Kosmo, Author at Lazy Man and Money

What It’s Like to Stay at an AirBnb

October 13, 2017 by Kosmo 3 Comments

The following is an article by frequent contributor Kosmo. I’ve been interested in how AirBnb works to stay at as it seems like people are using them to save some good money. I’ve written in the past about potentially being an AirBnb host. If you have stayed at one, I’d love read your thoughts in the comments

We decided to visit Door County, Wisconsin on our vacation this summer. For those who are unfamiliar with the geography of Wisconsin, Door County is the “pinky finger” that sticks up on the eastern edge of the state. It has a smattering of small towns whose population can swell to nearly ten times its size in the summer to accommodate tourists who come to visit the state parks, lighthouses, wineries, and many other attractions.

My wife and I have two kids, age 9 and 7. When we started looking at hotels, we had trouble finding ones that were close to Lake Michigan, could comfortably accommodate four people, and were reasonable priced. That’s when my wife got the idea to poke around on AirBnb.

To be honest, my wife did all the legwork for this. She searched for houses for rent in Door County and quickly narrowed it down to a handful of places. For the same price as a small hotel room, we found a two bedroom house to rent that purported to be a block from the beach and a block from downtown. I wasn’t born yesterday, so I was a bit skeptical, but it did appear to be close.

We asked the property owner a few questions about the property, and he was very quick to respond.

So we committed and made our reservation. One drawback is that you pay for the entire stay up front. So if you make a reservation six months before your stay, you’ll get charged immediately. It appears that AirBnb has been testing different payment options, but we only had the choice of the standard option.

AirBnb holds the money until 24 hours after check-in before transferring the funds to the property owner. AirBnb itself is the only entity that gets your credit card number in this process.

Shortly before our stay, we received an email from AirBnb with information the property owner had supplied. Most importantly, information on how to get into the house! There was a lockbox on the door, and the email gave us the combination to the lock. There was also information about the WiFi network, directions to the house, and general information about the area.

We left our home in Iowa on a Friday and stopped overnight in Madison, Wisconsin. We could have made the triple in a single day, but we didn’t want to press our luck with the two kids. Also, my wife wanted to visit Lambeau Field on the way to Door County. (Packers. Ugh.)

We arrived at our destination mid-afternoon on Saturday. The house was indeed very close to Lake Michigan – a few hundred feet from the very nice beach. There was a nice view of the lake from the living room window. There was a pizza place a few hundred feet in one direction, and one of the main streets (lined with restaurants) was a couple hundred feet in another direction. The location was awesome.

The house had two bedrooms. The master bedroom had one bed and the other bedroom had a bunk bed and another bed. In theory, the house could have slept six. There was also a good-sized living room and a combination kitchen/dining room. Definitely on the smaller side for a house (more of a cottage), but much larger than a suite at a hotel. The living room also had a bunch of board games, include a very nice glass chess set.

There was also a basement. My kids were fascinated by the basement (I had no idea why), but its most important features were a washer and dryer. They were on the small side, but they didn’t require coins, and the property owner even provided the detergent. Other than that, the basement area had storage for the consumable items (paper towels, etc) and it was clear that the property owner was working on a few projects in other area of the basement. The basement was pretty tidy, relative to most basements.

There was also a one car garage. It was a tight squeeze for our Ford Edge, but it did fit inside. It was nice to have a garage when the hail was falling.

Toward evening, we realized that the AC didn’t seem to be working, and we sent a text to the owner. Although we didn’t see his response until morning, he actually responded quickly with a suggestion to check the breaker box. I’m embarrassed to say that I hadn’t thought of that, assuming that there was a problem with the recently installed AC system. Minutes later, the AC was blasting cool air. The property owner knocked off $50 for the inconvenience, even thought it was mostly due to me being an idiot.

Overall, the AirBnb experience felt much more like home than a hotel. The house had all of the basics that we needed. Although we didn’t cook much while we were there, the kitchen had all of the pots and pans and utensils you’d need to cook nearly anything. There were plenty of plates and glasses, as well as paper plates, paper towels, tissues, toilet paper, etc. We were pleasantly surprised that they actually had name brand toilet paper instead of the thin, scratchy industrial toilet paper you see in most hotels.

The property owner did a great job of communicating. On a few of the days, there was the threat of severe weather, and he texted us to give us a heads-up, as well as letting us know where the weather radio could be found. As native Midwesterners, we knew of the dangers posed by severe thunderstorms, but it was nice of him to let us know.

We’ll definitely try AirBnb in the future. The process was very smooth and professional. We got a lot of space for the money, as well as a great location. Any of the hotels in the area would have been much further from the beach.

