Free Renter's Insurance? Yup.

Renter's insurance is one of those things that are affordable and important. So why is it that we don't have renter's insurance? I have one word for you: "procrastination". I have no excuse whatsoever. Last weekend I finally got around to fixing this problem - OK, it was more or less a happy accident, but the end result is great. We now have renter's insurance with token coverage for our belongings, and respectable coverage against liability. How did it happen?

Recently I got a new Hyundai. Yes, one of those that's being recalled and yes, I know. I still love that car. I added it to our insurance coverage the day I got it, but it occurred to me that I forgot to remove the old car, because at the time it was still parked outside waiting to be picked up by Public Radio (where all donated good cars go). I finally remembered and called AAA to make the policy change. While the agent was revising my premiums she was reciting the various discounts I was entitled to receive: good driver, multiple cars etc. Then she told me that if I had renter's insurance with AAA my car insurance premiums would be discounted another 20%. Procrastinating is one thing, but when you actually have the agent on the phone, not following up on an obvious opening would be negligence.

So I followed up. I answered some basic questions and 5 minutes later I was the proud owner of a renter's insurance policy. The total cost? $173 a year for the coverage I selected. Now here's the punchline: the discount we got on the car insurance premium because we now also have renter's insurance with AAA is $300.

Long story short, AAA is paying us $127 a year for the privilege of insuring our home. How incredible is that? Of course, I could have done this years ago and I would have saved about a thousand dollars by now, but that's the price of procrastinating.

At the end of the call I asked the agent whether there was something else she wanted to give me for free. She laughed.


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Crazy, Crazy Week!

Last week was one of the craziest ones I've had in a long time.

Start with the good:

New Car - I finally got myself a new car: a Hyundai Sonata SE.

My New Sonata

So far I love it. My favorite feature: Bluetooth, which allows me to wirelessly stream music from my iPhone to my car stereo. In fact, I can stream Internet radio from my iPhone to the car. One day last week I was actually listening to a live news program from Israel while driving at 65MPH down 101 South. Sweet.

I paid cash for the car since I don't believe in financing consumer purchases. My philosophy: unless you are talking about a house, if you can't afford to pay for it with cash, you can't afford to own it.

Old Car Donated to NPR - after 11 years of faithful service, I donated my old friend, the Geo Prizm 1997, to our local NPR affiliate. According to Kelly Blue Book it was worth somewhere in the neighborhood of $800, but since I listen to NPR all the time and am not currently a member, I thought this would be the right thing to do. Besides, I get to take an income tax deduction at the actual price NPR gets for the car AND I didn't have to deal with the headache of selling it. The donation process took a single call and a 3 minute meeting with the tow truck driver who gave me the paperwork and took the car.

A bit nostalgic seeing my old car getting towed away, but hey, I GOT A NEW CAR.

John Mayer Show - Alpaca and I went to see John Mayer perform at Shoreline last Friday. Mayer is one of my favorite artists and he gave a great show. My only concern - which is not new - is that the food at Shoreline Amphitheater is slightly worse than the most horrible food you can imagine. I paid $6 for garlic fries that stayed with me until the next morning (my nickname for them: "disgusto-fries"), and another $6 for a tiny cheese pizza that tasted like someone had pre-digested it for me.

Shoreline @ Night

If you are going to go to any entertainment event in this country, you are going to get overcharged for food and drink. That is pretty much a given. However, my plea to entertainment venue managers everywhere is a simple one: if you are going to charge us an arm and a leg for snacks, could you at least make them half way decent? Is it really so difficult to make a semi-edible pizza?


Three Days Without the Kids - My in-laws took the kids for three whole days and nights last week. This means that Alpaca and I had three whole evenings to ourselves. We got to go out three nights in a row and get together with friends. If you don't have kids, you have no idea what a big deal that was.

Much fun was had by all.

So where's the bad stuff?

Trouble at Work - Well there was really only one bad thing, but it was a big one. My company laid-off 15 people. Now only 20 remain (down from about 50 only a few months ago). The company's survival is very much up for debate. It is entirely possible that the company will be shut down by the end of the week. Yes, that's pretty depressing. Going to the office these days is a really dismal undertaking.

The situation is currently beyond my control. In fact, it is beyond the control of anyone on our company's management. Some of our investors are trying to work out a deal under which they will continue to run the company. If that works out, I have been assured by reliable sources that I have a key position with the firm. If not, well, I guess my job search will need to move into higher gear...

On the job hunt front, I have a number of leads, none of which appear very appetizing at present, however, I am encouraged by the fact that there seem to be opportunities out there. The question, which is probably a big enough topic for another post, is whether I should hold out for the right opportunity or take the first semi-decent offer that comes my way. More on that dilemma in the future.

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Is It OK to Over Pay?

Jerusalem Bazaar Store

We are on family vacation to Israel where my brother got married last week. Yesterday we took the kids to visit the old city of Jerusalem (one of the most beautiful places on earth, in my opinion). During a walk through the amazingly colorful bazaar, we told the kids they could each pick a small present as a keepsake from our trip. Our oldest picked a wooden necklace, and I asked the store keeper for the price, which he told me was 20 NIS (about $5). I gave him the money and thanked him.

