Monday, February 28, 2011

Pizza Delivery - a Real Job or Just Selling Your Car in Slow Motion?

Delivering Pizzas is hard work - for both you and your car!

When I was working my way though college, I did a number of odd jobs.  In addition to my work at GM and Carrier, I also interned at Planned Parenthood, tutored Calculus, worked as a Teamster, and also delivered Pizzas - for three different outfits.

Is delivering pizzas a good way to make money?  I had fun doing it, of course.  But it was dangerous to some extent, and it wears a lot on your car.  In fact, it really is little more than selling your car to Domino's, a little bit at a time.

My first job was at Domino's, before the corporation bought back a lot of the franchises.  It was a Mom and Pop shop, casually run out of a little shack, and we dressed casually (leather jackets and blue jeans).  It was a lot of fun, and you could make some good money if you hustled.  When we weren't delivering pies (they don't call them Pizzas, they call them pies) we folded boxes and B.S.'d and the manager, if he was in a good mood, would make us a pie to share.

We put our money in locked cans and we had to count our dough every night.  I learned a lot of respect for money then, as it was hard to come by.  But also I learned respect for physical money - Putting all the Presidents facing the same way, working out the folds and wrinkles in the money, and putting them in order of denomination.  You can tell a former Pizza Delivery driver - he usually has neat money.

One fellow had a fairly new Jetta that he was making payments on.  He asked the store manager about car insurance, and the manager said not to tell the insurance company he was delivering pizzas, or they would cancel his policy.

He topped the hill at S.U. and someone ran a stop sign and hit him broadside, totaling his car.  Only 36 more payments to make!  And since it was a "commercial delivery" the insurance company wouldn't pay out.  The cop on the scene, seeing the Domino's light on the roof, muttered about "30 minutes or free" and said the delivery driver was at fault for "driving too fast".

Needless to say, delivering pizzas didn't work out well for him.

Our pay was hourly, plus tips, plus a certain percentage of each "pie" - the latter of which was supposed to cover car usage, but really wasn't quite enough.

I left the job to go back to work at Carrier, as they had, by then, given me a raise in pay.

I went back to Domino's later on, when it had moved to a shiny new corporate-owned "store".  We had to wear dorky uniforms with name badges that said "Driver has only $20!".  And when we returned from a run, we were supposed to ring this stupid bell.

Other than that, it was pretty much the same deal as before.  They still had that "30 minutes or free" deal, and people would call in an order, and then claim you delivered the wrong pie, and they say "you have to give it to me for free!"  Needless to say, Domino's wasn't stupid.  We rarely gave out free pies.


I had only one scare while there.  Back then, the delivery labels were hand-addressed and sloppy writing could be a problem.  I remember telling one manager that some day, it would all be computerized, so that if you entered the phone number (or used caller ID) it would enter the address and print a label automatically.  He called me a dreamer.


But anyway, I went to the wrong address - a public housing building that was none too nice.  Some fellows chased me, but I made it back to the car OK - didn't even spill the cokes!

Once again, our pay was hourly, plus tips, plus a certain percentage of each "pie" - the latter of which was supposed to cover car usage, but really wasn't quite enough.

But working for the corporate man didn't seem like as much fun as before.  So I took another job...

My third job was with Sammy Ventura's Wings and Things.  Sammy was the Polish Bowling King of East Syracuse, New York.  He provided an old Plymouth Volare with bowling balls in the back.  I quickly learned not to put pies back there, as the bowling balls would roll over them in the corners and ruin the pies.

When not delivering, I would cut celery and learn how to make wings and pies.  Sometimes, I would make other types of deliveries and pickups.  I would fetch dough for pies, or deliver racing or football bets, in fat envelopes stuffed through door slots after ringing the bell and saying "Sammy sent me".  Other times I would score pot for the chef.  It was a very fun atmosphere.

At the end of the night, they would pay me a couple $20 bills, a large white pizza, a dozen wings, and a six-pack of St. Pauli Girl, and perhaps a couple of joints.  Needless to say, I was a popular guy with my friends at that point, when I showed up at 3:00 AM just as they were saying to themselves, "Gee, I could go for some wings, beer, pizza, and pot!"

I finally had to quit.  Sammy said I was the best driver they ever had and begged me to stay.  But I told him, "This is so much fun working here, that if I don't leave, I'll never graduate from college!"  So reluctantly, I quit.

My last delivery job was with Acropolis Pizza in Syracuse.  The story was run by a little Greek man, Ari, whose brother owned the shop.  His brother had returned to Greece and let Ari run the store with the proviso that Ari could keep all profits he made while his brother was gone.  Ari lived in a cot in the basement and pocketed as much as he could before returning to Greece.

The money was good there - I made hundreds of dollars a night on a few occasions, such as the Prince concert.  The only downside was that I had to wash dishes.  Sometimes my pot-smoking friends would drive around with me, out of sheer boredom, and ask if they could deliver the pies.

It was common, by the way, for college kids to play "Let's get the delivery driver stoned!" and I was offered, over a typical Saturday night, many a beer or bong hit or joint (the latter usually as tips) and yes, I consumed them all.  Not very safe, of course.  After the third or fourth occurrence within the hour, I was a pretty mellow delivery driver, and had to concentrate hard to remember what I was doing and where I was going.

And on occasion, people of all ages and genders would try to offer the delivery driver something a little more.  And it wasn't that I wasn't flattered or anything - or uninterested.  But those pies don't deliver themselves, and if I have three pizzas sitting in the car getting cold, I can't stay around for a quickie - not if I expect to get tipped or keep my job.

My pay at Acropolis was hourly, plus tips, plus a certain percentage of each "pie" or  food item.  The only exception was salads, which Ari felt he was losing money on, anyway.  So it was always a bummer when two girls from remote South Campus ordered salads - and then didn't tip you.

We had one guy working there, who was African.  The other drivers called him "Chicken George" which was racially offensive.  Not that George noticed - he called every black person he saw, the "N" word.  When I asked him about this, he said, "I am African, not some American (N-Word)!"

George always had a saying about South Campus - "They order cheap pie, leave no tip!"


I finally left Acropolis to work as a Teamster with United Parcel.  The pay was better (a staggering $8 an hour!  Whoo-whee!) and it was a lot less wear and tear on my car.


How much wear on the car?  A lot.

Consider than when you deliver a pie, you leave the store, open the car door, slam the car door, start the engine, drive like hell (full acceleration, full brakes) a relatively short distance, then stop the car, shut off the engine, open the door, slam the door, deliver the pizza, and repeat the process.

Each delivery is about the same amount of wear as commuting to work every day.  The same number of car-door slams, starter motor starts, etc.  And on a good night, you might deliver 30 pies.  So in one night, you do a month's worth of wear on your car.  In a month, you've done nearly three year's worth.  In a year, you've basically trashed the car.

A pizza delivery car, besides smelling like pizza and spilled coke, often has sagging door hinges on the driver's side, a shredded driver's seat, with a collapsed cushion, and a well-worn steering wheel and shifter.

So while the pay is OK, in addition to providing your services, you are providing the services of your car.  And if you think running to and from your car is hard on you, well, they are basically gang-banging your car in the process.

So over time, your car will fall apart, and the money they give to you better be more than the cost of a new one, is all I can say.

Throw in the occasional mugging, and wrecking your car (and not getting paid back by the insurance company - or having your insurance canceled) and it can be a pretty raw deal.

So if you are thinking "Gee, I need some extra cash, maybe I'll deliver pizzas!" think long and hard about it, as it really is not as lucrative as it may first sound, once you factor in the car costs.

But looking back, it was kind of fun and all.  Not that I'd do it again, in a heartbeat.

And of course, the few times I order a pizza, I always tip generously.  But I never offer him beer, pot, or sex.  Too old for that sort of thing!

Saturday, February 26, 2011

Quotable Quotes

Some Quotable Quotes of Robert Platt Bell


You may have noticed I tend to harp on some simple concepts over and over again.  Here is a brief list of quotes I tend to use again and again, as I think they illustrate basic important concepts:

The more complicated you can make any financial transaction, the easier it is to fleece the consumer.
Simply stated, any financial transaction where the price is obscured, or tied to some other unrelated transaction (a free toaster) or several different priced items or features are tied in (interest rate, trade-in, etc.) the easier it is to confuse you as to the fundamental terms of the deal.

It is always best to simplify transactions - you hand someone cash, they give you a good or service, period.  Any transaction more complicated than that inevitably confuses you and robs you of hundreds, if not thousands of dollars.

They throw pennies at us, hoping we spend dollars.
Promotions based on "free" things, giveaways, cash back, airlines miles and the like are almost always bogus.  They want you to concentrate on the ancillary deal, not the primary one.  So you think you are "making out" on free airline miles, and fail to realize you are getting screwed on the interest rate.

