Relax, You’re Swimming In It

Iguazu Falls, where $231 worth of water flows per second

Do you know how much that dripping faucet in your kitchen is costing you? If it drips once a second, 24 hours a day, it’ll cost you…

So little that a standard 8-digit calculator can have trouble measuring it.

When you go to other personal finance blogs that give useless “money-saving tips” like “use less water”, you’re wasting your time. And possibly some water, but that shouldn’t matter. The overzealous conservation of water is pseudoscientific, pseudoeconomic nonsense.

Kids were getting indoctrinated with screeds about the scarcity of water at least in the 1970s, and probably earlier. Here’s a gem that social studies textbooks still use:

Of all the water on earth, <3% of it is freshwater, and almost all of that is in glaciers. Only .01% is in surface water – lakes and rivers.

OMG we’re running out! We’re going to be a desert planet soon! Either that, or we’ll have to develop gills!

Congratulations, you just fell victim to a mathematical parlor trick. Percentages don’t mean a thing, only raw numbers do. The 310 million cubic miles of seawater on the planet are irrelevant to the discussion of fresh water. The only purpose they serve is to make the amount of fresh water on the planet look relatively small. If the entire Sahara turned to seawater tomorrow, the percentage of the earth’s water that’s fresh would fall but the amount of fresh water wouldn’t change. The earth’s surface water works out to about 100,000 cubic yards per person. You’re not going to die of thirst.

It’s Control Your Cash’s sacred duty to tear into other bloggers’ hogwash – especially after reading something as ludicrous as the following indefensible feel-good comments that sound great but signify nothing.

We asked the author of the following italicized lines if she wanted attribution. She politely declined. Remember, this is an attack on the post, not the person. Still, someone’s probably going to end up crying:

 

We use water every day for a number of reasons, but the bottom line is that water is a necessity.

Thank you. These are the kind of incisive, groundbreaking research findings that make most blogs such a pleasure to read. What are your feelings on air: necessity, or luxury? How about food?

Everyone likes to unwind in the shower after a hard day at work, but taking long unnecessary showers will definitely rack up that water bill.

 

No it won’t. Soon, we’re going to watch math work its magic.

Instead of taking a twenty minute (sic) shower try taking a ten minute (sic) one.

Also, a 9-minute shower will use less water than a 10-minute one. And if you want to use less water than a 20-minute shower, but aren’t quite ready for a 10-minute one, you might want to try a 15-minute shower. Other acceptable shower lengths in this range include 11-minute, 12-minute, and 17-minute.

20 gallons of water cost 1¢ in Control Your Cash’s neighborhood. A typical low-flow showerhead expels 1.5 gallons per minute, so by showering for 10 fewer minutes a day, you’d save 23¢ a month. Assuming you can shorten your shower by 10 minutes in the first place.

When we go into the bathroom to brush our teeth we just let the water run. Try turning it off while you brush your teeth.

Turning the water off while brushing your teeth will save significantly less than a penny. 1 gallon per minute is standard for bathroom faucets, and that’s at full power. Let’s assume half power, and even that seems liberal. The Sonicare Flexcare toothbrush cleans your teeth in exactly 2 minutes, or enough time to use .05¢ worth of water.

Many of us like to wash our vehicles at home, but this could be costly.

 

Nope. Just proved that. 5-gallon bucket = ¼¢. If your vehicle is a Los Angeles-class submarine, maybe washing it could be costly. Then again, you probably don’t keep it at home. Plus submarines stay wet as a matter of course.

It will be much cheaper in the long run to…collect rain water (sic, does anyone here understand compound words or hyphens?) to use when washing your vehicle.

This is the last refuge of the desperate blogger: a logically sound statement that makes zero practical sense. Yes, the clouds don’t charge for water. But unless you live in Cherrapunji, it’s going to take you a while to collect the raw material for your next car wash.

(In case you’re not getting it: no one is encouraging you to waste water. But unless you’re hiking Zion Canyon in the middle of summer, discarding a few ounces isn’t going to kill you.)

