Monday, October 23, 2017

Always the Brand Name, Always.

Walmart has gone from discount retailer to mainstream brand-name retailer and no one seems to notice.  It is no longer a place with really advantageous prices on most things anymore.

Further to my previous posting, I have written about Walmart in the past and have always been a big fan of the store and also am a shareholder in the company.  They have a lot of good products there at reasonable prices including, and perhaps especially, many of their store-brand "Great Value" products.
But the funny thing is happened along the way.  Walmart no longer is merely a competitor in the marketplace, but in many respects has become the marketplace in many towns, cities, and villages. Walmart is now the de facto grocery store, department store, automotive center, sporting goods store, optometrist, hair salon, fast food restaurant, gas station, tax preparer, and Obamacare sign-up center, among other things.  Where people used to go to malls for "one stop shopping", today they go to Walmart.  And for many families, going to Walmart is a weekend event.
In any retail business, often you your have to initially offer competitive prices or very low prices to attract business initially.   You do this to get warm bodies into the store, and perhaps drive competitors out of business.  However, once people get into the habit of shopping in your store, you can bank on that habitat, and no longer have to offer lower prices.  And it seems that Walmart is falling into that pattern, as lately their prices seem to be ratcheting up, and also they seem to have fewer and fewer store-brand products than before, and more "name brand" products instead.  Great Value Woven wheat crackers are nearly impossible to find, but there is a wall of Triscuits in its place.
And this is not by accident but design.  Several years ago I recall reading an article about Walmart where the management mentioned they were trying to push brand names more and move upscale.  The "always the low price" and smiley-face logo (and the "falling prices" campaign) went away and the new "live better" asterisk took its place.  It seems they've succeeded in this as I am finding fewer and fewer discount items at Walmart and more more things that are priced at what are fairly mediocre bargains compared to other stores.
But as I noted, people get into the habit of shopping in the store, and initially they may not notice the prices have increased.  And the many small towns and villages, perhaps the Walmart is the only place to shop anyway, so consumers don't have much of a choice.
Whether this bodes well for Walmart is anyone's guess.  I suspect that like any other type of system, there is a bit of hysteresis in people's shopping habits.  People will continue will continue to shop at Walmart and initially not notice that prices have edged up.  But eventually, over time people may gravitate toward another retailer with lower prices, much as they initially gravitated toward Walmart in the first place.
Whether that retailer is Amazon or someone else is hard to say.  Quite frankly, I find that Amazon, like Walmart, has sort of "meh" prices these days, and unlike Walmart, doesn't have the same products for sale, but often inexpensive off-brand Chinese products instead, which are hard to cross-shop.   If I want an inexpensive weed wacker, and don't mind some off-brand, Amazon is the place to go.   If I want a specific brand of one, Amazon might be the last place to look.

For example, I was looking for rye grass seed at Walmart the other day.  They were sold out, as the garden section has been converted to Christmas displays and that assume that no one plants "winter grass" in the winter (when else do you plant it?).  But Walmart, Lowes, and Home Depot ordinarily carry this product, about $30 a bag for $25 lbs of it.  Amazon, on the other hand, starts at $44 a bag for 20 lbs, plus shipping.   For some crazy reason, Amazon has crazy prices on a lot of things.   And then there is the weird deal of $50 jars of mayonnaise, which I think is a cover for money laundering.

In terms of lowest possible price, the big-box lumberterias, Walmart, and Amazon are no longer the "go to" places they were in the past.   Not only are their prices not very low, odds are, they won't have the item you want in stock - and you may not even be able to order it online!
Perhaps this is the break that Sears Kmart has been looking for.

We Need a Little Less Christmas, Right This Very Minute!.

We need a little less Christmas. 
Christmas and holiday items are huge markup profit centers for most retail stores.  However, just because they could make it a good profit on Christmas and Halloween items doesn't mean they can turn their entire store into a holiday accessory store and expect to make money.

I wrote before about how Hechingers, the lumber store chain went out of business when the children took over the company from their father.  They quickly realized they were being run over by the likes of Home Depot and Lowe's and could not afford to compete.  They saw that the markup on small appliances was the most profitable for the company, so they decided to focus the company on selling small appliances such as coffee makers and crock pots.  Unfortunately this meant they didn't order things like two-by-fours and sheetrock.

Within a year, Hechingers was out of business.  You can't run a lumber store selling small appliances. Even though the markup might be higher than on lumber, people go to the lumber store for lumber, not coffee makers.  They are not acceptable substitute goods.

I've noticed that this holiday season, it seems like more and more stores that are not primarily in the holiday decoration business are saturating themselves with holiday decorations.  Big-box Lumberterias such as Home Depot and Lowe's are both clogged with Halloween and Christmas displays, much moreso than in previous years.  Our recent trip to Walmart revealed that they have allocated at least one or two additional aisles for Christmas items and it seems the store is overflowing with various Christmas displays including inflatables, lights, and other items - and of course, toys.

Most of the stuff is made in China and the markup on it is rather good.  So you can understand why companies want to sell more of these seasonal items. I can just envision the meeting at the conference room. "Gee, we make a lot of money on this Christmas and Halloween crap - let's see if we can sell even more of it!"  The problem is when every store tries to sell more holiday stuff, it becomes a race to the bottom.  Since holiday decorations can be reused, eventually reaches a saturation point where you can't sell additional holiday decorations to people.

But you can see how this happens.  One store puts up holiday stuff a week earlier than others - and makes good money on impulse sales.  So the other stores follow suit, and next year try to be even earlier.   You can blame the stores for putting the stuff out earlier and earlier, or you can blame the consumers for buying all this crap.   It is our fault as much as theirs.

Maybe I am old-school, but when I grew up my parents used the same Christmas decorations and Christmas lights again and again, year after year, without much change.  It was a major deal in our household when we switched from the big old bulky screw-in type Christmas tree bulbs to those new miniature GE lamps that they sold at the drugstore.  But that was about the only change of Christmas decorations my parents made in over 30 years.  And even then, we were dragged kicking and screaming into the 1980's.  Mother always said that miniature lights were "tacky" until the day she came home with several boxes of them.  But the rest of our ornaments and decorations were decades old - most older than I was.

