planning tool and features on other aspects of personal finance.
- Download SEC filings for any public company from Edgar online.
- Download SEC filings for any public company on Morningstar. Research and compare mutual funds. Build an online portfolio. Their X-Ray feature shows your portfolio asset allocation based on your stocks and allocations within your mutual fund holdings.
- The Federal Trade Commission explains legal but unappealing financial schemes and offers tips on avoiding fraud. Find out how organizations might use your personal information and how to protect your privacy.
- Compare car features, performance, pricing, warranty, crash test results, and alternatives for two or more cars on Edmunds.com. If you test drive cars that your friends own, you can click a link to get quotes for the car you want from several nearby dealers without setting foot in a dealer's showroom.
- StreetPrices.com searches hundreds of online stores for the best deals on computers and electronics.
- About.com provides educational material on just about every topic under the sun, from finance to feng shui.
Note: When it comes to investments, there is so much information online that the individual investor can be as well informed as the pros. Of course, there is always a risk that the information you really need isn't in the annual report, the SEC 10-K, or the auditor's commentary. But, that's true whether your research is cyber or paper. The Web is constantly changing. You might find a great site one day only to find it gone missing or merged with another site the next time you look. Some sites are will designed, whereas others can be more exasperating than fingernails on a blackboard. Find the ones you like; save the URLs as bookmarks or favorites; but plan on checking out the new sites in town every now and then.
The encryption on Web browsers is pretty good these days. But, if you aren't comfortable sending a credit card number over the wires (or airwaves) you can usually call to finalize an online transaction. However, it's always a good idea to read a site's privacy policy before you hand over important personal information. If you become completely addicted to using the Web for every aspect of your life and find yourself logging on in libraries, airports, or Internet cafes, please remember to log off before you leave the computer. In fact, you might want to try to turn off the Web browsers cookie feature so your personal data doesn't remain on a public computer.
In the case of the bicycles, the greasy guy was right—when we rode the bikes with the vorpal welded frame, we were hooked. Fortunately, our selection spreadsheet supported our decision.
About the Author
Bonnie Biafore '76 is an author as well as an independent project management consultant. Her first book, the Complete Idiot's Guide to Online Personal Finance, is a humorous look at handling personal finances on the Internet. The book turned out well even by other people's opinion and started her writing career. Alas, the book is out of print as fast as a hardcopy tome about the Internet would expect to be.
Biafore writes a monthly column for Better Investing magazine called "Web Watch," which strives to explain how to use the Web for investing and personal finance. She is also writing a book about studying stocks for the National Association of Investors' Corporation. Her second book, Troubleshooting Microsoft Project (Microsoft Press), will be published in July. Again, she has outdone herself by explaining the often inscrutable workings of Microsoft Project (and project management to boot) humorously and succinctly for the benefit of frustrated project managers everywhere.
As a consultant, she manages projects and designs, develops, and documents customized applications for her clients. She enjoys this, although software development isn't quite as much fun as writing. She has a relatively unused SB in architecture from MIT and an occasionally applied master's in structural engineering from Columbia University. Don't hold this against her. She's quite nice, actually.
What Matters is a guest opinion column written by a different MIT alumnus or alumna. The views expressed are entirely those of the author and do not necessarily represent the views of the Alumni Association or MIT. Interested in writing a column? Email whatmatters@mit.edu.
