Carnival of Wealth, Answered Prayers Edition

March 18, 2013

 

Slower Traffic Keep Right

 

You dream and dream about this day, but you never think it’ll actually happen. The anonymous protagonist of this story was doing 63 in a 65 zone:

Md. Woman Cited For Driving Too Slowly in Left Lane 

This was the first time she’d ever gotten a ticket [Ed. Note: Sure it was.] — but on Friday, she said, the area was experiencing heavy winds and she had slowed down to be safe.

“Sometimes when it’s dangerous, you have to do what you can to stay safe,” she said.

Yes, lady. That would include moving to the right so other cars can pass. 

Those signs that read “Slower Traffic Keep Right” aren’t for show. Move over. You can drive in the #2, 3, and 4 lanes as long and as slowly as you want without concerning yourself with other cars and whether you’re impeding the flow of traffic. Keeping traffic moving is important, and that’s why as a society we’ve decided that the lane farthest from the exits is the one that ought to allow the least clogged driving. Cruising in the passing lane, like our friend here was doing, serves only to make the driver stuck behind you ask, “Is this person in front of me oblivious to her surroundings, or is she being actively obstinate and trying to teach me a lesson about following the speed limit to the number?” Either way, cruising in a passing lane is aggressive driving whether you choose to accept that or not. If you’re doing 200 in the left lane, and the car behind you is doing 201, move over. That the ticket the woman received is even newsworthy is part of the problem. God bless that cop, whoever he is, and hopefully this will start a trend. Again, move over. Now onto the Carnival:

Harry Campbell of Your PF Pro is as diligent a contributor as we have. He submits every week, usually only minutes after the previous week’s CoW has gone live. So while we wait for his latest to hit our inbox, we present Harry’s take on whether you should buy a house during this unusual double nadir of both prices and interest rates. Harry got himself a condo with a 7/1 ARM at 3⅛%, his argument being that he probably won’t be in the condo more than 7 years. Also, his homeowners’ association is charging him $390 a month. California sounds horrifying.

If you’re the kind of person who likes selling assets for pennies on the dollar, give the predators upstanding businessmen at Structured Settlement Quotes a call. We make fun of them every time they submit and they still keep sending us their press releases every week, so you know they’re too busy attending to their clients to pay attention to trivialities such as blog carnivals.

What’s worse than being old? Being old and manning the counter at Wendy’s. What’s worse than being old and manning the counter at Wendy’s? Being old, manning the counter at Wendy’s, and losing some of your Social Security benefits in the process. If you think your age saves you from paying taxes on your income, Kristine McKinley at Social Security Retirement Income has depressing news for you.

The Carnival of Wealth featuring…ourselves? This is the best post we’ve run in a while, so it bears repeating here.

Why you should never have heroes, Volume 43,582. According to the self-penned biography of the brilliant Jason at Hull Financial Planning, he’s one of those pretentious Americans who refers to soccer as “football”. So disappointing. On the other hand, Jason’s a West Point graduate who served 2 tours as an armor officer in Bosnia, which means he can call soccer whatever he wants. We’re still going with “90 minutes of tedium and hypochondria, devoid of strategy.” This week Jason explains how to get a legitimate college education without bankrupting yourself, and throws in a subtle dig at Navy.

This marks 6 consecutive submissions from Peter J. Buscemi at FourQuadrant, who didn’t say a word the first 4 times we skewered his somniferous prose. Then last week we gave him the coveted opening slot, criticized his work roundly, pointed out that he obviously doesn’t care where said work is being mocked, and yet he got back up on the horse again. We’d say that you’ve got to respect that, but Peter J. isn’t undaunted, he’s merely apathetic. As you’ll be if you attempt to read this pastiche of business phrases that Peter J. calls a blog post:

Developing a qualified opportunity that is in the sales forecast is a time consuming and expensive task that plays a huge role in any successful go to market strategy. It only makes sense to develop a pragmatic, systematic and comprehensive approach to bring each opportunity to closed won status. In an effort to do so, the sales enablement team is chartered with supporting the sales team at each step in the sales process. In this role, they ensure that all relevant resources are known and leveraged by the sales team. Also, the sales enablement team keeps metrics on what was and what was not used in each sales engagement and the corresponding success rates. Finally, the sales enablement team removes, modifies and adds new resources to assure the sales team does not run into the same road block repeatedly.

