How I Bought My Son $150 Worth of Cardboard Boxes (Or Free Box With Each Toy!)

Admiring the ability to enjoy the simpler things in life

As a child one of favorite sights was that of the suitcase my uncle had brought back with him from his travels. We always knew that bloated suitcase represented many mysterious and exciting gifts (toys of course) that can only be found abroad.

We were always very polite and waited patiently for the suitcase opening ceremony during which each of us received a present, thoroughly packed in wrapping paper bearing funny looking writing and smells of faraway places.

During the past decade I've been fortunate enough to visit my share of the world. However, only recently, with the birth of my Son I've been able to replicate those exiting moments. My wife and I are the only excited ones right now (he's 6 months old) but that didn't stop me.
Suffice to say walking into Manhattan's Toys R Us and FAO Schwartz had me leaving with a brand new 29" Samsonite and several pounds overweight.

Coming home, chest swollen with a new Father's pride I couldn't wait to show my wife my recent acquisitions. I knew she'd be proud of my toy hunting abilities and the new arsenal at the disposal of my Son.

I never noticed but it seems Duplo and Playmobil have really fascinating boxes. Apparently the contents were not nearly as exciting as the box that kept him busy for hours. Each corner, string and picture provided hours of fun either through banging or staring.

The mobile phone I bought, with numbers, letters and music which are activated by many colorful buttons came in a real neat packaging. It even stood upright by itself! The phone was cast away in minutes in favor of colorful yellow cardboard.

Seriously, I'm thinking of starting up my own toy factory for toddlers. Dorian's boxes and packages - all shapes and sizes. Why spend a small fortune on useless toys just for the packaging when you can buy as many as you'd like for the price of a single toy?

I'm currently in the seed level looking for investors. Would you be interested?

I guess I should be content. This phase won't last very long before toys get much more expansive, very fast. In fact, I've been trying to convince my wife we need a Playstation 3 since our son was born. I'm still counting on him to convince her we need it.

There's something beautiful about the total lack of materiality in babies. They are truly able to appreciate the free things in life such as a hug, a package, a tree branch or anything else of this sort. For some reason we lose it along the way.

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• Is Rationalization the Key to Happiness?
• Behavioral Finance in Everyday Life – The Lottery as a Case Study
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Learning the financial language will save you money

Proficiency in "Financialish" equals money and empowerment

According to one urban legend the score in tennis matches was meant to confuse the common bystander, safely maintaining it within the confines of aristocracy. Other explanations include a clock face used in medieval French for scoring the game moving a quarter each time and the different gun calibers of English naval ships (15-pound guns on main deck, 30 pound guns on middle deck and 40 pound lower gun deck).

I've also encountered a similar explanation as to the reason why the French language holds so many "redundant" vowels. According to this myth the French royalty added a bunch of complicated phonetic rules the French writing to make it harder for the commoners to develop reading and writing skills.

It doesn't really matter whether the aforementioned is true or false. The point of these arguments, as we all know, is that knowledge is power.

Proficiency in the financial language is directly translated to money saved or earned

Language is a form of skill and knowledge which empowers the ones proficient in it.
The current crisis, for example, has everything to do with ignorance or lack of proficiency in the more complicated aspects of the financial world. Complicated derivatives and structured products drove the world crazy, making regulatory financial reporting such as financial reports completely useless for investors.

Warren buffet had identified the problem with derivatives as early as 2002: "I view derivatives as time bombs, both for the parties that deal in them and the economic system… derivatives severely curtail the ability of regulators to curb leverage and generally get their arms around the risk profiles of banks, insurers and other financial institutions. Similarly, even experienced investors and analysts encounter major problems in analyzing the financial condition of firms that are heavily involved with derivatives contracts… ".

We don't have to as far as derivatives in order to demonstrate the importance of proficiency in the financial lingo. Many of us are completely puzzled with even the most basic conversation with our banker. The terminology is perplexing and no one really likes to admit one doesn't understand.

Be sure enough banks and financial institutions are quick to exploit on this tendency. A less known fact is that most of the bankers we meet in banks are really marketing personnel "in disguise". It's very simple really. The bank's goal is to sell financial products (loans, credit etc.) in high prices (interest). In order to be smart consumers we must first understand what this guy in a suit is talking about before we are able to be more confident in our negotiations.

It's really not that hard. Much like any other technical terminology the financial language may seem, at first, to be complex and full of subtleties and innuendos. At its higher level this is definitely the case but as with other things in life you can get a good comprehension of about 80% of the subject matter with 20% of the required investment (read this post on the 80%/20% rule). Just be confident enough and you'll be surprised of the results.

When one is proficient in a language one is confident. Suddenly bankers will start mumbling around you and will be turning much more to their manager when suddenly explanations and deviations from the standard pitch are required. This is literally worth money.

Where to start? Or is there a dictionary?

My idea for this post sprang to mind when Oxford university press were kind enough to send me a copy of "The Finish Rich Dictionary" by David Bach, an author of many other personal finance guidebooks.

While I'm less fond of the ever-promising title I did actually find the idea behind the book to be quite helpful. Much like any other language we need a "Finance to English" dictionary which will help in learning Financilsih.

David Bach has cleverly constructed this dictionary 1001 financial words "you need to know" are alphabetically organized and explained. The book is intertwined with helpful personal finance essays which discuss the issues at the very core of our personal finances including: Credit card problems, compound interest, the workings of the Federal Reserve, insurance, buying a home, money mistakes, financial plans, retirement, financial advisors and others.

The book also includes good references to other helpful resources and a interest rate risk calculator to complete the package.

I do feel the added value of this book should be articulated carefully since lack of financial resources is not something the internet is characterized by. This book is helpful as a glossary of words, combined under one roof, which maps the very basics of the financial language. If you don't know where to start this book may very well start you off in the right direction in an easy manner.

The interest offers much more diverse and deep knowledge resources of several kinds I highly recommend to anyone, no matter how proficient in the financial world:

• Wikipedia is without a doubt one of the best knowledge resources available to us, free of charge. Most of the entries are very comprehensive and well articulated. I often turn to Wikipedia first to find out more on a certain subject matter.
• Another helpful online dictionary is Investopedia which is centered around finance and investments.
• Finance blogs are great resources for financial knowledge. Blogs, such as my modest Personal Financier, aim at expanding financial literacy and discussion and are home to many good articles and advice. My link section has many helpful blogs listed. Some of my favorites include The Digerati Life, The Financial Blogger, The Simple Dollar and other more I apologize for not being able to list here.
• MSN money, Yahoo! Finance, NY Times (Your money section) and many other offer invaluable knowledge on personal finance. The problem is usually where to start from.

Whether you prefer a book to the internet or vice versa don't neglect your financial education. It's worth money.

Related posts:

• Behavioral Finance in Everyday Life – The Lottery as a Case Study
• Review: The Gone Fishin' Portfolio by Alex Green
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Shortcuts to Early Retirement – Absurd Frugal Thinking or Common Financial Sense?

