Blog

Short blog posts, journal entries, and random thoughts. Topics include a mix of personal and the world at large.

Can you though?

As a car enthusiast of over two decades, I am extremely familiar with stretching our dollars in order to buy cars. People spend money on eating out, we spend it on cars. If I weren’t a car enthusiast with a penchant for switching (brand-new) rides every three years, I would have immensely more wealth in investment accounts right now.

Obviously, they don’t give out medals for having the most money going to the grave. In this life you got to spend your money on something. It’s all about balance.

What my brother is planning to do is very far off balance. He’s put in an order for a car that is three times his annual income. Fair enough: he’s been saving diligently for as big a downpayment as possible. And apparently, with “exotic” cars, there exist banking services that would finance them for far longer terms than the typical mainstream vehicle. That is how my brother plan to “afford” this supposedly incoming car.

I’m sure the man-maths are working overtime to justify this move. However, the mistake is trusting the numbers on paper are static. Just look at recent inflation: gas, insurance, and maintenance costs have increased dramatically. The monthly fixed costs seem to be going ever higher. I guess my brother can save on gas by not driving the car, but then… what the heck is the point?

Then there’s the variable costs, with life being the variable. Pinching every possible penny to afford a car means any surprises down the proverbial road - and there’s always going to be surprises - will put my brother into the negative immediately. Can he afford an unscheduled wheel and tire replacement (unfortunate encounter with a pothole, let’s say) when he can barely afford the monthly payments? The only way the math is going to work is if life goes absolutely perfect. That’s simply not possible.

I’ve told my brother all of this, of course. Hopefully it’s enough to steer him from an enormous financial albatross.

A touch of curbing

One of the worst feelings as a car enthusiast is doing damage to your own car. One day you’re driving along, having a good time, and then boom. Apparently you took a turn too sharply, and the back wheel had a brief kiss with the concrete curb. And now your wheel has a rather nasty rash on it. And by you, I mean me. It seems there is no car in my ownership history that I’ve not hit the wheel on the curbs at least once.

Perhaps I should take up the finance manager on the extra wheel and tire insurance next time…

Speaking of driving: now that my dad is proper retirement age, it slightly worries me whenever he gets behind the wheel. It’s plain fact that as we age, our attention and reflexes deteriorates. It only takes one scant moment of inattention for something negative to happen. If I can carelessly misjudge a corner, then my father at twice my age is just that much more accident-prone. It’s not a value judgement, simply math.

Whenever I get in my friends’ vehicles, I never have to stress about their driving. I can afford to pay zero attention to the road, and have pleasant conversations. Not so when riding in my dad’s Toyota RAV-4. I am compelled to pay attention to the road for him, on the off chance that his total bandwidth isn’t enough to spy that rogue truck that is running a red light. Who knew that getting driven around can be so un-relaxing.

So I solved the problem completely: whenever I am on the road with my dad (my mother doesn’t drive), I will always be the one driving. This gives me peace of mind, and also puts my destiny in my own hands. If the BMW M2 gets damaged - a wheel curbing, for example - I want it to be me who did it. Then I get to stew in my own stupidity for at least the rest of the day.

Love all the days

Earlier this week I ran into a coworker in the hallway:

Me: “What’s going on? You doing good?”

Coworker: “Yeah, except it’s not Friday!”

Me, thinking internally: “What the fuck but it’s only Tuesday?!”

I get it, we all rather be doing something else than being at work. Our lives outside of it should rightfully be way more exciting. But the reality is, we all have to work. This whole free-market, division-of-labor thing kind of demands it. I simply cannot fathom the mentality of returning to work on a Monday, only to already look forward to the coming Friday.

Isn’t that a tacit admission that you won’t be happy until the weekend comes? The return on that investment really sucks if we’re only happy for 28% of the year (not including holidays and vacations.) That’s like promising yourself a happy and peaceful living only after retirement. Before then you’re simply miserably doing the work for three decades to reach that goal. There are those kind of coworkers, too: the can’t-wait-until-retirement type.

Of course, I think it’s healthy to have something cheerful to look forward to. Hopes and dreams keeps us all moving in a positive direction. However, it’s counterproductive if it forsakes happiness in the interim. The majority of our week is our employment. I’m not saying we have to enjoy it, but it’s important to find joy in it. Two days of a weekend is too fleeting. And guess what, you’re going to have to do it all over again come Monday.

Let’s not skip over life, halting our contentment until some euphoric endpoint. Be mindful always of what’s ultimately and the very end: death. When I say I love Mondays, I really mean it. Because I love all the days.

The math is not math-ing

The most dangerous time for a car enthusiast, is when they are about to pay off their car. No more car loan debt means that money is freed up for something else: another car, naturally. The mind wanders at the possibilities. Perhaps it’s time to buy a car with a drivetrain layout you’ve never had before. Or perhaps it’s to re-purchase a car you shouldn’t have ever sold (thank goodness I cannot comfortably afford to buy another Porsche 911 GT3).

If there’s money in the bank account, you have to spend it. Isn’t that the American way? This entire economic house of cards is dependent on people’s continuous, often times reckless, spending.

My 2021 BMW M2 Competition will be paid of in a few months. And boy is the itch to buy another car itching intensely as that date draws nearer. I’m not being irresponsible! It will be the same money that would have gone to the M2 each month! It’s very easy to rationalize to yourself any purchase. The only reason I don’t have a mortgage is because the banks wouldn’t lend me the money.

