How To Make An Effective $1200 An Hour

October 26, 2012

The guy with cop hand in his face should’ve read this post.

 

We haven’t done a story with a misleading headline in a while. So here’s one, in Yahoo! News and Drudge Report fashion.

You’re not going to make $1200 an hour doing this, but you could make $200 in 10 minutes. Or, more accurately, not lose $200 in 10 minutes. It’s a post about how to get out of a speeding ticket, or at least minimize the damage.

Your humble blogger enjoys driving fast for several reasons, the primary one being the self-evident one – you get where you’re going earlier. While we’re on the topic, something of a tangent: it makes no sense that old people drive slowly. They’re the ones who have the least sand left in the hourglass, yet they mosey along as if God isn’t tapping them on the shoulder and pointing to His watch.

So yeah, driving fast is efficient. Almost as importantly, it’s fun. The Richard Petty Driving Experience doesn’t charge people $135 to do laps of an oval at 45 mph. Also, driving fast forces you to pay attention to your surroundings, engaging you in a way that a driver fixated on the speed limit never is. Drivers who lull, or worse yet fall asleep at the wheel, are rarely speeding. It’s when the possibility for danger is heightened that your senses are correspondingly so.

Alright, enough preface. Two offenses, a couple of weeks apart. The first was outside the quiet desert town of Baghdad, Arizona, 82 in a 55 zone. Obviously, no one was in any danger. No bobbing and weaving, no dodging oncoming traffic, just unfortunate positioning (us here, the highway patrolman there – traveling in the other direction, on the crest of a hill, where a civilian’s radar detector is useless.)

That’s a $200 fine, for doing 25-30 over the limit. And probably a couple hundred more in the near future, indirectly, when the insurer realizes that they’ve been providing coverage to a genocidal driver who won’t be satisfied until the highways of the Southwest are covered with blood.

We got out for $40, no points, and no notification to our insurer (unless said insurer happens to read this blog. Hi there!)

How’d we do it? Simple. Here’s how you can do it:

  • Acknowledge the obvious: you’re busted. You saw the cop’s lights flash, so don’t be stupid. Pull over immediately. If it turns out that the cop happened to turn his lights on for a completely different reason, big deal – pulling over thus cost you a few seconds. If you are indeed the subject of the cop’s interest, you’re showing deference and expediency – you value his time too, and want to get this incident over with as soon as possible.
  • It’s going to take the cop a few seconds to approach your car. Break out your license, proof of insurance and registration and place them on the dash before he gets there. You’re not admitting guilt, at least not explicitly. But if you are guilty, or at least citable, doing this makes things easy for the cop.
  • Hands in front of you. On the steering wheel is as good a place as any. Tell your passengers to put their hands where the cop can see them, too.

Oh, you don’t have guns in the car? Why the hell not?

Riding with at least one gun (and, more importantly, availing the cop of its/their presence) shows you’re responsible. Doing so is common sense, and if you had to sit through a class to receive a concealed weapons permit, the instructor should have gone over this anyway.

The cop sees a speeder. He doesn’t know if you’re a career missionary who just returned from volunteer duty at the local veterans’ hospital, or Brandon Marshall. So put him at ease. Getting shot isn’t a common job hazard for any domestic line of work, but it’s a lot more frequent among police than it is in whatever you do for a living. The cop is certain you’re a speeder: make him equally certain that you’re not a criminal. Again, you’re trying to make his job easy here. Cops spend most of their workdays dealing with personalities ranging from verminous to merely uncooperative. Set yourself apart.

Oh, and tell him about the guns before he has a chance to talk. A) You’re supposed to and B) it’s kind of fun to initiate a conversation with a cop, forcing him to listen to you and not open his mouth until you’re done.

  • Don’t commit to a number when asked if you know how fast you were going. If you do, you’re signing your own warrant. Say something like “Officer, I was looking at the road, not my speedometer.” If you happen to be far from home, blame the scenery. “Officer, I thought I was driving safely and responsibly, but I was paying more attention to the gorgeous mountains and cacti than I was to my speed. I apologize for forcing you to stop me.”

