B Money

You Are Much Wealthier Than You Probably Realize – Part 2

A rich man’s car? Maybe, maybe not. Image courtesy of Jean-Marc Buytaert

Happy Friday everyone! Here is the conclusion of Wednesday’s post.

Now let’s look at the high end. A six figure salary is yesterday’s news since everyone has one now, right? Wrong. An annual income of $100k puts you in about the 90^th percentile as an individual or the 75^th as a household. Keep in mind, we are back to US only numbers now. And I want you to see how steep things get from there. Want to be in the top 5% of earners? That’s about $150k. And that top 1% that is always being demonized by the media? Roughly $300k. Not nearly as much as you thought, I’ll wager. And that means everyone making any amount larger than $300k is in an increasingly smaller fraction of the top 1%. There really aren’t that many of these people.

Not quite the common perception, is it? The distortion is caused by free and easy credit. Fifty years ago, if you were driving a Corvette, it meant something. Today, you see them everywhere because any idiot with some combination of a halfway decent income and a halfway decent credit score can buy one brand new. You don’t necessarily even need both of those to qualify anymore. Subprime auto loans are starting to blow up now that the recession is most likely in progress, but they’ve been handing the damn things out like candy on Halloween over the last several years.

The point is this: appearances mean nothing. Zilch. Most people have been so busy maxing out their credit to show off how successful and important they are for so long that they didn’t even notice when what they were doing ceased to mean ANYTHING. Women, here’s a special PSA for you. That guy driving the fancy car might be the hyper successful whatever that he claims to be. But more likely than not, the story is a lot more ordinary than that and he’s either borrowing Daddy’s car or he’s just maxed out his credit to sell you something a little different. It’s called peacocking and it’s extremely common – and a fairly logical response to a phenomenon called hypergamy. Women don’t usually do it because most men don’t care about the finances/career success of the women they date. They put on makeup and get breast implants to make themselves more marketable. But that is a whole different topic for another day.

When I was growing up, there was a very exclusive subdivision in our area where every single house was a million plus and living there almost seemed to make you a celebrity. And in fact, there were some living in there, even in lowly Wisconsin. A certain Green Bay Packer who once got in the wrong hot tub and suffered some pretty serious consequences for it was among them. Anyway, this was one small suburb of Milwaukee, Wisconsin. Today I realize there aren’t enough jobs within fifty miles of that subdivision that pay $300k or more for someone holding one to have been living in every one of those houses, let alone every similar house in all the other similar “rich people” enclaves in the metro area. Most of these people that I thought were living fairy tale lives were in fact living in financial prisons they themselves had built. I don’t need to know every one of their personal stories. The statistics make what I just said an undeniable fact.

There is a wonderful book called The Millionaire Next Door that I highly recommend to everyone. It goes into detail on this very thing and I still remember specific parts of it to this day that just blew me away. The summarizing message is that now that almost anyone can appear to be wealthy, it has obscured the fact that most people who are actually wealthy don’t care very much about appearances. The lesson? If you want to actually BE wealthy, you’re pretty unlikely to get there by trying to LOOK wealthy. In fact, spending everything you have on trying to keep up appearances will almost guarantee that you will never actually have much of anything.

This is a seemingly obvious concept. But everywhere you look, style is being valued more highly than the actual substance it supposedly represents. Most of what you see is fool’s gold. And bringing it back full circle, don’t let these peacockers fool you. Live your life reasonably and be happy. Remember that a very tiny percentage of the people who have ever lived on this earth have had things as good as you do. This is whether you make $30k a year or a million or anywhere in between. Perspective is incredibly valuable. It’s easy to lose it in a culture like ours where results are often valued more than the principles and the processes that produced them. But fight back against that. It’s only a feeling. The facts are much more relevant to your success or failure in life. And I want every one of my readers to have the former.

You Are Much Wealthier Than You Probably Realize

Hong Kong – Image courtesy of Jean-Marc Buytaert

In this crazy world we live in, everywhere you look, someone is showing off their wealth. Million dollar houses, hundred thousand dollar cars, exotic vacations, you name it – these things are all so commonplace that we barely even notice them anymore. Social media has only amplified this trend, with millions of people taking to the internet to post snapshots of their lives that have been carefully curated to show them only in the best light possible. Especially if you live a pretty typical life, and even if you don’t, you can be forgiven for getting the sinking feeling that you’re being left in the dust – especially financially. And that’s exactly the feeling I want to challenge today.

