B Money

“Why Don’t We Shut Down the Grocery Stores?” and Other Assorted Items

Hi All! Boy, have things been crazy. There have been huge changes in my life and that continues almost every day. Soon I’m going to post an update about all that, but in the mean time, here are a few quick items I’ve thought of or encountered recently.

Brightening up one’s world can make a big difference.

One of the big changes in my life is that I recently moved into a new apartment in a new place. And one change I made to that apartment almost immediately was to replace the sad yellow light bulbs with much better 5000K LED ones. It cost me about $40 to do the entire apartment, including the tube lights in my “before/after” picture above. LEDs not only last years, but save electricity – which doesn’t much matter since I’m currently paying $.06 per kwh (God bless Texas!). But in most places where there is a utility monopoly and prices are much higher, it can be a real money saver. However, the biggest difference in my opinion is the way it brightens things up. I think it makes an entire room feel about ten years younger. But the key is to buy 5000K bulbs. 2700K seems to be much more common and anything at that level or below will give off that sad yellow light you don’t want.

Ryan Reynolds seems like a pretty awesome dude even when he isn’t playing Deadpool.

In the past I’ve talked about how much I love paying a fraction of what most people do for cell phone service thanks to Mint Mobile. Apparently at some point, Ryan Reynolds bought the company. And last week, he left a voicemail for all his customers. It was fun and funny, but it also informed us that we’re getting free unlimited data until the virus hysteria is over. It’s not only a nice gesture, but it put a smile on my face and brightened up my day. Additionally, I understand Mr. Reynolds, unlike many celebrities who simply want YOU to donate while their mountains of money stay parked right where they are, donated a substantial amount of his own money to virus relief efforts. It’s nice to see someone famous doing some genuine good in the world rather than simply virtue signaling to the rest of us.

The stock market is absolutely fucking bonkers.

16 million people have filed for unemployment over the last three weeks (not counting the backlog, which has to be considerable), earnings season is just about to begin raining fresh acid on everyone’s parade, businesses are scrambling to get their share of the massive deficit spending effort while the SBA and the banks scramble to figure out which way is up amidst the chaos, the economy remains mostly shut down, and the stock market is going…up. What the fuck is going on here? The only plausible explanation I can think of is that the “smart money” realizes this entire virus nonsense was blown absurdly out of proportion from the beginning and that the economic suicide program almost has to end sooner than it appears it will at the moment in order to avoid financial ruin for all of us. They believe they have already priced in most of the economic damage and are now trying to buy up assets at a discount.

The problem? Nothing appears to be on sale. Roughly two thirds of the value dip has already been recovered in spite of the fact that almost none of these companies are going to emerge from this unscathed and that there is almost no possible way we’ve seen anything more than the tip of the iceberg that is the damage that has already been done – and we’re not even attempting to start the economy back up yet which means the iceberg is still growing. Plus, our national debt was over 100% of our GDP before this mess – an unsustainable level. With Congress spewing trillions around like it’s going out of style and the FED printing more money than has ever been printed before, we are almost certain to face both a debt crisis with devastating budget consequences and inflation issues at some point in the not too distant future. Either taxes are going to skyrocket, inflation is going to skyrocket, or both. Almost any road we could take from here leads to pain on a massive scale and even the United States can’t ignore that reality forever.

My take? As I’ve previously mentioned, I’ve been almost 100% out of equities for a year and I’m happily staying out for the time being. I believe almost everything is ridiculously overvalued right now, virus or no virus, and it seems almost inconceivable to me that as the full extent of the damage becomes impossible to ignore, pricing won’t come back down to earth. I would be shocked if we didn’t see both the DOW and the S&P 500 below their recent lows again before the year is over and I have zero interest in buying any assets until we do.

Either some members of the media are getting very high before these press conferences or they are just trying to see if anyone is paying any attention at all. Or they just genuinely do want us all to burn.

In reference to the title of this post, on Sunday, a reporter literally asked President Trump why we aren’t shutting down the grocery stores and restaurant drive throughs. Perhaps I’m just a “far right” bonehead (far right encompassing basically anyone who isn’t far left in the minds of the media and its trained mob), but I can’t fathom this having been a serious question. Frankly, I don’t see how suggesting we cut off the food supply to everyone involves politics anyway, although I’m sure the media would find a way to construe it that way as they do everything else. Trump brushed the question off much more calmly and smoothly than I would have, given that this man had just more or less suggested we complete the process of turning this into a third world country, complete with roving bands of armed looters.

I sincerely suggest we choose this as the moment we stop listening to these psychopaths who clearly do not have the best interests of our country in mind. I don’t think this reporter could have gone much further with his question unless he had asked point blank why we don’t just start executing anyone who is witnessed coughing on the spot. The part I don’t understand is why. How does anyone, far left or otherwise, benefit if this country collapses into chaos? How does anyone benefit if we lose tons of economic production and our standard of living goes down? How does anyone benefit if sorry, when corrupt politicians use this crisis as an opportunity to even further erode the foundation of freedom and liberty this country was built on as they have so many times before? I just don’t understand it. But I do know one thing. Unless we stop feeding the media monster, it is going to continue to tear us apart at the seams. Your move, America.

