Categories
Opinion

Begging

This post will upset some readers. I won’t insist that readers promise not to be offended or anything like that, but if you’re not in the mood to read something that may get you worked up, you might want to skip today’s post. If you’re angry and don’t have the time to write a well thought out comment, feel free to cut and paste one of the following (these work equally well for other posts that make you angry on this, or other, blogs):

  • “U R stuppid & cheep MrCheap!!@!”
  • “Well, I guess I can unsubscribe from this trash in my RSS, thanks!”
  • “Nice try, but you’re too [naive / unenlightened / white / uneducated / overeducated / male / affluent / impoverished / rural / urban / straight / unworldly / Canadian] (pick all that apply) to understand the complexity of this issue.”
  • “You, sir, are a heartless brute!”

I’ve had a long, strange history with beggars. In my home town, most homeless were outpatients from the mental hospital, and were as likely to scream something strange at you as to ask for change. My undergrad was in a slightly larger community and you’d occasionally run into beggars asking for change around town. When working down in San Francisco during the dot com boom, I lived on the north side of the Tenderloin and I’d walk across Market St. every day on the way to work (both areas are thick with beggars).

The strangest part is that something about me antagonizes beggars. Most of my friends have noticed that if we’re walking down the street together and we run into a belligerent beggar, without fail he makes a bee-line straight at me. I’ve actually been attacked by beggars 3 times (twice in SF and once in Toronto), so I’m cautious around people who are pan handling.

Historically, and in developing countries, the implied message when someone begs from you is “I’m desperately poor, if you don’t give me some cash for the bare necessities of life there’s a good chance I’ll suffer permanent harm.” I have no problem with this style of begging (although they aren’t likely to get cash from me), and as long as the beggar doesn’t harass or threaten me after I say no or ignore them I’m happy to have a live-and-let-live attitude towards them.

Some people who visit Canada from developing countries have expressed shock to me at the pan handlers they see around Toronto. They can’t figure out why people who are able to walk and have no obvious disabilities would be asking for money. I understand the perspective that a large number of people asking for money on the street have mental health or addiction issues, but once they start crossing the line to harassing and threatening other people it becomes unacceptable to me.

Rather than the traditional mode of begging, many beggars in a Western context take the stance “I’m going to make you uncomfortable and put you in a situation where you’ll pay money to get out of it”. This could be a beggar raising his voice and making a scene (with the expectation you give him some cash to quiet him down), getting uncomfortably close to people or their vehicles (perhaps with a squeegee) and only giving them space when paid for it, or intimidating people who can’t easily escape (I often see mothers with small children being shook down by aggressive pan handlers).

One of my friends has run into a beggar repeatedly who hangs out near the subway station she uses. He’s followed her a few times, and its gotten to the point where she gets pretty freaked out whenever she sees him. I don’t understand why it’s acceptable for him to set up camp at a public transit station and terrorize people.

At this point I feel that rather than begging what’s actually going on is a softer form of mugging. I’m definitely of the opinion that many criminals in the justice system have mental problems, but there are still unacceptable acts that society condemns regardless of the underlying health of the individual. If a shoplifter suffers from a compulsion, or a wife beats her husband because of anger issues, it doesn’t excuse the theft or the assault (although it may moderate the punishment). Similarly, I can’t understand why we tolerate the sort of behaviours that have become so common from beggars.

There are occassionally even larger escalations of violence. I am certainly aware that violence between beggars is more common than violence between them and society at large (and that the violence can go both ways). To me these news reports seem to be extreme examples of standard behaviour, rather than bizarre or isolated incidents.

I have in the past offered food to beggars, but often they’ll take offence at this, and start screaming at me (with the hope that I’ll give them cash to quiet them down I suspect). They’ll indignantly shout “I didn’t ask you for food!” I have no hard feelings at all towards homeless people who don’t beg (if they don’t beg they aren’t beggars). There’s one man who lives around Berkeley that a friend told me about who would tell people off if they tried to give him anything (he’d spend his time going through the trash). Apparently he even gets angry if he thinks people have put things in the trash for him to find. I’m not sure what his world view is, but I respect that he’s living his life in harmony with his values and not causing trouble for other people.