But I worry that this trend toward Xmas saturation might be a syndrome a sign of Hechinger syndrome.  Retailers are looking at the markup for products, rather than offering an array of products that people want.  They may find that there is a limit as to how many Christmas ornaments and decorations people will buy.  While it may seem like a money-making profitable move, if no one buys this crap, and you are "out of stock" on the stuff they do want, you may find that people stop shopping entirely - as I have been doing, walking out of Walmart and Lowe's, both stores twice, in recent weeks, without buying a damn thing, because what I wanted wasn't in stock, but the Christmas displays overflowed into the aisles.

On another note, in the housewares section I saw an entire aisle of pots and pans and other accessories labeled with "Pioneer Woman" with a woman's smiling face on it.  I presume this is some sort of reality television show that is on cable TV that I'm not aware of (since I don't watch cable TV).  It seems that she is gone Rachael Ray in a very big way, selling too much, too soon.  As you may recall, Rachael Ray put her name on everything from pots and pans to dog food and over-saturated the market with her smilin' face.  Today only her dog food seems to still be around.  I guess you have to milk those 15 minutes of reality TeeVee fame when you get it.

Pioneer Woman, I'm afraid, may go the way of Duck Commander, which once flooded the aisles of the local Walmart and now cannot be seen at all.   What ever happened to those folks?   I'm not sure why people prefer to buy products with celebrity endorsements on them. They're not inherently better than non-celebrity endorse products.   But obviously Walmart knows more than I do in this regard.

Or perhaps Walmart knows that the great unwashed masses will pretty much buy whatever Walmart puts out to sell...

More on that in my next posting.

Sunday, October 22, 2017

The Most Evil Company?

The Alien Replicants who work at Apple are ready to fly back to the home planet.

Apple has almost completed its new flying saucer headquarters in Cupertino, California. Once it is completed and all the employees - who are alien replicants - are on board, it will take off and return to the home planet, forever leaving the Earth behind.  Having done its job and infecting our planet with the iPhone, Apple aliens (Appaliens?)  no longer need to stay.

America is in the midst of an opioid crisis, and many people are pointing fingers at large pharmaceutical companies for looking the other way as distributors and doctors diverted millions of pills to drug addicts.  Tens of thousands of people have died as a result of this highly addictive drug.

However, Apple has scored a coup over the drug companies by creating an electronic drug in the form of the smartphone.  Not only is it far more addictive than opioids, it is far more pervasive. Nearly everyone in the United States now has a smartphone, while only a small number are addicted to heroin. And thousands, if not tens of thousands of people, have died as a result of smartphone addiction, usually while texting while driving.

And like drug addiction, cell phone addition has ruined lives, careers, and marriages.  It is certainly ruining the Presidency!

While touring our little island the other day, we went down to Clam Creek, which has a beautiful view of Jekyll sound.  I saw a number of people sitting on benches facing the water, but instead of enjoying the view, they all had their heads down and these little flat bricks in their hands which they were studying intently.  Yes, they were smart phone addicted.


On Facebook they say "pictures or it didn't happen" - which strikes me as odd, as today is Sunday and many people are in church reading the Bible which doesn't have any pictures in it.

Others were riding bicycles with their family members, stopping every few feet to take a picture so they can post it on Facebook.  Later on in the hotel room they would carefully go through the hundreds of pictures they took and pick the best ones to post on Facebook to brag to their friends about what a wonderful time they were having.

On Facebook they say "pictures or it didn't happen" - which strikes me as odd as today is Sunday and many people are in church reading the Bible which doesn't have any pictures in it.  People are willing to take 2000-year old stories on faith but won't believe that you took a vacation or went to a fancy restaurant, unless you have a photograph of it.

Whether Apple intentionally set out to create an electronic drug is up for debate.  However, I believe that the developers of the smartphone knew at the time they were developing something that had highly addictive properties.  And unlike opiates and other drugs, this new electronic drug is perfectly legal and in fact promoted and regulated by our government.

Granted, it is possible to become addicted to almost anything.  People are addicted to watching television - in fact the majority of Americans are.  Most Americans watch hours every day of television and think nothing of it.  People also become addicted to driving cars, particularly poor people.  As I noted in earlier postings, many people will just get in their car and drive around for "something to do"  Or they spend countless hours in long commutes and think nothing of it - and even admit that they enjoy this private time behind the wheel of this powerful machine, where they are in charge for brief point during the day.

And the nature of these addictions is very consistent.  There is a feedback loop that provides an incremental amount of pleasure to the user so that they keep coming back for more and more over time.  People stay up late watching television, flicking through the channels on their cable box trying to find something good on.  They look up with the clock and realized they've spent two or three hours flashing through dozens of channels watching only snippets of programs - and mostly advertisements.

Cell phones with the same way, but even more so.  There are some people who simply cannot put down their phone, whether they are texting on it, talking on it, or just looking at it.  Whether they are reading emails, going online to find sex partners, or just reading obscure articles on Wikipedia, it becomes a compulsive addiction, and no one, including myself, is immune from it.

I would like to think that I'm not completely addicted to the smartphone at this time.  I usually leave my phone off for most of the day, and leave it sitting on a table when I leave.  It is odd, but we will go into town to go shopping and not bring a cell phone with us.  People act shocked that we would leave the house without a cell phone, however in my lifetime this was a very common occurrence before the cell phone was invented.  Believe it or not, you can actually drive to the store without having to have your cell phone with you.

The problem is, since I am not tethered to my phone 24 hours a day, other people often get very upset with me.  Most other people have their phone in their pocket or in their hand or within easy reach at all times.  They have their cell phone ringer at full volume, whereas I have mine turned off.  So if they try to call or text or email me, I may not receive their message for hours.  They assume that I am screening my calls or intentionally not responding to their messages or emails and then get pissed off because I didn't immediately reply.

This is the new paradigm of the smartphone.  When people send you a text, they expect you to immediately text them back.  Since I don't have texting enabled on my phone at all, this becomes problematic.  People say, "I sent you a text didn't you get it?"  And I reply, "No I don't do texting" -  and they give me a blank stare.

This was driven home to me the other day when a friend called and asked why I hadn't responded to the voicemail message they had left on my phone.  The reason why I hadn't responded was that I had been in town shopping in my phone was sitting on my desk. When I returned home I didn't immediately race to the phone to see if there were any messages, and in fact didn't even look at it for several hours until they called.

