More Research on Buying Experiences vs. Things

travelsignpostYou’ve probably heard the advice that you should buy experiences and not things. (Except maybe when things help you experience.) This Atlantic article explores new findings from behavioral research about the differences between experiences and material objects.

With experiences, people are less competitive and worry less about keeping up with the Jones’:

Gilovich’s prior work has shown that experiences tend to make people happier because they are less likely to measure the value of their experiences by comparing them to those of others. For example, Gilbert and company note in their new paper, many people are unsure if they would rather have a high salary that is lower than that of their peers, or a lower salary that is higher than that of their peers. With an experiential good like vacation, that dilemma doesn’t hold. Would you rather have two weeks of vacation when your peers only get one? Or four weeks when your peers get eight? People choose four weeks with little hesitation.

Experiences elicit positive feelings and promote social togetherness rather than creating impatience and worries about scarcity.

Those waiting for experiences were in better moods than those waiting for material goods. “You read these stories about people rioting, pepper-spraying, treating each other badly when they have to wait,” he said. It turns out, those sorts of stories are much more likely to occur when people are waiting to acquire a possession than an experience. When people are waiting to get concert tickets or in line at a new food truck, their moods tend to be much more positive. [...]

Research has also found that people tend to be more generous to others when they’ve just thought about an experiential purchase as opposed to a material purchase. They’re also more likely to pursue social activities.

Baby Gear Reviews: Diaper Pails (Part 4)

diaperpailsHere is Part 4 of my series on baby gear, organized in the order of Amazon’s Baby Registry. The entire multi-part series can be found with the Baby Gear tag here. This time I’ll talk about our experiences with diaper pails.

Gotta put the poop somewhere, right? I’ll focus on diaper pails for disposable diapers. Most of them have some sort of mechanism to help prevent stinky odors from escaping the poop bucket. We got a Diaper Genie Elite from our baby registry, which was one of the two recommended by the Baby Bargains book. (The other was the Dekor.)

It works more or less, but like with razors and printers, the bag refills are where they make their profits. Each refill canister is really only 3-4 bags of diapers and they cost $6-$8 each. So essentially you’re paying upwards of $2 for a plastic bag! Compare this with under 10 cents for a kitchen trash bag from Costco. Also, the advertised “count” refers to an imaginary pile of newborn diapers that are vacuum sealed or something because I’ve never fit that many.

Parents have come up a number of ways to frugalize the diaper pail:

  • Wrap up your diapers as tightly as possible.
  • Throw the pee diapers in the regular trash and only the poops in the diaper pail.
  • Don’t waste too much bag when cutting and tying. Make sure you squeeze all the excess air out. Some use scissors instead of the provided cutter. I used to use those wire twist ties from other bags.
  • Use a plain kitchen trash bag wrapped around an empty refill canister. Note that it won’t fit perfectly and we got mixed results.
  • Buy generic refills. Note that Diaper Genie changed their design so they might not fit right anymore on new models. Check it out. Rather lame attempt at keeping their monopoly, in my opinion.
  • When your Diaper Genie bag is full, place a regular trash bag underneath and cut only the bottom knot. Let the diapers all fall into your 10 cent kitchen trash bag and throw that away. If you keep your wrapped diapers clean your refill liners can last 5 times longer or more.

We experimented all these things (with my prodding). In the end, my wife didn’t want to deal with any added hassles and we just buy the overpriced refills at Sam’s Club. I personally throw all the non-stinky diapers that I change straight in the regular the garbage.

  • Verdict: Considering you only fit around 50 diapers max at $2 a bag, that’s 4 cents a diaper which is an additional 20% of the cost of the diaper itself. In the end, you either think the reduced odor and convenience is worth the extra cost (my wife) or think you should just throw your diapers in a regular trash pail and wrap up the stinky poops in an extra plastic bag (me). For what you’ll be paying in refills you could buy a really nice trash can that will last for a long time.

Eat Anything You Want, Just Cook It Yourself

Want to learn how to eat well without the need for fad diets or deprivation? This short video narrated by Michael Pollan does a nice job of explaining his simple “just cook” rule:

Found via Farnam Street. Also see my book review of The Omnivore’s Dilemma. Some other thought-provoking videos on the same RSA channel as well.

It’s now been nearly a month of cooking mostly at home from scratch. With proper planning, the cooking hasn’t been too overwhelming and we are definitely spending less money on food. But I must admit I haven’t lost much weight. The food is so good and new and interesting… I’m eating too much! Hopefully I’ll adapt and perhaps I’m getting healthier in other ways (less salt, preservatives, binders, fillers, etc).

