I Wouldn't Worry About A Sub-Prime Auto Loan Crisis or Bubble

Looks like the "bubble to get worried about" for the day is the sub prime auto loan bubble.    I just saw two references about it in my daily twitter feed.     Apparently Esquire print magazine has an article and so does Slate.

So why shouldn't we get all worked up about it?

Buried halfway down a NYT article from 2014 in a mult-part discussion of the sub prime auto loan topic, they say :
"The size of the subprime auto loan market is a tiny fraction of what subprime mortgage market was at its peak, and its implosion would not have the same far-reaching consequences."

According to Credit.com as of 2015 the total car loan debt was $950B and sub prime market was 27% of that.    Thats about $256B in debt total.     I don't see general information on the average interest rates for the loans.   One reference, in that 2014 NYT article says that some bundled loans averaged 18.4%.    Of course thats way higher than the average car loan in general which is currently around 3% (sourced again from NYT).    

In 2006, just a single year, $600B in subprime home loans were originated.   (from Wikipedia)

Outstanding mortgage debt peaked around $14.7T in 2008 (the fed historical data )     Before the bubble burst about 20% of new loans were subprime.  

I also don't see any sign that this is really any kind of bubble.    There have always been high interest rate loans on cars for people with bad credit.   This isn't anything new and the rate of borrowing isn't even hitting the rate from before the recession.   This is really more along the lines of "business as usual" than a bubble as far as I see.

High interest rate car loans are certainly a problem and have really difficult impacts to low income / poor credit rating people who get them.   The loans are also often associated with predatory lending practices.    I don't want to minimize the negative aspect of these loans and the drag they have on peoples finances.    

But there isn't a bubble in the sub prime auto loan market and even if there was, if it were to pop it wouldn't have 1/10 the impact that the great recession housing bust had.


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Don't Try To Live in S.F. or NYC on Minimum Wage

You really should NOT try to live in a very expensive city like San Francisco or New York City on a minimum wage income.   A young woman named Talia apparently did not realize this.   She recently publicly whined at her companies CEO about how little money she makes and how she can't afford to eat.

Talia Jane's : An Open Letter To My CEO:  You can read the whole thing if you want but the key of the letter is where she says: "got paid yesterday ($733.24, bi-weekly) but I have to save as much of that as possible to pay my rent ($1245) for my apartment".    You really can't expect to afford to eat, drive, pay utilities, etc with the $200 a month left after paying rent.

There is a  customer support specialist job opening at Eat24.    But I would not recommend taking that job then trying to live in S.F. on that income alone.  

I doubt that job opening is just because they fired her after her rant.   Its more likely that they have that job open continuously.     Customer support service jobs are entry level high turn over positions.   They likely go through people on a continual basis and are always having to hire and train different people as others leave after a few months or maybe a year or two.

The Yelp CEO says he agrees SF is expensive but that her firing wasn't his doing.

Minimum wage is currently $12.25 in S.F.  But if she waited a few months she'd get a nice raise.
 S.F. minimum wage is going up... $13 in July $14 in July '17 $15 in July '18 I'd like to get 6.1%, 7.6% and 7.1% in the next 3 years but I know that ain't gonna happen.    I don't think we can really expect more help from the city of S.F. in this matter.  

I'm not sure what more we can really expect from Talia's employers.    $12.25 an hour for an entry level job that doesn't require college plus apparently has 100% free benefits and free food at work isn't a bad deal even in a city like S.F.  

I wonder what Talia's roommate thinks about all this?    Oh, wait, she never said anything about having a roommate and didn't talk about paying half of the $1245 a month, so apparently Talia doesn't even have a roommate.    Wow.     Seriously?      Trying to live in one of the most expensive cities in the nation, if not the world, on minimum wage AND doing it without sharing housing?   I mean really... ?     Even the totally unrealistic financial situations we see in TV sitcoms or dramas like Friends or Girls make it pretty clear that low wage earners in SF or NYC don't get the luxury of single occupancy housing.

I wouldn't try to live on minimum wage in most any city without a roommate.   Its really not going to work any better in most any city, not just the most expensive places.  

But even if Talia did have a roommate it would still be a significant struggle to try and live on ~$800 a month after rent is paid.     Its not impossible like living on $200 and maybe she could manage it but it would probably be pretty hard.    I wouldn't recommend it.  I recommend making more money if you've got a choice.   Eat some cake too while you're at it.    Or maybe Talia should follow the example of one of her ex coworkers and move to a city where minimum wage is a livable wage, if a low wage is all her skills and experience and career aspirations are going to get her.   Theres nothing wrong with wanting to get an English degree and then wanting to go write snarky comments on Twitter for a living.   Just don't expect corporate America to throw money at you for it.    And definitely, absolutely don't expect to be able to live in an over priced city like San Fran or NYC on your minimum wage without a roommate.     Its not Talias ex employers that made that plan fail.   that plan was Talia's plan.   That plan was doomed to fail from the start.


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Opinion: 50's to 70's Classic Cars Will NOT Appreciate As Well Moving Forward

Classic and antique cars have been a fairly good investment in the past.    CNBC wrote last year that Classic cars outperform global stocks.   Though that data only looks at cars over $500k so its not your typical car buyer.   But the general trend still holds.    Cars have been a good investment if you buy the right ones.  

I don't think this is going to continue as the Baby Boomer generation ages.   For two key reasons.  First they are going to gradually age and pass away and their cars will enter the market.  
Second the younger generations don't have the same nostalgia as the Boomers do for 50's 60's and 70's cars.

Fortune magazine has already reported what they saw as  The bear market for classic American cars back in 2014.   That seemed to be mostly 50s cars but I assume it will start with the older cars and then progress into the 60's as people age.