To the cell phone addicted, who never leave their phone for even a nanosecond, this is heresy.  My friend all but accused me of screening my calls and intentionally not answering his voicemail.  The idea that I simply wouldn't have my cell phone with me or not be constantly checking it every five seconds for new messages was unfathomable to him.  So once again, I have pissed someone off, simply because I am not part of the herd and don't engage in the herd behavior.  Modern living is so complicated!

What is amazing to me about this is that given that cell phones and smartphones have only existed for a few brief years, that this sort of behavior is become so quickly and heavily ingrained into our society.   People today have new norms of behavior which are shockingly different than those from just a few years ago.  Indeed, Apple has done a very good job of molding our behavior and addicting us to this electronic drug.  They have changed the world, and not always in a better way.  In fact, not very often.

Saturday, October 21, 2017

Shitblogs, Shitnews, Shit-text and the New Internet

You think you are being informed by the news.  You are not.  You are being baited with trash articles written by "text farms" in the far east, simply to get you to click.

What sucks about the article is not the content, but the writing.   Yes, it would be interesting to read about outrageous trademark applications, claims, and lawsuits.   But for some reason, the writer confuses the words "Patent", "Trademark", and "Copyright" often in the same sentence.   You cannot Patent your Trademark or get a Trademark on your Copyright.  These are three distinct forms of intellectual property.

And if you think I am nit-picking, let me put this in terms you might understand.   A car is not a boat, nor it is a motorcycle.   And you can't tell the difference between the three, you are being particularly dense.   And no, I don't want to hear, "what about amphibious vehicles?" as you are just being annoying for the sake of being annoying.

What's worse, the author confuses Trademark applications (filed with the United States Patent & Trademark Office) with lawsuits (filed in Federal Court) and again, conflates the terms often within the same sentence.

This is shit-posting.  This is shit-text.  This is garbage "news" generated by some fellow in a third-world country who no doubt was paid bubkis for this "content" which in turn was posted on a dubious site ("Lovemoney?") and reposted by MSN.

MSN, of all the "news sites" has fallen down the toilet of fake news more than others.   Apparently they have been blocked from reposting other content, particularly in their finance pages, and as a result, have resorted to the cheapest form of sensationalist postings for their "Money" page.  I mean, it is really crap these days.

But that, in a nutshell, is the new Internet.   No one wants to pay for content anymore, so companies rely on shit content to fill their web pages and news feeds.   This makes a perfect storm for Russian Troll farms, who find a ready audience for their outlandish stories.  The press acts like they hate Russian Troll farms, but frankly, they provide a ready source of news feed for them, as they can report the outlandish stories promulgated by Russia, and then write a second story debunking it.  No one reads the second story.

And if that isn't enough, you hire "copy writers" from third-world countries to come up with topical content that people will click on.   "List" stories (20 best this, 10 worst that, etc.) as well as "You'll never believe what happens next!" type stories are typical of the genre.    Of course, as others have noted, whenever you see a question mark in a headline, the answer is usually "NO".

What is the answer to all of this?   It is hard to say.  So long as we demand "free" data on the Internet, we will get exactly what we pay for - a shit taco, wrapped in a layer of advertisements.   In a way, it is like free television - not worth watching and mostly infomercials or commercials.  You can watch that crap, but it is mostly just ads trying to program your brain to get you to buy something.

Or worse.  On the Internet, much of the "free" content is stuff designed to destroy your life.  Join ISIS!  Join a White Supremacy Cult!  Join a Tax Protester club!  Come share your conspiracy theories!   All stuff that just poisons your brain and gets you nowhere - but free of charge, of course, until you run afoul of the IRS or the local police.

Of course, I am not sure "paid content" is the answer, either.  Both the New York Times and Washington Post (now basically the same paper) want me to pay to see more than a snippet of their articles online.   But what they are selling isn't necessarily impartial and balanced news coverage - anymore than Fox news is.

It is a conundrum.

In the meantime, before my malpractice insurance expires, I plan on Copyrighting a few Patents, or perhaps Trademarking a few Copyrights.  Or something along those lines.

Why Debt Forgiveness is Taxable and Should Be

If you allowed forgiven debt to be untaxable, we could all pay each other in forgiven loans and avoid the IRS entirely!

A recent heartbreaking story in the paper (which of course, tells only one side of the story) concerns a disabled vet who went to Cooley Law School and ran up a quarter-million dollars in student loan debt.   I will refrain from commenting about Cooley Law School as they have sued people in the past who have discussed their operations.  The Wikipedia link cited above, if read carefully, tells the whole story.

Sadly, this story is repeated time and time again in America, where we are told that a college education - any college education at any college in any field of study - is a one-way ticket to riches.   It isn't.   Even in the lucrative fields of Engineering and Patent Law (well, at least at the time I was in them) it was a ticket to a comfortable middle-class lifestyle, and certainly not worth $250,000 in student loans, even today.

For people majoring in "Sociology" or "International Law" or other nebulous fields?  People who attend "for profit" or bottom tier schools?  For them, college and grad school can be worse that worthless - the staggering cost and lifetime loan commitments mean the student sells off the rest of his working life for a few years of "study" that never leads to gainful employment.    It simply isn't worth it.

There are better fields to study, and cheaper ways to go about getting a degree.   Spending $60,000 a year on college is just plain dumb - no matter what your major is.   Sorry, but that's the God's Honest Truth about it.   I worked my way through college - all 14 years of it - and graduated with a lot less than $250,000 in debt.   Plus I had a job when I graduated - the same job I had before I graduated!

But I feel bad for this guy, because like so many before him, he answered the siren song of college and law school, sold on the idea that if he borrowed enough money, he would end up with this credential that would guarantee him a high-paying job.   The problem is, the jobs were never that high-paying to begin with and then the bottom fell out of the legal market about eight years ago.

Now he's on full disability and his law degree is pretty worthless to him.

Oh, it's not all bad news, of course.  There are still lawyers - with experience - who are finding jobs and employment.   They aren't making the big bucks that you see on television law shows, however.  It is a much more competitive business than before.   And as I noted before, "If you are in it for the money, you will never be happy, but if you do it because you love it, the money doesn't matter."