I think that my behavior came as a shock to the store keeper. If you've ever seen the movie Life of Brian, where in one scene a shopkeeper basically forces his customer to negotiate the price ("you've got to haggle"), our shopkeeper had a similar look on his face.

I probably overpaid for the necklace by 40% to 50%. Usually at these places you have to go through a whole process where you loudly complain about the price, start to walk away, give your best and final offer, and so forth. The fact that I just took money out of my wallet and paid the man his asking price is almost scandalous and  I have no doubt my mom would have given me an earful if I had told her the story. In fact, I bet the store keeper was disappointed he did not ask for twice his original price. But here's my thing - I came out with my kids to enjoy a day in old Jerusalem. Should I really waste the precious few hours we have there by haggling with a store keeper for a savings of $2 or so? I don't think so. This way the store keeper is happy. I am out 2 bucks, and I got an extra 15 minutes to enjoy this ancient and gorgeous city.

What do you think? Am I a sucker? Is it OK to knowingly be a sucker in these cases?

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The Wonderful World of eReaders

For my birthday a few months ago, Alpaca bought me an Amazon Kindle. I guess it was not difficult for her to find out that I wanted one - it was listed in my Amazon wishlist... Being the gadget lover that I am, I have been playing with my new toy quite a bit since I got it, and here are my thoughts on the subject:

Bad Financial Decision - if you are thinking of getting an eReader because you think that this will somehow save you money, think again. Alpaca bought this device for me for $269, before Amazon reduced the price to $189. Kindle books cost a dollar or two less than a paper book, so at that price you'll have to read about 100 books before you get to the break even point. I read about 10 to 15 books a year, which means that it would take me about 7 years to re-coup Alpaca's investment in the machine. If cost savings is the goal, buying a Kindle is probably not the best move.

There are a few exceptions to this rule. I am currently on a family vacation in Israel, and before getting on my flight on the way over I bought a copy of the latest issue of the economist. The news stand price is $7 and I picked up an electronic copy - on the spot - for $5 (and, of course, no taxes). If I do that every time I fly, the savings could potentially add up.

Another important area of savings are best sellers. Amazon sells kindle editions of NY Times best sellers for $9.99. If the average book costs $15 and you read a lot of best sellers, you could probably make up your initial investment pretty quickly.

Free Samples - with the kindle you can download the first chapter of pretty much any book you want, for free. I no longer decide to buy books by reading the back cover or just on the strength of reviews or recommendations from friends. I read the first 20 or 30 pages, in the comfort of my living room, and then I decide whether the book is worth spending my hard earned money or not. Speaking of which...

The Convenience is Amazing - people rave about how awesome it is not to have to carry a lot of books around. I find that pretty amusing myself, since I rarely carry more than one book with me and I am guessing most people fall into that same category. On the other hand, the ability to buy books ON THE SPOT is incredible. The other night I was reading a book review in a magazine after 1 am at night. The book seemed really interesting. 60 seconds later I had a free sample of it on my kindle. When I was done reading the sample, I had the full book on my machine less than a minute later.

No more waiting for boxes to arrive via USPS, no more paying for shipping. Presto. Book available.

Love the Dictionary - what does "eponymous" mean? Darned if I know. With a regular book I would vow to look up the word later. Of course, I would never actually get around to doing that. Not with Kindle. I move my cursor to the word and a definition just pops up: "giving their name to something". Ahhh, now that sentence makes sense.

I Never Worry About Battery Life - unlike a computer (such as the iPad), the Kindle doesn't use a typical screen, it uses something called eInk. Essentially the Kindle only draws power when you turn the page. Once the page is presented, it just stays there without consuming electricity. This means that I typically only have to charge my kindle every 2 to 3 weeks (assuming I turn off the wireless connection when not in use). It means I can go on vacation, and never worry about chargers or access to electricity.

But, Not All is Well in the Kingdom of Kindle - just so that you don't think I am completely in love with this machine, it's not perfect. It still has many flaws and little annoyances. For one thing, the screen is only grey-scale. No color for the kindle. This is not an issue for most books, but for magazines, where pictures are part of the fun, this is not such a great thing.

Another annoyance is the ability to sort and file your old books and magazines. Magazines are simply not filable and they just linger on your home page. Clutter, clutter galore. Books can be sorted into different folders, but the process is very cumbersome.

You like lending your books? Well, you're out of luck. The books you buy are stuck on your machine. Your friends have to buy their own. From my perspective, this is not such a horrible thing given that many of the books I lend to friends never find their way back home.

Perhaps the biggest problem of all is that Kindle is a closed system. You can only buy Kindle books from Amazon. You can get plenty of free books from other sources, but if it's a paid book you are after, only Amazon can sell you one. I think that this is patently unfair. It's like only being able to buy movies from Sony on your Sony television, or only being able to buy applications for your iPhone from Apple... oh, wait a second... I am tired of every technology company intentionally crippling their products to lock me in and get more of my money.

There are many other small and large issues and annoyances, but all in all, the Kindle is a really cool device. I am sure that in a few years, when I get a newer, better version of the machine I will be amazed at the primitiveness of this one, but for now, I really like my Kindle.

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Car Dealers Suck - Part II

Last week I wrote the first part of this article, in which I described how I got a crooked car dealer on tape explaining how he likes to bait and switch his customers (I was also stupid enough to erase that tape rather than send it to the local TV station as one of my readers suggested). Today, I'll share another installment in the series.