I’m going to use cold, hard facts – statistics in this case – to do it. When you’re looking at statistics, it’s important to make sure you understand the context. In the case of income statistics, you can start by ignoring average (or mean) and going straight to median. Why? Average income numbers are pulled way up by the highest earners. Median income is a much more accurate concept of what is “normal.” For example, the average household income in the United States is over $70k a year, while the median is roughly $60k. And that brings me to my next point. Household income seems to be the most commonly reported. And that’s fine. But if you’re a single person household like me, an individual income number is a better means of making an “apples to apples” comparison. And in this case, the median individual income is only a little north of $30k a year, while the median household is nearly double that at $60k. You can also drill down deeper using all sorts of other factors. The Bureau of Labor and Statistics (BLS) collects tons of data and it is freely available to anyone.

Now that we’re starting from a realistic point, we can begin doing some comparisons. if you live in the United States, or any of numerous other countries with modern economies, you are already better off than a stunning percentage of people in the world. There is a really interesting website called Global Rich List that aims to bring awareness to poverty around the world. If you enter the $30k figure from above (again, this is someone dead in the middle here in the US), you find that this seemingly small income would put you in the top 1.23% of people worldwide. The federal poverty level in the US is roughly $12k a year for one person. But even a person making that little is in the top 14.5% worldwide. And roughly that same percent (14) of the US population lives at or below the poverty line. So if you live here, the odds are overwhelmingly likely that you have more to be thankful for than you might think. You could do the same type of analysis with net worth numbers instead of income and get similar results.

This is without even getting into a historical discussion. If you started making comparisons with all the people who have ever lived on earth, you’d be looking at almost infinitesimally tiny fractions of a percent of people who have lived as well as even the poorest among us today. And that’s without even factoring in all the technological advances humanity has made. For example, air conditioning was invented in 1902, which means that before then, even royalty didn’t have it. Airplanes were invented the very next year, so the nobility of the past couldn’t travel anywhere nearly as fast as we can. And don’t even get me started on being able to hold the knowledge of the entire world in one’s hand. Before the printing press was invented in 1455, books themselves were very rare because they had to be copied by hand. But today you can carry thousands of them in your pocket – and they’re updated automatically as knowledge progresses!

To be continued…

My Best Efforts to Keep the Insurance Industry From Robbing Me Blind

This expense is one dragon even I cannot slay.

Happy Monday, ya’ll! Here is the latest post in my Annual Expenses series. If you didn’t see the introduction post that summarizes all of my expenses, you can check it out here. I’ve been going into detail on one category each Monday. Over 2017 and 2018, I spent an average of $3000 per year on insurance. To be honest, this category makes me sick since I don’t like betting against myself and have literally never received even close to what I’ve paid in premiums. Not one single year. There is a lot to discuss on this since it includes three subcategories: auto, homeowner/renter, and health/dental. And it is a highly variable expense category since insurance is based on personal factors. But I believe a minimal annual expense would be about $2000. And this is a great topic to go into since my annual auto/renter policy renews in early October and I’m going to be shopping around to try to get just a little bit closer to a reasonable amount – if that is even possible anymore.

I’ll start with health insurance since it is the most important. I’m very fortunate to have a solid plan through my employer that has a very low required contribution of less than $1000 total per year – and that’s pretax. Our dental insurance is less generous and as a result, I even went without it one year. But dentist appointments seem to be much more expensive than they are in the Midwest – about $300 on average versus about half that – so I got back on it. Anyway, admittedly, my minimum annual insurance number above requires an employee friendly setup because if I didn’t have that, it appears I would be paying about $4k total per year for fairly minimal individual health coverage. However, I would then have the advantage of being eligible to contribute to an HSA (health savings account), assuming I chose the right plan. An HSA is the add on you want. A FSA (flexible spending account) is only useful for those who have medical expenses that are both high AND predictable. Unlike an HSA, which is basically a bank account you own (but can only use for medical expenses), a FSA is a tax advantaged, but “use it or lose it” account. So only contribute what you KNOW you will spend or you could easily lose money instead of saving any.

The key with health insurance is really to stay as healthy as possible. It’s not going to be cheap no matter what you do, but if you have high medical costs, it’s going to be a lot worse. This is one of the reasons I said investing in your health is the best investment you could possibly make in one of my very first posts on this blog. This is also one of those areas where you’re going to pay through the nose for having kids, but that’s a whole other topic. Long story short on health insurance, go through your employer if they offer a decent plan and live the healthiest life you can so you can use it as little as possible. Frankly, if this industry doesn’t see dramatic changes over the next decade or so, this country is going to be bankrupt. So I don’t know how in depth it even pays to go into this. It is simply going to be a moving target for a while.