They give you tiny discounts or incentives, hoping you spend thousands of dollars over time.  Again, it is better to focus on the terms of the underlying deal than to focus on their game - the cash-back bonus or whatever.  They would prefer that you play their game, of course!
 
Generate your own Normative Cues!
Don't rely on society or television to decide what is "normal" - if you do, you will spend yourself to the poor house, as most Americans do this - and think it is "normal" as well.

To break free from the trap of our consumerist society, you must learn to think for yourself - think differently and analytically - and realize that much of the messages you are bombarded with daily are commercial messages that are designed to get you to act in a manner that is diametrically opposed to your own self-interest.

Create you own norms and live with them, despite of the inevitable ridicule you will receive from people who have literally "bought in" to consumerist norms.

Any business relationship predicated on a lie, no matter how trivial, will inevitably go downhill from there.
Liars play their hand early.  When you answer the phone and someone says "how are YOU today?" they are lying to you, as they really don't care about how well you are doing.  When you get a piece of mail that says "urgent!" when it is just an ad, or is faked-up to look like a tax refund check or something important - to get you to open it - they are lying to you.  When a commercial says you can "lease a new car for $199 a month!" and you get down to the dealer and realize it will cost far more than that, they are lying to you.

People who lie to you at the get-go aren't going to become more honest over time.  Just walk away from deceptive advertising, practices, and come-ons.  Every time you send business to people to operate this way, you encourage more people to do it - and drive out of business the few honest people left.

If someone tries to sell you "Peace of Mind", keep one hand on your wallet.
Peace of mind doesn't come from extended warranties, alarm systems, insurance, or other material things.  If you are worried about possessions breaking down, being stolen or damaged, perhaps a better solution is to own fewer possessions - or own less expensive stuff.

Buying a $50,000 car and then getting an expensive "extended warranty" because you are paranoid it will break, is a sure sign that you can't really afford a $50,000 car in your income bracket.

When someone says they are selling "peace of mind", just walk away.  Because what they are really selling you is one acre of blue sky in fee simple, and that just can't be done.  What they are usually selling is a bad bargain - either something wildly overpriced, or just a complete rip-off.

So when someone asks you to cheat, chances are, it is because they want to cheat YOU.  
If someone approaches you with a business deal or a transaction of any type, and either suggests or insinuates that you "cheat" somehow, just walk away.  The best "cons" out there are where the "Mark" (the sucker) is conned into thinking he has "pulled one over" on someone.  Once they get you thinking that way, they can fleece you solid.

For example, the car salesman will tell you that he "put a fast one over" on the dealership and got you a car for an incredibly great price - but don't tell anyone!  Otherwise the salesman would get in trouble.  In reality, he doesn't want you to tell anyone, as they would tell you that you've been conned.

People patrol eBay asking you to "end the auction early" and sell outside eBay to "avoid the fees" - what they are really doing is asking you to sell outside eBay so they can rip you off - and the minimum protections provided by eBay are non-existent.

Similarly, the Nigerian Scammers insinuate you are illegally laundering money - so you won't raise the red flags that their scheme should raise.  Or the "too good to be true" car price is so low because you are "cheating" the seller - when in fact he is cheating you, as there is no car - but you sent him the money anyway.

Any time you are encouraged into a crooked deal, chance are, the only crooks involved are not you, but the people stealing from you.  And when it all goes horribly wrong, you can't complain about it to anyone, as you were trying to steal in the first place.  This is why con-men like scams like this - it keeps the victims silent!

Using the tax code as an investment guide is a bad idea.
The IRS tax code is designed to tell you what your tax bill will be, and what are considered legitimate deductions from income, or what tax credits are provided as incentives to do certain actions.  If you do these certain actions, you should take advantage of tax credits, and of course take all legitimate deductions.

But doing things only because there is a deduction or credit is stupid.   Yes, you get a deduction for mortgage interest.  No, it is not smart to take on as much mortgage debt as possible in order to get a bigger tax deduction.  Yes, they give you a tax credit for buying an electric car.   No, this does not mean you can make money by buying an electric car.

Why?  Because...

You can't deduct your way to wealth!
As the name implies, a tax deduction merely adjusts your income, which lowers your taxes by the marginal rate times the deduction.  It does not lower your taxes by more that the deduction.  So if you pay $3000 a month in mortgage interest, this may knock $1000 off your taxes, if you are in a 32% bracket, but it won't pay for your home.

Even juicy tax credits are often no bargain.  Occasionally, people come out ahead on some deals, but usually the government closes those down right away.  A couple of years back, there was a tax credit for buying an NEV.  So astute business people made NEVs from golf cars and sold them as "free" NEVs, as the cost of the vehicle was less than the tax credit.

And as you might guess, the next year, that loophole was closed, and the tax credits for NEVs is a lot less.

A better approach, I think, that obsessing over the tax code and your deductions, is to think about what you really want out of life and then go and do that, and let the tax consequences fall where they may.  Because in the long run, you will be happier chasing your dreams than chasing sections of the tax code.

Act Rationally in an Irrational World
All it takes to become wealthy in the United States is to act rationally in an irrational market.  If you put money aside, diversify your investments, and stop drinking the get-rich-quick Kool-Aide, you will do OK.  If you can be the one who makes investment decisions based on math, careful study, and rational thinking, you will make out like a bandit.

Most of the other players in the marketplace are buying and selling based on reputation, hype, news stories, projections, or worst of all, jumping on the bandwagon.  If you just do the opposite of what they are doing, you will be OK.  They are thinking emotionally.  Be the one who thinks logically.

So when the media hypes buying Gold, chances are, it is not a sound investment.  If you think about it for even a minute, if it was such a good deal, why are all these celebrity talk-show haters hyping it?  They would be buying it for themselves, not selling it, right?

But that is rational thinking.  Irrational thinking is  "Glenn Beck is right!  Obama is going to turn America in to a Socialist State!  I'd better buy gold just in case!"

Of course, these folks don't think this through.  How is owning gold bars going to combat Socialism?  Or help you when Armageddon comes?

A far more likely outcome, and what they don't want you to think about, is that the bubble will burst, and you will be left holding the bag when the price deflates, as it did in the past.

Think rationally and act rationally (or as rationally as you can) and you will flourish economically.

All advertising is based on the simple premise of persuading a consumer to act in a manner that is NOT in their own financial best interest.
 Advertising sells products.  That's the whole point of it.  And products you need - that are good bargains, sell themselves.

But bad bargains and outright rip-offs, well, they have to be SOLD to the consumer.  And advertising is the way companies persuade you to act in a manner that is diametrically opposed to your own personal financial interests.

So, for example, the car company doesn't sell you a car that is "good solid basic transportation" but instead appeals to your ego, telling you that a hot performance car will make you appear sexy, that the big brawny 4x4 pickup more manly, or the high-mileage hybrid more politically correct, or the intelligent European car more sophisticated and worldly.  And they have to do this in order to move iron off the lot, as all cars are sold new for 10-20% more than their real value on the resale market.

Advertising should never be viewed as information - it is, at best, a minor entertainment, and at worst, a horribly bad normative cue.


While it may be safer in the center of the herd, the grass is all trampled down and pooped upon.

Herd mentality and thinking is part of our DNA.  Animals herd together or school like fishes, to avoid predators.  And at the center of the herd, you are pretty safe - but there is darn little to eat, as the other cows have eaten all the good grass, and trampled and pooped on the rest.  It is only at the edge of the herd - where there is more risk - that there is good eating.

In a similar manner, our society rewards risk-takers, and the "good eating" is to be found at the edge of society, not in the center.  Of course, you have to make sure you are on the leading edge of the herd, not the trailing edge.  With the latter, there is darn little to eat, and all danger, with no reward.

But in reality, what many in the herd may perceive as risk, may not materialize.   People over-insure themselves for petty or trivial losses that are often long-shots, while ignoring greater risks that are far more likely.  People obsess about having glass breakage coverage on their home or car, but few bother with an umbrella liability policy to cover their real catastrophic liability risks.

And what the average citizen considers risky, often isn't.  People who make huge amounts of money in risk-taking ventures often do not seem themselves as risk-takers.  When I bought investment Real Estate, I thought I was doing something ridiculously easy and risk-free.  The only thing that worried me was that it appeared to be too easy.

My friends at the time (1995) thought buying Real Estate was risky, as they had lost their shirts in 1989, when the herd stampeded off a cliff.  So they avoided the perceived risk.  It was only when the herd started to stampede again in 2005, that they decided it was "safe" to get in on a "sure thing".  But by that time, I found the grass being trampled and pooped upon by the heard, and decided to go in a different direction.  And the results, well, you know what happened.

