Another Way to Screw The Man And Feel Great Doing It

July 4, 2012

The Band Perry will be eligible for the Rock and Roll Hall of Fame in 2034. Click on LiveNation.com right now for tickets to their induction ceremony.

We’ve almost reached the point when there are people who didn’t know any other way, but a long time ago, there existed a music recording industry. A pretty lucrative industry, too. Famous musicians and aspiring ones would rent a studio, hire a producer, record singles and albums, and the major corporation that fronted the musicians the money to do so would then sell the finished products for a profit.

But that which can be digitized can be copied, infinitely. And in a world in which movies and books can be streamed into your home, the idea of driving to a record store and looking through the racks seems both antiquated and ludicrous. It became irrational for music fans to drop $12 for an album that a little ingenuity could put in their hands for nothing. The industry isn’t technically dead yet, but we’ve got the mortuary on speed dial. The number of recording artists has proliferated, while the number of profitable ones has winnowed down to just a few dozen.

Forced to improvise, the industry decided to pound its remaining profit centers. You can’t digitize and copy the attending of a performance, therefore if any money is to be made in the industry, it’s in concerts. (Yes, and merchandise, but that’s a topic for another post.)

So how to maximize concert profits? It sounds tempting, but the promoters and ticket companies couldn’t just raise prices arbitrarily. The laws of supply and demand still exist, and were tickets to cost too much, people will just find something else to do.

However, there is a creative way to get a little more blood out of each ticket buyer. Announce shows well in advance. Embedded in ticket buyers’ DNA remains the belief that every concert runs the risk of selling out. Therefore, buy your tickets as early as possible. Thus letting LiveNation enjoy your money all the longer. This has become commonplace. Depending on the size of the act, it’s normal to see tickets being sold 6, even 8 months early. Rush are playing Las Vegas this November. Tickets went on sale in March. For a naïve fan, that means an even longer window in which to risk seeing the show sell out. Got to buy those tickets now, and the earlier “now” is the better.

Understand that concerts, at least beyond the walk-up level, were never about you exchanging your money for a couple hours of entertainment. They were about you exchanging your money plus a few weeks’ worth of investment potential for said entertainment. Of course there wasn’t a whole lot you were going to do with that $35 besides spend it on a Def Leppard ticket anyway, so from your perspective, the investment potential was negligible.

But today, you’re exchanging your money plus months’ worth of investment potential. A minor difference as far as the individual ticket buyer is concerned, but an enormous one from the standpoint of the company that sells the tickets myriads at a time. You still get the concert, but they get your money and enough interest to make it worth Live Nation’s while to inconvenience you by forcing you to buy the tickets earlier than you otherwise would.

You could argue that this is blatant, but it’s mild compared to some of the other gouging tactics the ticket-selling oligopoly has used and continues to use. “Service fees”? “Handling charges” for a set of electrons that you can print at home? And they keep the charges if the show gets cancelled? It’s laughable, but that doesn’t mean you have to be a victim of forced forgone interest.

Because you know what other, tangential part of the music industry has been forever transformed by technology? The resale market. There’s no such thing as a sold-out house (Harvey Mackay, c. 1990). The longer you wait to buy tickets, the more resellers there are, competing for your business.

Case in point, in August the Control Your Cash principals are going to see Iron Maiden. Who aren’t coming within 450 miles of Control Your Cash World Headquarters, which means a road trip. The (seemingly overpriced) tickets went on sale early in the spring, and on the day sales opened, no one at CYC HQ bought. Why? Because prices will lower. The venue holds about 20,000 people. In the few days before the show, someone, somewhere, won’t be able to attend. Several people, in fact. And almost all of them will be unsophisticated market players who didn’t read our 2-part series on how to scalp and do business with scalpers.

A generation ago, not being able to go to a concert you’d bought tickets for meant calling your friends and hoping one of them could take the tickets off your hands. Eating the tickets, treating them as a sunk cost, was often the default position. You weren’t going to call the local newspaper and spend money on a classified ad to sell the tickets, especially with a 3-day turnaround time. (God, it’s unfathomable that we used to live in a world like that.)

But today? We’re not even talking about regimented for-profit services like StubHub and its parent, eBay. Put those ducats on Craig’s List and you’ll probably get multiple offers. And the same goes for a buyer: more likely than not, you’ll have your pick of seat locations and prices. It’s Adam Smith’s wildest fantasies come true, albeit 2 centuries too late for him to enjoy them.