Where do we go from here? Every week we lambaste his droning and agonizingly wordy style, and every week he submits yet again as if nothing had happened the previous week. It’s not as if we’re doing this behind his back. The CoW is publicly visible, and we even send him an email every Monday with a link to the Carnival. How much longer can Peter J. do this? We’ve already compared him to a battered woman who refuses to walk away. Should we accuse him of fondling children? Operating as part of an al-Qaeda sleeper cell? Listening to Nickelback? Peter J. Buscemi, you’re a master of willful ignorance. Promise us you’ll never stop not caring.

We also goofed on of Edgar at Degrees & Debt last week, in his inaugural CoW submission. (As a general rule, any site with “Debt” in the title is going to consist of little more than rehashings of financial decisions gone wrong time and again.) Edgar clearly doesn’t read the CoW either, even though we do him the courtesy of perusing his submissions. This week he wrote one paragraph, accompanied it with an infographic from an advertiser, and called it a blog post. Even better, Edgar’s site is written for Americans and the advertiser operates only in the United Kingdom. Great work, Edgar.

Then there are bloggers who would rather break down their assets than their liabilities. Bloggers such as Michael at Financial Ramblings, who explains which pies his fingers are in and to what extent. (Another general rule: People who fixate on the additive side of the ledger are probably going to be wealthier and more self-actualized than those who focus on the subtractive side.)

More in that vein from Free Money Finance, with the latest on his 2 real estate investments. Which will hopefully grow into 3 real estate investments.

For readers who are in the UK, Edward Webber at Tax Fix explains the basic personal deduction you can take before sending off your remittance to Uncle Sam, er, John Bull.

Why would you want a non-deductible IRA? Because of President Obama’s new 3.8% Medicare surtax on investment income, instituted because individuals’ health care is for some reason our collective responsibility. Michael at Kitces.com shows why you might have perverse incentives for losing money in a non-deductible IRA, as opposed to losing more in a deductible one.

We’re detecting an upturn in the quality of these posts. Next up is PKamp3 at DQYDJ.net, the first person whom we’ve seen point out that the Dow’s current “record high” is 12% off the true constant-dollar record high. Also, why does the standard interpretation of the Dow Jones Industrial Average not include dividend reinvestment? Elegant charts, eloquent commentary, and the objective perspective of a professional engineer who isn’t ensconced on Wall Street. You really need to read DQYDJ.net, and not just our weekly encapsulations of it.

Darned if Dividend Growth Investor doesn’t bring up that same issue. The S&P 500 is currently at close to a “record high” of 1560 or so. Include dividend reinvestments and it’s more like 8000. Granted, that assumes you’ve been reinvesting dividends since 1957, but the point is made.

Andrew at 101 Centavos continues his series on business development companies, expressing his suspicions about one he recently discovered. Never underestimate the power of a dopey name.

Another home run from Paula Pant at Afford Anything, the refreshing antidote to bloggers who incur and then ignore debt instead of not getting underwater in the first place. This week Paula demonstrates how bending your financially draining urges is smarter than attempting to break them.

We can’t change our habits with Post-It Notes, pep talks and Top 10 lists. We can only change them by understanding our human psychology – what drives us? We can only change our habits if learn how to manage our urges, rather than fight them.

She’s exactly like Trent Hamm at The Simple Dollar, except female, thin, adventurous, talented, consistent, erudite, not obsessive about every penny, and indifferent to board games.

Nelson at Financial Uproar thinks 2 words should be the maximum for a site’s name. Michael at Dividend Growth Investing And Retirement thinks otherwise. This CoW newcomer claims that past dividend growth rates can predict future ones. He even has a linear formula that illustrates, if not proves, his point.