On auto insurance, I’m paying a bit over $1500 a year for a single vehicle, which makes me sick given that I paid just over half that much for two in Wisconsin (and not much more than that for three when I was married). But you only have to spend a day on Houston’s roads to see that the drivers here more than justify that difference. Dallas, San Antonio, and Austin haven’t been much better in my experience, so it’s possible that sky high insurance costs are simply a Texas thing and a well justified one at that. Anyway, nearly half of that is for collision, which you should only have if your vehicle is objectively worth at least $10k in my opinion, and the rest is for liability, comprehensive, and so forth. I have a 100/300 policy and I’m actually likely to increase that and add umbrella coverage in the near future since as my net worth skyrockets, so does my potential loss if I somehow hit one of these aristocrats who drive $400k Bentleys in an area with roads that are about one step above a war zone. And it wouldn’t even need to be a car that expensive. Sending someone to the hospital could cost far more than that very quickly, especially if they sue. And if it’s major, that’s probably more likely than not. It’s a calculation you need to make for yourself. If the vast majority of your assets are in retirement assets, which are typically protected in the event of bankruptcy, then you can probably afford to gamble a little by having the state minimum level of required liability coverage. However, if the opposite is true, then you’re probably going to have to pay for higher coverage limits as I do and be thankful that it’s necessary.

As far as saving on auto insurance, there are at least some things you can do. First and foremost, have good credit and a clean driving record. If you get a ticket, fight it. The ticket itself may only cost a hundred or two, but the increased insurance premiums could cost more than that on an annual basis for five years or more. Some states are better than others for this. I know people in states where they’ve been able to lawyer up and get out of anything and everything up to and including alcohol related stuff. In other states, it’s not even worth trying. Do your research and find out which your state is and act accordingly.

Definitely shop around with your policy. The rule of thumb is to do it every other year, but with as much as I’m paying, I’m doing it every single year until further notice. Loyalty definitely doesn’t seem to be rewarded at all as most insurers raise your rates each and every year now. About the only exception I’m aware of is USAA. If you are eligible to do business with them, thank your lucky stars and do so! I’ve heard nothing but good things. I’ve also heard good things about Amica, although every time I’ve gotten a quote from them it’s been way out of the ballpark so who knows. But most insurance companies are the same basic “charge sky high premiums, then forget your wallet when it comes time to pay the bill” ~~scams~~ operations.

At least by shopping around, you know you’re not getting totally screwed. Ask for the longest term you can get (usually it’s either a year or six months) since if you don’t, you’re effectively financing your annual premium and the interest rate is not low. Also, you can raise your deductibles to the max. Usually it’s only $1000 though, which limits the premium difference it makes. My attitude is that most accidents involve replacing a bumper, which is going to cost about $1000. I’m not going to make a claim and send my premiums into the stratosphere so the insurance company will hem and haw and finally grudgingly pay out five hundred bucks. No thanks. So I’d be paying the first thousand regardless in the event of a serious accident.

That’s another thing to keep in mind with insurance. Don’t make a claim if you don’t have to. Much like with buying extended warranties, you are extremely unlikely to come out ahead in the long run. If you do, you’re one of the lucky (although also extremely unlucky in another way of thinking) few. Think about it. If the insurance company (and warranties are sold by them as well) pays out more than it takes in, it goes out of business. So in most cases, you’re going to have to fight for every dollar. If the scope of the situation gets big, make sure the insurance company knows you will involve an attorney if you need to. And don’t be afraid to follow through with that either. Someone needs to keep the bastards honest.

I saved the least important type of insurance for last, at least if you’re a renter. Most renters insurance I’ve ever had has included roughly $30k for personal property, which is enough for almost any apartment dweller, and has cost about a hundred bucks a year – yes, even in the insurance hell that is Houston. Usually I just get it as an add on with whatever auto insurance company I’m going with that year. Of course, it is much more significant if you are getting homeowners insurance since you’re insuring the exterior of the building as well. And if you live in a hurricane area like Houston, suck it up and pay for the flood insurance. In case you haven’t been paying attention for many years now, new storms “make history” on a very regular basis. Don’t assume you are safe just because the flooding didn’t reach your area in the past. People have literally lost their homes for doing exactly that.

If it hasn’t come through in the tone of this post, I fucking hate insurance. It is one of the only industries besides politics that makes finance look ethically upstanding. I get that there are problem customers like in anything else, but for the vast majority of us, this is going to amount to decades and decades of donating money to for profit entities. But if you keep an eye on them, both when making sure you’re paying a competitive premium, and when actually making claims, you can at least keep the bleeding from turning into hemorrhaging.

Sorry For the Lack of Posts This Week

I know I’ve been a little quiet. If I were Elon Musk, I would tell you I’m currently in “production hell.” However, I’m not an eccentric billionaire doing all I can to change the world. I’m just your garden variety finance guy working as hard as I can to mitigate the damage of the early, but already devastating stages of our latest and long overdue recession while also trying to somehow continue to find and close new business, run my growing side business, continue my flying lessons, and do what I can to be there for some very dear friends who are going through some difficult times in their lives. These are all such high priorities that I’m not willing to compromise on any of them. So it has been all I can do to keep up this week and I’ve chosen to let this blog slip over losing sleep or letting my workout schedule be affected.