And yea, many of my friends thought I was "crazy" to get out of Real Estate at that point, as the herd said it was the best thing ever!

So being risk averse not only yields smaller gains for individuals, it often yields higher risks, ironically.

Never confuse getting lucky with being brilliant.
It is tempting, when you make a decision that turns out right, to think that you are a bloody genius.  And this reflects, I think, why we learn less from success from failure.  Oftentimes, success is due largely to luck and circumstance - being in the right place at the right time.

Some young tech hotshot forms a company that grows like topsy and is "the next big thing" - and investors hang on his every word.  But it turns out that the dude was no big genius of computers or the Internet, but just some guy who was in the right place at the right time, and whose product, for one reason or another, became popular.  Bill Gates is no "computer guru" who "invented Windows" but rather a Harvard business school dropout who was in the right place at the right time when IBM needed an operating system, and no one else picked up the phone.  You're going to take tech advice from this guy?

On a personal level, it is tempting, once you've made some money on stock picks or maybe Real Estate investing, to think you are a financial Superman.  But Supermen are vulnerable to kryptonite, and in the financial world, this kryptonite is overconfidence.  Everyone is going to make right decisions on occasion and make a lot of money - this does not mean you have discovered the "secret" to the market or investing.  An eventually, if you keep on with this type of investing, the law of probability will catch up with you.

On Wall Street, the same effect happens.  A young hotshot at an investment firm seems to pick all the right stocks and is hailed as a genius.  But like any group of people flipping a coin 100 times, there will always be one guy who flips more heads than tails.  That doesn't make him an expert coin-flipper, but merely an outlier on the bell distribution curve.  And eventually, his winning streak will cease, at which point the prognosticators will shake their heads and say "Well, he certainly has lost his touch, hasn't he?" when in fact, his touch was the same, but probability kicked in.  Being lucky isn't the same as being brilliant.

If someone can't explain what they do for a living, in 10 words or less, they are probably lying to you.
The same goes for business models or other plans.  When you ask someone a direct question, and they hem and haw and use buzz-words and happy-talk, and 10 minutes later, they finish their answer, and you still have no idea what they said, well, you are being bamboozled in the classic sense.

And it doesn't matter if it is a job applicant, a prospective tenant, prospective employer, or whatever.  When you get the bamboozle, watch out!  Because they have started lying to you, and it is going to go downhill, fast.

I had a prospective tenant do this to me once.  "What do you do for a living?" I asked, and 10 minutes later, they finished their long-winded story, and I was none the wiser as to what they did.  When I ran their credit history, it was blank - no history at all.  The conclusion?  Whatever it is they did, it was either illegal or under-the-table.  Either way, a bad choice for a tenant!

When a "dot com" whiz-kid asked me to write some Patents, I asked them what the invention was.  10 minutes later, I am none the wiser, although I have been treated to a litany of buzzwords and some of the vaguest white-board diagrams imaginable.

Asking simple, direct questions is best.  And if someone throws buzzwords at you in return, just walk away.  You could ask for clarification, but in most cases, it never works - they just blather on some more.


Word of mouth is a powerful marketing tool.  If you can co-opt that, you can rule the world.
The Internet is a powerful tool.  And increasingly, it is being co-opted by marketing people.  Facebook is the latest and greatest example of this.  They want you to "like" products and also share, with other users, what you buy and where you buy it.

But it goes beyond that.  Various rating sites, from Angie's List to TripAdvisor to ePinions, all offer unfiltered recommendations, supposedly from consumers like you.  But every site can be spammed and shilled and otherwise skewed to the advantage of a company listed - or its competitor.

And of course, there are an increasing number of phoney sites that are faked-up to look like consumer evaluation sites, but are entire put-up jobs for the company being evaluated.

Use your common sense.  If something sounds too good to be true, it probably is.  If you go to a website and all the recommendations are positive and vague ("what a super (place/product/service)!") then chances are, it is just a shill.


If you see someone about to drive their car off a cliff, make sure you are not in the back seat when they do!

A lot of people spend a lot of time tying to "help" others, when their own lives are a total wreck.   They see a friend or family member or co-worker headed for disaster, and try to "intervene" in their lives, and "save" them from their own folly - sacrificing their own sanity and security in the process.

Most people think that what they are doing is right and makes sense - and they won't appreciate your meddling in their affairs.   Not only that, your meddling will not work and likely have inforseen consequences.   You are better off leaving them well enough along.   Tell them about the cliff and suggest they change course.   And if they say "Fuck you, I know what I am doing.  I can handle meth!" then just walk away.

Because, chances are, you have some issues in your own life, and your time, energy, and money is better spent trying to fix your own problems than to meddle with someone elses.   Is that "selfish"?  No, it is not.  Because if you don't attend to your own life issues, then you may end up driving off your own cliff, and create yet another burden to our society at large.

So, do us all a favor and get your own shit together.   You may not be able to "rescue" others, but at the very least, you have fulfilled your obligations to society under the unwritten social contract.


 * * *

These are just a few of the basic principles I have developed over the past two years - based on over 35 years of being a "consumer" in America.  My only regret is that it took over three decades to figure this out....

Thursday, February 24, 2011

The Corn Revolution

Corn subsidies, in the form of ethanol subsidies and ethanol fuel mandates have been partially responsible for the price of food to escalate worldwide.  This, in part has toppled two Arab regimes and threatens to topple more. People starve so we can drive 10 mpg cars.


Unrest in the Arab World.  15% ethanol mandates for gasoline sold in the US.  What is the connection?

Westerners are trying to label the Arab revolts as the "Google Revolution" or the "Facebook Revolution" or whatever Western-centric label they can apply.  But they might be more accurately labeled the "Corn Revolution" due to the impact of food prices.

A dictatorial government can survive for eons, provided it provides to its citizens the basic needs of life - food, clothing, and shelter.  Freedom of expression is a fine thing and all, but starving to death is something else entirely.  And when the food runs out, dictators are toppled.

And U.S. government corn policies may be in part to blame for these revolutions.  As this link notes, the unrest in the Arab world has a lot to do with food prices, which have doubled or tripled in recent years.  To Americans, this seems a fairly trivial matter, as we spend a small portion of our income on food.  Things like housing and transportation (our cars) are far more costly to us.  So it's not surprising we'd rather burn our corn as fuel than eat it.

And it isn't surprising that we've suddenly discovered "HFCS-free" foods, now that corn has another market outlet.

But in the rest of the world, struggling to obtain sufficient caloric intake for the day is a major problem.  And many people in the world spend most of their income on food.  The idea of dieting or being 100 pounds overweight is alien to them.

So, when the U.S. Government decided that ethanol was the answer to our "foreign oil dependency" problem, it subsidized the cost of ethanol in our fuels - and mandated more and more ethanol as part of our fuel supply.  As a result, the cultivation of corn in the US - which was already overblown to begin with - has gone into overdrive.  Every available acre is being planted in corn, and sales of farm equipment and Monsanto's "Roundup Ready" genetically engineered corn strains (and Roundup brand herbicide) have skyrocketed.  It's a good time to be working at John Deere.

But as the price of corn has gone up, this means less gain is available for export from the USA.  And the USA is, or was, a major exporter of food to the world.  In Japan, the word for  United States - 米国  was "Beikoku" or literally "the land of rice" due to the rice imports into that country (even with protective tariffs) after the war.  When it comes to food, we are as the Arabs are as to oil.

So, it begs the question, did we do this intentionally?  Did American "starve the world" by using its food to make fuel, in retaliation for the Arabs embargoing oil?  It is interesting fodder for conspiracy theorists.

Perhaps this theory is best summed up in this satire of a political cartoon, from the satirical website The Onion.


And perhaps the staggering cost of food explains the unrest in Africa, or future unrest to unfold there shortly.

And the strategy of using corn for fuel is an interesting and calculated one.  While we may be putting "only" 15% ethanol in our fuel, as I have noted in earlier postings, even small changes in the supply and demand curves can cause huge swings in market prices.  So, if we mandate 15% ethanol content in our fuels, this decreases the demand for imported oil very slightly, which in turn, drives down prices.  Conversely, it increases the demand for corn considerably, driving up prices.

(And as a side effect, ethanol, being very corrosive, tends to rot out fuel systems on older cars, effectively taking them off the road.  The automakers complain about E85, but secretly love the fact that this new fuel is forcing older cars to the scrapyard, thus spurring demand for newer "  flexfuel"   capable vehicles).

Back in the 1970's when the first "Arab Oil Embargoes" took place, many folks got upset, and noted that these same Arab countries imported a lot of their food, mostly from the USA.  Why not "embargo" our export of food to them?  But of course, an Embargo would not work, as they would merely import food from Europe, and in turn, we would have to dump our food for cheap elsewhere in the world.  This is in part why Embargoes and Price Fixing don't work, and why the Arab Oil Embargo eventually folded.  You have to sell product to survive - and eventually someone "cheats" on price fixing schemes - just as the OPEC members all do on oil production quotas.

