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“It’s a Combination of Things”

November 3, 2020 by Lazy Man 2 Comments

Happy Election Day 2020! I know you can get your fill of political commentary from people today. I’ll give you a break and mostly steer clear of politics.

(Of course, if you want my view on the election and your money, I suggest you read vote Biden for the economy.)

I was thinking about not writing an article today. I know that even I wrote my best article ever, it’s not going to get much attention. Just when I had convinced myself not to write an article, life intervened. This article practically wrote itself.

It’s a Combination of Things

I was looking forward to a productive Monday to start the week. My to-do list was a dozen items long, but I was well-positioned to fly through most of them. The first thing on my list after dropping the kids off at school was to get my car inspected.

I’m fishing through my glove compartment for the car registration when my phone rings. It’s the kids’ school. An automated message says the head of the school has sent out an important email. We all know what that means. I find the registration and walk to the mechanic while I’m reading the email.

I breathe a sigh of relief as there are no positive COVID cases at the school Instead there’s an early dismissal because there were three people who were in close contact with a positive COVID case.

I pick up the kids at school and get them home. My phone rings. It’s the mechanic. The car needs new brakes and some other repairs. It’s going to be $1100.

It wasn’t even noon and it was shaping up like a terrible week. I didn’t give my to-do list another thought.

I did take a minute to reflect on what this truly means. As long as the kids are healthy*, all of this is only slightly inconvenient. For many families in a different financial situation, it would be much, much worse. For many families in a different working dynamic, it would be much, much worse. The (relative) freedom of time and money was the right “Combination of Things” to combat this stressful day.

Those freedoms came from a combination of things:

  1. Our household income is far above average. My wife does well as a pharmacist. I piece together 3 part-time jobs and some contract work while managing much of the household errands.
  2. We live frugally. We drive our cars into the ground. Aldi groceries are cheap. I’m literally wearing a 24-year old shirt while I write this article.
  3. We’ve been very lucky. This shows up in our various ways, but one example is that we’ve had very few financial disasters.

Make more, spend less, be a little lucky… it’s a combination of things.

A few hours later, my mother emailed me asking why anyone thought Cam Newton would be a good quarterback for the Patriots this year. My response was predictable, “It’s a combination of things…”

* The kids were only in school for 2 hours this morning after a 3-day weekend. As there are no known positive cases yet, we are optimistic that health won’t be a concern.

Filed Under: Financial Freedom Tagged With: cars, covid

How Do Like The New Uber gPod?

August 23, 2016 by Lazy Man 3 Comments

I’m doing something a little different with this article. If you like it, please leave a comment and/or share this article with a friend.

It’s 2030 and my little man, Giles*, is now a big man. He’s a month away from his 18th birthday. He’s studied extremely hard and he’s got a shot at Stanford next year (finger’s crossed).

I’m continually amazed at all the things he’s been able to fit in his head. However, this is about the one thing that isn’t in there.

Giles doesn’t know how to drive a car. Neither do any of his friends.

Since the government passed the new Manual Driver Requirements in 2028, none of them have even taken a driver’s test. Why would they?

I couldn’t be happier about how things have developed in the last 15 years. When I started this blog nearly 25 years ago in 2006, I had planned to spend thousands on transportation in retirement. Who would have thought that transportation has become a small income stream for me?

Did I lose You? Let me take a step back.

In late 2015, I realized that several technologies were converging to change the world.

My solar panels hadn’t celebrated their first birthday, but they already had me thinking: “If only there were reasonably-priced electric SUVs, I could eliminate most of my gas bill. (I’d need something for longer trips.)”

Several months before that, Uber came my town. I’ve only used it a couple of times, but the idea of on-demand transportation is changing the way millions of people travel.

And the year before that, I was on “the 101” in Silicon Valley and next to me was a Google car without a driver.

A funny thing happens when you put autonomous cars, on-demand transportation, and “free”** solar power together. The cost of car transportation becomes very small.


