Thursday, July 24, 2008

Sweet spots and sailing

I'm taking a beginning sailing class, and that has me scheming about ways to continue sailing after the class is over, namely buying a sailboat. Last time I was at the library I stumbled across Jerry Cardwell's Sailing Big on a Small Sailboat, which is a real gem.

This blog isn't about sailing, so I'll skip to the part about living a deliberate life. Cardwell's thesis is that sailing is most enjoyable on sailboats that are just large enough to have an enclosed cabin, yet light and small enough to be towed by a regular passenger vehicle. He writes,
...many people who are tired of the complexity, equipment and maintenance costs, crew requirements, and limited sailing time on their big boats are downsizing in order to continue sailing, and to actually do more of it...For many of us, life is in great need of a heavy dose of the simplicity these smaller sailboats offer.
Caldwell argues that this size is the sweet spot: just large enough to have all the amenities of a large yacht, but small enough to keep things simple. Larger boats need a place to dock, a large piston engine, maneuvering thrusters, multiple sailors, trailering permits, specialized repair and launching facilities, and can cost more than a house. Trailerable sailboats cost about as much as an economy car and depreciate rapidly. The set-up and tear-down process is inherently quicker, making you more likely to actually sail.

This kind of analysis is key in any resource-intensive activity. It takes a certain minimum expenditure to to get fully running, to get to the "real deal." Spending more on top of that provides diminishing returns; the marginal reward of each additional dollar or hour is less and less.

In sailing, the sweet spot seems to be 22-24' trailerable sloops. In video games, you need a complete system and a large television, but don't need the latest technology. In carpentry you do need a large, stable workspace, but only need a few well-chosen tools. In cooking you need one great knife, a few good pots and pans, and a few other implements, but you don't need gadgets or gizmos. In amateur drag racing you need 300-400 horsepower to make driving a challenge, but beyond that parts costs escalate rapidly. And so on.

I don't think there's any point in pursuing an activity if you can't afford to get to the sweet spot, and it's rare that spending past the sweet spot is really worth it. I'll be reviewing my hobbies to verify that I'm in each one's sweet spot.

Wednesday, July 9, 2008

Visiting Austin

We spent last week on vacation in Austin, Texas, and had a great time.

Amanda's employer flew her out to San Antonio for a conference, and we took that as an opportunity to visit some friends and explore Austin. We did a lot of free activities and one of our friends hosted us, so our only expenses ended up being my air fare, a rental car, and dining (and lots of it).

Since this blog is purportedly about frugal bon vivant lifestyle I won't catalog our entire itinerary, but rather describe how we managed to have a rich travel experience without spending very much money. Our objective for the trip was to relax and catch up with our friends, but also to scout the Austin area as a potential place to live. So most of our activities were trial runs of the sorts of activities we'd do if we lived there. Before we left we compiled a list of things to do, based on recommendations from our Austinite friends as well as web pages for the city, travel bureau, and local universities.

Some specific strategies:
  • focused attention and expenditures on things we valued, in our case Texas-sized portions of cuisines we can't find at home
  • grouped activities by location so we didn't waste time or gas shuffling around
  • used local knowhow and patience to get free parking
  • ate at restaurants with live entertainment, and the Alamo Drafthouse which screens a free movie with dinner
  • attended a 4th of July festival, and watched the fireworks, in free parks
  • guided ourselves on a tour of historic neighborhoods
  • visited free museums
  • explored the state capital building and nearby college campuses
  • went canoeing on the river at nominal cost
  • traveled on a long weekend so we didn't use many vacation days
  • piggybacked on job travel to get one round trip flight for free
  • shopped online well in advance to get a good deal on the second plane ticket and the rental car
  • stayed with a friend, eliminating hotel costs
  • used small luggage so we didn't pay the overweight fee, could rent a small car, and were limited to very small souvenirs
  • packed based on a checklist so we were well prepared and didn't need to buy supplies such as sunglasses or sacrificial "lake shoes"
  • exercised moderation in staying up late, drinking, and exertion, so we didn't lose time to recuperation
We didn't explicitly set out to spend as little money as possible, but I realized on the plane ride home that our trip was very cheap yet also very memorable. I think this is an example of simple living axioms sinking in to the point where they start to become second nature.