If you're considering buying a 60's or 70's car now and consider it an investment then I'd certainly be wary about the future value longer term.     For investment purposes an alternative might be to buy 1980's cars now.  Cars from the 80's are less likely to have collector value today but as the Gen X people like myself age some the value is likely to increase.       Tricky part is finding the right cars now that will develop into classics.    Hagerty has a list of THE GENERATION X TOP 40/40/40: THE 1980S subtitled "40 Collector Cars, Built In the Past 40 Years, That Cost Under $40,000".    Those kinds of lists can give you some ideas, but any such investment is speculative in nature.   Its feasible that us Gen X won't start buying cars of our youth as we have mid life crisis and increased disposable income.

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Couples Should Buy Two Tubes Of Toothpaste

Do you squeeze the toothpaste from the end or do you do it wrong and squeeze from the middle   Do you fail to put the cap back on the tube when you're done like some sort of half crazed Visigoth?   If you and your significant other does these things differently then you may have some squabbles about the topic.   Its one of things couples fight about (youtube link)  If you're not openly fighting about it then it may be brewing resentment that will explode in a few years.    Its probably an uphill losing battle to change these kinds of habits.   Maybe you're trying and failing.   But why live with the problem at all when you don't have to?

So... buy two tubes so you each have your own.  Problem solved.   You're welcome.

With just one tube you may end up bickering over how its used.   With two tubes you can use your toothpaste however you see fit and it won't give your wife/husband/boyfriend/girlfriend anything to argue about.   Its that easy to fix this problem, yet people seem not to do it.   Plus as an added bonus you can also each pick your own preferred flavors or variety of toothpaste.

And one of the best parts about using two tubes simultaneously doesn't cost you any more than using one tube at a time.   Each of you will use the paste as fast as you use it then buy another.   Toothpaste isn't going to expire on you either.   Theres no financial downside to buying two tubes.

Granted this exactly nobel prize worthy idea and I'm sure many of you out there already have your own tube of toothpaste.   But I'm sure theres lots of people who share a tube for no specific reason.   And doing so can cause unnecessary, easily avoided friction.

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Why Do Restaurant Tip Rates Inflate? Slower Increases in Food Prices & Minimum Wage

A while ago I asked Why Do We Tip So Much?   I'd been puzzled why we used to tip only 10-15% but now the norm is 20%.

Just now a thought occurred to me... maybe the reason the standard expected % rate for tips has gone up is that food costs didn't go up as fast as wages?   Its a possibility.   I mean if a burger cost $1 in 1980 and is now $2 then a 15% tip in 1980 would be 30¢ and 60¢ today.  Just about doubling.   But what if wages tripled in that period?    Tips wouldn't have kept pace with inflation so it would make more sense to have a higher % tip.

In 1984 the 15% tip was typical (noted previously).   Today we expect 20% tips.

What has the cost of restaurant food done in that same period?

For that lets look too data chart from the Fed. :
Consumer food prices (away fro home ) were up ~155% from 1980 to today.

Now compare that to income.  From the census 

In 1984 median income was $10,417 and by 2014 it went up to $28,757.

From the early 80's to today, restaurant food prices went up ~150% and wages went up ~180%.

In 1984 the minimum was $3.35 with a 50% tip credit.   So workers would have gotten $1.67 per hour in tips.  (minimum wage history)    Minimum wage for tipped employers (with the tip credit) has been stuck at $2.13 per hour since 1991 where it is today.

 Median hours worked for waiters and waitresses is around 35 hours a week.  

Nationally today waiters and waitresses average $10.40 an hour.   (BLS data)    With a $2.13 minimum they're getting $8.27 in tips on average.

From an old Occupational Outlook Handbook said that "In 1984, median annual earnings (excluding tips) of full-time waiters and waitresses were $9,400."

I'm finding it hard to believe that annual wages for waiters were that high excluding the tips.    I'm thinking that might be an error and that they probably mean to say including tips instead.

If I start with annual wage of $9,400 in 1984 and then work forwards then it goes as follows:

$9,400 in total wages in 1984 would have been a combination of minimum wage and tips.   Assuming a weekly work week of 35 hours that works out to $5.16 per hour.   Minimum wage in 1984 would be $1.67 so they would have made $3.49 per hour in tips.   Thats then $6351 in tips and $3039 in wages.   Assuming a 15% tip rate then the food served would have to be about $42,340 a year to get to that $6351 tip total.

$42,340 in food in 1984 would then grow to $107,967 per year in 2015.
For the $9,400 in 1984 to grow the same as wages in general that would have to hit $26,320 today.
Minimum wage on 35 hours a week would give just $3913  so they'd have to make $22,407 in tips.
$22,407 in tips a year on $107,967 of food equates to just about ... drum roll.... 20% tip rate today.

So theres my answer :

Due to slower increases in minimum wage pay for tipped employees and slower increases in food costs tips would have to go from 15% to 20% in the past 30 years in order for tipped workers to retain the same relative incomes.

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NFL Players Don't All End Up Bankrupt

The idea that NFL players all end up bankrupt is kind of a common myth.    In 2009 Sports Illustrated published an article saying that "78% of former NFL players have gone bankrupt or are under financial stress because of joblessness or divorce."     I think that data point has been spread around that 78% go bankrupt which is pretty much saying almost all of em.     But the article really says that they "have gone bankrupt" OR are "under financial stress" because of "joblessness or divorce".     Thats really 3 things there.  1, bankrupt  2. unemployed or 3 divorced.    I mean doesn't joblessness and divorce pretty much always cause some form of "financial stress"?    Yeah pretty much.

A new study has much different result when they look at bankruptcy rates alone.    Bankruptcy Rates among NFL Players with Short-Lived Income Spikes at NBER  found that 12 years after retirement 15.7% of players have gone bankrupt.    Thats certainly a huge difference from that 78% figure above.