However, I’m going to do all I can to get back on top of everything this weekend and free up some time to get back to my regular posting schedule next week. For anyone who has been following my blog, I appreciate your interest and patience during this chaotic time. I’ve committed myself to keeping this blog going for at least a full year and I have no intention of going back on that. See ya’ll soon!

Don’t Be House Poor: How to Tame Housing Expenses

This is what a normally beautiful resort style pool area looks like when it floods during hurricane season. But one advantage of renting is that I didn’t have to lift a finger; the mess was cleaned up automatically.

Happy Monday, ya’ll! Here is the latest post in my Annual Expenses series. If you didn’t see the introduction post that summarizes all of my expenses, you can check it out here. I’ve been going into detail on one category each Monday. Over 2017 and 2018, I spent an average of $12,600 per year on my housing expenses. Please note that this only includes rent – not utilities, maintenance (I pay zero since I rent), or any other associated expenses. And that is actually trending upwards. This is the largest annual expense for most people and I’ve made tons of financial progress over the years by being very conservative with it. I still am in some ways, but I’ve definitely moved a significant distance along the cost/quality spectrum in 2018 and 2019.

What does that look like? For the last two years, I’ve lived in what I’d call medium-high end luxury apartment complexes. But I’ve also had one bedroom apartments, as much to maintain the more minimalist lifestyle I’ve learned I prefer as it is to save money. It’s hard to buy too much crap you don’t need when you only have 700 square feet to put it in. So I avoid clutter but also get to enjoy premium features in my unit, beautiful landscaping, great amenities, and a safe, quiet location. But even in the relatively reasonable Houston market, I’m spending more than I was in most of 2017 in the Milwaukee suburbs, which skewed the average down.

This year, I’ll have spent over $15k when all is said and done. I’ve allowed this form of lifestyle inflation to happen because I genuinely enjoy where I’m living and because it is still at an extremely manageable level relative to my total income. The conventional wisdom is to spend a maximum of 30% of your gross income on rent. My preference is no more than 10%, and grudgingly 15% if you’re paying a mortgage instead of renting (more on that later). I acknowledge this would be much more difficult with an income at or below the average range. But there are ways to do it, and without compromising on essentials like safety. And that is why I said I believe this expense can be reasonably kept to $6-10k.

How? For starters, by viewing things from a more traditional perspective. As individuals in today’s world, we are more isolated than at any previous time in the short history of our species. Only a few generations ago, someone living alone as I do was not only fairly rare, but seen as pretty unfortunate and even embarrassing. I think humanity has lost a lot in the process of abandoning our collectivist roots. And I say that as a man you can probably correctly guess is a pretty strong fiscal conservative. Long story short, live with someone. It requires careful relationship management, particularly if you choose to live with a romantic partner, but it can be done. I believe there are likely psychological advantages, even for someone like me who doesn’t need to do things that way for financial reasons. And with two (or more) people kicking in, it’s pretty easy to keep your annual rent expense below $10k in all but the most ridiculous markets, like New York City or San Francisco.

From there, follow the same process I always talk about. Think about what your needs truly are. If you don’t have a fancy car, you probably don’t need to pay more for a place with a garage. If you aren’t going to use a fancy resort style pool area, a gym, a spa, etc, very often, don’t rent somewhere where you’re paying for those things. If you want to be a hardcore personal finance warrior like the legendary MMM, consider paying more to be close enough to work to walk, bike, etc, and see if you can cut car ownership, the second largest expense for most people, out of your life entirely for a year or two. If you don’t care about hardwood floors and granite countertops, well, I think you get the idea.

What if you own your home instead of renting? Theoretically, it should be cheaper then, since with renting you’re paying for someone else to do all the maintenance as well as to have the option to leave on short notice. But in the reality of today’s hyper-inflated housing market, that’s often not the case. So my first advice in this area is not to buy something overpriced. Mark my words, eventually, even the mighty US housing market is going to get a dose of painful reality. Those who have been patient will be the beneficiaries when it finally happens. However, there is an argument for building equity (just don’t overestimate this factor or try to have any financial discussion whatsoever with your average real estate agent, who is desperate enough to say anything and knows/cares very little about economics or your financial well being), having a more permanent situation, fewer neighbors in close proximity, etc. So to allow for that value, which is certainly real in some cases, I would sign off on paying up to 15% of your income on a mortgage – preferably with a twenty year max term so you aren’t paying a fortune in interest or buying way more than you can truly afford. If you can’t do that, buy a less expensive house, rent another year, or look into renting out a room in the house. There are always options; never forget that.