Our general approach was to treat our time there as if we were residents on the weekend. I think this is a good mindset since it naturally steers you away from expensive tourist traps and toward things that give you a good feel of the area. Having local guides is also great because they can help point you toward the good stuff. In our case this was a two way street, as our presence nudged our guides to explore some attractions they hadn't visited yet.

Total World Stock Index

Recently Vanguard opened a new mutual fund, the Total World Stock Index. This is an index fund tracking the FTSE All-World Index, which is a close approximation of all the stocks in the entire world.

This is interesting for me because in general I'm a believer in allocating equities between US and foreign stocks according to their markets' capitalizations. Until now the simplest way of doing that was buying a total US fund (e.g. VTSMX) and a total ex-US fund (e.g. VGTSX) in roughly a 50/50 split. Now you can get the same effect with a single fund, and you don't have to worry about revisiting that 50/50 ratio over time.

In fact, I'm contemplating the following three-fund portfolio for my Roth IRA:
  1. Total World Stock Index, for 100% of equities
  2. Short Term Bond Index, for 50% of bonds
  3. TIPS fund, for 50% of bonds
You could carry the minimalist aesthetic even further and merge the bonds into a single fund (I'd probably use short term), but I think TIPS are worth having in there as an inflation hedge.

Wednesday, June 18, 2008

Are garage sales obsolete?

Last weekend we participated in a garage sale with some other members of our family. Unfortunately it was mostly a bust. Our gross sales were about $150, and that was split among four households. I'd estimate that we sold about 1% of the goods we offered for sale. It was nice to get rid of the stuff, but still, we were disappointed.

I have to wonder what went wrong. Very few shoppers came. The ones that did bought a pretty decent amount of stuff, so I don't think there was a problem with the goods or the way we laid them out. I think the sale was well advertised and there were no weather problems, so I think it was simply lack of interest in garage sales.

My hypothesis is that three trends are killing garage sales.

The first is fuel prices. The value proposition of a garage sale gets a lot worse when it costs a few dollars to drive to it. So I bet some garage sale veterans are (rationally) choosing to go garage-saling less.

The second trend is the rise of eBay, Craigslist, and Freecycle. All three are more convenient than garage sales since they let you shop for precisely what you want instead of sifting through a pile of everything. Most people probably prefer Craigslist and Freecycle for nearly-free stuff, and eBay and thrift stores for more valuable used items. That leaves a very narrow gap for garage sales to fill.

Finally I think this is part of the broader trend of Generation Y's preference for electronically-mediated interactions. Craigslist and eBay are fully Web 2.0-ified, but a garage sale is a purely in-person, face-to-face, analog affair. Our sale's customers support this idea, at least anecdotally. Almost all our customers were middle aged or older; we only had one group under the age of thirty, and the neighborhood kids ignored us entirely.

Wednesday, June 11, 2008

Products vs projects

A key mindset in frugality or simple living is to think in terms of utility rather than products. Our consumer-driven society is oriented to solving all wants by purchasing retail goods. The frugal mindset turns this on its head, and looks for means to ends. Buying something is but one of many solutions. It's push vs. pull. Marketing pushes: "you should be worried about identity theft and insurance solves that." Frugalers pull: "I need news. Talk to my neighbor? Blogs? Get a radio from Freecycle? Watch TV at the pub? If all else fails buy a newspaper or pay for cable."

This principle is manifested in a lot of bulleted money saving tips: brew your own coffee, buy used cars, use the library, and so on. The common thread is to identify the need, separate the core necessity (e.g. a book to read) from the unneeded frills (e.g. ability to keep the book permanently after it's read), and find the minimal solution that meets the core need.

