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Financial Jiu Jitsu will teach you how to gain leverage in the real world, step by step, until you are confident you no longer need more.

Quantify Yo Privelege!

Quantify Yo Privelege!

If you live in the Unites States and are reading this blog, you are exercising certain luxuries that much of the world does not have.  Unless you're at a library, there is a good chance you have your own computer, internet connection, perhaps even reading glasses or contacts that allow you to see the 11 point font on the page.  Perhaps you've even had lasik surgery or PRK, allowing you the luxury of not needing to exercise the luxury of needing to wear contacts or glasses.  That's like a double inception luxury right there.  You probably have a roof over your head (perhaps even at an employers place - gasp!) and a full belly.  No need to worry about obtaining water - let alone stuff that's clean (sorry Flint, I think that's still being sorted out. You guys are right behind the two dozen tomahawk missiles we're about to send to the middle east).

Pretty great, isn't it?  Now that I've got you all good and greased up about how good we have it even on a superficial level such as browsing a random internet page, I think it's important to think about explicitly what our privilege costs us.  It's a bit like an opportunity cost.

I thought Dilbert was dumb until I actually entered the white collar work force and witnessed first hand the gospel of this seemingly absurd comic series.

I thought Dilbert was dumb until I actually entered the white collar work force and witnessed first hand the gospel of this seemingly absurd comic series.

Wait, isn't privilege free, by definition? Nope.  It just means you have the opportunity to access certain avenues, activities, or luxuries.  It doesn't necessarily mean you get them without doing anything (although that isn't the case for everything).  You have the luxury of being able to drive a car to work.  That costs you:

1.) How much the car depreciates, mile by mile.

2.) The cost of gasoline for the trip.

3.) Wear and tear, averaged out such as maintenance, tires, oil, and other consumables.

Even if you own the car outright and aren't considering what you're paying for the asset of a vehicle itself, the above expenses will always be lingering.  There is no such thing as a car that appreciates the more you drive it, except maybe for the James Dean's "Little Bastard" Porsche, because every time an actor dies in it the value goes up.  Or something like that.  Look it up.

What does quantifying these expenses mean for you?  I direct you to the following quality mangagement principle, one that can be applied in many avenues of life:

If you can’t measure it, you can’t improve it.
— Peter Drucker

Now time for our example: You drive your car, that you own outright, 10 miles one way to work.  That's 20 miles round trip.  You also get 20 MPG, because I like making math easy if I'm writing the problems.  Gasoline in California is $2.98 on average at time of writing.  Let's say your car with worth $10,000 and it will be worth nothing in 15 years time.  Let's also say that it's going to cost you another 10,000 in consumables and maintenance expenses over that same time period.  That's $5.48 per day if you work it out.  Add that to the cost of gas and you get $8.46 per day, which is the hidden cost of having the privilege of being able to drive back and fourth to work every day.  So now that we have our number measured, it's time to optimize it!

...But wait. In this case, unless you can somehow find cheaper gas or a car that appreciates in value as you drive it (if you find one, please email us and let us know what it is so we can buy one too).  It's possible to get a car that depreciates less than other vehicles, but generally these are luxury cars that have already significantly depreciated past their original sticker price (~80% or more) or performance vehicles that tend to get worse fuel economy.  Either way, it's a bit of a crapshoot. I hear the Subaru Outback is an exception to this and they tend to depreciate less than any other vehicle, so much so that it behooves you to buy one new instead of used.  I digress.

Looks like the only way to truly optimize here is not by improving any of the parameters, but reducing the frequency in which you feed them, or eliminate them entirely.

What am I saying?  In practicality, ride a bike to work instead of driving a few days every week.

A cool ass bike makes me drool the same way as a sweet car.  But not enough to drop thousands of dollars on one, as some people do.  To each their own.

A cool ass bike makes me drool the same way as a sweet car.  But not enough to drop thousands of dollars on one, as some people do.  To each their own.

If my boss strolls into my office and says "I'll pay for your lunch every day you ride your bike to work." You bet your happy ass I'd be riding a free meal to work every couple days to work.  That's ultimately the same thing as just biking to work anyway, you just don't realize the dollar value because it's money saved instead of money earned.  But as the wise old man once said:

A penny saved is a penny earned.
— Wise Old Man

We don't really need the things we think we need.  In fact, I'm going to quote my college economics professor here - you don't need anything, because a need is something for which there is no substitute.  The things we curse on occasion in life are truly luxuries, and we pay for them whether we realize it or consciously acknowledge it or not.

The 50% Fix

The 50% Fix

Effective tax rate comparison time

Effective tax rate comparison time