We’re not kidding. Those quotes might look sarcastic, particularly the last one, but the idea here is to show deference. It’s amazing how many people will attempt to stand their ground against a cop, helpfully explaining to him why he’s wrong or at least misguided. If you’re going to do that, you might as well insult his mother.

All over our book, we remind you to look at each (financial) transaction from the other party’s perspective. Same deal for traffic stops. What does the cop want out of this? No hassles. Someone’s going to hassle him today, probably several people. Don’t be one of them. Be a bright or at least neutral spot in his otherwise stressful day. It’s not about who’s right. It’s about you minimizing the damage.

Back to our encounter. We found common ground, and continued to put the good patrolman at ease. We ending up discussing music for a few minutes – the merits of the Gibson SG over the Les Paul, etc. – and would have gone longer if we didn’t politely ask to get a move on before our bladders exploded. He said, “Look, I have to write you a ticket. You were doing 82 in a 55. I’m going to cite you for 5 over. Pay it by the end of the week and it won’t appear on your record. And slow down.”

Here’s what we didn’t do:

  • Plead for a reduced violation.

Reducing the violation is the cop’s call. Asking for it is like asking someone for a birthday gift. Tacky and ineffective.

  • Curse, threaten to fight the ticket, come up with an idiotic excuse, or use the venerable “Good thing there are no murderers or rapists for you to arrest” line.

This should go without saying, but it’s rarely a good idea to antagonize someone who has the legal authority to make your life miserable.

As for the second incident, that was on a lonely stretch of interstate in an even more remote part of the West. The officer was in the median. The radar detector went off too late to do anything about the excessive speed.

Again, pulled over immediately and did everything listed above. Complimented the officer’s beat (“These wide open spaces are just too distracting”), and he agreed to write up a 20 mph excess as a 1-5 mph one.

Then it got better. He did the thing where he steps back to his car for a few minutes, forcing his quarry to sweat, then returned and said, “I noticed you don’t have a front plate. The state requires one. I’m going to write you up for that instead.”

At least in the state in question, “No front plate” results in a fine or points only if the driver doesn’t show proof of correction within a fixed period. That is, if you affix the front plate to the vehicle, then fax a picture of same to the court, they’ll drop the charges.

Yes, if you no longer know where your front plate is you could conceivably just put the back plate on the front and send a picture of that to the court. Not that we encourage that, or would ever dream of doing it ourselves.

See? You learn something new on this site every day. Under the right circumstances, driving without a front plate can reduce your violation to zero. Grab a flathead screwdriver and take a little more control of your financial future right now.

 

And if all this fails, have breasts.

Filed Under: Bad Examples, Finance, Making Smart Choices, Role Model Tagged With: , , , , ,

Date The Plain Girl With The Good Job

October 10, 2012

 

You folks are never going to learn, are you? By “you folks” we mean the investing public, never ones to be dissuaded by a tight sweater or hair extensions. (Or for a corresponding example, an Xtreme Couture shirt and a neck tattoo.)

Our latest entrant in the irrational exuberance category, Chipotle Mexican Grill. The first few chapters of Chipotle history were a classic success story worth emulating. The company opened its 1st store in 1993, and opened its 2nd

  • 2 years later,
  • using the cash flow from the 1st.

Chipotle didn’t expand for the sake of expanding. It didn’t develop an appetite for franchise fees, saturating the market and abandoning quality control. It grew modestly, as you do.

There’s a common misconception that Chipotle originated as a brand of McDonald’s. Not quite. McDonald’s became a minority investor 3 years after that 2nd store opened, and within another 3 became Chipotle’s largest shareholder. With the resources of one of America’s healthiest corporations behind it, only then did Chipotle start growing exponentially and forever casting off its humble Denver origins.

And then, the initial public offering. January 2006, $42.40. Which is about where CMG stayed for the 1st year.