This Is Going to Get a Lot Worse Before It Gets Better

Remember all those surveys that came out back when things were normal? You know, the ones that concluded that about half the population in the most prosperous country in the history of mankind doesn’t have $400, $1000, or some other nowhere near adequate amount of savings for an emergency? Those were scary enough then. But today we’re living in a brand new reality where all bets are off. Assuming we survive this as a country, which is far from certain in my view, we the people will have an unprecedented and horrific new threat to always have to be prepared for from here on out. The greatest danger facing us today isn’t a physical virus; it is weaponized insanity being wielded against us by our own government. If there had been any shred of trust left in that institution, it is certainly gone now. So today, the only post I can think to write that would be remotely relevant is one about some of my observations related to this real life nightmare we’re going to be unable to wake up from for some time to come.

Survival has just become the one and only priority. Thousands dying from a flu like virus will probably be merciful when compared to millions facing economic ruin and even possibly starving. I wish I could say I’m being hyperbolic, but that almost isn’t even possible anymore. If you were living paycheck to paycheck (and remember, roughly half the country was) and the government one day decided that although you were willing and able to work, you would no longer be allowed to, the shit would hit the fan very quickly. Remember, paycheck to paycheck literally means that if you don’t work, your basic bills don’t get paid. That includes everything down to food and shelter. And you can’t very well count on help from Washington. After making the snap decision to take away millions of people’s incomes, they are now squabbling over the details of eventually sending people some pittance that may get the average household through a week or two. Of course, there is a good chance they will tax it back in the end anyway. And meanwhile, the bills are due and that food habit isn’t going away.

That is the exact situation tens of millions of people are in, with tens of millions more about to join them. I’m sad to say it but at this point, if you have some excess cash available and are wondering what to do with it now that your savings account pays zero, ammunition is one of the most important investments you can be making. When people get desperate, things get ugly. And I wouldn’t count on a rapid police response at a time like this. Hell, you couldn’t even count on that when things were normal. I recommend putting some of your cash into something that quite possibly might save your life.

What about the market? I sincerely hope you listened to me or one of the other finance people in your life and dramatically reduced or eliminated your equity exposure some time before the last few weeks. If you didn’t, your only real hope now is to stay the course. Assuming we go back to something resembling normal at some point, you may eventually recover. I wish I could say something more reassuring, but we’re literally in a scenario where the only plausible solution, aside from cutting our losses and abandoning the economic suicide plan immediately, is for an already bankrupt federal government to crank the printing presses up to eleven and start spewing out checks to keep people alive. The country’s survival is far from guaranteed and even if it does happen, all bets are off in terms of what life will look like going forward.

If you are out of equities, congratulations on having at least one silver lining. However, I’m not sure what to tell you now. While all of my retirement money is in either cash or cash equivalents and every major index is down over 30%, I’m not necessarily about to push any of my chips back into play. On Sunday, the FED announced that in lieu of making even some astronomical specific commitment, they’re already down to the “whatever it takes” route. In other words, they have absolutely no clue what to do at this point, but they know that whatever they end up having to, it’s going to have neither upper limit, nor historical precedent. And the market’s response? A bounce in futures but a roughly 3% drop in all major indexes the next day. Even an unlimited commitment of free and easy cash wasn’t enough to do any more than momentarily slow the bleeding. We are likely to see a bounce whenever the federal government quits bickering and starts sending out lifeline money, but that could easily be neutralized by earnings reports, some of which are coming this week, and are obviously going to be atrocious.

The conventional wisdom would tell you that everything is on sale right now and it’s time to buy. But the conventional wisdom doesn’t come from a world where the most powerful country in history just committed economic suicide over a trumped up flu virus. And I’m not sure it’s relevant now that we’re living in that world. Here is the problem. On sale from what? If we survive this, the old economic normal is gone. At a minimum, we’re looking at thousands of bankruptcies, both personal and business. There is a ton of economic production that isn’t just going to turn back on as if controlled by a light switch and a ton of financial pain that will take time to filter through the system. Either a liquidity crisis or runaway inflation is also all but certain. I’d say the total market valuations we had been at a month ago are out of the question for a few years at the absolute minimum.

And even after the economy has had enough time to recover, who is going to forget this? Our government has voluntarily created an economic doomsday scenario that has already made 2008 look like a blip on the radar and is likely to do the same to 1929 before all is said and done. At one time, there were multiple generations of people who were frugal to a degree that only made sense because they had lived through the Great Depression. And many of them were that way for the remainder of their lives. A 30k DOW requires people to spend money like it’s their job to get rid of it as fast as possible. It also requires a high degree of business investment. How courageous is any business owner going to be with the knowledge that the government could effectively declare bankruptcy on their behalf at any moment?

