Things Financial - 02 Getting Started; the Hardest Part

I’m sure you’ve heard it said that “it takes money to make money.” But for most people that isn’t true. For most it takes work to make money. And for many of those people their money is gone by the time the next cheque arrives.

Why is it so hard to save money?

Well, for some people there is no money to save. Some folks truly live hand-to-mouth with no wiggle room at all. It’s a hard situation to be in. For these people the only advice that I can give in a financial advice blog is to invest any free time that you might have into yourself. Study, ask about, research and practise the things that will help you improve your employment situation - anything that will help you get a raise or a promotion or that will make you more valuable to your present employer or to the next one. Or the one you hope to have.

Good luck.

There are other people who aren’t in this hand-to-mouth situation but think that they are.

Bloomberg did a study in 2023 among people who each made at least $175,000US per year, placing them all in the top 10% of earners in America. They were asked to rate their personal financial situation. About one quarter of them rated themselves as “Poor,” “Very poor” or just “getting by.”

Are these people really living hand-to-mouth?

If this group of people, who make more than twice the median income in America, see themselves as suffering financial hardship what does that suggest about people’s spending habits and their ability to save? Clearly the possibility or ability to save isn’t just a matter of income. For perhaps a quarter of the population it is a matter of psychology, discipline and self image.

It’s hard to be a saver. It’s an unnatural act. Our human instincts tell us that having something now is better than having it later. There is uncertainty in waiting to get that ‘something later.’ It’s natural to think, “What if it’s not there? What if someone else gets it first? What if I miss out?” Why delay gratification?

Human beings, by nature, are not inclined to save for a rainy day.

There are no songs that go, “Hey, big saver!”, but there are lots about big spenders. Western culture celebrates spending. Big gifts, new cars, monster houses, pool parties, exotic vacations. Whatever is new & trendy gets screen time and the new & trendy is shown as coming with social validation. Advertising would have you believe that if you drink the right beer, the Beautiful People will love you. What an ego boost that would be!

People who are not willing to spend as much money as their friends can sometimes be socially ostracized. Sometimes they remove themselves from their group for fear of being ostracized. Have you ever been called (or called someone else) cheap? It’s deflating to the ego.

If you’ve ever bought an impulse item at the supermarket checkout, bought a lottery ticket, drank a pop instead of water when you were thirsty, bought a luxury car or taken an all-inclusive holiday then you have the capacity to save money. Fear-Of-Missing-Out (FOMO) or absent-minded consumption drains the money from your wallet and from your future self.

If you’re going to start saving you don’t have to give up all of your small or pleasurable purchases. You should just spend consciously and with purpose.

Saving is the conscious act of waiting until later and trusting that when ‘later’ arrives the thing that you will have in the future is at least as good, and probably better than, what you could have today.

Without the realistic belief that saving will make your tomorrow better, there is little purpose in saving.

No one can predict the future no matter what they may tell you. The best anyone can do is study the past and try to make an educated guess about what the future may hold. Using the past as a guide we can say that hard times are coming. Hard times always come. Historically, saving (and investing) money has generally been a better plan than not doing so. Cash on hand won’t prevent every hardship but it can help you weather the storm.

So why is it so hard to save money? It goes against human nature. It goes against social norms. It’s a conscious decision to pass up today’s opportunity when FOMO is screaming “Grab it!” It is a conscious decision to believe that a better future doesn’t just happen, you make it happen.

I have an eight word saying that seems to apply to most things in life: “Hard now, easy later. Easy now, hard later.” Remember that, if you choose to save for a better tomorrow.

It takes work to make money but it’s hard to save. The reasons why include:

Truly living hand-to-mouth.

Psychology, discipline and self image.

Saving is the unnatural act of trusting in the future.

Saving is socially awkward. No one wants to miss out.

Advertisers know how to push psychological buttons.

Absent minded consumption. (We all do it.)

https://www.cnbc.com/2023/08/22/fewer-americans-consider-themselves-wealthy-report-finds.html

Things Financial - 01 Why Save? Why Invest?