Best of all, it’s a way to stick it to the man. Don’t worry about the ticket companies, operating in cahoots with every venue in the nation. They’ll still make their money. Let them make it off the other idiots, not you. Repeat after us:

I will not buy tickets the moment they’re released to the public (see Facebook, IPO of).

I understand that ticket sellers at the origin no longer have a monopoly. Tickets.com has no more power over me than does user 5htdlpsp67ckls on Craig’s List. Welcome to 2012, it’s a great place to be.

I am in control. And I’ll keep my money in my wallet until as close to the show date as possible.

Caveat vendor, indeed.

 

 

Filed Under: Healthy Living, Making Smart Choices Tagged With: , , , ,

Control Your Cash’s 6 Axioms For Building Wealth And Thus Saving You The Trouble Of Buying Our Book.

June 22, 2012

 

Why is he smiling? No debt. You should be so diligent.

 

We’re going to go an entire week without writing about what a waste a college education (almost always) is. Don’t worry, we’ll beat that drum again soon enough, probably next Wednesday.

It’s time for us to embrace that old standby of the uninspired blogger – the list post! 5 Ways to Save At The Grocery Store. 8 Financial Mistakes First-Time Parents Make. 17 Cheap Graduation Gifts. 432 Tired Ways To Write A Blog Post.

We’ll call this one Control Your Cash’s 6 Axioms For Building Wealth And Thus Saving You The Trouble Of Buying Our Book.

1. Don’t Have A Budget, Have A Ledger.

Creating a household budget is a waste of time. If you earmark $423 for groceries in a given month, and you’re at $454 with 2 days to go, are you going to starve yourself just to prove a point?

Or, if you happen to be under budget as the month is ending, then what? Do you replace the tilapia in your cart with Chinook salmon just because your numbers allow you to? Even if you’d rather eat tilapia?

We hear this constantly: “I can’t believe how big my VISA bill is. What happened? There must be some sort of mistake.” But VISA didn’t make a mistake. You did. You bought too much and you didn’t think about how you were going to pay for it.

Have a ledger means be conscious of every dollar you’re spending. Track them. There are smartphone apps for this, Mint has a good one. Don’t have a smartphone? Buy a pocketbook, they’re like 49¢ or something. Doing this eliminates the possibility of seemingly insurmountable expenses “creeping up on you”. They can’t, not if you know that they’re coming. Even if you’re not so meticulous that you enter every expense in said app, that monthly credit card statement should never, ever make your jaw drop.

2. Stop rationalizing.

You really wanted that Croatian vacation and/or theme wedding? You feel like you’re entitled because you hate your job and your mom’s being a bitch? Wow. It’s like you and we are different species.

Your finances should be the least emotional facet of your existence. Save the emotion for the non-financial parts of your life.

It’s fine to want (and even to buy) extravagant stuff. An otherwise prudent friend of ours dropped $2,462.35 for a couple of nosebleed seats to Game 4 of the Stanley Cup Final. A lifelong L.A. Kings fan (a legitimate one, not a bandwagoner), it was perhaps his only-ever chance to see his team clinch the Stanley Cup at home.

They lost. No big deal, they ended up winning the Cup anyway, but our friend didn’t get to watch the clinching moment live. (Had he wanted to, he could have spent a similar amount, probably a little more, for tickets to Game 6. And flown across the country for Game 5, just to cover every base.)

Was that a waste of $2,462.35? Maybe to us, but not to him. This story isn’t an argument for spending extravagant amounts on ephemeral things. Our friend is a smart guy with a big cushion who could withstand the loss. He weighed the risk of the New Jersey Devils winning, paid cash, and still enjoyed 3 hours’ worth of Stanley Cup Final action. He’s not going to be spending the next 7 years financing his tickets at 19.9% interest, which would be unequivocally dumb.

3. Unless you’re going to major in the hardest of hard sciences, pure or applied, or possibly in corporate finance, don’t go to college.

