Lazy Man and Money

Skip the Product, Buy the Investment

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I’m going to start this article with a couple of housekeeping notes. I hope all the father’s had a great day yesterday.

I know I did. My wife and kids took me to Gillette Stadium (home of the New England Patriots) where I could walk on the field and tour the locker room. It was great to walk on the field and think, “This is where the magic happens!” The biggest draw was the locker room tour. On Tom Brady’s locker there was a motivational “poem.” It said (paraphrased):

1. There are people who “+”
2. There are people who “-”
3. There are people who “X”
4. There are people who “÷”

Surround yourself with 1s and 3s. Ignore the 2s and 4s.

Unfortunately, cameras weren’t allowed in the locker room, so I couldn’t get a picture to give you the exact wording. I tried to find the source and closest I came was this Tweet by Jalen Rose:

The connection makes sense as they both went to University of Michigan with Rose leaving the school as Brady was entering it.

(If anyone can sleuth out the whole thing and post it in the comments, I’d love them forever.)

I have one more quick housekeeping note before we get on to the article. I hope to be writing a lot more in the coming weeks. Camp has started which translates to 2.5 hours more of kids’ care in the evening than I get during the school year. That’s a lot of potential productivity.

Buy the Investment, Not the Product

I was reading Joe from Retire By 40s article about thinking before you buy your first home. The main premise was that the house that you live in is a liability. The bigger the house the more the mortgage is going to be. That’s money that you aren’t going to be able invest. You also need to fill it with stuff. Utilities are also going to be higher for bigger houses in general.

That’s why I always say, “Don’t Buy Too Much House.”

However, Joe notes that real estate can be a great investment. After all that’s how Arnold Schwarzenegger made his first million dollars.

I came away thinking, “Buy just enough house to live in and invest the rest of money into an asset that someone else paying you for.”

iPod Nano, A Love Story

Allow me to illustrate the “Skip the Product, Buy the Investment” with the story of an iPod Nano. To borrow from Dickens, it is the best of examples and the worst of examples.

The iPod Nano came out in September of 2005. For $250, you carry a whopping 4GB of music in an extremely compact space. It was amazing!

You could have bought a share of Apple stock for $6.60 on September 2. While the stock went up a bit on the news, that month you could have bought around 38 shares of Apple stock instead of the iPod Nano (I’m rounding up a tiny fraction of a share, but let’s just attribute it to sales tax.) Today, 38 shares of Apple stock is worth $5548.

You could have made over $5000 if you were able to “think different.”

This is an extreme example, so let me balance it with a counter example. I bought the iPod Nano when it came out. A woman I was dating really wanted an iPod, but she grew up in a family without money. She’d been out of school for only a few years, but had a mortgage (with PMI) and some student loans. It didn’t really make sense for her to buy a Nano.

For Christmas, I surprised her with the iPod Nano and she was speechless. I luckily scored a better investment than buying Apple stock.

Today that woman is my wife. We’ll celebrate our 10 year anniversary next month.

IPodMeister: Trade your CDs for an iPod or iPhone… legally?

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CNet’s Cheapskate Blog is one of my favorite sites for technology deals and very much a daily read. They recently had this article on iPodMeister. They provide you with the labels for free shipping. You simply pack up your old CDs and get a new iPod, iPhone, or hard drive. They’ll even send you a DVD with all your music back for an additional cost (more CDs).

It sounds interesting, but I have a few questions and so did commenters:

  • Legality of Keeping Your old – The biggest thought in my mind is that once you sell your CD back to iPodMeister, it’s probably illegal for you to keep a copy for yourself or use their digitizing service (I use “probably” because I’m not a lawyer.) If you it were legal to keep copies for yourselves, we’d just recycle CDs on Craigslist all day. I’d pay $2 to get the used the CD and sell it back to someone else for what I paid after I copied it. The Right of First Sale was getting a lot of scrutiny in some states as far back two and a half years ago.
  • Value for Your CD Collection – One commenter pointed out that you are getting less than a dollar a CD (or less) in value when a pawn shop would give you $1-2. I’m not up on the pawn shop market for CDs so I can’t verify that.
  • Is iPodMeister affiliated with Apple? – Lastly (and least importantly), does iPodMeister have an affiliation with Apple? I ask only because they give out Apple products and use a derivative of the trademarked Apple iPod name in their name. Again, I’m no lawyer, just curious about these kinds of things.

The legality of the digitizing question is the big one for me. It just doesn’t seem right. Yet it seems that the Consumerist will interview them and not ask the question. Interestingly though the Consumerist asks for feedback from it’s readers on the service (largely implying that they don’t know if it’s a great deal either).

I have a pile of CDs back from my college days (Those BMG and Columbia House “deals” really got to me.) Though I’ve digitized all my CDs, I save space by putting them in binders and keeping the artwork and jewel case in the attic – of my old home in Boston. Because the service requires the artwork and cases, I couldn’t use it even if I thought it was legal. Oh well, I think I’d rather have proof of the official rights to the music anyway.

Personal Finance Links (Red Sox, iPods, or MLB Umpires)

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This was a pretty bad week for on several fronts. My treasured Red Sox played horribly in just about all areas of the game, earning themselves some extra vacation time (and I thought I was Lazy). The Major League Baseball umpires missed numerous calls including three tags in the first Red Sox game (the Red Sox can’t even blame the loss on this as it didn’t matter too much). If were a Twins fan now, I’d still be upset at Joe Mauer’s clear double that was called foul, which had a huge impact in the game.