 

In the story “The Ant & The Grasshopper” during the summer the ant stores grain while the grasshopper plays the fiddle. In the winter the ant eats while the grasshopper starves.

My mother, the farmer would say, “Make hay while the sun shines and save for a rainy day.”

...And some philosophy for the Biblically inclined:

Ecclesiastes 7:12 - “For wisdom provides protection, just as money provides protection.”

I know that that last one might surprise a few folks. People mostly seem familiar with the Biblical misquote, ‘money is the root of all evil.’ The Bible doesn’t say exactly that. It says “...the love of money is the root of all evil.” (1 Timothy 6:10) It’s not the money that’s evil but a person’s attitude towards acquiring it that might cause them to do evil.

Money has a use, it’s a tool. It provides some form of protection. Having it won’t solve all of your problems but there are some problems that money can make go away, just like a toilet plunger can make some problems go away. Whether your problem calls for cash or a plunger it’s good to have the tool handy when you need it. Why deal with crap when you can make it go away?

One reason to save: Having money saves money.

Maybe this sounds odd but it’s expensive to be broke.

Everybody eats and buying groceries in smaller, less expensive, packages tends to cost more per ounce (or kilo) of food. If you can only afford the small package you’re paying more for the meal than a person who can afford the bigger package.

If you get an unexpected, unbudgeted, bill you’ll have to find the money somewhere. If you don’t have it saved you’ll have to sell something, borrow somewhere or delay paying some other bill. If you’re forced to sell something in a hurry you almost always get a bad price; there is a ‘desperation discount.’ If you borrow cash or put off some other bill there will be interest or penalty charges or both. And once the emergency expense is paid you still have to pay back the loan or catch up on the other bill you skipped...plus those extra charges.

To make your loan payments or catch-up payments you have to make sacrifices elsewhere in your life or work extra to come up with the extra cash. And the sacrifices and extra work after the emergency will be larger, greater and more than if you had done it before the emergency. You have to pay the extra charges. Saving beforehand doesn’t charge penalty fees. Saving beforehand doesn’t charge interest, it pays interest.

Working to pay for an emergency before it happens makes you richer. Working to pay for an emergency after it happens makes somebody else richer.

It’s cheaper to save than to borrow. It’s less work to save than to borrow. It’s less sacrifice to save than to borrow.

And nobody goes through life without surprise expenses.

Another reason to save: Having money relieves money anxiety.

In my early twenties I had a roommate who was always broke. He never had a lot of debt but his money always seemed to arrive the week after he spent it. One day I asked him why he was always broke. He didn’t really spend more than he made, he just never had any cash on hand and was always borrowing from friends for emergencies or surprise expenses. And he could always come up with money to pay it back the next month. He told me that if he were to die that day and hadn’t spent every cent he had made and every cent that he could borrow then he would feel like he miss some opportunity.

I understood his choice. I didn’t agree with it, I thought it was short sighted, but at least it was thought out and not impulsive. I’ve always been inclined to save. Even if it’s only $20 a month. I get nervous if I spend every cent that comes in. I told him that the worst thing that could happen to him was to live beyond his working years.

We’re still friends.

About 20 years later we were chatting. He told me that for the first time he had looked at his bank account and seen enough to cover all of his expenses for the next month. “And it just hit me. It feels really good. It’s like there’s no pressure. I can relax. Is this what you were talking about all those years ago?”

“Yup.”

Another reason to save: Having money pays. If you have money in the bank it pays interest. Not much interest these days but a small amount of interest is better than none. If you look around you might find a bank that will pay more than your present one does. And some banks will pay more if you have more on deposit.

The more money you have the more options you’ll be offered for investing. I’ll talk about that later.

So the reasons to save are:

Money is a tool that can solve some sorts of problems.

Having money saves on unexpected expenses.

Having money relieves some sorts of anxiety.

It pays to have money, like getting a tiny raise in pay.