Uber's future  gPod

Currently, the average American family spends 19% of their money on transportation. (I’ll make the assumption that the number is typical, or more, for car owners and those who commute via public transit save money.) However, the average car is in use only 4% of the time according to Morgan Stanley.

So, roughly, 1/5 of the money goes to something that is used 1/25th of the time. That’s terribly inefficient.

In a world of autonomous, on-demand cars, people pay for what they use. I choose to save money by riding at off-peak hours to run errands.

What about the cost of human drivers? In 2016, Uber had to pay hundreds of thousands of drivers. Autonomous cars is a huge, huge cost savings for them.

I don’t mind one bit, because autonomous cars are great for riders like me as well. We can use our commuting time productively. The average commute to work appears to be about 24.5 minutes. We’ll estimate that to be 50 minutes a day (round-trip). It appears that the average hourly wage is $20.43, meaning that the 50 minutes saves people around $17 a day on just their work commute. (This makes the dangerous and possibly false assumption that people would be as productive while in the car. If they aren’t being productive, I humbly suggest that they have a higher quality of life.)

In the spirit of the late, great, Steve Jobs, there’s One More Thing.

The autonomous cars drive much more efficiently. They merge perfectly because computer sensors direct everything. The same sensors help ensure that there are extremely few accidents. Commuting times are reduced which is allows people to have more time to do the things they want to do.

What about solar? How do I make money from Uber’s gPods?

A few years ago, the last of the gas-powered auto companies announced they’d be switching to electric, just like everyone else. At the time of the announcement, I couldn’t help but think of the last companies to make typewriters and VCRs.

Our family has always tried to be a little ahead of the curve. In 2015, We were the first house in the neighborhood to get solar power. So when Alphabet’s Uber subsidiary announced their latest innovation a couple of years ago, we were quick to sign up.

We make a little money each day renting out a parking space in our driveway (and electricity) to Uber. Uber realized early on that by distributing cars throughout a neighborhood, people would always have fast access to a car. Location, location, location. It was much more efficient than having them in a central parking area. By tapping into the solar power that’s already in most people’s homes, Uber eliminated the need to “refuel” cars.

I imagine that Uber swaps out cars for maintenance, but it’s hard for me to be sure. The cars look mostly the same. The come in any color you want as long as it is black. All I know is that we have size 1, 2, or 3 in our driveway at any given time.

Back in 2016, I was estimating that we’d pay more than $800 a month for our two cars in retirement. That’s around $10,000 a year. This system is much, much cheaper. In fact, our car expenses are essentially zero when you factor in Uber’s payment to us for the parking space.

We finished paying off our 15 year mortgage 3 years ago in 2027. With our electricity and transportation costs zero we are left few other expenses. I haven’t figured out how to eliminate the cost of health care, food, taxes, insurance, and other utilities. For most people health care is one of their biggest expenses. We’re very fortunate to have my wife’s military coverage. Though it is much more expensive than in was in 2016, it’s still a great deal compared to the other options out there.

Thank heavens that we’ve been able to reduce and/or eliminate all these expenses. This year Stanford is $150,000 a year. Giles’ younger brother, Xander, is looking into MIT. That’s not any cheaper.

Is it silly to reflect about saving $10,000 a year on transportation when you are spending $300,000 a year between two colleges?

* In traditional Lazy Man fashion, I have substituted real names with a character from Buffy the Vampire Slayer.

** Solar power isn’t free, but the panels are very cheap and efficient in 2030. There’s no incremental cost to power cars like there is with gasoline.

Filed Under: Best Ideas, Random thoughts, Retirement Tagged With: cars, future, Uber

Devil’s Advocate: Buy a New Car, Not a Used One

October 11, 2013 by Lazy Man 9 Comments

[Today I continue a short-series of devil’s advocate posts. The series is short, because I’m running out of ideas for them, so if you have some ideas you’d like to share, please contact me.]

It seems like everyone knows that a new car loses a lot of value as soon as it is driven off the lot. I’ve seen estimates in the 20-33% range. It’s natural to want to avoid this. Why not be that person that buys the car after the depreciation, scoring a big deal?