The Great Baseball Card Regifting

September 5, 2017 by Kosmo 2 Comments

The follow is an article by staff writer, Kosmo

I began collecting baseball cards when I was a kid. One of the first cards I remember having was a 1985 Gary Gaetti card that a friend gave to me. I have no idea what happened to this card – I assume I traded it at some point, since I’m not a Twins fan. Another early card I had was a 1985 Ryne Sandberg card. Sandberg is my all-time favorite player. My cousin gave me this card. It’s well worn, but it’s still prominently displayed in one of my albums. I could replace it with a better copy for a few bucks, but I’ve kept this one to remember that it was a gift.

This is a Ryne Sandberg 1983 Fleer, not a 1985 Sandberg

I fondly remember collecting the 1993 Topps set. There were “black gold” special cards that year. I kept pulling cards that could be redeemed for sets of 11, 22, or 44 of the special cards. I didn’t really care for them, and traded them (at book value) to my friend Justin for unopened packs of cards. Many times those packs contained winners, which I would again trade to Justin. I ended up putting together two complete sets of the 1993 Topps set for a total investment of about $5. My godson (and nephew) was born in 1993, so I gave one set to his parents to give to him when he was older.

The inevitable market crash came – due in large part to the companies printing cards like they were the Weimar-era German mint. The market became flooded to the point where supply exceeded demand, and the cards of this era became just pieces of cardboard with pictures of players. Editor’s Note: The Economist has a great article on the baseball card bubble.

I still collect today, but in a different way than I did 25 years ago. I don’t try to put together complete sets. I pick up a few cards for the current players I like, and I buy occasional cards from decades past. I don’t buy too often, but when I do, it’s far more likely like I’ll buy a card from pre-1950 than from the current day.

Over the years, I’ve had a couple of people give me their entire collections. At some point, many people outgrow the hobby and simply need to storage space. Luckily, I’ve always been able to find the space.

In the cache of cards I got from a friend, I discovered that I had a complete Topps set from 1976. In the condition it’s in, it’s probably worth a couple hundred bucks.

Instead of selling the set, I decided to go a different route – I decided to give it away. I decided to give away a team set to a fan of each team. There were 24 baseball teams at the time (currently, there are 30). I switched allegiances from the Cubs to the Rockies in 1993, so I actually don’t have a team represented in the set. I’m going to keep the Cardinals set for my seven year old, and gave the Cubs set to the 10 year old across the street. The other 22 went (and are still going) to people I’ve gotten to know over the internet. Some of these are people I’ve interacted with for a decade or more and some I’ve only become acquainted with more recently. I’m going to cripple the Brewers set by taking the Hank Aaron card – because I don’t have any Aaron cards, and I want one – but all the other sets will be complete.

My out of pocket cost for this venture is about $3.60 per team. The boxes cost about 85 cents (including the shipping costs) in bulk, and it costs $2.76 for postage.

The Red Sox cards went to a personal finance blogger who walks dogs to make a few bucks and is a big fan of the New England Patriots. Editor’s Note: That guy sounds like a jerk ;-). What’s especially cool is that I was born in 1976..
The Expos set went to a prominent sports writer who is perhaps the best known Expos fan in the world. Those of you who are baseball fans may know who I’m talking about.
The Reds set – absolutely loaded with stars from the Big Red Machine of the 1970s – went to a pastor in Indiana.
A college baseball coach in New Jersey got the Oakland A’s set. His dad happened to be in town to help with a household move, and they spent some time reminiscing about guys like Vida Blue and Rollie Fingers.
A guy who advises congress on matters related to pensions was the recipient of the Phillies set. Although I never asked for anything in return, he sent me a hat for a local minor league team.

There are plenty more stories about where the cards went, but the key point is that they went somewhere where they were appreciated, instead of cluttering up my storage room. Sure, I could have cashed in and made a few bucks, but I was able to send gifts to a couple dozen people instead, at a fairly low out of pocket cost.

You might ask why I’m going this? Not only am I giving up the ability to sell the set, but I’m spending money to give it away. Well, I am getting something out of it. I’m getting some entertainment value out of the process. I enjoy seeing people receive their small gift and gush about how cool the cards of their favorite players are.

And you, reader, are also a part of this story. The Great Baseball Card Giveaway eventually turned into this article. I get paid by Lazy Man, who in turn gets paid whenever you use his links to buy things. So, in a way, you are helping to fund my giveaway. A couple dozen complete strangers thank you.

What Kosmo doesn’t know is that more than 5 years ago, when I lived in California, I found a small collection of around 100 cards for sale at a flea market. It was mostly hockey and football players who weren’t as heavily printed and collected as baseball cards. I probably would have skipped it, but I saw one particular card (pictured in this article) that I thought a friend would like. Like many things in my life, I put it aside and forgot about it. Maybe, he’ll get a surprise back in the mail.

