Why Don’t More People Use Programmable Thermostats?

ecobeeThe hottest time of the year has arrived. The U.S. Energy Information Administration (EIA) shared some results from their 2015 Residential Energy Consumption Survey in regards to air conditioning.

A programmable thermostat can save you a ballpark 15% on your cooling bill, with the average household saving $10-$15 per month. A programmable thermostat will adjust based on a preset schedule of when you expect to be home, away, or sleeping. Various studies (Nest whitepaper) have shown that you can save about 10% on heating and 15% on cooling, with the averaging household bill going down by about $10-$15 per month.

Prices start at only $20 for basic models, but you could theoretically break even in two years even with a fancy $250 thermostat. This highly-rated touchscreen model is $45 and this basic Honeywell version is only $20. Newer smart thermostats like the $250 Nest Thermostat and $250 ecobee4 can learn how you like the temperature and also work with WiFi and Amazon Alexa so you can change the settings wherever using your smartphone or with your voice.

So… you’d think they would be quite popular, right?

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Less than 20% of homes with central air conditioning regularly use a programmable thermostat. Heck, only 30% of folks who already have a programmable thermostat installed actually use them. The article doesn’t explore the reasons behind this behavior. Maybe it’s just too complicated to program? They tried it and didn’t like it?

In case you’re curious, below are the average temperatures at which other people report setting their air-conditioning thermostat. Hmm… is it weird that my house is usually around 78 or 80 degrees?

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Bottom line. Using a programmable thermostat is a pretty reliable way to save money your electricity bill. But for some reason, people don’t use them! Using a smart thermostat is a less reliable way to save money (higher upfront cost, lower marginal benefit over basic programmable thermostat), but if the alternative is doing nothing, then it could be worth the additional upfront investment.

Landline Phone Replacement: OBi200 Adapter $40 Deal + Installation Tips

obi200Updated. If you still like the idea of landline phone service and multiple handsets around the house, Obihai VoIP boxes are officially supported by Google Voice to provide unlimited free calls to the USA to Canada. That’s totally free: $0 a month + $0 in tax and fees. Low international per-minute rates as well. All you need is a broadband internet connection and and a power plug (no computer).

Special offers. Get Obi200 for $39.98 when you use promo code OBIDEAL7 (expires 7/30/17). The seller should be Obihai Technology, Inc. at $49.99 before the coupon brings it down to $39.98 during checkout. There haven’t been many deals on these boxes recently.

I bought myself a Obi200 in order to try out their free calls, and also compare the voice quality with my Ooma device. I thought about making a video, but it turned out to be unnecessary.

  1. Open the box and plug in the cables. AC adapter, telephone line, and ethernet cable to router. All ports are clearly marked. All the cables are included except the phone cable which you should already have. The image below says it all:

    obi200a

    Here is the back of the box, showing the ports:

    obi200_ports

  2. Write down your unique Obi number. This is clearly printed on the bottom of the Obi200 box. Mine was 9 digits like “123 456 789”.
  3. Go to your computer and visit ObiTalk.com. Click on the link that says “Register” in the top right corner. Then just follow the directions. Dial a test phone number when it asks. It is easiest to use the “Sign in with Google Account” button since you already have one if you use Google Voice. I didn’t even have to type in my password (as I was already logged in by cookie). They didn’t require name, address, or credit card number. A few confirmation clicks, and that was it.

    obi200b

  4. Use your phone. I turned on my phone, listened to the dial tone, and called my cell phone. Success! Traditional phone service with unlimited calls within the US and Canada for the great price of $0 a month. The voice quality was fine, and continued to be quite good for the few months that I was using it before giving it away. (I already have the grandfathered fully-free version of Ooma. The voice quality between the two was comparable.)

Total set-up time was under 10 minutes. If for some reason my directions don’t work, check out the official Obi200 Starter Guide [pdf] or their extensive set of tutorials. You can also add e911 service for $15 a year.

Which Obi box model should I buy? I think the sweet spot for most people will be the Obi200, which supports T.38 faxing and has a USB port which can be used to connect to your router over WiFi using an OBiWiFi adapter.

