Garrett M. Vonk

It has now been nine full months since I sold my car and started commuting daily via scooter. Here are the vital stats:

• Miles driven:1500
• Fuel costs: ~$15/month
• Estimated savings: $250/month*

All in all, I am pleased with my “lifestyle change”. The scooter is a hell of a lot of fun, and I am no longer constantly complaining about paying for a car I don’t use all that often. There’s no grander “save the planet” motive at play, but at the same time, I do like to compare monthly fuel expenditures with my friends and see how we compare. (For the record: four gallons.)

Yes, there are downsides. Sometimes it rains and I’m unprepared. Sometimes the helmet and jacket get really hot. And there are one or two times each month where I’m slightly inconvenienced by our single-car existence. For example, if I’m at work and need to pick up more groceries than the scooter will carry–16 gallons of storage under the seat–I have to go pick up the car. But the fact that this situation comes up so rarely underscores just how little we really needed to have two cars.

*Note: This back-of-the-envelope guesstimate takes into consideration the facts that A) we spend slightly more on gas for the other car now that we’re down to one, B) the scooter itself did have a cost, and C) I am actually spending less on Marta now than when I owned a car.

We’re off this Wednesday to the land of rain and cold. We’ll be packing for the next four days and then we’re off to Ireland and England for the following ten. Today was catch-up-shopping day: power adapters, khakis, and paperbacks were my primary goals. The most depressing purchase? Currency.

Yes, almost as frustrating as our experience getting the new HD TiVo set up* was turning our hard-earned US Dollars into far more valuable (and thus far less plentiful) Pounds and Euros. I can’t wait until we arrive and can spend it all on $8 pints and $10 sandwiches.

I just noticed that this is post ID# 500. I think I’ve deleted a few here or there, but at a week over six years since my first entry, it’s as good a milestone as any. Happy birthday, blog.

*More on the ridiculous Comcast CableCard experience later.

If I said to you, “You can have $10,000 to spend now—or $9,500 to spend in 10 years,” which would you choose? Probably the $10,000 now. And in doing so, you would be making the same choice many Americans make when deciding whether to save or spend their hard-earned cash.

The problem is how we tax investment gains. Over the past 80 years, the average annual return on Treasury bills (a proxy for savings accounts) has been 3.7 percent per year. Inflation, meanwhile, has averaged 3.1 percent per year. This combination has produced a “real return” of a paltry 0.6 percent per year.

-Slate.com, Why U.S. tax policy makes saving a sucker’s game

It certainly makes some logical sense on its own. If inflation is 3% a year and taxes eat the rest of your gain, you accomplished nothing by saving that money. But there’s a huge omission in this strategy. Even if you lost a few bucks, you still didn’t spend that money.

It’s a point that my parents made to me early on. It matters very little where you put it or how you do it, but saving money and making sure that you are unable to easily spend it, even in “emergencies” is a key strategy. When I ran my list of prospective mutual funds by my dad for 401k advice, he basically said “Those all sound great; pick one that sounds good and don’t touch the money.”

And that’s the key point of saving that this article misses. It’s not about getting an awesome return on your money (although that’s definitely the goal for someone that’s already putting money into savings). It’s about saving money at all. People aren’t making the choice not to save their money because of oppressive taxation; I’m sure that a lot of families don’t even think about their return as compared to inflation. The people who aren’t saving don’t even get that far: they just don’t want to save their money, or are convinced they can’t afford to. The article does seem to acknowledge the real issues that demotivate saving– spending beyond your means with credit cards, “acquisitive consumers” spending to keep up with fashion or trends, etc.–but I think the author attributes far too much spending and non-saving behavior to tax disadvantages.

If I said to you, “You can have $10,000 to spend now—or $9,500 to spend in 10 years,” which would you choose?

He neglects to even consider the fact that if you come up with that $10,000 to save every year, in that tenth year, you’ll have $95,000 plus any compound interest on the earnings from each of the yearly contributions. If you spent the $10,000 on a life-saving surgery, well, yeah, it’s better to spend it now. But you’d probably spend it now even if you could be guaranteed to get a great return.