I think the only way to conceptualize this is to try to imagine a different world. For example, if we survive this and don’t subsequently make a massive effort to start manufacturing in this country again, we’ve learned absolutely nothing from this experience. And I highly doubt we will go back to a world where people eat half their meals at restaurants or blow a hundred bucks on a casual night out. The retail and entertainment sectors will still exist, but at nowhere near the scale they did. Hopefully many of the people who previously worked in those industries will go into either newly created manufacturing jobs or the trades, where they were already sorely needed. Either would be a better alternative to a job that pays essentially minimum wage and doesn’t offer consistent hours.

And if we survive as a country, we’re going to have a desperate need for those people. Our infrastructure is crumbling and has been for years. It seems to me that overhauling it would be a great way to recover economically and improve life for everyone in the process. Mind you this won’t be cheap. Nothing will be now that we’ve destroyed the economy that made this country what it is. But if one good thing comes out of this, I’m hoping it will be that we as a society learn the difference between cheap and a good value. Maybe instead of the Kardashians making a billion dollars and pro athletes constantly bitching that their ten million dollar salaries aren’t enough now that someone else is making eleven, we could pay decent wages to people who do something other than sit in front of computers. Maybe they could make us some decent stuff that we don’t have to throw away and replace all the time.

Imagine if we rebuilt our country, our economy, and our middle class, all at once. If that were to happen, I could see this whole thing having been a huge blessing in disguise. Don’t get me wrong, economic suicide is not something we should have ever considered and every politician that had a say in it should be voted out yesterday. In fact, I think now would be a great time for across the board term limits and some other badly needed reforms. Anyway, the new world, whatever it looks like, will be a much more sober, grounded one. We definitely aren’t going back to where we were for a generation or two at minimum. But I don’t see that as a negative. Maybe it’s an opportunity for us to go back to focusing on the important things. Maybe it will even reunite a badly divided country. Who knows? We can’t always control our circumstances in life. Sometimes, the best we can do is to create strength out of struggles – even if those struggles are self inflicted wounds. I hope and pray that something good comes out of this. But for right now, buckle up. This is not going to be an easy time for anyone.

We’ve Created this Nightmare but We Can End It Too

Even the produce department had virtually nothing. I wound up buying a can of peas because it was literally one of the only vegetables available in the entire grocery store.

No one can hurt you as badly as you can. I learned this lesson in a very brutal way as I worked through my divorce in 2016. Yes, the girl I had dedicated myself to loving and spending my life with had done some horrible, cruel things (please don’t misconstrue this as me saying I had no responsibility for the failure of the relationship – I certainly did). But I’m the one who tortured myself over them. I’m the one who took much longer than necessary to let it all go. And in the end, the vast majority of the pain I experienced wound up being self-inflicted. Now I want to apply this concept to the situation we find ourselves in today.

The most dangerous virus on earth is the mainstream media and the product it creates. This collective group of people profits from reporting on almost exclusively the worst elements of humanity. And it is getting worse. What had been an hour of reading the news with little or no personal opinion being featured has turned into hundreds of channels of absurdly biased, round the clock “analysis,” which actually amounts to little more than propaganda in most cases. What had been a clickbait headline has turned into a rage baiting headline that fuels hatred of fellow human beings.

And now this horrifying phenomenon has devastated the entire world economy over a virus that, by all accounts, amounts to a moderately worse strain of the common cold. It’s not just the trillions of dollars in equity that has been vaporized in markets all over the world. People in everyday America have lost desperately needed income (way too many people live paycheck to paycheck even in the richest country in the history of the world, but that is another topic for another day) because the hysteria has demolished the businesses that had provided them. Some of these job losses will become permanent. And it’s also the fear and mob mentality that has resulted in some of our stupidest people buying up almost all the household supplies and even food so there is barely any left for the rest of us to buy.

If this goes much further, we’re going to see riots, looting, and other behavior that has no place in a civilized society. Already there have been reports of physical fights over toilet paper. Yes, there are actually people in this world who will get into a fight over fucking toilet paper. I would love to blame the media for all of this, and undoubtedly that would be at least partially correct. But at the end of the day, the media only exists in its current form because we let it. MSNBC, CNN, Fox News, and the rest of the horde of ENTERTAINMENT news channels (and websites) are only doing what they are because it is profitable. And it is only profitable because people watch.

