Saturday, June 30, 2018
Knowing that something is going to happen is one thing, knowing when that something is going to happen is another.
People a lot smarter than me have said all along that timing the market is for chumps. We may be able to spot trends, but it is hard to know when these trends will change. I thought the real estate market would crash in 2005, but it kept on, in zombie mode, until nearly 2008. I suspect we are seeing the same thing happening today - I am reading the same headlines I read back in 2007 about how houses are so unaffordable. something has to give.
And similarly, many prognosticators are saying the market will tank - or at least a recession will occur. But when? That is the tricky part. Predicting the future is difficult business, unless you are Faith Popcorn. Her method is nearly foolproof - simply predict every possible thing, and then later on, pick only those answers you got right as "proof" of your prognostication abilities.
So, with that in mind, I will jump in with both feet and offer my utterly un-expert opinion as to when the market will tank: 2020.
We would be having a mild recession by about now, but Trump ginned up the economy by passing these tax cuts. This threw gasoline on the fire of a dying bull market, keeping it flaring up for another 18 months or so - enough to safely get him past the mid-term elections and keep the Senate at least intact. The trick is whether he can ride this wave until November 2020, or like George Bush, see it all fall apart a few months before the election in 2008.
The problem with the tax cut is that it is like taking methamphetamine. You are living large today, but there will be a price - a steep price - to pay tomorrow. And in this case, the price is debt - massive debt on the part of the government, started under Obama, but now accelerated under Trump. With less tax revenue, we will have more deficit spending. Throw in higher interest rates, and we will be back where we were in the 1970's with interest payments taking up more and more of the government budget.
Now throw in personal and corporate debts. The latter is the reason so many "brick and mortar"stores are going out of business. Amazon didn't sink Toys 'R Us, $5 Billion in debt incurred by KKR, Bain, and others, did. And it is the same story across the board with these private equity deals. The "vulture capitalists" throw in a billion or two, use the company's own equity to borrow money to buy the place, and then run it into the ground, getting back their initial investment in the form of management fees, interest payments, and whatnot.
A reader asks me how a company can be purchased by using the company's own equity - it makes no sense! I have to agree with him, but that is capitalism in America today. In a way, it is no different than buying a car on time, I guess. You walk into the car dealer, put down a pitiful amount of cash, and then walk away with a car, financed using the equity of the car. Of course, you are upside-down on that loan from the get-go. So was Toys 'R Us. But I digress.
The debt problem will be exasperated by rising interest rates which in turn are driving inflation. More and more borrowers will default when rates and thus monthly payments go up. And the only HEMP program that will help them will be legalized marijuana, if Jeff Sessions doesn't put a stop to that.
But what about our flash-fire economy? Unemployment is down! Everyone is back at work! Wages are up! The stock market is, uh, going up and down like a see-saw. Signs, my friend, signs. These are the same predictors that in the past have foreshadowed recession. When unemployment is too low, wages skyrocket. All this talk of raising the minimum wage to $15 and whatnot is pointless today - there are wage wars going on at nearly every business. Even in remote rural areas, we are seeing billboards advertising jobs. The local fast-food places have competing signs - offering $11 an hour to START there! $15 isn't far behind. And hey, maybe they will have to start offering full-time benefits, too, right? Crazy!
But rising wages are increasing production costs - as are the tariffs on imported steel and aluminum. This in turn is slowly increasing inflation, which will rise more rapidly as this effect snowballs. The net result is, like in the 1970's, rising wages merely keep pace with inflation, and thus the middle-class doesn't come out ahead. With rising interest rates on debt, they come out behind.
Now throw in some collapses of some local housing markets that are overheated - exasperated by the new tax law that eliminates home interest and property tax deductions for many people. Home ownership is no longer looked upon as some tax-dodging goldmine as it was in the past. Toss in a demographic that is seeing fewer young people graduating from high school and college in the next few years, and we may see demand for housing slacken.
These things go in cycles. And we will see this cycle repeat, again and again, over time. The key is, how dramatic do you want the cycles to be? A gradually growing economy as under Obama, followed by a mild recession? Or dramatic gains followed by catastrophic losses?