Last Monday, at 4PM in the afternoon, I get a voicemail from an agent named Ron at Steven's Creek Hyundai. Saying something like "I got great news for you. We have found the car you want." I call back, and sure enough, Ron goes on and on about how he's finally found the car I have been asking about. Only problem is that it's in LA, but he's willing to ship it over - for a shipping charge of about $400. Awesome. Finally, I'll get my new car. I ask for a quote and he says, not to worry, he's already emailed me a quote. I tell him I will check my email and call him back later that evening.

In my email I find the quote, which includes the following excerpt (actual font sizes & highlights):

"Please note: The following price is good for the next 2 days.

Here is your Internet Pricing on the:2011 Hyundai Sonata SE with carpeted floor mats, cargo net, cargo mat, ipod cable, auto-dimming rear mirror.

MSRP: $23,845

Your Internet Price is: $20,597*.

...

!!This is an Internet Special Price only, You MUST Bring this Ad to qualify for this Internet Special Offer!!"

OK. Something is suspicious here. How can it be that the quoted price is so much lower than the invoice price? I send Ron an email reply which includes the following language:

"Thank you for the quote. 

Can you please clarify what other charges will be added to this quote?

Since I am paying cash (via BoA cashier's check) what would be the amount that I would need the check to be for?"

He doesn't respond to the email, so I call him. Over the phone he insists that it's all legit. This is the price, he says. There are no other charges, he assures me. I am still suspicious, but I decide to check it out. We agree that I would come to meet him onsite the next morning.

The next day, I print the quote, and I print the list of government taxes and fees (doubly so, after my previous dealer incident), and I take a break in the middle of my work day to drive to the dealership.

Ron greets me with a wide and friendly smile, asks me to take a seat, and says that he's going to print out the details and will be right back. He disappears for 20 minutes, which I spend doing my email and getting progressively annoyed. When he shows up, he has 3 pieces of paper in his hand. The first he shows me is a list of 5 cars he's located in California - this, he maintains, are all the cars in the state that fit my specifications. OK. Next, he shows me a poorly printed page with the vehicle specs. All seems to be in order. "Wonderful," I say, "how do we move this forward?"

"Let's talk about the price," he says and reveals the third piece of paper. The third sheet is a white piece of paper with three hand-written lines.

Ron points to the first line and says:
"Are you a member of the US military?"
I say, "Ron, you know I'm not. We spoke at length over the phone. You know I am a business executive."
Ron, with a note of triumph in his voice, says:
"well, you are not getting THAT rebate".
He crosses off the line that says: "Military Rebate - $500".

He points to the second line and says:
"Are you a college graduate?"
"Absolutely", say I with a grim smile.
"Ahh," says he, "but did you graduate in the last 24 months?"
"No", I admit.
A triumphant grin returns to Ron's face, and he crosses off the second line on the page, which says "College Graduate Rebate - $500".

Then he point to the third and final line. "Do you own a Hyundai?"
"No. I drive the crappy, old Geo Prizm that is parked on the street right there"
The third line disappears. When it was still there it said "Hyundai Loyalty Rebate - $400".

"Let me get this straight," I say, "you are expecting me to pay $1,400 more than the price you quote me in writing yesterday? Even though I asked you in email and you confirmed to me over the phone that this was the actual price you were asking for?"

Genius Ron looks at me with an innocent and injured face and fires off a volley of explanations in quick succession: "You have to understand, those rebates are not my money, I can't give them to you" and "how could I know that you are not a military man?" and so forth.

But I have no patience left. I cut him off at the pass, and I basically lose it. I say something like "Why the F*** are you wasting my time, Ron? I spoke to you over the phone at length. I asked you if there were any other charges. I asked you repeatedly if there is anything else I should know about your quote. You chose to drag me down here knowing full well that you had no intention of honoring the quote you gave me."

I then left, never to return.

I am still searching for a single, honorable car dealer, who will negotiate with me in good faith and honor his commitments. That dealer will get my money and will get a loyal customer who will gladly tell the world that honest dealers are not yet extinct. Sadly, so far, an honorable dealer appears to be an unfounded urban myth.

Don't shop at Steven's Creek Hyundai. They're just dishonest idiots who will waste your time and money.

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Car Dealers Suck - Part I

I am in the process of trying to replace my 1997 Geo Prizm. Much has been written in this blog about the adventures of my wreck of a car, but it's time to move on. I have done my research and decided to buy a new  Hyundai Sonata 2011. For the past 3 months I have been trying to put this decision into practice, but to no avail. I have been doing my shopping and price comparisons primarily online, but that did not help me to avoid the antics, stupidity and plain ugly practices of Hyundai car dealers of Northern California. Below is the first of two posts on the topic.

My first incident happened about 3 months ago, and involved a quote I received from a Bay Area dealer. It looked good on paper and after comparing prices I was ready to do the deal. When the time came to close, the dealer tried to get me to pay significantly more than the price he quoted me by pretending taxes, registration and fees were higher than they were in reality. I'm not that stupid, I came prepared. I brought with me a complete list of all government taxes and fees, which I got from the California DMV website. When I confronted the dealer, he "explained" that the car he was selling me had more features and options than the one I wanted to buy and which he originally quoted to me in writing. I left, but that wasn't the end of it.