Dripping faucets are an annoyance. They’re not a financial drain, to coin a phrase, that’ll bankrupt you if you don’t immediately fix them. (Heck, one hour of a plumber’s labor would already put you in a hole impossible to dig out of in your lifetime, if you’re weighing it against the water you save.) If you want to collect rainwater to wash your car with, knock yourself out. If you want to take showers that are shorter than the average Ramones song, fine. But don’t kid yourself into thinking that there’s an economic rationale for it.

Charles Barkley, Read This

From NFL.com, and for ENTERTAINMENT PURPOSES ONLY

 

Ah, football season and all it encompasses: tailgating. Camaraderie. The thrill of seeing elite athletes injure themselves for your gratification.

And setting money on fire.

Look, we can’t convince you not to wager on football: God knows it makes the game more exciting, and even the people who follow it for a living and have to remain objective as to the games’ outcomes can’t always help themselves.*

 

Al Michaels is the kind of guy who sounds like he just might have placed a modest wager or two at some point in his life. If you’re going to bet, bet with your friends. In the long run you’ll probably win no more than you lose, and most importantly, if you bet with your friends no one’s getting a cut.

Unfortunately, people don’t. And nothing sounds cooler among a certain brand of guy than saying you’ve got some sort of institutionalized action on a game. (With a bookie named Lefty? With a sports book? With Vegas?) If you announce that you’ve placed a sanctioned wager on a game in progress your friends will like and respect you, but not nearly as much as the bet middlemen themselves will.

If this only makes partial sense, you’re fortunate not to know the basics about gambling on sports. Honestly. But to justify the time you’re spending on our blog, here goes:

When you wager through a casino, a bookie, or an online sports book (let’s just say “an intermediary”), the intermediary is not your opponent, taking the other side of the bet and hoping you lose. The intermediary facilitates your bet, finding one of its other customers to take the other side. Obviously, the intermediary needs to get paid for accepting your bet. The industry standard is 10%, so if you want to win $10 on a standard bet, you have to wager $11.

So does that mean the intermediary makes 10% off every bet? Of course not. Half those bets are going to win. For every $22 the house collects ($11 on one side of a game, $11 on the other), it pays out $21. That’s 4.5%, which is still a sweet return for 3 hours’ work (if you can call simply holding onto money “work”. Even banks have to approve and make loans.)

Would you be interested in an investment that pays 4.5%, say, every 3 months? You should: it’d pay 19.5% annually. So. How about an investment that pays 4.5% over the course of an afternoon?

The volume with which you answered “yes” should equal the volume with which you should answer “no” if you’re the one on the hook for providing the return. That quick 4.5% is how much the intermediaries make off you.

It gets worse, much worse, in the form of parlays: the most efficient method devised for impoverishing you since the invention of the state lottery ticket.

A parlay, if you’re not familiar, is a high-risk/”high”-reward bet that involves multiple events. Instead of a straight bet – Team A to cover the spread, or Team B to – a parlay also incorporates Team C or D, and maybe E or F, up to and including Teams CC and DD.

In other words, with a “3-team” parlay you need the Lions, Buccaneers and Vikings all to cover. With an 8-team parlay, you need the Chiefs, Cowboys, Texans, Seahawks and Jaguars to cover too. If all 8 teams pull through for you, a $1 bet would pay $100.

If 7 of your 8 bets come through, you win nothing. Sure, that sucks, but look at that amazing payoff for going 8-for-8!

Do you know how hard it is to pick 8 games correctly?

Let’s start with an easier example, picking 3 games correctly. Somewhat obviously, there are 8 ways to pick 3 games (Home-Home-Home, Home-Home-Visitor, Home-Visitor-Home…all the way to Visitor-Visitor-Visitor. Try it and see.)

Only one of those ways pays. And with standard wagering odds, it’ll pay 6-to-1.

But mathematically, it should pay 8-to-1.