And in that regard, the signs from the stock market are most troubling. Two things preceded the big crash of 1929. First, farmers started going bankrupt years before. And today, they are doing likewise. Farm suicide rates have risen, according to some sources, by a factor of five. Economic pressures are given as the primary cause. Nearly half of all farmers have a second job to help make ends meet. This is the same sort of pattern we saw in 1927 or thereabouts.
The second thing is volatility. You may recall just a few months ago, how people were "investing" in derivatives that were based on the volatility index. They were betting on the market remaining steady. Again, this is 1927 all over again - when even the local grocery clerk was investing in the market - and the market went nowhere but up. But before the big crash of 1929, we saw a lot of see-saw action, as the markets went up and down. People still want to invest in the markets - they want to make a lot of money, and in many cases, have to make a lot of money in order to survive. I know a lot of retirees whose retirement plans are predicated on a perpetual 10% return on their investment. Nice work if you can get it.
The markets are going up and down because of uncertainty. And the uncertainty is being driven, for the most part, by one man and his twitter account. We have reached a new level of absurdity in our country - the twitter economy. One tweet from you-know-who and markets can rise or tumble, or a company's stock can skyrocket or tank, overnight. Everyone, it seems, is looking for signs, in these tweets - signs of where the market is heading.
Meanwhile, other signs, the most basic ones, are being ignored.
Sunday, June 24, 2018
The cell phone, like cable television, encourages sloth and immobility.
I was turning on my cell phone the other day and it struck me that in order to turn on the phone I had to push the button on the side of the case for five seconds, making me virtually immobile until it turns on. I was frozen in position for five seconds, just to turn the damn thing on!
And then it struck me that almost all use of the smart phone requires the user to sit in a static position and move their muscles as little as possible, other than the fingers necessary to manipulate the device. Taking a photo, for example, requires a serious effort in stillness, for several seconds - which is why tourist places are clogged with people taking "selfies" - the instantaneous "snapshot" of years gone by has been replaced by the ten-minute selfie.
The smartphone is thus the antithesis of exercise. It is the opposite of the Fitbit. When you use the cell phone, you stop moving entirely, and become static.
It is like cable television, where people sit for hours on a couch staring at the the screen and not moving the single muscle. Unfortunately, this form of behavior is very bad for your health.
Like it or not, we are trapped in flawed human bodies, bodies that have, over the millennia, evolved to perform manual functions repetitively. We were born to be walkers and workers and not intended to sit for long periods of time doing nothing.
With the coming of industrial society, this all changed. Early in the history of mankind, some people, instead of hunting or gathering or farming, sat down and performed various manual tasks while sitting in one position - making pots, sewing clothes, cooking food. We started to move from one mode of operation to another. But even those early sitters had to get up to get work done. They may have spent hours sewing a buckskin jacket, but they also had to gather firewood, hunt for food, gather nuts and berries and medicinal herbs. There was at least some exercise involved.
But over time, as we have specialized, we no longer perform even these modest tasks. Early office workers had to walk to work, even if they sat for hours a day. And even then, if you wanted to send a memo to the 8th floor, you had to leave your desk and walk there - no click of a button as today. Watch old movies from the 1930's and 1940's depicting office workers in Manhattan, and see how many of them are mobile most of the time.
Today, we commute to work not by foot, but by car - if we commute at all. Many today, including myself (until recently) merely shuffle down the hall to a computer terminal in our home. No need to even shave or get dressed to go to work! Ten hours later, you've got a lot done, but are still in your pajamas. This is not right.
Unfortunately the evolution of our body has not kept up with the changes in our lifestyle and culture. Our body still demands to be exercised and moved, in order to function properly. Thus, like it or not, we have to exercise our flawed bodies in order to keep them operating at peak efficiency or even partial efficiency - or even to keep them running at all. Once we stopped moving, we fossilize and the body deteriorates quickly.
And sadly, you see the effect of this, daily on the streets. Go to Walmart and see people who have ballooned to 300 lbs or more, riding little electric carts - taking away what little exercise they have left. Their legs look like giant sausages, with no real change in definition from the ankle upward. Diabetes, heart disease, and amputation lie in their future.