Backup Hard Drives: Expect Failure and Plan Accordingly

In the past month, both of my Western Digital 1 TB external backup hard drives have failed on me. This was pretty disconcerting considering I bought two of them specifically so they could be redundant backups. I was a bit lazy and barely had enough time to transfer my data while the last drive was limping along.

I turns out there isn’t that much data on real-world hard drive failure rates. When searching, many reference this post by online backup site BackBlaze which has owned over 25,000 hard drives (also see their recent update). In both posts, Seagate drives had much higher failure rates than Hitachi or Western Digital. However, other tech experts point out the flaws in drawing that conclusion. Brands don’t matter as much when they keep merging with each other anyway.

Really, the only conclusions I would confidently draw are (1) don’t buy specific “low power consumption” models of Seagate hard drives and (2) expect hard drives to fail on you. Imagine how little can go wrong in order to fit 4 terabytes of information on a little spinning disk. This Backblaze post is the one you should actually read. It cites other studies that say hard drives fail much more often than the MTBF (Mean Time Between Failures) statistics put out by manufacturers, and it is hard to predict impending failures even with regular hard drive checks. Here is a chart showing that hard drives tend to fail either within the first year, or after 3 years.

hdfail_bb2

Here is a chart of survival rates over time.

hdfail_bb

That’s roughly 1 in 5 drives failing within 4 years, and maybe half will fail within 6 years. That starts to make a service like Crashplan at $60 a year more palatable.

In the end, Backblaze still buys Seagate drives because their cheaper price more than offsets any expected unreliability. Perhaps that is what consumers should do as well. Forget brands, buy whatever is cheapest, keep redundant backups in expectation of failure, and save your receipts. Of course, hard drive warranties keep getting shorter and are now usually only a year long (perhaps an admission of their unreliability?). Here’s my plan:

  • Purchase with an American Express that offers their Extended Warranty which will double the manufacturer’s warranty, up to one year.
  • Purchase from Costco whatever is on sale, due to their generous return policy. While even 90 days is relatively good, but I also do not see hard drives included explicitly in their 90-day electronics return policy – “We guarantee your satisfaction on every product we sell with a full refund. The following must be returned within 90 days of purchase for a refund: televisions, projectors, computers, cameras, camcorders, touchscreen tablets, MP3 players and cellular phones.” Do accessories count?
  • Keep my important documents and family pictures on multiple formats (cloud, flash drives, multiple hard drives).

Feel Like You’re Always Eating Out? You’re Not Alone.

Here are some charts illustrating a couple of interesting food trends in the US.

Americans are spending a smaller percentage of their income on food than ever. From America’s Shrinking Grocery Bill:

In 1984, the average U.S. household spent 16.8 percent of its annual post-tax income on food. By 2011, Americans spent only 11.2 percent. The U.S. devotes less of its income to food than any other country—half as much as households in France and one-fourth of those in India.

shrinking700

But you see that big orange slice of the chart?

We are also spending a larger percentage of our food budget on food prepared away from home than ever. From Cheap Eats: How America Spends Money on Food:

foodathome

Looking at the chart, it seems like only a matter of time before we eat out more often than we eat in.

Our peak period of eating out was after the birth of our first child. It felt like we were whipping out the binder of take-out menus nearly every day. More recently, we completed the Dinner Boot Camp which contained a week-long plan for easy home dinners, and since then we’re on our 4th consecutive week of cooking dinner (and the following day’s lunch) at home at least 5 times a week. It’ll be hard to keep up, but doing a bit of planning before every week really does go a long way.

Baby Gear Reviews: Baby Bottles and Accessories (Part 3)

azbottlesHere is Part 3 of my series on baby gear, organized in the order of Amazon’s Baby Registry. The entire multi-part series can be found with the Baby Gear tag here. This time I’ll talk about our experiences with baby bottles.

Our first baby was colicky and not a great eater, and that is really where these bottle companies make their money. Design a bottle nipple that reduces the unstoppable crying of colic, and we’ll gladly pay upwards of $6 per bottle. Heck, if it really worked I’d pay $50 a bottle without blinking an eye. The basic idea is that air is being swallowed when air backflows into the nipple during drinking, which supposedly causes colic. So the fancier bottles all have some mechanism to alleviate that vacuum.

Our babies were breastfed, so we got a “free” Medela breast pump (it was covered by our health insurance). Thus, we started out with a few Medela brand bottles. Baby didn’t like it. Between purchasing and borrowing from friends, we ended up trying most of the brands: Medela, Born Free, Playtex, Tommee Tippee, AVENT, and Dr. Browns Natural Flow. We tried the last three because they were the most recommended by the Baby Bargains book.