Under normal circumstances, this is a big enough problem. The media encourages us to hate people who think differently and yell them down rather than to try to understand and work together. It amplifies everything that is evil in us as humans. If someone is doing something genuinely good like feeding starving children, it may get a passing mention, but it is very unlikely that anyone will remember this person’s name in a week. But if someone shoots up a school full of kids, it will be shouted from the rooftops for months until none of us can ever forget his name. This doesn’t just make it very easy to believe that “the world’s going to hell in a handbasket!” It also creates a feedback loop of negative behavior. Lots of other troubled kids watch this all happen and it isn’t lost on them that suddenly the whole world is paying attention to someone who had previously been a bullied, ignored kid a lot like them. I would bet my life that the media has literally caused school shootings that otherwise would not have happened.

In the case of recent events, the media has created a panic where none existed before, nor would one have been justified. Enough people watched enough of this nonsense on tv, decided they had to prepare for Armageddon, and went out and did just that. I’ve heard reports of people cleaning out their bank accounts to go supply shopping. This is nothing short of hysteria. And guess who then gets to report on it, profit from it, and create even more of it? The same group of people that started it to begin with. Make no mistake; despite the grim faces on the tv, this situation is an absolute dream for the media. But for the rest of us, of course, it’s a nightmare.

This reminds me of a Simpsons episode from years ago when the show was worth watching. It was smart back then. This particular episode was a Halloween themed nightmare scenario. A bunch of giant advertising creatures had come to life and were terrorizing people. Lisa visited the ad agency that created some of them and was advised that just like any other advertising, these creatures would go away if people simply stopped paying attention to them. With Paul Anka’s help, she came up with a little jingle called “Just Don’t Look” and sure enough, as soon as people stopped paying attention, the monsters all collapsed and the town was saved.

If we want to stop our real life media monster, this is exactly what we have to do. Stop paying attention. For the love of God, turn off the fucking tv. Get off of Facebook, Instagram, Twitter, and all the other methods you are using to squander the precious time you have on this earth being addicted to misery. Go back to living a productive, healthy life. The summarizing message of the coronavirus should be “wash your hands, eat healthy food, exercise, get enough sleep, stay home if you’re sick, and otherwise go about your business.” These are all common sense practices that should be followed regardless of the circumstances. If we stop feeding the disease that is the current state of the media, it will have to die – or at least change into something less destructive.

I’m going to close this post with a plea for sanity. Please, let’s stop hording years’ worth of supplies and let some other people buy what they need in order to get through the next week or two. Please, let’s be calm and rational. And most importantly, please, PLEASE, let’s stop allowing the mainstream media to turn us into little more than angry, hateful, idiotic puppets. We are better than this.

What I’m Doing Now that the Long Overdue Market Correction Is Finally Happening

Yes, I’ve used this picture before. But it’s a good one for today’s post too since stock market corrections are just another example of something going on sale!

I’m back! A wild string of events, combined with some laziness on my part, has resulted in me posting absolutely nothing for an entire month. I even considered shutting down the blog altogether. But after some reflection, I’ve decided that my original purpose of sharing my financial and life experience with anyone who wants it is still worthwhile and more than doable – provided I recommit myself to it a little. At this point, in light of my rapidly changing life circumstances, my goal is one post a week. And what better cue to get back to posting than a historic stock market event?

For the last couple of years, I’ve had plenty of people laughing at me. After all, I’ve been calling for a significant correction, or even a recession, since 2018 and I even did so publicly on this blog. In my eyes, the underlying economic fundamentals of this economy, as well as those of others around the world, have nowhere near justified the stratospheric asset pricing we’ve been seeing for quite a while now. And while recent events may be a little vindicating, this is no time for schadenfreude or gloating. Besides the fact that I’m not that petty, that wouldn’t do anyone any good. Instead, here is my take on where we are now and what I plan to do going forward. Please note that everyone should do his or her own diligence and I am in no way advising anyone to do anything in particular.

For anyone who hasn’t been paying attention, over the last week or so, stocks have collapsed, blowing right through correction territory (a loss of 10% or more) to the cusp of finally ending the more than decade long bull market that has had more people believing themselves to be investment savants than at possibly any previous point in the history of the world and entering a bear market (20% loss or more). Today alone, the DOW, Nasdaq, and S&P 500 indexes each lost over 7% of their value and even caused trading to be temporarily suspended for the first time since the Great Recession. At first, this was attributed mostly to the coronavirus, or more accurately, to the resulting mass hysteria drummed up by the typically profit motivated, rubbernecking mainstream media. But at this point, it appears pretty safe to say that was nothing more than a catalyst to the broad-based obliteration of trillions of dollars in asset value.

So what am I doing about this? Absolutely nothing…yet. I’ve had less than 5% of my assets exposed to the stock market in any way, shape, or form for well over a year now. But I’m eying the trigger with greater and greater excitement as I await the right time to start moving back in. I don’t think we’re there yet. I anticipate at least another week or two of serious volatility and carnage. Remember, the oil price collapse element just happened over the weekend so there will likely be more industry fallout there. Plus, the FED is likely to do at least one more pointless knee jerk rate cut, which will likely have a similar lack of positive effect to the .50% one they did last week, since they’ve long since painted themselves into a corner by following a policy of presidential placating rather than giving the economy the tough love it actually needed. When I decide it’s time, I’ll start pushing my 401K and Roth IRA money back in, probably 20% at a time. It’s almost impossible to “catch the falling knife,” so I’ll use dollar cost averaging to get as close as I reasonably can.