At one point I was debating about doing a PhD in anthropology and focusing on homeless/beggar populations. When I investigated, the consensus among people I talked to was that current academic work on homelessness was done from a sociology / political perspective. There wasn’t much work that viewed homeless societies as distinct societies and approached them from a viewpoint of understand their norms and values, rather than viewing them as a problem to be solved.

One of the few things I like about living in Waterloo instead of Toronto is that I haven’t run into any beggars here (although with RIM’s share price there might be a few in the near future). I understand that people who fight to have beggars left alone by police feel that they’re defending a vulnerable segment of society, but sadly I wonder how many of these champions are living their lives in the suburbs, driving their SUVs and seldom encountering the population that might not be as down-trodden as they believe.

Do you give money to beggars? Do you feel that it helps them? If you accept that throwing money at beggars at a societal level has never solved the problem (and typically draws more beggars to the area where services are being offered) what do you feel would be the best approach to let people live in an urban environment without being molested? Since police crackdowns are typically met with anger and protests, is the only option for people who don’t want to be victimized to move to smaller towns or the suburbs?

Categories
Real Estate

Not Making Any More Land?

I’ve written before about quotes being twisted for various purposes and being misleading.  One witticism for real estate investing which means what it says is “Buy land!  They aren’t making any more of it”.  The wisdom that’s supposedly encapsulated in this saying is that there is a finite amount of space on planet Earth and by staking your claim to some of it you stand a good chance of getting higher returns in the future (as scarcity drives up the price).  I think this is the wrong perspective for a great many reasons.

They *ARE* making more of it

A variety of artificial islands have been created.  These can be made using sand dredged up from the sea.  Cost is certainly a consideration, with some construction being estimated at a billion dollars.  However, if land started to get scarce this is an option.  As more islands are created, the techniques and technologies supporting it would become better understood and it would get cheaper to make more.

Beyond making more, we are continually getting better at supporting a higher population density.  While a person with modest needs might live in a 600 sq ft living space, if they live in a 6 story apartment building, 6 times as many people are using that same plot of land.  A 44 story building has just allowed the land below it to be utilized 44 times over.  Construction techniques are also always improving to allow higher and larger buildings.

If for some reason we hit a limit on going up, there’s always the possibility to dig down.  With 101 floors above ground and 7 floors below ground Taipei 101 is the tallest habitable building in the world.  This allows 108 times the usage of every square foot of land where this building is located.

Demand isn’t uniform

In some ways it might seem odd that we’re devoting billions of dollars of resources to make islands and 44 story apartment buildings when there’s so much land going unused.  With 3.3 people / sq. km Canada has a crazy low population density.  We could cram TONS of people into the Northwest Territories (which currently has a roomy density of 0.02 people / sq. km – I wonder if anyone up there ever sees anyone else? 😉 ).

The unfortunately reality is that people want to live in the areas where they’re making islands and skyscrapers, not in the Canadian wilderness.  If someone is blindly buying land “because they aren’t making any more of it” they’re going to be sadly disappointed when developers keep focusing on maximizing the usage of high demand areas (instead of blindly buying all land for sale).

Heck, during the recent run up in oil prices people started talking about the death of the suburb.  Even the well known idea of buying a big plot of land on the edge of town, then selling it decades later when the city has grown around it may or may not work in the future, it all depends where people want to live.

The father of one of my dad’s friends moved into a retirement home a couple of years ago.  His house in the small town he came from is STILL sitting unsold.  Everyone who lives there already has a place to live and no one is buying.

Rate of demand growth is slowing

While the human population is definitely growing, that rate of growth is slowing and has been for some time.  We’re moving towards a point where births will equal deaths and we’ll have a stable population number.  People used to talk a lot about over-population, but the math just isn’t there to support it.  Already Japan has a negative population growth (if it wasn’t for immigrants their population would be shrinking).  Other countries are following this trend.  This doesn’t say much about other resource demands, as more of the world is leading an increasingly affluent lifestyle.  Slower (or no) population growth certainly won’t allow the whole world to live a Western lifestyle, but land isn’t going to be the limiting element.