The two that ended up working best for us were:

tippee

  • Tommee Tippee – The silicone nipple does look most like a human nipple with a wide base, the construction felt of high quality, and the wider bottle was easier to hold in my palm. Keep the air vent hole facing upwards so milk doesn’t block it. On the expensive side.
  • Playtex Drop-Ins with the Latex Nipple – I bought this when desperate in a drugstore after reading a recommendation from a parenting forum. Latex is softer than silicone and thus feel more natural, although silicone is more durable and some babies are allergic to latex. The collapsible liners are convenient and eliminate vacuum but are not eco-friendly. Really, it was all about the soft latex nipple.

All bottles sold today should be BPA-free, I would check if you are using hand-me-downs. I would also note that you can buy nipples with different-sized holes that change the flowrate, your baby may prefer one to another and that could make a big difference in itself.

Other things to buy. As for accessories, a simple dishwasher basket was a very good buy; we’ve used it daily for 2 years now for all kinds of small kiddie things, even after we stopped using bottles. A good bottle brush is also helpful for thorough cleaning.

Other things we didn’t buy. We did not buy any bottle sterilizers or bottle warmers. When we had our first child, I think the first two weeks we boiled water and manually sterilized the bottles every time. What a pain. After that, we only sterilize them before the first use. Now we just wash them with warm, soapy water or use the dishwasher and rinse them well. Hot tap water works fine for warming milk or formula. When eating out, we simply ask for some hot water like they would serve for tea. If you formula-feed, the advice is to start them at room temperature and your baby will be fine with it. Our pediatrician agreed these were unnecessary. Perhaps they are wonderful inventions, but I don’t feel like I’ve missed out.

  • Verdict: There are endless combinations of nipple shapes and bottle designs. I’m sure some babies will drink from anything. For us, there really wasn’t a huge difference between any of the bottles, but I listed our two favorites above. If possible, try to borrow different bottle brands from friends to try out.

OBi200 Adapter + Google Voice Installation Review

obi200After the announcement that Obihai VoIP adapters were officially supported by Google Voice, I bought one of their discounted Obi200 adapters. I wanted to learn more about this cheap alternative to landline phone service, and also compare the voice quality with my Ooma device.

Obihai adapters have been around since 2011, but this is the first Obi product I have purchased. I don’t know that the installation procedure was in the past, but I believe the official integration has made the installation even easier than before. Supposedly the authentication method is also more secure and your Google password is no longer stored. I thought about making a video, but it really wasn’t necessary.

  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

  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. 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, but I’ll test it out more over the next couple of weeks.

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.

The Obi200 is currently $49.99 at NewEgg and $48.89 at Amazon, both with free shipping options. The newer Obi200 supports T.38 faxing and has a USB port which can be used to connect to your router over WiFi using an OBiWiFi adapter. If you want to save some money you can buy the OBi100 for $37.99 at NewEgg and $37.99 at Amazon (prices often change). NewEgg works with Shoprunner which many people have for free, giving you free 2-day shipping. Here is a comparison of the OBi100, OBi110, OBi200, and OBi202.

obi200compare2

Healthcare FSA $500 Rollover and Open Enrollment

rxbottleIn October of last year, the government announced that administrators of Healthcare Flexible Spending Accounts (FSA) could allow employees to roll over up to $500 of unspent FSA money into the following year’s balance . This change was designed up help address the (stupid in my opinion) use-it-or-lose-it nature of these accounts. Per this Reuters article, given the short notice only 8% of U.S. companies adopted this rollover policy in 2014.

As Open Enrollment season for benefits starts for 2015, keep your eyes out for mention of this rollover option. Adoption rates could jump up to 50% now that they’ve had a year to prepare, according to benefits administrator Alegeus Technologies.

If your company does offer a $500 carryover (and your job is stable), then it would be much more appealing to contribute at last $500 even if you are unsure of your future expenses. If you don’t spend all (or any) of it, you can simply roll it over year after year.

Despite the potential tax savings, we stopped contributing to our FSA last year because the company switched to a new (likely cheaper) FSA administrator that made you do everything online while also repeatedly rejecting half our claims without clear explanations as to why. So painful! Thankfully it sounds like everyone else hated them too, as they are back to processing FSA claims in-house.

Google Hangouts App Update: Free Voice Calls Over Data for Android and iPhone

hangoutsGoogle has just announced better integration between Google Voice and their Google Hangouts smartphone app. Both iOS and Android apps can now make domestic and international calls through a Wi-Fi or data connection (like 4G). You can also receive calls if you have a Google Voice number. Calls to the U.S. and Canada are currently provided by Google free of charge from all countries where Hangouts calling is available.