So on average, for every $8 the house takes in on 3-team parlays, it pays out $6 and pockets the rest. That’s a 25% “interest rate” for an afternoon’s trouble.

And that’s about the best (for the player) cut, or “vigorish”, that the house collects on parlays.

Back to our question about how hard it is to pick 8 games. 28 = 256. An 8-team parlay should pay 256-to-1, instead of the 100-to-1 it does (numbers courtesy of BetUS.com.)

To a lot of people, innumerate people, it doesn’t really matter because 100 and 256 are both big numbers and thus either one is a great return as a multiple of a $1 bet.

At 100-to-1 odds, the house takes 61% of the players’ money. Even the Obama Administration doesn’t confiscate that much from high-income earners, yet.

Still not convinced? Here’s a handy parlay chart. Enjoy tonight’s games.

# of wagersBetUS oddsTrue oddsVig (%)
22.6435
36825
4121625
5253222
6406438
77512841
810025661
915051271
10300102471
11450204878
12600409685
13750819291
149001638495
1515003276895

*Exhibition game, San Francisco favored by 3½. That’s Minnesota’s 3rd-string rookie quarterback.


**This post featured in the Festival of Frugality #248**

The single dumbest industry in the universe.

You can’t be retarded enough to play this. You just can’t.

 

Dumb from the customers’ perspective, that is. Ingenious from that of the industry itself.

Gambling. Dumber than alcohol, dumber than tobacco, dumber than network TV. At least drinking gives the user an inflated feeling of self-worth, and at least cigarettes make a statement (“I enjoy slowly killing myself while rendering the radius around me uninhabitable.”)

As for gambling, however, it just impoverishes its practitioners. Nothing else.

We’re not counting football bets between friends here, or a night of poker with the fellas. Those are zero-sum games. Unless you’re exceedingly horrible at reading an injury report or you insist on drawing to inside straights, you’ll end up neither making nor losing money in the long run when you bet among your friends. You’re essentially moving bills back and forth as a form of camaraderie.

Casino gambling is different, thanks to vig. That’s the cut the casino takes from every wager, which will ultimately bleed you dry. On the roulette wheel, the casino takes 3% of every bet. On straight sports wagering (i.e. a single game per bet), the casino takes 5%.

If someone offers you an investment that pays, say, 10%, would you take it?

The correct answer is “I don’t know.” A rate of return needs to be quoted with a time period for it to mean anything. If the investment takes 20 years to pay 10%, that’s .5% annually. You might as well leave your money in a savings account.

What if the investment pays 10% per day?

Say you invest $1. You’d have $1.95 by the end of the week, $17.45 by the end of the month, and $28 million in half a year’s time. Within 11 months you’d be earning more money than the rest of the world combined.

(That being said, when you read an interest rate quoted in a financial publication – or on any Control Your Cash post other than this one – assume the rate is annual unless otherwise specified.)

So an investment’s duration is always as important as the interest rate, with one exception – negative interest rates. These are always bad, for obvious reasons. If the reasons aren’t obvious, understand that having less money today than you did yesterday is something you want to discourage.

So let’s rephrase that earlier question:

If someone offers you an investment that pays, say, -3%, would you take it?

Which returns us to casino gambling. And for today’s example, the casino mainstay of keno. Keno, if you’re not familiar, is a type of lottery. Some states even incorporate it into their idiot impoverishment plans official lotteries.

In keno you pick up to twenty numbers from 1 to 80. The casino then draws twenty numbers, and you get paid depending on how many you got right. The game appeals to idiots for several reasons:

  • it requires zero skill.
  • it offers an outlet for superstition (“My granddaughter was born on the 17th day of the 11th month. I was 48 when I joined Oprah’s Book Club. I have 2 eyes on my head, which are currently looking at 77 collectible miniatures,” etc.)
  • it provides a margin for error (for instance, if you mark 6 numbers on your ticket, you get paid even if you get only 3 right. If you mark as many as 15 numbers, you get paid if you get only 6 right. What’s not to love about a game that still pays you even if you get more numbers wrong than right?