What if you didn’t get out when I did? If you have a long enough timeline before you need the money – I’m talking years – you’re fine. Staying in as opposed to bailing out has historically been the right move. Remember, you haven’t lost a penny until you’ve actually sold your asset for less than it was worth when you bought it. And if you keep putting additional money in, you will dollar cost average your way into a better position over time.

If you don’t have a long enough timeline, you shouldn’t have been in a stock heavy position. Sorry to be blunt, but sugarcoating isn’t going to make the situation any better. At this point, you have to adjust your plan to accommodate the new reality. Maybe you can hold off on retiring until the market recovers or if you have to retire soon, maybe you can work part time or do something else to bring in enough income to avoid being forced to sell and realize losses. Or if you have gains elsewhere, maybe you can use those assets for some liquidity and harvest some losses to offset them so you at least get a tax benefit out of the situation. It depends entirely on your individual circumstances.

Remember, there are two ways to look at this. One is that your asset values have declined. The other is that there is a big sale going on! If a recession does take place, it will definitely create huge opportunities one way or another. Happy hunting!

Big News and My Latest “Life Hack”

After all these years, I believe I have finally seen the district office in Chicago for the final time. And I’m thrilled to say that after everything that has happened, I’m walking away on MY terms. Note: there are many companies in the building so don’t worry, I’m still maintaining my anonymity…for now…

Happy Friday, Folks! I know I haven’t been very consistent with my posting lately. I’ve simply been insanely busy. I’ve been spending most of my time during the weeks working my current job and then traveling north to central Texas to spend the weekends working my new one.

Oh yeah. I found a new job. It involves working with great people I’ve built a great relationship with over the last year or so. They want me to help them take their company to the next level. And it gets better. They’re allowing me to continue to build my own company under the umbrella of theirs in the process. This is the best opportunity I’ve seen thus far in my young life and as well as things have gone for me over the last few years, I’m risking a lot of it to take this “from good to great” step up. I will most likely be resigning from the best job I have ever had within the next few weeks.

In order to juggle all of this, I’ve needed to find ways to budget my time much more effectively. And this morning it occurred to me that it’s finally time to grab a very low hanging piece of time saving fruit. I deactivated my Facebook account. Should I have done this a long time ago? Obviously. But better late than never. I hadn’t done it before because there are some groups here in Houston that only seem to post details about their events on Facebook. However, I rationalized that not only do I not have time for these activities right now, but any group that doesn’t offer a non-Facebook way of keeping up with it isn’t a group I’m interested in anyway.

I only deactivated my account for now so that I can go back to it if I want to. However, if some time goes by and I don’t miss it, I will complete the process and delete it completely. Won’t I miss out on people’s updates? I doubt it. Anyone who is truly significant to me is in touch with me regularly on the phone or in person. What I will miss out on is the annoyed feeling I always seem to come away with after scrolling for a while and seeing updates from the hordes of people I don’t truly know (because I never had a desire to) who have friended me over the years and constantly post on there. I believe the annoyance is usually mostly with myself for wasting time on something so pointless.

Here’s a hint. If you’re truly happy and successful in life, you are probably too busy being happy and successful to brag about it to the world on social media. That goes for Linkedin too, which has gotten more and more Facebook-y over recent years. I once literally watched someone destroy his career using primarily that site. And it just so happened to turn into a pretty amazing opportunity for me at the end of the day.

Anyway, I will post some updates soon and I intend to get back to my regular topics at some point when things calm down a little bit. Have a great weekend!

How to Save Money on Everything

I’ve been to well over half of the fifty US states and I’m not sure I’ve ever seen another one that has waffle irons that make waffles in the shape of the state in what has to be at least a majority of its hotels. God bless Texas.

Through much of 2019, my readers and I soldiered through posts about how to save money on every type of expense. Now that we’re in 2020, it’s time to pull it all together in possibly the most valuable single post I’ve ever written for this blog. Below is a list of the best ways I know to save money on literally everything, along with links to the original posts if you’re looking for more detailed information. If you follow everything on here, combined with some extra tips/tricks from the original, you are very likely to spend half what your neighbor does for almost exactly the same lifestyle. And that, my friends, is how you make financial progress in life.