To slightly misapply a term from Econ 101, I just don’t think that the elasticity of the “demand” for saving money can be influenced all that much by a tax scheme. I just can’t imagine Joe and Flo Median Income looking at their paycheck and having this conversation:

Joe: “Golly gee, we can either buy a plasma TV or save this money for our retirement in treasury bills.”
Flo: “But if we save it for retirement in these T-bills, the inflation and taxes will just eat up any return we would have gotten!”
Joe: “Screw it, we’re buying the TV!”

It’s a false choice. It should really read “You’ll make $45,000 this year. Would you rather have $0 of it or $9,500 of it 10 years from now?”

Followup: My Playstation 3 camping friend survived the Wal-Mart ordeal, making a tidy profit on eBay. It really seemed like a lot of radio and TV commentators missed the point when discussing the “console camping” phenomenon. My impression is that there were at least as many profiteers as there were PS3 Fanboys, and the 12,000+ consoles currently for sale on eBay confirms that in part. But somehow, all of the questions asked of the people waiting in line were “What’s so awesome about the PS3?” And all of the answers were “The graphics are great and I just love playing games!”

Tomorrow we leave for Orlando for a week. Work will follow me, to some extent, but it will still be relaxing. I’m looking forward to it.

In the same vein as my post about haggling your way to a good cell phone deal, I want to make sure everyone within the sound of my voice knows that there’s a better way to buy cables than at your local Big Box electronics retailer.

I’m talking about all kinds of cables: From USB to Cat5, from RCA to DVI to HDMI to VGA, there’s really no reason you should pay what the big retail stores want for these cables.

Example A: HDMI Cables

HDMI is all the rage. You can connect your high-definition components to your HDTV with a small, single cable, covering video and audio, rather than the 3-5 bulky cables previously used for the same process. It’s a miracle! Except that when the man in a polo shirt who just sold you a TV, in his most helpful voice, intones “And you’ll need an HDMI cable to connect that to your components”, he’s not actually trying to help you. He’s trying to send you home with, at a bare minimum, a $64 length of rubber-coated wires. Which somehow seems reasonable to people who don’t know you can get that cable for $6 on the web.

Example B: USB Cables

The (admittedly apocryphal) word on USB cables is that Best Buy et al have a tendency to mark down their printers to near-cost, and just lean heavily on their salespeople to make sure everyone walks out with a $30 USB cable to push the margins back up. The “standard” USB cable Best Buy sells will set you back $28.99.
Granted, part of that ridiculous amount gets you hilariously witty Geek Squad marketing banalities like “Agent 642 does not personally recommend using this cable as a fish stringer.” Ha ha ha!

While you’re laughing your way to the big yellow and blue cash register, you’re supposed to forget that you can get a cable that is equal in length and function for seventy-two cents if you know where to look. I’ve used similar dirt-cheap cables (hint: they come bundled with a lot of USB devices), and I’ve never had a problem with one.

Example C: Ethernet Cables

I’m of the school of thought that ethernet cables are easy enough to make yourself that you should never even have to resort to buying them “prefab”. However, I realize that operating an archaic BDSM-esque crimper is outside the scope of many people’s Sunday afternoon hobby proficiency. Still, that’s no reason to pay $20 for a pathetic, 6ft length of ethernet cable. If you don’t have the skills to DIY, there’s still a veritable rainbow of cables in all sizes, starting at $1.70 for a 7ft cable that will be just as good as any $20 Geek Squad Cable.

Sources

It would be painfully negligent if I were to publish such a diatribe on what I would label as a paradigmatic pricing scheme, only to pepper my examples with evidentiary links that all point to the same site. That would prove nothing, except that one retailer happens to have great prices on cables. But there are tons of them out there.

