Which is why some merchants are encouraging consumers to use debit instead of credit if they are given a choice.  The transaction fee for debit is less than what it is for credit.  Banks, on the other hand, would love to get consumers to use credit for every debit purchase since they earn more money that way.  That's how the interchange system works.  Unfortunately, most people don't realize that.  When a bank dangles a free movie ticket in your face, it's really about the bank enriching themselves at the expense of the merchant while pretending to offer you a nice freebie.

If you look at the entire financial system over the last few years, it's all about the different ways to charge fees for everything underneath the sun.  If you bought a cup of plain black coffee at Starbucks that causes your checking account to be overdrawn, the bank will charge you an overdraft fee for each and every item that comes.  If you use a foreign ATM to withdraw money, you will get hit with a fee by the ATM owner and the bank.  If you don't keep a minimum balance in your savings account, you will pay a monthly maintenance fee.  (Never mind the five percent interest spread that the banks make from paying out on savings and earning from loans.)  The financial system is no longer in the business of creating new wealth that benefits society as a whole.

These fees will soon change this summer.  The bank will lose a significant source of easy profits by no longer being allowed to charge overdraft fees if you don't opt in to their overdraft programs, and the interchange fee will be reduced for merchants.  No doubt that the banks will find new fees to make up difference, like eliminating "free" checking accounts by charging a high monthly maintenance fee.  The fee list will continue to grow until consumers cries out again and politician finds it in their self-interest to bring the banks under heel.

I have no intention of switching from debit to credit to score a free movie ticket.  The only ethical way I could do that was to make purchases at a merchant that does credit transactions by default.  That would be my local gas station.  However, I only buy gas once or twice a month, and don't drive enough miles to buy gas 30 times in two months.  Unless, of course, I buy a gallon of gas at a time.  That's not ethical because that's gaming the system.  Then again, the banks are already gaming the system.  Not that I would try to do that at my local gas station.  The fat Indian guy might come out of his booth with a baseball bat to swing at my head if I'm messing around with his pumps.  He yelled at me once for using an American Express card—before they cancelled it—that he doesn't take.

The U.S. Mint found itself in a similar situation last year when they offered free shipping for gold coin purchases made by credit card. Some people were repeatedly buying gold coins on their credit cards, depositing the gold coins at the bank to pay off the credit card balance, and earning frequent air miles to score free airline tickets.  They weren't doing anything illegal except gaming the system as they found it.  The U.S. Mint put in safeguards to prevent abuses of this nature.  Gold coins are for collectors, not speculators.  Never mind that the frothy gold market today.

I sent off an email to Wells Fargo Bank customer service to ask them if I could get a free movie ticket if I did buy a gallon of gas 30 times in two months.  Not surprisingly, they didn't know about this promotion and told me to check in with the local branch office.  That I didn't do.  Every time I go in to make a cash deposit inside (those envelope-less ATMs don't think my cash is good enough for them), the tellers remind me that I don't have a savings account and no overdraft protection. They're never happy to hear that I have my savings account at a different bank that charges no monthly fee and pays one percent more in interest, and I'm really careful about managing the money in my checking account.  People like me who manage their finances responsibly are the kind people that banks don't like since they can't charge extraneous fees.  No wonder they're going broke.

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All the pennies fit into a one-gallon sandwich that was roughly a 6" x 6" x 6" cube.  I hauled that in a blue FoodMaxx canvas bag.  The plastic grocery bags that I had all had holes in them.  Even if I doubled up on the plastic bags, I didn't want to risk the pennies from falling through and spilling out on the hot pavement outside of the store.  Knowing my luck, that would've happened.  No sense in crying over spilt pennies.

I lugged the heavy canvas bag into the store, ignoring the strange glances that people gave me.  No one walks into  a grocery store with a loaded canvas bag.  With my beard modestly trimmed, no one assumed that I was a terrorist planning to bomb the meat department and called the cops.  I've been shopping at this FoodMart since my college days in the early 1990s.  All the clerks know me as the guy who usually comes in with a gym bag after working out at the 24 Hour Fitness next door.  They didn't give me a second glance when I made a beeline to the Coinstar machine.

This was my first time "recycling" pennies through a vending machine.  Whenever I had a surplus of pennies in the past, I rolled them up in paper rolls and took them down to the bank to deposit.  If you go into a bank today with rolls of coin, they may very well call the cops on you.  No one likes coins in the age of debit cards.  I followed the directions on the screen and started dumping the pennies into the tray.  I spent ten minutes listening to the rattle of pennies falling down into bucket inside the machine.

I'm a short story writer.  While waiting for the pennies to be counted, I imagined writing a scene with an old man, probably short and bald, hunched over the tray of pennies he hauled in on his hand cart like a paranoid gambler at a slot machine, watching people come and go through the nearby entrance, and then something weird happens.  I like to write about old people since I understand them better and they tell me interesting stories that no one else wants to hear.  I'm not sure what the weirdness would be if I wrote that into a story.  When I got home and took the elevator upstairs, I found a brown lizard blending in with the brown floor tile that hissed at me as I tapped my shoe next to it.  I've seen a lot of weird stuff inside that elevator over the years but that was the weirdest yet.  Maybe they're connected somehow and someday I'll write that story.

The Coinstar machine took everything except a Canadian penny that I put back in my pocket.  I had a grand total of 3,711 pennies, seven dimes and one nickel.  After a 9.8% service fee, I had $34.15 USD.  I thought I had like twenty bucks at the most.  That was more than enough for groceries.  I handed the print out to the clerk to pay for my groceries and received the remaining change.  I still have a smaller jar with bigger coins at home that I might bring in if I need the money for groceries next month.  As for the Canadian penny, I tossed that back into the empty penny jar.  I'll see it again in another five years.

