Wheaties for Your Wallet

You’ll very rarely see me talking about new technology purchases as money-savers. Being a geek myself, I certainly succumb to the Geek Tax, buying new toys when they are expensive and watching them drop in price for years after. Personal Finance Wisdom, this is not.

I was struck, then, by Brett Arends’ recent Wall St. Journal article, which asks if Amazon’s new electronic book reader, Kindle, currently retailing for $359, might be a money-saver. Arends looks at two areas where you could save money: on the cost of the books you read, and on mobile wireless Internet access:

First, you usually pay less for books purchased on the Kindle than you do for those printed on paper and delivered to your door. In a completely unscientific survey, I picked an array of 10 popular books and compared their Kindle price with that of the paper version bought from Amazon. These included Fareed Zakaria’s The Post-American World, Ken Follett’s Pillars Of The Earth, Elizabeth Gilbert’s Eat, Pray, Love, to Dan Brown’s The Da Vinci Code. Kindle versions worked out on average about $6 cheaper. (And, of course, you get them instantly.)

On this point, though, he notes, “at a saving of $6, you’d need to buy 61 new books to earn back the $365 cost of the Kindle” (note, the price of the Kindle was slightly higher when he wrote earlier this week). But, he claims, there’s also mobile Internet service included:

if your mobile Internet needs are pretty basic – such as checking email and news, that sort of thing – you can do that too. Most data plans from a mobile network start at about $20 a month.

How does he figure this all adds up?

So if you need rudimentary mobile Internet and you typically buy two new books a month, getting a Kindle could save you $32 a month. Even when you factor in lost interest, that’s a payback period of 12 months on the $365 cost.

Buy two books a month on Kindle instead of on paper, and you’ll save money. Sounds good — but is he right?

I have a number of quibbles with this analysis — I think Arends gets both parts of his assessment wrong, in different ways.

As a book platform, I think Arends understates the potential savings of the Kindle dramatically. For example, he compares the $24.75 price of the new hardcover book Nixonland with the same book delivered through Kindle for $9.99 — a savings of $14.76 for one book. That assumes, though, that shipping the hardcover book is free. Amazon certainly offers discounted or free shipping programs, but they require an Amazon Prime subscription for $79.00 a year, or Super Saver shipping, with a $25.00 minimum purchase (Nixonland would fall just under that).

Assume for a second that you were not a Prime member and did not want to buy anything else with Nixonland. You would pay at least $3.99 for standard shipping (about 3-5 days for delivery), or $11.98 for second-day air, or $17.98 for next-day air. On the Kindle, you’d pay none of those costs, you wouldn’t need a Prime subscription, and you wouldn’t need to add anything else to your order to get Super Saver shipping. Rather than saving $14.76 a book, you’d instead save between $18.75 and $32.74 for one book. Looking at Arends’ average savings estimate of $6.00 a book, including shipping increases that savings to between $9.99 and $23.98 a book (assuming the Nixonland shipping costs are representative, and that you shipped each book you buy individually, which hopefully you wouldn’t!). Best of all, Kindle delivery — nearly instant — beats the delivery time of any of the shipping options, potentially by as much as a week.

There are downsides of buying books on Kindle, though: you can’t share them with others unless you’re willing to loan out your Kindle itself; storage on the device is limited; and more sentimentally, the feel of a well-read, dog-eared, coffee-stained book certainly isn’t the same on a slab of electronics. But let’s continue as gimlet-eyed rationalists.

For mobile Internet access, unless I misunderstand the description on Amazon’s site, the Kindle does not give you a free web browser. Instead, you have to pay monthly subscription fees for the blogs you want to read. For instance, O’Reilly Radar, where I am a contributor, is available for free online, but costs $0.99 a month to read on Kindle. The excellent blog Boing Boing, co-written by Wesabe advisor Cory Doctorow, is $1.99 a month through Kindle. If you read around 20 blogs, you’ll quickly swamp the $20.00 monthly savings that Arends claims, compared to mobile data plans on other devices. If I subscribed to all 190 feeds I read in Google Reader for free online, it would cost me at least $188.10 a month on Kindle — assuming they were all available on Kindle, which they aren’t. So I’m not buying the “mobile Internet is a cost savings” argument for Kindle. [UPDATE: see the comments for more on this.] For the purposes of argument, I’ll count this as a wash, although really I think you’d do better not paying for blogs that you can read free online.