Keeping your housing expenses well in check really only requires thinking a little bit outside of the box. Just because other people do things a certain way, that doesn’t mean you have to follow suit. There are way, way too many people out there who are “house poor” – in other words, their finances are unnecessarily constrained because they are paying way too much for their residence. P.S. If you want to live in Silicon Valley, ask yourself if you can get a job there that will pay you several times what a job in a reasonable housing market will. Keep in mind that the higher the income, the greater the diminishing return effect due to higher marginal tax rates. And spoiler alert, unless you’re a CEO or something pretty close to that, and you couldn’t get that kind of job anywhere else, the answer is going to be no.

The Most Accessible Thing Jordan Peterson Has Ever Said

The bottling room at St Arnold Brewing Company – Houston, TX. Breweries have to be very clean to keep their precious product safe and delicious!

“Clean your room.” Such a simple concept, but so chock full of brilliance. I wouldn’t call myself a Jordan Peterson disciple. While I regularly find myself almost wanting to scream “get to the damn point, man!”, I agree with him a lot of the time, especially when he’s talking about using personal responsibility and discipline to improve yourself and the world around you. But I can’t abide his stated view that this personal responsibility must also extend to having children and that it is impossible to reach self actualization without doing so.

First, I believe we already have plenty of people on this planet to pose a serious threat to its continued support of us as a life form. The changing of Earth’s climate at a more rapid pace than has ever been previously recorded, war in all its forms, hatred, chronic and unnecessary freeloading, and many other problems seem to be progressing well enough without the help of even more people to further intensify the constant, and often brutal competition for the limited available resources. So I’m not sure that more procreating is the answer. Second, I believe one benefit of this sentience thing we’ve evolved is that we can make lifestyle choices for reasons other than biological urges alone. I wouldn’t begrudge anyone the right to have children, provided they have the resources necessary to take care of them and the intention of doing so. But I feel I can live a full, meaningful life and contribute almost anything I want to the world around me without ever reproducing. I guess we’re going to find out in any case. Frankly, my genetics seem to be average at best and ya’ll should probably be thanking me. But I digress. The man has a lot of very important things to say and “clean your room” is one of them. Why?

A lot of people dismiss Peterson’s call to action as too obvious or not enough to move the needle. But that’s the point. It’s an easy step one. Look around you, figure out a way you can make your surroundings better in about ten minutes, and do it. I believe that is closer to the exact words he used. And anyone who has ever dealt with depression understands exactly why we’re starting small. Sometimes anything more seems like an unscalable mountain and then the end result is the same inaction that has already been taking place. But just clean up a little in the room you’re already sitting in? That seems pretty doable.

A funny thing happens once you make that small improvement. Even in the depths of whatever you’re going through, you suddenly feel something different – a tiny sense of accomplishment. You took ten minutes you could have wasted and instead, you used them to impact the world in a positive way. Suddenly you notice something else that could use doing. It’ll take a little longer than the first thing, but those first ten minutes didn’t turn out to be a waste, so what the hell? Twenty minutes later, you look around your home and realize you’re really getting somewhere. That feeling gets addictive and before you know it, your whole house is clean and it didn’t take nearly as long as you would have guessed from your favorite spot on the couch.

But this isn’t just for people who have let things go a little at home. You can apply this concept to any part of your life. Let’s say your career seems to be going nowhere. You would love to take the next step in your career, but it would require you to go back to school and finish your degree, plus putting in a bunch of overtime, plus the position you want isn’t even open at your company. That is a big pile of obstacles and if you only look at it that way, you might rot in your crappy job for the rest of what will likely be a pretty crappy life.

But then you remember “clean your room.” What if you just went and asked the boss if there is anything extra you could do to help out? It would be a simple enough conversation and there is almost no chance of an adverse result, so you give it a try. The boss gives you some extra grunt work and you do it. You realize it wasn’t so bad and it actually made the day go by just a little quicker. So you do the same thing the next day. And the next. Eventually, the extra grunt work turns into something a little more challenging. You find yourself learning a new skill. Once again, it isn’t so bad and this time you even enjoy yourself a little. Fast forward a few months and the guy in the job above you leaves. Your boss approaches you about taking over the job. Sure, you would have to take some classes, but it turns out the company has a tuition reimbursement program and some of the classes can even be done on your lunch hour. Now you’re getting somewhere. But it never would have happened if you didn’t take that simple first step and discover in the process that it was easier than you thought.

