July 2009 Archives

Investment

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An easily stated précis for becoming wealthier is: spend less, make more. We've talked a lot about spending less, but not much about making more. Obviously, one of the important ways to make more is to make your money work for you through sound investment.

And so, let me give you our investment advice: don't listen to us. It's an extraordinarily complicated field, and we claim no expertise. Our strategy in allocating our retirement accounts' investments has been conservative, but some of what seemed to be the squarest of investmests have plummeted in recent years. Most of ours have gone down; some have, miraculously, gone up, but I attribute that to luck, not to shrewd choices. We kept talking about how we needed to come up with an investment plan, and now are just grateful that our lack of investment prevented a lot of money from disappearing.

My intent for the years to come is to follow Nassim Taleb's advice: put most of the money into the safest investments possible, and reserve a small percentage for high-risk investments.

In the years to come, there's no doubt that a lot of people will make a lot more money with a riskier strategy. But odds are good that a lot more people than that will lose a lot more money than we will.

Baked French Toast

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2009 is shaping up to be the Year of Yeast-raised Breads for me. Back in April, I hadn't baked a loaf of homemade bread in so long that the yeast I found at he back of my spice shelf was dead --- nary a carbon dioxide bubble when I dissolved it with sugar. So when I went to the store to restock, I decided to buy an entire jar (equivalent to sixteen packets, and reusable for bulk yeast) and thought to myself, "By the time I'm done using up this jar, I'll be an expert!"

The yeast in the jar has mightily dwindled, and I'm pleased to report that my dough instincts have been honed. My trusty Pyrex and I have risen pizza dough, cinnamon rolled, and kneaded a challah on a Friday afternoon.

But what has made me deliriously happy is I found a recipe that very closely resembles the Custard French Toast that was offered at the now-defunct Tower Cafe in Sacramento (as in the Tower Records; it was the flagship store). Actually, technically it's not a French toast, but more like a bread pudding or pain perdu. Ok, enough food geek nattering.

What's special about this recipe is that it really does require stale bread (a hark to its French name of "lost bread") to work right, and hence an overnight soak. But the results! Ah, the custard solidifies into a heavenly creation that can be a brunch dish or dessert....or dessert later in the week. Unbelievably, it tastes better the next day.

And I make this recipe starting with homemade challah --- before you panic, it isn't going to be braided, just pop it into a loaf pan, it's all easy-breezy. And for those who don't know, challah is a slightly sweetened egg bread, similar to brioche or Hawaiian bread or Taiwan bread....apparently every culture has its own version).

So here goes....

Challah

For a loaf pan 9" × 5" or even 8" × 4"

  • 2 ¼ tsp yeast (or 1 packet)
  • 1 1/3 cups milk (whatever kind you want, but I use soy milk because the finished dish is dairy-rich)
  • 2 eggs
  • 3 tablespoons sugar
  • 2 tablespoons oil
  • 4 ¾ cups all-purpose flour (I substituted half with whole wheat pastry flour to add fiber)
  1. Heat milk to 100-115 degrees F, and dissolve yeast and 1 tablespoon of the sugar. Mix and set aside.
  2. Combine eggs, remaining 2 tablespoons of sugar, and oil in a large bowl. The yeast should be foamy by now, so add it to the other wet ingredients.
  3. Add salt and flour, mixing until the dough comes together, then begin to knead. Add additional flour or water as needed until the dough is smooth and elastic.
  4. Cover tightly with plastic wrap in a warm place and rise, or until the imprint made by two fingers poked into the dough remain, approx 1 hour.
  5. Re-knead the dough --- this step is very important, because the yeast needs to be redistributed throughout the dough.
  6. Shape into a loaf by patting it into a rectangle the length of the loaf pain and about 4 inches high. Roll up along the length and place seam-side down into the buttered loaf pan.
  7. Rise for an additional 40 minutes.
  8. Bake for 40 minutes at 375 degrees F.

Depending on when you bake this bread, you may have to speed-up the time it takes to dry out. I cut it into ¾ inch slices and place on a baking sheet and leave it uncovered in my oven with the door slightly ajar. Or you could bake it at 200 degrees F until just before it starts to brown.