Things Financial - 0 Intro

 

Intro

    Most of my life I’ve worked for an hourly wage as a skilled labourer. I’m a child of the 50’s, a Boomer. I’ve reached retirement age. I’ve never worked for a company or organization that offered a pension. I recall one of my school teachers, back in the late 1960’s, telling the class that the country would be broke by 1980 and there would be no government pension for any of us. As old folks we would starve if we didn’t look out for ourselves.

    The ‘no government pension’ prediction didn’t come true. As for the country being ‘broke’, there is still some debate about that. ‘Looking out for ourselves’ turns out to have been a wise strategy just the same.

    The generation previous to mine grew up in a time when it was considered rude to talk about money, politics or religion. The ‘not talking about money’ seems to have been a thing that was passed on to my generation and damaged the financial lives of many of my contemporaries and their children. I would like to do something to stop the financial pain. I just don’t like seeing people stressed by financial problems when there are other things in life that need our attention.

    People under stress tend to make bad decisions. If there’s a way to relieve one area of stress in their life it may allow a person to make better decisions in other areas of their life.

    Of course most of the Boomers are near or into retirement age. There is a limited amount that they can do to get their financial houses in order. (There’s almost always something that can be improved, if only slightly.) This series of articles is aimed more at the following generations. I hope there will be something of value here for anyone from 15 to 50, but even if you’re 70 there may a tip or two along the way.

    I’ll explain my philosophy on money and along the way you’ll get an idea of my outlook on life. The stories I tell and the advice I give will be from the point of view of an hourly-wage worker, because that’s the life I know. There will be talk of things that I’ve done and not done, things I wish I’d done or not done, as the case may be.

    It’s hard to suggest financial advice without also suggesting or implying a financial philosophy. My approach has been one of debt avoidance and the slowish, safe-ish accumulation of wealth during my working years. In retirement I have tried to turn my savings into an income stream that will preserve those savings for as long as possible while providing the greatest amount of spendable cash over my expected (or at least hoped for) life time.

    I hope you find these brief articles helpful and maybe a bit entertaining.

Tariffs in 2025. Here We Go Again.

 

I thought that I should have another go at this.

During Mr Trump’s first term I wrote regarding his comments on tariffs and that the things he said were incorrect. Lies actually.

With Mr Trump again assuming the office of the Presidency he is calling for import tariffs from 10% to 60%, depending on the country of origin. Just so that we’re clear, TARIFFS ARE A SALES TAX WHICH IS ULTIMATELY PAID BY CONSUMERS.

In case just pointing that out is insufficient, perhaps walking you through the steps will make the point easier to see:

Suppose that a manufacturer (say, Chinese) makes an item and needs to sell it for $10 in order to keep his factory open. Before tariffs he arrives at the border and sells it to an importer for the $10 that he needs and goes away. The importer adds his standard 100% mark up and sells it to a retailer for $20. The retailer adds his standard 100% mark up and sells it to the final consumer (you) for $40.

Now let’s take a second look.

Suppose that same manufacturer (still Chinese) makes that same item and needs to sell it for $10 in order to keep his factory open. After tariffs, he arrives at the border with the intention of sailing away with $10. He’s told that there is a 60% import Tariff. What happens now? The manufacturer isn’t going to drop his price. He needs that $10. Ten dollars is a fair price and cheaper than the same thing can be made in America.

It is going to cost $16 to get this item across the border and that’s what the importer will pay if he still wants it. At this point it doesn’t really matter whether the extra $6 Tax is paid to the manufacturer who then pays it to the Government or whether it’s paid directly by the importer to the Government. Either way, $16 comes out of the importer’s pocket. That’s $10 for the manufacturer (who could sell the item to another country if you don’t want it.) and $6 Tax for the Government. The importer adds his standard 100% mark up to the $16 he paid and sells it to a retailer for $32. The retailer adds his standard 100% mark up and sells it to the final consumer (you) for $64.

The end result of a 60% tariff is that the final customer (you) have to pay 60% more for that imported (Chinese) item. Something that had cost $40 last week costs $64 this week.

Now let’s look at who this affects.

A few years ago it was true that WalMart was China’s 5^th largest customer. WalMart bought and imported more Chinese goods than all except 4 countries. And one of those countries is the USA, which has other companies that also import Chinese goods. Other companies like Dollar General, Costco, Target and Amazon.