Better yet, I’ve seen estimates that a car loses 50% of its value in the first 3 years. So it makes sense to buy a car after that and drive it for another 7+ years. I’ll take 7 years for half the price over, right? In fact, I’ve written about this car buying strategy before.

That was exactly what I was planning to do when I bought a new Subaru Forester at the end of last year. Sometimes there’s a wide difference between having a theory and pulling it off in practice.

It seems my first miscalculation was thinking that the 50% loss of value applied to car dealerships. It seems like the car retained closer to 66% or 70% at the dealership. It makes sense because dealerships have to make money for their overhead. Also they’ve presumably put these cars, typically coming off of leases, through a process to get them “certified used.” That adds to the price too.

So when I went to cash in that 50% depreciation, it was closer to 30%. Simple math: if you plan on driving a car for 10 years and you’ve only scored 30% depreciation for 3 years… you really aren’t saving anything. In fact, you are giving up the best three of the car.

What’s worse is that you are buying a car that’s three years behind the times. If there’s improved fuel efficiency in the newest version of the car, you sacrifice that in going used. I also found that there aren’t dealer incentives, and that generally leaves less room to negotiate. For example, the 0% financing that they were offering on the new car didn’t apply to the used ones. It was like the dealers were purposely pushing us to buy the new car… almost as if they liked having a few used cars in to bring in people, so that they could upsell them a new one.

But car dealers aren’t that smart, are they?

What do you think? Did you score a good deal from a dealer on a used car? Let me know in the comments.

Filed Under: Devil's Advocate Tagged With: cars

Help Me Buy a Car (or Two?)

December 26, 2012 by Lazy Man 11 Comments

After trekking across country with a newborn and a dog in two older cars we are thinking its almost time to have them replaced. My wife’s car, a 2004 Jeep Liberty had a little trouble starting on one of the legs. The mechanic “juiced” the battery (technical term?) and we were good for about two weeks until it started to have the same starting problem again. Maybe a new battery is all it needs, but it has 120,000 miles on it and with the baby (a whole quarter year old today) we entered the “reliable transportation” part of our lives. Ugh.

Along those lines, it’s time to look at my own transportation, a 2001 Ford Mustang. Nearly 12 years later, it’s a good time to consider a better car for the New England snow. That limits me to just about every other car made in history. The only problem is that it has relatively few miles on it, 90,000, and drives quite reliably (if you don’t consider the two breakdowns for a new battery and fuel pump last month).

It turns out that December is one of the best times to buy a car. In fact, five of the bests days of the year are closing out the year.

Today, we test drive cars. We just don’t really know where to begin.

I’ve done a lot of research online, and to be frank, my dog makes better progress chasing his tail. We know we want an SUV that’s good in snow. My wife also wants more of a luxury model, because she passed that up in the past… and well we can afford it. We’ve got a little of the Clark Howard family thing going on where I am happy with the best value car because it is a depreciating investment and his wife isn’t quite as frugal (hey few can be). She’s been looking at a used Audi Q5 or a BMW X3. She’s looking for the bells and whistles, but honestly, the first thing she looks at is whether it can connect to her cell phone and play her music over it. Since almost all cars do that today, there may be hope to swing her to a more practical model.

After doing so research, I think our price point is around $35,000. With the luxury models that would be about a 2010 with around 20-25K miles on it. I hopped on Consumer Reports and saw that their extremely highly-rated Lexus RX450h fits the bill as well. The Lexus RX450h is a hybrid and it gets a very good 29 miles to the gallon, which I estimate will save us roughly $5,000 in gas vs. the Audi Q5 or BMW X3. My wife was quite receptive, fewer stops for gas is a good thing. I was confident we were on the same page, a good compromise between luxury and frugality… until I saw a Toyota Highlander Hybrid. It doesn’t have the same luxury name (though its the same company), but it does have many of the same options with the great gas mileage and it also one of the top SUVs according to Consumer Reports. So we’ve now got too great options, right?