Mandating 15% ethanol in fuel, on the other hand, drives up corn prices, and thus does what an Embargo or price-fixing scheme cannot do - raise prices worldwide.  And many folks are feeling the pain, mostly in poorer countries where food is scarce and represents a major portion of a person's budget.

But we will see this effect ripple through the economies of second-world countries and finally Western Nations as well.  Price subsidies for corn are slated to decrease next year and then disappear entirely.  But the mandate for 15% ethanol will remain - at least for the time being.

The result will be staggeringly large increases in the price of gas in the USA - by perhaps 50% or more, as un-subsidized ethanol is still required as 15% of pump gas.  And this staggering increase in the cost of fuel will ripple through the economy, forcing price increases across the board - inflation.  And since more and more corn is going into fuel, expect food price increases to be on the forefront.

And as I noted earlier, when food is scarce, governments can be easily toppled.

In the meantime, enjoy your E85 unleaded.  Tasty!


Note:  I received a nice note from a reader with THIS LINK to their website which provides an interesting infographic on ethanol fuels.  The bottom line is, this is a political solution to an economic problem - a solution that favors certain economic interests over others.  Ethanol mandates are fine for corn farmers and processors, but not the best idea for motorists...

Wednesday, February 23, 2011

Do You Really Want a Sunset View?


Ahh.... A house with a Sunset View!  What could be more annoying!  Seriously!

I grew up in a house on a lake in Central New York.  We lived on the West side of the lake, which many folks said was the "wrong side" of the lake.  After all, the folks on the East side got the fabled "sunset views".  And that was better, right?

So, for 20 years or so, I always felt I was missing out on the best part of living on a lake - the fabled "sunset view" - watching the sun disappear over the horizon, the reflected light dancing across the water.  What could be more luxurious, right?

Years later, I bought a home on another lake in Central New York, this time on the East side of a lake, with a beautiful "sunset view".  Great, right?  Not exactly.

The problem with a house that faces West is that during the day, the house heats up in the sun.  By the time the sun is setting, the house is very warm.  And by then, the sun is shining through the glass windows that are all set to face "the view".  As a result, the houses heats up like a furnace.

In addition, the glare from direct sunlight into your home is, well, like being under an arc lamp.  Add in the reflected light off the water, and you are reduced to painful squinting, even with sunglasses.

Look at any home facing West and you will see all sorts of curtains, shades, window tinting, and other devices designed to keep out the sun.  We added tinted roll-down window shades, blinds, curtains, awnings, and still it was no use - the sun shone into the house every evening like a car headlamp.  Sunset and darkness was a relief from the onslaught of light.

While we enjoyed our home, we found that the sunset was less than we imagined.  When the sun is low in the horizon, it blinds you.  The house is a furnace, and the furniture gets faded.  The actual sunset, when the sun is at the horizon, is a 15-minute affair that you have to catch at the right time.  And some sunsets are bitter disappointments.

We now live on an island, and many folks have houses facing West.  And just like our lake home, they have shades, shutters, window tinting, and other contraptions designed to keep out the blinding sun.  Far from "enjoying the view" most of these homes block it off.  You drive by and see their window-walls of glass, covered over with curtains and heavy drapes.

Some view.   More of an HVAC nightmare.

Having lived a half-century, I have to say that perhaps an Eastern view is better.  Consider this:

1.  When the sun is rising, your home is still cool from the evening.  Far from being an unwanted intruder, the morning sun warms your house when you need warmth the most.

2.  When the sun sets, your back is to it.  You may miss the sunset (all 15 minutes of it) but your house is not baking like a solar oven.

3.  For most of the day, particularly the afternoon, you enjoy a beautiful indirect light and temperate ambient temperatures.  No glare, no blasting heat.  No curtains, shades, or window tinting.

It is something to think about.  Every day, I drive by a row of homes with glass walls facing West.  And every day, their blinds and shutters are drawn tight, their window tinting showing bubbles and wrinkles.  And I wonder, why on Earth they do this.  Why have a "killer view" that you never look at, because it kills you?

People think a "sunset view" is really great.  But it isn't.  Sunrise is better.  Far better.

Or, if you have neither, trust me when I say you ain't missing much.  Sometimes, what makes things like sunsets so beautiful is that you don't see them every day.  By being an occasional treat, they are more enjoyable.

But when they are part of your everyday - and when they make your personal life difficult and impractical - well, what's the point of paying extra?

Just a thought.

If you don't get 10% off at Lowes, check your pulse, you may be dead.


Lowes offers 10% off to just about anybody.

If you are a retired or active military veteran, show your card at Lowe's and get 10% off on your purchase.

Not in the military?  Go to the Post Office and request a change-of-address kit.  Inside you'll find a 10% off card, for purchases of $250 or more.  Stop by the Post Office on the way to the store.

They also offer 10% or more off at the commercial desk (maybe 11% or so) and of course, 10% off if you open a "12 months same as cash" charge account, although I don't recommend it.

In fact, if you don't get 10% off your purchase at Lowes, check your pulse, you may be dead.

This begs the question:  Why don't they just lower their prices and stop dicking around with these "discounts"?

The Problem With Pills

Americans Love Their Pills!


Americans love their pills.  Almost any problem in life can be cured with a pill, or so we are lead to believe.  Whether it is a bad mood or a chronic illness, your solution is to be found in a cheery little pill, that will whisk all your problems away.

And the pharmaceutical industry is thriving as a result of this trend.  While we all decry the use of "illegal drugs" the pharmaceutical industry has done a neat end-run on the DEA by coming up with new recreational drugs and then saying "golly gee-whiz!" when most of the production ends up out on the street.

And it is not hard to do, either.  When Mark was having back pains, we went to a "pain specialist" who without a moment's hesitation, offered to write a prescription for powerful pain-killers.  You want Oxycontin?  No problem.  And tellingly, much of his waiting room was filled with very young people who seemed inordinately healthy to be needing pain medication.

And it is a pretty lucrative business, too.  Get a 'script for a pain-killer from a friendly doctor, and then sell the pills on the street for several times the cost.  Or the cost may be free, if your health care plan pays for the pills (wonder why health care is so expensive?  That's one reason why).

And our society's attitude toward prescription drug abuse is remarkably blase.  For example, I was watching a television show on Netflix the other night, and one character says to the other, "Oh, want a Valium?" as if they were dispensing candy vitamins.  The casual use of Valium was a boon for the Hoffman-LaRoche.  And while on paper the pharmaceutical companies decry such use, you can be sure that they appreciate the business.

And it is all too easy to get hooked on some of these prescription pain-killers.  Ask Rush Limbaugh.  People abuse these drugs for the same reason they take illegal drugs - it makes them feel good, at least for a short period of time.  Long-term, however, they end up causing more pain than the pleasure they provide.

Or perhaps it is like some giant Karmic wheel.  When you experience the pleasure of a drug, later on you will have to pay for that pleasure with an equal amount of pain.  And if you rack up years of drug abuse by taking pleasurable drugs, the inevitable bill, when it comes due, will be staggering.  Ask Elvis.

But on a more prosaic level, many over-the-counter drugs or antibiotics that people take can have problems as well - which often go beyond mild side-effects.

Antibiotics, for example, the miracle drug of the 20th Century, made it possible for people to survive infections that just a few decades ago, would kill you.  The only problem with them is, since they have been prescribed in increasing numbers, the bugs they were designed to kill off have become more resistant to the drugs.  And increasingly, we have to resort to more and more powerful antibiotics to kill off the bugs.

And then, of course, there are side effects - which we often are not aware of.  I occasionally take Avelox, a powerful antibiotic, if I have a serious diverticulitis attack.  I try not to use it often - perhaps less than once a year or so.  While it does wipe out the infection, it does leave one feeling weak and washed-out for quite a time.

And the other day, I was trying to load a Kayak on the roof of my car, and it slipped out of my hand.  I tried to grab it and my arm twisted around and made a disturbing popping noise and then went limp - giving me the Mother of all Charley-Horses.  After applying a lot of heat and relaxing the arm, the pain went away.  However, the bicep on my right arm was now misshapen and unlike the one on the left.   I had a regular appointment with my Doctor coming up, so I asked her about it.

The bad news was that the bicep had partially detached and that generally, they do not operate to re-attach the muscle in this situation.  The muscle would still work, based on its remaining attachment, but would always look slightly different than the other arm.  She remarked, "We're seeing a lot of this with people using Avelox - muscle detachment".

