How cheap are you outside investing?

[oddballstocks]

"This can go the other way as well.  I know a guy who manages a VC fund, he values his time very highly.  So he outsources everything possible in his life.  He compares his 'wage' with what he'd lose if he wasn't working to do some everyday task.  It's beneath him to do anything but work since that's the highest valued item.  It's a strange concept, it works well in theory, but he can't shutoff.

 

He would say he's frugal or cheap because he's paying a maid and working, but when you look at his life he's living a very nice lifestyle that's unobtainable for most."

 

Dang, and I've been taking down the paneling and putting up sheet-rock in the basement. The amount of time I'm spending is enoromus, but I'm having a blast and impressing SWMBO, which isn't easy to do after being together for over 50 years.

 

When I did my basement I didn't think about the time, because like investing I really enjoyed the process.  I also rationalized that if I were to lose my job I could probably get a construction job to pay the bills, I was learning a skill!

 

It's fun to build something yourself, I love it.  The impression factor is nice too.  It's cool to have friend over and hang out and know that I created the place on my own.

 

Not only are you learning a skill, but it's a very creative process...for you and many others!  I never liked shop in high school and I don't like fixing my hardwood floors or fridge today.  But I do love technology, computers, business, etc. 

 

My point was that frugal makes sense to a certain extent, including when you enjoy the process of an act and it saves you money, but at some point, your time spent elsewhere doing something you enjoy that is profitable, will offset the cost of someone else providing a service for you for a fee.

 

When I first started the funds, I hardly ever ate out and brown-bagged my lunch every day for several years.  I did not want to take the chance that any extra dollar I spent could jeopardize my future to run the funds if I eventually ran out of money.  I sold my other car as well...my beloved Mini...just to make sure costs were low monthly.  I used public transport weekdays, and only drove on weekends most of the time.  Cut coupons all the time, travelled only for fund business (Toronto & Pabrai Funds meetings) and even gave up some of the sports I enjoyed like skiing, Canuck games, etc. 

 

But as the fund's future started to look better and better, I could relax a bit, because I knew I wasn't going to run out of money any time soon.  In fact, things started going dramatically the other way.  My investments did well, the funds did well, my house appreciated dramatically, the website was doing well, my other business interests were doing well, etc. 

 

At this point, I work from my home office 2-3 days a week, and I'm in the office downtown 2-3 days a week.  When I go to the office now, I don't brown bag it anymore.  This is for three reasons:  One, because I'm in the downtown office less now, so I don't leave my desk for the 6-7 hours I'm there on those days...I don't have time for anything other than work.  Two, I can easily afford to spend $10 on a cup of coffee and freshly made sandwich for lunch.  That fear in the back of my head when you start down the road as an entrepreneur is no longer there.  Finally, the cost of not brown-bagging it, is now offset by me eating lunch at home in my home office half of the time.

 

So the point is that it's good to be frugal on things, but everything has an innate value...a sandwich, a repair job to your porch, your hourly rate of earning income and even your free time.  Like buying stocks, it only makes rational sense to weigh those things against one another.  At different points of your life, those values will vary.  But if you enjoy doing any of those acts, then that adds to the innate value...such as working on your own house, painting, taking photographs, watching a sports event, etc.  Cheers!       

 

This makes much more sense.  I don't know many details of your business outside of this and a few others posts, but based on what you've said here I'd say a large part of your success is attributed to your discipline. 

 

I think a larger point that you hit on is that frugality and cheapness needs to have a goal.  There is no point in being cheap to be cheap.  Many of us save money in some areas so we can have more to spend in other areas, or more to invest.

 

There is definitely a balance with all of this.  Life should be enjoyed, and money should be a tool to enjoy it.  As others have said, a servant, not a master.

[oddballstocks]

"This can go the other way as well.  I know a guy who manages a VC fund, he values his time very highly.  So he outsources everything possible in his life.  He compares his 'wage' with what he'd lose if he wasn't working to do some everyday task.  It's beneath him to do anything but work since that's the highest valued item.  It's a strange concept, it works well in theory, but he can't shutoff.