Adding these up, it looks to me like if you normally order books using standard shipping, you’ll need to order 36 books — three a month — before you start saving money with Kindle. If you usually use second-day air shipping, you only need to buy 20 books to save money with Kindle. If you use overnight shipping, you only need to buy 11 books before you start saving — less than one a month. (Again, these numbers assume you are not an Amazon Prime member, and that you’re shipping books individually.)

Is Kindle worth it, then? You can certainly use your ordering history on Amazon to decide for yourself, but the numbers look very good to me. I also believe that wireless delivery of products like books has a real environmental benefit: compared to the carbon cost of shipping a book to you overnight, Kindle is potentially a huge savings of plane exhaust.

All told, Kindle looks like that rare tech device that avoids the Geek Tax and offers a number of economic and other benefits. For myself, I find the first version of the device inelegant, and I’ve had a hard time getting excited about buying one. I do buy and read a lot of books, though, and would love the cost savings it appears Kindle offers. I’ll probably wind up buying one for that reason, and for the environmental benefit I’m guessing wireless delivery would offer.

Last summer, we brought Allese in as an intern to help us take care of the increasing amounts of work at Wesabe. We were psyched that she dove right in and did a great job with her assigned tasks. Even better, though, was that she started using Wesabe for her own finances, and had a ton of great suggestions and contributions for improving the site. Best of all for me, she jumped into Wesabe Groups and started asking questions, posting her own advice, and kicking off threads that turned into great and long-running conversations. Her participation in Groups wasn’t part of her job nor even anything we asked her to do, but right away she made the community better and has been very active in Groups since.

Allese working on her Latte Factor (photo by Brad Greenlee)

I’m happy to announce that we’ve hired Allese full-time, and that she’ll be taking on the role of Community Manager for Wesabe. For a long time this has been part of my role, and of course I’ll continue to participate in Groups as I have. As Groups activity has continued to climb, though, we’ve wanted to make sure we can answer every question in Make Wesabe Better, and that we’re keeping track of all the great feedback we get from our members. Allese will also continue to post topics and questions that we hear about from members frequently, or that are of interest to her in her own financial life.

Please join me in welcoming Allese to her official role at Wesabe. It’s great when you can start someone at a job by saying, “Just keep doing what you’re doing.”

We’ve gotten a ton of feedback and requests about the Wesabe search function in the time since we originally added search as a feature. Our design — okay, my design — was to have one search field with two buttons, one that would search your own personal accounts, and another that would search all the public information on Wesabe. That didn’t work — it was too confusing and people didn’t like it. We’ve also gotten a lot of requests for attribute search — that is, a way to make more sophisticated searches than the basic “anything with this word in it” format. Finally, as Wesabe has grown, the amount of data our search engine covered started to grow enormously as well, and unfortunately we had a number of performance and accuracy problems with our original search engine as a result.

That’s all over now. After finishing up a long run of work on our new Tips tab, Coda put on his surgical mask, took search into the operating room, and made a bunch of “We have the technology — we can rebuild him” jokes. He set about fixing everything about search on Wesabe, and I’m happy to report that almost every one of the requests we’ve gotten for search has now been fulfilled.

We’ve gotten rid of the two-button search interface, and now each tab has its own search field, which searches that tab only. If you want to search your accounts, the search field in the Accounts tab will do that, whereas if you’re looking through Groups, the search field there will only search Groups.

In the Accounts area, Coda has added a very rich set of attributes for searching. You can, for example, search for all of your work expenses that don’t have a receipt image attached like this:

tag:workexpense has:no-attachment

You can search for all of your $100.00 ATM withdrawals in your Wells Fargo account like this:

merchant:atm account:wells amount:100

Or, if you want to make sure you get the ATM withdrawals near $100.00 (say, the ones with a withdrawal fee attached to them), you can search for transactions within 10% of an amount like this:

merchant:atm account:wells amount:~100

If you want to search through your notes on your transactions to find the place you took your friend Sarah, that’s easy, too:

note:sarah

There are many more options available — check out the search documentation to learn more.