And sadly, a lot of people get into fields such as Engineering, Medicine, Law, and so forth, convinced they will make a lot of money, when in fact, the best they can hope for is a nice comfortable middle-class existence and a career that is interesting and rewarding.

That ain't such a bad thing, is it?

But I digress.

What is shocking - at least to some folks - is that after this fellow had his quarter-million-dollar loan debt cancelled, he was sent a bill by the IRS and the Michigan Department of Taxation for taxes due on this loan forgiveness.   Since this $250,000 "payday" puts him in the highest brackets, he owes about 40% of the loan amount as income - and a smaller amount to the State as well.

To some folks, this makes no sense, or at the very least, seems unfair.  The poor guy can't repay his loans on disability income, so there is no way he can pay the taxes on it, either.    Perhaps a payment plan can be worked out with the IRS to pay the debt in installments over a number of years.   Maybe the government will come up with a new law exempting people on disability from this tax.    Hell could also freeze over, too.

But while it may be unfair to tax a disabled person this way, the underlying premise of the tax code in taxing forgiven debt isn't anything new or anything shocking.   If we allowed "forgiven" debt to be untaxed, it would not take long for everyone to be paying each other in forgiven loans.

For example, suppose you wanted to pay me a million dollars.  That would knock me into the highest brackets and I would end up paying the IRS and the State over $400,000 in taxes or thereabouts.   I suppose we could form a Subchapter-S corporation or something and I could pay myself in dividends or deferred interest whatever that Mitt Romney and Donald Trump uses.   That might knock me down to 25% or even 15% capital gains rates, if we structured it right.

But suppose instead, you loaned me the million dollars and then said, "I forgive the loan!"   Since you don't pay taxes on loans (because, despite what poor folks think, getting a loan is not like getting free money) you don't have to pay taxes on the million bucks, right?

Well, the IRS and the United States Government are not that dumb.  That loophole was closed a long time ago and Publication 4681 explains how this works.  And if you think about it, there are logical reasons why this law is in place.   A loan forgiven is income, because your net worth just jumped up by the amount of the debt that was wiped out.

Now granted, this can have unintended consequences - most sections of the tax code do.   For example, you buy an investment property for $250,000 and then proceed to remortgage it over the years, adding to the balance of the loan.   A decade later, you now owe $500,000 on the mortgage, having "taken out" cash at closing in a series of serial refinances.   You also have depreciated the property on your taxes, reducing your income tax each year.  But now your "adjusted basis" in the property is zero dollars.

You sell the property for $500,000 which barely pays off the mortgage.   You walk way with no cash.   But the IRS (and State tax people) sock you with a capital gains tax of $75,000 or more - 15% of the proceeds.   You made no cash on the deal, but you now owe money, which you haven't got.

Now in this case, you would not cry "unfair" because the person with the property made money and just chose to spend it by taking cash out in refinancing.   They also got a tax deduction as well.   The fact they didn't put some money aside for the inevitable capital gains taxes isn't the fault of the government or the IRS, but themselves.

But of course, we expect an investor to be a little more sophisticated when it comes to finances.   Someone investing in real estate should know what they are doing, but of course, the track record of boom-and-bust-and-default-and-foreclosure that has been going on since the 1980's would seem to tell a different story.  Americans all think their houses are made of gold and get angry when they find out that sometimes they aren't.

You could make the argument (but I won't) that this disabled vet received a free education worth $250,000 (I question the pricing of the law school, though - that seems awfully pricey!).   So he is not simply walking away from debt, he is walking away from something of value he bought.  That he overpaid for that "something" isn't really the IRS's problem.

In other words, the IRS isn't being "mean" here but just doing their job.   In fact, they have no discretion or choice in the matter.  If they chose to "forgive" tax debts, they would be in far more trouble than the bad P.R. they are getting now.  Government agencies are not allowed to selectively enforce laws depending on the sympathy of the person or corporation involved (at least in theory, I am sure there are examples where some well-heeled company has managed to bend the law to their will).

Of course, this raises the question, did Donald Trump have to pay taxes on all the forgiven debt he had running his various businesses into the ground?   And I suspect the answer is "no" as he was shielded from most of these debts (directly) as they were run through corporations that ran his various projects.   The corporations then declare bankruptcy and leave the banks and the IRS hanging.

Too bad law students can't incorporate.   Oh, a neat idea, but it won't work.   For us "little people" the idea of forming a corporation and then accumulating debt in the corporate name simply won't work.   I had three subchapter-S corporations at one time, and two of them had debts, my real estate venture in particular had over a million dollars in mortgage debt.

But a funny thing - in order to obtain those mortgages, we had to personally guarantee the notes, which meant that if the whole thing went belly-up (for example, we didn't sell out in time as we did) we would be on the hook personally for those debts.  And if those debts were forgiven, we'd have to pay taxes on the forgiven debt amounts.   And yes, some real estate investors caught up in the bubble of 2008 found themselves with tax bills for forgiven mortgage debts.  For your own home, however (whose capital gains are largely untaxable) such taxation of forgiven debt may not apply.  It gets complicated.

Funny, but if his home mortgage was cancelled, he would have been in the clear.  Maybe pay for school with a home equity loan instead?   That does require you have a home, however, as well as equity in it.

I hope the poor fellow in the article finds some sort of relief from the taxes due.  Perhaps he needs to declare bankruptcy, as painful as that sounds.   Expecting Congress to act and pass a retroactive bill seems kind of farfetched, given how little Congress gets done these days.

But the idea that taxes are due on cancelled debt is "a weird area of law" as one person opined in the article or that it "makes no sense" as another noted, it just naive.   Cancelled debt is clearly income - you are receiving a monetary benefit that increases your net worth by the cancelled amount and relieves you from paying back the balance of the loan.   While it may not put cash in your pocket, it is income, no matter how you slice it.

Whether this is "fair" in certain circumstances, is another question.

Friday, October 20, 2017

Used Jet Ski Trailers

Jet skis burn out after a few years, leaving the trailer to rot in the owner's side yard.  You can buy these cheap and use them as utility trailers, for camping, or to haul a small boat or kayak.  And hey, if you're dumb enough to buy a jet ski, at least save a few bucks buying a used trailer.  Be sure to pack those wheel bearings though!

