Lazy Man and Money

Let’s Discuss $800 Candles

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I’ve been extremely busy lately, hence the tumbleweeds on this blog.

One of the great things about blogging about money is that there are always new stories to write about. Money isn’t going away and people are always going to do interesting stuff to get it.

For example, 5 years ago I wrote about Kanye West’s $120 Plain White T-Shirt. I guess he needed that money to buy his private jet.

I’d rather buy very cheap T-shirts. They do the job and I can move on with life.

So what about an $800 candle? I didn’t know this was a thing, but the luxury candle market is booming.

No matter how hard I try, I can never wrap my head around “the lifestyle space—specifically by the beauty, wellness, and fashion industries.”

When I read news about $800 candles, it motivates me to teach my kids how to make candles. They won’t be “luxury” by any measure, but it will still perform its primary function… light and heat. And of course there’s the pedagogical benefit. (That’s my attempt to sound smart by using big words. Did it work?)

I’m going to make this short and sweet. I don’t understand this crazy pricing. Yankee Candle has a deal for around $13 a jar this holiday season. That’s the premium brand. There are knock-offs at a fraction of the price. If it was like DoTerra’s Essential Oils, I’d get it. However, it’s not wrapped in a pyramid.

What do you think? Let me know in the comments.

We Own Two Cars!

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I hope you had a good Columbus Day. Yes, I’m a day behind (as usual). I’m still trying to figure out what kind of holiday it is. The kids and wife didn’t have school or work, but the stock market was open. At this point, if I don’t haven’t figured it out, I probably never will.

That four word title has been nearly 6 years in the making. Let me recap:

The Subaru Forester

In late December 2012, we bought a Subaru Forester. The move back to New England with a newborn made my old Ford Mustang not practical.

I wanted to buy a gently used car to take advantage of someone else paying the depreciation. However, there were very few gently used Foresters in New England. I think people tend to drive them for years. The dealership had a couple of used Foresters, but the discount was only about 8% off a new one, not a big savings. In addition, there were some dealer incentives with the new cars that weren’t available with the used ones. I felt like they wanted to keep those used ones around to bring in new customers into the showroom.

One of the dealer incentives was 0% financing over 60 months. Why yes, we will take your interest-free loan, Mr. Subaru!

Many personal finance gurus will say we made the wrong financial decision buying a new car. The numbers worked out better with the new car. It was a reasonable new car purchase at $25,000. Finally, we put a premium on safety with the newborn. We had an incident with the old car and it reaffirmed to us that life is very different when you are new parents with a newborn.

The Acura MDX

Eight months after the Forester, we found ourselves buying an a luxury SUV, the Acura MDX. We were expanding the family with another son. It made sense to move sell the Jeep from 2004 with 125,000 miles and get one that is bigger than the Forester for longer family trips. Two kids, big dog, and strollers take up a lot of space. When we travel with luggage to the airport, we get very close to using every square inch of space.

From a personal finance perspective, a new luxury SUV breaks ALL the rules. It’s a cardinal sin. There’s no way to justify spending a lot of money on a depreciating asset, right?

Wrong.

As I wrote in that article, my wife’s previous two cars had been the “junk college car” and the “need a car right now” car (2004 Jeep). At the time of the car purchase, she’d been a pharmacist for a dozen years. That’s another way of stating what I wrote at the time, “she’s earned a luxury car and then some.” She commutes 90 minutes a day a couple of times a week to her office – a tremendous reason for a luxury car. Finally, did you notice from the above that she was pregnant twice in a very short time?

We went through a dozen luxury cars (as mentioned) and eliminated a lot of the 70K+ luxury SUVs. The Acura MDX checked off all the luxury boxes. It also was only $42,000. I realize that “only” in this case may mean different things to different people. Personal finance is relative. However, when you are looking at spending $70K, $42K is a bargain.