What if it IS true?

Even if this statement was true and if eventually people would be standing back-to-back covering the globe, I’m still not sure it would mean that pouring all your money into real estate is the way to go.

All sorts of finite resources exist, and the market finds efficient ways to price them.  We’re running low on oil, but I think putting all your money into an oil stockpile and hoping to massively profit in the future is a mistake.  The current reserves, as well as usage and growth in usage, are all very well known factors and are incorporated into the price.  New refining technologies and gaining access to previously unattainable fields (such as Alberta’s oil sands or underwater oil wells) are also factored into the price and could limit the gains your oil stockpile could make.  Alternative energy technologies would also threaten it.

Similar considerations are there for other finite resources.

What to do from an investment perspective

My view is to treat real estate investing like any other investment,  look at the deal in and of itself (or the allocation of REITs if you’re more of a passive investor).  Future scarcity of specific land is going to be VERY hard to predict, so unless you have some special skill in this area you’re just speculating.  Giving real estate investments preference because of some imagined inevitable payoff is a strategy that I think is very likely to disappoint.

Categories
Book Review

Book Review: Findependence Day

The Canadian financial press has been very kind to Four Pillars, so I was excited when Power Publishers offered us a review copy of Jonathan Chevreau’s new book “Findependence Day”.

Most Canadians interested in personal finance already know Jonathan Chevreau from his column in the Financial Post.  While Mr. Chevreau has written previous books on finances, with this one his goal was to present information in “classic fiction structure”.  By this, he means that it is first and foremost a story.  As he mentions in his interview with himself, and a number of the review blurbs on the book, he seems to be trying to create his own version of “The Wealthy Barber”.

Unfortunately, while “The Wealthy Barber” successfully used characters and a narrative to reinforce the financial concepts being presented, in this book the financial concepts and the story seemed to struggle against each other, with neither being particularly successful.

The story takes a predictable path from a young couple appearing on a “debt reduction” style TV show along their way to eventual financial independence.  The man, Jamie, gets talking to the financial planner that appears on the show with him and sets a “Findependence day” for himself:  A point in time where he’ll have enough money that he will no longer need to work unless he wants to.  The term “Findependence Day” is used throughout the book with a desperation to coin a new term that reminded me of Gretchen trying to introduce the new slang term “fetch” in the movie “Mean Girls”.

Gretchen: That is so fetch!
Regina: Gretchen, stop trying to make fetch happen! It’s not going to happen!

In terms of a story, the characters are flat and undergo very little development.  Jonathan Chevreau feels that you need to exaggerate human traits to make characters come alive, but his characters ended up coming across as caricatures.  The dramatic tension he tries to create doesn’t work.

Often conversations between the characters would jump between financial topics and plot development.  Rather than clarifying the ideas being presented, which “The Wealthy Barber” successfully did, these two directions undermined each other.

Similarly, he tried to offer both information for Canadians and for Americans (one of his fictional couple is a Canadian, the other is American).  Again, by trying to go too broad, he ends up not covering either topic well.

For some reason he felt vinyl music and classic rock were very important themes in this work, going so far as to title each chapter after a classic rock song.  I can’t even guess how this is supposed to relate to the work as a whole.

When I started reading this book I first thought it would be interesting for someone who was interested in learning about personal finance.  I figured the structure might help them get through the boring bits on finances and sneak a few of the core concepts into their head.  Instead, I think it would be tough for a novice investor to dig out these ideas.  In the end I felt that I was able to understand what he was getting at because I’d been previously exposed to the ideas presented, but for a rookie trying to get a handle on their finances, I think this book would a poor choice.

Later I thought maybe it would be interesting for people with a good understanding of finance to have a narrative incorporating some familiar ideas, but as mentioned previously the story wasn’t particularly interesting or well executed.