Lastly, I bought my wife a new refurbished 16GB iPod Touch as a surprise for her recent promotion to Commander. (I couldn’t be more proud.) For our trip to Aruba, I loaded it up with her music and pitchers. She didn’t end up using it too much since we always had other things to do. On the way home she showed the person next to her on the plane some of the pictures and turned it off as we took off to return home. It hasn’t turned back on since. I’ve hard reset it and reinstalled iTunes numerous times as the support pages suggest. Finally, I took it to the Apple Store. The person there said they never saw anything like it and booked me to see a “genius.” We’ll see how that goes in a couple of hours…

Finally there’s Pottery Barn… well they deserve their own article. For now here are some links.

Money Writers:

More Financial Posts:

Get Your Money Questions Answered At Moolanomy

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Every has questions about money every now and again. I hoped people might make use of the contact button under my logo, but it seems most would rather have a root canal. That’s fine. You still aren’t going to get away without getting your questions answered. Moolanomy Answers is here to make sure of that.

You might know Moolanomy from his very popular personal finance blog… or one of several hundred concurrent projects he runs. Those projects range from Personal Finance Buzz, a place to vote up your favorite personal finance posts, to Blogthority, a resource dedicated to all things blogging. To be brutally honest, his lack of Laziness bugged the poop right out of me. He is very much Bizarro Lazy Man. I got over this bitterness though. We are on the same team – trying to help people better manage their money to live well and be happy.

Getting back to Moolanomy Answers, you can either ask questions, or if you think you are Mr. Smarty Pants, give a shot at answering questions. By answering questions you’ll earn points. For a limited time the points could win you an iPod Shuffle. Help people out and get a chance at free music? That sounds like a win to me.

A Horse of a Different Color is Still a Horse

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I, like many Generation Xers I imagine, was first introduced to a phrase “horse of a different” through Wizard of Oz. You know, when Dorothy says, “What kind of a horse is that? I’ve never seen a horse like that before!” And the driver responds, “No, and never will again, I fancy. There’s only one of him, and he’s it. He’s the Horse of a Different Color you’ve heard tell about.” The origin of “horse of a different color” seems to predate that usage by quite a bit. I think most people understand usage of the phrase to mean that it’s another topic entirely from what the previous topic was.

Why all this talk of horses and colors? Well, I was reading a USA Today article that claims changing an item’s tint drives consumers to bring the green. I think the article can be summed in the first three short paragraphs:

It doesn’t really matter that Margie Leigh’s granddaughter, Laura, got the pink iPod she so desperately wanted last Christmas “” at age 4. For the now-5-year-old, pink is out this holiday, and purple is in.

Grandma in Kentucky will be buying her granddaughter in Virginia a purple iPod this Christmas for one reason “” its color.

“I know it sounds crazy,” says Leigh, who is retired. “But that’s what she wants.”

Margie Leigh, you are right about one thing here – it sounds crazy. Let’s take a step back and look at what’s going here. I am going to make some questionable generalizations because I don’t have all the information available to me.

First off, let’s address the child. I’m not one for picking on children and I shouldn’t throw stones because I wanted Converse Chuck Taylor All-Star High Tops in a few different colors as well. Still, if I was lucky enough to get a walkman for my birthday, I didn’t think about trading it in for one in a different color. Next year, I just wanted more music for it. So is the argument that iPods are the fashion accessories that Chuck Taylor’s or Swatches were then? I would buy that if they didn’t cost $150. If it’s normal for a 4 or 5 year old to think that $200 electronics count as fashion in today’s world, my wife and I might decide never to have children.

Now, let’s address the grandmother. It does make a point that she’s retired. Perhaps she’s retired with all kinds of money – it’s possible. If she’s the average retired grandmother though, the last few months have been extremely stressful on her finances. I know, I’m having those kinds of talks with my mom who is nearing retirement. Many people have watched a third of their money disappear. Let’s ignore this and assume that she’s got lots of money and has budgeted well for this gift.

What example is the grandmother setting? She’s teaching Laura that she can get what she wants, even if it’s something that makes no sense. An iPod of a different color is still an iPod. This isn’t like the horse of a different color saying at all. It has all the same features regardless of color (which, if you think about it, is true of horses). Furthermore, it’s utter bovine-excrement that pink isn’t in fashion. If it were Apple wouldn’t be selling Pink iPods. And last I checked Barbie hasn’t traded in all her pink dresses for a purple one (not that I keep up to date on Barbie).

If I’m Leigh here’s what I would do. I would grab a 2-3 Silicone iPod Cases in various colors for $25-35. Then I’d get her a couple of iTunes Gift Cards. At this point, she would have spent around $80 and came away with what I would consider more value than just an iPod in a different color. She can either chose to use up the rest of her budget on other things, or what I think I might do, put some money aside in an account to save for Laura’s first car in 10-12 years. Grandma Leigh wouldn’t have to tell her that’s what she is doing, but let me tell you, Laura is going to think she’s the best grandma ever when she gets ready to buy that car and has a head start of $800-$1000.

I wonder if Laura is going to be selling off her old pink iPod or if it’s going to be kept as a secondary one. If this is the case, and it’s in good condition, she might get decent enough value for it to make this whole rant somewhat unnecessary.