We financed the Acura through USAA which had a partnership with TrueCar. It was 60-months at 1.35%. If someone wants to loan me thousands of dollars at a nearly 1% interest rate, I’m not going to say no. Unfortunately, it’s not as good as Subaru’s deal.

Fast forward to today. The 5 years (60 months) have passed and we have the titles. We moved from “buying” two cars to “owning” two cars.

The plan is to drive both cars for many more years. I’m hopeful that we’ll get 8 more. At that point this 50-year Lazy Man will have yet another mid-life crisis and buy the Mitsubishi 3000GT that caught his eye in college. (I try to plan my next mid-life crisis because that means I’ll live forever, right?)

Like everything in life, plans change. We’ll re-evaluate all the time like we always do.

How Much are You Spending on Your Home?

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[Editor’s Note: If you were a member of my VIP Email List on Wednesday, you know that I’m giving away $100. If you missed it, perhaps you should join the list as I’ll be doing more giveaways.]

A couple of weeks ago, I wrote, Your Life or Your Home. In it, I explained that people generally work 45 years and housing expenses. It’s estimated that people spend about 1/3 of their money on their homes, which translates to 15 years of work. (It’s not exactly that simple as income typically changes throughout one’s lifetime.)

I got an email from Zillow that reminded me about this. Their press release stated research that Mortgage Payments Require Largest Share of Income Since 2009.

If you think about it, it seems obvious. How could it be any other way with the housing recovery and rising interest rates on mortgages? I suppose income could be growing faster to outpace the recovery, but income (at a nationwide average level) doesn’t usually fluctuate that much.

This is the rare case where the headline didn’t seem to tell the most interesting story. It was almost anti-clickbait.

Zillow looked at the 35 largest housing markets and gave a regional breakdown of “Share of Income Spent On Mortgage” for each. They gave averages for the past and projections for the future, but I was mostly interested in the 2018 number. Maybe I’m just in a “live for now” mood today.

I think it’s worth looking at the national numbers to get some perspective on the average. From 1985-2000 mortgages were around 21% of income. In 2018 it’s only 17%, and that’s despite growing a lot over the last 9 years to reach a high. There are other housing expenses than just mortgages, but it still seems like this is below the 1/3 (33%) estimation that I’ve seen as an average.

I immediately decided to calculate our own number. I bet most people don’t know it off the top of their head. Our income fluctuates quite a bit due blogging, dog sitting, and whatever else we’ve got going on. I picked out a reasonable average and our mortgage came out to 21.6% of income. I’m changing my name from Lazy Man to Mr. National Average (at least in this case.) That may not be a fair number as we have a 15-year mortgage and most people probably have 30-year mortgages. It would likely have been closer to 15% if we didn’t love the idea of not paying the bank for 15 years.

The regional details in the report showed how much this number can fluctuate. If you scroll towards the bottom of the chart, you’ll see two of the extremes, Indianapolis at ~12% and San Jose at over 51% of income. Of course the job situation in Silicon Valley is very different than Indianapolis. It’s no surprise that housing prices were at opposite sides of the spectrum in these two cities. However, this number is a percentage of income, which means it should be normalized for all the high tech salaries in San Jose.

If you had guess without looking at the chart, you’d think that New York City would be like San Jose. We know the housing in New York City is outrageous, right? We’ll it’s 27.7% of income, which is just 6% more than average of the US. That’s not insignificant, but I found it notable that NYC is a lot closer to Indianapolis (15% difference) than San Jose (24% difference.)

When I wrote that aforementioned VIP Email List earlier this week, I asked people for suggestions on how to improve the website. Many of them asked for more practical advice. It’s hard to know what’s practical for a diverse group of people. However, what if we used this chart to figure out if relocation could pay off for us?

I know there are a lot of factors that go into choosing where you live. However, with so much of your income tied up by this decision, it’s probably worth taking a second look and seeing what you are spending on your home and what you could be spending. It’ll make a much bigger difference than that subscription to Netflix.