15.7% of players going bankrupt in 12 years is still a pretty high rate.     But how does it compare to the general population?    

About 1 million people (roughly) go bankrupt every year.   You can find the US bankruptcy stats here.  Thats roughly 1 in every 120 households.   In a 12 year period we'd see about 12 million bankruptcies which is roughly 10% of American households.    Then, figuring roughly, about 10% of Americans go bankrupt over a 12 year period.

NFL players go bankrupt about 50% more often than the US average.

Thats still bad given how much money the players make.  But theres some major causes for it.  Most of the players have short careers and do not make the mult-million salaries.     A short and high paid career may lead players to spending beyond their means while they have money only to end up bankrupt shortly after their careers end.   That result is almost natural and predictable.   Give any average American $1 million today and then give them a random chance of getting another $1 million next year and then expect to manage it prudently for the next 25 years and I bet the failure rate will be pretty high.

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You CAN Make 6 Figures As A Welder (... if you work 80 hours a week)

While skimming the headlines this morning I saw this article from the Wall Street Journal :
The $140,000-a-year welding job

And I figured it was another one of those articles touting high paying jobs that don't really exist.   Or if they do exist are special cases.    But I had to read 2/3 into the article to find the real answer on this one and its simple, the welder in question Mr. Friend : "... typically works 72 hours a week" and "His base pay is more than $25 an hour..."

I think its a bit misleading to have a title for an article like that and then bury the detail that he works 72 hrs a week.     Thats like working 2 jobs.     Most people working hourly jobs with overtime can make a lot of money but few jobs have that kind of opportunity for overtime.  

Then theres also this little detail, his employer "sent Mr. Friend to work for a month on an oil project in Ghana".    People willing to travel can often find better compensation.  I don't know much of anything about Ghana but it doesn't appear to either much of a hot tourist destination nor a warzone.
  
Welding can be a pretty good job.   Its got pretty fair wages and it can be  in fairly high demand.   Overtime can be common as well.   So I don't fault the idea that welding can be a pretty well paid job, I think that the fact that you'd have tow work 72 hrs a week to get that $140,000 is very key and shouldn't be buried in the 2nd page of the article.

I think the real message of the article is that : If you work a ton of overtime then you can make good money.    But thats not news.

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Working at Amazon is Better than Being Homeless

I recently read this article : 'Being homeless is better than working for Amazon'

I"m sure that articles title is purposefully sensationalized to attract attention.    But no, sorry, working at Amazon isn't worse than being homeless. 

Points the article makes :
"Superb performance did not guarantee job security."
 Thats actually true at most jobs really.

" it would be six months before I could receive my first unemployment compensation check."
I don't know why.   Shouldn't take 6 months and thats not under the control of the employer.   Is there more to this story?  What?

" I “flew a sign,” street parlance for panhandling with a piece of cardboard: ... I went to my usual flying spots around Seattle and made more money per hour protesting Amazon with my sign than I did while I worked with them. ... I created carefully crafted signs with cardboard and a Sharpie and, just like that, I was making money again. Hundred-dollar hours became the norm, not the exception."

I bolded the bits above for emphasis.   What this woman is really doing is begging for money and getting apparently quite a lot of it in Seattle.    Thats not "being homeless" thats being a professional panhandler with a successful gimmick.
  
I think this is the actual story here:   Being a panhandler in Seattle who complains about Amazon is very lucrative.

I'm not saying that I think working in an Amazon warehouse is fun or that they treat their workers well.   I have no personal experience working in Amazon nor do I know anyone who does.   There have been several reports describing the working condition in their warehouses and it doesn't sound fun (see several links in this article).   A lot of that seems to be basically saying that working in an Amazon warehouse picking orders is a pretty crappy job.  Its hot or freezing, its boring, they have mandatory overtime or send you home when theres no work.  its exhausting tough work, they will fire you if you're late too many times, they demand performance quotas, etc.   A lot of that is not so much about Amazon but more the nature of the job of working in a warehouse picking orders.


The 3000+ reviews of Amazon on Glassdoor give it a 3.3 score which they put in the 'OK' category.   So Amazon as a whole doesn't seem to be either a great nor an awful place to work, but simply well... OK.      Its also important, I think, to note that a lot of the people in the warehouses seem to work for temp agencies rather than Amazon itself.   While Amazon is responsible for managing those temp agencies they aren't directly at fault for poor treatment of temp employees working for a third party.

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10 Times I Told People They Were Wrong

I often find myself writing a big long article venting about some idea or fad that I see echoed around the personal finance blogs.   Here are ten of my favorite such articles I've written in that vein :

Experiences Aren't Necessarily Better than Things  I like my stuff.   I also like many of my experiences.  One is not necessarily better than the other. 

Tiny Houses Are A Stupid Idea  I can't fathom the popularity of these things other than that they are cute.  So are kittens.

Money Can Buy You Happiness    Not sure?  Gimme your money and I'll demonstrate.

I really felt strongly about that so I wrote the same thing again about three years later with a slightly altered title (because my memory is awesome).

Money CAN Buy Happiness 

Give People Cash as Gifts  A $20 bill is better than a crappy poorly chosen gift they just have to return.

You Are Not Entitled to Financial Aid  So stop whining about it.   Nobody promised you a free college education.

You Should Love Mopping Floors  Work, like mopping floors, isn't something we should all  love.

Lottery Winners Don't Automatically go Bankrupt   Many do but many don't.   I'm willing to bet that the vast majority don't go bankrupt.

The Hazardous Road of Following Your Passion Its a nice idea but a passion doesn't ensure a good paycheck.

Americans do NOT spend 6 Billion Hours on their Taxes   Thats about 20 hours for every single person in the country... no we don't spend that long.