As much as I wanted to enjoy and recommend this book, in the end I really can’t think of anyone who would enjoy it or learn from it, so instead I’d just recommend giving it a pass.  Here are some suggestions for best personal finance books.

Preet was optimistic about this book when he posted about it, the Canadian Capitalist also reviewed it and the reviews on Chapter’s website have been glowing.  An exerpt can be read here.  We will be giving away our copy of this book at some point if someone wants to read it in spite of my review (hey, who are you going to trust, the reviewers at Chapter’s or me?).

[add]After this went live, I came across another review at “Blessed by the Potato” which was fairly balanced (and the author himself commented).[add]

Categories
Frugal

Internet Service Providers

I was really impressed with the comments and discussion when a post on VOIP services (and specifically Vonage) generated a lively discussion last year.  Along similar lines, I’d be very interested in what people have been using for their ISP in Canada, especially anyone based in Ontario.

I used Bell years ago, and without fail they messed up everything they had the chance to mess up.  Recently a man called me asking what it would take to get me back at Bell.  I told him straight-up that I didn’t believe anything Bell offered me, so there wasn’t really any way they could get me back (which seemed to be the right answer as it got me off the cell phone quickly).  A friend in Toronto got a similar call where the woman was VERY hard sell trying to get her to switch from Rogers to Bell.  After my friend asked if she could review the numbers and call back if she wanted Bell’s offer (the answer was no, she had to accept immediately) I figured that Bell is the same old company it has always been, despite how they keep claiming they’ve changed.

I’ve been happy overall with Rogers, but the one thing they do that’s driving me nuts is that they’ve started charging a “usage overage fee” (basically a bandwidth cap that you get charged per gigabyte if you exceed).  The fee itself doesn’t really bother me, but they snuck it into their service (after I purchased “unlimited Internet” I don’t like that they’ve suddenly and quietly changed it to “very limited Internet”).  It’s also no fun checking every day what your usage is to make sure you aren’t using up your monthly allotment too quickly.

Recently I’ve gotten to the point that I’m ready for a change.

Most of the small ISPs are Bell re-sellers, which basically uses the same technology Bell uses, but you interact with another company.  I’ve dealt with a number of these over the years, and they’re ok for the most part, but inevitably problems seem to come up that they blame on Bell (and Bell blames on the re-seller), which from a customer’s perspective gets annoying in a hurry too.

I was originally going to sign up with “Yak” when I moved to Waterloo, but they had this stupid policy that you have to set up your home phone with them, THEN you can sign up for Internet with them (and they’ll be delivered in 2 installation trips).  This was silly enough that I decided not to do business with them.

I used Primus for my home phone / Internet years ago and at the time I didn’t have any complaints with them.  I switched to Vonage for a cheaper price and regretted it.

Teksavvy has come up a few times when I’ve been researching ISPs and is supposedly good, but I’ve never talked to anyone who is actually their customer.

One thing Rogers claims about Bell (and their re-sellers) is that they supposedly have a hidden cap as well, above which your speed suddenly slows down dramatically.  So instead of charging you when you exceed their cap, they just slow your transfers to a crawl.  Has anyone experienced this or know enough to verify / disprove it?

I’m currently paying about $70 / month for Internet and phone (before usage fees and long distance charges, last month’s bill was $100 which prompted this post).  I’m willing to pay this rate ($70), ideally without a transfer cap.  Unlimited long distance (within Canada is good, to the US as well is even better) would be gravy.

What is your phone / Internet plan?  What company is it with?  How much are you paying and how happy have you been with the service?

Categories
Book Review

Book Review: Die Broke

“Die Broke” by Stephen M. Pollan and Mark Levine has been on my “to read” list for a while, and I finally got around to checking it out from the library.  It was published in 1997, so it should be easy to find a copy at the library or a used copy.  I was impressed in a few places in the book where he suggested caution about stocks (which would have been useful a few years later during the dot-com bomb) and caution with real estate (which seems particularly wise these days).