The Obi202 offers two independent phone ports so you can use two different VoIP providers simultaneously (or you can have two Google Voice phone numbers). If you can find one on the cheap, the older boxes work too. However, note that Obihai has stopped supporting Obi100 and Obi110 with new development. Here is a handy comparison chart of the OBi100, OBi110, OBi200, and OBi202.

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Bottom line. If you like the idea of having a landline-style phone service (multiple handsets around the house), this is a very good way to save money on your budget.

Money Buys Happiness… If You Outsource Your Unwanted Chores

happyfaceFirst, you were told that the best way to buy happiness was to buy experiences, not things. Other research then said happiness can come from buying the right things. Here’s another academic study making the rounds (WaPo, NYT): Buying time promotes happiness by Whilans et al, published in Proceedings of the National Academy of Sciences. Abstract:

Around the world, increases in wealth have produced an unintended consequence: a rising sense of time scarcity. We provide evidence that using money to buy time can provide a buffer against this time famine, thereby promoting happiness. Using large, diverse samples from the United States, Canada, Denmark, and The Netherlands (n = 6,271), we show that individuals who spend money on time-saving services report greater life satisfaction. A field experiment provides causal evidence that working adults report greater happiness after spending money on a time-saving purchase than on a material purchase. Together, these results suggest that using money to buy time can protect people from the detrimental effects of time pressure on life satisfaction.

The study found that spending money on time-saving activities was more efficient than material purchases in improving life satisfaction and decrease stress. This applied across different countries, careers, and income levels.

Here are some examples of time-saving activities:

  • House cleaner
  • Grocery delivery
  • Dry cleaning, laundry
  • Lawn care
  • Home repair
  • Cooking service
  • Shopping service
  • Shorter commute (taxi vs. bus)
  • Moving services
  • Junk removal services

For example, instead of spending $125 on clothes or gadgets, you’ll be happier if you spend $125 and the house is cleaned for you every two weeks. The more the activity is a chore that you dread doing yourself, the better.

This seems perfectly reasonable. I’m betting most of us have washing machines and dryers. Many also have dishwashers. That’s paying money to save time. I also paid more for a house with a shorter commute. This article about “extreme” commuting (4 hours+ total every weekday) sounded quite horrible. Amazon… enough said.

I must admit, I still have a hard time outsourcing many household tasks. I don’t love doing home repair, but I do like that after something breaks (and I spend a couple of hours on YouTube and trips to Home Depot), I have learned something new. I should think about what tasks I hate doing the most.

Bottom line: You can buy happiness by spending money to have more positive experiences. You can also buy happiness by avoiding negative experiences (i.e. having to spend your time on unpleasant tasks).

What if the North Pond Hermit Has Pursued Early Retirement Instead?

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Of my summer reads was The Stranger in the Woods: The Extraordinary Story of the Last True Hermit by Michael Finkel. Many people dream about leading a “quiet life” away from all the hustle and bustle. The “North Pond Hermit”, real name Christopher Knight, lived alone without speaking or interacting with another human being for 27 years. Read a preview in this GQ magazine article.

Since this is not a personal finance or investing book review, I will just let you read the nice synopsis from the Amazon listing:

In 1986, a shy and intelligent twenty-year-old named Christopher Knight left his home in Massachusetts, drove to Maine, and disappeared into the forest. He would not have a conversation with another human being until nearly three decades later, when he was arrested for stealing food. Living in a tent even through brutal winters, he had survived by his wits and courage, developing ingenious ways to store edibles and water, and to avoid freezing to death. He broke into nearby cottages for food, clothing, reading material, and other provisions, taking only what he needed but terrifying a community never able to solve the mysterious burglaries. Based on extensive interviews with Knight himself, this is a vividly detailed account of his secluded life—why did he leave? what did he learn?—as well as the challenges he has faced since returning to the world. It is a gripping story of survival that asks fundamental questions about solitude, community, and what makes a good life, and a deeply moving portrait of a man who was determined to live his own way, and succeeded.

People seem to form strong opinions about this story. Some treat him as some sort of inspirational figure. Others only saw a saw a weirdo that stole a bunch of things. A lot of time and energy was spent trying to label him with the appropriate psychological disorder.