A couple of days after I walked out, one of the workers at the dealership left a voicemail on my cell phone, asking me to call back to do the deal. Thinking he hung up on the call, he continued talking to his boss, while my voicemail was still recording. In the recording the two are clearly heard discussing how it's a great strategy to give a low quote in email correspondence, only to change it later on. They called it "a hook".

Needless to say, I never called the idiots back. Incidentally, the name of that dealership is Magnussen's Hyundai, and it is located in Fremont California. I would strongly advise my readers to avoid those would be con-artists.

Now, if you can believe it, today I had an even more outrageous incident at Steven's Creek Hyundai. I would advise you right now to stay the hell away from those dishonest peddlers, but I'll tell you the details in part 2 of the story. Stay tuned.

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Is It OK to Walk Away from Your Mortgage?

Absolutely.

I came across this article in the NY Times yesterday, which seemed to imply that there was something wrong with walking away from a mortgage. A complete bunch of crock, as far as I am concerned. I know this position will likely draw some fire from those who believe that there is some sort of moral obligation involved here, but that's nonsense. Just like any other business transaction, a mortgage does not carry any moral obligation with it - it is merely an agreement between two parties in which they allocate the risks and the rewards of a  given business transaction.

The two sides enter into this transaction in a very deliberate way, each knowing exactly what risks they are accepting and each hoping to get as much out of the deal as they can. The written contract between them is all that binds them, and the types of re-course they agreed upon in it are all that they have a right to expect.

In a typical non-recourse mortgage agreement, the bank is fully aware that at most they will be able to take possession of the house. No one is forcing them to enter into this relationship, they are doing so of their own volition. If they so chose, they could protect themselves by insisting that the borrower put more of his own money into the transaction to make sure that the asset is worth more than the loan amount. If they underestimated the risk, or chose to enter into a losing transaction, it is their own bad choice.

The borrower can choose to continue to pay his mortgage even though the asset securing the loan is worth less than the loan amount, but that is not a rational economic choice. The government and the banks are running a morally bankrupt campaign to portray strategic mortgage defaulters as immoral. What's immoral is trying to get people to act against their own financial best interest, and grant the banks protection from what is nothing more than a bad business decision.

Defaulting strategically is simply the exercise of a contractual right negotiated by borrowers in non-recourse loans. Indeed that is the whole point of a non-recourse loan. Your exposure is limited to the capital you put into the deal. The lender willingly accepts the remaining risk. This is why the lender gets  his own appraisal of the asset value as part of the deal.

Moreover, in mounting their campaign to discourage strategic defaulters the government and lenders are protecting the more powerful side in the deal. The banks are the sophisticated party in the financial transaction. It is they who practically dictated the deal terms to their borrowers, who are in a vast majority of cases simple homeowners. They deserve no protection from their own economic choices.

There is no shame in walking away from a mortgage. No sense in protecting a sophisticated bank from their poor business decisions, at the expense of your family's financial security. There may be reasons to avoid walking away - the most important being the credit score hit - but there is certainly no moral obligation to keep throwing money down the drain.

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Companies Making a Comeback

I want to talk today about three companies who I had very negative opinions about until recently, but who are doing dramatically better these days, as far as I am concerned:

Domino's Pizza - talk about a crappy pizza, right? That's what I thought until a few months ago. When they released that shocking commercial in which they actually admit to having a crappy pizza and pledge to change their evil ways, I figured we'd give it a shot. Whatdoyaknow? It's true. The pizza is definitely better and the price is reasonable. Nice work guys!

BusinessWeek / Bloomberg - I started reading BusinessWeek about 10 years ago and over the years the quality of that magazine fell of a cliff. It got to the point where the only time I would renew my subscription was using airline miles, to avoid having them expire... well, no more. A few months ago Bloomberg bought the magazine from McGraw-Hill, and totally revamped it. Until that time, I used to leaf through the magazine in about 15 minutes on Saturday morning, spending most of that time commenting on the shallow and crappy quality of the stories (and the particularly large font used to fill up the pages). Now, it takes me hours to go through the magazine and there are actually a bunch of well written, interesting articles for me to read. Kudos!

Ford - These guys have made quite a turn around to their car line-up, haven't they? Now that I am in the market for a new car, I took a serious look at their Fusion vehicle - which looks pretty impressive. I think I will buy a Hyundai Sonata in the end, but still, a few years ago I never would have considered Ford.

Then you have the companies going the other way. Some doing well and clearly losing their way e.g. Apple (see my post from a few days ago) and Toyota, and others that have been giving consumers the middle finger salute for years now, e.g. every major airline in the country, with special recognition to United. The wrath of the consumer be upon you!

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Thoughts on iPhone 4 & Apple

I am one of the 600,000 people who pre-ordered the iPhone 4. I got it in the mail on Wednesday, a day before the retail insanity started. My verdict? It's a nice phone. The processor is blazingly fast, and the battery life is dramatically better than the one I experienced on my older iPhone 3G. Having said that, I want to share a couple of thoughts on the whole iPhone phenomenon.