Permanent income gone astray

The past week has been exceptionally long. I've managed to work 42.5 hours in just three days. Since I found this particular project very interesting it hardly felt like work was robbing me of my spare time. I often dislike working long hours as it simply seems like the days are glued together, endlessly working through the week.

Something else was different this time around as well. I've been accustomed to a global salary which remains the same no matter how many hours one invests. These are naturally higher salaries but they weaken the link between office hours and salary and often cause frustration, especially when your colleagues always seem to be relatively underworked and overpaid.

Getting paid for overtime is fantastic in that aspect. Even though I'm well into my 14th hour at the office on any given day my "reward" is directly linked to the time invested.

Since I spend considerable time pondering personal finance in general I started thinking about overtime from a financial-philosophical perspective. Thankfully, we've currently got our hands full of work. Each and everyone who wishes to get more done are quickly assigned another project and another. Many of those who wish for more spare time are often assigned more and more as well.

My financial-philosophical line of thinking quickly led me to a hopeful yet somewhat disturbing conclusion. Walk with me through this simple line of thought: Each extra hour of overtime I put in is quickly translated to a higher salary at the end of the month. Now, since we are currently able to save a portion of our income each month an additional hour of overtime would simply increase our savings by that amount directly.

Now comes the hopeful yet disturbing part. Since we all know the power of compounding interest each hour of overtime is quickly translated to 2.5-3 hours of early retirement 20 years from now! (compounded using a modest 4.5% return for 20 years). Assuming approximately 1,800 work hours a year, all I have to do to retry a year early is to work 2 more hours every day for 3 years.

The more I work today, the higher the compounding effect so I might as well go for 4 hours a day, right? That's where the disturbing part kicks in. Mortgaging the present for future's sake is a part of extreme financial frugal thinking.

The basic economic logic behind this line of thought is called permanent income and states an individual wishes to smooth income over the course of one's life. When earning more one will save more to compensate for a potential future in which less income would be available (such as retirement).

But there is more to this line of thought than permanent income. Philosophers often disprove arguments by giving absurd examples which the argument supports. This technique is called Reductio ad absurdum and it is very fun to use.

If we continue with this line of thinking than every vacation we postpone will compound and be worth so much more in the future (far future). Every expense we avoid can be saved and left to compound for eternity. There's more to life than compounding, isn't there?

We financial people tend to see everything in terms of present and future value, interest rates, returns and capital. It seems we forgot to enjoy life as it is. The assumption early retirement will bring us some great joy is dubious at best. If ever, many retirees I've talked to have distinctly pointed out they miss work and meaning. I do believe I will be able to find meaning in retirement as well but I think I'll avoid thinking about overtime as a shortcut for early retirement for now.

Related posts:

• Making Investment Decisions Together Helps Avoid Common Investment Mistakes
• How I Saved $2,000 by Being Creative and What Else Did I Discover
• How Can they Possibly Afford That? Or Is Money in the Eye of the Beholder?
• Outsourcing Our Chores - Do We Overvalue Our Spare Time?
• On the Psychological Effects of Ownership and Overpricing
• Budgeting As a Family Activity

Image by: anguskirk

How I Saved $2,000 by Being Creative and What Else Did I Discover

The before and after pictures of my latest experiment are attached but there was so much more to the process.

The straw that broke this camel's back was a cream "oven painted" M.D.F bed and dresser priced at a whopping $2,400. We've been looking for a new bedroom for quite some time now but haven't really been able to find anything that suited our taste and was reasonably priced.

We've been looking for a relatively specific design and color which apparently are quite hard to find. Upon returning, yet again, to a couple of pricy "designer" furniture stores we finally stumbled on something minimal and acceptable in our eyes. Naturally it was priced like it was the last bedroom on earth.

I usually don’t mind paying a bit extra for quality and design. I have shared my view of frugality (or the extreme version of it) here at TPF (The Personal Financier) more than once and am usually far from being frugal (for good and bad). However, this time I was really upset by the obvious lack of value for money. A good design merits higher prices but proportionality is also very important. $2,400 for an M.D.F bed and dresser was a tad too much.

After a very short negotiation the sales person was willing to lower the price by $300. Needless to say that wasn't enough. On the way back the muse hit me on the head with a hammer. We had some time off this past week. Why not put it to good use with some old fashioned manual labor? There's nothing really wrong with the bed we have. Why not try and suit it to our needs?

If you've been reading TPF for a while now you must have read my post on Doing It Yourself Doesn't Always Pay - A Short Lesson Learned Yet Again. Well, apparently I had forgotten the lesson yet again and had set out on a quest to paint our bed myself.

I boldly marched into a hardware store and spent $70 on paint and supplies. If this works, I thought to myself, I just saved close to $2,000.

And much to my surprise it actually worked. I couldn't believe my eyes; the bed we've been looking for has been under our nose this entire time. It's potential waiting to be revealed. All it took was one coat of primer, a 15 hour wait, two coats of paint and one night spent sleeping on the floor. An adventure if you will.

There's something deeper to this whole experience aside to saving money, which is always great. It appears I've missed manual labor (a bit). There's something about creating, transforming and building that is important to the human soul. Papers and computers don't simply fail to fill that gap.

It's really amazing how our consciousness if molded by what we do. Being able to perform a very simple thing like painting a bed really altered the way I look at things. Maybe I don't need a new dining table after all?

As for the argument on the cost of lost or spent time for this effort see my post on Outsourcing Our Chores - Do We Overvalue Our Spare Time? There's isn't really a price for every spare hour we have. Even if there is I still think $2,000 is a pretty good price for two days work.

Outsourcing Our Chores - Do We Overvalue Our Spare Time?

Outsourcing chores to free up more spare time is a good idea but more often than not laziness is the real reason while the spare time just generates more expenses

I just finished cleaning my house. I try my best to thoroughly clean it at least once a week. There’s something about starting the weekend with a fresh, clean home which I greatly enjoy.
Having started working over 50 hours a week, as of late, I find the weekend to be the only time left for tending my personal affairs. Sometimes I wonder whether I should be “spending” the time cleaning by myself.

Many of my friends pay for housekeeping services which mostly include cleaning and maintenance. Cleaning takes, on average, 3-4 hours for a small apartment (like ours) and it’s needed 3-4 times a week. A quick multiplication amounts to paying hired help for 9-16 hours each month.

Outsourcing Chores is an Industry

It doesn’t end there though. Apparently many of the people I know value their spare time so much they’ve found paying for other such services worthwhile. Chores take up a significant amount of our spare time and it’s truly a delight handing them away.

• Eating out - Many of us have already outsourced food, at least a couple of lunches every week. Buying groceries and cooking takes some time and it much easier eating out. The time saved adds-up quickly, think of the time saved on grocery shopping, cooking, cleaning the dishes, packing a lunch and getting up 10 minutes earlier every morning…
  
  
• Laundry – A relatively new initiative, at least in our neighborhood. Pack up your dirty clothes and send them away. They return fresh, scented and folded. Again, the time saved is very significant.
  
  
• Ironing – A whole other successful initiative is outsourcing ironing. This back-aching and frustrating endeavor which I never get done right. For a decent amount of money you can have your shirts and pants ironed to perfection and delivered to you as well.
  