[Some post about forex trading. We would have run it but the first few paragraphs were just filler. The worst thing a submitter can do is make his post not quite deficient enough. At least the truly awful ones get featured so we can point out how bad they are. Those in the second-from-the-bottom tier just get rejected. If you’re going to fail, fail like you mean it.]

Lynn B. Johnson’s parents must be ecstatic, especially if they’re Jewish. The Wallet Blog writer is married to a doctor! Well, a Ph.D. holder. In English. Who can’t seem to find a job that will pay off his giant student loan balance any decade soon.

As their numbers grow, unemployable liberal arts students are becoming more than merely disinterested towards reality. They’re becoming hostile to it. It doesn’t matter that my useless degree doesn’t pencil out, I heard that an education is invaluable and dammit, I’m going to continue to believe that. Meanwhile, Dr. Johnson will gladly prescribe treatment for that dangling participle you suffered. Also, read the comment from Courtney Barnett.

Some people don’t care if they’re in student loan and/or credit card debt, they need a vacation and who’s going to tell them they don’t deserve it? We suggest Pauline at Reach Financial Independence, who draws little distinction between work and play. Pauline lives on the beach in Guatemala, because she’d rather spend her days there than in a cubicle on the 14th floor of the Société Générale building. While she doesn’t necessarily vouch for one approach over the other, Pauline runs the numbers and shows how screwed you’ll be if you head to Busch Gardens while making minimum payments on your VISA.

I have never carried consumer debt, so I couldn’t judge the urgency to take a holiday while in debt. I would still express concern if someone on a diet had an urgency to eat a family sized pizza.

Unfortunately, fat people don’t like being reminded that they’re fat, stupid people hate hearing that they’re stupid, and indebted people aren’t interested in being reminded that they’re in debt.

This post has little to do with personal finance, but the site seemed interesting. Fearless Men on how to save money at the gym. (This is how we did it.)

Trading options? That’s a quick way to go broke unless you’re really good at it, and we can only assume that Steve Moses at Trading Academy is, or he wouldn’t be doing it. By the way, Steve’s college major was theater.

This week’s rhetorical headline winner is from Card Hub: Could Budgeting Actually Promote Overspending? This is part of John Kiernan’s series of interviews with academics, who give richly theoretical answers for why setting a price for something you want can backfire.

If you’re old, stop counting down the days to death and get a reverse mortgage instead. You can’t spend money once you’re gone, right? Ross Garner at Wallet Hub explains the advantages of trading equity for cash, and dispels some misconceptions.

Thanks for reading. Let’s do it again Wednesday.

Filed Under: Carnivals Tagged With:

Acquire More Stuff

March 15, 2013
You know what America needs? A good assistant manager.

You know what America needs? A good assistant manager.

Believe us, we’d rather not cite all these rotten examples. We’re sincere: we’d much prefer it if we could show you more people to emulate than to deride. But not only do the latter outnumber the former, it seems to be an inescapable rule of the universe that they always must.

There’s a regrettable phenomenon among the financially semi-aware that’s worse than hyperfrugality, and almost as bad as whining about self-inflicted and pointless debt. It’s rationalizing away reduction (and diminished fortune.)

Last week the New York Times ran a first-person opinion piece by Graham Hill, founder of both LifeEdited.com (“Design your life to include more money, health and happiness with less stuff, space and energy”) and TreeHugger.com, which is what it sounds like. (Recent headlines include “‘Don’t frack my mother,’ sing Artists Against Fracking” and “Test-drive: Ford C-MAX Hybrid vs. Toyota Prius V”.)

Hill lives in a 420-ft² Manhattan apartment, and feels so righteous about doing so that it’s the opening line of his piece. He wasn’t always so virtuously minimalistic:

in the late ‘90s…flush with cash from an Internet start-up sale, I had a giant house crammed with stuff — electronics and cars and appliances and gadgets.