We were thinking of making some sort of trailer to tow behind the golf cart, so we could take the kayak to the boat ramp.   Hauling it on the truck is OK, but it takes a long time to set up the roof racks and whatnot.   We saw someone hauling their kayak on a small trailer and thought, "why not?"

(The Kayak in question is an Old Town 13' two-man loon we bought used for $200.  Sturdy, but heavy).

We found this out by talking to someone at the campground who had a neat trailer to haul his kayak and a box bolted on top with some angle irons to haul all his camping gear, life preservers, etc.  He told us it was a used jet ski trailer he found for $70 at a junk yard.   Good scavenging!

As opposed to.... going out and spending thousands of dollars on brand-new kayaks.  While searching for a cheap used Jet ski trailer, we found this missive on Craigslist in nearby Jacksonville, Florida:
Three Kayaks, Trailer, paddles, life-vests, transporter, storage box, rod storage tubes, rod holders etc. These kayaks and trailer have been stored in a garage and are in excellent condition. Two of the them have only been used twice and the other (140) was a demo model. Just have too much going on to be able to use the kayaks. Would like to sell as a package to someone who wants to get started in a great outdoor activity. Contact me if you would like to take a look.

Wilderness 140 Tarpon
Wilderness 135 Ride
Wilderness 115 Ride  
Ouch.  They spend all this money on brand-new kayaks, a trailer and then use them twice because there is "too much going on" (read:  Watching Fox News 6 hours a day).   You can go kayaking for a lot smaller investment than this, trust me.  Like $200 or so.

But this got me thinking.   A lot of people decide, "We're going to get into Kayaking!" or boating or pottery, or a motorcyle or a hobby car or whatever.  And they go out and buy all brand-new stuff and it languishes in the garage.   We've seen a lot of brand-new kilns, for example, that sit unused and obsolete, over 10 years old, in the owner's garage.  They were going to get into pottery, spend thousands of dollars on equipment, and then lost interest.   And pride prevents them from selling all this brand-new stuff and moving on with life (and learning a valuable life lesson).

We've seen people buy brand-new motorhomes - spending tens if not hundreds of thousands of dollars - and then go camping and decide they hate RVing.   And they sell the rig at a huge loss, or since they are upside-down on the rig, let it rot in the side yard until the loan is paid off.

Or consider my former dental hygienist, who went to a boat show with her husband and bought a boat.  They went out on it once, on a very windy day, and it scared them so much they never used it again.  They failed to winterize it, and the first winter cracked the block.   Nearly a decade later, it sits in the driveway, full of green water, the transom rotted out, and ten hours on the hourmeter.   What a freaking waste!

Yet the middle class does stupid things like this all the time, and then wails that the "1%'ers" took away their money.   And younger people do this too - signing onerous loan agreements to go to party university to get a useless degree in naval gazing and then wondering why there is no six-figure job at the end of the pipeline.   Forgive my loans!  Make college free for everyone!  Guaranteed minimum income!  Tax the rich!  It has to be someone else's fault, right?

I could go out tomorrow and buy a brand-new trailer at a boat store.  I could go to Lowe's and buy one of their "little gay trailers" they have parked out front and pay cash for it.   I choose not to.  Because this is a want more than a need, and the fun part is finding something that someone else discarded and then making something of it.

Sort of like our $299 golf cart.   Our friends have spend thousands of dollars on tricked-out golf carts - $8000 or more.   We've spent about $2000 all told, and are having a ball with it.   And if our friends think we are "poor" then so much the better.   Fly under the radar - that's my mantra.

If all else fails, I think I can make something from some old galvanized steel studs they are throwing away in one of the hotel demolitions, and a couple of used wheelbarrow wheels.   Either way, I'm in no hurry to go out and spend money on a trailer, that's for sure!

Thursday, October 19, 2017

Why Brick and Mortar and Mom and Pop are Not Dead Yet.

What store has the best prices and best service?  Amazon?  Best Buy?  Lowes?  The local Mom & Pop Appliance store?  The answer may surprise you.

Our icemaker finally died after 12 years.   Such appliances are designed with a 15-year design life in mind, so it was a few years too early.  Hard water really eats these things up, as they are constantly on and constantly spraying water about the innards, and scale builds up quickly.

So I go online to find a replacement.  Most undercabinet ice makers are 15" wide, and ours was 18" wide.  Not wanting to re-build our cabinets, I search for an exact replacement.   These are not cheap.  The retail price on a replacement is a staggering $2599.   Ouch.   These are toys for the rich, or at least people who like their martini ice just so.

So I check Lowes and Home Depot.  They can order one, with two month's notice, for $2159.  That's somewhat better, I guess.  But having seen all the dented appliances at both stores, I am reluctant to order.  They hire kids to work at these places - kids who basically don't give a shit about anything.

I actually found a used one on Craigslist that needed a new pump.  I just replaced the pump in mine, so I could swap that part out.  Sadly, it was sold by the time I called.   That might have been a big savings, but then again, if ours burned out at 12 years, how long would a used one last?

I go online to all the other places - Compact appliance, Amazon, etc.  They have 15" models, or ice makers that are just freezers with conventional refrigerator ice makers in them (that make half-moon shaped cubes, not "clear ice" like a real ice maker).  Or they have 15" models which have pretty half-hearted ratings.   So much for Amazon taking over the appliance business from Lowes.

I keep searching online and find pretty good prices at some appliance stores.  But since I am out of their area, they can't ship to my house.   Then I think a minute.  The local Mom & Pop appliance store, Coastal Appliances, furnished all the Kitchen Aid appliances that came with this house.  We bought the fridge, washer and dryer from them as well.  I call up and they are $100 cheaper than Lowes or Home Depot, and will deliver, install, and remove the old ice maker as well.

And unlike Lowes and Home Depot, I trust these folks not to drop the damn thing off the back of the truck, put a dent in it and say, "Gee sorry!" the way the chain store lackeys do.

Now, sure, you could say I could have bought a cheaper model, or paid a carpenter to narrow the cabinet opening.   But that's comparing apples to oranges.   When it comes down to it, when I searched online, the best price available for this particular make and model was at the local appliance store.

Not Lowes.

Not Home Depot.

Not Best Buy.

Not Compact Appliance or - they didn't even stock such an item, only pale imitations.