  
• Shopping for groceries online – I’ve recently wrote a post on the many merits of shopping for groceries online. We obviously pay for them extra.

The Subjective Math

Still, my wife and I are set in our old ways and refuse to “outsource” our chores. We both try our best to limit eating out to twice a week at most (including lunches and dinners). We do our own laundry and ironing. We’ve tried shopping online but the produce wasn’t satisfactory and we clean our apartment on our own.

I can attribute our behavior to the education we got at home according to which no one should clean our mess. There’s something intimate, in my opinion, in chores but that’s not the reason we’re haven’t outsourced them. I believe many of us overvalue our spare time.

Many of us do a simple math trick. We calculate how much our working hours are worth and boldly make the claim our spare time is too precious to waste on chores. A very wrong conclusion, naturally, as the alternative “cost” to the time we spend on our chores is not work or income but spare time and leisure.

Valuating spare time is subjective and difficult but I do have the feeling we often overvalue it. As I’ve already mentioned I’ve recently started working for a different, private corporation. I’ve went from 40 hours a week (which was quite dull but enabled me to invest more time writing here, at The Personal Financier) to 50-60 hours work weeks. The difference is astounding as my spare time dramatically reduced.

Naturally, a scarce resource is worth more and I’ve considered the thought of outsourcing my chores to create more spare time. I must say I’m pretty convinced chores are a good use of my time, as paradoxically as it may sound.

Working 12 hours a day leaves me at least 3-4 hours to myself (Riding my scooter from work to my home takes about 10 minutes – Consider this as a great alternative to create more spare time).

It’s more than enough to get two posts done a week, spend time with my family, catch up on news, exercise and read. The chores themselves take up 3-6 hours every weekend which I usually try to get over with when the weekend starts.

The financial comparison is pretty much straightforward and tilts the balance in the direction of performing our chores ourselves. The monthly expense required to outsource all our chores (a couple) is surely greater than $500, an under estimation I believe (without the cost of eating out).

• Ironing – $2 per business shirt and $3.5 per pants – At least $60-$80 a month and frees up 10 hours a month.
  
  
• Laundry – $0.75 per pound – At least $100-$150 a month and frees up 15 hours a month.
  
  
• Cleaning - $20 an hour – At least $300-$350 a month and frees up 15 hours a month.
  
  
• Eating out – A whole different game – anywhere from $500-$1,000 a month and frees up 25 hours a month.

The average cost of each spare hour is approximately $20 an hour.


End up shopping in your spare time?

There is another element to the comparison which is I believe is rarely considered. What do people do with so much spare time? My answer (and that of the western civilization as a whole): Shopping! Spare time? Let’s go to the mall, go to the movies, drive somewhere or just sit and watch TV. We need new ______ (choose: furniture, clothes, gadgets, games, etc… ). Spare time incurs more costs.

We’re not only paying to get more spare time but we spend more during our spare time. I truly believe our spare time is overvalued.

I also believe very few people really plan out their spare time rather than wasting it away idling somewhere. The main motivator behind outsourcing chores is probably laziness. It is important to note that I believe having a big family, with two kids and more, changes the basic premises. The time required to properly tend to several children is obviously much greater and changes considerations.

Still, I would carefully consider and balance everything before I go outsourcing my chores.

Related Posts:

• How Shopping for Groceries Online can save you Money As well As Time


• Saving Money and Time (while Reducing Pollution): Americans in Big Cities Discover Scooters


• Save Time and Money with These Tips for Organizing Your Personal and Financial Records


• 10 Tips on How to Make the Most of Time Spent In Traffic – How to Make More Time Post #4

Images by: Jana Christy

More than a Third of British Citizens are Only 11 Days Away from Financial Ruin: On The Importance of Good Financial Planning

How long could you last on $1,100?

A recent survey by the Yorkshire Building Society reported by the Daily Mail indicates 36% of British citizens could survive financially for only 11 days should a personal crisis occur such as losing a job or getting too ill to work.

Researchers examined income and expenditure patterns among British citizens and come to alarming conclusions. The survey indicates 36% of British citizens have less than 500 Pounds in savings to use as an emergency (Approx $1,100).

The current economic climate apparently leaves people with little choice regarding their financial conduct. More and more people are living on a “financial tightrope” as the Daily Mail puts it due to rising commodity levels and inflation and the growing impact of the current economic slowdown or recession.

The typical person, according to the survey, has 52 days before running out of financial resources. The average monthly expenditure of the average British citizen amounts to 1,445 pounds which are approx. $3,300.

Source: The Daily Mail

Many of the people surveyed indicated they will sell their home should a crisis occur. Relying on selling your home as a last resort is a very poor option as we’ve witnessed only recently. In a crisis real-estate prices tend to respond rather quickly plummeting down due to lack of demand.

In another recent survey by the ASEC Americans reported they saving habits and progress. According to the survey more than two-thirds (71%) report that they "have sufficient emergency savings to pay for unexpected expenses like car repairs or a doctor visit."


Good financial planning is about smoothing both consumption and living standards over one’s life

Solid financial planning aims to smooth consumption over a life time. As crisis come out of nowhere, annoyingly unannounced, good financial planning should utilize precautions to smooth out such a crisis as losing one’s job or becoming too ill to work. There are several tools which help smooth out such a crisis:

#1 Budget for the unexpected

Unexpected expenditures are a fact of life. Budgeting for these unforeseen expenditures each month is a great way of tackling them. Set aside 2%-3% of your entire budget for unexpected expenditures (aside from savings). This method has two distinct advantages: You won’t be surprised and hard pressed when you suddenly need a new car battery and more importantly should frequency and volume be surprisingly low you’ll be able to save that amount, increasing your emergency fund (step 2).The temptation to consume these funds is great. However, keep in mind that on average these expenses will occur eventually.

#2 Set up an Emergency Fund

Much has been said and written on emergency funds and their importance should be clear by now. It’s a method of expecting the unexpected and a very important pre-emptive measure towards more pressing times. Should nothing surprising happen you’ll have a healthy saving generating solid interest.

I believe an emergency fund should last for at least a couple of months of debt and mortgage payments as well as solid living. Everyone knows that decisions made under a lot of stress are usually bad decisions (I already addressed the faulty logic of selling your home as a last resort).Great articles on emergency funds can be found at The Digerati Life, The Simple Dollar and Get Rich Slowly.

#3 Get Insurance

Accidents, disability, mortality and longevity (surprising but true) all significantly or totally hinder our ability to maintain the level of comfort we have been used to. These events are unexpected in nature but have a certain probability of occurrence. Accidents and disability significantly change our lives, mortality is self-explaining and longevity has the risk of turning us into a liability on our children’s lives.

There is no real way to budget for these occurrences. What do we have left in our arsenal of pre-emptive measures? Insurance.

Insurance is basically transferring our specific risks to the community for a premium. For a certain premium which is carefully calculated according to the risk of a certain occurrence we can assure ourselves and our families a steady and good life even should the unfortunate happen. Disability Insurance, life insurance and retirement planning are all integral parts of planning for unexpected expenses in the “life” level.