Huh?  Did I miss something here?  You take an anti-biotic and your muscles fall off?  Now, to be sure, there probably was a warning paper stapled to the prescription.  Did I read it?  Did I read all of War and Peace?  But as it turns out, taking these types of powerful antibiotics can cause "tendinitis" which is a euphemism for your muscles falling off.

The message is clear here.  While these miracle drugs are a real miracle and can save our lives, they should not be taken lightly.  The idea of "popping a pill" and getting better is too easy, too pat.  Every drug that cures one thing can cause another problem.

And this goes for over-the-counter pills as well - especially over-the-counter pills.  We wrongly assume that many of these pills are "safe" but are only safe "if used as directed".

NSAIDs - Non-Steroidal Anti-Inflammatory Drugs are another amazing invention.  If you have inflammation, they knock it right down.  Ibuprofin, in particular, has been a real Godsend for people who have arthritis.  But if you take it all the time, well, it can play havoc with your digestive tract, kidneys, and liver.

As a special bonus-fun-time feature, if you take NSAIDs with Avelox, you can end up having seizures.

But NSAIDs are amazing, and if you have inflammation (which I get occasionally with Gout) or are just sore because you are getting old and tired, they will make the soreness and stiffness go away.  And it is interesting that they almost get you "high" as a result.  As I noted in my Pain article, your brain releases endorphins in response to pain.   When the pain is removed (as when happens when a Gout attack ceases) these can make you feel almost stoned with ecstasy and elation, as the endorphins circulate through your body.

Some folks think that spicy food may have a similar effect - releasing endorphins in response to the heat - and thus cause a drug-like effect.  I can only say that I've had a Vindaloo on occasion that has caused hallucinations.  And yes, I am a spicy-food junky, I'll admit it.

And it seems that taking ibuprofin (Motrin) or Naproxin-Sodium (Aleve) seems to cause almost a euphoric effect, as the pain ceases and the body "bounces back" from pain.  There is nothing so euphoric or delicious feeling as the removal of pain.

So NSAIDs can be habit-forming, in that if you are older and your body starts creaking around, it certainly feels great to pop a Naproxin-Sodium and feel great instead.  But if you start taking 2-3 of these pills a day, for several days in a row, well, you are courting disaster in a big way.  The side effects of these drugs are directly related to dosage, and the more you take, well, the worse things can get.

Unfortunately, no matter what drug you are taking, there are likely to be "side effects" of one sort or another.  Even good old Aspirin (the grand-daddy of all NSAIDs and itself another miracle drug) has its side-effects, including gastro-intestinal distress (ulcers).  And while I was a kid, Aspirin was handed out like candy.  Today, it is considered a no-no for children.  St. Joseph's Aspirin for Children is now called "coated aspirin" and is promoted as a prophylactic for heart attacks instead of kiddie medicine.

So what's the answer to all of this?  Well, to begin with, use less pills.  Use the minimum effective dosage and use it according to your Doctor's instructions.  And avoid using pills for problems you don't have or for imaginary problems or for recreational use.  The idea that taking a pill for "fun" whether it is to get high or to get a boner, is flawed.  These things all have side effects, and should be treated seriously.

I am not giving medical advice here - talk to your doctor for specific instructions for your medication.  But I am happy that my Doctor is one of the variety that views medications as a last resort, not a first line of defense.  If lifestyle changes and diet changes can effect a cure, they are a better alternative than a pill, she believes, and I believe this as well.

And read the instructions that come with medications!  I only wished I had read the instructions that came with the Avelox more carefully (or that they were written in English).  My right bicep would still be fully attached right now.

In a way, pills are like taking on debt.  They should not be employed for silly reasons, but for serious business.  Taking on debt to finance school or to buy a home might be a worthwhile endeavor - if done cautiously and carefully and if you "read all the fine print" and don't borrow more than you need or sign papers on a "toxic" loan.   But taking on debt to buy a Jet-Ski or a time-share is just idiotic, always.

Similarly, taking a medication to save your life or to cure an illness - or to allow you to function normally - is important and worthwhile, provided you follow the instructions, which you have read carefully and take no more than you are instructed to take.  Taking pills to "get high" or to get an erection, well, that strikes me as recreational use, which is not a sufficient reason to risk the side-effects of such pills over time.

Monday, February 21, 2011

Retread Tires (recaps)

A retread or re-cap tire takes an old tire casing, grinds off the surface, and attaches a new outer tread.  In the old days, with bias-ply tires, these were a good option for older cars.   Today, they are rarely seen on automobiles, but often used on 18-wheeler trailers.  You often see the casings or " gators"  on the highway when the tread inevitably separates.


Retread tires are hardly found anymore for passenger cars.  And yet, not too long ago, they were a common option for budget-minded car owners.  But like with used tires, they probably are a bad deal for cars, and in fact, more expensive than buying new tires.

As this article illustrates, buying retread tires for a car can be a nightmare or at the very best, a bad bargain.  The article also illustrates how it is possible to be "penny wise and pound foolish" as the lady in the article buys used tires twice a year - spending more on balancing worn-out rubber, over time, than she would buying new tires.  She decides to "upgrade" to re-treads, thinking they will "last longer" and actually finances them.  The results are predictable.

I paid nearly $250 apiece for my Michelins on my X5 - mostly because they are an odd size (P255/55 R18) and thus a prescription tire.  But they have been on the vehicle for 60,000 miles now, and appear to have another 10,000 miles of tread left in them.  So even though these are an esoteric high-performance tire size, they end up being less costly to buy and mount that the string of used tires and re-caps that the lady in the article cited above put on her car.

Again, poverty-think leads to poverty.  People get it in their mind that tires are "expensive" because they cost a few hundred dollars, which is "a lot of money".  So they spend twice as much dicking around with used tires and recaps, not realizing that over time, they are spending more than they would have on quality tires.

Recaps have one big problem, and that is that if you let them get hot, they will likely throw the cap.  If you travel the nation's highways, you've seen this happen firsthand, as tractor-trailers leave "gators" on the highway when they throw their caps.  Truckers often use recap tires on truck trailers, as they tend to wear out quickly anyway, due to the scrubbing action produced when turning a trailer.

And usually, what happens is a tire gets a leak or runs low on pressure, and this causes the casing to heat.  Once the casing gets hot, the cap separates and falls off in one giant piece.

For an 18-wheel truck, this is an occasional inconvenience (and a road hazard for the rest of us).  For a car or SUV, it is a catastrophic tire failure that could lead to a major accident.  Not only that, but a tire casing coming off the tire can literally tear up your bodywork.

Again, stop fishing so far downstream - it isn't saving you any money and in fact could be dangerous.  The "nice man at the used tire store" is not your friend.  He is overcharging you for crappy tires.  Break down and buy new tires for your car, even if this means having to finance them (go to your credit union or bank and get a low-interest rate credit card, or save up your money and get out of the "monthly payment" mindset of life).  Because a good set of NEW TIRES will be LESS EXPENSIVE than crappy used ones or recaps.

This site online has listings for recap tires for trucks and SUVs.  The prices are anything but a bargain.  You can go to Wal-Mart and buy new tires for about the same amount of money.

Notice how many of the tires are for over-sized "off-road" bozo tires for jacked-up pickup trucks.  Many rednecks feel that they have to jack up their truck to make it a miniature "Bigfoot" to compensate for their tiny penis that is hidden in their folds of belly fat.  By doing so, they end up adding prescription tires to their truck - over-sized tires that can cost twice what normal truck tires would cost.

As I noted in the prescription tires posting, buying a car with oddball tire sizes is not a good idea, as the cost of replacement tires can be double that of a more popular size.  Taking a "normal" vehicle and intentionally adding oddball tire sizes to it, just for cosmetics (and please, don't tell me about how you are a rough-and-ready off-roader in your pickup truck, when you use it to commute to work) is just idiotic.  Going to retread tires as a means of affording such "mods" is even dumber.

And yes, here in Georgia, we see rednecks doing this - driving down the road in jacked-up trucks, on their way to work, with their knobby re-treads making grinding noises the whole way.  And these people can least afford it - or afford the gas.  So they whine and bitch about how poor they are and how it is all Obama's fault.

We all make choices.  And if you make poor, stupid choices, you have no one to blame but yourself.  And yet these macho men cannot "man up" to their own mistakes, but rather they whine like little school girls who have lost their lollipops, when gas goes to $5 a gallon.

Just say "no" to Poverty-Think.  Just say "no" to used tires and retread tires.  Leave then to the Truckers.  The real truckers, not some idiot in a pickup truck with lift blocks.

Sunday, February 20, 2011

Treat Life as if You Were a Customer

Sometimes it pays to approach life from a customer point of view.

Suppose you have a favorite coffee shop around the corner.  They have a special on regular coffee for a dollar, and every afternoon, you stop by there and grab a cup.  It is good coffee, served hot, and the service is friendly, and unlike the designer shop across the street, it is fairly cheap.  You'd be a happy customer, right?