So what sorts of people shop at places like WalMart & Dollar General? Folks like Donald Trump? Steve Bannon? Linda McMahon? Elon Musk? Steve Mnuchin? Mark Zuckerberg?

Billionaires all.

How about any other members of Mr Trump’s cabinet & inner circle?

I don’t think you’ll see any of them pushing a cart through the aisles of your local Target store.

No. The folks who will be hit hardest by this Tariff (sales Tax) will be the people who can least afford to pay. The folks who need to shop at discount stores in order to scrape by. The ones who will never be able to afford to buy a home.

I don’t want to talk anybody down (particularly because I fall into the demographic most likely to have voted for Mr Trump) but, statistically speaking, people with lower levels of education are more likely to be poor (and hence shop at discount stores) while people with higher levels of education are more likely to be wealthy. You can easily find a video on-line of Mr Trump smiling and saying “I love the poorly educated” while at the same time asking for their votes.

So why does he want to increase the taxes on the people that he “loves” and who voted for him, while in his last term he gave tax breaks to non-Costco-shopping billionaires?

The guy went to business school. He knows how this works. So why does he lie about who ultimately pays the bill for his highest tariffs?

I just thought I’d ask.

What do you think is the answer?

Dubay's 15th "Proof"

It's been a long time since I've thought of Yoga Instructor & Flat Earth Promoter Eric Dubay. I see that he has a new flat earth movie out repeating many of the claims from his first, "200 Proofs..." movie. Of course most of those "proofs" aren't proofs, many are just unsubstantiated assertions, some are his failures-to-understand being presented as fact, and some are outright fabrications. Since he spends around 40 seconds per "proof" there's little to no time spent citing references or examining any claim.

I'd like to take a few minutes to look at one of the failures-to-understand that is claimed as a proof of earth's flatness. Dubay claims as his 15th "proof":

"15) If the Earth were truly a sphere 25,000 miles in circumference, airplane pilots would have to constantly correct their altitudes downwards so as to not fly straight off into “outer space;” a pilot wishing to simply maintain their altitude at a typical cruising speed of 500 mph, would have to constantly dip their nose downwards and descend 2,777 feet (over half a mile) every minute! Otherwise, without compensation, in one hour’s time the pilot would find themselves 31.5 miles higher than expected."

There are a lot of things wrong with this claim.

A) It relies on the earth being flat: The use of the word 'downward' is problematic. It has different definitions in a flat earth and a globe earth. On a globe earth, downward is a local phenomenon - towards the centre of the globe. A plane need not descend toward the centre of the globe to maintain its altitude. That's moronic.

On a flat earth, downward is an absolute - towards 'down.' For Dubay's argument to be understandable you must assume that the globe exists in a place that has an 'absolute down.' And that place with an absolute down is a flat earth. The only possible circumstance for Dubay's claim is if his airplane takes off from the "top" of a gravityless globe that is resting in the gravity field of a flat earth. One may surmise, that since pilots don't constantly correct downwards, our globe is not sitting on a flat earth.

B) It relies on bad math: Dubay uses the formula from his "Proof #9" as the foundation for the claims made in "Proof #15." As part of "Proof #9" Dubay introduces the idea that curvature of a globe earth must be 8 inches downward multiplied by the square of the mileage from the observer. This is the formula he uses to derive his claims of excessive altitude in "Proof 15". If you passed Grade 10 math you might remember that this is the formula for a parabola. If you didn't remember, you can be forgiven. You probably haven't needed to think about it since your last math test. But presenting it as part of this mathematical based 'proof' is not forgivable.

C) Dubay misunderstands/misrepresents what his bad math says: Dubay derives an average slope between 2 points on a parabolic curve, then presents an interpolation of that slope as if it has some 'real world' meaning. It doesn't.

  Since no serious person has claimed that the earth is a parabola, and this slope only has meaning in relation to the 'absolute down' of a flat earth, it is a meaningless claim. It could easily be reworded as, "because the earth is flat the earth can't be a globe." And that's not a "Proof." (See the addendum for the math, if you like.)