 

He would say he's frugal or cheap because he's paying a maid and working, but when you look at his life he's living a very nice lifestyle that's unobtainable for most."

 

Dang, and I've been taking down the paneling and putting up sheet-rock in the basement. The amount of time I'm spending is enoromus, but I'm having a blast and impressing SWMBO, which isn't easy to do after being together for over 50 years.

 

When I did my basement I didn't think about the time, because like investing I really enjoyed the process.  I also rationalized that if I were to lose my job I could probably get a construction job to pay the bills, I was learning a skill!

 

It's fun to build something yourself, I love it.  The impression factor is nice too.  It's cool to have friend over and hang out and know that I created the place on my own.

 

the thing is, if your employer lets you work unlimited hours and pays you well, it makes no sense to do stuff around the house.

 

i understand fixing stuff up around the house when retired or doing just 8 or 9 hours a day, but if you have a chance to work 12+hours for 7 days a week, it's just stupid spending countless hours trying to learn a job a pro would've done in 20 minutes (usually with better results).

 

With this line of thinking then all we should be doing is working 100% of the time then right?  I mean I'm losing money when I sleep because I'm not working.

[Mikenhe]

 

With this line of thinking then all we should be doing is working 100% of the time then right?  I mean I'm losing money when I sleep because I'm not working.

 

too right.

stop sleeping. its slacker time...

[no_thanks]

 

With this line of thinking then all we should be doing is working 100% of the time then right?  I mean I'm losing money when I sleep because I'm not working.

 

too right.

stop sleeping. its slacker time...

 

I saw a good one on twitter yesterday- Carl Icahn doesn't sleep, he waits...

[muscleman]

I'm pretty cheap for most things, but not with others.  I guess you could say my wife and I pick what is important to us and we're cheap about everything else.  I live in a 3900 sqft house with a 3 story barn that is bigger than the house, we put in Viking, sub-zero appliances, marble counters,  (not cheap), but my wife makes her own curtains, decorates with yard sale finds, some of our furniture is second hand and even a few pieces from IKEA.  We grow a lot of our own food, we have a huge vegetable garden (45ft by 45ft), we have 18 chickens (we eat a lot of eggs), but we also spend a lot on things like grass fed beef, grass fed butter, pastured heritage breed pork, wild caught salmon, etc.    We never go out to eat, I mean almost never.  My kids ask to go out to eat as part of their birthday presents, because it's something they almost never get to do.  If I eat lunch at all during the week, I pack it.  I never even buy coffee outside the house.  When we go away, we use the camper, so that we can stay cheaply and bring our own food.  I drive older cars (a Hyundai and a Toyota), I've never owned anything like a BMW, Mercedes, Lexus, etc.  Our main TV is still a 32" tube TV.  I have computers that are close to state of the art, but I build them myself and upgrade them a component at a time.  My wife is actually much cheaper than I am, and will keep me in line if I suggest buying some kind of electronic device or something.  We have tracphones. My current phone I paid $149 for the phone and a year of minutes, my wife's phone was even cheaper it's a flip phone with no touch screen.  If I ever did something stupid, like buying her roses for valentines day, I'd get holy-hell for it.  I bought her a potted plant (tulips) and she was even happier when I told her I paid $4 for it.

 

It is better to trade in your Hyundai and Toyota to something like a Volvo. It is really unsafe, especially Toyota. I would never put my own life at risk. :)

http://www.iihs.org/iihs/ratings/vehicle/v/toyota/camry/2013

 

Volvo is the only car in the small overlap test that didn't collapse the passenger structure.

 

 

I only drive used cars, but I buy a 1-2 year old certified pre-owned Volvo and intend to drive it for the next 200k miles. A one year old certified pre-owned Volvo is just 60-70% of the price of a new, but it has 10 year 100k mile bumper to bumper warranty. I think it is a very good deal.

 

My Toyota is a Sequoia SUV.  Does Volvo make something that can seat 7 and pull a 5500lb camper?

 

Yeah. Volvo XC 90 does that. I wouldn't recommend buying XC 90 though. The technology is way out of date.

