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.