All of the precautions and preemptive measures mentioned naturally cost money. That is what good financial planning is all about. Save when you’re able to finance possible hardships. Too many people live on a much higher level than they can actually afford. With an upcoming economic slowdown in Great Britain as well many people will unfortunately learn this lesson the hard way.

I believe its much easier compromising for 15% of your monthly income (that’s how much you need to put aside totally) than to face financial ruin.

Related Posts:

• Budgeting for Unexpected Expenses


• The Problem of Accounting and Budgeting For Cash Expenses


• How to Save Money by Analyzing Your Budget: 4 Basic Tools


• How to Make Saving More Rewarding and Tangible: 5 Practical Tips


• How to Save by Making Credit Card Payments More Real and Tangible: 5 Practical Tips

Images by: Phil Moore

Saving Money and Time (while Reducing Pollution): Americans in Big Cities Discover Scooters

Scooters present a rare opportunity to save both money and time and also go green in the process

Apparently more and more Americans are switching to scooters and light motorcycles these days. In the bigger cities scooter riders can be easily spotted making their way through traffic both cheaper and faster.

I’ve been riding a scooter for half a year now and I must say I feel reborn. I can’t even fathom how I didn’t make the switch to one of these vehicles sooner. I’ve experienced something similar to a religious epiphany and I’m intent on promoting my recent new revelation to the masses.

No more traffic, no more wasted time and no more frustration from spending a couple of hours on a distance that should be covered in 20 minutes. If scooters and motorcycles didn’t have enough going for them already high gasoline prices definitely gave these vehicles another attractiveness boost which quickly translated to sales which hopefully results in more eye opening experiences happy new scooter riders.

According to Reuters, “Piaggio” scooter sales went up 105% in May and 147% in June. “Piago” executive points out American city dwellers are definitely embracing this clean, fuel and time efficient means of transportation. Reuters also reports total scooter sales are up by 65% for the first half of 2008.

The US has traditionally lagged behind Europe and certainly behind Asia when it comes to scooters. The enormous distances and motorcycling tradition in the USA have certainly played a key role in the relative weakness of the scooter market. However, it seems increasing gasoline prices have tipped the equation in favor of the urban scooter which has everything going for it.
Scooter prices are a laugh compared to the average car ranging from $1,800 to $7,000. The old traditional image of the scooter, a faltering and noisy little motorized bicycle couldn’t be further from the truth. Leading scooter manufacturers have created new super-scooters which at times easily overshadow motorcycles.












The distinct advantages of scooters

• Cheap and reliable means of transportation that helps avoid yet another pricey car loan saving thousands of dollars easily.
  
  
• Very efficient mpg ratio at 70-90 mpg quickly translates to $10 for a week of city riding saving hundreds of dollars a month.
  
  
• Environmentally friendly due to very high fuel efficiency contributing some more to the global effort.
  
  
• Parking is a breeze translating to hundreds of dollars saved on a yearly basis.
  
• Traffic and gridlock are foreign to scooters easily cruising between jammed packed roads.

The distinct disadvantages of scooters

• Usually limited to the urban environment easily solved by keeping one car for long distance travels only.
  
  
• Far riskier than driving a car obviously and requires attention, skill and maturity.
  
  
• Insurance premiums are accordingly high but are nowhere near your total saving potential.
  

From my short experience I believe replacing a car with a scooter results in saving literally thousands of dollars with a much higher potential depending on the car you drive and the mpg you get.

If you’re looking to make a serious change in both lifestyle and personal finance considering the switch to a scooter is one of the best opportunities you have available.

Images by: maisonbisson, Presspix Photography, WorldWideMotorcycles

10 Tips on More Efficient and Economic Use of Air-Conditioners

Air condition your home more cheaply and more efficiently

Surging oil and gas prices have generated a high increase in electricity costs as well. With the summer approaching rapidly I decided on taking a look at some options of cooling our homes cheaper and in a more energy efficient manner.

The air-conditioner is the most common way of cooling our homes and as such I’ve decided to focus on it this time. Here are the tips I’ve been able to gather through some research. As always, I’d appreciate any ideas you might have:


#1 Set the air-conditioner to no less than 77F or 25C

Apparently each couple of degrees less will cost about 5% more in increased electricity consumption. Setting the air-conditioner to lower levels will force it to constantly operate trying to reach lower temperature it can’t possibly reach.

#2 Use a thermometer to better adjust the temperature in the room

My air-conditioner comes with a built in thermometer in the remote control. This way I know what would be a realistic temperature to set the air-conditioner to in order for it to operate economically.

#3 Properly shade your home

Shading dramatically lowers the green house effect created from sun radiation heating your glass windows and, in turn, your house. Experts claim proper shading can reduce air-conditioning costs by up to 30%.

#4 In the summer vents should be directed up-wards

Cold air travels down towards the floor as it is heavier than air. Adjusting the vents up-wards would enable the cold air to travel better to the entire room.

#5 Clear any objects directly obstructing the flow of air

The space close to the air-conditioner’s vents should be clear of any objects obstructing the air-flow. A close sofa, for example, might significantly hinder cooling efforts. If a particular object gets really cold it’s in the way.

#6 Keep the air-conditioner’s filters clean

Over time dust accumulates on the filters and can significantly reduce the efficiency of the air-conditioner. Clean filters at least once a month for optimal results.

#7 Make sure the area conditioned is sealed

There’s really no point in air-conditioning the living room with all the doors open.

#8 Make sure the unit is properly installed and is not located next to heating sources

Many different parameters need to be considered when installing an air-conditioner. Among these is its location, its physical installment and its exposure to external heating sources (the sun, an oven, etc.).

#9 Install fluorescent lights

Fluorescent lights are much cheaper in the long run and also give out no heat. If you’ve ever stood under a regular bulb for more than a couple of seconds you know how much heat they generate.

#10 Relatively new Inverter technology

A relatively new air-conditioning technology called “inverter” increases the efficiency of air-conditioning units. Air-conditioners with an “inverter” tag essentially have the ability to continuously regulate their thermal power flow. While regular air-conditioners either turn their compressors on or off inverter air-conditioners can vary the speed of the compressor thus saving power and also keeping the temperature more leveled and comfortable.

Related Posts:

• The Perfect Home is a Financial Nightmare - Don’t Get Caught Up In the Costly Race
• Save Time and Money with These Tips for Organizing Your Personal and Financial Records
• How Shopping for Groceries Online can save you Money As well As Time
  

Data source: US Department of Energy
Image by: humanoide

How Shopping for Groceries Online can save you Money As well As Time

The advantages of shopping for groceries online significantly outweigh the disadvantages – 9 distinct money and time saving consideration

I personally dislike shopping for groceries. I usually have much better uses for my time than combing the length and breadth of a supermarket and standing in endless lines. I think every spare moment in my home is precious and shouldn’t be spent standing in line waiting for someone to decide whether she really wants that candy bar or why she was charged an additional 5c for something that used to cost a bit less.

Unfortunately shopping for groceries is a basic and essential need and activity which can’t be overlooked or neglected.