The vig on keno would be criminal, except that keno players engage in voluntary exchange with the casino and know the rules going in.

Say you play the simplest possible keno ticket; one where you select just one number. The chance of you getting it right is 4-to-1. Most casinos pay 3-to-1.

Which means you just found an investment that pays -25%.

We showed how an investment that pays 10% every 24 hours can make you legitimately rich within a few months, and richer than the rest of the world in less than a year.

Meanwhile, a keno ticket pays -25% in about 7 minutes. (The length of time the casino takes to draw its numbers, then set up for the next game.)

By the way, that one-number ticket is the safest (well, “least dangerous”) keno bet in existence.

Say you play a two-number ticket. The chance of getting both numbers right is about 17-to-1, and pays 12-to-1. Here the casino takes a 28% cut.

Like any good (for the casino) game, the dumber players are, the worse they get punished. Take the average keno player, who isn’t there to win a lousy $4 on a $1 one-number ticket, or even $12 on a $1 two-number ticket. Not when she can WIN UP TO $50,000!!!

One Nevada casino doesn’t require players to perform the toughest feat in keno – correctly picking all 20 numbers on a 20-number ticket – to claim its biggest prize. Instead, in a nod to ease and simplicity, this casino offers its biggest prize even to anyone who can just pick all 14 numbers on a 14-number ticket. Again, for a sweet $50,000 prize.

Care to guess what the odds are on getting 14 numbers right out of 14?

“Well,” you’re thinking, “Control Your Cash has already demonstrated that the casino takes a gigantic cut, somewhere in the 25-28% range. So the odds are probably around…65,000-to-1.”

Higher.

100,000-to-1?

Higher.

You’re telling me the casino actually keeps most of the money wagered on said tickets, paying the player less than half? That’s horrible.

Yeah, we know. Back to the original question: what do you think the odds are?

110,000-to-1?

Look, we try to keep these posts down to a reasonable length. Stop pussyfooting. The chance of getting all 14 numbers right is…

38,910,016,282-to-1.

It’s as if the casino said, “We chose a random person, somewhere on the planet, and got that person to roll a die. Who did we pick, and what number came up?” In other words, you’re going to lose.

We understand that the casino must take some cut for its expenses, like say the 3% it takes on roulette bets. If the casino were taking a similar cut here, then a winning $1 ticket should entitle you to Warren Buffett’s net worth. Or the entire market capitalization of Ford Motor Company. Or the gross domestic product of Costa Rica.

But instead, you get $50,000. Which makes the vig 99.9999%.

But hey, it’s only a buck. And you could win $50,000!!! Which is a big number! And aren’t all big numbers basically the same?

Below is the vig the casino takes on each keno bet. The Roman numerals refer to how many numbers you chose on your ticket. So for instance, if you play an 8-number ticket and get 5 right, the casino keeps 84% of your money. Happy reading.

IVig (%)
1 right25
II
2 right28
III
2 right86
3 right43
IV
2 right79
3 right87
4 right63
V
3 right92
4 right90
5 right47
VI
3 right87
4 right91
5 right71
6 right81
VII
4 right95
5 right84
6 right70
7 right80
VIII
5 right84
6 right78
7 right76
8 right92
IX
5 right90
6 right76
7 right80
8 right85
9 right99
X
5 right90
6 right79
7 right77
8 right86
9 right97
10 right100
XI
6 right80
7 right73
8 right84
9 right94
10 right99
11 right100
XII
6 right68
7 right79
8 right80
9 right92
10 right99
11 right100
12 right100
XIII
6 right86
7 right84
8 right83
9 right82
10 right96
11 right99
12 right100
13 right100
XIV
6 right87
7 right82
8 right85
9 right82
10 right95
11 right99
12 right100
13 right100
14 right100
XV
6 right91
7 right76
8 right85
9 right87
10 right94
11 right97
12 right99
13 right100
14 right100
15 right100