Pain Perdu

  • 1 stick softened butter
  • ½ cup raisins
  • ½ cup chopped nuts (walnuts, pecans, etc)
  • 2 tablespoons cinnamon

Mix the following:
* 5 eggs
* 3 cups half-and-half (or heavy cream if you want it richer)
* 3 tablespoons sugar
* 1 tablespoon vanilla
* ½ teaspoon salt

  1. Butter a 13"× 9"x 2" pan, then butter one side of half the bread slices.
  2. Place bread, non-buttered side down, onto the pan to make one layer. Cut and break up pieces of bread to fill in any gaps.
  3. Sprinkle on raisins, nuts, and cinnamon.
  4. Cover with second layer of bread, sandwiching in the fillings.
  5. Pour egg mixture over everything.
  6. Cover tightly and refrigerate.
  7. Remove cover, sprinkle with white sugar and cinnamon before baking at 425 degrees F for 30 minutes.

Wake up, Cheeple!

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For the last few Monday mornings in a row, JetBlue has offered amazing, unbelieveable, rock-bottom fares. Say, $9 from OAK to LA, or BOS-JFK. The catch is that they are only published on JetBlue's twitter page, only offered on Monday (@ 7am PDT) for travel the following Saturday, and there are a limited number of seats. To further the twitter metaphor, these low fares are called cheeps.

That sure gives me motivation to wake up a little earlier on Mondays to check their tweets, I mean cheeps.

UPDATE: Natch, JetBlue changed the terms this week. Cheeps are only for Sunday travel, but OAK to LA is again less than a Hamilton, baby.

Don't pay to get cash!

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[ Oops! This was Wednesday's entry, but we mistakenly didn't publish it. We'll be back on our MWF (does not mean married white female) schedule next week. -- Zed ]

I remember well the dark ages before the ATM.

In the carefree days before I was old enough to be a schoolkid back in the Seventies, I accompanied my mom the housewife with the weekly errand running, which always started with the bank. Even better was its state-of-the-art drive thru. It always amazed me that we could perform the whole transaction from the car, so far away from the actual bank itself. And the best part was that the teller would always enclose a lollipop in the vacuum tube for me at the end.

Then the ATM came on the scene in the Eighties. It worked out, as long as you didn't get cash from a machine that didn't belong to your bank. Outrage alert: in western Europe, people are not charged to use an ATM! Whether or not it's your bank. The only fee I pay when I access cash in Europe is to my American bank, whose bankers obviously have much better summer homes than their European counterparts.

These days I have an account at a credit union, but there are thousands of ATMs I can use for free, via their credit union network, as well as 7-11 stores, which is quite a boon.

I want to remind people that there's no reason you should pay money simply to get your hard-earned cash. It's something I just don't believe in.

Frugality doesn't mean deprivation

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Occasionally, I'll encounter the insinuation (or outright assertion) that those intent on frugality live a life of joyless asceticism.

I'll say again. Frugality is about spending your money, time, and energy in ways that are consistent with your values and goals, and avoiding waste. What that looks like is up to you, because only you know what your values and goals are.

For the things that will improve your daily life, for the tools that are important to you, we'll always counsel spending more to get high quality (consistent with what you can afford, and where the point of diminishing returns is for that item, of course.) Make up for it by spending less on the things that don't provide real value to your life.

Is there somewhere in your life where you're dealing with something broken, or half-working? Can you afford to replace it? Then just do it. Do you have a chair or couch that's a pleasure to sit in? Do you have a good bed? Do you have a desk or work space where you can comfortably work? These are things that can actually improve your quality of life.

Being penny-wise and pound-foolish can be just as wasteful as an impulse purchase of something useless, and can create more unhappiness for longer.

Sharpen your axe

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One of the Seven Habits of Highly Effective People (a book with some good advice) was to "sharpen your axe." Its example was two woodcutters with dull axes. One of them thought there was too much to do to sharpen the axe, and went ahead and cut with the dull axe, and had a slow, painful day's work. The other one invested time in sharpening, had a much easier time, and cut more wood in the same total amount of time.

There are a lot of dull axe situations in life, and it's easy to get caught up in thinking there's no time for sharpening. And there may not be the time in a real emergency. But if you want to make less of your life feel like an emergency, invest the time in sharpening.

Here are some of my dull axes. When my bike tire pressure is low and the drive chain needs lubricating, biking is slower, harder, and less pleasant. When I don't keep written track of the things I need to do, I waste time and energy worrying about whether I'm forgetting something, and reminding myself about them. When I let my work areas get cluttered, I waste time looking for things, and don't feel like using my work areas.