Retail Insanity - what possesses people to camp out for days just to get a phone? Do these people have no jobs or families? Stranger still, why couldn't they just pre-order the damn thing online, like I did? Or else, why couldn't they wait a few weeks and just walk into any store and buy one off the shelf? I am amazed by people's impatience.

The Walled Garden - I think that this will be my last iPhone. I was seriously contemplating getting an Android based machine, but was intimidated by the hassle of prying all my music from the clutches of Apple's obnoxious music management system. There are phones out there that are just as good as the iPhone, but that don't restrict users from installing whatever the hell they please on the machines they buy with their hard-earned cash.

I hate Apple's censorship of applications. I am an adult and don't need a nanny to screen my content.

Worse still, I hate the fact that Apple is acting like a monopolist - restricting choice of carriers to AT&T's crappy network, preventing Flash from running on its platform and actively disrupting other devices from syncing with iTunes.

As monopolists go, Apple is far, far worse than Microsoft ever was.

The bottom line is that iPhone 4 is a great device and I highly recommend it, but Apple's smug and arrogant behavior makes me hope that the others guys win. Go Google Android!

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How I Doubled the Value of My Junk Car

It's been a few months since the last time my junker car fell apart on me, so I guess it was time for it to happen again. Last Friday when I got to the office in the morning and got out of my car I was greeted by a billowing cloud of white smoke. The car was smoking like the Marlboro Man.

That's got to be the end of that ol' junker, right? Not so quickly. After the smoke cleared and the car cooled down for a while, I drove it about half a mile to the local car shop, where the problem was diagnosed. Apparently break fluid was leaking from the rear axle, and started to burn when friction from breaking created heat.

The total cost of the adventure? About $400 in repair costs. The way I look at it, the repair cost me about as much as the car is worth (maybe I'm exaggerating a tiny bit. Maybe a lot). So what do you think? Did I double the value of my car? :-)

13 years and still going (not so) strong. But with no car payments and pretty impressive gas mileage (31 MPG), I am going to keep it for a little while longer.

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Smart Shopping for Auto Insurance

Unlike what many people seem to think, the purpose of auto insurance is not to reimburse your expenses next time you ding your car pulling out of a parking spot or get into a minor fender bender. The purpose of all insurance - car insurance included - is to shield you from the worst of catastrophic financial damages in the event that something goes horribly wrong.

Here is a tragic but appropriate example to illustrate this point. About three years ago one of my colleagues at work had a terrible accident while trying to drive his car across an intersection while the light changed from yellow to red. He escaped with some minor injuries but the elderly driver of the other car was not as lucky. He was severely injured, hospitalized for a long time and eventually died of his injuries. A horrible story no doubt. My colleague was understandably distraught over the incident. As if the emotional and physical toll of the accident were not enough, my colleague also had to deal with the legal and financial consequences of his mistake.

In most cases the real financial costs associated with such major accidents are not the property damage - unless you completely destroy a Lamborghini the costs of buying new cars are relatively manageable. The real costs are the medical and financial losses potentially incurred by anyone injured in the accident. These can mount into the hundreds of thousands of dollars, and sometimes even more, more than enough to bankrupt the average family.

All this leads me to the main point of this post. If you accept the proposition that the purpose of insurance is to shield you from large, catastrophic costs, the correct strategy in buying car insurance is to go with those policies that offer you high coverage limits. Of course such policies can be expensive, and a way to mitigate these costs is to accept higher deductibles which will reduce your coverage in the event of minor accidents which you can afford to handle without reimbursement from your insurance company.

If, like me, you dislike shopping for car insurance and have been using the same car insurance company for a long time (in my case it's AAA), you may want to do some shopping before you next renew your policy. If you are looking for a place to start, you can take a look at this list of car insurance companies. Safe driving to you!

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Retail Silliness

After our triumphant return from our Costa Rica vacation, it's time to edit all those pictures and HD video I took using my tiny new Flip MinoHD Camcorder. Unfortunately, our new computer did not come with editing software, and I am looking for something a bit more sophisticated than the free software you can find everywhere on the web. I have been using Adobe Photoshop (for pictures) and Adobe Premiere for video for years, so I decided to try the new versions of the software before going for a purchase.

I downloaded the trial versions of both software pieces from Adobe, played around with them for a couple of days last weekend, made sure that the video editing and DVD burning worked the way I needed them too, and decided that all was well. It was time to make a purchase.

Since I already had the trial versions of both software pieces on my computer, what could be simpler than unlocking them, i.e. turning the software from the time limited trial version to the full thing using a software key. A quick hop onto the Adobe website gave me the answer I was looking for. A bundle of Photoshop and Premier would cost me $119 after a $30 mail-in rebate. Sounds fair enough, right? Just to be sure, I went online to check the price for the same bundle on Amazon. Guess what?An Adobe Photoshop & Premiere Elements 8 bundle on Amazon cost me only $89 after the same mail-in rebate...

Strange, no? Adobe has already got me to download their software. The cost to them of letting me unlock the software is essentially zero. Every cent I pay would go directly to them, since I was proposing to buy online and directly from Adobe. When I buy the same bundle on Amazon, Adobe is getting a lower price for their software - since Amazon also has to profit from the transaction. On top of this, shipping is included in the Amazon price, where no shipping charges exist for Adobe. Insane, no? Rather than take a higher profit margin, Adobe is forcing me to buy from Amazon. Forget this nonsense about cutting out the middle-man. In this case the middle-man (i.e. Amazon), appears to be the good guy...