Is it Time to Refinance your Mortgage?

August 22, 2017 by Kosmo 8 Comments

We are in the process of refinancing our mortgage – again. We bought our first home in 2005. Due mostly to the expense and uncertainly of kids, we took out a thirty year mortgage. In 2014, we moved to a different, larger house with a different, larger mortgage. My mom’s estate was recently settled, and we decided to pay down the principal refi the 30 year mortgage (which has 27 years remaining) into a fifteen year mortgage at roughly the same cost (about $15/month more).

[Editor’s Note: I wanted to emphasize that again… he reduced 27 years of paying a mortgage to 15 years!]

While the optimal choice for us would have been to start with a 15 year mortgage, this really wasn’t feasible at the time. We wanted to be able to fund retirement plans, 529 plans for the kids, pay for day care (a big cost, especially before the kids reached school age), have a sufficient emergency fund, and have the flexibility to deal with other costs that popped up along the way.

One thing we did do over the years is refinance. In the nine years that we owned the first home, we refinanced it twice. In each case, the break-even point was between eighteen and twenty-two months. After each refi, we continued to pay the amount of the original mortgage, but with additional money going to principal (shortening the length of the loan). A key part of understanding the break-even is understanding what portion of closing costs are actual incremental costs and which are not.

Pre-paying the escrow is money that you pay to ensure that there is a enough money in your escrow account to pay for homeowner’s insurance and property taxes. Why is this not an additional cost? Because you’re spending money up front to fund the escrow on the new mortgage, but you’ll be getting a check for the amount that is in the escrow account for your old mortgage (this may take a month or two, depending on your state and your lender). Regardless of whether you kept the old mortgage or refinanced, you would have had to had sufficient funds in the escrow account to cover the taxes and insurance when they are due. Once the escrow on the old mortgage is refunded, it’s a wash.

You’ll also have some pre-paid interest. This accounts for the interest in the partial month between your closing date and the first of the month. If you close on the 30th, this cost will be minimal. If you close on the second, it would be almost an entire month’s worth of interest. But this is interest you would have paid regardless if you refinanced or not. It’s important to note, though, that if you close on the 2nd, you’re skipping an entire month’s worth of principal payments, pushing your payoff date nearly a month past what it would be if you had closed on the 30th.

What remains are the actual incremental costs to refinance. In my specific case, these come to around $1500. To illustrate the break-even calculation, let’s assuming you are saving 3/4 of a percent and have a mortgage balance of $150,000.

The monthly interest savings would be (180,00/12)*0.0075 = $112.50
Here’s the tricky part. While mortgage interest is tax deductible, the closing costs generally aren’t. Let’s assume your combined federal and state income tax rate is 25% (note: you’ll want to use your marginal rates, rather than your effective rates, since you’re calculating an incremental effect). This means the actual cash savings from the reduced interest is ($112.50 * 0.75) = $84.375.
$1500 / 84.375 = 17.77 months

While this is a reasonably accurate quick calculation, it will be slightly off, because you’re saving slightly less in interest every month. You’ll save $112.50 ($84.375 after adjusting for impact of taxes), in month one, but you’ll save a dollar or two less in each additional months. So to be safe, just round-up and add another month to the break-even length, bringing the break-even to 19 months.

Some other notes about mortgages and refinancing:

Some people have a rule to not refi within X years of taking out the mortgage or doing a previous refi. This is not a good determiner of whether the time is right to do a refi. If you close on a mortgage today and rates drop a full point tomorrow, you absolutely should refi. You can’t change the fact that you had bad luck in the past – but you can change your future rate. The key thing to look at is how many months it will take to break even on the refi costs.
When buying a house, some people will approach the lender and ask what amount they can be pre-approved for. My advice is instead to settle on a price point and get pre-approved for that amount, plus a small cushion. If you ask the lender to set the amount, odds are good that it will be higher than the price point you would have chosen, and you may end up purchasing a more expensive house than you really need.
A lender will often allow – or even encourage – you to roll the closing costs into the mortgage amount. If you have the ability to pay these amounts up front, it can save you quite a bit of money in interest. We’ve never rolled the closing costs into a mortgage or refi.
Shop around. You may be able to find slight differences in rates between lenders.
Watch for coupons. We routinely get coupons in the mail for $100 off closing costs. When we knew the a refi would be imminent, I made sure to save one of the coupons. In comparison to the mortgage, $100 is a very small amount – but it’s still $100.

Are The Great Courses Really Great?

August 1, 2017 by Kosmo 6 Comments

I’ve always been a person who tried to continue learning about new things. Over the years, those, this ended up being a piecemeal effort. When I read books, it was mostly novels. When I read non-fiction, it was often news articles.