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An Unpleasant Experience With Sears

My wife and I went shopping for a fridge.    We found the make/model we wanted and ended up buying one at Sears.   The fridge we got retails for about $2500 but it was on sale and we got a discount with our Sears card so it cost us around $1800 plus an extra $70 or so for delivery & install.   Bestbuy had the model in question for about $2100 at the time.   We've generally been happy shopping for appliances at Sears as they have a good selection and good prices.

The fridge was to be delivered on a Tuesday around 8:30 AM.   That morning about 7 AM or 7:30 AM they called my cell phone and left a couple messages.  One of the messages said they had discovered a dent in the side of the fridge but since they couldn't reach me they would just deliver it anyway but should be able to offer a discount.   I told my wife about this and she wasn't pleased about the dent since if we'd wanted a dented fridge we could have shopped at the Sears Outlet and gotten a steep discount.   My wife felt that we should be able to get 50% discount but I figured that would be on the high side and I told her I expected maybe 10-20% off.   We were both far too optimistic.

The delivery guys showed up around 9AM give or take.   They unboxed the fridge and showed me the dent.   It was a very noticeable dent and not a simple scuff or anything.   It was about the size of a quarter coin and maybe 1/16" deep.    BUT the dent was on the side and should be hidden when installed in our kitchen due to the way our cabinets are setup.   Of course that wouldn't be true for other customers, in my old house that dent would be totally visible since there aren't cabinets on that side.  I asked the delivery guy about the discount mentioned on the phone message and he wasn't aware of that so he called some sort of Sears customer support number and he gave me the phone.

I talked to the service person myself.   The service lady offered me a whopping $30 off OR a 10% coupon of some sort.   I turned that down flat and told her she had to do better than that.   She then replied that she could go all the way up to $50.   No I told her again thats not good enough.   I asked she talk to a supervisor.    She put me on hold and then came back to say the $50 was the best she could do or she could give me 10% off...   I cut her off there and told her I didn't want a coupon.   She said the 10% would be off this purchase which seemed to contradict what she told me before.   In any case the $50 or 10% off coupon was not nearly enough to compensate for taking damaged goods considering we expect a 30% discount in their outlet store.   I told the woman on the phone
"no thanks" and the guys packed up the fridge and drove off.   Neither the woman on the phone nor the delivery guys knew when they could get me another fridge.

I went home and told my wife the story and she was equally irritated and surprised that Sears would only offer $50 discount on a dented major appliance.    It doesn't make much financial sense from two perspectives.   First, Sears will probably spend $50 just to make a second delivery when you account for the hourly wages of two delivery guys plus the gas in their big gas guzzling truck.   Second, bigger reason is that they will give much steeper discounts on such dented fridges in their outlet store.  Now they have to turn around and sell that fridge in the outlet store for a steep discount.  If they'd simply given me that steep discount they could have made the sale right then and saved another trip.

After talking to my wife at home I was still annoyed by the whole thing and surprised that $50 was the best Sears would actually offer.   I decided to call them again and ask about it to see if this is really their policy.  I also needed to try and find out when they could deliver another (non-dented) fridge.

In my second call I first talked to a service person who gave me the same story and offered me the $50 discount.   They didn't know when the 2nd fridge could be delivered.   I asked to talk to a manager and they told me that their manager would just say the same thing.  I insisted.   That person put me on hold then transferred me.  When the call picked up I found I was talking to my local Sears store for some reason.  The first customer rep had just cold transferred me to the local store rather than get her manager on the phone as I'd asked.  I told the story to the person at the store again and they transferred me to another department.   The third person I talked to couldn't help much either but they did transfer me to a supervisor of some sort.   The supervisor was the fourth person I had to talk to and the fourth time I repeated the story.   I explained the situation to the supervisor and she offered me a whopping $100 discount.   No thanks.   At least the supervisor was able to tell me they could deliver the second fridge on Saturday so that was not too far away.

Now while I was waiting on the phone and being transferred between every Sears employee I had gotten on the net and looked up the Sears Outlet.   In the Outlet store I found the SAME model fridge in an 'open box' state with some sort of dent damage for about $1500.  The outlet store website show the exact damage but I at least know that you can get a substantial discount via their outlet on damaged merchandise.    Knowing that they'd have to cut $300 minimum off our already good sales price or $1000 of the full retail due to dents, I figured that them offering me $100 off wasn't very good.  

In the end the second fridge was delivered promptly on Saturday with no damage.  We got what we paid for, and it just took a little longer and subjected us to some inconvenience and several annoying phone discussions with unhelpful Sears employees.

There are a few things  I'm unhappy about with this whole experience.
1. The initial offer of $30 discount on a $2500 appliance was pretty insulting and the fact that they would only go up to $50 was really no help.
2. Sears wasted their own time and effort making two deliveries here and if they had instead given me a good discount on the dented fridge they would have completed the sale and saved a second delivery.
3. Now Sears has an unhappy customer ranting about it on the web and they still have that dented fridge they have to try and sell to someone else at a steep discount.
4. When I called Sears the customer support that I got was pretty poor.   I asked to talk to a manager and the service rep just dumped me on the local Sears store.   I was transferred between 4 people in that second call.
5. I don't recall anyone I talked to on the phone being particularly apologetic nor empathetic, (not counting them reading words on their scripts).

The only positives are that
1. the delivery guys were pretty nice about it and understanding.  
2. I didn't get any hassle or run around about getting a replacement new fridge.

One semi ironic detail:  I am now a VIP customer in their Shop Your Way Rewards program.   Let the exclusive VIP treatment begin!

An extra note :  This situation with the fridge actually happened quite a while ago and I'm only now gotten around to writing about it. 