Auto maintenance/repairs
- Use Amsoil for better protection and less hassle.
- Use Youtube to learn how to do some or all of your own work.
Cash donations
- This is a work in progress for me, but 80,000 Hours was recommended to me and seems to have a lot of information to help in this area.
Clothing
- Buy high quality, “timeless” style clothes that will last a long time.
- Save money by buying clothes at Costco, where they are often sold at incredibly good prices.
Food – groceries
- Buy select items at Costco to save a ton.
- Learn to cook your own food at home.
- Spend most of your grocery shopping time in the produce department and almost none of it buying highly processed crap.
Food – restaurants
- Treat restaurant meals as the luxury item they are.
- Limit high mark up add ons like alcohol and desserts to minimize costs.
Fun
- Learn to enjoy activities that cost little or nothing – there are plenty of them to occupy most or all of your spare time.
- When you do spend money, do it intentionally; in other words, make sure there is a good reason the money needs to be spent rather than just spending it mindlessly.
Gas
- Drive a reasonably fuel efficient, well maintained vehicle.
- Drive gently and potentially look into “hypermiling” techniques if you want to save more.
- Look for opportunities to reduce mileage by combining trips or walking/biking.
Gifts
- Be creative and buy something that shows you were actually thinking of someone rather than simply spending money to spend money. If you don’t know someone well enough to do that, why are you buying this person a gift in the first place?
Household expenses
- Costco. All day in this category.
- Use less of all kinds of things – toothpaste, dishwasher soap, etc. Replace disposable items like paper towels with reusable ones like microfiber towels.
Housing
- Whether you rent or “own” (that is in quotes since no one truly owns real estate; even a paid off house requires paying annual rent to the bad guys), think about what space, amenities, etc you actually need and don’t get something that has dramatically more than that.
  - This has the added bonus of limiting the amount you spend on crap you don’t need. If you can’t store it, you probably won’t buy it.
Insurance
- In general, whether it’s health insurance or auto/home/renters, you want to buy minimal, “disaster only” coverage and then keep yourself/your car/your home/whatever healthy. Do whatever you can to avoid using your insurance. It’s a necessary evil, but the goal is to minimize what you spend on it.
Medical
- An ounce of prevention is worth a pound of cure. Probably a hell of a lot more given today’s medical costs. Keep yourself healthy. It’s the most important investment you can make.
- Understand the health insurance system and act accordingly so you don’t get screwed.
- Goodrx is a godsend if you don’t have prescription insurance.
Memberships
- Costco will pay for itself many times over, even if you’re a household of one like me.
- A gym membership is almost infinitely cheaper than high medical expenses.
- I would be very skeptical of most other types of memberships; if I were going to get any, they would need to offer much more in actual value than what they cost.
Supplements
- This used to be a quagmire but now it’s pretty simple; Costco will save you a fortune in this area. Their economy of scale relative to “Bros Selling The Same Exact Stuff in a Gym Themed Store R’ Us” is just impossible to compete with. If they don’t have it, try Amazon. Again, economy of scale. This was so, so much more difficult when this stuff wasn’t mainstream.
Technology services
- No cable. Stream. And even then, only what you genuinely want to watch. In other words, don’t watch tv just to be watching tv.
- Don’t let the internet companies trick you into paying for way more bandwith than you need. Talk to an IT person you trust and they will help you on that.
- Learn to play the game; don’t ever pay more than the “promotional” price.
- Use a low cost cell phone service provider like Mint Mobile or Republic Wireless to pay a fraction of what most people do.
Utilities
- Use less. That is 90% of it for most people. Learn which items/devices use most of the electricity (the refrigerator and air conditioner in most cases), start working on those items, and move down the list from there.
Vacation
- If you travel for work and you aren’t using rewards programs to build up points that can be used towards your personal traveling throughout the year, you’re doing it wrong.
- Churn credit cards as needed to pay for flights, hotels, etc.
Vehicle depreciation
- Buy something 4-5 years old with around 50k miles on it for half price.
- Take care of it and drive it for several years.
- Rinse and repeat.

Happy New Year, Six Days In! Here’s What I’ve Been Up To

It may be a new year, but this man’s photos are still out of this world amazing! – Image courtesy of Jean-Marc Buytaert

Good morning everyone! Welcome to the first full week of 2020. My goodness, can you believe that? It’s crazy how quickly a single new number in the year can make things feel real. Anyway, some of you may have noticed my lack of posts lately. I know, shame on me. In this case, though, there is a very good reason for it.

My one and only “New Year’s Resolution” is to be at least covering my expenses with business income by the end of 2020, whether or not I actually take the plunge and stop being anyone else’s employee. And no longer being one to sit around planning too long (on account of my getting so old, thanks again 2020), I started a brand new business last month. Unlike my other one, this one is both very capital intensive and has the potential to actually make me a lot of money pretty quickly. However, it has been incredibly time consuming, especially when paired with an already pretty full time job, the holidays, and running another more part time business.

It has also been an absolute roller coaster so far. I’ve had some moments where I wanted nothing more than to go back in time to before I started and just not have done anything (or to simply disappear from the face of the earth so as to not have to deal with the situation another minute). I’ve had some moments of sheer, unadulterated ecstasy. And it hasn’t been unusual to have both extremes happen in the same day. Over the last few days, I realized I had made a terrible mistake, got through the process of admitting it to myself, then to some very important people in my life, and then made a dramatic change to fix everything – with a massive assist from someone who will likely become a big player in the whole thing. At this point, it looks like through both hard work and some extremely good luck, I may be on to something. But only time will tell.