Goodbye McDonalds… Hello Taco Bell, Subway, and Dunkin Donuts!

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It feels like I get stuck in a pattern sometimes. I recently wrote Goodbye Google Finance, Hello Google Spreadsheets. The family passed around the plague for a couple of weeks. So I’m going to return back to that formula, because it works.

I have a history of writing about McDonalds. For years and years, they’ve been a great value. I recognize that it is unfortunate that the healthiest food (salads and grilled chicken sandwiches) are the most expensive. Nonetheless, if you were on the go, a single dollar (plus tax) could sustain you for quite a few hours. Here’s a brief history of what I’ve written about McDonalds over the years:

  • Back in 2006, you could use a Bank of America promotion to get 10-cent double cheeseburgers for 3 months!
  • In 2007, I defended McDonalds Double Cheeseburger as be more efficient than making your burgers. Another popular blogger went through a detailed exercise to say it wasn’t so.
  • In 2008, I wrote about McDonalds Eat-in Tax. This got very confusing for everyone, and I still don’t know what the truth is about whether McDonalds charged a separate tax for eating in the restaurant. I just know that on consecutive days, I was charged different prices and the receipt on the second day when I ate in had the difference which appeared to be clearly labeled.
  • In 2009, I wrote about McDonalds switching from the double cheeseburger to the McDouble on the Value Menu. They took away a slice of cheese and called it a McDouble. So if you weren’t paying attention and ordered a double cheeseburger, you paid a 29% premium for that extra slice of cheese. I called it sneaky, but credited McDonalds with good disclosure.
  • There seems to be a gap when not much changed. You could get a McDouble for a number of years for just a buck. Alas inflation, like Father Time always wins*. In 2013, I wrote that people should avoid McDonalds $2 egg. Essentially that was the price difference between Egg McMuffin with Sausage and the Sausage McMuffin. A wise blogger, Tight Fisted Miser chimed in that you could order a side of eggs separately. They were about $1.20 and you seemed to get twice as much egg.
  • In 2015, I wrote how to lose money at McDonalds. It compared making the silly choice of buying a QuarterPounder instead of a McDouble on the Value Menu.

As you can tell, I’ve been a fan of stretching my dollar when I go McDonalds. It may sound like I was a little obsessed, but it’s 6 articles in 11 years, so that’s not too bad, right?

Today, I think you can throw out most of those articles. The breakfast ones might be somewhat relevant, especially the eggs if they still honor that cheap price.

McDonalds went away from the Dollar Menu for awhile. They had various Pick 2 for $2 and Pick 2 for $5. I couldn’t make use of the Pick 2 for $5, but the Pick 2 for $2 of McDoubles could at least be shared with my wife.

Finally, it seems McDonalds has settled on their $1, $2, $3 Dollar Menu.

It seems like great marketing, but not a lot value for consumers.

For $1, you used to get a double cheeseburger. Now you can get a single cheeseburger. As we all know, the single cheeseburger is essentially bread, right? It’s 300 calories, and 8 less grams of protein from the McDouble, which makes it not very much of a meal. There’s a chicken sandwich, but there’s 40 empty calories from mayo. That brings it back down 310 calories.

For $2, you get a little more, but at that point you aren’t getting through for just a dollar. It doesn’t seem like much, especially if it’s only a sometime trip, but if becomes more of a regular thing, you are paying twice as much as you used to.

For the same reasons as the $2, menu, I don’t see a reason to dissect the $3 menu. There’s a triple cheeseburger, but shouldn’t that be less than $3 because I could get 3 of the $1 cheeseburgers and use the left over bread as Frisbees?

I understand that I’m rare to dissect McDonalds Dollar Menu like this. It’s good business for McDonalds and this will help improve their margins (as long as it doesn’t drive customers away). I don’t follow McDonalds stock, but maybe this is a good time to buy.