So much of modern technology was designed to prevent us from actually using our bodies. The automobile, one of the most widespread and most important inventions of the 20th century, eliminated the need for people to walk long distances. Instead, we slouch behind the wheel, while our blood pressure peaks, and we exert very little effort. We are assisted by power steering, power brakes, and even power windows and door locks. Every tiny task and our lives has been replaced with some sort of electronic motor or actuator.
Pull into a rest stop sometime and watch carefully the professional long-distance truck drivers as they emerge from big rigs. Most of them can barely walk. It is a temporary thing, in some instances. After sitting for an hour to behind the wheel of a vehicle, your legs seem to not function anymore and it takes about 10 or 20 minutes before you could learn to walk again. But for others, a lifetime behind the wheel of a big rig slowly destroys their health, and walking becomes a painful chore. It is almost painful to watch these long haul truckers try to walk to the restroom and back.
Perhaps someday, our bodies will evolve to this new mode of operation - this mode of sloth. We may end up looking like Jabba the Hutt, our legs diminishing into a pseudo-pod as we no longer need to have mobility in any way shape or form.
But until that far-off time, we are stuck with the bodies we have evolved into - bodies intended to be used for manual labor, work, and walking. And once we stop walking and working, and stop using our hands and legs, they atrophy and our health deteriorates. Quickly.
A whole host of inventions have been created to alleviate us of the "burden" of manual labor, or even the tiniest of efforts. But the mobile phone is arguably the worst of these, as it requires you to be perfectly still for minutes or even hours at a time. You see this all over the place - people standing and sitting like statues, staring into tiny screens. The mobile phone has become the immobile phone.
Maybe today is a good day for a hike - or a kayak.
Saturday, June 23, 2018
RVs are back, baby! But not the same as it was a decade ago...
More than a decade ago, the RV business was experiencing a renaissance. RVs were flying off the lots, and people were going everywhere in their new bus motorcoaches, or big 5th-wheel trailers with four slide-outs. Today, people are still doing this, but it seems to me the real growth in recent years has been in the lower-end towable units. And I think how people are using their RVs has changed as well - people are not driving nearly as far as before.
In the 1960's, the idea of travelling across America was a norm. "See the USA in your Chevrolet!" Dinah Shore exhorted us to do since the 1950's. And my parents did just that - my Dad saving up a month's worth of vacation, buying a new Dodge station wagon (with air conditioning, no less!) and taking the family on a vacation through the Southwest, idiotically in the summer, of course. We didn't have an RV, but back then, taking a "dream trip" across America by RV was a thing.
Because flying was so expensive. I also recall in the mid-1960's, going to Chicago's O'Hare airport and waiting in the American Airlines "Admiral's Club" while our plane taxied to the gate. Dad flew the whole family - first class, no less - using the frequent flyer miles he accumulated from business travel. We had to dress up to go to the airport - as if it were church, which in a manner of speaking, it was.
Today? Well, the airport is the new bus station, and thanks to low fares, everyman can fly - and does, unfortunately, making air travel a toxic experience. Can I bring my service flamingo on board? He helps calm my flying anxieties by squawking loudly every three minutes. And thanks to HIPPA, you can't say no!
But the upshot is, you can take the whole family to Disney by plane for a lot less than traveling by car - or at least at a competitive cost. And given that people have less time off these days, it makes more sense as well.
Which is why, when we travel, we see that most of the RVs in the campground are not from faraway places, but from right next door - often literally. People drive no more than a few hours to get to their campsite, often just for the weekend. And in many cases, people reserve the same site for the same week, year after year - only a few hours from home. The RV is no longer a traveling machine, but a weekend cottage or a once-a-year getaway by the lake - at a cost far less than that of owning a lakeside cottage.
Some folks will even drive up and park their RV on a site, days in advance, and then the whole damn family shows up (each with their own car, even the small children, with their pink Barbie Jeeps) and hangs out for the weekend. In a way, it is like the old "railroad camps" that used to line the tracks on some of the Finger Lakes in New York State. Clapped together out of old scrap lumber, the family would decamp to the lake for the summer, while Dad worked in the city. On the weekends, he would take the train to the camp, which was often adjacent the right-of-way. On Monday morning, he would flag down the train (no, really!) and catch a ride back to the city. Those were the days.