Well, sometimes it pays to approach life from that point of view.  Just look at life as a transaction, and think about whether you are happy with the bargain, and don't get distracted by ancillary and irrelevant data - such as whether someone else got a better deal than you.

For example, suppose one day you go to the coffee shop and the barista starts bending your ear about what a rotten place it is to work - how the management is inept, his boss is an "asshole" and the coffee is actually wildly overpriced.  He tells you that they only pay 15 cents a cup for the coffee, and you are getting "ripped off".  And of course, the coffee company is making wild profits, which is unfair to the employees and the customers.  And they are exploiting the coffee growers and deforesting the rain forest to boot!

Suddenly, your favorite dollar-cup-of-Joe isn't as satisfying anymore.  It is the same coffee you had the day before - and you enjoyed that.  But now, in the back of your mind, you are all riled up about the injustice of it all - and how the coffee shop could be better managed.

Pretty soon, the coffee tastes pretty sour.  And yet, nothing has really changed except your mental attitude.  You've been Baited, for sure.

And yet, life is a lot like this coffee shop experience.  As I noted in my They're Baiting You! entry, you can start a job and think it is pretty interesting work and a nice place to be, and that you are being paid well, but before long, some sad-sack will come into your office and tell you what a shitty place it is and get you thinking the same way.

Or take our little retirement island.  Miles of endless beautiful beaches, four golf courses, bike paths through forests of live oaks - you name it.  You'd think people would be happy to live here, right?

Right?

And you'd be wrong.  Many of the residents are very unhappy and grouchy people - and what they are upset about is often irrelevant data.  While it is a beautiful place to live, they are convinced that it is being horribly mis-managed, mostly because of stories they pass among one another - mostly half-truths and exaggerations- about how the management is inept, corrupt, or just plain stupid.  If only someone asked Them what to do, well, they've have everything tip-top in no time!

And I thought I about it at the time.  If I was a "customer" coming to visit our little island, I would probably think it was pretty neat.  I would not be aware of all these oh-so-important "issues" that the locals obsess about.  As I noted before, if you want to ruin a good vacation, either pick up the local newspaper and read about the insane local politics, or look at real estate.

Or take the small town where we recently sold our summer home.  An alumni of the local college donated millions so that the dilapidated hotel and bar could be overhauled, updated, and made ADA compliant - all at no charge to the residents.  You'd think they'd be happy, right?

Right?

Wrong again.  While none of the changes really affected their lives one iota, the locals got angry and started a "concerned citizens group" and just started a lot of negative vibes about how everything is is inept, corrupt, or just plain stupid.  If only someone asked Them what to do, well, they've have everything tip-top in no time!

In other words, same-old, same-old.

And as a "customer" to both places, not knowing these riveting and all-so-important back-stories, I naively enjoyed myself, thinking, that "Gee, what a nice place to visit, and how nicely appointed it is!"

If only I had been "smart enough" to see through the smoke-screen and understand all the vile corruption behind it all!

Or, maybe - just maybe - it is a better idea just to play dumb and take the customer approach to things.  Is this a good bargain for you?  Does the value and quality meet your expectations?  If so, whether Suzie-Q at the knitting shop is unhappy really is irrelevant isn't it?

If you are a happy customer at the coffee shop, it really doesn't matter about the "back-story" and what goes on in the back room.  So long as the coffee is reasonably priced, hot, served quickly with a smile, and not too expensive, you've made a good bargain.  Worrying about how it "could have been better" only serves to detract from the Now.  Because, let's face it, anything could be made better, and if you go down that road, you can pick apart paradise in short order.

So, who are these people who constantly gripe and try to run things down and think "If only I was in charge, I'd run things better!"

Answer:  DEPRESSED PEOPLE.

Depression is a horrible thing, to be sure.  And it is sad that so many people in this country - living a lifestyle that is in the top 10% for the planet, are still so horribly unhappy most of the time.

But the best thing for you to do is just walk away from them.  Yes, it would be humanitarian to try to "help" a depressed person, but like the scenario where a friend is driving their car off a cliff, you want to make sure you are not in the back seat when they drive off!

In other words, as in the Unwritten Social Contract, you have to help yourself before you can help others, and listening to the dronings-on of depressed people isn't going to help them - it is only going to depress you.  It is just going to make you an emotional punching-bag, and wear you down until you, too, are depressed - and convinced that everything - simply everything - in life is corrupt, venal, and vile.

So the next time you are in the coffee-shop and the barrister starts to go off on what an asshole their boss is, just tune it out - and don't leave them a tip.  Enjoy your coffee and forget about other people's whining complaints and irrelevant "backstories".

Because 9 times out of 10, their long-winded diatribes are based on utter nonsense, exaggeration, and just plain bullshit.  Life is not an optimized event - and criticizing others for not being 100% efficient is sort of weak thinking, considering we ourselves are far from perfect.

Enjoy life as a customer.  If you find you are getting a good bargain, be content.  Don't worry that your neighbor is getting a better deal, or that you are being "overcharged".  Keep an eye on your own plate and your own life, and evaluate it on its merits alone.

Because, chances are, if you are reading this, you are one of the lucky minority of people in the world who doesn't have to worry about putting food on the table or worry about want.  Appreciate that and be a happy customer!

Wishful thinking..





I hate to break it to you, but wishing for something doesn't make it so.  Sorry!



Reading some of the queries that send people to this blog is interesting.  It seems that a lot of people out there don't "get it" and never will.  They have little or no clue how money works - or how anything works.  They live like savages in a cargo cult, outside of society, yet a large part of it, scratching their heads at technology and finance, and wondering why they continually get hurt by these things.

The basic problem, if I could sum it up, is that people seem to think you can get something-for-nothing.  The first and second laws of thermodynamics don't apply to them.  You can create wealth from a vacuum, you can generate more energy than you consume.

The idea that if you spend a dollar of money, you'd better at least earn a dollar, is alien to them.  Somehow, they think that you can earn a dollar, and spend a dollar and ten cents, and that will never catch up with you.

And unfortunately, this form of weak thinking pervades our society.  And anyone who doesn't want to go along with it is "mean".  Like those nasty old insurance companies!  All they care about is profit!  Why can't I get $100,000 in medical services and pay only $10?  Seems reasonable to me!  Or maybe the "Government" should pay for it.  After all, they have a lot of money (and any amount of money over $1000 is basically an endless amount, right?).

And for some folks, wishful thinking is real.  No, seriously, they really think that if you "wish" for something hard enough, it will come true.  There are even religions based on this - so-called "Prosperity Theology" - that if you pray hard enough, God will make you rich.

Don't get me wrong, visualization is a powerful thing.  But merely visualizing (fantasizing) about something isn't going to make it true - it will merely make you more miserable when you fail.  You cannot lose weight by "thinking thin" - you actually have to monitor your calorie intake.

In a similar way, with regard to finances, visualization alone is not enough.  You actually have to do something - and by that, I mean something constructive, not destructive, like spending.  Unfortunately, most people, it seems, chose instead to believe in a fantasy world, and then live in abject misery and confusion, when their fantasy clashes with cold hard reality.

And one real danger of Wishful Thinking is that if you wish hard enough, what you want may seem to appear before your eyes!  But what you may be looking for is not wish-fulfillment, but rather a deceitful Genie, who till take your money and crush your dreams.

Wishful thinking takes a number of forms.  And you may have heard these in your life, or worse yet, said them....


We can repeal the law of gravity.

Memorizing Pi is too hard.  Let's round it off to 3.

Let's pass a law making everyone a millionaire, so there would be no more poor people!

Let's abolish all taxes!

You can make money by gambling.

Pyramid schemes will work, if you just give them a chance!

Insurance companies are so mean to people.

The Government should pay for everything we can't afford.

If I give a lot of money to my church, God will send me to heaven.

The political party I support is good.  The other one is bad.

Perpetual motion machines work, but the oil companies are suppressing them.

If only I could afford $49.95 to buy "The Wealth System" I could be rich!
I deserve a new car!

Leasing makes sense!  I only pay for the part of the car I want!
If you wish for something hard enough, it will come true!
You can lose weight by taking a pill while eating all you want!

etc. etc. etc. ad nauseum...

Support Your Local Library!

Your local library has a lot of resources, and many of them are free of charge.


As I noted in the Death of the Book Business, the model of the modern American book-store caused it to self-destruct.  Rather than selling real depth of product, the modern mega-store actually sold more volume of fewer works - and many of these works being "McBooks" by the same dozen or so authors, or celebrities, or coffee-table books written to spec.