It would be easy to give McDonalds a pass and say, “Hey that’s just how inflation works.” However, it’s worth looking at a few other chains.

Hello Taco Bell!

Taco Bell’s $1 Menu is so large it feels like all its food is on it. The Beefy Frito Burrito is one such example. It’s not healthy. I don’t think anything with the word “Frito” in it pretends to be. However, it does have 440 calories. That qualifies as a meal for me at a price of a a single dollar.

While on the topic, I hear that the new nacho fries are good. I haven’t tried them, but they sound good. Again, this isn’t an article about healthy eating.

Hello Subway!

Subway seems to be having a hard time with its sales. Things got bad enough that they decided to bring back the $5 footlong while their franchises complain. I apologize to Subway franchise owners. I understand that you might not make big profits if everyone comes in and orders a $5 footlong without a drink or other “upsell” items.

That said, this is good news for me, the consumer! If I want something reasonably healthy (the health police are everywhere on such claims), I can pay $5 and often get 900 calories. That’s enough to two meals (I’m assuming a 450 calorie meal size, which is consistent with the calories in a McDonalds double cheeseburger, which was our baseline.)

So yes, it’s a little more money, but it feels more reasonable as a healthy upgrade.

Hello Dunkin Donuts!

I never thought I’d get Dunkin Donuts into a value article. I’m not a coffee drinker (the horrors!) and when we go there in the morning (my wife’s request), the bill always seems to come out to $12 because the breakfast sandwiches are so much. (The Wake-up Wrap is just an insult to food everywhere.)

However, there was a deal that caught my eye. It may just be my local franchise as I couldn’t find a lot of information online, but after 11AM they lower the price of the sandwiches to $2. That’s a decent price for a sausage, egg, and cheese on a bagel. I can see why Dunkin Donuts would want to do this. Their clients are focused on the morning coffee rush. I would expect business to be very poor after that.

It’s very tempting to do dinners at Dunkin Donuts especially since the only protein my kids will eat are their breakfast sandwiches for some quirky reason. They are small kids, so I can pick up dinner for the whole family for way under $10.

Random Fast Food Stuff

This isn’t part of the point of the article above, but I found these both interesting and worth reading:

* The exception to this is obviously Tom Brady. And yes, this qualifies for my obligatory Tom Brady mention in every article until at least the Super Bowl.

Environmentally Friendly Money Saving: Make Your Home Energy Efficient

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Because I’ve contracted the flu that’s been passing around the family, we’re going to do a guest post. Hopefully, when PainBot is done eating my soul, I’ll have a new article. In the meantime, Kostas Chiotis is here to save the day. He is an economist and he shares the latest tips on how to save money and manage finances at FinanceBlogZone.com. Connect with him on Facebook and Twitter.

Every time we think about home improvements, the first question that comes to mind is, “ Will this save me money”? Your goal might be getting out of debt, or saving money or just keeping your budget in place, but did you know that you can save money while being kind to the planet? I will talk about how we can make our homes energy efficient without hurting the environment.

In recent years, many people have become sensitized of the need to conserve the environment and save money at the same time. The perception that eco-friendly homes must be newbuilds is misleading because you can start making small changes to your home with the few bucks that you have. Such improvements can be done with any budget, without breaking the bank. If you want to make a start, here are suggestions to reduce your energy bills and help the planet.

Top 10 Eco-friendly Home Improvements to Save you Money

1. Seal Leaks and Drafts

Sealing air leaks during winter and summer will help you save some dollars off your energy bill. Check your house for possible drafty doors and windows, that bring in cold or hot air, forcing your air HVAC system to work extra hard to maintain desirable temperatures. Overworking the air conditioners or furnace means that more energy will be used up, putting a strain on your wallet. Test for leakage in draft-prone areas such as window frames, doors, baseboards, pipes and chimney and use weather stripping or caulk to seal them.