Did he willingly jettison all that “stuff”, or did circumstances do it for him? Hill doesn’t say, but he does see advancement and accumulation as inherently negative:

My life was unnecessarily complicated. There were lawns to mow, gutters to clear, floors to vacuum, roommates to manage (it seemed nuts to have such a big, empty house), a car to insure, wash, refuel, repair and register

We here at CYC aren’t big fans of lawns ourselves – xeriscaping is less work and better suited to our regional climate – but millions of people love them and accept their upkeep as necessary. As Hank Hill (no relation) would tell Graham, the light yard work is its own reward. For those who’d rather not bother, well, that’s what Manhattan is for. Same deal with regard to the car.

And “floors to vacuum”? That lament is ludicrous for 2 reasons: first, as ascetic as Graham Hill is today, presumably he still has floors. Second, talk about your 1st World problems. Hey, Cambodian villagers: the rich American white man is complaining about the hassle of having to plug in his magic machine that effortlessly makes debris disappear.

Also, we’d love to know how his roommates feel in retrospect about being under Graham Hill’s “management”. Furthermore, look at the cause and effect. He takes on the unwanted responsibility of too big a house (for him), then complains about the subsequent problems of his own creation that follow the purchase of the house.

A message for Graham Hill, and more importantly, for all y’all:

POSSESSIONS ARE AWESOME. Looking around the room right now, we see a coffeemaker. If you’re not familiar, you spend a few seconds filling it with water and coffee grounds, press a button, and coffee shortly appears. No picking, roasting, shipping, grinding, nor distilling required on our part. We just spend a few pennies per serving and enjoy.

There’s also a TV, modestly sized as these new ones go. At barely an inch thick it’s as unobtrusive as possible, and it entertains us for hours on end. Yes, that’s a lousy deal.

Furniture to sit on. Appliances to keep food cool or hot as required. Drawers to prevent us from having silverware and dishes, which together eliminate much of the mess of eating, strewn about haphazardly. Forgive us for considering this shameless mass consumption to be better than the alternative. But from our perspective, there isn’t a single possession we can see that doesn’t make life markedly better.

However, possessions can also be wastes of money. You’re not going to believe this, but it depends on the possessions. The CYC principals have enough money to live comfortably, and do, but part of living comfortably is not having a dysfunctional relationship – or any “relationship” – with what one owns.

There isn’t any indication that (products for sale make) anyone any happier; in fact it seems the reverse may be true.

His lemma is provably false. Anyone reading this who has ever driven a new car, or moved into a new house, or even bought a new article of clothing, felt at least temporarily happier than he or she did a minute earlier. Graham Hill was an early internet millionaire, cashed out in 1998, but before getting racked with guilt did what impetuous nouveaux riches do:

To celebrate, I bought a four-story, 3,600-square-foot, turn-of-the-century house in Seattle’s happening Capitol Hill neighborhood and, in a frenzy of consumption, bought a brand-new sectional couch (my first ever), a pair of $300 sunglasses, a ton of gadgets, like an Audible.com MobilePlayer (one of the first portable digital music players) and an audiophile-worthy five-disc CD player. And, of course, a black turbocharged Volvo. With a remote starter!

The most important word in that curious passage is the first important one: “celebrate”. If you’re possessed of a truly wealthy mentality, you don’t buy a house that requires 4 descriptors because you want to “celebrate”. You do it because you:

  • Need a place to live.
  • Can afford it and make it cash flow. Obviously most primary residences don’t generate income in and of themselves, but the idea is to live somewhere that doesn’t make you poorer month-to-month. If you do, you’re buying too much house.
  • Want to set yourself up for appreciation. (Or, you’re so rich that you don’t care. Laurene Jobs’s ostentatious and impractical residence isn’t ever going to be easy to sell, but she doesn’t worry about it. Her house could be annihilated by antimatter, which insurance doesn’t cover, and it’ll barely affect her net worth.)

Remember what we said about possessions being awesome? This post is being written on a $1500 computer that’s thin, portable, fast, aesthetically gorgeous and largely free of bugs. That sounds expensive, but no other laptop can do what it does as efficiently and sleekly. And cheaply.