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Tiny Houses Are A Stupid Idea

I'm sorry but I can't hold my tongue on this topic any longer and I have to go on a rant.  

I think "Tiny Houses" are a really stupid idea.   

Oh look, its a tiny house!   How cute!    Lets rebel against consumerism and live in a tiny house.  It will be like playing house when we were kids but in a super duper cool clubhouse!   Instead of spending half a million on a McMansion that only lost 80% of its value back in '07 we can instead live in this a large sized walk in closet called a house.   All for the mere cost of $57,000!  

Ugh!

No no no.   

OK I get it.   Tiny Houses are cute.   Peoples houses are 'too big' because you know we live in America and every year the size of a new home goes up and we like big stuff and we need somewhere to store all our big stuff.   Americans spend too much on housing so cutting back makes sense.   So, the Tiny House is introduced and seems like a great idea to many.    In fact its not a bad idea per se.    Living in a smaller house is a good way to save money.   

Various reasons that Tiny Houses annoy me...

• If Tiny Houses weren't cute they'd be called shacks.
• Tiny Houses are way over priced.   When I see companies selling built houses they are much too expensive for what you get.    Or you see stories of someone who built it themselves for a more reasonable $10,000 level cost... with 100's of hours of labor and discount products, etc.  
• Someone invented this idea a long time ago and they called it mobile homes.   Look into it.
• You know you can buy a used trailer or RV for a mere fraction of the cost of a new Tiny House in most cases?   If you really wanna save money then live in a trailer.  Sorry the press won't cover your story about living in a van down by the river cause its not a cute Tiny House but you'll save a lot more money.
• Where ya gonna put that Tiny House?   On someone elses land?   On your own buildable lot?   When housing is expensive the largest factor there is really the land.   If you've got free land to park a Tiny House on then you're getting subsidy from someone or mooching off free land.    What about zoning?   Does your city allow trailers parked on someone elses lawn?     If you've got a buildable lot to put a Tiny House on then you should just sell that valuable land.   The cost of the land that a Tiny House sits on is a huge factor in housing costs and is generally ignored entirely when touting the benefit of a Tiny House.   
• Being Tiny doesn't really save much at all versus simply being small.   Seriously, why live in 200 sq ft when you can get 600 sq ft for a little more?
• The whole concept is an extreme over reaction.    People go from over spending to living in a shack.   Why not just cut back in a reasonable manner?
• Lastly, you know if you can't afford housing where you live then one option is to move somewhere more affordable.   I'm not saying the entire state of CA needs to pack up a U-haul and head off to Texas  here either.   But if you really can't afford to live where you are then there are cheaper places.

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Chase Bank CD Rates are Really Awful

We have a checking account with Chase.   They took over Washington Mutual some years ago after WaMU failed.   Chase has been 'good enough' for us so we've stayed with them.  However their interest rates are not good.   I've been meaning to put some of our savings into a CD to try and make at least a little bit of interest off them.   I know that Ally bank has decent CD rates and you can get 1% or more there.   But I thought, hey, why not just open a CD with Chase...  The answer is that Chase is currently paying 0.02% for 12 month CDs.   You lock your money up with them for a year and you get 0.02% out of it.   Let me put that another way.  A $1000 CD with Chase will make you 20¢ in interest.   Awful.     Interest rates are low but theres really no reason for them to be THAT low.  Chase could at least try to pretend to be competitive.   I mean they may as well make it 0.0000002% as far as I'm concerned, they'd still technically be paying interest right?    


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Can I Cut Cable and Watch All MY Sports?

One of the common themes in personal finance is the idea of cutting cable.   Cable is expensive and a luxury expense so its a natural candidate for cost cutting.    I've said before that I'm happy to spend a lot of money on cable.    We enjoy watching TV and even though it is pricey cable is really a pretty reasonable cost considering the amount of entertainment you can get from it.  Even though I have certainly looked at ways to cut that cost by going to cheaper alternatives like Netflix and Hulu.    One of the key reasons we don't cut cable is sports.   Live sports are hard to find anywhere but cable.  

Any time this discussion plays out on the net it seems that someone will step in and argue that you can cut cable and still watch all the sports you want.   The arguments go like this :

Just get an antennae and watch it over the air!   
Why don't you go to a friends house and watch the game there?  
I'm sure you can see those games at a local bar.   
You can use MLB.com or EPSN3 online to see all the games.

Now those can all be reasonably good solutions for some people.    But they really don't work for me or a lot of other sports fans.   My wife and I watch two teams : a football team and a basketball team.  The football team has 13 games a year and basket ball is 82 or more.

Over the air -  We could actually see 2 football games & 18 basketball games on the local networks over the air.    Thats actually quite a lot of games.   However I'd be missing 11 football games and 64 basketball games. 

Friends house - Its an imposition on my friends.  I don't always want to spend evenings and afternoons at a friends house away from my own home to catch games.    While I certainly do find watching sports with my friends its not always convenient and sometimes I simply prefer to stay in the comfort of my own home.  None of my friends are basketball fans so theres nowhere to watch those games.   Its also not totally free.  I'd have to travel to my friends house and to be a good guest I should bring snacks and/or beverage.

Local bars - I could absolutely see every basketball game at a local bar.     My football team is not a local team and doesn't get much if any playtime in local bars.   Bars generally expect you to spend money so I'd have to buy stuff.   Bars are not always convenient or comfortable.   I'd also have to travel to the bar and back which is extra time.    This is not a free option.   If I spend just $3 per game on a beverage to watch 64 games then thats $192.   If I travel 10 minutes to the bar each way then that ads up to 21 hours of travel time.   At $10 an hour thats $210.   Gasoline would cost me about $90 in total, not to mention the wear and tear on my car.   Altogether I'd be spending $300 - $500 in time and money to go to a bar and watch the 64 games.