Pretty soon, even the most astute consumer tires of spending $100 or so to buy forgettable tomes that really are not worth purchasing.  Spending $29.95 for the latest Danielle Steele hardback makes no sense, when, chances are, once you've read it, you will never pick it up again.

And spending this sort of money is doubly stupid when you can simply borrow the same book, for free, at your local library.  Granted, many local libraries may not have the "latest bestsellers!" right away, but great literature is not a Pop phenomenon.  In fact, to me, I prefer to read something that is timeless and interesting, rather than the "latest book" from one of the dozen McAuthors out there who churn out the same murder mystery, horror book, political potboiler, spy thriller, or adventure tome, like clockwork.  The fact the library has real literature for FREE is just icing on the cake.

In addition to books, many libraries have videos (DVDs and even antiquated VHS tapes) that are lent out for free as well.  While Netflix is cheap, free is even cheaper.  Some libraries even lend out CDs as well.

Many libraries also provide access to the Internet, either for free, or at a reduced charge.  If you need to check e-mail while traveling, it can be a good place to stop by.  And for poor folks who have no access to resources like the Internet, the Library can be a Godsend, in terms of putting them on equal footing with the rest of society.

The future of the public library is, of course, uncertain.  Budget cuts mean that many branches are being closed and others are being furloughed for days at a time.  And the emergence of the e-Book will be an interesting trend for libraries.  How do you "lend" an e-Book, when it is a computer file that is sold by commercial interests on a one-use-per-customer basis?  It remains to be seen how Libraries will survive and adapt into the e-Book era.

But in the meantime, they are a heck of a resource for the average citizen, and something you should support.  Most Libraries have book sales once a year to raise money - and your donation of books, CDs or DVDs can help.  If you find yourself overwhelmed with all those Danielle Steele books, why not donate them to the local library for their book sale?  Volunteering or donating to your local Library is also a good thing.

We usually visit the local Library once a week, to check out books to read.  Our library is part of a Statewide system, and as a Library member, you can request books from anywhere in the system and have them sent to your local branch.  This has come in handy, for example, when we were researching cruise ships and vacation destinations.  We ordered a number of books and they were sent within a week or so.

Back in the old days, when we thought we were "making a lot of money" we would go to Borders or Waldenbooks (remember them?) and think nothing of spending $100 buying some "books to read" and the getting a Latte for $10.  While that may not sound like a lot of money, if you do that every week, it adds up to over $5200 a year, which in fact, is a lot of money.  To earn the same amount, you'd have to make $10,000 more a year.  And as percentage of your disposable income, it is a staggering amount.

It is no surprise to me that places like Borders are going belly-up.  As our generation ages and faces retirement, we have to cut expenses to the bone - not only so we can fund our retirement, but so that we can live comfortably on a reduced retirement income.  Spending $10, $20, or $30 on a book you are going to read once and toss simply doesn't make sense in this day and age.  eBooks might be one alternative, of course, but the Public Library is free and already extant.

So take advantage of your local Public Library!  The best things in life ARE free!

Friday, February 18, 2011

Death of the Book Business.

Things are so bad in the book business, they had to hire Harry Potter to help put up signs for Border's going-out-of-business sale!

Borders is having a fire sale - closing 200 stores in Chapter 11 Bankruptcy.  The book business is changing, no doubt.  People are reading less and e-readers will change the nature of the business in the next few years.

For the consumer, the rise of the mega-bookstore has been a mixed blessing.  Most of these large chains have served to put smaller booksellers out of business.  And like fast-food franchises, the large chains didn't sell more variety and greater selection, but rather a more standardized product in higher volume.

So instead of a great diversity of books at Borders or Barnes & Noble, you find the same stuff on the shelves.

The "Bestsellers" are going to be celebrity biographies, or "I'm famous and now I've written a book" kind of deals.  For example, Captain Sully, who heroically landed a plane in the Hudson, writes a book, and then goes on all the talk-shows to promote it.  Great literature?  Hardly.  But everyone who gets into the news for one reason or another ends up with a "book deal" and we, as consumers, are supposed to be salivating to read this ghost-written trash.

Or political tomes - the commentators on the far left and far right put together poorly written books that are little more than extended rants.  These are little more than preaching to the choir, as the people buying these books are not looking for new ideas, but merely validation of their old ones.

The rest of the dreck in these book stores is interesting.  For example, there is always a huge display of coffee-table type books, which usually are also heavily discounted over time.  Most are about cars, airplanes, boats, or Nazis.  These are the kinds of books women buy for the men in their lives.  Lots of photos and short captions or articles accompanying each.

A large bulk of books are written by the same authors and/or cover the same genres - over and over again.  If you can become a "bestselling author" these days, you write the same book again and again, barely disguising the recycled plots.  Whether you are writing mysteries, spy thrillers, or horror, you basically keep writing the same book - over and over again.  Michael Crichton has a new book out.  I'm just guessing here, but I suspect the plot revolves around some sort of computer that goes "haywire" in the end, illustrating man's folly of trusting in technology.  Hmmm... where have I heard that before?  Oh, right, in the 30 other books he has written.

So these sort of "Novels" are like happy meals - they are written at about a 6-8th grade level (or what should be a 6-8th grade level, but what is now considered college level) and repeat themselves over and over again.  They are hardly "great literature" by any means.

The book business has gone the way of the music industry - and the parallels are enormous, as the means of promoting books (the talk show circuit) mimic the payola of the radio business.  And of course, the media conglomerates use their radio/tv/internet/books/movies/etc. to cross-promote their products.

So you become a media star, thanks to a network, then write a book, which is picked up by a publishing house owned by the network's holding company.  It is made into a movie (guess who owns the studio) and you go on the talk shows to promote both.  Meanwhile their newspapers and websites promote you book, then the movie.  And the soundtrack for the movie highlights a new band that is "popular with the kids" and is sold in their captive record stores and hyped on their network of radio stations.

What's not to like?  Shut up and eat your media kibble.

There was, however, a time in this country when books were literature, and you didn't see the same four authors all the time on the bookstore shelves.  A time, when a book was published, the movie rights were not the big deal.  And much of the literature of the bygone era is too difficult for most people to read or fathom today.  Few explosions.  No gadgets.  No hysterical drama.

Of course, as consumers, we do have choices.  We can read real books, not hyped mega-star authors or media darlings.  And the best news is, you can do this for free - at your local library - which is the subject of my next posting.

Thursday, February 17, 2011

The Deafening Silence

Many people create trouble or noise in an effort to shout down the deafening silence in their lives.


One thing most folks don't like to think about are the more profound questions in life.  Why are we here?  What is consciousness?  What is reality?  What happens when we die?  These are disturbing questions, of course, and they can't be logically answered, for the most part.

For many, belief is the answer, and they turn to religion to answer these questions - or at least drown out the questions with a lot of interesting stories and mantras to repeat, over and over again.

But perhaps for many, religion is not enough, or the answers that most organized religions provide are too pat, too fantastic, or just to obviously self-serving ("behave well now, give us your money, and you'll go to heaven in an afterlife!) that they really don't believe them.

So many folks turn to other things to drown out the silence in their lives. 

Materialism is one aspect - buying a lot of stuff and buying into a materialistic culture - ministered by the television, that tells you that if you just buy enough stuff, you'll be OK.  "He who dies with the most toys, wins" they claim.

But most people quickly see through this answer, or at the very least, they see it isn't an answer and wonder what must be wrong with them for not seeing it.

Others try to find "meaning" in their lives by making trouble for others, or getting involved in more and more frantic activities - joining clubs, social groups, organizations - "getting involved".

The political junky and conspiracy theorist do this - after all Kennedy Assassination theories are far more interesting than disturbing questions about the meaning of life.

Yet others throw themselves into their work, which is at least productive, and perhaps the only shot one has at some minor immortality after the grave (for a time, only, not forever).  The life so short, the craft so long to learn.

The deafening silence, however, is not so scary, and in fact it can be your friend, if you accept it.

Myself, I don't worry so much about these questions, as the answers will be revealed to all of us, in time.  We all will die, eventually, and find out whether there is an afterlife, or just decay - whether consciousness is a chemical reaction or a spiritual being.

There is little point, to me, in trying to figure it out ahead of time, like cheating on a test, when God will provide the answer in a very short period of time, if you think about it - how short our lives are, when compared to the life of the universe.

If there is an answer, I think it is in having loved someone and being loved by someone, which is something that, sadly, happens to few people these days.  God is love.

What does this have to do with finances?  Perhaps nothing.  Except that it seems I see a lot of folks expending a lot of emotional energy racing around to little or no purpose, often making others miserable in the process.  And all the while ignoring the silence, learning from the silence, embracing the silence.

Perhaps that makes no sense.  Just a thought I had.

Going Broke on $250,000 a year.