Look at the chart, which comprises CMG stock’s entire history. Notice anything unusual about it? Not that we encourage technical analysis over fundamental analysis here, but again, regard the chart.

It’s a fractal! The movement from inception through 2007 is a smaller version of the movement from the start of 2009 through April of this year (when the stock hit its zenith of $442.40.) We’ve already been on this ride before, the one where Chipotle loses ¾ of its value. This time around, the stock has lost only 35% of its value.

That includes a 7% drop in 5 minutes. The company has the Department of Labor assailing it from one side (for hiring illegals, or more precisely for hiring illegals while not being a union shop or a proud political contributor.) On the other side are venture capitalists selling off their institutional holdings. Unless you were prescient enough to have loaded up on Chipotle when it bottomed out the first time, which you weren’t, you’re probably looking to bail out.

Chipotle trades at 34 times earnings. It’s profitable, but not crazily so. What do we have here, fundamentally?

  • A company that provides what’s on one hand a necessity (sustenance), but on the other, a luxury. (We’re in a protracted recession, remember? You can make your own burritos, perhaps in less time than it takes to wait for one if your local Chipotle has an exceptionally busy lunch hour.)
  • A company with competitors that make an almost indistinguishable and indistinguishably priced product. (Qdoba, Moe’s Southwest Grill.)
  • The market leader, which isn’t necessarily a good thing:

Chipotle operates 1310 stores throughout the United States and Canada (and another half dozen in the United Kingdom and France.) Revenue is about $4700 per store, per day. Qdoba has half as many locations, Moe’s half of that, and Baja Fresh slightly fewer than that. The subject of our post can only sustain so much more growth.

Are there any barriers to entry? If you’ve got a) the phone number of a grocery wholesaler and b) a kitchen, you’re a potential Chipotle competitor.

Chipotle is a $9 billion company if you measure by market capitalization, what its stock is worth. It’s a $1 billion company if you measure by stockholder equity, the difference between accounting assets and liabilities. To us, that’s a company that’s overvalued by something approaching a factor of 9.

The food is better than Taco Bell’s. That’s not the point. This isn’t about winning consumer accolades. It’s about showing profitability and the potential for growth. Goofing on the food at McDonald’s is the go-to material for hack comedians everywhere, but In-N-Out didn’t turn a $5½ billion profit with a 20% margin last year.

Ask your average CMG stockholder which he thinks the stock will do first: hit $430 (a 50% jump), or $191.16 (a 50% reduction.) It’s obvious, isn’t it? We’re now at the point where mathematical inevitability will trump all the investor confidence in the world.

Believe it or not, we don’t follow the movements of 5000+ publicly traded securities every single day. We don’t even follow market sectors all that closely. But a $400 price tag for a seemingly unremarkable stock got our attention. Was that merely a function of the IPO, the company just originally deciding to have divided itself into a small number of shares in the first place? No. Did Chipotle figure out a way to dramatically reduce costs? (Unless you count hiring illegals, no. And the company’s habit of rounding checks to the nearest nickel doesn’t quite count as “dramatic”.)

Have you bought lunch at McKesson recently? Has Cardinal Health ever caught your eye with a wacky promotional and/or advertising campaign? The questions are rhetorical, but the balance sheets are hearteningly real. If you’re going to buy stocks, research like crazy and don’t lose sight of the goal – making money, rather than patronizing businesses you have an emotional affinity for. And if you have no clue how to get started, don’t just buy our book, but read the free e-book that accompanies it if you buy it on our site.

Filed Under: Bad Examples, Finance, Investments Tagged With:

An Actual Financial Misstep

October 5, 2012

Some personal finance blogs (and by “some” we mean “all but these“) are nothing but chronicles of the authors’ bad financial decisions. Fortunately for them, they’ll never run out of material. Unfortunately for them, they’ll never get out of debt and don’t really want to. Meanwhile, we sit here from our relatively affluent perch, laughing at their foolishness and patting ourselves on the back for being so savvy.