My takeaway from the book was that he was a simple guy. He wanted to be alone. That was it. He wasn’t a libertarian or other political leader. He wasn’t religious. He wasn’t an environmental activist. He was never violent and didn’t carry a weapon. He wasn’t trying to impose his views on anyone.

The fatal flaw to his plan was that he couldn’t provide his own food and shelter. He had to steal things from other humans to keep warm and to feed himself. His criminal trial sounded rather boring – He pled guilty for stealing about $2,000 worth of stuff like propane tanks, canned food, and batteries. More importantly, he affected the personal security of the people he stole from. Knight did wrong things, and he knew it. He served roughly a year in jail with specific terms during probation.

I kept thinking to myself – Christopher Knight could have lived alone forever if he had just worked and saved up some money for a few years. He has nearly all the traits required for early retirement – disciplined, resourceful, low expenses, and disregard for social pressure. Knight said that growing up as a kid, his rural Maine family taught him that being tough was better than strong, and clever is better than intelligent.

What if he had read the books Your Money or Your Life or Early Retirement Extreme when he was 20 years old? (I know they weren’t published until 1992 and 2010. But what if they were?) ERE author Jacob Lund Fisker used to catch flack because he voluntarily took cold showers to both save money and follow his personal philosophy of self-discipline and low environmental waste. Christopher Knight took cold baths from a bucket of rainwater for 27 years. No problem.

He had already shown that he was willing to sacrifice nearly anything to stay away from people. He was willing to live in a tent. He pooped in the bushes. He never spoke a single word so as to keep hidden. How much would it really have cost him to live in the woods alone? $5,000 a year? If you use the 25x rule (aka 4% withdrawal rate), that’s $125,000. If he kept his previous job as a home security technician, he probably could have saved that up in 5 years.

This guy is not a role model, but that’s kind of the point – with financial independence you don’t need to worry about what others think. The book doesn’t provide a current update on Christopher Knight. Maybe he did save up enough “F- You money” and is now alone again somewhere, minding his own business.

The Intangible Benefits of Saving Money: Flexibility and Robustness

tardisNeed a break from the charts? Morgan Housel has an insightful article Let Me Convince You To Save Money that includes no historical data, no survey results, no fancy infographics. Read the whole thing, but here’s my favorite excerpt:

But the best reason to save is to gain control over your time. Everyone knows the tangible stuff money buys. The intangible stuff is harder to wrap your head around, but can be far more valuable and able to increase your happiness. Savings gives you options and flexibility, the ability to wait and the opportunity to pounce. It gives you time to think. Every bit of savings is like taking a point in the future that would have been owned by someone else and giving it back to yourself.

In my experience, every incremental bit of savings changes your life in intangible ways. Going from paycheck-to-paycheck to having $1,500 in the bank lets many things become minor speed-bumps instead of derailing your life. It’ll also make you happier according to (sorry!) the research: Does Cash Make You Happier Than Income or Paying Down Debt?

Continuing onward, going from having a basic emergency fund to $10,000 gives you the ability to take career risks without fear of starvation. You feel like you can put your full effort into a new business, or take a different job with less stress. I personally made a life-changing career switch at about $50,000 net worth.

Finally, going from $10,000 to $100,000 is amazing because that’s when you realize that reaching financial independence is a matter of WHEN, not IF. It’s a sign that you’ve put in the dirty work and figured out the hard bits. To put it crudely, “The first $100,000 is a b****.”

In biology, the term robustness refers to the “persistence of a system under perturbations or conditions of uncertainty”. In computer science, robustness is the ability to “cope with errors during execution and cope with erroneous input”.

In today’s world of questionable safety nets, having adequate savings improves the robustness of your family’s lifestyle. First, you can endure an expected car repair. Then you can endure a temporary blip without a job. Finally, you can go without a job whenever you wish (aka retirement). Your savings rate fuels all of that.

Pretirement App: Interactive Countdown Clock to Financial Freedom

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What would you do if you knew that skipping that morning $4 coffee/muffin combo every day would get you 8 months closer to financial freedom? What if I told you that buying that $40k car instead of the $25k one would only extend your working years by 3 months? That’s the entire purpose of the Pretirement app (Apple iOS/Android):

A financial independence app that instantly converts spending or savings decisions into days, weeks, or years of your life.