Because I am still employed at my “day job,” I’m not prepared to reveal what I’m doing yet. But suffice it to say that it’s very likely to result in either a very good or very bad outcome. You don’t reach major goals by half-assing something. You have to throw the entire thing into the mix. And that’s what I’ve been doing, often foolishly sacrificing sleep in the process, instead of writing posts on here. However, I’m going to work harder to carve out enough time for at least one post each week (and also to sleep an adequate amount). That will include a couple of year end posts as well as a potentially very impactful update on the situation I talked about in this post, pending what happens in the next few days.

For now, I wish you a great and effective Monday!

Do You Have Credit Questions? This May Help.

I hope everyone had a great Christmas! Today I just have a quick referral for you. Recently, I had someone named Chris email me about a post he wrote on credit. He scoured the internet for information as he put this together and found my blog among many others in the process. His goal was to create the most comprehensive source of information about credit anywhere on the internet. After reading the post, I have a couple of takeaways. First, it is extremely thorough. Clearly he put a ton of time and effort in. Second, it talks about credit both in the US and the UK. So if you live in either country (or both) and want to see how the systems stack up to one another, this is a great post for you to check out.

You can find Chris’ post here. Thanks for reaching out, Chris, and good luck to you!

The Easy Way to Drive a Great Car (Or Truck) and Pay a Fraction of What Most People Do

I bought this car five years old, with about 30k miles on it, and in great condition. By the time I’m done with it, I anticipate an annual depreciation cost of right around $2k a year – well under half what most people spend on comparable cars.

We’ve done it! We’ve reached the last of my Annual Expenses posts and we’ve gotten through them all with just a few grains of sand left in the 2019 hourglass. I plan to do an aggregated, “year in review” style post that will pull together the highlights so be on the lookout for that in the coming weeks. My last expense category is vehicle depreciation and I spent an average of $2100 on it over 2017 and 2018. I believe a “bare minimum” budget number would be about $500.

When people talk about deciding between buying a new car or keeping the old one around a while longer, you will often hear phrases like “this one is paid off” or “I don’t want to have a car payment again.” Those statements come from a cashflow oriented viewpoint. But I prefer what one of my customers, a lifetime wheeler and dealer, likes to say: “You make money when you buy, not when you sell.” In reality, that “paid off” car still costs actual money each month, cash or not.

This expense is called depreciation. For a simple example, let’s say you purchase a car for $35k, roughly the average new car price today. You drive it for five years and then sell it for $15k. Your depreciation cost was $20k over the life of the car or $4k per year, regardless of your monthly note payment or when you paid it off.

So how can you reduce this expense? Exploit the depreciation curve, which starts out very steep but flattens quickly. Almost any car is going to lose roughly half of its value in the first five years. But most cars will only have 50-75k miles on them at that point and a good, well maintained one can go 100k or more relatively trouble free miles from there. This is reflected by the fact that the average car in the US is nearly twelve years old. The secret is out and that is the only reason the depreciation curve isn’t even steeper from the outset.

But it still makes sense to follow this principle and you can do it with two simple rules. One, only buy cars that are about five years old. That way, you will always pay half price at most. Two, only buy cars that have been taken care of well. If you aren’t personally mechanically inclined, insist on having someone who is inspect any car before you buy it. It shouldn’t cost you more than a hundred bucks or so, which is nothing compared to repairing even a single major issue if you wind up buying “someone else’s problem.” By following these two rules, you can buy almost any car within reason for $20k or less and run it long enough to keep your annual depreciation expense at $3k – or less.

But what if you want or need to keep the number much lower than that? It’s going to require more shopping around and more know how, but it can be done. You’re looking for something later in the depreciation curve, likely priced around $5k or less. In that price range, you’re going to be looking for higher mileage cars (100k+), cars that start out priced lower than most, or cars that depreciate faster than most. I would avoid that last category altogether, since there tends to be a good reason cars depreciate faster than average. Chrysler products, for example, are widely known to be unreliable. You’re not looking to lower your depreciation expense by simply increasing your maintenance expenses.

Instead, I would look for quality, high mileage cars in exceptional condition. They are out there and they don’t sell for all that much since most people aren’t willing to take chances on them and they are very difficult to get financed. One trick is to look for signs of mostly highway mileage, which puts a lot less wear and tear on a car than city mileage does. There are plenty of good guides on how to do this online, like this one. In this price range, inspecting the car thoroughly is crucial. Here is an excellent place to start learning how to do it, although if you’re uncomfortable with it, it’s well worth it to bring someone who is.