I am not sure about Sequoia's safety, so I can't comment on that.

What is your MPG when towing? I bet it is like 5-7 MPG?

I think it is best to use a diesel SUV for towing because that can increase your MPG to 15 or more.

 

No XC90 max towing capacity 3790lbs.  I wish there was a large diesel SUV available in the US.  I don't want a pickup truck, because it has to double as a family car for around town.  My Hyundai Elantra is my commuting car that gets the miles put on it.  And yes, my mileage is horrible when towing, somewhere well bellow 10mpg and only about 15-16mpg highway when not towing.  I'd love something the size of a Sequoia or Chevy Suburban with a massive amount of seating and towing capacity with a diesel engine.  I don't know of one, but it has been a few years since I've shopped for a vehicle, so maybe there is one now.

 

No there is still none. I know if 5 seats are ok to you, Jeep Grand Cherokee diesel can get you 29 MPG highway and 15 MPG when towing a 7000 lb trailer.

Otherwise you would have to wait. I heard Jeep will launch a new 7 seat SUV next year, but I don't know if they will put in a diesel heart for it.

Gasoline engines are way uneconomic for towing.

[jouni1]

With this line of thinking then all we should be doing is working 100% of the time then right?  I mean I'm losing money when I sleep because I'm not working.

 

no but if the choice is between doing more hours at work or spending those hours on "saving money", usually working is the better choice.

[SpecOps]

I've slowly been coming to the conclusion that being "cheap" isn't always in my best interests. Like walking 30 minutes to a different shop just to save $2 on groceries isn't worth my time.

 

I generally now just try to disregard price for the most part on things that cost less than $5, and as long as I'm frugal on the rest of it  especially big ticket items, then I'm not really losing much.

 

These days I spend far more than I did a few years ago, if I were really living frugal I could save a lot more but I'm trying to enjoy life a bit more and not obsess over money so much. Its a hard habit to break when you're wired that way though.

 

I focus more on 'value' now. Like I buy tailored, nice shirts (ok online so they're a bit cheaper!) but I think of it as I'm paying $60 for a shirt that I wear a lot, will last me years, and that will make me look good (cheap shirts just look bad for the most part). So $60 is a good price considering the value I'm getting.

[ukvalueinvestment]

I agree that being "cheap" isn't a good use of time.  At the end of the day we all think we're intelligent people that can make good investments.  Why should I spend half an hour washing my car (for example), if I can read an annual report that might be a great investment?

 

I think that most people worry about the little things when they should save money on the big things.  Example: Plenty of people wouldn't think twice about buying a £50k SUV, when they could buy one that does exactly the same thing for £20k, with a different badge.

 

Most people don't spend much time at all thinking about their pension plan.  They just put it in default funds, with bad managers and fees.

 

In the Uk, it's the "done thing" to send your kids to private school if you can afford it.  This leads to both parents working and being stressed all the time and leading lives that are less happy than they could be.  Why not save the money, have one parent work in a less stressful job, but devote all their time to helping academically or paying for tutors here or there.  If you're saving £20k per year on school fees, there's a lot to fat to cut.  Plus your kids get a more "real world" education.  Some private schools aren't even that good, people just don't really think about it.

 

Holidays:  Do you really need to go to a plush hotel in the Caribbean (if you're European), if you can go to Egypt and sit in the sun for about a quarter of the price?

[bookie71]

For you folks working 12 hours or so a day. Are you really efficient working that many hours.  From having my own CPA firm for almost 50 years, I found that most folks can do the long hours for a few weeks, then suddenly their production becomes 40 hours of effective production gets done in 60 hours. 

Take some time to smell the roses, go fishing, go to a play, go to a concert, go camping, do some gardening, or something you enjoy that is not work related.  No matter how much you enjoy what you do, we all need a "mental health holiday" every once in a while.

[premfan]

I havent read all the replies but heres my take on this. There are two markets that will never go away are the discount cheap lower quality people and the luxury people that want high quality. 

 

Quality is subjective that's where each person can frame what is quality or not quality.  Value as all of the board members know is where its at.  Value = cheap +quality. Quality is subjective there is no right or wrong way to value quality.  Cheap is objective. Objective relative to whats out there.