Last but not least, Coda rebuilt the search infrastructure so that we have good confidence it can scale with the amount of growth we’ve had over the past year and a half, and a lot more. (Maybe it would be more accurate to call this the “Six Trillion Dollar Search.”) We have some work planned to make the search results display significantly faster, but we’re not limited by the search engine any more — any performance problems left are in other parts of the system.

Oh, and one more thing: all of these search features are available through the Wesabe API, too.

Thanks to Coda for taking this on and making such significant improvements to search on Wesabe. We’ve been making “nah-nah-nah-nah-nah” sounds while searching, now — it’s fun to have all that power available.

If you follow Wesabe on Twitter, you know that a few weeks ago, Jason Knight, our CEO, and his wife Jane welcomed a new son into their family. Unfortunately, their son was born with a serious respiratory disorder, and has been in and out of intensive care since his birth. While the prognosis for his long-term health is good, he has required and will continue to require very close care for a period of years. The amount of care and attention Jason’s son and whole family need at this point have led Jason to decide that he must resign from his position at Wesabe and focus on his son’s health.

Everyone at Wesabe supports Jason in his decision, and we all wish him and his family the best for the full and complete recovery of their son’s health. Of course, no one can see any other alternative for him but to make this choice. At the same time, everyone here is extremely sad to be losing Jason as our CEO.

As Jason’s co-founder, it is very easy for me to say that Wesabe would not exist but for his work. I first began talking about the ideas behind Wesabe in 2004, and nearly everyone I spoke with told me that asking people to manage and talk about their money on a Web site was completely crazy. There were two people who immediately and strongly supported what I was proposing to undertake: my wife, who has always been a wonderful supporter for me; and Jason. I have known Jason since we were each 14, and in all that time we’ve shared many ideas about the world and many ambitions for changing it. While Jason often disagreed with my ideas for businesses, and I with his, when we started talking about Wesabe it became clear very quickly that this was the right idea at the right time. During a particularly frustrating time in the lead-up to the company’s founding, I thought about giving up on the project, but Jason offered to keep working on it without me if necessary. We both made it possible for the other to keep going through those early, hard times of getting a company started, and Wesabe exists today as a result.

Unlike then, today Wesabe has a fantastic group of employees, members, supporters, partners, and investors, all of whom make the site the fantastic world it is today, and will continue to be into the future. I will be stepping in as Wesabe’s interim CEO, a position I’ve held before and am happy to hold for this great company. While we all are extremely regretful not to have Jason with us at the company, we won’t for a moment stop on the path to building out Wesabe’s future.

Please join me in wishing Jason and his family all the best.

-Marc

You’d think that a completely new Automatic Uploader would have been all for today, especially after a new release of the Firefox Uploader yesterday and a datacenter move last weekend. But no.

I’m very happy to announce the new Wesabe Tips tab. We’ve been working on the new version of Tips for a while, and in many ways, it fulfills the whole idea of Wesabe: to automatically and easily find ways for people to get more for their money. We’re calling this idea the Wesabe “Value Engine,” and we think it’s a great way to find values in your current spending, local to your neighborhood.

When you manage your finances on Wesabe, we look through the places you spend, and find suggestions for competitors that might offer you lower prices, higher satisfaction, or ideally, both. We then suggest those comparisons to you right in the transaction list of your accounts:

These tips are pulled out of the billions of dollars worth of transactions that members have uploaded to Wesabe. We look at how much people spend at a merchant, how often they come back to give that merchant repeat business, and what they have to say about their satisfaction with that merchant. From these points, we build a comparison that lets you narrow in on the values in your neighborhood, and decide which merchant is best for you and your needs:

In the case above, Wesabe recommended a local grocery store I’ve seen but have never been to, since I shopped at a more expensive option, Andronico’s, in my area. What’s great about this tip is that it shows me a cheaper option that also makes far more people happy. That’s great for me to know, and it may very well change where I shop.

You can also use the very rich tagging data on Wesabe to find related merchants that might be hidden values, or might be well-known to you as brands but not as economic options:

Here, people spend more at Ikea than at other “home“-tagged items, but they’re also far more happy with it. Between Lowe’s and Home Depot, two close competitors, Lowe’s costs a little more but also seems to make more customers satisfied.