That’s where the research kind of fell apart.

The hybrid version of the Toyota Highlander costs about $6,000 more that the tradition non-hybrid version. So while we would get fewer stops at the gas station, it might not save us any money over the long haul. Going with a hybrid of either car might not save us money… and that’s a stiff right hook to my frugality ego. It’s made me think that it’s worth opening up the search again… and why not test-drive a lot and see what’s out there?

Also as I was looking into the Lexus RX450h, I noticed that TrueCar.com has quite a few people paying around $40,000 for a 2012. I had been seeing the 2010s for $39,900 that I figured I could talk into the $35,000 range. Now I’m wondering if we’re just better off going with the 2012s that I expect them to want to clear out. I think I’ll have to play that one by ear when we get there. I noticed that the online prices for the 2013 RX450h are around $56,000 and the TrueCar MSRP is around $46,805, quite a big difference… I can’t imagine that they come with $10,000 of options.

As for what kind of car I might get, I haven’t a clue. That Toyota Highlander might be a good fit, but it looks like prices can approach the Lexus’. That frugality side of me would probably be interested in test driving a 2010 Kia Sportage or whatever SUV Hyundai has (as you can tell, I’ve put a lot of thought into this) as I could probably get it for half of the luxury SUV that my wife is looking at. I’ve got a solo 401K that has tons of room to maximize and my eye on an investment property that I think could bring in a few hundred dollars a month, which just might be enough to make my car free.

Since neither of us really have any strong brand affinity, have any suggestions for us? I’m not too interested in particular reliability stories, but I’ve found they are all over the map. You can always find people who had trouble with any kind of car and people who will swear it is awesome. Without a big sample size, the information is kind of pointless and I think it only muddles our decision-making process.

Final Thought: If we do come home with a Lexus, I’ll have to take a shower from all the egg on my face. For more than a few years, I’ve been writing about how much I hate Lexus’ marketing in December: One Less Car Company to Consider and Surprise Honey, I Just Added $60,000 to Our Debt. If we do it, I’ll probably have to post a picture of it with the bow, even though it is after Christmas.

Filed Under: Spending Tagged With: cars, highlander, lexus, rx450h, toyota

Can I Pay Less for Something of Similar Value?

August 4, 2008 by Lazy Man 4 Comments

Pay less and win the game of personal finances.

pay-less.jpgTodd at Harvesting Dollars contacted me today to tell me about a new meme he’s starting. With the upcoming summer Olympics, what financial games or tricks do you use to keep your finances in order? He saves his raises and doesn’t buy into lifestyle inflation. If you are good at that game, you are going to do pretty well. It’s a tough game to play and requires a lot of self-discipline.

My game: Can I Pay Less for That?

I don’t know too many who subscribe to the philosophy of “I like to pay full price whenever I can.” I honestly know a few, but they are pretty rare people in my circle. I’m very firmly looking to maximize my dollar in every area of my life that I can. Here are just some ways that I play the “Can I Pay Less for That” game:

  • Books – Library or Paperback Swap have the same books.
  • Movies – Netflix, RedBox, DVD Play, your cable’s On Demand (if you already have it) are fantastic alternatives to movie theaters if you realize that you are simply time-shifting the viewing of the movie. Plus I’d rather introduce my wife to The Godfather than run out to see Mamma Mia.
  • Transportation – I’ve already written about how I save money on cars. Now you can add save on gas to the list.
  • Clothing, Homes, and even Alcohol? – Want to pay less on other things? I covered a lot of my major savings in my save money round-up.

Despite the picture I chose to include, the key to almost all these tips to pay less is that I give up very little quality (at least in my mind, do what’s right for your mind). The books and movies tell the same stories. The cars get to me the same location. I have decent clothes for when I need them. I can trick my friends into thinking that my wine is expensive, since it’s actually good quality. It really adds up over time.

Photo Credit: St.VincentVolunteers

Filed Under: Frugal Tagged With: alcohol, books, cars, financial games, gas, movie theaters, movies, paperback swap, wine

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