Online games - There are NO ways to see our teams online.   None.  Trust me on this..   Yes you can often view many sports teams online, but our teams are simply not online.    NBA league pass online version would work if we weren't in the local market but since we watch the local team we can not see our games online.  My football team has no online viewing options.    If online options were available they generally wouldn't be free.     NBA's online pass is $65.

Honestly I could watch games over the air, impose on my friend to watch football at his house then spend dozens of evenings sitting in a bar nursing a drink like a cheapskate and catch all the games for our teams.   But I do not want to.


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I'm an Evil Landlord and You'd Probably Be An Evil Landlord Too

If you're a landlord for very long then I think it might be impossible to avoid being an evil landlord.   At least in the eyes of some tenants.   

I previously wrote my theory on Why Some People Think Landlords Are ALL Evil Slumlords.   In summary my thought was that most people run into a bad landlord so they walk away with a bad general impression.   Yet few people are landlord and don't see the other side of the story.   

But then there are also difficult and almost inevitable situations that landlords get into with tenants where we are faced with hard choices.   I thought I'd give a couple specific examples showing both sides of the landlord and tenant situation to illustrate how people lack the landlord perspective and only hear about the evil landlord story.   Both of these examples are real situations that I've ran into as a landlord.
 
Tenant story:   When I got out of the hospital my evil landlord had kicked me out!

Someone comes home from the hospital and finds they've been evicted from their home by their landlord.   Must be an evil landlord right?   I mean what kind of heartless person would evict a sick person? 

We've had this kind of thing happen to us.    One of our tenants fell very ill and was in the hospital for a long period.  I want to say he was there a month or two but this was a while ago and I can't really remember the specifics.   In the meantime he was already behind on rent and paid no rent while he was in the hospital.   During his illness he lost his job.   He also had pretty bad outlook and it wasn't clear if he'd be able to work in the future or how long he'd be in the hospital or if he'd even be able to care for himself.   In the meantime we had a vacant rental for 1-2 months and unpaid rent.   Eventually we declared the apartment abandoned (legally) and remove his possessions.   Oh, did I mention that rental was totally trashed? 

Landlord perspective :   We had a tenant 3 months behind on their rent who was unemployed and in the hospital.  We had no choice but to declare the unit abandoned, house their property at our expense for a month then take a loss on the rent and most of the cost of cleaning out the apartment.  

What would you do?   How long do you let someone live in your your rental for free if they are sick?     Would it matter the reason they are sick?  Should you give free rent to someone because they had a better reason for being hospitalized?    Or should you kick them out faster if they have a really bad reason?    How much free rent out of your pocket should someone get in general due to hospitalization?   And we are talking about free rent here.   If I had good reason to expect I'd get paid then we certainly would not have made the choice to remove them.    That raises another question... how do you know if you'll ever get paid?   Is someone calling you and ensuring you that the rent will be paid?  Probably not.


Tenant Story:   The evil landlord left us without heat over Christmas. 

We had a tenants heater break down over Christmas one time.    As soon as we found out it was broken we called a repair service to go out and work on it.  Of course its sometimes hard to get a furnace repair guy out to you over Christmas.   In the meantime our tenants lacked heat ... during Christmas.   It was a pretty awful timing.    This was for a property in another state so we did not have the ability to fix it ourselves, not to mention that I don't know anything really about fixing furnaces.   The tenants ended up staying with family, but if they hadn't then I think its fair that we'd have been on the hook to pay for a hotel.    If I recall right we knocked some money off their next months rent to say 'sorry', but I'm not sure on that detail since this was a while ago.


Landlords perspective:   We did everything we could but the repair guys couldn't make it till after Christmas.  It was just awful luck that the furnace broke down over Christmas.

How would you handle that differently?    Unfortunately this one was really just bad timing and we felt we had done everything we could.

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There Will Be NO Student Loan Bailout

No.  Its not going to happen.   Stop expecting it.   Whatever you do .... DON'T make financial plans around it.   There is not going to be a student loan bailout.   I thought this story had died out months ago but just recently I saw someone still talking about the prospect for a bailout of student loan debts. 

The government isn't going to just write off over $1.2 Trillion in debts because some people would benefit.  There are many people who do struggle to repay student loans, this is true.   But most people are certainly willing and financially able to pay their loans back.     In either case we can't expect free money to come from the government any time soon.   Honestly a student loan bailout is just a misguided pipe dream.


The bigger reason that there isn't going to be a bailout is that we've already had bailouts.    For people struggling with their student loan debts there are already government programs to help them and get at least partial forgiveness of the debts.

There is the new Pay As You Earn Repayment Plan  which has 20 year forgiveness.   Which is added to the existing Income-Based Repayment Plan (IBR) which includes 25 year forgiveness plan.   And if you go into public service then there is the  Public Service Loan Forgiveness  which has 10 year loan forgiveness.    These programs aren't simple blanket loan forgiveness for the entire nation as some people delusionally expect but they are certainly a very big helping hand for those who really need it.


I know that student loans are a burden to many people who have high debt levels and lower paying jobs.  But thats what the income based and pay as you earn repayment plans are setup to help with.   Now unfortunately those plans do not work with private lenders and many of the people in the worst situations are burdened with high private loan debts.  I don't expect any major changes or aid for people with large private loan debts.    Personally I think it would be a good step if they would force private lenders to all offer a income based system at least.  As it is you can't get rid of student loans in bankruptcy so you're stuck with the private loans for life, and I don't see what harm income based system would do there.

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Should You Spend Money on Vitamins?

[note: for any health related topic you should consult your doctor as they would have more knowledge of your personal health]

Every day I take a single mult-vitamin and a extra dose of vitamin D.