On top of that, you can search for merchants that you know about, and want to learn more about — and that you want to compare to other options in your area:

As a consumer, these kind of comparisons, and this kind of data, just haven’t been available before. We know about big brands, and maybe we think well of them, or maybe we don’t. But while they know all about us — our credit score, our salary, where we shop, and even our personal details — we know far too little about them. Wesabe Tips intend to change that, and to empower consumers to make better decisions with our money.

This is a new feature, so the quality and number of tips we identify will vary based on how long you’ve been using Wesabe, and how you tag. We also know that you’ll find some hilariously bad suggestions in there — our favorite in testing was, “Don’t shop at Federal Income Tax — State Income Tax is way more affordable!” Oops. In order to account for problems like this, we’ve added a way for you to say, no, this tip isn’t useful, and here’s why:

The more feedback like this we get, the better the recommendations will become.

Of course, all of our aggregate data is available for free, without registering, to anyone. We’ll talk more about getting the most out of the Tips tab in the weeks to come. Also, all of the Tips our members have contributed over the past year and a half are now part of the new Tips system — check out, for instance, the creditcard tag, which is full of fantastic advice from Wesabeans.

Congratulations to everyone at Wesabe — especially Jeff, Brad, and Coda — for their work on this great new feature. We hope that this is a great new tool in the movement to empower consumers, so that we can all get more from our money and reach our financial goals.

I’m very happy to announce the release of the Wesabe Automatic Uploader, a new way to keep your accounts updated on Wesabe simply and easily:

As I mentioned in February, many of our members have asked for a way to keep their accounts up to date on Wesabe without having to download a client application, and without having to manually upload. We hear again and again from people that they love how we offer them tools that get them set up without having to give their bank passwords to a startup company — but that after using and coming to trust the site, they want a higher level of convenience. The new Wesabe Automatic Uploader means that for all covered accounts — including nearly 90% of the accounts on our site, and more and more all the time — you can enter your credentials once and then never have to deal with uploading again. The whole process takes under two minutes to set up, and works great.

We’re very happy to be able to make updating your accounts easier, since of course Wesabe aims to be the easiest to use, most powerful, and importantly, the most effective tool for getting the most from your money. But more than that, I’m also very happy that we have been able to build the best and most secure option for automatic updates. Unlike our competitors, we do not give your credentials to a third-party data middleman service — instead of having your data thrown around by a set of companies, with Wesabe your data stays just between you, your bank, and our site. Unlike our competitors, we don’t have to wait for a vendor to fix their code when something breaks. And unlike our competitors, we do not rely on fragile and unreliable “screen scraping” methods. Instead, we’ve built data import tools from scratch that allow us to support far more banks, credit unions, and credit cards, and do so much more efficiently. We believe our approach offers more flexibility, reliability, security, and privacy, than any other option you have. It also allows us to offer our Data Bill of Rights, which gives you full control of the ownership of your data, and our open API, which allows you full access to your data stored on Wesabe.

Not all accounts are supported, yet (Tanc, I hear you!), but we’re working on adding more accounts all the time. For those accounts that aren’t yet in the system, or for those people who do not want to use the Automatic Uploader, we are continuing to support our Firefox, Desktop, and Manual Uploaders indefinitely. We know that these tools allow people around the world, and with accounts at smaller banks and credit unions, to enjoy automated updates, and to keep control of their credentials where they want them. As long as people want them, we are not in any way removing these options.

To get started with the Automatic Uploader, sign into Wesabe and you’ll see an “Auto Upload Available” link for all your accounts that are currently supported. Click that link and you’ll be led through the two-step process to enable your account. Or, click “Add an Account” for any new account you want to upload to Wesabe, and you’ll be prompted for your credentials if the account is supported.

Congratulations to Brian, Jeff, Andre, Sam, and Tim for all their work on this great release. The design of the feature and its simplicity are unmatched, and its great to be able to offer the ease of use we know people want. Let us know what you think!

The Wesabe Firefox Uploader continues to be a very popular tool for working with Wesabe. Many of our members tell us that they love the Wesabe Dashboard, which shows you account balances, recent transactions, and pie and bar graphs of your spending. And, of course, it makes it very easy to automate uploads from nearly any financial institution — even smaller banks, credit unions, and credit cards that other sites refuse to support at all. While we are putting a lot of work into the upcoming Automatic Uploader release, we are planning to continue supporting the Firefox and Desktop Uploaders indefinitely.