Although I truly try to avoid grocery shopping I do enjoy fresh fruit and vegetables, meats and cheese. I’ve been aware of the option of shopping for groceries online for some time now but I’ve also been worried about the quality of the products I’ll receive without choosing them myself. Obviously since I’m already shopping for those groceries there’s no point in paying higher prices online for boxed and stored goods and I buy those as well.

Recently I’ve been more and more interested in online grocery shopping as I’ve had enough of these endless journeys. I’ve decided on trying an online order a couple of times with high hopes of ridding myself of this annoyance without having to settle for stale and day old products.

Delivery days for my area are scheduled for Thursday, Friday and Monday and I’m very eager to give it a try. In the mean time, much like I always do, I sat down and tried to look at this experience from an economic and financial viewpoint. Online grocery prices are considered to be relatively higher and can amount to 15%-20% more than shopping at the supermarket itself. I came up with interesting results which just might justify paying higher prices for online grocery shopping.

The following are the main points I’ve given thought to regarding online grocery shopping. I’d love to hear more from your experiences with shopping online for groceries:

#1 See the total price of your shopping cart at any given moment

I think the number one advantage of shopping online is the ability to view the total cost of our purchase at any given moment. Think about how many times the total amount surprised you. “I just bought eggs, milk and a couple of more things… How did I get to $100!?” Sounds familiar?
With a total amount available at any given time you can really examine what you’re about to buy and maybe decide on settling for a cheaper brand this time.

#2 Really stick to your shopping list

Another distinct advantage is the ability to really stick to your original shopping list. You avoid the instant craving and sudden impulse and just pick what’s on your list.
In future purchases you’ve got your list all ready and you only need to make minor adjustments. What are the chances you’ll deviate from it and spend wildly on an attractive bottle of wine that just smiled to you from one of the isles?

#3 Check if you actually ran out of something

How many times have you asked yourself “did we run out of this and that?” and couldn’t remember. All you have to do is get up and take a peek at your refrigerator or pantry and find out. Avoiding unnecessary shopping might save significant amounts of money in the long term.

#4 Dramatically lower your exposure to supermarket marketing tricks

Much has been written on the cheap yet effective tricks supermarkets employ on us susceptive shoppers. I’ve written a post on cheap marketing tricks supermarkets employ and how to avoid overspending by being aware myself.

When you’re shopping from home you’re in a controlled environment unsusceptible to those tricks. I believe that save money. If those tricks hadn’t worked on us supermarkets wouldn’t employ them.


#5 Compare prices easily

No longer having to duck all the way down to the bottom shelf you can easily compare prices for similar products and save a bundle on good cheaper products.
In each session you can choose another niche to dig in to and buy cheaper products of the same quality thus lowering you grocery expenses on fixed basis.

#6 Add or remove items quickly and without hassle

Looking at the bottom line you suddenly decide to get rid of a certain product. Maybe you forgot something and you’re already in line. It’s very easy to add and more importantly remove products from your shopping cart when shopping on line.

#7 Get shopping done very quickly

By the third or fourth time I guess everyone has their own list of groceries to buy on a weekly basis. Log in, load the list, make minor adjustments and get exactly what you need. I’m guessing 30 minutes ought to be enough for the complete process.

#8 Choose the delivery time

Buy from work and have everything arrive 10 minutes after you get home, or maybe late at night if you’re insomniac. I believe this might also limit you a bit as you have to wait for the delivery sometimes but wouldn’t you have spent that time in the supermarket in the first place?

#9 Save on gas

With gas prices so high each 15 trip to the store is a waste of money. Shopping online helps us save on gas and car related expenses easily.

I’ll report back with my couple of first experiences and tell you how it’s been. I’m most worried about product quality and packaging. I do believe 15% higher prices just might be economically and financially sound as the advantages seem to outweigh the disadvantages significantly.

Related Posts:

• 10 Tips on How to Avoid Overspending In Supermarkets
• The Problem of Accounting and Budgeting For Cash Expenses

Images by: desiitaly, miss_jen

Teach Your Kids Basic Finance and Economics with Monopoly - 11 Valuable Lessons

11 lessons to teach our kids drawn from a monopoly game I just finished

I remember monopoly being one of my favorite games. I remember getting filled with anxiety before the first throw of dice hoping no one gets to my rail-roads before I do. I used to love winning and really hate losing in monopoly. There’s something really eternal about this game.

Looking back at it I can’t say I remember monopoly creating or changing my perception of money as a child. Then again, money has always been a personal favorite of mine and maybe monopoly had something to do with it. Anyway, I do think parents can leverage monopoly for some fun education and basic finance and money teaching to kids.

I’ve just finished a round of computer monopoly (I actually won with my secret rail-road orange property technique!). During the game I’ve written down 11 important lessons the game teaches and imbeds as intuitive in the player’s mind (I believe that the younger the player the more powerful the influence of the game is). I thought It would be fun writing a post about it:

#1 Money doesn’t grow on trees

The most powerful lesson, in my opinion, is of the value of money. You have to think carefully and constantly evaluate how much money you have and how long it will take you to pass go and collect a bit more.

You simply can’t buy everything you desire and you must accept the tradeoffs that go hand in hand with limited funds.

#2 You need luck

You can’t escape it. Luck has a key role in success. It may seem unfair but that’s the way it is. You might have had the best of strategies, your properties lined with bright and shiny hotels but no landed on them for three rounds. Then, after your friend just finished building his first couple of houses you decide to visit them every turn.

Learning to live in peace with the random factor in life is essential to reduce frustrations (you can never really avoid them).

#3 You need other people

With good monopoly players you’re chances of landing three properties or four railroads is slim to none. Often times the game leads to a sort of stale-mate in which the first two to strike a deal will surely cause the downfall of the rest of the players.

Learning to cooperate with other people and learning that where ever you go you need other people is a valuable lesson for life.

#4 There are win-win situations

Learning to think of deals as a sort of win-win situation is essential for good business understanding. Some people think of deals as closed system where one gains at the others expense. Seldom is that the case (even though in stocks that’s usually the case).
Almost any deal can be put in terms of win-win situations and can be marketed as such. This view is necessary for progress and deal closure.

Teaching our kids to create win-win situations and to be able to express a certain value to other people is priceless.

#5 Shortcuts can lead to jail

I’ve never really understood why three double rolls in a row result in jail. After I’ve written it down as a lesson it suddenly hit me this might be the reason. No such things as shortcuts in life (or very few of them anyway). Shortcuts will usually result in getting thrown back and held for some time.

Hard work and good planning is always a sound lesson.


#6 Life holds good and nasty surprises

I love the little drawings on chance and community chest cards. I take pride in the creativity of this lesson. There are both good and bad surprises in life and we must accept them as they are.

Taking each surprise as an experience and learning to live with uncertainties is an integral part of life.

#7 Even small things can influence the greater scheme

I love J.R.R Tolkien’s ‘Hobbit’ and ‘Lord of the Rings’. I always enjoy the lessons of the massive impact small things can have. I’ve won my share of monopoly games by buying Baltic and Mediterranean Avenue and laying two $450 traps for innocent players. $2 rent properties should not be trifled with.