Sorry, we had to mention it. We’ve broken it down in greater detail before, but not only is college a colossal financial expenditure, it’s an enormous time commitment. 4 years of your life and tens of thousands of your (or your parents’, or the taxpayers’) dollars? So you can spend decades paying off the loans? Which brings us to our next point:

4. Only incur debt if you have a plan behind it. A plan that pencils out.

Borrowing $200,000 might sound like a bad idea in and of itself, but what are you borrowing it for? To have a stable place to live for a fixed period (and simultaneously avoid paying rent)? Going into debt to buy a house makes sense, most of the time. Look at the alternatives. Borrowing money might set off a frugality switch in your head, but would you rather spend 30 years renting and knowing that you won’t recoup a penny of your housing costs? While enriching the person who does own the place where you live?

And that’s shelter: as high as #2 on the hit parade of necessities behind food, maybe #3 behind clothing unless you live in the tropics.

Incurring debt for other reasons is – we’re running out of synonyms for “idiotic”. All your life, you dreamed of having a storybook wedding. Great. Do you want to spend the next 10 years paying off one memorable afternoon?

Some people are going to take that literally. Of course no one wants to spend an extended period paying for something fleeting (and that has a 50% chance of ending in failure), but if you incur the expense, you have to pay it. We come out of the womb understanding this inherently, but the sophisticated and rationalizing brain knows better.

5. Look at each transaction from the other party’s perspective.

Your humble blogger had a (dumb) high school finance teacher who believed that for someone to make money, someone else had to lose money. Were that true, it would mean that all of human civilization has been one big zero-sum game. And that the accumulation of wealth in the world today – all the ocean freighters, skyscrapers, communications satellites, power plants etc. – is no greater than it was when the only items of value in existence were Smilodon pelts.

Not to turn this into an Economics 101 lecture, but exchanges benefit everyone. However, they don’t necessarily benefit everyone uniformly. Sometimes you run into a seller who’s desperate to do a deal, or a buyer with the same problem. In that case, enjoy your bargain. Other times, the one who needs to make a deal and has time or other circumstances working against him is…you. Don’t be that person.

6, the big one. Buy assets, sell liabilities.

Do this consistently and you’ll build wealth no matter how stupid or lazy you are.

401(k) contributions are assets, defining them as we do as something that will help your wealth grow. Extravagant dinners are liabilities.

We should elaborate. You can’t sell extravagant dinners unless you own the restaurant, but from a consumer’s perspective you can avoid buying them.

That doesn’t mean you shouldn’t cut loose and enjoy what life has to offer, every once in a while. It just means that if you do so, you’ll be forgoing future wealth and investment potential. You need to weigh this stuff, assess it intelligently. Don’t buy what you can’t afford, which is so fundamental it barely counts as advice. Mark Zuckerberg gets to spend more than you do. No offense, but at least at this point he’s entitled to more Caribbean cruises and country club memberships than you are.

But don’t fret. In turn, you get to spend more than that hobo who stands on the street corner every morning.

Unless you’re in debt. Then the hobo (assuming his net worth is 0) gets to spend more than you.

STOP.

If you read that last couple of paragraphs and your internal monologue is:

“Who are they to tell me what to do? I deserve it. Life’s too short”,

send us a request and we’ll fix it so that your IP can’t access our site anymore.

There are a million analogies we could make here, but people hate to face reality. If you want to spend profligately, and then complain about your financial situation, you’re no different than a chain-smoker who considers it a random tear in the cosmos that he’s the unlucky stiff who ended up with lung cancer.

One more time: build assets. Sell liabilities. Get in the other person’s head. Attack debt like the household pest it is. Don’t take on expenses with only an unformed (and uninformed) idea of how you’ll profit from them. And buy our book.

Filed Under: Consumer Debt, Economics, Making Smart Choices, Net Worth Tagged With: , , , , ,

A Message To Graduates Everywhere

June 13, 2012

You don't want to peak early. But you probably will.

 

Congratulations. You coasted through high school – 94% of which requires you to do little more than be present – and now the next chapter of your life begins, to quote a tiresome saying. Or, if you prefer, you can just extend the current chapter and defer adulthood.

If you think a college education is the one good or service in the world that doesn’t stand up to cost-benefit scrutiny, where price means nothing, you’re too dumb to go to college (or for you parents out there, have your progeny go to college) anyway.

How much higher can the universities make you jump? We recently spent a few seconds seeing what a generic accredited 4-year school, Arizona State, charges incoming non-resident freshmen who want to spend 4 years languishing in the liberal arts program. Including on-campus housing, and assuming no fee increases until 2017 (as if), it adds up to $152,588.