To make things even more appetizing from my perspective, I made my purchase on Amazon through my Squidoo page - meaning that I will get an additional couple of percentage points in cash back on my purchases. Actually, this Squidoo business is probably worth a separate post.

What could explain Adobe's seemingly illogical pricing strategy? I am not ruling out simple stupidity, but I am guessing that channel conflict is the issue. The manufacturer - i.e. Adobe - does not want to undercut its distribution channel - i.e. Amazon, for fear of losing it's "shelf space" with a large retailer. Just goes to show you, in retail you can't take common sense pricing for granted. Don't assume that just because you are buying from the manufacturer you are paying the best possible price.

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My Gadget Addiction

I am addicted to gadgets. It's time to admit it. They fill my life and I love it. You have about as much chance of spotting me without my iPhone as you have of spotting a sensible individual on Capitol Hill. Let's take our recent vacation to Costa Rica as a case in point:

First, there is the all important GPS. Never leave home without one. Yes, I am directionally challenged, and being directionally challenged in a foreign country without a GPS is an excellent way to get into trouble. Even in the US I never travel to a foreign city without making sure that I am satellite navigation ready. The day is fast approaching when I will purchase this functionality for my iPhone, and then there will be one fewer little box in my bag of tricks.

Second, but by no means less important is the iPhone. This little machine has served me phenomenally well on this trip, as it does everywhere else. I bought a $24.95 copy of a Spanish-English dictionary for iPhone as well as a 99 cent copy of Spanish for dummies. These were constantly open, and while I didn't truly need to use Spanish - since practically everyone we met in Costa Rica speaks some English - what's the point of traveling to a new country if you are not going to make an effort to learn and experience the local culture? Language is a key part of that.

But the iPhone is so much more than a glorified dictionary. It was my video game machine at night after the kids and Alpaca collapsed from exhaustion. It was also my connection to news and work e-mail (hey, I can't just not check email for 2 weeks), wherever WiFi was available. It was available everywhere. Also, did I mention that this marvelous device can make phone calls?

Next is my latest acquisition: a Flip MinoHD Camcorder. This world wonder takes 2 hours of high definition video and is literally small enough to fit in my jeans pocket. I was constantly using that thing and the video quality, sound and color are all excellent. I do have three complaints though: because this machine is so tiny, every movement of your hand shows up as a jerk in the video. You really have to be mindful of holding the camera steady. Battery life is far from spectacular, but I did charge up the camera every day and I was never close to running out of juice. Finally, the zoom on the camera is pretty pathetic. Overall though, as excellent purchase.

Next comes the iPod. But wait. Why would I carry both an iPhone and an iPod, you ask. Here we go. That's where the trouble with gadgets starts. They are just not made to play nice with each other. I have an FM transmitter for my iPod that I use to connect it to the car stereo. This same connector connects to the iPhone but then a screen comes up telling me that the accessory is not compatible with the phone... early on I tried to find some FM adapters for the iPhone but was never able to find one that actually worked. All I got was very noisy links full of static. So, an iPod and an iPhone it is.

I cannot neglect to mention our Digital SLR from Cannon. As gadgets go, this one is pretty ancient. Had it for probably five years or more. It's a 6 mega pixel jalopy for crying out loud. This one is definitely approaching the end of it's life and a new Digital SLR is in our future.

Last but not least is my trusty ol' ThinkPad laptop. It goes wherever I go. On this trip I was really not planning on doing any real work, but I carried it just in case. The ThinkPad was relegated to the undignified role of charging up my various gadgets from iPhone to Flip, and to acting as my data back-up and extra disk space. Our videos and pictures all got moved to the computer every day.

As you can probably tell, I love gadgets. Yes, I spend some money on gadgets, but to be honest, technology is just not that expensive these days. What can I tell you, gadgets make me happy.

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Spending My Bonus: It's Tech Time!

I have made my big bonus decision. A few weeks ago I wrote about how I got an unexpected bonus and was trying to make up my mind about what to do with the windfall. The decision has been made: an upgrade to our computer and home theater system.

As a first step, we bought a fully loaded new PC: quad-core Intel processor, 9 GB of memory, a 1.5 TB disk, 2.7 inch monitor and a bunch of software. $2200 from Costco, all in. Really, really expensive, yes, but given that our previous computer lasted for 8 years, and that we hope to get the same mileage from this machine, that's not a completely reckless decision. This computer will also play an important part in the next phase of the plan: connecting our TV to the Internet.

For months I have been plotting a wireless assault combining TV, media server, computer & Netflix. Netflix now has a massive collection of movies and shows that can be instantly streamed over the Internet. The only problem: connecting the TV to the Internet has been a challenge. It turns out that this can be done in several different ways: certain TiVo machines, Blue Ray players and XBox consoles can be wireless connected to the Internet, and be used to stream content to the TV. That's the sole missing component in my scheme to upgrade our home entertainment system. I'll probably pick the TiVo or XBox and my master plan shall be complete! Muahhh-ha-ha-ha-ha..... Wow, that's almost as good as taking over the world...