Today I’m happy to announce the 2.0 release of the Firefox Uploader, which now supports Firefox 3.0 (beta 5 or, when future versions are released, later). Firefox 3.0 is looking to be a great revision, and we wanted to be fully ready to support it when it is released. Tim did a big overhaul of the Firefox Uploader to make it work with the newer Firefox code, and also allow it to support Firefox 2.0 in the same codebase. That way, you can upgrade your browser whenever you want, and still have the latest Firefox Uploader release.

Also, some members have reported that when they switch from one upload method to another, sometimes a duplicate account is created. To avoid that, Tim added a new way to automatically associate a newly-added account with one of your accounts already on Wesabe. Give it a try and you’ll see that it makes this process a ton easier.

Congrats to Tim on the new release. Let us know what you think, and thanks for all the great feedback about the Firefox Uploader. By the way, Tim is speaking at the Web 2.0 Expo in San Francisco this Friday, talking about how to build Firefox extensions and about the work he did to support Firefox 3.0. If you’re at the Expo, go give him a pat on the back!

We’re preparing for some big changes to the site, and as part of that preparation, we’ve scheduled downtime for Wesabe this Saturday, April 19th, starting at 8:00pm and ending Sunday morning at 4:00am, Pacific time. (To see the downtime period for your time zone, click here: start time to end time.) We’ll warn about the start of downtime on Twitter, and will post another tweet as soon as the site is back up. (You should follow Wesabe on Twitter to get all updates about the site — very useful and low-volume.)

With any large transition, things may go wrong or take longer than expected. We think it’s better to be up front about that possibility, so we’ve scheduled a fallback downtime for Sunday night, the 20th, again starting at 8:00pm and ending at 4:00am the next morning, Pacific time. If all goes well Saturday night, we will not use this time at all, but we wanted to alert you to the possibility.

Also, we’ll be taking our search system offline for upgrades during this transition. Search will not be enabled when the downtime is complete, but will instead be offline while we test and fix some of the issues many members have seen with it. We’ll post updates on search as soon as we have it stable and working in the new setup.

Again, follow us on Twitter to get all the updates as we go through this transition. Thanks much for your patience through this downtime, and look forward to a bunch of big improvements in the days and weeks to come.

UPDATE: The transition was mostly successful, and the site is up and stable. However, we did have some hardware trouble this morning, and we will be using some of the fallback downtime to fix it. We will be down tonight from 10:00pm to 2:00am, Pacific time. As before, follow us on Twitter to get updates about this. Thanks again for all your patience and support.

Wesabe is honored to be nominated for a 2008 Webby Award in the Banking/Bill Paying category. Thanks so much! It’s interesting that this year all of the nominees are startups — usually, well-established banks and credit cards get nominations. I think it says great things for the development of personal finance sites that so much great work is taking place, and getting so much attention. We’re very happy to be part of this fantastic movement.

Good reading for March 3rd:

• Nation & World | Consumers fight rising use of hidden fees | Seattle Times Newspaper - “For years, consumers ignored [fees] because they were relatively small and weren’t worth the hassle to fight. But multiply those small amounts by millions of customers and they become a multibillion-dollar corporate windfall.”
• Banking Fees Are Rising And Often Undisclosed - washingtonpost.com - “Banks are failing to provide consumers with information about fees on savings and checking accounts even though federal rules require such disclosures, according to a government report to be released tomorrow.”
• More Americans using credit cards to stay afloat - USATODAY.com - “Seven years in the credit-counseling business didn’t prepare Ann Estes for the alarming trend she began noticing last fall: As her clients’ mortgage bills became unaffordable, a growing number of them began paying their credit card bills before — and sometimes instead of — their mortgages.”
• I Will Teach You To Be Rich — Announcing the 2008 Tax Makeover Guide - “Today, I’m announcing a new eBook that covers all the basics of taxes. It’s called the 2008 Tax Makeover Guide.” Good timing…
• Tactics for the Frustrated Consumer (SmartMoney Magazine) | SmartMoney.com - “Consumers have had a lot to complain about these days. But where exactly do you go to get satisfaction? We looked at some tactics for the frustrated to employ.”