When the "pull" mentality becomes an instinct these lists of tips become redundant because you automatically do this stuff as a matter of course. You might notice one or two clever ideas you hadn't thought of, but that's trimming around the edges. Detailed budgets become redundant as well. There's no need to monitor and ration your book expenditures (for instance) when you're already avoiding time-wasters and maximizing your library usage.

There's also a sense of calm that comes from acquiring things in response to only your own impulses and not the implied expectations of others. Those marketing messages work by instilling insecurities and providing solutions to them. Next time you see an ad, ask yourself "what is this ad designed to make me insecure about?" It's a relief to block out all those seeds for insecurity.

This all crystalized for me while watching a Linux machine install itself. Bear with me here. Historically Linux software had utilitarian, descriptive names. The Editing Macros are "emacs". The C Pre-Processor is "cpp". Free software isn't meant to be sold, so its name is just a utilitarian identifier. Indeed, the developers are sensitive about calling their work projects, never products. It's the "pull" mentality, and it's refreshing.

Tuesday, June 3, 2008

Frugal Entertainment: Pub Trivia

My favorite frugal entertainment activity is Trivia Night at our local pub. $2 will buy your way in to participating in the trivia event, in which teams of up to 8 people battle it out to be crowned "King/Queen with the most useless knowledge". I am a connoisseur of all things pop culture related, and thanks to wikipedia, Kevin has more obscure knowledge than he will ever need. Lucky for us, we have friends with similar mental prowesses, and most nights, we make a damn fine team (especially with entire categories devoted to knowledge of swords).

The pot for winning an evening of trivia can range from $60 to $120, depending on how many teams are playing that evening. If your team is lucky (and knowledgeable enough) to win, you walk away with a profit from partaking in this experience (or breaking even, at the very least). And even if you don't win, you have an enjoyable evening drinking and commiserating with like minded people. Always a positive in my book. Try for a listing of pubs that hold trivia nights in your neck of the woods!

Monday, June 2, 2008

GLOwing weekend

Early in graduate school, a friend and I termed the phrase "General Life Organization" (GLO), pronounced "glow". GLOwing means catching up on all the loose threads: running errands, catching up on housework, computer maintenance, paperwork, setting up furniture, and all those kinds of low-priority tasks that pile up.

We spent this weekend "GLOwing". I'd been under rapid-fire deadlines for the past two weeks so the entropy was stacking up. Things reached a breaking point when one of our book shelves tipped, triggering a "bookvalanche" that made a huge mess. Our biggest accomplishment was reorganizing our office space, including identifying a huge pile of books to get rid of. We also stocked up on food at Costco and the farmer's market, bought some much-needed clothes, made a thrift store run, organized our recipes into a binder, replaced a flaky network cable, and got about 90% of the way through merging our two always-on Linux computers into one machine.

I'd estimate we're getting rid of 4 linear feet of books. Most of them are old textbooks, which turned out to be worthless. Lesson learned: if a textbook isn't worth keeping forever, sell it ASAP. I'm getting rid of all my roleplaying game books from high school; those have a little sentimental value but I learned that I can buy PDF copies of the few that I care about. I'm pretty happy to convert bulky, rarely-read books into a PDF file on my computer. We're trying to unload the books on Amazon and an upcoming family garage sale, and will donate whatever's left over.

Sifting through the books wasn't fun. In many of the borderline cases we'd either feel frustrated by the money we once spent, or anxious that we might want the book "someday" for some reason. But seeing that heap of clutter leaving the house was well worth it. It's a couple hundred pounds of material that we are no longer responsible for, won't have to move, and someone else can benefit from. Our bookshelves were overflowing, and now we have ample space. Now we're on the warpath for more clutter to jettison. My pile of spare computer parts is the next target.

Thursday, May 29, 2008

Why bother?