This is a close relative of Jen's maintenance post from Wednesday, and my earlier posts on margins and the high cost of poor planning. Picking up spares and frugal health are examples of this, as is avoiding clutter and not skimping on your important tools, and, well, most of what we say here.

The time and effort savings are most obvious, and the easiest way to demonstrate this point and to persuade of its value. But the more valuable part of this is making the things you do feel easier and more pleasant, keeping your daily activity from seeming to be drudgery and hardship, preserving your mental, physical, and emotional energy and health.

This is being frugal with your inner economy, and that's the important one. Keep that in order, and you'll always be able to deal with the external.

Maintenance

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A stitch in time saves nine.

An ounce of prevention is worth a pound of cure.

These old adages refer to maintenance. Better to maintain anything before it breaks and requires an overhaul or a new part. This applies both to inanimate objects and animate ones.

Obvious examples are checking the air pressure in your tires and getting oil changes when needed for your car. If you don't, the dreaded "Check Engine" message lights up on the dash followed by the inevitable bill to the mechanic.

Checking our blood pressure and getting blood drawn to get a picture of the healthy functioning of our bodies is similar. Except there is no "Check Engine" message, but rather a panicked call to 911.

Neatloaf

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There is a vegetarian restaurant in San Francisco that I like soley for this one dish: a vegetarian meatloaf of sorts. It really has nothing to do with meatloaf, but it's baked in a loaf pan and sliced so I guess it was inspired by meatloaf. It's more like a crustless quiche than anything else, thanks to the eggs & cheese. They call it neatloaf.

Neatloaf

2 cloves garlic, diced
1 onion, diced
4 eggs, beaten
½ lb ricotta cheese
½ lb tofu, mashed
¼ cup olive oil
1 tsp oregano
1 tsp Herbes de Provence (or rosemary, thyme, etc)
salt and freshly ground pepper, to taste

- Preheat oven to 300 degrees
- Saute onion until caramelized, then add garlic to lightly saute and set aside.
- Combine remaining ingredients, then add onion & garlic mixture.
- Oil and flour a standard loaf pan, and pour in mixture
- Bake for one hour
- Allow to cool before slicing. I like to serve mine with barbecue sauce and roasted red potatoes, as a side dish.

Watch what you watch

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In Berkeley, the cheapest digital offering of the only cable company available is $60/month. The cheapest satellite offering looks to be $51/month -- their website is so bad, it was hard to tell. That's $720/year or $612/year, respectively. Like I keep emphasizing, because of taxes, a penny saved is more than a penny earned. At a 30% tax rate, saving $720 is equivalent to almost a $1000 annual raise.

Do you watch enough for it to be worth $2/day, every day? If you live somewhere where you could get broadcast TV, do you still watch enough if you don't count what you could get for free? In these worrisome times, are you wondering how you could cut back?

There are a lot of great shows on cable, but they'll still be the same show when the used DVDs are selling on Ebay, or when the DVDs are available at the library, or on Netflix.

Do you have dreams that get deferred because you don't have the time for it? Because watching less TV can save even more time than money.

Like always, my purpose is to raise the questions, not give the answers. If your finances and your life are in a place where you think what you get out of cable tv is worth the time you put into it and a $1000 raise, that's great.

If we were independently wealthy, I'd probably want cable. But if I want us to get from here to financial independence, I think we're much better off without it.

Responsible Credit Card Use

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We don't have any unhealthy relationships with our credit cards. We use them when we need to, and don't feel any compulsion to max out a card as soon as humanly possible. I had a friend who mistakenly thought of her Visa's credit limit as a goal to reach, a finish line of sorts. She learned some life lessons the expensive way.

Please, don't let it happen to you.

We got a credit card associated with REI, because it had no annual fee, they gave us a $40 credit at REI just for signing up, and we get cash back on any purchases made at REI. I don't keep mine in my wallet, and just take it with me whenever I'm headed out to shop at there. So I've used it less than a handful of times since I got it back in October.

Imagine my surprise when I received a letter from the bank that issued the REI credit card with these ominous words printed in red: IMPORTANT MESSAGE REGARDING YOUR ACCOUNT. I was worried I had been a victim of identity theft, since I know the last time I used the card was back in March.

Unbelieveable! It was a letter from the bank saying they'd noticed I hadn't had activity on my card in a few months, and they wanted to remind me that I had a large credit limit to max out. It was the opposite of an identity theft letter!