D) It's disingenuous: Dubay uses a hodgepodge of 'flat earth physics' and imagery as the criteria to test globe earth claims. This, once again, starts with the assumption that the earth is flat and concludes with, "a globe earth doesn't make sense when the earth is flat."

If a person was honestly seeking truth the starting point might be something like: "These 2 models are incompatible. They can't both be true. They could both be false. Is there a way to test these models that doesn't depend on either model as a starting point?" The answer to the question is, "yes." But Mr. Dubay seems reluctant to explore that path choosing, instead, to always start from the assumption that the earth is flat.

Addendum

Extrapolate: extend (a graph, curve, or range of values) by inferring unknown values from trends in the known data.

Interpolate: In the mathematical field of numerical analysis, interpolation is a type of estimation, a method of constructing new data points within the range of a discrete set of known data points.

Dubay used his claim of being 31.5 miles too high 500 miles after departure then divided that by 60 to get an average value: "2,777 feet (over half a mile) every minute!" But because the slope of a parabola changes constantly the slope of a line between any 2 points can't be interpolated or extrapolated to give any useful information.

To make the math a little easier I'll speed up Mr. Dubay's plane from 500MPH to 600MPH. Now it's easy to see that 600mi/60min = 10mi/min and 10mi/60sec = 1/6mi/sec. Let's plug that back into the parabolic formula

 y = 8in * (1/6)^2 = 8/36in = 2/9in 

And there you have another solution to the parabolic world curve problem (if such a world existed); 2/9th inch every 1/6th mile or 2/9in every second at 600MPH. Now we plug those numbers back into the original story of a plane flying 500Mi.

 500Mi = 3000 * 1/6Mi  which corresponds to 3000 * 2/9th" =~ 56 feet 

Or slightly less than 1 foot every minute! Imperceptible to a person on a plane without the use of instruments.

(At 500MPH the numbers change again to about 1/6" drop per second and therefore 47 ft over 500 miles, about 9" every minute! Nothing like Mr. Dubay's half mile claim.)

I can hear you saying, "But that was an extrapolation! Dubay interpolated. Surely that will give the same value as Dubay got." So let's try interpolating. If we use Dubay's formula for a flight of 1,000Mi. at 500MPH and 2 hours we get a "y" value (Dubay would say 'drop.') of 126Mi. which, interpolated to 1 hour, would be 63Mi. Or over 1 mile (5,555 Ft) every minute. That's twice what Dubay claimed it would be in his "proof." Such a route wouldn't take the plane around the curve of the world, it would take it through Dubay's parabolic planet!

So what does all of this mean? In the physical world it means nothing. It's just a demonstration that the bad math Dubay uses to bamboozle people produces crap results. The average value of a parabolic function is a meaningless number. A meaningless number used to support a baseless claim.

The Folly of Buying GameStop

I want to start by saying two things:

1) There are no true investors who own GameStop shares now and;

2) Bitcoin isn’t an investment. It is a speculative instrument at best and most closely resembles a method of gambling.

Let’s start with point #1: An investor buys a stock with a reasonable expectation of making money. A stock represents an ownership stake in a company and, as a part owner of the company, the investor would be entitled to a proportionate share of any company profits. GameStop has issued 69,746,960 shares. If you own one share you are entitled to 1/ 69,746,960th of the profits; that was $1.52 in 2018.

GameStop stopped paying dividends in March 2019. No profits to investors in about 2 years. At the time of the last dividend payment the stock was selling in the $12 - $14 range.

In the last fiscal year GameStop profits were in fact losses; -$4.76/share. The company lost close to $332,000,000 or about half of what the company was worth at the beginning of the year. Another year like last and the company will be a net value of Zero. Worthless. And Zero return to investors.

Any reasonable investor, looking at the possible loss of his investment in a failing business, would have taken the money and run before the end of January 2021 when speculators/gamblers were paying far beyond what an investor would reasonably expect. By the end of January all of the true investors would have sold their shares to people who are speculators and gamblers.