The heralded demise of brick and mortar and Mom and Pop may be further off than we think.   Sure, Amazon has great prices on some things.  But if you want a specific thing, they largely don't have it.  They will have some crappy made-in-China substitute that no doubt is cheaper, but not quite as good.  And granted, half the time what they have is adequate.

But in terms of buying a specific product, the big-box stores and online sites all fall down when compared to the local Mom & Pop appliance store.

Wednesday, October 18, 2017

Late Model Used Cars FOR SALE BY OWNER

A used car from the original owner can be a good deal.  Unknown crap off a used car lot, not so much.

I have received a number of e-mails recently about buying used cars.  In several posts, I have repeated what a lot of "car guys" have said for years, that the best deal in a used car is a late model used car from the original owner.

This means a car "for sale by owner" about 1-5 years old, with all service records, being sold by the person who owned it - NOT from a used car dealer, a "curbstoner" (a guy who buys and sells cars on the side) or the third or fourth owner of a 10-year-old car.

For some reason, this common-sense advice gets twisted around to "used cars are ALWAYS a better deal!" or "I should buy a 15-year old Mercedes with 300,000 miles on it!" - which of course, is not what I said at all.

The low mileage, late model used cars for sale by owner are out there - but are not easy to find.  You have to look.  And it may not be possible to find the car you want or are looking for, at least right away.

It this is a generalization, not a hard and fast rule.   Used cars from a reputable used car dealer (such as some new car dealers or a chain such as Carmax) can sometimes be a good deal, but usually cost more - as evidenced by the price guides (NADA, KBB, Edmunds) which all show used car dealer prices to be 10-20% higher than "private party sale" prices.

And some types of cars are hard to find "for sale by owner" in good condition, because they are the kinds of cars bought by young men, "modded" and then beat to shit.   One problem with Jeeps and 4x4 pickups is that kids (and by kids, I mean these oversized children well into their 30's, usually young men) buy them new, put bozo tires and 8" lift kits and loud exhausts on them and then take them "off-roading" and usually break things.   Or "performance cars" that are modded with questionable aftermarket accessories and then beat upon.

These types of sellers think the "mods" they made make the car worth more than new and are unrealistic on pricing - and in fact are often not really even selling the car.   You know the type.  Back in my day, it was always the jerk with the Camaro with the perpetual "for sale" sign taped in the back window.  Yes, Mom's Berlinetta is a collectable - not many of those inline sixes with an automatic were made, in baby blue.

Like I said, the decent cars are hard to find, and if you can't find one, then you may have to move to plan B.   Buying a brand-new car is one alternative, but bear in mind the second you sign the papers on it, it is a USED CAR and worth about 10% less than the nanosecond before your pen hit the contract.   You take a big hit, so if you can find that two-year-old car with low miles, you can save a lot of dough.

Used cars from a dealer can be dicey.  The guy who offers "buy here, pay here" or "we repair bad credit" or whatever, should be avoided at all costs.  These are not car dealers, but just people who rip off the poor by selling them crappy cars for inflated prices at obscene interest rates.  New car dealers are a mixed bag.  As I noted before, the local "Monster Motors" offers shitty deals on overpriced used cars.   But other dealers I have visited (in more affluent areas) often want to "move iron" off the lot and will keep their best trades for sale.   You will pay more than in private party sale, but you won't get totally screwed as you would at Smilin' Bill's Used Car Lot and his weekly payment plan.

Whatever you decide to do, research, research, research first.   Pick one make and model car first - you will have to look at a lot of cars first and decide on one model.   You can't cross shop Fords and Chevies - the pricing patterns are apples and oranges.   Pick one and then shop that car.

For example, when we bought the Nissan Frontier, we narrowed the selection down to that model (and trim level, SV) after looking at Fords, Chevies, Toyotas, etc.   That made it a lot easier to compare Frontiers to Frontiers, and quickly get a feel for what prices were reasonable and what condition to expect as normal.   We used the NADA guide, KBB, and Edmunds (and printed out the pricing pages as a guide) and set up a file.  We read reviews online. We scoured Autotrader, Craigslist, eBay, and whatever other places listed cars for sale new or used.  We visited several dealers and quickly realized that "small town" dealers were the worst of the lot, as they sold few cars and tried to extract maximum profits from each sale.   Sometimes you have to drive to the "volume" dealer in the big city, as they get kickbacks for selling more cars and thus can offer lower prices.  Most dealers make more on service than they do on sales, particularly warranty service.

We picked the Nissan because it was cheap and not as popular a the Toyota.  The Nissan dealers were dealing, the Toyota dealers thought they were selling gold bars.   And this is true for any popular car.  You want an SUV?  You will pay through the nose.  You want a 4-door sedan?  The salesman will beg you to buy it.  Of course, this can backfire on occasion.  Some cars are unpopular simply because they are pieces of crap.  Fiat-Chrysler is always offering amazing rebates and sales prices, simply because they make the worst quality cars sold in America, other than Mitsubishi.

We then we kept looking.  And looking.  2011, 2012, 2013.  We looked at these damn things for nearly three years.  We didn't need a new truck or a used one, so we were in a good position to look and not have to commit.  With each passing year, they added more options to the truck for the same purchase price.  And eventually, I got a call from a dealer who wanted to unload a truck at the end of the year, and since it was two-wheel-drive, there weren't a lot of takers for it (the kids all want 4x4 to look cool).   Since I had looked at over 20 of these trucks and had been monitoring the pricing on them since 2011, I was able to figure out he was asking a reasonable price and we pulled the trigger on it.

Reasonable price being the key.  Expecting to "win" in the car business is just a fantasy.  They are not going to give away a car, and you are not going to "pull a fast one" on the salesman.  Every time I hear a story from some old white guy on how he snookered the car salesman and "got a good deal" I can pick at the edges of the story and discover that he either fell for the inflated trade gag, gave his trade away, or was screwed on financing, or the teller of the story is basically lying and not reporting the actual sales price (with the $600 "dealer processing fee" of course!).

What do most people do?  They wander into a car dealer "just to look at the cars" and end up trading in their car and buying something they didn't even want, without checking prices or cross-shopping at all.   My neighbor went into the Volvo dealer to buy a convertible and came home  - eight long hours later - with a wagon.