Regardless of what you think of him, it is pretty indisputable that Jordan Peterson is a very well read, insightful man. He doesn’t just understand psychology, he knows how to apply it to your life effectively. I believe just about anyone could learn something from him. Yes, he is long winded and meandering at times. And yes, his voice might sound just a little like that of Kermit the Frog. But I’ve learned that valuable information can come from just about anywhere. And it can certainly come from this somehow controversial Canadian gentleman. It has for me in any case. If you’re struggling to get things moving in the right direction in your life, you may want to check him out and actually listen to what he says. You may be surprised.

Happy Friday, folks!

What Do You Think of This Book?

Seriously, I’m asking. After reading The Signal and the Noise by Nate Silver, I’m not totally sure how I feel about it. Given the mostly dry subject matter, I thought it was a very readable book. But I also felt like it started off strong but couldn’t keep it going to the end. I definitely learned a lot. For example, I have a much better understanding of weather forecasting now. And I suppose the same goes for the baseball analysis, although you would literally have to pay me to get me to watch a game from start to finish.

In general, this book seems to be an effort to help the general public understand just how difficult it actually is to make a prediction successfully. It also seeks to define what predictions are and what they are not. When the weather forecast says there is a 60% chance of rain, that means that out of a hundred possible scenarios, it rains in sixty of them. In other words, there is plenty that isn’t KNOWN and in reality, there is still a pretty strong chance that it won’t rain. And when Nate Silver gave Donald Trump a 29% chance of becoming president, that means he still saw scenarios where it would happen, even if he believed it was less likely than the alternative outcome. And to be fair, the vast majority of the mainstream media gave the current president virtually no chance to win so against that backdrop, Silver’s prediction looks much better. After all, he does what he does largely by aggregating the same polls everyone else was using and when polling proves to be less than reliable, it’s a garbage in, garbage out scenario. He actually assessed that and accounted for it more effectively than almost anyone else in his field. And no, this isn’t discussed in the book. It was published in 2012.

Anyway, The Signal and the Noise seems to be more a collection of borrowed ideas than a discussion of anything original. It’s at its best when talking about Silver’s personal experiences, at its worst when making conclusions that are debatable at best and presenting them as established fact (and no, I’m not talking about the global warming chapter, I’m talking about random comments that are occasionally peppered in throughout the book; I thought the global warming chapter did a pretty good job of explaining what is and is not considered consensus at this point), and somewhere in the middle most of the time. But Silver clearly did a ton of research and does a great job of presenting a fairly eclectic range of sophisticated concepts in an accessible way.

But at the end, I think this book could have done a little more to tie everything together than to simply repeat a summary of what was talked about throughout. It wasn’t a bad book or a boring one to read; I simply think it could have said more. In any case, I think it was worth my time because it got me thinking creatively about a broad range of topics.

What I Spend On Household Expenses and How I Do It

A boring picture for a boring topic, but anyway, one of the microfiber towels I mentioned can almost always be found on my kitchen counter

Happy Monday, everyone! Here is the latest post in my Annual Expenses series. If you didn’t see the introduction post that summarizes all of my expenses, you can check it out here. I’ve been going into detail on one category each Monday. Over 2017 and 2018, I spent an average of $700 per year on household expenses. For me, this category includes supplies that get used up like paper towels and toothpaste but it also includes items I use around the house that will be around a while but aren’t expensive enough to be considered long term assets. Examples would be small tools or a coffee maker. I think I could keep this category at around $300 a year if I were really careful about it. There isn’t any huge secret to saving money in this category. Just buy quality when it makes sense, cheap stuff when it doesn’t matter, combine those two when possible, and don’t be wasteful.

When I bought that coffee maker, I bought a nice, but very affordable stainless steel setup that will likely last me a long time. Before that, I had a simple, but effective $20 Mr Coffee version that may have outlasted me if I hadn’t given it away. Do your research before you buy. With coffee makers, for example, it really doesn’t pay to spend a ton of money on a complex, fancy machine, because the longevity tends to be terrible. On the other hand, you definitely get what you pay for with pots and pans and a high quality set will work much better and last you much longer than a cheap one. Note, I said high quality, not high priced. Spending more will typically get you better quality, but there is a diminishing return effect at a certain point. A little bit of research will show you where that point is.

Buying in bulk helps a lot with consumables. I’m a huge Costco fan and it doesn’t matter one bit that I’m a one man household. Paper towels, dish soap, toothpaste, deodorant, and tons of other items aren’t going to go bad before I can use them and I probably save hundreds of dollars a year buying them in bulk at Costco. Of course, Costco isn’t just for buying in bulk and I’ve talked a lot about that on this blog previously.