Teaching our children to respect what appears as small and weak is very important.

#8 Patience is a virtue

Someone will eventually hit that certain square. Patience is all that’s needed. They mass pas it 5 rounds in a row but eventually they’ll land on it. I always enjoy the long wait before someone is tackled by 4 menacing green houses.
Patience is not something kinds excel in. Monopoly is another opportunity to strengthen this trait.

#9 Investing early pays higher dividends

My favorite players to play against are the ones that hog their money afraid to spend it on the less valuable properties. They’re usually the first to go having been left with no real chance of leveraging their properties into winnings. Money can only be enough to land on Baltic 3-4 times. Bankruptcy follows.
Parents should really take this lesson to heart and invest early for their children’s financial sake.

#10 Loans only go so far

We all know mortgaging our assets will only take us a couple of more rounds at best. Why do we insist on rolling debt in life?

#11 Economies of scale

For the more advanced kids the lesson on economies of scale is a powerful one. You own all the rail-roads? Now you can really start charging those fees. Own both utilities? Start multiplying by ten.

I love this game! I’d love to hear your monopoly experience and ideas on more lessons to draw.

Images by: izzie_whizzie, d0bb0, coffeegeek

My View of Frugal Thinking

Presenting my thoughts on frugality and personal finance literacy

I’ve never been a huge fan of extreme frugal thinking. I’ve always thought excess frugality comes at a rather high price which outweighs the financial benefit of saving $30 a month. I don’t, by any means, discredit a sum of $30 a month. However, as a big fan of efficiency and productivity I believe the time and effort it takes to get frugal enough to save quarter to quarter is just too precious.

Reading and writing personal finance articles has opened my eyes to many different views of frugal thinking. The simple act of reading is already enough for some ideas to grab hold and nest in your head ready to evolve with the next article and next post.

Those of you who have been following my writings here at The Personal Financier have surely noticed by now that my view of frugality is a bit different. I believe in investing the time in financial education and competence which later translates to much bigger savings.

Clipping coupons has its place and is very wise if you can afford the time. Quarters add up pretty quickly as grains of sand create dunes (I’ve expanded on this here: The Little Savings That Could). However, learning basic financial thinking, financial math and getting to know the capital markets better will pay higher dividends in the long run.

I suggest concentrating efforts at becoming very knowledgeable in the following personal finance niches which will serve as true leverages to your personal finances:

#1 Mortgages and Loans

I’ve recently wrote an article about how I saved over $3,000 in one hour. It sounds like, and it really is, a catchy headline, but it’s also completely true. Realizing we are in a very low interest environment allowed me to quickly capitalize on low interest rates by refinancing my mortgage. My financial understanding also made me to keep my mortgage payments at their current level thus saving on the number of payments and directly on interest paid (Naturally, the factor of time is crucial for compounding interest).

#2 Investments

Understanding common investing mistakes will also save you much more than any homemade rain water receptacle. These are fun and creative to build but financially wise don’t translate to significant savings. Understanding the relation between risk and return, the concepts of investment terms, asset allocation and investing goals and planning is much more valuable than throwing frugal birthdays.

I’ve written on my share of common investing mistakes. Two of my favorites are: 10 Sure Ways to lose 50% of your investment and Investing mistakes to avoid.

#3 Retirement

All the frugality in the world won’t get you a proper retirement unless it’s combined with solid financial planning. The amount of money required to retire properly has no equal (besides, maybe, a New York Apartment).

There are so many mistakes we can make that will affect our retirement it’s no wonder such a small percent of people retire as they planned (more on How to Avoid Crippling Your Retirement Funds here).

#4 Insurance

One of the most important aspects of financial planning is making sure the financial impact of sudden and unforeseen events is smoothed out through insurance. Life and disability on the one hand and property insurance on the other will ensure a smoother financial “life line”.
Insurance always seems easy enough but is really very complicated. Different coverage, plans, alternatives and more create a dazzling array of products to choose from. I’m not knowledgeable enough to be writing on insurance but hopefully in the near future I’ll be closing more knowledge gaps and become more proficient.

#5 Real Estate

One of the biggest expense and investment items in our lives is real estate. As a result each successful or less successful decision has a huge impact on our lives. Location is often mentioned as a prime consideration, home renovations and their return on investment is a popular topic, rent vs. buy comparisons are always relevant and more (there are a lot of relative posts in my top posts section).

#6 Career Planning

Instead of constantly focusing on how to spend less, which usually holds a finite and small potential I believe in concentrating on earning more. Career planning and opportunities offer much more than simply saving on expenses. From education to day to day management career planning is crucial for success. We do most of the things intuitively but often times some posts and articles can offer precious ideas.

I recently wrote, what in my opinion is a very good post on how to actively manage our careers which should really clarify what I’m talking about.

There are more subjects to explore such as budgeting, debt and risk management, credit cards and loans and more with an almost infinite pool of knowledge.

To conclude, my view of frugal thinking is of learning and education. I believe sinking our teeth in all of these subjects has a greater return on time invested than focusing on every-day frugality. I agree frugality translates, directly, to pocket money but how much are we talking about here?

Image by: ethorson

Creative Ways Airlines Cut Fuel Costs Provide 7 Invaluable Lessons on How to Save Money

7 lessons learned by observing how airlines cut down on fuel costs. These lessons have never been more relevant.

Skyrocketing fuel costs are causing havoc in airline business. Airlines face a dire need to significantly cut down fuel costs if they want to stay in business. Some of them have come up with some very creative ways I thought worth mentioning.

I believe this glimpse into how the biggest corporations deal with rising fuel costs will provide us with valuable lessons to implement in our own personal lives. The key words being: Quick adjustment, rapid action and creativity.

Fuel prices now account for over 40% of airlines operating expenses (compared to 15% eight years ago). This is easily their highest expense and they will naturally focus on creative ways to reduce it.

Lesson #1: Recognize the situation you’re in and respond promptly. Quickly adjusting to a new, less fortunate, financial situation is crucial to successfully riding it through.

Lesson #2: Identify your budget busters and focus on them. You’ll get the most saving out of those items.

Airlines next identified the major cost drivers for their budget busters. In the case of fuel costs these are: Weight and Speed.

Lesson #3: Identify the major cost drivers behind your budget busters. Reducing expanse requires dealing with these first.

Naturally, airlines focused on their major cost generator to reduce fuel costs (weight and speed). Some companies have been ever the more creative with their solutions:

• U.S Airways have eliminated snacks.

• Japan Airlines is using crockery in first-class and business-class cabins that is 20 % lighter than the service items they replaced.

• American Airlines has switched from using onboard power units that draw down jet fuel while planes are parked at gates to electrical generators on the ground.

• Deutsche Lufthansa, Europe's second-largest airline, is one of several that has begun washing planes more frequently because dirt on a fuselage increases wind resistance.

• As speed goes, a number of airlines are flying their planes somewhat slower in order to save fuel — 480 mph, for example, instead of the usual cruising speed of 500 mph. This translates to about a 6 minute increase in flight time from LA to Atlanta.