And this is a shame, as in this day and age, with a few clicks of a mouse, you can research prices on any car, print out all sorts of data, and cross-shop deals online from a number of sources.  There are price guides, buying clubs, all sorts of tools at your disposal.   It takes some effort, to be sure, but not long ago, none of this data was available to the consumer.    Back in the day we had classified ads in the paper and maybe the "blue book" which a salesman might let you look at, or if you had a friend at the bank, he might let you sneak a peek.

So do the research.  Pick a car.   Cross-shop and think carefully.  Don't be afraid to walk away.  The last two cars we bought - the Nissan and the Hamster, I picked out the exact car I wanted, and negotiated a price over the phone, before I even went to look at the car.   Most folks do the opposite - they wander into a dealer with their checkbook and a pay stub, and say, "please Mr. Salesman, put me in this '08 Hupmobile!  I desperately need a car, as my trade-in caught fire on the way here!"

You laugh, this happened to a friend of mine, whose old SAAB burnt to a crisp in the dealer parking lot.   That didn't give him a lot of negotiating leverage with the salesmen at that point.  I think he ended up driving home in a Lincoln Mark VIII.  Another friend of mine bought a car when her trade-in seized its engine in front of the dealer.   Again, not a strategic place to be, in terms of negotiating power.

When I worked at GM, we were able to buy cars at "employee pricing" (Class A discount) every two years.   Many folks would buy a popular car, drive it for two years and then sell it for about what they paid for it to some third party.  In some cases, they had a friend who would agree to buy the car ahead of time, and even pick out the options and color.   Two years later, they get a lightly used car at a very advantageous price, while the employee got to drive for free.  Those sort of deals rarely work out for the rest of us, however.

Whatever you decide to do, do the research first and understand what is a "fair price" for the car you are looking at - and in order to do this, first pick out what car you want to get, before doing the research.   Don't just walk into a dealer and compare a Ford to a Chevy to a Toyota, as you'll be confused as all get out by the different levels of options and trim, as well as model years and prices.  Avoid used car dealers in poor neighborhoods or car dealers with come-on prices, weekly payments, re-leasing or weekly leasing, or giant inflatable monsters or mascots.

The best deals, and they are out there, are late model cars from individual sellers - people who actually owned the car and bought it new, and now want to unload it.   These are not easy or common deals to find, but they are out there and worth looking for, if you can find them.

Sunday, October 15, 2017

Why Bank Of America Doesn't Want Your Business - Sort Of.

Are we returning to 1950's banking?  Sort of.

A recent article online in Forbes, which can be read without paywall here, illustrates why Bank of America has such a shoddy reputation among the poor.    The Bank has been actively trying to court its existing users who actually have money while at the same time turning away folks who just want to shop cafeteria-style for one banking product, or poor folks who have $22 in their savings account.

Bank of America is profitable again, and they returned to profits by closing down unprofitable branches, fully embracing electronic banking, and embracing their existing customer base.   As I wrote in an earlier posting, in the good old days, the banks paid "bank interest" on savings and then loaned out money at mortgage rates.  The money being loaned out was, by and large, the money being deposited by others.   Banking was a local and community thing.

Maybe that has all changed today.   And many folks today use banking services cafeteria style.  They get a credit card from some place online that offers the lowest rates or the fanciest gimmicks.  They get a mortgage through a mortgage broker.  They get car loans from car dealers offering low rates or even 0% interest.  And they shop for checking and savings accounts based on who has the best services, lowest fees, and highest interest.   And of course, their investments and savings are with some mutual fund company or a financial adviser who operates out of a storefront.

This model of banking makes it very hard for a bank to make money.   Since there are always going to be people online with no overhead who can undercut your rates, you will lose the mortgage and credit card business as well as the car loan business.   All you are left with is grandma and her passbook savings account.   And you ain't making money on grandma.

And we saw this in the now-closed branch here in Brunswick, Georgia.   You would go into the branch and you'd see a line of people cashing paychecks or making tiny deposits and withdrawals from their savings and checking accounts.   The bank makes no money on these customers, and after paying rent and employee salaries, actually loses money.

There are legions of complaints online about how banks screw poor customers with bounce fees and late fees.   In fact there was a joke on SNL, I believe, where the punchline was "give me my $17, bitch!" - which was in fact the balance on their account.   It sounds like a stereotype, but I have read online, "complaint" forums about BoA where some 20-something whines that he overdrew his account and is now being assessed a bounce fee which exceeds the account balance.   Another complainer tried to use his savings account like a checking account, and was charged an excess transaction fee.

Of course, these fees are there for a purpose - to drive away marginal customers.   Banks make no money from someone who deposits a paycheck on Friday and has it all spent by Monday.   The best advice for folks like that is to join a credit union if possible.   But don't expect the credit union to be any friendlier about marginal banking practices.   At the Patent Office Credit Union, back in the day, clerks would line up on Friday to get money orders (at 75 cents apiece!) to pay all their bills.  When I asked why they did this, one teller told me, "We tried giving them checking accounts - they just kept writing checks until they ran out!"   The old joke of "I can't be overdrawn, I still have checks!" is indeed based on real-life experiences.

The problem, of course, is banking discipline, not merely a small paycheck.  As I recounted in another posting, I was in line behind one clerk, who had a beautiful Coach handbag and was looking at a car brochure for the new Coach-edition Camry.   I couldn't figure out how she could afford these things when I could not, making more than twice her salary, when she mentioned she lived with her parents and a number of other relatives.   In other words, she had money to spend, and she was doing a pretty good job of spending it, too.   Financial discipline was just not in the cards.   Having bling was.

And that was me, at age 21, after dropping out of college, bouncing checks at the convenience store and spending every last dime on gasoline, beer, and pot.  I could not understand why the bank was being "mean" to me with bounce fees and whatnot.  It took a long time to figure out that it wasn't the bank that was the problem, it was me.  I had no savings in my savings account.  No financial cushion, no rainy-day fund.   A dollar in my pocket was a dollar spent, and like many poor people, I tried to play a game of leaving as little money in the bank as possible.