A quick Google Search for “cheap cables” brings back plenty of results, but here are some I rely on (or have heard good things from trusted sources):

• MonoPrice
• Cable Wholesale - I got some really long VGA cables from these guys at an amazing price.
• Computer Geeks - They sell a kit for $28 that you could use to make fifteen 20-foot cables, at only a little more than Best Buy wants for one six-foot cable.
• Deep Surplus - Haven’t ordered from here, but the prices look very good. I’ve read good things about them.
• A tangentially related post from Make Magazine

But Don’t Take My Word For It

Whether you hook up your TV via digital connections, analog connections, or both, you are unlikely to detect any difference in picture quality between a cable with a moderate price and a luxury brand. The only difference you’re likely to notice is how the cable looks behind your TV.
-PCWorld.com: The Cable Game

There are some great insights, not just in the body of this blog post, but in the comments:

Not only isn’t there $143.62 worth of quality difference, there isn’t $.01 worth of quality difference.
-mattyice11 on Gizmodo: HDMI Cable: Price Gouging?

And if you’ve made it all the way down here and you still care, even just a little bit, about the quality and price of the cables you buy, check out this grandaddy of expensive cable debunkers, Roger Russell. This has long been my favorite exposé on “audiophile” cables:

So what do our fifty hours of testing, scoring and listening to speaker cables amount to? Only that 16-gauge lamp cord and Monster cable are indistinguishable from each other with music and seem to be superior to the 24 gauge wire commonly sold or given away as ’speaker cable.’
-Speaker Wire: A History

So there ya have it… Lamp cable sold at 30 cents a foot outperforms so-called “Speaker Cable”, and is indistinguishable from the cable sold for hundreds, even thousands of dollars.

So, there’s apparently some kind of uproar over Geico tying some of their auto insurance rates to education and occupation.

The Consumer Federation of America (CFA) today called on state insurance regulators to ban the use of rate-making methods that directly base eligibility and premiums solely upon the educational background and occupation of consumers. The use of this information results in an unjustifiable increase in insurance rates for many lower income and minority consumers.

“If a student’s parent has the misfortune to have a job outsourced to India or lost to an event such as an employer’s insolvency or a natural disaster, that student may have to quit school to help the family. Why does this make the former student a worse driver?” Hunter asked.

I think what this spokesman is suggesting is that the element of reality be removed from the insurance equation. Obviously, the most “fair” auto insurance policy, by this logic, is one that costs exactly the same for every driver and ignores risk factors completely.

I’m no actuarial expert, but the risk-mitigation that higher rates provide seems like an essential part of keeping rates low for everyone. In a competitive market, where insurance companies couldn’t charge the consumer more to mitigate the risk of insuring them, what effect does that have on prices for everyone else? Seems to me like it would cause everyone else to subsidize the higher-risk people.

I read a few comments that made sense, as well. Insurance companies have been charging different rates based on zip code for a long time, now, and nobody’s calling to ban that. What about age and gender, over which we have far less control than our education and occupation?

Via The Consumerist, which I still highly recommend.

Lest you think I’m biased as a beneficiary of policies like these, I pay–despite being marginally educated and employed–outlandish premiums, without any accidents on my (3-year) record. We’ll see what happens when I turn 25 this month. It may be time to shop around for insurance.

I’m always impressed to see people squeeze a good deal out of a faceless corporation. Others are far better than me at this, but I still know the principles involved. A friend of mine lives and breathes Fatwallet, a site that I find all the more exciting because the Big Guys hate it. Said friend was recently rewarded with a free home theater system just for paying attention. (And by following up with the Rebate Police over and over.)

I pride myself on being able to stand up to everyone from shady car and mattress salesmen to cable company CSRs, and walk away feeling like I got a good deal. One arena where this is exceedingly straightforward is the cell phone companies. Even with the deck so stacked against the consumer in the U.S. via suffocatingly long-term contracts and confusing fees, there’s still a power play you can make when the time is right.

After Heather and I picked out the phones we wanted, I went to the store alone to try to really hammer home a deal that made sense. I was able to get a great price by negotiating the post-rebate price in-store, then printing the rebates at home and submitting them for a double-dip. I didn’t back down, and I saved about $200 just by being willing to walk away at any time. Being willing to walk away is a tried and true technique for buying a car or other high-ticket item, which are generally more ephemeral processes, but less people consider it when it comes to their cell phones, cable service, etc.

It’s indeed possible to save a lot of money by negotiating exactly what you want from the carriers once you’re out of your contract. I remember when Clark Howard used to advise people “Don’t sign a contract for a cell phone.” Now it’s “Try to sign only a 1-year contract for a cell phone.” Times have changed.