Of course, there are other factors at work here. The cost of travel is still high. Even at around $3 a gallon, travelling by RV isn't cheap. Even our small rig burns up about $40 of fuel per day, going only a couple hundred miles or so. Larger rigs get even worse mileage (in the single digits) and cost more to move. As a result, the idea of "seeing America by RV!" has less and less appeal.
But beyond that, I think this recent boom in RV sales is different than in the past. The era of the big-bus motorhome may be on the wane. Again, this is based on my unscientific observations. Perhaps real RV industry data would say otherwise. But it seems to me that there has been a real boom in inexpensive tow-behind trailers in recent years. And in a way, this makes sense. Americans are buying large SUVs and pickup trucks in record numbers. They find out they own not just a big vehicle, but one with a tow rating in the thousands of pounds - sometimes over ten thousand pounds. The vehicles are out there - why not sell them a trailer to pull behind it?
And a simple "box trailer" made of sticks and staples can be affordable for a young growing family. And this seems to be who we see buying them. All this talk of a decline in the number of high school graduates (which is something I discussed years ago in my college bankruptcy posting) is just a blip in the statistics. Spend a weekend in a campground sometime - you'll think a kid bomb went off!
So these inexpensive trailers are affordable for young families. They have the rig to tow them with, and there is a RV park within a few hours of their home to drive it to (within whining distance of small children kicking the back of your seat). A perfect storm. And an affordable one, or at least more affordable than a motorhome.
Motorhomes had their heyday more than a decade ago, methinks. As the 401(k) generation matures and retires, the idea of spending a quarter-million dollars or more on a rapidly depreciating asset makes less and less sense. The previous generation - the pre-baby-boomers - retired from the finger-cutting factory with a hefty pension. They could live on that comfortably, and when they hit 63, they got a nice present from Uncle Sugar in the form of a Social Security check of $1500 to $3000 a month.
So off to the RV dealer they go, and find out that you can "buy" an expensive motorcoach with a monthly payment about equal to their social security check. So many did, not realizing that they were upside-down on the coach for most of the term of the loan. And if Bain Capital bought out the old finger-cutting factory, they might find their pension paying out 40 cents on the dollar. For a lot of folks, the "dream" RV turned into a real nightmare.
For us in the 401(k) generation, such a nightmare is less likely, as we simply don't have the money. Or if we did, we would look at the overall cost, not the just the monthly loan payment, and realize that spending 1/4 of your net worth on a "thing" makes no sense at all, particularly when, after five years, it is worth half what you paid for it.
Yes, we still see the motorhomes being driven, and rows upon rows of them at the dealer lots. But during the recession of 2008, many motorhome manufacturers went bankrupt, including the "See Ya!" brand (which is what they said to people who wanted to make warranty claims after bankruptcy) and the venerable Wanderlodge brand (hampered no doubt, by a front axle overload problem on their later models). Even old-line brands such as Winnebago, while surviving, branched off into the towable market to get a piece of this rapidly expanding slice of the business.
In short, we are experiencing an RV revival right now, but I am not sure it is the same as the old days. It seems to me that we are seeing brisk sales, but not of $250,000 motorcoaches, but $25,000 tow-behinds. And that is a big change in expectations of the current generation over the last.
In other words, it is a thin recovery, not a fat one. And whether it has sustainability remains to be seen. When the shit hits the fan, the first things to be cut from the family budget are expensive toys like boats, RVs, and jet skis. And speaking of boats, that industry is experiencing a similar recovery- lots of sales in the very high-end boats to billionaires, and lots of sales of starter boats to the middle-class. But the era of middle-class people buying 40-footers seems to be waning, at least from what boat salesmen are telling me.
But the RV industry is a flexible one. The "factories" that make RVs are little more than warehouses where these rigs are screwed together one at a time. No big investment has been made in assembly lines or other capital equipment. They buy the parts, mostly from the same suppliers, and then hire kids to screw and drill and saw it all together. When the market tanks, it is a simple matter to just lay people off and hunker down until the next boom cycle.
Of course by then, most of those rigs they sold are already starting to leak....