• Delta is studying whether it is feasible to divide the heavy pilot manuals required on each flight between the captain and first officer, so pilots are not toting duplicate sets.

• Airlines are swapping heavier seats for models weighing about 5 pounds less.

• American is replacing its bulky drink carts with ones that are 17 pounds lighter.

• Northwest is putting 25 percent less water for bathroom faucets and toilets on its international flights.

According to airline executives every 25 pounds removed equals saving $440,000 a year.

Lesson #4: You can save on even the most straightforward expenses by being creative. Creativity goes a long way.

Lesson #5: Small changes and small steps amount to big differences. Don’t underestimate small efforts.

Less successful solutions, in my opinion are:

• Delta Airlines charges $25 for telephone reservations

• Airlines come up with various surcharges.

I believe these are less successful since the public will not associate these extra charges and costs with rising fuel prices and will not take them kindly. For change or a saving effort to succeed it has to be associated properly with the cost driver. I believe none of us objects to reducing the amount of extra water on board.

Lesson #6: Educate and market the change properly. Associate it with the expense and the cost driver.

Economics will force airlines to implement even more radical solutions like charging by the pound. When fuel prices are low enough airlines have no economic and financial motivation to implement a “by the pound” billing system. However financial motivators can be extremely strong. High fuel costs will force airlines to consider how much weight each passenger contributes in order to charge him properly.

Naturally, this will start with baggage. Each of us will be “motivated” through a financial fine to carry less baggage when traveling. If fuel prices remain as high we will soon pay for two tickets: one for ourselves and the other for our baggage.

The day is not far away when we just might pay by pounds for our own weight as well. Apparently South West Airlines are asking passengers to buy a second seat if their girth prevents the armrest from lowering.

Lesson #7: When a resource is not priced properly waste is created. A proper economic value assigned will help prevent waste and promote saving.

Learning from the airlines recent experience is a free lesson offered to us all. As always I’d love to hear more lessons you’ve noticed and learned which I may have overlooked.

Image by: Matt Hinsta

Americans Report Their Savings Habits and Progress

A recent research by the ASEC sheds light on some very important statistics regarding Americans’ saving habits and progress

Americans have long been accused as saving too little while consuming too much. A recent survey by the ASEC has some intriguing results. Can you find yourself in the numbers?

I’ve extracted what seemed to me as the most interesting statistics from the report and I’ve divided them into groups. There’s a lot to learn from the following numbers. The most powerful conclusion I draw from this particular survey is the strong need for mass personal finance education the lack of which is responsible for what seems to be an innate inability to save.
Spreading the message of personal finance, budgeting and planning is essential to making real progress in American saving habits (naturally higher interest rates might help as well).

Saving Habits

• Half of all U.S. households report adequate savings progress.

• Nearly three-quarters of Americans (73%) report that they "spend less than their income and save the difference."

• Little more than half of them (53% of all respondents) say they save at least 5% of their income, and only 28% say that they save at least 10% of their income.

• More than two-thirds (71%) report that they "have sufficient emergency savings to pay for unexpected expenses like car repairs or a doctor visit."

A little reminder here, experts usually recommend saving at least 10% of your income on a regular basis. As far as the data goes it seems a quarter of all Americans have difficult time saving at all.

A more intriguing fact is that of half of the Americans who report adequate savings only 28% save at least 10% of their income. This conflict in data stresses the lack of personal finance education and a lack of understanding when it comes to the importance of saving.

Retirement Saving

• Only 57% of those not retired say they are saving enough for a retirement with a "desirable standard of living".

• An important reason for inadequate retirement savings is the failure or inability to "save for retirement at work through a 401(k) or other contributory plan," which only 55% of the non retired report having.

The crux lies in saving for retirement. Sadly, only 60% of Americans save enough for retirement to meet their desirable living standard. I don’t believe it’s a problem with the subjective definition of “desirable”. I truly believe people weren’t properly educated to plan for retirement.

Lack of contributory plans is an outrage. There are examples of other countries where a mandatory contributory plan was installed with minimal contributions. While these are not enough to properly retire they are a good start while always introducing retirement planning to the other 50% of the population.

Planning

• Only 62% of Americans have a "savings plan with specific goals".

• Only 49% have a "spending plan that allows you to save enough money to achieve the goals of your saving plan".

• Only 42% "save automatically through regular preauthorized transfers from checking to saving or investments".

• Only 41% "save a portion of tax refunds, gifts, bonuses, or other financial windfalls."

Needless to say having a sound plan with specific goals is the first step in saving. You need to have clear and specific goals that will motivate you to save and help you postpone instant gratifications with a clear view of what you’re aiming for in the future.

Windfalls such as tax refunds or bonuses are excellent saving surplus that will get you ever closer to the goals you’ve set. It’s a pity 59% of Americans quickly consume these funds.

Debt

• Only 21% say their consumer debt is “growing” or “remains at the same level.”

• More than three-quarters with mortgage loans (76%) say they "will pay off all mortgage debt before retirement."

"Hard data about savings behavior suggest that responses to several questions were buoyed by the personal optimism of respondents," said Stephen Brobeck, Consumer Federation of America Executive Director.

We need to be very careful in estimating our current financial situation and future financial prospects. Personal optimism and success oriented planning certainly have their place in life but we must make sure we’re not clueless once our plans don’t go as planned.

Income Differences and Saving Habits

The survey verifies what we all assume intuitively. High income households:

1) Save more
2) Are more aware of the importance of saving
3) Have adequately funded emergency funds
4) Have adequately funded retirement savings

The survey defined high income households as households with incomes of at least $75,000. Obviously these households can afford bigger savings but this is not the entire story. I believe the following statistics are no less important:

• 85% of the high-income group, but only 36% of the low-income group, report having a savings plan.

• 72% of the high-income group, but only 29% of the low-income group, report having a spending plan.

• Furthermore, members of the high-income group are much more likely than those in the low-income group to: know their net worth (72% vs. 38%), save automatically through checking transfers (54% vs. 28%), and save financial windfalls (55% vs. 30%).

It’s all about awareness and good financial education. Low income households are less exposed to good financial advice and the basic of financial planning. Knowing how to plan, budget and manage is crucial for financial success.

Hopefully this blog and many others of its kind will raise public awareness to the importance of personal finance and active management and control of our lives.

For the complete report

Related Posts:

• Budgeting for Unexpected Expenses
• The Problem of Accounting and Budgeting For Cash Expenses
• How to Save Money by Analyzing Your Budget: 4 Basic Tools
• How to Make Saving More Rewarding and Tangible: 5 Practical Tips
• How to Save by Making Credit Card Payments More Real and Tangible: 5 Practical Tips

Image by: s2photo

Gas Prices Finally Impact US Car Sales

More on the better side of record gas prices

For some reason pickup trucks and SUVs have rooted themselves in American culture. Apparently they serve as symbols for strength, power, durability and more values that are held dear to many Americans.

I’ve read somewhere the pickup serves as the modern horse, keeping the old west’s heritage alive. With all due respect to culture it seems more and more Americans are finding it hard to continue maintaining these gas eating monsters with gas prices constantly rising.