This article in the Green Issue of the New York Times, written by Michael Pollan (author of the famed “In Defense of Food: An Eater’s Manifesto”), does an amazing job of explaining why we should all bother to change our habits in this current environmental climate. Sometimes it takes the words of people much smarter than I am to remind me that the actions of individuals can be powerful. Read it.

Wednesday, May 21, 2008

Dead car battery

Amanda and I both own cars. My commute is a walk, and Amanda's car works better for routine errands, so my car is relegated to "backup" duty. A couple weekends ago we tried to use it while taking her car to the shop for some maintenance, and found that the battery had drained out and my car wouldn't start.

The car was boxed in on an incline in a busy parking lot, so jumping it was impossible and moving it would be a risky feat of strength. According to my Hank Hill-approved maintenance file, the battery is 5 years old; young enough to be salvageable. After some analysis I decided the most prudent solution was to order a battery charger online, wait for it to arrive, then recharge the battery outside the car.

Right now we're on the "charging" step. The charger registered a fault at the fastest charge rate, so I'm trying the slowest charge rate. The battery might be toast -- which would be unsurprising for a 5 year old battery that's been deep-cycled -- but hopefully I can nurse it back.

This whole thing reinforces several rules of thumb:
  1. Keeping (comically) detailed maintenance records has a concrete benefit.
  2. Modern cars are outrageously complex. They are full of limitations (need electricity to start) and patchwork fixes (rechargeable batteries) that may fail (drain out after a month of non-use).
  3. If you can afford to be patient, you save money. The charger took a week to come from Amazon via free shipping, but was a lot cheaper than buying a charger or new battery locally.
  4. Every "thing" in your life has the potential to cost time and money, even seemingly-inert things like parked cars.
  5. Keeping an old car running feels expensive because it amounts to occasional out of pocket expenses, but in reality it's usually cheap. A $31 charger is a lot less than a single monthly payment on a new car.
  6. If my car were parked in my own garage this would have been easier to solve. Houses offer a lot of little miscellaneous benefits.

Friday, May 16, 2008

"Investing" entertainment experiences

Mass-market entertainment gets cheaper as it ages. Examples:
  • movies start showing at dollar theaters
  • shows on premium TV channels become available for rental through Netflix
  • DVDs, CDs, video games, and books become available used
And on longer time frames,
  • libraries add media to their collection
  • movies are broadcast on over-the-air television
  • media formats go obsolete (e.g. VHS tapes now, CDs and non-HD DVDs soon) and become extremely cheap
As I discussed in my post on old video games, this creates an opportunity to enjoy media for pennies on the dollar. Instead of paying for entertainment when it first comes out, set it aside until its price lowers to a "strike price" you're comfortable with. The cost becomes much smaller, so you can either
  1. consume more with the same amount of money, or
  2. use a lot less money for the same amount of consumption.
There are two big downsides:
  1. you don't get to experience the excitement of premieres at the same time as other people
  2. if you're excited about something you have to wait until it eventually shows up under your terms
At first downside #2 is discouraging because it effectively cuts off your flow of entertainment. I.e. if you decide to only watch movies at a dollar theater and you've already watched everything that's showing there, then you can't watch any movies. However once you wait through an entire release cycle you will enter a "steady state" where movies debut at the dollar theater at the same rate as a first-tier theater, just offset a few months later.

These tradeoffs parallel those of investing. Let's say you decide to invest $1,000. Then you are depriving yourself of the short-term gratification of $1,000 worth of consumption now, for the promise of much more than $1,000 worth of consumption later. If you choose to wait to see Iron Man until it's at the dollar theater or on Netflix, in a sense you are "investing" the experience of watching Iron Man for the promise that the experience becomes much cheaper in the future.

We apply this mentality to the media we consume. When something comes out we make a quick assesment as to where our "strike price" is. A movie is either worth seeing at a full-price theater, a discount theater, renting on Netflix, or not seeing at all. In addition to saving money, this moment of reflection also helps us sort out the movies that are actually worth our time, from the ones that we're only interested in due to marketing pressure.