Articles like this editorial Enough Is Enough: Stop Wasting Money on Vitamin and Mineral Supplements published in the Annals of Internal Medicine might make me believe that I'm wasting my money.   The editorial seems based on these three studies :
Oral High-Dose Multivitamins and Minerals After Myocardial Infarction: A Randomized Trial Long-Term Multivitamin Supplementation and Cognitive Function in Men: A Randomized Trial Vitamin and Mineral Supplements in the Primary Prevention of Cardiovascular Disease and Cancer: An Updated Systematic Evidence Review for the U.S. Preventive Services Task Force

I read those as meaning that vitamins in high doses won't stop heart attacks, vitamins won't keep you from losing mental abilities in older age and that vitamins don't prevent cancer or heart disease.   OK.   I wasn't expecting that vitamins would stop cancer or heart attacks.    My purpose for using vitamins is to prevent a common vitamin deficiency.   I don't have any specific reason to think I'm prone to have a vitamin deficiency but how do you know?   There are a significant number of people with deficiencies and most don't know it.   I figure vitamins are a fairly cheap way to make sure that doesn't happen.   I don't expect them to stop cancer.  Do people really expect their multi-vitamin to prevent heart attacks or fend off dementia?  

If you do take a multi-vitamin then make sure to shop around and get a reasonably priced one.   If you get store brands like Kirkland or similar or hunt for sales then you can find tablets for about 3¢ each.  

You can get a Kirkland muti-vitamin for $14.49  with 500 tablets or about 3¢ a day. or get it at Amazon for $17 or so if you don't belong to Costco.  Similarly  you can get  a NOW Foods Vitamin D-3 1000 IU  supplement at Amazon for under 3¢.    I'm spending abut $2 a month on vitamins.  Thats not too much money really.

Maybe its a waste of money but I don't know.   In fact I actually hope it is a waste of money because that would mean I'm not deficient in any vitamins.   In my opinion the cost of reasonably priced vitamins is quite small and I think that its worth it just to make sure you don't end up deficient with something like vitamin A or vitamin D or iron for example.  

Whether or not you want to take vitamins is up to you.   



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Go Buy Some Ear Plugs

This topic has nothing really to do with personal finance.


If you don't own some ear plugs then I'd recommend you pick some up next time you have the chance.

You can get a 20 pack of Howard Leight disposable ear plugs on Amazon for little over $3.   Those are disposable versions which would be good to have on hand for the rare use. You'll probably find a box in your local store for similar prices.   I think I've seen them for sale in both the first aid section and the home improvement section.   If you need ear plugs for more extended uses like in the workplace then you may want to invest in some higher quality reusable ones.

A good pair of earplugs like this will get rid of a LOT of noise.  Ear plugs have a NRR spec. which is the Noise Reduction Rating.  So an NRR of 33 would cut the noise level by 33 decibels.   30 decibels is the difference between a vacuum cleaner and a quiet room.

I really wish I'd considered buying ear plugs a long time ago.    There have been several times in my life which I recall where I really could have used ear plugs but simply hadn't thought to buy them ...

• Sleepless nights being tortured by the "plip"  ... "plip" ... "plip" ... "plip" ... ... ....  "plip"... "plip" ...  sound of the dripping rain spout right outside of my bedroom after a rainy/snowy night.  
• That one night in that one hotel that hosted a wedding party that lasted till around midnight or 1AM the night before I had to catch an early morning over seas flight.   I distinctly remember trying to shove rolled up tissues into my ears and ear plugs would have done the trick perfectly.
• Half of the airplane rides I've been on in my life.
• Very loud sporting events, especially in door arenas.

There are lots of other good uses for ear plugs.    You should wear ear plugs to protect your ears from extended exposure to loud noises.  If you work in a  job with a lot of noise then you are probably already familiar with using earplugs at work to avoid noise induced hearing loss.   But most of us have some exposure to loud noises while doing things like mowing our lawns or using a leaf blower or anything along those lines.

Oh, and in case you are objecting because you've heard “You shouldn’t put anything smaller than your elbow in your ear”   You should rest assured that ear plugs are safely designed and will not damage your ears.

Well anyway thats my pitch for buying some ear plugs.   I'd wished someone had told me about something as simple as buhing ear plugs years ago so I could have slept well those nights when the down spout went "plip" ... "plip" ... "plip" ... "plip-plip" ... ... "plip" and drove me insane at 2AM.


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Is it OK to Lie to a Mercant for a Discount?

At MoneyBox Matthew Yglesias recently wrote about How To Save Money on Amazon With a Fake Baby.   You can read the article if you want but the summary is that he lied to Amazon.com and claimed he had a fake baby to get the 'Amazon Mom' discount program.   If you are in Amazon Mom you get a 20% discount when ordering 5 Subscribe and Save items compared to the normal 15% discount.    So... lying to Amazon about a fake baby is getting him 5% discount on some purchases.
In a follow up article Matthew claimed that Amazon Gives Thumbs Up to Fake Babies.   I don't really agree with his interpretation.   Amazon explained :""We are using the honor system, and we expect the vast majority of users to be honest.""     Which to me tells me that they expect people to be honest and if you aren't then you are lying to them and ... they didn't say its OK to lie to them.      When they say its on the 'honor system' that means you're not supposed to do it.  Bottom line.


In any case the Amazon Mom example raised the more general thought about lying to merchants for any kind of discount or promotional prices.    Matthew is clearly not the only person doing this.   I assume theres a few folks out there who are lying to Amazon for such a discount.   I'm also sure that Amazon is not the only merchant people lie to.   I would imagine that every day there are people claiming to be older than they are for senior citizen discounts, claiming to be in college when they aren't for student discounts, claiming to be younger than they are for child discounts and so forth.