One other nice thing about our new fancy computer is that it has a built-in TV tuner and DVR which I intend to connect to Comcast cable. That way our 1.5TB hard disk will become a massive new DVR.

A final note on the new computer: this is a Windows 7 machine and so far I like this new operating system. Some problems with software that's not yet compatible with the new operating system, but generally speaking, Microsoft did a good job making sure that accessories and most software install and operate smoothly. Very nice. Ironically, the only problem we experienced with migrating to the new machine has been with Apple... migrating my iTunes, iPod and iPhone to the new computer has involved days and days of work. Because the old computer crashed and we had no access to the old copy of iTunes, I had to recover my music from our home back-up. This process resulted in the loss of all my playlists, song ratings and customizations. As I said, it took me DAYS of work to recover, and all this while my iPhone retained a PERFECT record of all my data that could have been easily recovered and migrated to the new computer if Apple cared at all about it's customers. I love Apple's products, but abhor the company and it's philosophy. What a pointless nightmare.

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Imaginary Personal Finance Cages

Once again I am on a business trip, this time I am visiting Texas. Yesterday I went out to dinner with a colleague in a local restaurant and we got into a conversation with our waitress - who happened to be on her first day on the job. The conversation lasted about 5 minutes, but we learned some very interesting thing about her which I wanted to share with all of you.

Our waitress, a nice woman in her late 20's, whose name I don't remember, is an Illinois native, but she lived in many places around the country, including South Carolina and now, Texas. She has a college degree in "culinary arts" and a passion for wine. Before moving to Texas, she was thinking of moving to California and to work in the wine industry but decided that this was too risky, and instead moved to Texas where she "has some family". Her dream is to go to Italy, travel the country and experience the culture and the people. I don't know this for a fact, but I got the impression that our waitress is not married, and I am pretty sure that she does not have kids.

My colleague and I were perplexed. I asked her why she's not chasing her dream? Why not go to Italy? Her reason: she doesn't have the money. My response to that was "why don't you go to Italy and work there?" After all, if she can be a waitress in Texas, she can be a waitress in Italy as well. She explained that she wants to go to Italy when she has enough money to experience the country and its culture without being worried about every dime she spends. In a different part of the conversation, she mentioned that the restaurant was paying her a salary of $2.25 / hour, not including tips.

I am not going to sit in judgement on a hard working waitress, but both my colleague and I were amused by her attitude. I am in my late thirties and my colleague in his early forties. Both of us traveled the world extensively, on tiny sums of money. Backpacking and hitch hiking our way across continents, when we were more or less the waitress' age. I didn't work during these extended trips, but I met many backpackers who did. And what better way to experience the land and its people than to live among them? We both recall those times as some of the happiest in our lives. For me these were times of adventure. Of freedom. Of peace of mind. Imagine waking up in the morning in a strange part of the world, for months at a time, with the only thing on your mind being the next big surprise that is waiting for you around the corner.

I compare those times to the life I lead today, tightly constrained by the daily necessities of raising a family and nurturing a career, and I marvel at the adventures I had. I am tempted to look at our waitress and wonder at the imaginary personal finance cage that she put herself in. Not pursuing your dream until you have the money!? "Break free", I want to shout at her. From my vantage point it looks like the barriers standing between her and her dream are all in her mind. But then I wonder whether someone with a different vantage point could say the exact same thing about me. Even though those cages exist only in our heads, the barriers we set-up for ourselves govern our lives.

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Home Insurance: The Big Picture

As part of our ill fated house purchase late this summer, we did a lot of thinking about home insurance policies. A truly riveting topic, to be sure. Nevertheless, we discovered a few interesting things about the subject:

Most home insurance companies offer about the same rates for the same coverage. This is not terribly surprising when you think about it. These guys' jobs is to estimate risk and then to price their plans a bit higher than the expected pay-out, such that they generate a profit for their companies. Since this is an extremely competitive market, prices should gravitate to more or less the same level, and they more or less do.

The biggest impact on your home insurance premium seems to be your deductible... that stands to reason as well. The insurance companies are in the business of making money. If you can sue them for every little thing that goes wrong with the house two things happen: one, you are more likely to sue. Small things go wrong all the time. Second, when you sue, they not only incur the cost of paying you for your loss, they also have a considerable administrative cost. However, if you are willing to take a higher deductible, things look much brighter from the insurance company's perspective: you are less likely to sue and you are less likely to be able to manufacture false claims. In addition, the insurance company knows that you are motivated to reduce the likelihood of damage, since you bear a larger percentage of the cost.

The difference in insurance premiums is dramatic. We found that by increasing our deductible from $2,500 to $5,000 we could roughly double our liability coverage for the same premium.

My philosophy about insurance is a simple one: you insure only risks you cannot afford to bear yourself. The window is broken? No problem. Repair it yourself. You don't need insurance coverage for that, and you certainly don't need to pay for the insurance company's profits. However, most people (ourselves included) can't afford to replace a entire house lost to major disaster. That's what insurance is for.

