Blog

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

Sitting pretty

With the (supposedly) looming 25% tariffs on all automobiles assembled outside of the United States, the people in the best position is drivers like me: owning a fully paid off car that’s made in this decade. So long as my BMW M2 doesn’t get totaled in an accident (knocks on wood), I don’t have to worry about the price increases that are sure to come. That is, if President Trump actually goes through with the threat.

With so much economic uncertainty in the near horizon, a debt-free position, with multiple months of cash in reserves, is more crucial than ever. The only reason a recent auto insurance premium increase did not cripple me is because my car is paid off. Funds that would otherwise have gone to service a loan (the average new car payment currently is a whopping $742 a month) now acts as a buffer.

And it’s having a money buffer that keeps the stresses at bay. Friends have checked in on me recently, because my place of employment is facing a budget deficit. Layoffs are definitely on the table. Am I worried about my job? Not as much as I should be, as perceived from the outside. A emergency fund runway for many months of spending allows me to not stress about any job loss. The world is not going to end. I’ve got the time and resources to reset at my own pace.

Even outside of losing a job, life will keep throwing financial curveballs at you. That’s just part of the game. Unexpected expenses are unexpected. Living on thin margins month-to-month leaves you vulnerable. Having a buffer is just good preparation.

I know, I know: sob story about how everything is more expensive, and people aren’t as privilege as me. Okay, someone please square this hole: if many folks are so struggling, then explain the record-breaking 2024 holiday shopping season?

Price sensitivity

The goal of President Trump’s tariffs threat is to bring manufacturing back to America, right? The downside of course is that things will become more expensive. Manufacturing didn’t leave America because of some evil corporate plan. The simple reality is that labor is cheaper elsewhere. Lowering cost of goods sold is a big lever to increase profits. Or have profits in the first place.

Tariffs are merely tacking those labor savings back onto the purchase price. There’s one for sure loser, and it’s the consumer.

For sure there are plenty of cheap crap coming out of China. But in the year 2025 it’s beyond pass time to acknowledge that China can also produce things of the highest quality. Did we forget the iPhone has been made in China since inception? The Apple smartphone is as precise a device as it gets.

“Made in the U.S.A.” still denotes a higher quality in people’s minds. Whether or not it’s actually true is up for debate. What is definitely true is that it’ll cost more compared to foreign-sourced manufacturers. I recently bought a barbell, and the unit made with American steel is $85 dearer than the Chinese-made equivalent from another company. The decision was easy.

Coming out of the high inflationary period of the pandemic, I am always looking for the best deals on anything. And doesn’t everybody? Who has the money to boycott Amazon (because big bad Bezos)? If a particular item is the cheapest on Amazon, I am buying it there. I do not have the income to support an artisan soap business at a farmer’s market. If you do, please go ahead.

I will live life as cheaply as possible, because everything else has gone up in price. Tariffs - if they come to full fruition - is only going to make it worse.

Splitting it four ways

Word on the street is DoorDash is partnering with Klarna to offer split payments. So now you can pay for that $30 (in total) delivery burrito in four easy monthly payments. Wonderful. I can finally afford to use DoorDash! Peasants who actually drive to the restaurants to pickup their own food: I cannot be you.

It’s hilarious to me that in response to high inflation, instead of abstaining from things that’s gotten too expensive, people are seeking methods to lower the initial cost! Can you really afford that couch if you have to split it over four months? I would argue no, though I understand the pressure. Even couches from famously inexpensive retailer IKEA are getting up there in price.

A used couch with curious provenance on Facebook marketplace it is.

Maybe our university can attract more students if it also partners with Klarna: tuition payments over many months. Oh wait, those already exists. it’s called student loans.

How another person spends their money (or borrows money to spend) is their business. These are consenting adults consenting to a purchase agreement. You cannot be victim of capitalism if you choose to participate. Of course we can’t not participate, but the bare minimum to subsist is not overwhelming. I get it, though: eating rice, beans, and chicken breast for every single meal is torturous.

So get that sushi takeout delivered via DoorDash! You deserve it. And by splitting it four ways using Klarna, you can afford it, too.

Not free shipping

A thing we take for granted in the online shopping age is free shipping. Thanks to Amazon, we’ve come to expect free shipping no matter what we buy, from the smallest everyday item to the bigger furniture set possible. Heck, if I buy a Tesla car online, I expect a Tesla employee to deliver the car to me, gratis. How is the guy getting home afterwards? That’s not my problem.

Of course, free shipping is most decidedly not free. Someone is paying for the teams of people driving those trucks and carrying those poundages, and it’s certainly not the retailer. The cost of shipping is baked into the margins the retailers have on the item sold. Any Shark Tank watcher would know, margins between landed cost and wholesale is typically enormous.