But, as I like to say since last year: “Not in this economy!” Some people think that because they can afford the monthly car payment, they can afford the car. Don’t be like those people. We have to take in account the total operating cost. That means insurance, gas, and maintenance. And unless you’ve been living under a rock, all three of those things have gone up a lot in recent years thanks to inflation.

Never mind the fact that new cars have gotten rightly expensive. (Average transaction price in America is $47,338 as of this January.) High interest rates also means that monthly payment will be up as well. It’s really not a good time to be buying a second car, taking on tens of thousands of debt for another five years. I am going to keep telling myself that this entire 2024.

Get the Michelins

Ally bank is sneaky. They are quick to email me when the interest rate on the savings account goes up, but not a single peep when it goes down. I didn’t even realize it went down until my friend told me that it did. It came as a surprise because the Fed has kept the federal funds rate at the same level for the past several months. So it’s double sneaky: why am I getting less interest when the benchmark rate hasn’t moved at all?

Don’t make me move to SoFi! I really don’t want to do that!

In this post-pandemic era of high inflation, it’s never been more important to have a money cushion. Unexpected items arise and you kind of have to deal with it. For example, my friend recently found a tire defect (a sidewall bulge, likely due to San Francisco’s lovely potholes) on his Tesla Model Y. Because of this - combined with significant mileage on the original set of tries - he had to fork over $2,000 to replace all four Michelins.

If (the royal) you don’t have a savings cushion, that $2,000 will be one of those setbacks that you see in people with heavy debt. They are making steady progress in paying off debt, then boom, an unexpected $2,000 kicks them right back down the chute. Okay, maybe they’re paying $1,000 instead for the Chinese brands. For four split payments with Affirm. Or Klarna.

Honestly, nobody really budgets for tires, right? They see the monthly payment for the car, and petrol, as the only true outlay. The rest is out of sight, out of mind - because they occur not nearly as often. Insurance renewal only comes around twice a year. Maintenance - unless you drive an overwhelming number of miles - is once a year. Tires? Let’s say once every few years. But, if you have a money cushion, then these maintenance events won’t ever be shocks to the finances.

The interest rate may have lowered slightly on my savings account, but that money serves a critical, foundational purpose: emergency fund for unexpected expenses.

Just keep buying?

What if we simply stopped spending? Let’s vote with our wallets.

With all the price inflation going on, the one thing consumers have control over on the supply-and-demand seesaw is our spending. Prices too high - I don’t like it - therefore I am not buying (looking at you, McDonald’s). If enough of us do that, then the proprietors will have no choice but to lower prices. At least that’s what I was taught in economics 200.

Of course, people are still happily(?) buying. That’s why we have not seen a reduction in prices. The entrepreneur wouldn’t lower them if current pricing is sustainable in terms of customer count. Any savings in production cost should be pocketed as increased profit margin. It’s not greed, it’s math. People aren’t running charities. When high prices actively hurt the bottom line, only then will they go down.

Nearly half of Americans cannot cover a $1,000 emergency, and consumer credit card debt is at record highs. That tells me that lots of people are recklessly spending money well into the red, seemingly undeterred by inflation. Please don’t give me the bullshit about folks being poor and unable to afford necessities - thereby going into debt: my parents made less than $2,000 a month for a household of four for the longest time, and yet they still managed to save money over the years.

Overspending is the problem. During the pandemic, when supply chains were impacted, new vehicle inventories were low. A classic supply and demand problem: low inventory, high transaction prices. Because the American appetite for cars is insatiable. I never got mad at dealer markups, because they exist precisely because someone out there is willing to pay. If absolutely nobody was willing to pay, then the markups wouldn’t exist.

It only takes one. And it only takes consumers continually spending for the current high prices to remain. That’s not going to be me, though. I am hugely price elastic. Printed books have increased in price, so now I begrudgingly buy the digital Kindle version.

Do your job

My Youtube rabbit-hole this past weekend was personal finance videos. In particular, this episode of Caleb Hammer’s Financial Audit struck emotional resonance with me. The person having her finances checked over by Caleb is child of Chinese immigrants. Her family migrated over to America when she was eight years old. So did I! But unlike her, I am not swimming in credit card debt.

But like her, I bore the burden of supporting Chinese parents who did not know the English language, and were wholly unfamiliar with American culture. Whatever childhood we had were arrested abruptly, and we had to become essentially adults soon as we learned English. Any interaction with the outside world was automatically thrusted upon me. Can you imagine needing to go to the hospital, and it's your kid that has to communicate with the staff and fill out forms? Actual adults were suppose to do that!

I couldn’t ask my parents about anything. They simply did not know.

Needless to say, a lot of my proclivities and neuroticism stem from that period. Because I had to shoulder so much more burden than any typical kid, I absolutely detest anyone who cannot put their own weight. Nothing annoys me more at work than people who cannot do the one job they’re suppose to do. Me having to pick up the slack takes me right back to my childhood of performing the adult duties that my parents could not.

Another thing stemming from that time is my inability to ask for help - even when I totally can and should. Because I never could ask anyone for help back then. There was nobody to share that burden. So the adult me ends up trying to do as much as possible, by myself. Not because it’s the best way, but because I simply have not developed any better.

Obviously, I don’t blame my parents. It is, indeed, what it is.