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Credit Buyers are Undisciplined Consumers

Buying things on payment plans is an insane idea. I know, what I am saying is practically un-American, but nevertheless that's where I stand. A great example of that all prevalent insanity is car payments. A car is the classic depreciating asset - you buy it today and it's value can only go in one direction: down. However, tens of millions of Americans buy their shiny, cash draining machines on credit, burdening themselves with financing changes and negative cash flows. Some would say that they have to buy a car on credit because they can't afford to buy it straight out. If you can't afford to buy your car with cash, you can't afford to buy it on credit either. You can't afford to buy that Lexus? Spend $8K and buy a second hand compact car. Believe me, it will get you to work and back, just like that fancy car would. Yes, I know, you won't look as cool, but think of all that cash rattling in your piggy bank.

Are all payments bad? Of course not. Credit is a good thing if it is used for the right things, and there are primarily two types of things that are worth buying on credit: (i) appreciating assets (or at least ones that are not expected to lose value) - a house is a great example that falls into this category; and (ii) assets that generate a positive cash flow after the financing charges - for example, a profitable business.

Financing consumption through credit payments does not make your consumption more affordable, it simply robs your future self to pay for things you want today. Show me a payment buyer and I will show you an undisciplined consumer.

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Health Care Inflation & My Wallet

Health care inflation is here again. Our open enrollment season for health care plans at work is upon us, and this week I received an e-mail from our benefits administrator informing me (and the rest of the team) that our premiums this year are up about 4.9%. My per paycheck deduction will now increase from $253.25 to $265.75, or a total of $325 per year. Nope we are not any sicker, and no our plan didn't get any better. It's the same old coverage for the same old plan.

So what's going on? Inflation. But this is the smart bomb equivalent of inflation - it's affecting only very specific sectors of the economy. In fact, if you take a look at government statistics, total inflation at the consumer level from August 2008 to August 2009 was - brace for it - negative 1.5%! So even while the rest of the economy was showing serious signs of deflation, the cost of our health care plan increased by about 5%. Does this make sense to anyone? How can anyone delude themselves into thinking that this is sustainable?

Before you bring up this issue, let me add that my employer is not sending more of its coverage costs to the employees. Our benefits administrator sent us all a detailed chart showing that the company's cost per employee is also increasing by about 5%.

The US health care system. The good news just keeps on piling up.

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Medical Insurance: Small Battles of Attrition

Forget all about the big philosophical questions of reforming the health care system. Let me tell you a couple of small medical insurance stories that my family has gone through over the past two months.

Chapter I - the twin mix-up - we have twin boys. When one is sick, the other quickly follows suit. It's the whole contagion thing. Anyway, some weeks ago both twins came down with a nasty cough, that progressed to the point where the doctor prescribed them both antibiotics. The two prescriptions were delivered within a couple of days' difference from each other, and while we had no problem filling the first prescription, our health insurance refused to authorize the second prescription, assuming that this was for the first child. An hour on the phone with the insurance company while at the pharmacy was not enough to correct the problem, and eventually we paid for the prescription out of pocket and waited several days while the insurance idiocy was worked out and we got reimbursed for the fiasco.

Chapter II - my wife took the kids to the dentist the other day - regular check-up and cleaning. She paid the dentist and filed a claim with the insurance. The insurance company sent us an explanation of benefits, but didn't send us a check. Alpaca called them to figure out what was going on. Turns out they sent the check to the dentist. They will now cancel the checks they already issued and send new checks to us.

Two small incidents. Nothing earth shattering, just tedium and annoyance. But there's more to it than that. Think of all the money that our health care system just wasted in the process of providing routine service to a generally healthy family. Now multiply that waste by 100 million households and you get some staggering amounts of waste. What a burden on the system. What a burden on health care premium paying consumers.

Folks, there is no reason on earth why we should put up with this insanity. What is Congress waiting for? Where is meaningful reform?

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Shopping to Save the World

A couple of days ago as we were eating a family dinner, my dad pointed out a "save the rain forest" promotion on a box of Tropicana Orange Juice. According to Tropicana, they will protect 100 square feet of rain forest, every time you enter a code you find on a box of Orange juice. I am pretty ambivalent about such promotions. On the one hand, there's nothing wrong with raising awareness of environmental issues. On the other hand, I feel such promotions have a healthy dose of green washing in them. Marketers these days are trying to sell us on the notion that we can shop our way to a cleaner world and a healthy environment, when truth is the exact opposite. It's our consumerism and shopping that is driving the planet to the brink of environmental disaster.

All manners of car companies, from Toyota to Ford are now advertising their hybrid vehicles as environmentally friendly. Even energy companies - read "oil companies" - are now trying to sell us on the notion of their products being more environmentally friendly (see this campaign from Chevron for example). However, reality happens to be in the exact opposite direction: nothing you buy will improve the environment. Nothing you buy will slow down global warming. If the environment is on your mind, buy less, not more.

True, there are some products that are more environmentally friendly than others. Hybrid cars certainly require less gas than a "light truck" or SUV. So if you must have a car, definitely go for one that will have a smaller negative impact on the planet, but don't delude yourself into thinking that you are actually improving the environment. You are only doing less damage than you would otherwise. Still, there are some exceptions. If you buy a product that reduces your net impact (e.g. a compact fluorescent light bulb to replace a regular light bulb), you are, in fact, creating a net positive change. That's a good thing.

Drinking orange juice to save the planet? Drinking tap water would be better, and would also save you money. That's not to say that you shouldn't drink orange juice, only that you shouldn't tell yourself comforting lies about why you're doing so.

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