We are paying for shipping, it’s just that the norm is to bake it into the price of the product. Except on platforms like eBay. The auctions there are where the true cost of shipping can be seen. No individual seller can afford to “eat” the shipping cost just to placate the customer expectations. The economies of scale is non existent. Psychological test: is it more lucrative to hike up the price and offer free shipping, or lower the price and charge shipping a la carte?

The problem with free shipping is that it sets an unrealistic expectation that shipping should also be free if customers need to return an item. I’m sure Target can afford to absorb the cost to return a pack of pencils, but for something like an exercise bike? Probably not. But then the customer gets pissed once they see the actual costs to ship the bike, which they must pay if they want to return it.

Amazon is kind of genius in purchasing Whole Foods, thereby creating a physical location where Amazon shoppers can return items conveniently for free.

Not again!

I am incredibly peeved the insurance on my BMW M2 is going up once again. What is going on? I thought inflation has stabilized? A $180 increase for the next six month period, for a car I seldomly drive, and has had zero accidents on record. Worst of all, Progressive - the insurance company underwriting the policy - is the cheapest of all the major companies.

Contributing to the problem, a double-edge sword, is the M2 has kept its value really well. The lack of severe depreciation means in the event of an accident, the replacement cost remains high. Of course, it’s nice to have a low-depreciating car, in the event I do sell it in the future.

And sell it I just might if the insurance cost either keeps increasing, or doesn’t go down. I can afford to insure a high-performance sports car, but I kind of don’t want to anymore. Gone is the era of car enthusiasm where I would expend as much money as my (meager) income can afford to keep a car around. I’m in my having a lot of money saved in the bank as a cushion era. As the kids say these days.

The thing about hobbies is the opportunity to continually dump money into them is kind of endless. The photographer who can’t stop buying new cameras and lenses, or the car guy who can’t stop swapping cars every few years (that was me). Now that I am a year deep into weightlifting, I’ve been eyeing upgrades to the gear I am currently using. A better barbell would sure be nice to have.

Goods news about lifting gear is that most can literally last a lifetime. I mean, weights are weights. Plates and dumbbells don’t lose kilograms the more years you own them. A solid barbell can be passed onto your progeny. So can a power rack.

It’s simple, really: buy quality, keep forever.

Nice new fence you got there. It would be a shame if something happened to it.

True cost of buying

If the economy is in the dumps, you know how they can spur spending? Give a tax holiday. Perhaps I’m the only one who thinks about this component? The sales tax is highly salient for me when it comes to big ticket purchases.

Remember in the early days of Amazon they did not charge sales tax? Those were the lucrative times. You can buy a television by the thousands of dollars and save hundreds on tax. Now I think we’re suppose to report that come tax time, but honestly, who the heck did that? Besides, doesn’t sales tax go to the state and city?

Never mind! As an employee of a state (at least until Elon Musk’s DOGE gets around to state public workers), I’m a big fan of the sales tax.

Look at buying a new car. The (let’s just say) $30,000 sticker price is not inclusive of the addition thousands in taxes the buyer must pay. Obviously it’s obscured by the mechanism of spreading it over multiple years in payments. (That’s how they get you!) I tend to look at it holistically: do I want to pay additional thousands to not even for the car itself?

What scares me from a mortgage (not that I can afford a house around here) is the amortization table. The amount of interests alone over a 30 year term is freaking outrageous. It seems more prudent to me to keep renting until I am able to pay a majority portion of a house in cash. Keep that money in investments in the meantime and let those interests come to me, instead of the bank.

The true cost of buying something significant is super important to consider.

A credit card person

After four years, my Yamaha CP88 keyboard is finally paid off. Why did it take so long? Well, Guitar Center allowed me to open a store card to spread the high initial cost over four years with zero interest. Of course I am going to take that arbitrage opportunity. That lump sum has instead been growing in my investment account.

You offer me free money, I am going to take it every time.

I recently had to buy new tires for the M2. For the occasion I opened a new credit card with Capital One. The company is offering a signing bonus: $200 cash back on a $500 spend within the first three months of account opening. There’s also zero interest for 15 months. That’s just easy money. I paid for the tires on the card, got the $200 as a statement credit, and will pay the amount in full sometime early 2026.

Buy now, pay later - splitting payments over four equally small ones - services like Klarna and Afterpay are showing up more and more on online checkouts. I’ve not use those services before, but if I ever need to split a large payment and take the zero interest arbitrage, it’s an easy decision. Heck, even my bank - Chase - offers a program to split large credit purchases over time, with introductory zero interest offers.

Of course, in order for me to “profit” from these credit opportunities, there has to be a loser on the other side of the trade. And it isn’t Guitar Center, Capital One, or Klarna. The loser is their other customers, the ones who are not paying the balance before interest (and back interest) starts accruing. It’s the credit debtors subsidizing the profiteers.

After paying off the new tires, I will never use that Capital One card again. Therefore, they will never recoup that initial $200 in startup bonus. Not from me directly, anyways.

Right to privilege jail, right away.