After you supply some initial numbers and assumptions, it will provide a countdown timer to your financial freedom date. You can then input a specific change to your current saving/spending routine, and it will show you the impact to that date. Found via Reuters.

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There are no fancy Monte Carlo simulations, but the underlying math appears correct and the overall design is pleasing in a minimalist way.

What the app shows you is that long-term habits matter more than temporary changes. If you make permanent saving change like dropping the morning $4 breakfast stop, you can put more money towards your nest egg and your required nest egg is smaller. If you just do a one-time saving of $100 or even $1,000, it really doesn’t make much of a dent. You need to be able to repeat the savings over and over. It’s similar to weight loss: Diets don’t work.

Hopefully, people can use this information as activation energy to change their habits for the better. (Ironically, activation energy is explained using coffee…) The developer Danny Murphy himself has started cooking more and eating out less after going through this exercise. It took us lot of initial effort to learn how to cook efficiently, but after developing a set of “go-to meals” and a pre-plan method it has become much easier.

If you are truly serious about early retirement, my advice would be to look for things that you can change permanently and/or automate so you can repeat it without requiring constant willpower. This usually means a larger, upfront effort. Up your 401(k) contribution by 1% every year. Relocate to a cheaper city. Move to cheaper housing. Search for a better job. Once you set yourself up on the right path, go ahead and enjoy your prioritized expenses – be it high-quality coffee or fun cars.

The Incredible Shrinking Cell Phone Bill

iphonepixel200If you wanted to shave $1,000 a year off your housing expenses, you’d have to move or at least refinance a mortgage. That takes a pile of paperwork and lots of time. Meanwhile, with a few clicks on a website and a SIM swap, many people on a major carrier plan can easily save $1,000 on their annual cell phone bill. I just transfered my service to Sprint’s Free Year of Unlimited promotion (extended to 7/30) and my new bill is $3 a month per line including all taxes and fees. Took maybe 15 minutes of my time.

The average cell phone bill has dropped by over 12% from a year ago. If you haven’t shopped around in a while, you might be missing out on big savings. The WSJ article The New Sticker Shock: Plunging Cellphone Bills (paywall?) shows us how cell phone bills are dropping across the board:

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Verizon, AT&T, and Sprint have all been losing net customers this year. Most went to either T-Mobile or various MVNO/prepaid providers which can provide 95%+ of the coverage at a fraction of the cost. (MVNOs don’t have the same roaming agreements as a postpaid major carrier.) Sprint was both a smaller competitor and losing customers, so apparently they felt they had to do something drastic.

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I expect to switch to either T-Mobile or an MVNO after my year is up, unless Sprint can come up with another deal.

New vs. Used Car Total Cost of Ownership Calculations

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A financial topic that nearly everyone has an opinion on is car ownership. Do you buy new and drive it into the ground? Do you buy slightly used after the early depreciation hit? Do you buy a cheaper 10-year-old car, drive it for a while, sell it for not much less, and repeat?

Reddit user nmtxinsc2 put together an interesting car cost comparison of the total cost of ownership for these options and more. Here is the final graphic, which you should click to enlarge:

carcostcomp_full

Assumptions. These are not based on average or historical car values, but from a theoretical cost model for a single car. A quick overview:

  • Car Value. New price $32,000. Value depreciates exponentially down to $2,000 after 20 year lifespan. The historical depreciation behavior of a Ford F-150 is a general benchmark.
  • Maintenance. From $0 to $800 over lifespan.
  • Insurance. From $742 to $300 over lifespan.
  • Fuel efficiency. MPG goes from 25 to 16 over lifespan. 12,000 miles a year at $2.50 a gallon.

Don’t agree? You can download the source spreadsheet and adjust any of the assumptions yourself.

Observations. It’s not surprising that leasing a brand-new car every 3 years is the most expensive, or that buying a 10-year used car and keeping it for a while is the least expensive. However, it may interest you that the calculations show that, for example:

  • You would save ~$68,000 over 20 years if you Buy 10-year-old Used Car/Keep 5 years instead of always doing 3-year New Leases.
  • You would save ~$20,000 over 20 years if you Buy New/Keep 10 years instead of Buy new/Keep 5 years.
  • You would save ~$8,000 over 20 years if you Buy 5-year-old Used Car/Keep 15 years instead of Buy New/Keep 20 years.