Is something wrong? You haven't used your credit card! Don't you know that's the way to achieving the American Dream? Shall we send you a replacement?

That, in a nutshell, is how we got into this credit crisis, economic collapse, and resulting recession. Don't be fooled by easy credit (well, it's gone the way of the dodo bird now)

You enjoy the things you enjoy, and I'd hesitate to suggest that one choose one's pastimes based upon how inexpensive they are.

(pause.)

Hesitation over! Reading is the greatest cheap solitary recreation there is. Sure, you can make it expensive if you read only new hardcovers. But all it takes to have a lifetime's worth of good reading is borrowing privileges at a decent public library. In many cities, library sales, thrift stores, yard sales, and bookstore clearance sales offer lots of opportunities to get books for $1 or less. Paperbackswap lets you trade your unwanted books for wanted ones for about $3 each.

Close to home for us, the Bay Area Free Book Exchange in El Cerrito, CA exists to simply give away books. The selection includes a lot of the forgotten bestsellers of yesteryear, as you'd expect, but a lot of good stuff, too. I left with Hackers, Stand on Zanzibar, One Two Three... Infinity, and Distraction. Jen took The Grains Cookbook, The Women's Room, and Cryptonomicon.

Again, I understand that if you know you're not into reading for fun, then you're not, and that's not likely to change. But if you are, I'll remind you that the world is so full of cheap, free, or freely lent books, that reading can be not only enriching and rewarding, but dirt cheap, a combo that's as frugal as it comes.

My parents got married 43 years ago yesterday, and one of my mom's most-cherished wedding presents was the Pyrex nested mixing bowl set she received.

I used the bowls last month, and they look brand-new. Part of it is my mom's good care over the years, but she used them an awful lot, so a tip of the hat to good-ol' Pyrex. I mean that literally. More like a tip to vintage Pyrex.

Back in the day, it was manufactured by Corning, but subsequently was sold and no longer made of borosilicate glass. It is easy to tell the difference. When I upgraded my mixing bowl set in 2000 (a mere two years after the fateful sale), I bought a set of nesting Pyrex bowls, but was sorely disappointed. They didn't have the heft, the gravitas, that my mom's set did. Or the handy lip to pour batter easily.

But all is not lost, thanks to the internet. Many people are offloading their mom's vintage Pyrex (anything before 1998 will do, but the retro styles are charming) on ebay for as little as $10 for a three-piece set.

So whaddaya waiting for?! Those Pyrex pieces aren't going to buy themselves!

Dealing with dealers

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Jen recently mentioned that paying attention to the big ticket items can offer the biggest bang for the buck in savings. I'd like to talk a little more about buying a car.

I gladly gave up car ownership when I moved to Berkeley (Some time soon, I plan to get to a discussion of how much more can be saved if you can avoid buying a car.) But before that, I lived in New Jersey and had a car. A friend had recommended the book Don't Get Taken Every Time, and I'm very grateful to him. It portrayed car sales as a cutthroat world in which the salesperson would lie, manipulate, and wheedle by any means to take you for the most. Really, it was hard to believe, but even in my slight experience, having bought only one car, I encountered many of the dirty tricks described.

The basic advice was to comparison shop and choose the model you want, and never allow yourself to get sucked into a discussion of price on the spot. Research the model's cost, and come up with a firm offer. Have your financing in hand from your own bank or credit union. Make your firm offer to the salesperson, and don't deviate. If the salesperson won't agree, move on to another dealership.

The salesman misrepresented their financing to try to make it sound better than my credit union's. He balked at my offer, saying he could show me the dealership's own invoice, demonstrating that they had paid more than my offer. When I wasn't interested in looking at his fictitious invoice, he blew up at me and stormed out of his own office, ranting about how unreasonable I was being. I got up and left. As I was getting into the car of the friend who'd driven me, he ran out all smiles, saying the manager had agreed to my offer.

A friend of ours is looking at buying a car, and we're working to steel her against the lies and manipulation she'll face. I pointed her to this story by a reporter going undercover at a car dealership. It shows how the dealership deliberately creates a system of punishments and rewards to drive the cutthroat behaviors. This video presents an updated version of the advice I followed years ago; the most salient difference is recommending that after you know what you want, you contact multiple dealers for competitive bids on it. It warns you that they'll claim they don't do that, until you make clear that your business will go to someone who does. Then, suddenly, they do.

Don't get taken every time, or any time. Know what you want, and refuse what you don't.