Recently, I’ve been taking advantage of a lot of Audible deals. (Editor’s Note: Kosmo admits to his e-content hoarding addiction, but it’s a good thing.) I’d get a couple months free, when a new deal to get a few months and half price, and then later, rinse, repeat. During this time, I realized that I could use audio books to easily consume some non fiction books. I set a goal of 50-75 hours of academic listening per year.

I could have used Ted Talks or even podcasts to achieve this, but I decided that I wanted a fairly deep dive into topics. While poking around on Audible, I found the Great Courses series. For the cost of one Audible credit ($14.95), I can get 12-25 hour lectures on a variety of topics.

Naturally, I started with the Big Bang, in the Big History course. It’s a 24+ hour course that covers time from the Big Bang until modern day. Obviously, this is at a very high level and is looking more at overarching trends than at the details.

With history out of the way, I turned to Genetics and spent 12 hours listening to discussions of things like short tandem repeats. I’ve always had an interest in genetics and read articles on the subject, but I was surprised at how many concepts I was unaware of.

Currently, I’m in the middle of Economic History of the World Since 1400. I’m just about at the point where the printing press has been invented. They voyage to the present day should be interesting.

I’m not the only one who is learning from these lectures. I have two kids, age nine and seven. My nine year old, in particular, tends to listen to the audio books I’m playing in the car. In the past several months, we’ve had discussions about the expansion of the universe, Gregor Mendel’s research on pea plants, Darwin’s theory of evolution, and the attempt of Europeans to find sea routes to Asia. One of these days, I’m going to work with her on some Punnett squares.

Where will our next book take us? I don’t know. At the end of the day, it doesn’t matter, it’s about the journey, right?

Editor’s Note: This article is very positive about The Great Courses. Neither me nor Kosmo (to the best of my knowledge) have received any compensation from the company. I have a few of the Audible books from The Great Courses myself, but I haven’t listened to them yet.

Keeping Employees Happy: Navigating the NCAA Pool

March 12, 2017 by Kosmo Leave a Comment

It’s that time of the year again – the NCAA tournament is about to begin. If you’re an employer, you may be groaning inwardly – you know that productivity is going to dip a bit in the next couple of weeks. Nationwide, the NCAA tournament causes a loss of nearly $7 trillion in productivity. Well, maybe a bit less than that, but it does have a very noticeable impact.

Instead of fighting March Madness, why not turn it into a company event? You’ll lose some productivity, but you were going to lose some anyway. Consider it to be an investment in employee satisfaction. Employees like it when their bosses show an interest in something they enjoy.

Some tips for a successful event:

Sponsor a bracket contest for employees. Make it free to join (to encourage participation, as well as staying on the right side of the law) with a tangible prize at the end (perhaps a $50 Amazon gift card). Point out some basic facts (9, 10, 11 seeds win with some regularity, 16 seeds literally never win) to help out the folks aren’t fans.
Try to accommodate folks that are out of the office, since many people may be on vacation for spring break. In the past, I have taken bracket entries via fax and phone.

Appoint a “basketball ambassador” or two. They can help develop the rules for the bracket contest and assist non-fans with their picks. Trust me, you’ll have no shortage of volunteers.
Have a lunch cookout on the opening Thursday of the tournament. It might he too chilly to sit outside and eat, but you can probably find one person who will sacrifice for the good of the team and do the grilling. Grill some brats, burgers, and even some veggie options if desired (I live in Iowa, where 99% of people are carnivores). Grab some desserts from the local bakery.
Take the time to engage the employees in conversation about their picks (this works best if you have at least a working knowledge of the tournament). Congratulate them on picks that turn out well, and commiserate when things don’t work out so well.

As I mentioned at the beginning, you’ll definitely incur a cost in doing this. The lost productivity, the contest prizes, and the cost of the food. However, you’ll gain employee loyalty. You’d be surprised how much employee happiness you can get by buying an employee a couple of brats and letting them have a long lunch to watch a game.

Editor’s Thoughts

I have never been a fan of college sports. I think it’s because I grew up in Boston and we weren’t really very competitive. Maybe UConn basketball and some of the hockey stuff, but it was really boring stuff to me. I think it might have also been that I’d rather watch a higher level of play considering no real local rooting interest.

About ten years ago, my work had something similar to this with horse racing’s triple crown. I had about the same level of interest as I did college basketball (zero!), but with everyone involved, I started to research the horses a bit. It became a lot of fun. It certainly bought a lot of loyalty for me with that manager.

Arguably, I lost some productivity that I wouldn’t have otherwise lost being that I wasn’t interested in horse racing in the first place. It was minimal productivity though, since the races were on the weekends and mostly during that Friday afternoon time where productivity was low to begin with.

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