What if Arizona State raised that number to $250,000? Or $350,000? Would you shrug your shoulders, say “Hey, it’s an investment in the future/An education is priceless”, perhaps complain to your elected officials about skyrocketing costs and organize a protest?

Or you could take a step back and think, “Maybe the math doesn’t work out on this.”

Universities and the DeBeers Company are the only producers in all of commerce who have adopted the following (wildly successful) sales pitch:

What we’ve got is so important, you have no choice but to buy.

COROLLARY: In fact, you’re lucky we deign to sell to you.

A diamond isn’t forever, and neither are most college educations.

No, really. Unless you didn’t happen to notice that divorcées and underemployed college graduates are two categories of human that not only exist, but flourish. If marriage can be the triumph of hope over experience, so can overeducation. A poorly suited spouse will wreck your life, as will a poorly suited degree.

A B.A. in English literature is – what’s the word? Useless.

How dare you say that. Besides, that’s not true. I can teach.

Are you really going to teach? Furthermore, is that even an ambition, or just a defense against an uncomfortable accusation?

Even if it is your lifelong dream to teach (and the timidity of so modest a dream is a topic for another time), you do understand that you’ll be setting yourself up for a life of miniscule pay and massive debts, right? Or have you not applied the math you learned in the 4th grade, and determined what you’ll be getting into, financially speaking?

Of course you haven’t, because you’re not that bright. Despite what everyone’s been telling you, and despite how going to college somehow serves as reinforcement of your status as a smart person. Look, we’ve seen your emails and comments. Most of you think punctuation is like oregano, to be used only sparingly, not consistently.

Here’s the Control Your Cash College Entrance Questionnaire. It has 78 fewer questions than the SAT, and we can grade it instantly.

 

 

 

1. Do you have an aptitude for math and/or science?

Yes         No

IF YOU ANSWERED YES, PUT YOUR PENCIL DOWN. DO NOT TURN TO THE NEXT PAGE.

2. Okay, how about for craftsmanship? This could be anything that gets your hands dirty and that provides a tangible result – carpentry, working on cars, helping your uncle install ceiling fans, whatever.

Yes         No

IF YOU ANSWERED NO TO BOTH QUESTIONS, YOUR FORMAL EDUCATION IS EFFECTIVELY OVER.

 

 

 

University is not the only option. You don’t need a bachelor’s degree to do plenty of lucrative and/or worthwhile jobs. There are thousands of examples. Here are four:

You can hawk real estate with a high school diploma (and a realtor’s license, which takes a few weeks to earn and does not require a demanding course of study). You can be a roustabout on an oil rig, and you’ll immediately be in the top half of American workers by salary. You can enlist in the Air Force, which will teach you much more marketable skills than college will and will pay you for the privilege. You can get a job selling appliances at Sears, which might sound awful to you, but a) you’re 18 and b) if you go to college to study something that carries no prospect of financial reward, you’re going to be working retail in 4 or 5 years anyway. At least this way, when you’re 22 you’ll have enough experience that you should have moved up by now. You’ll also have zero student debt.

As much as you think tertiary education can improve your life, consumer debt can hamper it. Education broadens your horizons, you’re telling yourself? Great. Debt narrows them at every turn.

“Want to do x (move to Alaska, backpack Asia for 3 months, buy a new and reliable car, put a down payment on this cheap house that I found)?”

“Sorry. I can’t afford it.”

Borrow money to defer life for 4 years, and there’s a lot you won’t be able to afford. Then and later.

None of the above jobs has to be a career, either. The Air Force is the only one that comes with an obligation, and even that lasts only 3 years.

Stop believing the hype. People hear the phrase “college isn’t for everyone” and they think it means “college is for everyone but the dumb.” When we say someone “isn’t college material”, it’s usually intended as an insult. It shouldn’t be. Some of the stupidest people on the planet parade through the halls of academia. Many of them never leave. Your average long-haul driver at the roadside diner will give you more stimulating conversation than your average adjunct professor of sociology. Also, the former is far more likely to offer to pick up the tab.

Can you find something satisfying and rewarding to do for a living? Will you be able to do it without dreading certain bills that’ll come at the end of the month (unless you planned to not incur those bills in the first place)? Can you do it while building wealth, and thus options, for you and your loved ones? If you can do all three, that’s true intelligence.

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