 

So how do you know whats valuable in your life?  I suggest making an value hierarchy list every six months. My current list:

 

1.) Working out/ healthy diet/ mediation or any spiritual stuff

2.) family

3.) The business

 

The list should evolve as your priorities in life change. Placing a value in whats important in your life is highly important. By knowing my value hierarchy I say no much easier and without any guilt.

[thefatbaboon]

Man uses first-class ticket to eat for free at airport's VIP lounge ... for almost a year

By Mike Krumboltz, Yahoo News

January 30, 2014 9:51 AM

The Sideshow

 

View photo

.

Free lunch (Thinkstock)

In the grand tradition of the mad genius who bought mountains of Healthy Choice pudding so he could rack up millions of frequent flier miles on the cheap comes the story of a Chinese man who took advantage of a loophole to eat for free in an airport VIP lounge for nearly a year.

The story was originally covered in the Chinese-language newspaper Kwong Wah Yit Poh in Malaysia, according to the New York Post.  The man, who isn't named in the piece, purchased a refundable first-class ticket aboard China Eastern Airlines that came with a complimentary meal at the airline's VIP lounge.

 

That was almost a year ago. Every day since the purchase (after eating his meal), the man would then rebook his ticket (for free) for a flight on the following day. Then he'd return to the airport, eat, change his flight and go home.

 

Eventually, according to the Post, the airline grew wise to the man's ruse and confronted him. This was after officials noticed that his ticket had been canceled and rebooked an incredible 300 times over the course of one year. That's a lot of complimentary shrimp cocktails.

 

Because the ticket was fully refundable, the man was able to turn it in and get all his money back.

 

Apparently there is such a thing as a free lunch. You just have to be willing to hang out at the airport to eat it.

 

Follow Mike Krumboltz on Twitter (@mikekrumboltz).

[SpecOps]

Man uses first-class ticket to eat for free at airport's VIP lounge ... for almost a year

By Mike Krumboltz, Yahoo News

January 30, 2014 9:51 AM

The Sideshow

 

View photo

.

Free lunch (Thinkstock)

In the grand tradition of the mad genius who bought mountains of Healthy Choice pudding so he could rack up millions of frequent flier miles on the cheap comes the story of a Chinese man who took advantage of a loophole to eat for free in an airport VIP lounge for nearly a year.

The story was originally covered in the Chinese-language newspaper Kwong Wah Yit Poh in Malaysia, according to the New York Post.  The man, who isn't named in the piece, purchased a refundable first-class ticket aboard China Eastern Airlines that came with a complimentary meal at the airline's VIP lounge.

 

That was almost a year ago. Every day since the purchase (after eating his meal), the man would then rebook his ticket (for free) for a flight on the following day. Then he'd return to the airport, eat, change his flight and go home.

 

Eventually, according to the Post, the airline grew wise to the man's ruse and confronted him. This was after officials noticed that his ticket had been canceled and rebooked an incredible 300 times over the course of one year. That's a lot of complimentary shrimp cocktails.

 

Because the ticket was fully refundable, the man was able to turn it in and get all his money back.

 

Apparently there is such a thing as a free lunch. You just have to be willing to hang out at the airport to eat it.

 

Follow Mike Krumboltz on Twitter (@mikekrumboltz).

 

That reminds me of my dad, who has a store card just so he gets a free cup of coffee each day haha

[rkbabang]

Man uses first-class ticket to eat for free at airport's VIP lounge ... for almost a year

By Mike Krumboltz, Yahoo News

January 30, 2014 9:51 AM

The Sideshow

 

View photo

.

Free lunch (Thinkstock)

In the grand tradition of the mad genius who bought mountains of Healthy Choice pudding so he could rack up millions of frequent flier miles on the cheap comes the story of a Chinese man who took advantage of a loophole to eat for free in an airport VIP lounge for nearly a year.