We’re not perfect, it only seems that way. Case in point, last week we went to the Capital Grille. What a mistake.

If you’re unfamiliar, Capital Grille is one of those chain restaurants whose each location makes an effort to have you believe it’s not a chain restaurant. It’s an upscale steak joint, but not so upscale that they’ll turn you away for wearing shorts. The hostess wears a formal pantsuit, there’s a guy in a blazer who stands next to her and wears an earpiece, and everything is cherrywood and superfluous cutlery. But Capital Grille is still a subsidiary of the same company that owns Olive Garden and Red Lobster.

Maybe once or twice a year, your hosts splurge and eat somewhere expensive, and even that’s too many. The only reasons we went to the Capital Grille this particular night were a) we were going to be in its neighborhood anyway and b) American Express had sent us a $50 no-strings-attached gift card. That we used it makes us the betting favorites for next month’s RoTM award.

The rationale went something like this. “$50, that’s $25 apiece. How much more than that can an entrée be? We’ll end up enjoying a fancy steak dinner for like $10 each.”

Two steaks, a salad for one of us, and two shareable side dishes (green beans and pommes frites, and good God that’s a pretentious way of saying french fries.) Neither of us drink. So…total with tax and tip, including the discount?

$112. 

Not to go Trent Hamm on you, but we felt dirty. We could have had more fulfilling, more flavorful and healthier burritos at Qdoba for $7 apiece, and would have if we had the night to live over again. Our distaff half even said afterwards, “This is stupid. Let’s never do this again.”

Thank God our tastes are normally cheap. That Qdoba date is next on our list, assuming we can take enough time away from buying our groceries at Winco and flying coach to do so. However, we have plenty of friends – you probably have a couple too – who spend money like this as a matter of course. Maybe not on overpriced food, but on overpriced alcohol or overpriced mood alterers or vehicle rustproofing or something.

Our evening made us wonder if people really enjoy fancy dining, or if it’s just a rite that people adhere to unthinkingly. Most of our fellow diners appeared to be on business. A couple groups of 12, one group of 20, all obviously from overseas and all probably enjoying expense accounts. Plus they were visiting a city where financial recklessness is practically a requisite for entering.

Again, opportunity cost. That $112 could have gone to countless better places. We’re not agonizing over this; we can afford to drop $112 in a night and not worry about how we’re going to pay the power bill. But it’s just such a freaking waste. For an experience that lasted about 45 minutes, and that required us to wear clothes significantly less comfortable than what we usually wear.

The moral? Spend $112 on a hotel room if you know it’s going to be much more comfortable and cleaner than the $40 fleabag palace across town. Spend $112 on music, books or ski equipment that you know you’ll enjoy over and over again, as opposed to going without them. But $112 to keep yourself nourished for a few more hours, when you could do so for far less? Lunacy.

A dumb and/or rationalizing person would say “Hey, you only live once” and add the $112 to his credit card balance. (Oh, who are we kidding? His bill would be closer to $200 with wine and maybe dessert.) Then he’d try to win it back at the tables, fail, and go to the “Hey, you only live once” defense again. Vegas, baby. Meanwhile, your authors will think nothing of spending thousands of dollars a month on a property manager to save us the trouble of having to deal with our rental housing tenants. We value our time.

If you’re not spending money to improve your life, to make your life easier, to free up time, or to get a greater return in the future, what the hell are you spending money for? Us squandering $112 was no different than that kook at The Simple Dollar blowing 5 hours making his own Pop-Tarts and toothpaste. Time is indeed money. Worst of all, the food wasn’t even that great. The steaks sat in our intestines like lead. Vegetables are meant to be blanched, not smothered in grease and heavy sauces. Steak belongs on a list with movies, Radiohead, nightclubs, New Year’s Eve, Derek Jeter, Shakespeare and kids as the most overrated things in the universe.

Filed Under: Bad Examples Tagged With: , , , ,
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