2. Roof restoration

Investing in roof restoration will save you money in the long run, although the price for the restore services could be high. During the summer, roof restoration will prevent heated air from entering your house, thereby reducing strain on the cooling system. It also helps in keeping the house warm during winter. You can lower the cost of roof restoration by using green roofing products and hiring a local contractor.

3. Use wood-framed windows

solar-panels

Replacing your UPVC and metal windows with wood-framed windows will save you money and protect the environment. Wood-framed windows last a lifetime, are more insulating and less polluting than the popular UPVC windows which emit toxic compounds. Also, wood-framed windows are easy to repair.

4. Install a Programmable Thermostat

If you use an old air conditioner at home, you are likely to see inflated utility bills during the summer, since these systems have to do extra work to maintain the home temperatures. Ideally, you have to turn off the AC when there is no one at home or lower the temperatures when people are asleep. You can quickly forget such actions.

With the programmable thermostat, you can regulate your home’s temperatures depending on the settings you choose for specific times of the day. Plus, it is inexpensive to install, and it will shave off some bucks from your bill.

5. Buy Energy Efficient Electric Appliances

When purchasing new appliances or upgrading your home equipment, check if they have the Energy Star label. The label means that the devices have been certified by Energy Star and meet a high level of energy efficiency. They offer significant energy savings without compromising on the performance. Also, some electricity providers offer incentives for replacing old appliances with the energy star rated models.

6. Install Solar Energy

Solar energy power is a renewable source of energy that is provided naturally from the sun. Although solar panels are expensive to purchase and install, they can result in huge savings in the long term, making your home green.

To take advantage of solar power, make sure you locate it in a place where it can collect as much energy as possible. Hire a local contractor to advise you on the best location for the solar panels. Also, you can benefit from tax breaks, grants, and incentives from the government, as they continue to encourage the public to utilize the natural power around us and bring down electricity consumption. If you are in debt, getting advice on how to manage debt and taking advantage of such government grants and incentives is good for your wallet.

7. Use Sustainable Building Materials

Did you know that you can use eco-friendly materials when building every part of your home? Using materials such as recycled plastics, recycled glass, reclaimed lumber, bamboo, and cork will help reduce the impact of the construction on the surrounding. They can be used as building materials, roofing materials, floor insulation and sealing air leaks in your home.

In addition, insist that your contractor recycles old wood floors, doors, and windows instead of sending them to the landfill.

8. Eco-friendly Lighting

Replacing your old bulbs with compact fluorescents lamps (CFLs) and light emitting diodes (LEDs) will lower your electricity bills over time. CFLs and LEDs have a longer lifespan than the traditional bulbs, even though they are pricey. They are an ideal option for eco-friendly home improvements.

9. Add heavy curtains over windows and doors

Although they may seem cumbersome, heavy curtains or drapes will help conserve energy by trapping warm air inside during cold weather. Also, the curtains will keep the sun’s heat out during the summer, thus reducing an overwork on the air conditioner. This helps to reduce energy bills in the long term.

10. Water Saving Improvements

Moving from high flow to low flow faucets and showerheads will contribute to water conservation and cutting down your water bills. Also, you can help the environment by taking a shower rather than a bath that requires a lot of water.

Collect rain water by installing a water harvesting system and storing it in a tank. Use the rainwater for household activities such as watering your landscaping and flushing the toilet. Also, using tankless water heaters instead of hot water tanks will help save space and energy, since it heats only water that is passed through the electric coil. The extra space can be used for holding the rain barrels that store rainwater.

No matter how limited your budget is, you can make your home energy efficient and save the planet. The best part is, you do not have to make complete upgrades to be eco-friendly. Instead, start making small improvements, and your home will be green. In the course of the year, plan to make small improvements such as replacing your old bulbs with LEDs or CFLs, upgrading your electrical appliances to Energy Star rated models and sealing the air leaks around your window frames and doors.

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