There is nothing wrong with speculating or gambling as long as you know that you’re doing it.

And that brings me to point #2, Bitcoin: I hear people referring to Bitcoin as an investment. It absolutely is not. Bitcoin is not based on any underlying asset or (potentially) profit-making endeavor. Of itself, it will never turn a profit, Bitcoin produces no saleable goods or services it will never pay a dividend. Placing money in Bitcoin pays no interest. The only thing you can reasonably do with Bitcoin is hope to sell it for more than you paid. In this last case it seems to be very like the present treatment of GameStop shares.

Here’s the difference. There was never anything behind Bitcoin, it was never intended to be an investment. Bitcoin is traded on unregulated exchanges and openly manipulated in ways that would be illegal on the regulated stock exchanges. Meanwhile, GameStop shares are attached to a business and traded in regulated financial markets.

Bitcoin will be traded as long as people want to trade it and as long as any unregulated cripto exchange exists, but not GameStop.

There is a slim chance that GameStop may stop the bleeding and survive in some smaller form or that some other corporation might see some value in the carcass of GameStop and suggest a buyout, offering a few cents or a dollar per share. This would require a vote from the shareholders so is unlikely to go through. If GameStop runs out of money and goes into receivership the shares will cease to trade on the financial markets and anyone left holding them will lose all they paid.

After gambling hundreds or thousands of dollars the owners won’t even have any Hockey Cards or Beanie Babies to look at.

Cycle Touring Tool Kit

 

Cycle Tour Tool Kit

Some folks asked me the other day what tools I carry on a long trip. Here's the speel:

Truly, you can do most roadside repairs with just a bicycle tool, tire irons, a $7.00 patch kit and a pump. But on a longer trip you won’t have access to those rarely used tools that you might have in your (or your buddy’s) garage. And you may be putting on more miles than usual, too. So you’ll probably need a few more tools than you’d carry on a Saturday near home.

I carry more tools than I really need for emergency use. The chain breaker and spare link I’ve only needed twice in 15 years of group rides, and never for my own bike. The loose Allen wrench is only because it’s easier to use than the bike tool on 1 type of adjustment; the same goes for the spoke wrench. The spare chain pieces I’ve never needed for fixing a chain, but I have used them plus hose clamps to make emergency fastenings. So everything here I’ve used at least once while on the road.

Photo

A) Chain links X 2

B) Chain breaker

C) Wire hook – to hold the chain when replacing a link

D) 10” chain

E) Electrical vinyl tape

F) Tie Wraps/zip ties

G) Velcro strap

H) Combo tire iron/ open end wrenches

J) Loose Allen key - 5mm

K) Bicycle tool (set of 2)

        Part 1

    #1 Philips screw driver

    Allen wrenches 6, 5, 4, 3, 2.5mm

    Tire iron

        Part 2

    Bottle opener

    3/16” Flat screw driver

    Serrated blade

    Box end wrenches 8, 9, 10, 12, 14mm

    Spoke wrenches (3 sizes) (3, 3.4, 3.45mm)

    Allen wrenches 2, 8mm

    Tire iron

L) Self adhesive tube patches

M) Spoke tool (3 sizes)

N) Hand pump c/w Schrader & Presta adapters

O) Pedal wrench

P) Multi tool

    Needle nose pliers

    Gripper jaws

    Wire cutter

    Knife

    Can opener

     Flat screw drivers 1/8”, 1/4”, 5/16”

    #0 Philips screw driver

     Awl/Drill

    File

Q) Pocket knife (half serrated)

R) Piece of inner tube

S) 6” crescent wrench

T) Multi-bit screw driver (5 bit)

#1, 2 Philips. 1/4” Flat. #2, 3 Robertson (There’s really no use for Robertson on a bike.)

U) Valve tool

V) Valve adapter

W) Presta ring

X) Small bungee

Y) Hose clamps

Z) Assorted bolts, washers, nuts.

        Also

Bit of sandpaper or emery board

Spare tube

Rag

Chain lube/Wax

Old tooth brush