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For the first time in ten years, I was filing my own federal tax return on paper.  I entered all the numbers into TurboTax and then figured out where to put all the numbers on the paper form.  I owed the federal government $452 in taxes on my unemployment benefits.  I wasn’t going to pay $150 to file through TurboTax.  My tax situation is somewhat complicated by the business side of being a writer.  If I didn’t have that, I would’ve followed the same steps that I did with Dad’s tax returns.  Fortunately, state owed me $338.  With Dad helping out with half the rent and covering my newest car repair bill for a replacement ignition switch and battery, I was able to pay off the tax.  I filed my state return for free using CalFile.

Doing my own taxes made me appreciate the small business angle that I haven’t considered before.  I’ve been writing in red for the last five years from buying all those red pens to revise my work.  I haven’t started making money until now and I’m hoping to break even this year.  After struggling to fill out my own tax return, I took some steps to avoid repeating this awful annual ritual.

First, breaking down the numbers on a quarterly basis.  Shoving all the receipts into an envelope all year long is the easy part.  Figuring out how to break down the numbers at tax time is very time consuming.  Doing that every three months will make putting the final numbers together a snap.  I also did my first profit and loss statement.  I haven’t done one of those since I took business courses in college.  I’m updating that every two weeks to keep tabs on my income and expenses.  Ideally, income goes up and expenses come down.

Second, I started filing estimated taxes for both federal and state.  Technically, I’m not required to do so.  This is a preventive measure on my part to avoid not paying enough tax when I file my return next year.  If you start making some serious money as a writer, you want your tax bill to be current at all times.  Since I’ve shown a loss on tax returns for five years with little income, I need to prove that I’m running a business.  Only an honest small business would fork over money to the tax man.

Third, if I do reach the break even point and make more than $400 in profits, I will have to pay a 15% self-employment tax.  At first, that made me mad.  Looking into this deeper, this is half of what I would be paying in a regular job plus the employer contribution.  This amount is then reduced in half as a personal deduction.  Doesn't make much sense but that's how the tax law works.

I’m hoping that this year will be very profitable indeed—even if I do have to pay more in taxes.

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When the credit card companies notified me that they were increasing my rates to 30%, they gave me two choices: I could accept this highway robbery or close the accounts at the current interest rates.   So I closed out the accounts.  Only later on did I learn that this is classic "damn if you do, damn if you don't" situation.

I couldn't afford to accept the status quo with the new rates.  Turned out I couldn't afford the closed accounts when the interest rates stayed the same but the minimum balance payments doubled or tripled from before.  Paying these outrageous amounts wasn't in my best financial interest after being out of work for a year and I no longer had any savings.  So I restructured my budget to pay my credit card bills 90% less than I was paying before the rate increases.

What comes around goes around.

After I closed out those accounts and started making reduced payments, I got an American Express card after I read that charge cards were coming back in style.  What did I use my charge card for?  Paying off all my monthly utility bills and expenses when they came in, and then paying off the entire balance a few days after the billing statement close.  This saved me some money since I wasn't paying late fees because my cash flow often didn't match when the bills were due.  Very convenient.

Unfortunately, American Express requested my credit score and canceled my card based on that.  Turned out that closing those credit card accounts and reducing payments by 90% had adversely affected my credit score.  I also spent twice my usual amount this month since my car needed repairs and I got some stuff for Dad after he was released from the hospital to stay at my place.  All of which I was reimbursed for by Dad.  I was now a credit risk to American Express.  Never mind that I had used my card responsibly and made prompt payments.  That doesn't count.  Funny how I thought universal default was outlawed in the recent credit card reforms passed by Congress.

I'm not sure what I want to do next.  If I reapply for another American Express card and get approved, I would have to pay a $25 USD reinstatement.  Uh, no.  My card shouldn't have been canceled in the first place.  I'm not going to pay an extra fee for the privileged of being screwed over.  I would've kept my credit card accounts opened if I wanted to be screwed over.  I'm still waiting to see if this same nonsense will happen with my business credit card that was opened under my Federal Identification Number.  If so, I will be out of credit cards entirely.  Cash will be king in my life.  Thanks to the Great Recession and the greedy credit card companies, that might be the best thing to happen to me.

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That's exactly what I did with the savings that I'm rebuilding.

I opened a new stock trading account at ShareBuilders and pay a $4/month fee to invest my savings deposit into shares of iShares Barclays Treasury Inflation Protected Securities Bond Fund (TIP).  If I'm going to pay a monthly service fee for saving money, I might as well get my money worth.

Unlike a regular savings account, I'm extremely reluctant to move money out of a stock brokerage account.  A transfer usually takes three or four days to be processed and figuring out the capital gains for tax purposes takes that long too.  The quarterly dividend payment will be more than what I get in interest from the bank and is automatically reinvested into the fund.  A bond index fund avoids the complications that comes from directly investing in Series I savings bonds and safeguard my money from deflation and inflation.  Based on all the information that I read in recent months, I suspect inflation will be an issue in the future.

This works as long as the stock market doesn't go belly up.  Unlike plain old savings account, there's no insurance protecting a stock brokerage account.  If everyone cashed out their chips at the same time, my entire savings will disappear.  Considering that federal government had bailed out Wall Street once already, and the bankers are still gambling that the federal government will rescue them again, a total economic collapse seems unlikely.

A more conservative option would be to open an Orange savings account that pays better interest rates and doesn't charge a monthly service fee.  I have a small savings account with them for leftover gas money from my budget to cover car expenses and save up for a new used car.  I could've opened another account with them.  That wouldn't removed the temptation from periodically raiding the account.  A stock brokerage account forces me to consider the costs of moving my money around.

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