My own thoughts on managing car costs. I like reading about models and statistics like this. However, my rule of thumb on affordability is more simple and behaviorally-based. If you want to achieve early retirement, you should only pay cash for cars. In my opinion, car debt and credit card debt are equally harmful to your financial health. In fact, auto loans may be worse – many can garnish your wages even after the car is repossessed. Financing obscures the real cost. When you’re faced with writing a huge check for $20,000 or whatever, your decision-making clarity is greatly improved.

Extremes in Minimalism, Frugality, and Early Retirement

masonjaraceI enjoyed reading this NYT article When the Gospel of Minimalism Collides With Daily Life. The “Minimalist Mom” was profiled who vowed to not buy their kids anything for an entire year (2013). How does she live now?

These days, she warned, their two-story London house is far from minimalist. “Lego bricks strewn across the floor, poster paints cluttering the breakfast table, children’s drawings covering the fridge,” she said. In hindsight, she said, some of the trade-offs she made as the Minimalist Mom, like spending days looking for free toilet-training underpants for her toddler, “may not have been the best investment of my time.”

Ms. Garlick cautions those flirting with such a lifestyle change, “Chasing any ideal, whether it’s minimalism or anything else, isn’t the way forward.”

“Family life,” she added, “and actually any life probably, is at its best when it’s a bit scruffy and messy.” Being the Minimalist Mom entailed some daily mental gymnastics, she said, and required her to say no to her son about buying certain things, purely “in pursuit of a principle.” Today, she said, she feels more relaxed and happier, without the added worry of so much minimalism.

I’m sure she felt a lot of pressure to keep up with her commitment. It can be hard to keep projecting the perfect life (credit: Fowl Language)…

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Perfection is exhausting. I figure if two people cut their consumer waste by 50%, that’s the same effect on the environment as one person living as before and another person fitting all their waste into a tiny jar.

The perfect frugal early retiree. I observe this dynamic at work in the “frugal” and “early retirement” communities as well. Very quickly, an ideal forms. Small home. 15-year-old used econobox car. Better yet, bike 30 miles a day or use public transportation exclusively. At least two side hustles and your hobbies must consist of couponing, dumpster-diving, and visiting garage sales to resell on Amazon and eBay.

My goals is to not teach my children any specific ideal, but instead that the world is full of options. You don’t need to spend like everyone around you, and you don’t need to live like everyone around you.

I have to admit, I enjoy reading about extremes. You can learn a lot from people living at the extreme and it can help inspire a change within your life. The key is to not treat it like a religion (“gospel”). Pick and choose what works for you. It shouldn’t feel like you’re in a cult. Otherwise, it’s conformity all over again.

Our family does not fit into any ideal. We have not optimized our life solely based on savings rates and early retirement. We chose to have three kids (higher expenses). We chose to work half-time instead of paying for daycare (lower net income). We intentionally spend more so that we can travel (supplemented by points and miles) and are also putting some funds aside some money for future education to take advantage of time and tax-exempt 529 growth (hopefully the kids will see this and appreciate compounding returns and long-term investing).

Standard eBooks: High-Quality, Free, Public Domain eBooks

sebooksThe Standard eBooks Project is a new volunteer-driven, not-for-profit project that produces carefully-formatted, open-source, and free public domain ebooks. They improve upon the work of sites like Project Gutenberg and HathiTrust in the following ways:

  • Modern & consistent typography
  • Proofreading with careful corrections
  • Light modernization of language (spelling, hyphenation)
  • Additional metadata
  • Ready to download in .epub (iBooks), Kobo, and Kindle native formats.

Basically, it makes these public domain books easier to download and more pleasurable to read. The only drawback so far is that the library is somewhat limited. You can also contribute in a variety of ways, from reporting errors to proofing entire books. Found via Daring Fireball.

The .epub format works with iBooks and most other readers, so you can download directly from iPad or iPhone. If you prefer to read on an Amazon Kindle, visit the website using your built-in web browser and download the .azw3 file directly. This saves you the step of having to transfer files from your computer.

Another source of free eBooks with improved formatting is Feedbooks.