Meanwhile, Graham Hill paid 20 times what he should have for an item whose sole purpose is to shield your eyes from the sun. As we tweeted last month:

Foster Grants

Graham Hill didn’t just buy stuff: he bought liabilities. Things that serve only to make someone else rich (the local Volvo dealer, for instance) and that erode Graham Hill’s own wealth. Which he can’t see, because he’s too busy wasting money:

I hired a…personal shopper. He went to furniture, appliance and electronics stores and took Polaroids of things he thought I might like to fill the house; I’d shuffle through the pictures and proceed on a virtual shopping spree.

The CYC principals could probably afford a personal shopper (we’re not sure how much they go for, whether they take a portion of the proceeds or a salary, etc.), but don’t.

(My) life (was) cluttered with excess belongings.

Then why’d you buy them? And once you realized that, couldn’t you just sell them? Of course not. Why, when you can be didactic and tell the people without internet windfalls how they can live as austerely as you. Ultimately the crux of his complaint is ecological, but he throws in some Americacentric criticism of elbow room, too:

Our fondness for stuff affects almost every aspect of our lives… The average size of a new American home in 1950 was 983 square feet; by 2011, the average new home was 2,480 square feet… In 1950, an average of 3.37 people lived in each American home; in 2011, that number had shrunk to 2.6 people. This means that we take up more than three times the amount of space per capita than we did 60 years ago

Yes. IN THE 178th MOST DENSELY POPULATED SOVEREIGN NATION OR DEPENDENT TERRITORY (out of 243) ON EARTH. We’re not exactly Macanese here.

Look, Ace. Just because you and 1.6 million other misguided souls decided to cram yourselves onto a 23-square-mile island, that doesn’t mean the rest of us in the remaining 3,541,245 have to or want to apologize for our love of space. Then there’s the obligatory quote from an academic to give Graham Hill’s piece that patina of respectability:

In a recent study, the Northwestern University psychologist Galen V. Bodenhausen linked consumption with aberrant, antisocial behavior.

Let’s peek at Control Your Cash’s most recent credit card statement. (Business account, thank you. But they’re all business accounts.) We’ll try to compare our profligate spending habits to those of Graham Hill, and see where and if we can cut back. These are all the purchases from the past month, with the qualification that they were:

  • for non-food items.
  • for goods, not services, which means they could theoretically fall into Hill’s “excess belongings” category.
  • over $20.

Let’s see…$179.48 for pet medications. But that’s an essential, unless we want feline blood on our hands.

$696.77 for a mattress. But that’s a business expense, because it’s going in a rental property. Renters like latex foam and a single-stage coil design. A threadbare mattress leads to an unoccupied unit.

$131.44 for a windshield wiper reservoir. The old one was leaking and beyond repair. Regardless of Professor Bodenhausen’s stern assessment, we fail to see a link between buying car parts and “aberrant, antisocial behavior.” Then again, we’re not that educated and have trouble operating on so advanced a level.

$25 for a blender.

Graham Hill can go die. Guilt is bad enough, misplaced guilt worse still. Misplaced guilt that’s supposed to inspire commiserative guilt in others is worst of all.

Today, Graham Hill operates on a higher plane. Here’s his variant on the platitude about “experiences” being better than “stuff”:

Aside from my travel habit — which I try to keep in check by minimizing trips, combining trips and purchasing carbon offsets

With the possible exception of “combining trips”, 3 of the 3 actions he undertakes to mitigate the harm he inflicts on Mother Gaia are moronic. Read the first one. He likes to travel, but tries not to travel. And now, instead of spending money on expensive sunglasses, Graham Hill takes that same money and flushes it down a (solar-powered, composting) toilet.

Does this really need explaining? Buy stuff that gets you ahead: or as we call it, “assets”. Buy lots of them. Buy nothing else. Even a $15 toaster might not meet our strictest definition of an asset in that it’s probably not going to appreciate for future resale, but owning one beats holding your bread over a fire pit every morning.

The flip side of the equation is to sell liabilities, or at least not buy them. Graham Hill bought nothing but liabilities, then complained about how they impoverished him (definitely financially, and also spiritually, he seems to say.) There’s no more efficient way to get poor.

Filed Under: Bad Examples, Capitalism, Making Smart Choices Tagged With: , , , ,
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