Although there’s a large number of ideas in the book, the most innovative (and people’s main take away point) is his idea that you should structure your finances such that there’s nothing left when you die.  He spends a fair bit of time talking about inheritances, and how he feels they are poisonous to the recipient and the giver.  The core of his argument is that in the past inheritances came with obligations.  The first son would get the family farm, but be responsible to take care of his parents in their old age.  A daughter would inherit the silver, but would be obligated to maintain it and pass it along to her daughter (or a niece).  He feels that in modern times the obligation has disappeared and turned inheritances into something like winning the lottery.

He’s not opposed to gifts or transfers of wealth, but suggests they be made during a persons lifetime so they can enjoy giving the gift and seeing it impact the person’s life.  He talks about buying a farm with a swimming pool where his children and grand-children would visit and spend time with him each summer.  He suggests paying for children’s or grand-children’s education or helping out with a child starting a business if finances allow and that’s the sort of thing you want to do.

It’s definitely worth reading the book to get all the details, but the core of his approach to making sure you don’t run out of money is:

  1. Keep working:  He feels retirement is also poisonous, and that it’s harmful to suddenly become a useless lay-about at 65.  He recommends decreasing your workload, but maintaining some sort of paid labour for life.
  2. As you cut back on work, replace the work income with things like annuities and reverse mortgages that will pay out over time in exchange for a lump payment.

One of his other big ideas is that job security is dead (remember, he wrote this in 1997 so it wasn’t as obvious then as it is now).  He recommends doing a good job, but to always be looking for your next position (and to look for job experiences that strengthen your career rather than just helping the organization you’re currently in).

He touches on a number of other financial issues, such as how much he hates ATM cards and credit cards (he feels people don’t consider purchases as carefully), investments, insurance, estate planing, health care and career planning.

I didn’t agree with everything in the book (I’m keeping my ATM card and credit cards) and I might even want to leave a nice inheritance if I ever have kids.  He has a very interesting  perspective however, and presents an well thought-out opinion on a number of issues that are worth considering.

The book is broken down in 72 chapters, some of which are only 2 or 3 pages long, so it’s a fast, easy read.  I enjoyed it, found it well worth reading, and I would definitely recommend tracking down a copy if any of the issues mentioned above are of interest to you.

Categories
Frugal

Last Minute Cheap Christmas Gift Guide

With the economy in a downturn, this year more than ever the pressure is on to find cheap gifts for loved ones.  Luckily, this is Mr. Cheap’s forté, so without further ado may I present the “Last Minute Cheap Christmas Gift Guide”.

  • pineconebirdfeeder-1Pine Cone Bird Feeder:  A perennial favourite, this feeder can be made by finding a pine cone and smearing peanut butter on it.  If you’re like Mr. Cheap and you really like to give on a shoestring, you can just give the cone and explain to the recipient how to “load it”.  Perfect for environmentalists or animal lovers, this proved to be the ideal gift for the Four Pillars’ household this year.  Each time I’ve talked to them since giving them this little treasure, they’ve assured me how much fun Mike and the kids were having watching the birds nibble on it (until it attracted a family of raccoons who now live in their attic – definitely one danger to be aware of).
  • rollingEuropean style rolled cigarettes:  For the smokers on your list, this gift can be had for the price of some rolling paper.  For tobacco, stake out bus stops, entrances to office buildings and other areas smokers congregate.  Collect the “gently used” butts, break them apart for the unburnt tobacco, and roll yourself some stylish, continental luxuries.  Just like they smoke on the Riviera, ooh la la!
  • moonshineHobo cocktail:  For those of us short on funds but with a well stocked liquor cabinet (or left-behinds from a recent house party), Hobo cocktails can be made by digging out all the undrunk booze, mixing it together, then pouring it back into the bottles.  You haven’t lived until you’ve drunk a 1/3 gin, 1/3 vodka, 1/3 rye delight!  Scrub off the labels, so recipients don’t mistakenly believe they’re getting boring, “pure” liquor.  If the budget allows, make up funny labels like “Mr. Cheap’s Patented Apéritif, Molotov Cocktail and Nail Polish Remover”
  • sadcatNew-To-You Pets:  This works best if you live in a rough neighbourhood where pets are mistreated.  “Liberate” a neighbour’s pet who you think would be happier living with someone on your gift list.  Then give the gift that keeps giving, a loving addition to their family!  You need to make sure that the recipient doesn’t live too close to the pet’s former home (or there might be an awkward encounter when your uncle Bob is out walking his new mutt).  You should warn the pet’s new family to make sure he doesn’t get outside without a leash, or he might make a bee-line back to his former prison.