What’s better than buying in bulk? How about not buying at all? A package of microfiber towels probably costs about the same as a bulk package of paper towels and can do almost all the same things. But the difference is that when the job is done, the microfiber towels can be washed and reused. I haven’t bought any more paper towels since I learned that trick since I rarely even use them anymore. And there are probably other ways that concept can be applied that I haven’t even thought of.

Finally, pay attention to what you’re doing. Little things add up over the course of a year. Soap is a great example. You don’t need to come anywhere close to filling the designated soap hole (Is there a name for that? I even googled it and couldn’t find anything) in a dishwasher all the way up for your dishes to get clean. Maybe 10-20% max is plenty. Right there, you could spend 5-10 times what is necessary on dishwasher soap and get absolutely nothing additional for it. Same goes for laundry detergent. Remember who puts the lines on the cap and how often they would like to have you coming back to buy more of their product. Healthy hair doesn’t need to be washed every day or anywhere close. Are you noticing the trend here? Figuring out the difference between necessity and convention with everything in your house can amount to a lot of money saved, particularly if more than one person lives in it.

This is kind of a boring category, but if you optimize it, you can still find ways to save hundreds of dollars per year versus if you don’t. And that is a quick description of how I keep my household expenses under control. Have a great week, ya’ll!

Happy Friday! Sadly, this One is Rather Bittersweet.

Sometimes it rains. And sometimes, it POURS.

Howdy folks! This week, we saw something a little different. My employer’s latest round of firings caught just about everyone by surprise when it was done on – gasp – a Tuesday. Not even the last day of the month. Now I think they’re just toying with us. But in any case, nearly half of our division, by far the most productive in the country, is now gone – and that includes several people I truly love and care about. Yours truly survived again thanks to two very good months followed by a July so stellar it literally eclipsed any previous QUARTER I’ve had by itself. Can I keep it up? Only time will tell. The industry is in absolute shambles, with widespread attrition happening. That’s why I haven’t been able to simply leave. Very few viable companies are hiring and even if they were, I’d likely be jumping out of the frying pan and into the fire. But this latest round has opened up an opportunity for me that I believe will result in a lot of new business. So stand and fight, while diversifying by growing my side business as much as possible, seems to remain my best available course of action for now.

Do you like to play chess? I loved it as a young lad. And lately, I’ve found a fairly convenient way to get back into it a little bit. It wasn’t exactly difficult. I play on www.chess.com. You can play with a computer at various levels or with human players from around the world who you are matched with based on both of your ratings. It works pretty seamlessly. There are lots of different game settings, different types of tournaments you can participate in, analysis, lessons, different ways to practice, basically, it seems to have everything you could want. I’ve only been playing the free version and while it offers plenty of functionality for a casual player like me, there are also very reasonably priced paid versions for more serious players. I highly recommend the site if you enjoy playing chess. And if you give it a try, who knows? You may find yourself facing off with me – although you likely won’t know it.

That’s all for today. Have an awesome Friday and an even better weekend!

Answers to Some Common Questions About the Equifax Data Breach

The mischievous look in this guy’s eye makes me suspect he may be an identity thief. Image courtesy of Jean-Marc Buytaert

You would have to be living under a rock to have completely missed the media frenzy over the recent Equifax settlement. It is still going strong, even though it is nothing but a basically meaningless parody of justice to show the rabble that “the bad guys are paying the consequences.” And as a result, I’ve been getting a lot of questions about the situation and credit reports in general. Here are my answers to some of the more common ones.

How do I claim my $125?

Unless you signed up for credit monitoring services, nothing. Because that’s exactly what you’re eligible to get. If you did, you can claim your pittance here:

https://www.equifaxbreachsettlement.com/file-a-claim

What if I had my identity stolen?

If you had actual, quantifiable expenses resulting from it, you can theoretically recover up to $20k. You probably won’t get nearly that much, even if your expenses exceeded that amount. After all, there are hungry law firms at the front of the line, tons of people who will make claims, and a finite amount of money to cover it all. But again, if you want to make a claim, go to the link above.

I never even gave Equifax permission to collect my data. How did they get it?

Yes, you did. Any time you signed up for a credit card, auto loan, mortgage, personal loan, or basically anything else that would show up on a credit report, you most certainly agreed to let all three major credit bureaus (Equifax, Transunion, and Experian) collect your data – and to allow many other things to happen as well. However, like any normal human being, you didn’t read it and like any human being who isn’t an attorney with an ass ton of time on your hands, you wouldn’t have understood most of the terms and conditions even if you had. Don’t like it? You can try “living off the grid.” As for me, I’ll keep my electricity, internet, car, home with an address that can have mail delivered to it, having living, breathing women willing to have sex with me (and that’s really the only reason for any of that other stuff to exist in the first place if you think about it), and so forth.

Should I sign up for credit monitoring?