The story was originally covered in the Chinese-language newspaper Kwong Wah Yit Poh in Malaysia, according to the New York Post.  The man, who isn't named in the piece, purchased a refundable first-class ticket aboard China Eastern Airlines that came with a complimentary meal at the airline's VIP lounge.

 

That was almost a year ago. Every day since the purchase (after eating his meal), the man would then rebook his ticket (for free) for a flight on the following day. Then he'd return to the airport, eat, change his flight and go home.

 

Eventually, according to the Post, the airline grew wise to the man's ruse and confronted him. This was after officials noticed that his ticket had been canceled and rebooked an incredible 300 times over the course of one year. That's a lot of complimentary shrimp cocktails.

 

Because the ticket was fully refundable, the man was able to turn it in and get all his money back.

 

Apparently there is such a thing as a free lunch. You just have to be willing to hang out at the airport to eat it.

 

Follow Mike Krumboltz on Twitter (@mikekrumboltz).

 

Good one, but not possible where I live. That airport must be easier to get into and out of than Logan.  Every time I've flown it has cost me more than the cost of a lunch just to get there before my trip and back after.  Not to mention the aggravation.

 

 

[ukvalueinvestment]

What's his cost of capital?  A first class air ticket is never cheap...

[Gamecock-YT]

Also amazing that none of the flights were sold out either.

[LongHaul]

I am frugal.  Can a value investor buy Prada then get good values in the market?  Perhaps, but I have some doubts because of the emotional contrarian element.

 

 

I like the Dollar Menu at Mcdonalds.  I really just get the Spicy McChicken which isn't too unhealthy.

I don't think they make any money on the sale.

[yadayada]

High quality expensive clothes (so not just expensive like some brands) are worth the money most of the time imo. Ofcourse within reason. Im not talking about 400$ jeans, that is ridicilous.

I now buy 40-50 euro t shirts. I used to buy 10 euro shirts, but they would always go bad after washing them a few times. And the fabric didnt feel nearly as nice on my skin. When I buy expensive shirts from a good brand, they will still look and feel the same after 3 years.

 

And there is intangible value in looking good in your daily life. And if your clothes fit really well, look nice and feel nice on the skin, then you feel better about yourself as well. So i think buying the cheapest possible clothes doesn't get you your money worth in the end. Especially if you can easily afford it.

[Liberty]

High quality expensive clothes (so not just expensive like some brands) are worth the money most of the time imo. Ofcourse within reason. Im not talking about 400$ jeans, that is ridicilous.

I now buy 40-50 euro t shirts. I used to buy 10 euro shirts, but they would always go bad after washing them a few times. And the fabric didnt feel nearly as nice on my skin. When I buy expensive shirts from a good brand, they will still look and feel the same after 3 years.

 

And there is intangible value in looking good in your daily life. And if your clothes fit really well, look nice and feel nice on the skin, then you feel better about yourself as well. So i think buying the cheapest possible clothes doesn't get you your money worth in the end. Especially if you can easily afford it.

 

If I could I would go the Steve Jobs route and wear the same thing every day :)

 

I've always liked the quality of American Apparel basic t-shirt (2001 model, iirc). They are usually $21, but they went on sale for $8 a few days ago so I ordered 5 black ones. Not sure I ever would pay $50+ for a t-shirt...

 

http://store.americanapparel.ca/2001.html?cid=198-313

[rogermunibond]

Great John Ruskin quote (or at least attributed to him).

 

“It's unwise to pay too much, but it's worse to pay too little. When you pay too much, you lose a little money - that's all. When you pay

too little, you sometimes lose everything, because the thing you bought was incapable of doing the thing it was bought to do. The

common law of business balance prohibits paying a little and getting a lot - it can't be done. If you deal with the lowest bidder, it is well

to add something for the risk you run, and if you do that you will have enough to pay for something better.”

 

I remember it whenever my wife goes to the dollar store to buy an inexpensive item that breaks before we get home.

 

I used to try to be pathologically cheap emulating Buffett, but then realized I was too old and not good enough an investor to emulate him.  Plus, my palate was infinitely more sophisticated.  Now, I enjoy in moderation the finer things, but truly in moderation.

 

Still will never fly first or business class.