The payoff? If you buy a quality used car for $5k or less, it has already depreciated close to as much as it’s going to and you have a great chance of keeping your depreciation expense at $500 a year or even less. When I was a young lad, I bought my first handful of cars on the extreme end of the depreciation curve, all for less than $1k. In most cases, I drove them for about a year and ultimately sold them for within a few hundred dollars of what I had originally paid. I don’t need to do that today and I like to have something a little fancier to drive around in, but it’s nice to know I could if I needed to.

That’s about all for now. I provided links to a couple of great videos in this post. As for this blog, I wrote about which car brands are the best and worst here and about basic maintenance here. And the nice thing about the internet is that there is a whole universe of information out there at your disposal. If you don’t know much about cars, I recommend browsing around and doing some research until that has changed. The more effort you put in and the more you know, the better a position you will be in to score a huge win on your next car. Have a great Monday and a Merry Christmas!

How I Was Able to Create a Small Raise For 2020 Out of Nothing

Just a few more tricks like this, and I, too, can show the world how successful I am by spending hundreds of thousands of dollars (and tens of thousands more per year on an ongoing basis) on something someone will probably go out of their way to hit with their door in a parking lot somewhere

Happy Friday! I know most of you are in a hurry to get work over with and go home, so let’s get right into this. Recently, my employer’s HR department sent out the dreaded annual insurance email – you know, the one where they tell us how much more we will be paying for coverage in the new year and how much worse said coverage will be. To some extent, I’m lucky and thankful to be joking because at least with the health insurance, our coverage is actually relatively excellent and the company makes a very serious commitment to keeping our contributions towards the premiums very reasonable for what we’re getting. But nonetheless, we do pay at least a little bit more for less every year, just like at every other company I’ve worked for over the last several years. What can I say? Combining government and healthcare was a very, very poor decision some power hungry, vote buying politicians made a long time ago and we’re all going to continue paying for it until someone with very big balls comes along and fixes that mistake.

Anyway, this year, the health insurance only changed to a different insurer while the coverages and premium contribution stayed about the same. That’s a win in my book. But for whatever reason, the company has never had a great dental insurance option. This year, the deduction stayed the same: $20 per pay period ($40 per month). However, the $100 “lifetime” deductible we had with last year’s insurer turned into a $100 deductible without the lifetime language with this year’s. In my mind, $580 is too much to be paying for two dentist appointments a year and even in the unlikely circumstances I would need anything more than those two appointments, the insurance has the same stingy $1500 cap as last year’s.

So this year, I decided to do some checking and see if I could improve the situation. And boy, was I surprised. When I called my dentist’s office to find out how much appointments cost, it quickly became apparent that I had struck a nerve. She described a dystopian clusterfuck that basically involves providers getting screwed by the same insurers that are screwing the patients on the other side, much like health insurance. It sounds crazy, but by my not having insurance, my dentist can literally charge me less money AND make more.

How much? The standard annual protocol is one cleaning/exam/x-ray appointment and one cleaning/exam appointment. And the costs? $80 for a cleaning, $42 for an exam, and $46 for x-rays. In other words, for the $580 I paid last year, I was getting the equivalent of $290 worth of appointments. That means I was paying $290 to insure against the chance of incurring up to $1210 in additional costs. And keep in mind that if there were additional costs above $1500, I would have been paying for them anyway. And the last time I had a non-routine dentist appointment? Probably when I had my wisdom teeth removed about fifteen years ago. To sum it up, I’ve been getting robbed for however long I’ve been paying anywhere close to this much for dental insurance.

But wait, I can hear you saying. I won’t save a full $290 since the $480 in premiums would have been tax exempt, thus costing me closer to $300. And that’s true, but I’ve got it covered. In conjunction with declining the dental insurance for 2020, I also began contributing $30 a month to an FSA (flexible spending account), which is also tax exempt. Mind you that I don’t like FSAs since they are “use it or lose it” money. But in this case, I know I will use $360. $290 of it can go to the dentist appointments I just mentioned (yes, dentist appointments are FSA eligible). The rest is spoken for by a regular prescription I have. So while I will lose a tiny bit of tax shield, it will only be to the tune of $120 a year or roughly $50 in actual dollars. In the end, I will be saving about $240 in 2020 thanks to getting rid of my ripoff dental insurance.

The brilliant part? Anyone can do this kind of thing. I absolutely don’t recommend doing it with health insurance, as that would be unacceptably risky. But in the case of dental insurance that would only cover a max of $1500 a year, it’s a pretty solid win. And if you’re lucky enough to pay a lower tax rate than I do, all other things being equal, you save even more than I am. This is why I’m not terribly concerned about inflation. I can almost always find little ways to cut expenses without losing any value whatsoever. This tiny adjustment saves me close to 1% of my annual spending by itself! With just a few more like it, I will easily recoup the 2-3% inflation is likely to take away. Brilliant. Have a wonderful weekend!