Friday, June 22, 2018
Traveling is something you should do while you're still relatively young.
A reader asks whether we ever get sick of traveling. I responded that we get sick while traveling but never get sick of traveling. And there is a difference.
Traveling is difficult both on the mind and the body. When you travel to different locations, even within the United States, you were exposed to the viruses and bacteria of thousands of different people, as well as different water supplies and foods and whatnot. Yes, it is not an unexpected that you will get what they call it Mexico, "Montezuma's Revenge" when you travel.
Travel is also difficult on the mind. You are in strange places, where you don't know the streets and the stores all have different names, and the foodstuffs and products seem slightly different than back home. And what's worse is that they're not entirely different, but just slightly different, which makes it even more jarring. And of course, everyone talks with a funny accent, eh?
We are creatures of routine, and traveling often upsets this routine. Even though I am retired, I find myself going to be about the same time every night and waking up at the same time every morning. Disruption to this routine can be fatiguing and unsettling. Loss of sleep can make you cranky and even sick. We find comfort in routine, whether it is the morning commute, or our regular television shows every night - or whatever. People get used to a pattern in life, and travel can upset that pattern. For that reason alone, some folks cannot stand to travel. It is hard.
I used to travel to California once a month, on business. At first, it was exciting and fun, in a way, even though there was a lot of work to do. But over time, it just became exhausting - flying the "red eye" from coast to coast and spending a day or two to get over jet lag. It went from fun to none in no time whatsoever. That's why they give business travelers frequent flyer miles and other perks - to compensate for the hassle and fatigue of travel.
Travel is both physically and emotionally exhausting. Thus, it is something you should do while you're relatively young rather than wait until you retire. What we have seen, living on retirement island, is that people make elaborate plans for big trips for when they retire - and then never follow through with their plans, or if they do, their plans are aborted.
A good friend of ours likes to travel, and she is one of those hippie types who is very easy to get along with. But even so, at her age it is very difficult to go to foreign countries and experience foreign cultures as well as foreign bacteria. She told us of a recent trip to India which she said is something everyone should do in their lifetime. But even though she was traveling with her adult children and had a car and driver (which is not that expensive in India) it was a trying experience. It is a very crowded country and it as she put it, "sensory overload." She advised us if we want to go to India, to do it while we're still young or at least relatively young - and not wait until we're 70 or 80. At that age, it could probably kill you.
We see all the time in the RV and boating magazines, advertisements for brand new RVs and boats that have been bought by retirees with great intentions to tour America or do the great circle route. "Must sell due to illness," the ad sadly reads. They spent all their lives working in the figure-cutting factory looking forward to age 65 when they could retire and take the trip of their dreams. Sadly, cancer had other ideas.
Even at the relatively tender age of 58, travel is still very hard on me. My digestive tract, weak as it is, has trouble adapting two new water supplies and foodstuffs. Last year, we explored the Saint Lawrence River and Thousand Islands area of New York and had a great time. I also enjoyed visiting their Hospital in Alexandria Bay which has a beautiful view of the water. It was a $2,500 experience I would rather have done without!
But that is the nature of travel. You have to roll with the punches and stick with it. A lot of people give up and retreat back to their to the comfort of their homes and daily routine. Neighbors of ours saw our RV and decided that maybe they should try RVing. They very wisely decided to rent one for a 2-week trip. They took off and came back three days later, saying that they hated RVing and wanted nothing to do with it. That's okay - in fact it was smarter than to rent an RV and figure this out. Too many people buy RVs and then discover they hate RVing and then end up with a $50,000 albatross around their neck, parked in their backyard.
Of course, some people are hardier than others. There are septuagenarians who are quite spry and think nothing of hitchhiking across the Himalayas even at an advanced age. While other, younger than their 30s, can't live without regular access to American and fast food and culture. The bottom line, is, that no matter what your level of hardness, it will decrease over time.
And of course, there are different modes of travel, some easier than others. Going on cruises has become wildly popular in America, particularly since 9/11. You put your luggage on the ship and you go on board and they basically ply you with booze and food until you pass out. Oh, and yes, they actually travel to other destinations. But many friends of ours who enjoy cruises tell us they never actually leave the ship at these different locations to experience the tropical climate. Rather, they sit by the pool, which they enjoy even more because most of the passengers have left to see the sights.