Americans save on gas by switching to economy cars

According to Reuters US auto sales tumbled in many as consumers spurned pickup trucks and SUVs in the face of record gasoline prices, driving General Motors Corp (GM.N), Ford Motor Co (F.N) and Chrysler LLC to double-digit declines.

Furthermore, Japan’s Honda Motor outsold Chrysler for the first time to emerge as the new No. 4 U.S auto-maker with Toyota closing the gap on General Motors.

Record gas prices apparently sent Ford’s sales tumbling down by 16% and General Motor’s sales by 28%. Honda, on the other hand, registered a 16% in Civic model sales which are fuel economic. Pickup truck sales were reduced by 30%.

Could it be Americans are realizing how wasteful and costly these vehicles are?

The smell of change is in the air but history teaches us we humans quickly adapt for better or worse. In the 70’s the oil crises caused gas prices to soar forcing Americans to seek cheaper more economic alternatives. This was the growth bed for the Japanese auto industry in the US.

Now, as then, it’s money and economic considerations which make the biggest difference (rather than ideology, environmentalism and more). As long as gas prices remain at all time highs this trend will continue.

However, should prices drop or remain stable I believe the public will quickly get accustomed to paying more on gas slowly turning the trend back around.

Americans driving at historical lows

In the meantime we get to experience the better side of high gas prices. A press release by FHWA reports Americans drove less in March, 2008 continuing the trend from November 2007.

Additionally, the U.S. Department of Transportation estimated that greenhouse gas emissions fell by an estimated 9 million metric tons for the first quarter of 2008.

Record gas prices take their toll on countries and people all around the world

In India three county states went on strike a response for high gas prices. Malaysia suffered mass demonstrations after the government announced a 41% increase in gas price while in France and Spain taxi drivers blocked highways and roads to protest against record prices.

Governments seemingly have their hands tied having little other choice than to constantly adjust prices. But that is only half a truth. These countries can and need to make strategic decisions regarding their dependence on oil as an energy source.

New Zealand recently announced its strategy of becoming the first sustainable nation in the world and will balance its gas emissions. Furthermore, currently 70% of New Zealand’s energy is generated from renewable sources and it has committed to a goal of 95% by the year 2025. That’s strategy and definitely a lesson to be learned by leaders everywhere.

Hopefully the environmentalist trend is here to stay even when gas prices cool down a bit.

Image by: code martial

Related Posts:

• Higher Gas Prices: A Blessing in Disguise or America's Wakeup Call
• Is There an Oil Price Bubble Evolving?
• Spontaneous Observations on Commodity Prices - Will Prices Remain so High?

The Perfect Home is a Financial Nightmare - Don’t Get Caught Up In the Costly Race

It is very easy to get sucked in a terribly expensive effort which never really ends

My wife and I just returned from our 203th visit to IKEA with some interesting insights I’d like to share. Since we’ve bought our apartment and renovated it we’ve been caught up in a continuing effort to furnish and design it into our perfect little home. All this time a very obvious yet elusive insight eluded us: There’s no end to this effort, no finish line to the race.

It starts very early on. You decide to buy a house, maybe even decide on a budget but all the plans and all the decisions soon fade away when you start shopping for a one. It’s understandable. Some locations, architecture and design, extra rooms and more may be well worth the extra money but have you ever heard of anyone buying a cheaper house than they initially planned on?

It continues with massive, endless renovations trying to shape reality to dreams with multi-million homes as our inspiration. Even the world’s best interior designer can’t create that much space in a two bed room apartment.

Naturally, our quest goes on even after we’ve moved in. Furniture, appliances, designs and adjustments all continue to trouble us. I’ve heard the sentence “we’ve got to replace that couch” from everyone of my friends (and they bought the couch just a couple of years ago).

Our house is a major factor in our lives. It’s our home, it’s where we spend most of our lives (after work), it’s where our children grow up and it also reflects on us as people. Aiming for the perfect home is very understandable but is it wise? Is it financially sound? Is it at all possible?

I’ll show you that even billionaires can’t really attain the perfect home and are constantly busy searching, buying, designing and eventually selling their homes.

My case against the race for the perfect home is built on the following:

#1 It’s Endless

Stop and think about it. When will you tell yourself you’ve got it made? Chances are you’re not even living in your perfect home just yet. Most of have dreams, be they a park view apartment in Manhattan, a mansion in the English countryside or whatever else comes to mind. It could also be just two more rooms, or just a pool and that’s it.

Don’t delude yourself. We can’t really be happy and content with what we’ve got. It’s a human curse and a blessing. We adjust too quickly to both good and bad and always fail to appreciate the present and what we’ve got. It’s a sort of hedonistic fallacy. We always want more and better. It’s fantastic because it drives humanity forward (supposedly) but we must understand this basic psychological concept and how it affects us so powerfully.

#2 It’s terribly expensive

When it comes to our homes it’s always expensive. Forget about buying or renovating one. Those costs are astronomical and the point is easily made. Instead think about that $2,000 designer sofa you just saw on “sale”.

Designers of any sort have it made. They can price their products as they like since “inspiration” cannot be measured. The only measure is whether people buy it and surprisingly they do. You don’t need me to tell you there’s no practical difference between a $200 sofa to a $20,000 sofa. It’s whether someone is willing to pay that price (and keep mentioning it in our ears to justify the purchase).

The same goes for tiles, baths, showerheads, dining rooms and everything else you can think of. Nothing is too good for our home, and the retailers know it.

#3 It’s time consuming

I’ve personally spent (or invested some might say) at least 50 hours searching for an apartment, 200 hours renovating one and at least 50 hours shopping for my home. It’s not wasted time but that time has many alternative uses. Every time you go looking for a set of cups think about the alternatives.

As the quest never ends so the shopping, browsing, designing and adjusting never cease.

#4 Fashions change

Fashions change and we have to start everything from scratch. This means yet another trip to the handy store for that oceanic-pearl wall color to replace our previous wall color of tomato-orange mix or whatever name they came up with to justify paying an additional 20% for that color.

We obviously have to re-design everything else to fit that new wall color and so on and so forth.

The National Association of Home Builders (NAHB) cites interesting numbers for first year spending in a new home (the numbers are for 2003 but the ratio’s are ever more relevant):



Another interesting view point is how these expenses divide up the first year. The following pie charts speaks for itself:



Remember I promised you I’d prove how even billionaires take part in the race? Well, Russian billionaire Roman Abramovich just bought a $36M Colorado ranch. The 1,300-square-meter, split-level home is set on a secluded 81 hectares in Snowmass, near Aspen, The Wall Street Journal reported Friday. The house, built by surgical-equipment magnate Leon Hirsch, has 11 bedrooms, 12 bathrooms, a media room, a climate-controlled wine room, a hot tub and a spa, the report said.

I’m sure you don’t find this at all surprising. But did you also know Roman Abramovich intends to create a super mansion in the heart of London which will become the most expensive private residence in England and that it will cost approximately $300M? Apparently Abramovich owns dozens of houses around the world, all unique, beautiful and terribly expensive.

I guess it really never ends.

Image by: Lincolnian