What does this mean exactly?

  • For the frugal minimalist, as long as you have a data connection like WiFi, you can now make and receive unlimited domestic voice calls using a basic Apple or Android device. You can pay for a cheap prepaid option as a backup, or simply go without any cellular plan. You can also use voice over data to complement T-Mobile’s $30 plan which offers 5 GB of 4G data but only 100 voice minutes (this plan isn’t heavily-advertised, but scroll down and you’ll find it).
  • For the international traveler, as long as you have WiFi in a supported country you can call back home to the US for free using your phone. No foreign SIM card or even Skype account required.
  • For the international caller, you can more easily use Google Voice’s discounted calling rates which have recently been lowered again. For example, rates to India (mobile or landline) and Mexico (landline) are only 1 cent a minute.

iPhone / Apple iOS. Download the Google Hangouts app and the calling functionality is built-in.

Android. Download both the Google Hangouts app and the Hangouts Dialer app. If you need help, here are directions straight from Google: Make calls with Hangouts on Android.

SMS text message support is also supposedly coming, first to Android devices “in the next few days” and then to iOS devices “soon”.

Get Rid of Second Car and Use Uber Instead?

uberiphone5Forget borrowing money to buy a car, the concept of owning a car itself is changing. Owning a car requires committing to a long list of expenses:

  • car payment and value depreciation ($1,000+ a year)
  • car insurance premium ($500+ a year)
  • fuel costs ($600+ a year)
  • government tax, registration, and fees ($300+ a year)
  • maintenance and repair costs
  • parking, traffic tickets, and tolls

In rough terms, owning a car runs at least $3,000 a year with most people spending more than $5,000 a year. Consumer Reports calculates the median at $9,000 a year over the first 5 years for new car buyers.

As a couple with two cars, I’ve been thinking about trying to get by with one car in the household. Even besides public transit, consider all the car-based options that may be available:

  • Renting a car, but driving ourselves. (ZipCar, RelayRides)
  • Being driven around by other people who rent or own cars. (taxis, Uber, Lyft)
  • Being driven by autonomous robotic cars. (Google or major auto company)

After recent positive experiences with Uber and reading about the advancements in self-driving cars, I now believe that within the next 10 years we will shed at least one car. (I doubt I would want to go completely carless with two kids and all their activities.) Some food for thought on the subject:

  • With Uber, Less Reason to Own a Car – Farhad Manjoo at NY Times.

    “In many cities and even suburbs, it’s becoming much easier to organize your life car-free or car-lite,” said David A. King, an assistant professor of urban planning at Columbia University who studies technology and transportation. By car-lite, Dr. King means that instead of having one car for every driver, households can increasingly get by with owning just a single vehicle, thanks in part to tech-enabled services like Uber.

  • A Financial Model Comparing Car Ownership with UberX (Los Angeles) – Kyle Hill at Medium.

    So there you have it… for the average American who drives 13,476 miles per year, owning a motor vehicle will cost them $12,744 per year to maintain, and the cost of taking UberX everywhere will cost them $18,115 per year. However, Americans who drive less than 9,481 miles in a year should seriously consider ditching their car, because UberX will be cheaper.

  • How Do Car Ownership Costs Compare to Uber? – Uber Blog.

    The math doesn’t lie. In a city with with a fast, practical (and cool) alternative like Uber, it would very much be worth your time to crunch the numbers and see how much you’re really spending on your gas, parking, maintenance, etc. and how much time you spend doing those things. Because having your own personal driver pick you up in a slick car each and every day is a hell of an appealing alternative.

  • Uber vs Car Ownership – Sam Altman.

    Taking uberX everywhere is now cheaper for me than owning a car (I have an expensive car, so it’s not a super fair comparison, but I still think it’s interesting).

Of course “the math” depends on where you live and how you drive, but even small to medium cities will be affected. Uber now has UberFamily (car seats) and UberPool (multiple passengers heading the same direction). Now look at self-driving car technology. If I buy a self-driving car, that’s really just another convenience/luxury that costs me more money. But what happens when Uber and Lyft don’t have to pay drivers? (Robots taking jobs again!) Fares will drop even further.

Early Retirement Lesson #4: How Much Car Can I Afford?

Pretty Jaguar F-TypeHere’s another installment of what I would tell my kids about pursuing financial freedom. Read all of my early retirement lessons here. I’ve already covered housing, so the next big expense that comes to mind is cars. This is a revised version of a older post.