Whether shopping for a smoker, a drinker, or a naturalist, with a little creativity you can find a spot-on gift that doesn’t cost an arm and a leg!

Read the 2011 Cheap Gift Guide!

Categories
Personal Finance

Dream Wedding

Weddings can be pricey. They’re also all so generic! Years ago I came up with my dream wedding.

For starters, the invitation will specify a strict dress code: BLUE jeans and a t-shirt. The groom (Mr. Cheap himself) will be in BLACK jeans, and wearing a tuxedo t-shirt. The bride will be in white jeans and a white blouse (so she’ll look all frilly and nice compared to everyone else – who says Mr. Cheap doesn’t understand a woman’s needs!?!?).

On the invitation RSVP guests will check off which McDonald’s extra value meal they want (and we’ll super size the wedding party’s and close family’s meals). For drinks I’ll get a vat of that McDonald’s orange drink and we’ll spike it with Al-cool.

I’m hopeful that McDonald’s might throw in a Grimace costume for the person officiating the ceremony to wear (since I’m buying so much from them already)…

We’ll hold the ceremony and reception in someone’s back yard probably. I’m figuring a budget of $300-$400 should cover it the whole thing.

I know this is a great idea, so I’ll answer your first question right now: no, I won’t be offended if you steal my idea and get married in a similar fashion (I’ll be flattered!). And I’ve anticipated your first comment too: yes, the woman who gets a lasso around Mr. Cheap will be a very lucky lady indeed!

Wooly Woman inspired me to write this up. She had a taco bar at her wedding, which is uber-cool (I might blow the budget and add one of those to mine!).

Categories
Opinion

Your Health

Some time ago, while writing a reassurance post about the stock market melt-down, Mike pointed out that for most people our career is our biggest asset.   I think Mike made a good point: given the choice between the loss of an investment portfolio or the loss of a career, the career is more valuable.  However, I was visiting my Grandmother in the hospital for the holidays and felt that health is even higher on the priority scale.

It’s a cliché, but you really can’t put a price on your health.  When we were in the sun-room singing carols, I looked around and saw people struggling to move, talk and even breath.  I’m sure any of them would happily be unemployed and in debt if it meant having their youth and health back.

Recently Seth MacFarlane, the creator of “Family Guy” and other shows, got a contract worth $100,000,000 from Fox.  He made the comment that he traded Fox his 20’s for a hundred-million dollars.  He figures they got a good deal, since money is a renewable resource but time isn’t.

When I was a young guy, the tech company I was working at thought I should move all the heavy things in the office in addition to software development.  After throwing out my back for 4 days, I realized what a joy it is to have pain free movement.  Some times if I’m down about money or career issues, I think back to being in pain whether I moved, sat or lay down and am a little less dejected about whatever I’m going through at the moment.

John Reed has commented that real estate and health are the only two areas he can think of where the most expensive advice is the worst.  There are people trying to capitalize on our desire for health, and are willing to sell us snake oil.  Even proper medical research seems to be constantly flip-flopping on some key issues (I’ve lost track of whether I should or shouldn’t eat eggs – now I just eat them because they’re delicious and figure the health consequences will work themselves out).

Random events in life will play a role in your health (even if you take care of yourself, you might get hit by a car), so I’ve embraced the chance element and hope for continued health (and try to appreciate it each day that I have it).

To all our readers in good health, I’m glad you’ve already got the best possible gift for the holidays.  For those who are struggling, I hope the new year brings you improved health and comfort!