Work + Skill + Luck + Risk = Big Success

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A new book called Barking Up the Wrong Tree by Eric Barker promises to reveal surprising facts about what really determines success. The publicity tour has generated several articles about how high school valedictorians are less successful than you might think:

Beyond the clickbait, what really happened? I haven’t read the book, but I did learn that Dr. Karen Arnold of Boston College tracked 81 high school valedictorians and salutatorians for 14 years after graduation. Here are some of the findings of this study:

  • 95% went on to graduate college.
  • The average college GPA was 3.6.
  • 60% went on to receive graduate degrees.
  • 90% were in professional careers.
  • 40% are in highest tier jobs (not exactly sure what this means).

Apparently, none of the subjects became billionaires or “changed the world” in a meaningful way. Why not?

The theory is that high grades are a product of conformity and obedience, while being “successful” is about mastering a unique skill and non-comformity. Research has found that high grades are only loosely correlated with intelligence. In addition, out of a survey of 700 millionaires, the average GPA was only 2.9. If you are devoted to a single passion, it can be hard to have good grades in all subjects; thus you tend to struggle in high school.

My question is – How you define “success”? If it’s a respectable career with above-average income, it seems that being valedictorian gives you a much higher chance for that. There’s a reason why many parents want their kids to get good grades and become an engineer, doctor, accountant, or lawyer. You are playing the odds. There are many starving artists and writers, but not many starving nurses.

If “success” is becoming a billionaire, then yes it seems that being a valedictorian may not match up with that. If you want to get rich quickly, you’ll need to start your own business and take some sort of ownership stake. The richest people all own something – music copyrights, book copyrights, businesses, real estate, something.

The difference is taking risks. By definition taking a risk means there is the chance of failure. A small business can make you rich, but most small businesses end up failing. However, you’ll only get graduation speeches from the winners. This is called survivorship bias, as this XKCD comic explains:

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There is no direct formula for success, but you can still break it down into the required parts:

Work + Skill + Bad Luck + High Risk = Failure + Experience

Work + Skill + Good Luck + High Risk = Success + Experience

No Work + Good Luck = Failure

The takeaway is that you need hard work, valuable skills, taking a risk, and some luck. Luck plays a role, but you need the other three or you have no chance at all.

If you can be a high school valedictorian, I feel you are able to do hard work and thus have the ability to develop valuable skills. That’s a good base. The difference is… will you take the risk? Will you risk putting all your time and energy into developing a skill or a company that may or may not result in something valuable? Will you accept that chance of failure? Or would you rather go with the odds and do something with more reliable results? Perhaps statistically valedictorians take less risk than other groups.

I plan on advising my kids to take calculated risks when they are young and can devote 70 hours a week to a single task. That’s possible when you aren’t taking care of your kids (or your parents). However, I would also teach them that a reliable stream of above-average income plus a high savings rate equals financial freedom, aka early retirement in 10-20 years. (Getting rich via ownership just accelerates the process even further.) Once you have that financial freedom, you can do whatever you want with your life. Start a charity, write a novel, spend time with family, travel the world. Living a lifestyle aligned with your values certainly sounds like “success” to me.

Frugal Entrepreneur Earns $5,600 a Month Farming Other People’s Yards

Here’s a cool story at the intersection of entrepreneurship, frugal living, and sustainable farming. Jim Kovaleski is a one-man farm, growing produce and selling it at local farmers markets, earning over $5,000 a month. What’s unique is that he doesn’t have a central plot of land – he grows his plants on other people’s residential yards in Florida and Maine. Some stories say he “leases” the land but in the interview below he says he doesn’t pay in cash, only in veggies.

He’s profiled above on the Justin Rhodes YouTube channel. Found via Kottke.org.

This nomadic gardener travels between Maine to Florida gardening leased front yards. With a frugal lifestyle and revenues as high as $1.5K a week, he’s living the dream.

It’s not an easy job, but he gets to work on his own terms while developing a unique set of skills. I’m impressed both by the yield he gets from relatively little space, and how he keeps people’s front yards looking relatively nice (as opposed to industrial or commercial). If you live in a neighborhood with the right vibe (like my old one in SE Portland), this idea could probably be replicated.