If you want to achieve early retirement, my rule of thumb is that you should only pay CASH for cars. By cash I don’t mean retirement savings in an IRA, I’m talking about actual cash sitting in the bank while otherwise still making timely progress towards your other financial goals. I’ve never had a car loan. When I buy a car, I write a check or hand over a wad of cash.

Don’t you like cars? I’ve been a Car and Driver subscriber off and on for 20 years now. I wanted to become an ASE-certified mechanic and even applied to automotive school, but settled on being a mechanical engineering major. But I also know that cars are the biggest area where the price paid vs. utility derived (i.e. value) can get completely out of whack. While a BMW M3 is a beautiful example of precision German engineering, unless your commute involves an unrestricted Autobahn it won’t get you to work any faster than my old 2001 Pontiac.

I’m also a proponent of individual choice according to personal priorities. Great cars are beautiful manmade creations, just like great buildings and great bridges. (Top Gear reference!) You may derive an obscene amount of personal joy out of your car. Okay, so buy it with cash saved up after you put 15%+ of your pay aside for retirement. An old classmate drove a 12-year-old Porsche 944 that he worked on himself.

So I can never buy a new car? Again, if you have the cash knock yourself out. My parents are the buy-new-and-drive-for-a-decade type, and they’ve done well with that philosophy. Not everyone enjoys haggling for a used car, and buying new with cash and driving it into the ground is good enough.

Reliable car sweet spot? The “true cost” of a car is the sum of depreciation, maintenance costs, gas, and insurance. New cars hurt you on the depreciation front. Going too cheap may result in high maintenance costs overwhelming the low depreciation. Any fuel-efficient car between 3 and 7 years old with good maintenance records seems like a reasonable choice to me. Buy it from a private party on AutoTrader or Craigslist, get it checked out by a trusted mechanic, use one of the many pricing guides available. Modern cars can easily go past 10 years and 100,000 miles now with proper maintenance.

I personally like the idea of a used GM, Ford, or Mazda model. This is because I bought a Pontiac Grand Prix for under $9,000 at 3 years old and 35,000 miles (company car went off-lease). Even though this was the base model of a struggling-and-now-defunct domestic brand, it ran for another 9 years with the only major repairs being broken power window motors. Essentially, I now believe that the used car pricing market adjusts adequately for reliability. Hondas and Toyotas are certainly more reliable but there is no way I could get a 3-year-old Camry for $9,000.

What if I only have 50 bucks and need a car for work? My first advice would be to try harder to find alternatives. Public transportation may be uncool, but I dislike the idea of working past 65 even more. Can you vanpool or carpool? Could you (gasp) bike or walk?

If you absolutely have to finance a car, buy used and bring your own financing from a credit union like PenFed or Hanscom FCU, which currently offers used car loans starting at 1.49% APR. Negotiate only on price, not monthly payments. Make the loan term 3 years or less.

Again, this rule of thumb is targeted at those folks to want to escape the rat race early. You can still have the $40,000 luxury vehicle, but you’ll have to plan ahead and save for it. Then, when you’re staring at a nice $40,000 balance on your bank statement, it becomes much easier to weigh clearly the value of the car vs. writing a huge check.

As a final note, never buy anything based on monthly payments – that’s the same logic that encourages just making the minimum payment on credit card debt and spawned rent-to-own furniture! Don’t fool yourself into believing you can afford a car just because the monthly lease payment seems manageable. Did you know that over 70% of Mercedes-Benz C-classes are leased? There are many people who spend big chunks of their income every year on cars when they could have a paid-off mortgage instead.

Dinner Boot Camp: Free Family Meal Planning for a Week

dinnerplaybookThe New York Times Motherlode blog is running Dinner: The Boot Camp next week with Jenny Rosenstrach, author of the new book Dinner: The Playbook “A 30-Day Plan for Mastering the Art of the Family Meal”.

Here is the free shopping list and weekly dinner meal plan [pdf] for Sunday night 9/7 through Thursday night 9/12 (you get to go out on Friday). Just shop once on Saturday/Sunday, and the meals are meant to be easy-to-make and tasty. Check in the day after each meal on the Motherlode blog to share experiences.

Inspired by Pollan’s Omnivore’s Dilemma, we’ve been trying to shift our eating our habits to the theory that as long as you make it yourself from scratch, it’s healthy enough and cheap enough. Think of “processing” as the middleman that shaves off quality (and replaces with salt and sugar) while increasing cost (have to make a profit, right?). Cut out the middleman.

Our overall goal is to cook ourselves using raw materials 5 days a week, eat “food-in-a-box” dinner once a week, and eat out (or take-out) from a restaurant once per week.