Is it OK to lie to a merchant for a discount?

No of course its no OK to lie to companies to take advantage of discounts.   Any time you're lying to someone purely for financial gain its not ethical.   This should be a pretty obvious and straight cut case as far as I'm concerned.

I can think of a couple arguments people might use to try and rationalize to themselves doing something like this :

Argument 1: They are a big rich company so its OK to lie to them for a discount cause they can afford it.     It doesn't matter if the company is rich or not, that does not make lying ethical.   By this logic it would be OK for anyone to steal from everyone who has more money than they do.   Do you think its OK for poor people to steal your stuff simply because you have more than they do?   Clearly not.

Argument 2 :  Its not fair that someone else gets a discount and I do not.   It doesn't matter. Promotional discounts are meant to generate business for a company and are not meant to be universally fair.   Any time any company has a sale or discount its not going to be equal opportunity for everyone everywhere.   Thats just how the world works and is not reason to steal or lie or engage in other unethical behavior.

So again, no.. no its not OK to lie to companies for a discount.

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You Need Health Insurance

If you don't have health insurance then you should really get it.   

Most people get health insurance via their employers or through existing government programs like Medicare, Medicaid or VA benefits.    But there are still a lot of people who don't have insurance for various reasons.   Before the Affordable Care Act  (ACA) (everyone calls it Obamacare) there were a lot of people who really had a difficult time affording health insurance.  But with the ACA there are now subsidies that help pay for the cost of health insurance for those with medium or lower incomes.

If you don't have enough money to afford it then you can get generally get coverage under Medicaid.  If you make too much money to qualify for Medicaid then you will probably qualify for a premium subsidy from the government that will help pay the cost of health insurance.   If you make too much to qualify for the subsidy then you can afford health insurance.    I think this really splits the uninsured into two groups, those who have difficulty affording it but can now get aid through the government programs or people who can actually afford it but don't buy it.


Some people feel they can't afford insurance but they simply aren't making it a priority.    Health insurance should be a priority over many other expenses.   If you make an average income or better than you should have money in your budget to afford health insurance.   If you don't feel you have the money then you need to re-prioritize your spending.    People without health insurance generally skimp on healthcare when they need it since they can't afford the out of pocket costs without insurance.    What good does cable TV or a nicer car do you if you end up seriously ill for lack of adequate health care?  

Its not likely you'll have a giant unaffordable hospital bill but the consequences are catastrophic.   If you do end up with a serious illness or injury then the total healthcare costs can easily bankrupt most people.   Some people feel that going without health insurance is an acceptable risk because they think the chances of needing it are low such that they feel its 'worth it' to fore go buying insurance and take the risks.   We don't treat auto insurance or home owners insurance this way so I'm not sure why people make such choices with health insurance.   Healthcare costs can wipe you out financially just as well as a severe auto accident or a home fire.  

Younger people may also feel that they have no 'need' for health insurance because their healthcare costs have been generally low.   Younger people are generally more healthy and do have relatively low healthcare needs and lower risks.    This however is not good reason to go without health insurance entirely.  Younger people are not immune from serious illness or injury.    While its not likely you'll end up with a giant hospital bill it can and does happen to people who are under 30 years old.   Just stop and think about all the people you know and who you know in their 20's who've had serious illnesses and serious injuries.  I'm sure you know someone.  

Healthy lifestyles also don't defend you against all serious healthcare costs.   A lot of people seem to think that because they do a good job taking care of themselves with good diet and exercise that this means they're immune to hospital stays.   Certainly keeping in good shape will keep you in good health but it doesn't defend against all illnesses and injuries.  

It may make good sense to get a high deductible plan but you need catastrophic coverage at a minimum.    Young and healthy people do have lower healthcare costs so a high deductible plan may be a good idea financially.  But you should at least get a plan that will kick in and protect you against extremely high medical costs for serious illness or injury.   People under 30 can still buy catastrophic plans under the ACA and the Bronze level often has $5000 level deductibles.    These plans are often quite reasonably priced (relatively speaking) especially when you consider subsidies available to most people.


Please make health insurance a priority in your budget.  Going without health insurance is not worth the risks.
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Why we Don't Have A La Carte Cable TV Programming

Have you ever wished you could just pay for the TV channels you watch?   You probably have.   Most of us watch probably less than 5% of the 100's of cable TV channels available.   Why pay $50 or $70 or whatever for 100+ channels if you really only like watching 7 of them?   Can't we just pay for the 7 channels we do want?   Makes perfect sense right?

The problem with that concept is that everyone would only pay for a handful of channels and so you'd either end up paying $10 per channel or cable TV revenue would plummet.   And what would happen to the more obscure channels that most people never watch?   They'd die because their handful of viewers willing to pay couldn't support an entire channel.

They're trying A La Carte in Canada right now so we'll see how it goes.   But that article about Canada has this explanation:

"Needham Research estimates that a purely a la carte model would wipe out $70 billion in revenue for the U.S. TV industry and that fewer than 20 U.S. channels would survive if consumers had to pay for each one separately."
  
Another report on that study from Needham says that  the total revenue is about $150B and that doing away with bundling would wipe out 50% of it.

Hard to say how accurate that report is really.   I imagine if they did go to an A La Carte system you'd still have bundles available and a lot of people would just stick to the status quo and keep the whole 100+ channels for $70 or whatever.   People are lazy and they like variety.   Maybe that wouldn't be a big factor and the vast majority would  catch on quick and get rid of all the channels they never watch.

But in my opinion its hard to see how we'd all come out ahead financially in the end.   The cable / satellite TV companies would not want to lose revenue so they'd figure out the pricing that would keep their revenue the same.   I assume that we'd then end up paying $5-10 per channel and the net cost would be flat.
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