And it wasn't as though I couldn't have saved.  Rather, I blew through money on "stuff" instead of saving it.   I mean, when you are trying to make ends meet, do you really need to have exotic fish, or indeed, pets at all?   Why buy a new car when you have one that runs perfectly fine?   I made all of those sorts of mistakes and more.   Of course, back then, we didn't have tattoo parlors and piercing places on every corner - or check-cashing stores and payday loans.   Today's generation has a whole lot more shitty choices to make than I had.   And they say there is no progress!

Today, Bank of America is my new buddy - at least most of the time.   They have been fishing for my business and getting a lot of it - credit card, investment, savings, checking.  Since I have no debts, however, they probably are a little miffed at me for not having a mortgage or car loan.   But rather than fish for new customers - which is an expensive process that requires advertising and promotion - they are trying to harvest bucks from their existing accounts - and doing a pretty good job of it, too.
They have managed to persuade me to move much of my business to their bank, instead of having it spread out across a number of banks (five at one time), mortgage companies (ditto), credit card providers, and so forth.   While I still keep a backup credit card for traveling (if your card is stolen, you are kind of screwed if you are away from home with no way to pay for anything), I have slimmed down my accounts considerably since I started this blog - much to the advantage of BoA.

Saturday, October 14, 2017

Fat-free prunes

Prunes are fat-free, doncha know!  They are also gluten free!  Who knew that fruit has no grease or bread in it!  Learn something new every day, it seems!

One of the craziest things about American culture is how science turns into pseudoscience and is applied to everyday products.  I was noticing this in a small package of prunes, which stated that, among other things, they were good source of fiber (which is true) but that they were also fat-free.

The struck me as kind of an obvious statement.  Fruit generally doesn't have oil or lard in it.   For that matter, prunes are also gluten-free, in that they don't have any bread in them.  I suppose it wouldn't have hurt if they had also advertised them as being not only vegetarian, but vegan as well.  If you are going to state the obvious, you might as well go whole-hog.  No, there is no meat in prunes.  Funny how that works.

I wrote about this before, how the vegetarian aisle at the Wegmans is more like a candy store, with lots of sugary cereals and even outright candy.  A package of Jolly Ranchers was advertised not only is being vegan, but fat-free as well.  Yes 100% sugar has no fat in it.  That doesn't make it health food.

Of course, this plays into the popular misconception that fat makes you fat.  For some reason, Americans are obsessed with the idea that removing the fat from something somehow makes it healthier.  And this is only the case if it is transfats, which largely been removed from the American diet.  And ironically, many "healthy" foods of bygone days contained trans fats - such as margarine, which as offered as a low-fat alternative to "unhealthy" butter.

You know what?  Cigarettes are also fat-free, vegan, and also a good source of fiber.

I ran into this attitude at a restaurant recently.  Our waitress was confiding that she had bought a fat-free fryer to fry her french fries in.  She said this after I declined the side offer of fries and asked for a side salad instead.   She felt that the "evil part" of the french fries was the vegetable oil they were cooked in.  But the reality is the main problem with french fries is that they are 100% starch which is converted in your body to sugar, which in turn goes right to your fat cells, if you overeat and under-exercise.  It is not the oil, but the high amount of calories in fries - calories your body hoards if they are not used.  The fact that they are dripping with canola oil is really secondary.  And of course, the main problem is they give you a pile of them size of your head which really amounts to about 300 to 500 calories worth of potato- enough to serve an entire family.

But she was convinced, that somehow this food stuff could be made healthier if you just remove the oil, when in fact it was the huge amount of calories that was involved that made it unhealthy.

Granted, if you have cholesterol problems, the fat and oils are also an issue.  But "low fat fries" are not the answer to your health problems, the boring side salad is (sans oily dressing, of course).

But marketers and advertisers have seized upon the misinformation of the American public and thus place these labels on products where they are meaningless.  Of course prunes are going to be fat-free, unless you fry them in oil or lard.  Of course Jolly Ranchers are going to be gluten-free, unless you wrap them in a piece of bread.

But moreover, saying something is "free" of an ingredient doesn't necessarily make it healthier.  Fats and oils are not necessarily unhealthy things in your life unless you consume them to excess, much like anything else.  The same is true for glutens.  Very, very few people are actually allergic to gluten but it's become trendy to say something is gluten-free and people love to make a big deal or fuss about ordering something without gluten in it, much as vegetarians and vegans like to have things made special for them just to be a pain in the ass.

Sadly, one of the ingredients in food that really can be unhealthy for you, particularly large quantities, is sugar.  And for a long time, marketers love to use the words "sugar-free" in selling products.  But of course, the way they achieve "sugar-free" was to use some sort of artificial chemical or sweetener in place of the sugar.  And some of these chemicals have been alleged to be dangerous to humans and have been withdrawn from the market.

Other alternative is to just not put sugar in things to begin with.  As I noted my previous posting about Trader Joe's, for some reason they feel obligated to dump sugar and almost all of their products. They make an excellent hot sauce call Green Dragon hot sauce, or I should say it would be an excellent hot sauce if it didn't have cane sugar as its fifth ingredient.  When you have this hot sauce you think yourself, "Gee, this is a good hot sauce, but it's a little too sweet."  Unfortunately it seems like everything in their store is saturating with sugar, which is better than high fructose corn syrup, I suppose, but why not just leave the sugar out and be done with it?

The same is true for most commercially available tomato sauce as you see in the stores.  They are usually laced with sugar and sickly sweet.  Ironically, sometimes the store brands are the ones that don't have sugar in it, such as some of Walmart's store-brand tomato sauces.  And if you look at the calorie count on the back of the bottle, you see that the calories count correspondingly lower as a result.

You wouldn't think about making a plate of spaghetti and meatballs and then dumping a bunch of Jolly Ranchers into it would you?  I mean that would be disgusting and sick.  But for some reason, the people who make canned tomato sauce think that we want candy and all of our Foods.  And even so-called "progressive" retail outlets like Trader Joe's (which is really just a German supermarket chain gussied up for the American Market) seem to feel likewise.

And it's unfortunate, but this use of misleading labels seems to point out exactly how ignorant Americans are.  If people really need to be told that fruit is fat free or that candy is gluten free or that sawdust is sugar free, one wonders about the level of intellect in our country.

But then again this illustrates how easy it is to make money in this country, as most people are so entirely clueless and moreover believe whatever is convenient to them.