Yes Virginia, you can go broke while making a quarter-million a year.  And you do it the same way a fellow making only $50,000 a year does - spend faster than you make it.

A reader asks: "What should my net worth be if I make a salary of $250,000 a year?"

The answer is "a lot" but depends on how old you are and how long you've been making that much money.  The vaunted "net worth equal a year's salary at age 30" might not make sense if you just became a doctor, and spent years in medical school and training, and have staggering student loan debt and are just now, at age 30, making "big money".

On the other hand, if you have been making this kind of dough for a decade or more, you should be worth millions - or at least a million.

Surprisingly, few are.  And this is a shame.  Why on both counts?  Let's explore.

With regard to the latter, it is a crying shame, as if you are making that kind of money, you have the opportunity to build dynastic wealth, and yet most squander it, like the couple above, on a fancy house and depreciating assets - high end cars.  It is doubly a shame as that sort of income is not guaranteed for life.  Oftentimes, events occur, usually in the mid-50's, that put a screeching halt to the money train, and bad things pile up in a hurry.

I know a lot of bitter, old people who will, after a few drinks, tell you what a high roller they "used to be" back in the day, but now at age 65 they are nearly broke.  And this needn't have been, if they had put a little aside early on, rather than trying to live up to their salary expectations.

So how do you go broke on $250,000 a year?  It ain't hard to do.  As I noted in my "Going Broke on $100,000 a year" posting, the simple answer is to spend more than you make.  And I have used the example of my Attorney friend, now deceased, who lived the large lifestyle on a six-figure income, with the look-at-me house, the fancy cars, and the country-club membership.  He thought it would go on forever, but when he died, it turned out it was all financed, and that his net worth was zero, and within months, his widow and infant son were destitute.

So, where does a quarter-million dollars go?  As I noted in one of my tax postings, a lot goes to Uncle Sam and your State.  The nice thing is, our tax system actually favors people making more than $100,000 a year, as they pay no Social Security tax on income above about $108,000.  But nevertheless, expect to pay about 1/3 of your income in taxes, between Federal, State, Social Security, and Medicare.

So, right off the bat, $250,000 becomes $160,000 in a real hurry.  And if you are earning that money on a salary, you are paying the highest taxes possible.  So right off the bat, you call an Accountant and ask them how to reduce your tax burden.

And since the Accountant is not a Genie, all he can do is suggest the usual tax tricks - home mortgage interest deduction, or perhaps using an investment property to convert ordinary income into capital gains.

So, our intrepid friend goes out with the wife to buy the biggest and ugliest mini-mansion possible, as the Accountant suggests that the interest on the mortgage is tax-deductible and will "reduce your taxes".  Funny how someone can be smart enough to make $250,000 a year and still be dumb enough to fall for that line of reasoning.

You can't deduct your way to wealth just as you can't eat your way to slimness.  Spending less is the key to accumulating wealth, not spending more.  But our friend, convinced he is making a sound investment - using the IRS tax code as his investment guide, goes out and buys a 1.5 million-dollar home, which has a mortgage payment of over $7,500 a month, or $90,000 a year.  While he may have cut his taxes by $30,000, he has put a real dent in his cash flow.  And the savings in income taxes are pretty much offset by the cost of property taxes on such a home, plus the insurance.  So from a tax perspective, it is a net wash.

So, his $160,000 a year is now down to $70,000 a year.  Just taxes and mortgage payments have cut his salary by 3/5ths.

But of course, he and the wife feel they deserve new cars - preferably every three years by leasing.  And of course, on his salary, Nothing but the best Mercedes or BMWs will do - or even more esoteric marques like Bentley or Maserati (as shown above) or Jaguar.  They can spend, with lease payments and insurance, easily $1500 to $2000 a month on car payments, between the two of them, particularly since our friend likes to speed, and his insurance is astronomical.

So we're down to $46,000 a year now.  Still a lot of money, right?  Well, throw in all the cable channels and a premium cell phone family plan - we have to have the latest iPhones, right? - and of course XM radio and other subscription services, and we're taking $400 a month or more.  So that drops our income to $41,200.

And there are the cost of groceries and eating out.  I easily spend $1000 a month on this, but if you have one of those high-paying, long hour jobs, chances are, you are eating out for lunch every day, and "too tired" when you get home, and so sending out for take-out or going out to dinner.  So we could be talking $2000 a month, easily.

Our $250,000 income is down to $17,200.  The Accountant calls and suggests you contribute to your 401(k) plan.  Too late, you realize that you need to be saving for retirement.  So you try to sock away $20,000 in the 401(k) plan - a pitiful amount for someone making $250,000 a year - and your income goes negative at this point.

But hey, you're "rich", right?  Making good money?  So, just put some of those expenses on a credit card.  You've got a great credit score!  And that must mean you are financially astute. 

Of course, that mini-mansion doesn't furnish itself, and with the wife staying home all day long, she has little to do, other than take her aggressions out on shopping, to the tune of thousands a month.  And of course, since you are "rich" you deserve that vacation in Vegas, right?  And it's tax-deductible as a business expense, so it must be a smart thing to do, right?

So the credit card debt starts to climb, higher and higher, and our intrepid friend doesn't worry because he's making $250,000 a year and anyone who makes a good salary is a rich man.

Right?  Right?

Wrong.

It doesn't matter how much you make, if you spend more than you make, you are poor - and going into debt.  And what is really sad is that people do this, and then wonder "where all the money went".

Now, some of you may accuse me of fudging the numbers here - of making up a scenario that is too fantastic to believe.  Because no one in their right mind making $250,000 a year would squander money in this way, right?  Right?

Wrong.

The scenario described above describes a couple I know (or knew).  They had over $50,000 in credit card debt, massive monthly car payments, huge expenses from "living large" and bought an outrageously overpriced home on one of these dubious financial instruments.  And of course, it all fell apart when the recession came.

What mistakes did they make?  A ton.  Where to start?  Well, here goes.

1.  Never use the IRS tax code as an Investment Guide:  Deductions are fine and all, but you can't deduct your way to wealth.  They bought too much house, no only because they thought they "deserved it" and wanted Status, but because they thought it was astute financial planning to get as big a deduction as possible.  And a lot of financial and tax gurus preach this nonsense.  A smaller, more reasonable house would have allowed them to save more (max out that 401(k)) and live on less.

2. You are never too rich to cut expenses:  When you start to make six figures, you assume (wrongly) that you need not worry about money so much.  A dollar here, $10 there, $100 there, it is chump change compared to the "big money" you are making - and you can always make more, right?  Wrong.  You can get laid off on a moment's notice, and if you spend all your disposable income on take-out pizza and cable TV, well, too bad for you.

3.  The Road to Middle Class Poverty is Paved with Car Payments:  A big chunk of their disposable income goes to car payments and insurance.  While a brand new Mercedes every three years is nice, it is also nice and expensive.  And these are the kinds of cars that easily last a decade or more - and are timeless in their styling.  So why not take advantage of their tank-like construction and keep them?  Saves a lot of money, and you can still have your status.

4.  Not Paying Yourself First:  Before spending on a house, car, and other junk, max out your savings on that 401(k) and also set up a savings plan for after-tax income (the money you will live on when you are laid off or can't work for some reason).  THEN, spend what you have left over.  Buying toys for yourself first and then trying to save is bass-ackwards.

5.  Not Monitoring Net Worth:  Spending money based on the salary-man mentality - dividing up the paycheck into a monthly cash-flow of payments to creditors - is idiotic at any income level, criminal at six figures and above.  If you spend this way, you are not looking at the actual cost of many of these items in terms of how they affect your net worth - and as a result can easily go further and further into debt over time, or at the very least, not increase your net worth as you should.

So, what's the downside for our friend?  In the worst case scenario, he ends up bankrupt on $250,000 a year, and yea it happens.  Or he loses the "dream job" for one reason or another and ends up destitute.  At best, he realizes later in life (age 50) that he should have been spending less and saving more, and figures out that his retirement years are going to be a lot bleaker than they should be, because he spent on junk instead of saving first.  He scrambles to put aside money in his later years, realizing that the benefits of compound interest are no longer working in his favor.

And how do I know this?  Well, this latter scenario describes my situation, to some extent.  I never made the fabled $250,000 a year - well, I came close to it, anyway.  But those days are gone, as the Patent Business has gotten more competitive and less lucrative (and as I work less, too).  I was smart enough to sock some money away, but not as much as I probably should or could have.  I felt, like many people in their 30's and even 40's that saving was something I could do later on down the road.

If you are making "good money" but still don't seem to be able to "get ahead", maybe TODAY is the day to re-think your priorities.  You can have a wealthy lifestyle without squandering a lot of dough.  It just takes some effort and thought and a rearrangement of your priorities.

Because no one will feel sorry for you if you go broke on $250,000 a year.