This kind of makes me sad, but again, each person makes their own life choices. Some friends of ours recently went on the cruise to Cuba and reported they were very disappointed in the experience. They went ashore on a tour and found that the country was run down and depressed - what you expect from a third-world Caribbean country such as Cuba.
A friend of mine noted that everyone made a big deal about the old cars in Cuba, which were really basically bondo'ed and rusted-out old Chevys and Fords with Soviet tractor engines in them. "I don't understand what the big deal is," he said, "I have a pristine 57 Chevy in my garage, what they drive over there it's basically junk!"
And in a way, he has a point. Many of the places you travel to in this world are not as nice as the United States of America - or may not be as nice as your home town, even if they are in the US of A. But for us, sometimes that is the best part of traveling. When we return home to our retirement island, we realize how fortunate we are to live in such a pristine place with so few people around us.
We do live on a pretty small planet. And you have a finite amount of time in your life to explore it. If you decide you do want to explore, I strongly suggest you do it while you're still young. Age will creep up on you and you'll find that you're no longer able to travel at time in your life you want to. At the very least, you will find travel harder and harder to do, the older you get.
Thursday, June 21, 2018
Owning fancy things is nice, until they own you.
We are in a campground near Michigan's upper peninsula, which is a nice part of the country to explore. We hope to come back again maybe next year or the year after, and spend an entire summer exploring the area. Sadly, we only have time for a week or so to knock about.
Leaving a beautiful campground (albeit primitive, but hey, parking right on the lake, what's not to like?) we pass a young couple with a big dog named Henry. Henry barks and runs over to us, tail wagging, and puts his sandy paws right on the side of the truck, no doubt scratching the paint. The young lady was appalled. "Henry! Come back here now!"
Now of course, Henry should have been on a leash, but hey, dogs. We both laughed and said, "Oh, Henry!" and once he was clear of the truck, drove on.
Years ago, I would not have been so relaxed about that. Scratching my perfect paint! How was I ever going to buff all that out?
When I started this blog, I owned six cars, and for the most part (other than the Jeep) they were in perfect shape. I spent hours washing, buffing, and waxing, to keep them pristine. And over the course of this blog, I realized I was wasting a lot of time and money owning "things" and trying to keep them "perfect." Funny thing, we had more fun with that clapped-out Jeep than with the "perfect" cars.
You see, the cars depreciated, whether I waxed them or not. Sure, they looked nicer and lasted longer, but the upshot was, when I sold the nice green convertible shown above, it netted me about $6700, which was high book value. Yes, it was a nice car, but it still depreciated like any other thing you own. And eventually, all the wax in the world isn't going to forestall the inevitable - major repairs, things just rotting out, falling headliners, torn seats, and general wear and tear.
I have friends who are still on this bandwagon - trying to make their lives "perfect" - with perfect cars, perfect houses, and perfect spouses. They are never happy and always anxious. Was that a blemish in the finish of the roadster - or on my wife? Maybe it is time to trade in!
The Nissan pickup truck went though a hailstorm in El Paso Texas a few years ago, pretty much trashing the body, particularly the roof and hood. The hood looked like it had been pelted with a ball peen hammer. I replaced it with a junkyard hood and never looked back (and banked the check from the insurance company). The nice thing is, I can put my life jackets and dirty sandals on the hood to dry in the sun (and engine heat) or spread out a map, and not worry about scratching the paint. I can drive down a narrow road with brambles and brush on the sides and not worry that my "perfect" paint job will now be imperfect.
In short, now I am free.
And yea, it is nice to have "nice things" but it is even nicer to just have things you can use and not worry about. And for most people, this is how they view their possessions - as tools to use in life, not an end in and of themselves.
I mentioned before, a long time ago, how a friend of mine's adult son, when looking through their family photo album, was musing that Dad should have kept that old '57 Chevy they had (in 1960 as a used car) as "today it would be worth a fortune!" But then again, a four-door post sedan with a six-banger and three-on-the-tree might not be worth all that much. It was a piece of transportation for a young and growing family at the time, and when it succumbed to New York State salt, it was not worth restoring or preserving, but rather was just another oil-burning, rusted-out junk car, ready for the scrapyard. No amount of heroic effort could have "saved" that car for over 60 years, and even if it was possible, the costs would have been horrific.