Nope. Credit monitoring is just one more way the credit bureaus, including the one that potentially lost your data in this case, profit by selling the information you unwittingly gave them right back to you. It won’t give you an ounce of data you can’t get for free but you will pay for it anyway. Unless you’re determined to be part of the settlement. Then you can get the information that is already available to you for free…for free. Long story short, credit monitoring is bullshit.

Ok, then what SHOULD I be doing to stay on top of things?

1. The credit bureaus are each required to give you your credit report for free once a year. Go to www.annualcreditreport.com to get them. Get one every four months and keep track of which ones you’ve gotten and when. This way, you can space it out over the course of the year and be as on top of things as possible. They won’t have scores, but I have at least half a dozen credit cards that give various versions of my credit score for free and you probably have at least one. Besides, that isn’t the point. The point is to go through everything on the report and make sure it’s correct (or more likely, that the mistakes that are there aren’t materially adverse). Like any faithful churner, my credit reports have dozens and dozens of accounts, active, historical, etc. But even so, it takes me no more than ten or fifteen minutes to scan through them (again, this is three times a year) and make sure there are no issues. The point is, it’s not difficult, especially for someone with a more normal amount of financial activity.

2. Know what to do if identity theft happens. You should already be monitoring all your existing accounts weekly. So even if your finances are absurdly complex like mine, you will quickly realize if something happens that you were not a party to. Call your credit card company, bank, or whatever entity issued the financing ASAP and ask to speak to someone in the fraud department. It is a simple process from there. If you find an account you didn’t know about on your credit report, you have a bigger problem. But you just have to work through the process. First, make absolutely sure that you’ve really been a victim of identity theft and this isn’t just something you did when you were drunk and since forgot about or that is reporting differently than you would have expected it to. Then, call the police. Not 911 obviously. File a report with them. Go to www.identitytheft.gov and file a complaint with the FTC. Report the issue to the credit bureau in question. Freeze your credit with all three bureaus. This step will create additional hassles any time you want to do anything financial, but it is almost certainly necessary at this stage. You may even have to get an attorney involved. But if you pay attention, you will almost certainly learn something from the situation too. So at least it’s not a total loss.

I have the first form happen about once a year on average as I would imagine most people with a ridiculous number of credit cards do in an era where identity theft is so rampant that I once read that credit card skimmers with a thousand numbers on them were going for about thirty bucks on the black market. But thankfully, I have never dealt with the second. I’m sure I will eventually and when I do, I will attack the situation with great vengeance and furious anger (anyone else remember Pulp Fiction?) and maybe I will write a post about it and turn it into a net positive. But until then, I will just keep watching. And waiting. Keep that in mind, identity thieving assholes.

How worried should I be?

Not. This shit happens almost every single day. There are twelve year old computer geniuses, in horrible countries where their gifts are being tragically wasted, coming up with new ways to hack into the most secure databases on the planet as we speak and many of them will succeed. It’s an inevitability. But luckily, you live in a country where the consumer is basically the only thing keeping our vastly overinflated economy afloat. No one, and that includes most politicians, has any interest in seeing what would happen if consumers lost that precious confidence that keeps them borrowing money to buy shit they don’t need to impress people they don’t like (I believe that one is a bastardized version of a George Carlin quote – that guy was a genius and he was right about 89% of the time, which is way more often than almost anyone, ever). The economy is basically the only thing keeping people just happy enough to prevent them from realizing (or caring) how corrupt those politician pieces of shit are and thus, consumer confidence is to be kept sky high. And it follows that the laws are extremely in favor of consumers when it comes to matters such as identity theft. Do your basic diligence and you will be fine.

Should I get identity theft insurance?

Probably not. Insurance is an industry run by a combination of typically beautiful crooks and people who are extremely good at math. It wouldn’t be so bad if insurance companies didn’t do all they could to screw ~~the marks~~ customers out of the money they should be entitled to at literally the only time they’re expected to do anything whatsoever in exchange for the money they collect year after year in the form of premiums that consistently go up for literally no fucking reason at all. But they do. Ever make a claim on your car insurance or homeowner’s insurance? Remember the experience? Now imagine trying to get those bastards to pay for something intangible. If I recall correctly from the last time someone tried to upsell me on my insurance (talk about barking up the wrong tree), it’s about a seven dollar a year premium addition and there’s probably an excellent reason for that. It’s bullshit and they will never pay you a dime, no matter what happens.

Why was this post so sarcastic and profane? My delicate sensibilities are offended.

I don’t care. This is my blog. Get out. And to answer your question, I’m not sure. I’m in a funny mood tonight. I hope I succeeded in providing some worthwhile information and entertaining at the same time. Maybe more people would read this blog if I could master that skill. I guess this post will serve as a test.