I guess it took me a long time to realized this - that life is not an optimized event, and that things are just things, and so many of them will pass through your life. Trying to "save" something and keep it perfect often only means you are creating a really nice used car for someone else to buy and drive into the ground. As eventually, you will probably move on to another car or truck or whatever.
And eventually, the Nissan will go away, too. By the time we sell it, it will have well over 100,000 miles on it. By then, it will be worth a few thousand dollars, and the person buying it will be more interested to know if the oil was changed regularly than whether the car was detailed and waxed. The prospective purchaser will probably not notice that the paint on the hood doesn't quite match the rest of the truck, or notice the small, round dents on parts of the roof.
And I doubt they would notice a small scratched paw print on the passenger side door, either.
Friday, June 15, 2018
Just because you have some money doesn't mean you have to stop worrying about how you spend it. In fact, the opposite is true.
We are in a campground, and our neighbors have one of those new campers with all the bells and whistles. An outdoor kitchen, complete with microwave and fridge, slides out from the side, next to the outdoor television - this in addition to the television(s) inside the rig and the inside kitchen as well. These folks have more kitchens in their trailer than they do in their home!
Pretty sweet! But of course, it is all paid for "on time" and they owe more on the rig than it could be sold for, if push came to shove.
It got me to thinking. Should we have one of these fancy RVs? I mean, we could afford to pay cash for one of them - or ten of them, or even twenty. But we didn't, because we chose not to. It took me a long time to figure this out, but being "wealthy" doesn't mean spending money, but rather saving it. Instead of owning things, one has to own money. And not many people own money today.
Early on in this blog, we started looking at expenses and decided that getting a "haircut" by driving 20 miles into town, waiting an hour in a stuffy barbershop while listening to Rush Limbaugh on a cheap AM radio, wasn't worth $20. In fact, it was worth nothing. A basic hair trimmer could be had for the cost of one haircut.
Making simple changes in our lives - as well as larger ones - put us on the road to wealth. Up until then, we had fallen into the trap that many Americans do, of spending just slightly more than we made every year, looking at each raise in pay as an opportunity to borrow yet more money. I still cut my own hair, even though I am a millionaire, simply because cutting my own hair is what made me a millionaire, at least in part.
When you try to explain that to people, they just don't get it. So long ago, I stopped trying. I put down my thoughts in this blog, and a few people read it. But I got a lot of angry responses from people - as if my cost-cutting moves were somehow threatening to them, which I guess they were, as they called into question their entire lifestyle.
I also got a lot of e-mails and comments from people who wanted to know how to "get rich quick" - as if most of the world were mere dunderheads who only needed to know the "inside secret" to quick wealth, but were too lazy to bother to find it. Of course, such secrets don't exist - but the legend of them illustrates how people think. They get hopelessly in debt and wonder why other people seem to have it "so easy" and wonder whether they too, could know the "inside secret" to wealth.
And if there is one, here it is: cutting your own hair. Not literally, but as a metaphor. But it could be literal as well. The idea of spending less and saving more isn't interesting or exciting. It doesn't sell seminars and isn't sold on informercials. The shouting guy on TeeVee doesn't promote it (and his haircut is far worse than mine!). In short, it really is a secret, in a manner of speaking, in that it lies hidden - but hidden in plain view for anyone to see, if only they stop looking so hard.
We won't be buying a fancy camper with a slide-out kitchen. Our 20-year-old Casita (which we paid $8750 for, in cash, 15 years ago) works just fine. I did make a slide-out kitchen for the back of our pickup truck, using the cargo tray I made many years ago, and a couple of pieces of wood we bought at Lowe's. Total cost: About $50. Of course, it isn't as fancy or nice as the camper next door to us.
But it is paid for.
Saturday, June 9, 2018
I don't think that payday loans, check cashing stores, rent-to-own furniture, or buy-here-pay-here used car lots are good bargains. This does not necessarily mean the people running these places are evil or crooks - or view themselves as such.
I met a nice couple who are retired and living in their RV. They owned a chain of check cashing stores and payday loan places, as well as rent-to-own furniture stores and a few buy-here-pay-here used car lots. What was interesting to me was that they were very nice people, not what you'd expect given the stereotypes of "evil capitalists" exploiting the masses. And although they were able to retire early (in their 50's, I'd guess) they certainly weren't putting on the dog. They didn't have a fancy motorhome like a million-dollar Prevost bus or something. They lived quite modestly, from what I could tell.
A couple of years ago, a reader asked me if it was OK to run a payday loan store. My response was, that if he didn't do it, someone else would. You see, these types of businesses are not run based on push, but pull. It is the customers coming through the door who demand shitty deals that makes the whole operation tick. So long as there are people who think they are "lucky" to get a loan, or that borrowing money is a way to solve their financial problems, there will always be exploitative lending operations.
And if you make them illegal or try to regulate them, they merely move underground. When I was a kid, the Mafia had a roaring business running "the numbers" until the State lotteries made that sort of obsolete. Why gamble with some sketchy outfit when the corner convenience store sells state-sanctioned tickets? Similarly, back then, "loan sharks" would offer loans to people at rates that were as high as, well, as high as a payday loan place today. The problem for the Mafia today is, why would someone go to a loan shark when you can go to the local "Money Tree" instead?
The folks I met had made some good money at the business, but were hardly Warren Buffet rich. They did OK, but in the business of sub-prime lending, there are a lot of costs involved, the main one being the high rate of default - which is why interest rates are so high in this business. Of course, it becomes a self-fulfilling prophesy - with high interest rates, the borrowers can never pay off their loans, so default is a given. And even if you make a lot on interest and get most of the principle back in a workout in bankruptcy, there are costs involved in dealing with insolvent clients - even those who eventually pay, but pay late, chronically.
These operations are legitimate businesses today. But that does not mean it is a good idea to patronize them. I leave it to your own moral compass to decide whether you think it is right and proper to run such an operation. Myself, I think I would have a hard time running such a business. But then again, the sort of folks who are "victimized" by a payday loan place (but in reality are merely victimizing themselves) are the same folks who sat in the back of class at school and snickered at me when I raised my hand (and beat me up after class). Maybe it is just karma coming around to bite them on their ass. Ignorant people who refuse to learn - or worse yet, eschew education as somehow "elitist" or whatever, get their comeuppance in the short and long run. These are the sort of folks who vote for Trump and then wonder where all the money went.
We can outlaw payday loans - and then only outlaws will make such loans, as loan sharks did in the past. We can try to regulate them and force them to limit interest rates - but such regulations can be circumvented or drive business underground. In one state, after efforts to regulate "buy here pay here" used cars, the dealers merely changed to "lease here pay here" used cars. These sort of operators are creative - and their clients are the ones driving the business, not the operators of the businesses.
So I do not sit in judgement of those who operate such businesses. I am not "outraged" by the latest story on the internet about some poor slob with three kids out-of-wedlock who lost their job and thought a payday loan was the answer to their problems. If they hadn't gone to one payday loan place, they would have gone to another. Ignorance and stupidity have a high "tax" associated with them, and I know this firsthand having paid this tax time and time again in my life. The answer wasn't in outlawing shitty deals, the answer was me waking up from a long slumber and realizing what a first-class chump I was being.
Some of the nicest people run these sort of outfits, and they view themselves as legitimate businesspeople, which of course, they are. You can blame them for offering crappy deals to the poor, or you can stop taking crappy deals and stop being poor. Whenever you read one of these "victim" stories in the press, there is always another side either untold or told on page two, that sort of picks apart at the threads of the story. Usually drug and alcohol abuse is part of the picture, and again, I say this from personal experience.
No one felt sorry for me when I act the fool or did stupid things. And likely, no one will feel sorry for you, either. It is incumbent on all of us to look out for our own best interests. And salesmen and businesspeople look out for their own interests first, and then to yours, if they do at all. Thinking that the nice man at the car dealer or the loan store has your best interests in mind is just foolishness.