What to the rich do with their money?

Charlie brought up the question of what the rich do with their money in response to the theory of trickle-down economics. This seems timely, as one of my coworkers and I talked trickle-down just yesterday.The theory is often maligned, and usually by people who don’t understand it very well. But frankly its proponents don’t always understand it either.

The classic justification is that if you tax the rich less, they’ll use that savings to buy things like boats and luxury cars, creating jobs for people who build and sell things like boats and luxury cars, and for the suppliers of those companies. And the argument is that this economic activity spreads the wealth better than the government taxing and redistributing wealth, due to government overhead.

At least that’s the simple, back-of-a-napkin explanation you’re likely to hear from a conservative activist when you ask the question. It’s the one I’ve always heard.

The theory is more complicated than that. For most of the 20th century, the fabulously rich were taxed at extremely high rates–70 or even 90 percent. The economist Arthur Laffer argued that if one taxed the rich at a lower rate, then tax revenue would actually increase–the reason being that someone who had the ability to make $10 million probably also had the ability to make more than that, but would probably be more willing to try to make more if the government weren’t taking 90% of the spoils.

Ronald Reagan lowered that upper tax rate to 50%. And sure enough, revenue went up, because 50% of $20 million is more than 90% of $10 million. So both the entrepreneur and the government won.

But contrary to what the modern Republican party seems to think, Laffer didn’t argue that the less you taxed, the more revenue would increase. Tax revenue is a more like a bell curve–tax at 0%, and revenue will be $0. Likewise, take 100%, and revenue will be $0, because nobody will work (or they’ll hide it if they do). The question is what percentage puts tax revenue at the top of the bell curve. I believe that history says it’s somewhere around 38%. Ironically, it was a Democrat who demonstrated that rate. (Hint: it wasn’t Jimmy Carter.)

And when Democrats malign trickle-down economics, they ignore one important fact: When Reagan cut taxes, revenue did rise–a lot. And when Bush I cut them further, it rose even more. The problem was that spending in Washington outpaced revenue growth during the 1980s and most of the 1990s. In the waning years of Clinton’s presidency, revenue finally caught up with spending, and for two years in a row there was actually a small surplus.

And in all fairness to Bush II, that’s been the biggest problem with his economic policy the past 8 years. Revenue went down slightly when he cut the highest tax bracket. But the bigger problem is that Washington spending increased beyond Reagan levels. Had spending stayed in check, we might still be talking about small deficits and occasional surpluses. Instead, he kept taxes low while signing budgets that made Clinton look like a fiscal conservative.

But that’s enough about trickle-down economics. Let’s talk about the rich.

A little over three years ago, I was walking out to my car after work when a couple of well-dressed men approached me and asked for a jump start. I pulled my Honda up to their rental luxury car, we hooked up the cables, got the car started, and they went on their way.

I now believe one of the men that day was the man who soon became the CEO of that company. I won’t name him or the company. Perhaps he was interviewing for the job that day. Not long afterward, he got the job, and as a result of one of his earliest decisions, I lost mine.

So I did a favor for a guy who made $4.81 million last year, and the thanks I got was unemployment.

The soak-the-rich attitude comes from stories like that. When we think of the rich, we think of CEOs who take over large, failing companies, get rid of lots of people, bring in their people, and in the end the companies don’t really get much better, but in the meantime they pocket a few million dollars every year. And when they lose their jobs, they get a golden parachute of a few million more.

But the majority of the rich aren’t like that. They’re more like the owner of the next company I worked for. It was a small consulting company, but it was smaller when he bought it. He bought it during a dark time in its history, brought in some good people, and together they worked hard to make the company profitable again.

In 2006, not long after I met him, he sold the company to a much larger competitor and turned a nice profit for himself. They only retained him for a short time, but he’s not hurting for money. Shrewdly, he didn’t sell them the building, so the company is still paying him rent every month.

Nobody knows what his future plans are, but some people who know him better than I do believe he’ll start another company at some point.

Read books like The Millionaire Next Door, and you’ll find the majority of millionaires are unassuming people who park their Ford Crown Victorias in front of ranch-style houses every night. They’re often self-employed, and usually made their first million by saving a lot and investing in themselves.

I have little respect for the first CEO I talked about, because he has his job mostly because he looks and acts the part. He dresses well, looks like a movie star, and when he talks, he can convince you he cares. But let’s talk qualifications. During his first year on the job, his company’s shares were worth about $1.20 apiece. Now they’re worth 42 cents per share and the company is $1 billion deeper in debt. That’s not all his fault, but it’s hard to argue that he’s done much to turn the company around, and it’s even harder to argue that those results are worth $4.81 million a year. I would think they could outsource his job to India and get comparable results for $100,000 a year and bank the savings.

At least they’d save more than they saved by outsourcing people like me.

I have a lot of respect for my other former employer, because he took a bad situation and turned it around, and he got the job because he bought a company with his own money. He invested his time, energy, and money in it, and besides making himself wealthier, he also created jobs–about 200 of them at his company’s peak–including one for a 31-year-old newlywed who was down on his luck and had worked for two other employers that same year.

The problem with trying to use tax policy to soak people like the first guy I mentioned is that it’s very difficult to do without also hurting the second one I mentioned. And if tax policy hurts him, he might as well just stay retired and play golf or whatever he enjoys doing, rather than starting a new company and making some new jobs for people.

And frankly I’m not sure what we gain when we make people like the first guy pay. I guess we feel better for a while. But the main thing we do is motivate him to hire the very best accountants and lawyers to find and exploit every loophole they can. So he still keeps most of his money, the government gets less than it projected, and the masses are blissfully ignorant, thinking they got some fat cat to finally give up his fair share, whatever that means, but they never see any tangible benefit.

Outlandish CEO pay and incestuous boards of directors loaded with conflicts of interest that perpetuate these outlandish compensation packages really are a separate issue, and the tax code isn’t the appropriate place to try to fix it.

But back to that tax code, and the second guy–the one worth worrying about. For what it’s worth, neither of the two major presidential candidates is likely to do anything that would singlehandedly persuade the second guy to stay retired. A return to Reagan’s or Carter’s income tax levels might, but neither candidate is proposing something like that. The difference between the two is much narrower than either of them want the rest of us to think, and their political rhetoric reflects that.

A big time test for Nlite

I saw an XP Myths page this weekend, and although I don’t agree with its assessment of XP’s security, most of it seemed credible. It said XP can do fine on as little as a 233 MHz Pentium with 128 MB of RAM.

I whipped out a P2-266 with 192 MB of RAM to see.The specs are humble, to say the least: P2-266, 192 MB RAM (upgraded from 96 because XP kicks into some kind of "reduced functionality" mode with less than 128), and a very old Seagate 1.2 GB hard drive.

I installed XP with lots of pieces, like Media Player and the Internet Connection Wizard, removed, although I did leave in Internet Explorer.

Initially I formatted the drive FAT, since FAT does perform about 20% better than NTFS on limited hardware. The problem was the cluster size got me. Formatted FAT, I had about 100 MB free when the installation was complete, which is dangerously low. Converting to NTFS brought that up to 170 MB, and gives the option to compress some items to get some more space.

Performance wise, it’s not as bad as it sounds. Windows boots in 1 minute, 15 seconds after defragmenting the drive. Considering this 1.2 GB drive probably dates to 1996 at the latest, that’s awfully good. Memory usage was 96 MB, so you’d be able to run an application or two on it, although a modern web browser would feel claustrophobic after a while.

If I were actually going to try to use this computer, I’d put a decent hard drive in it–the newer the better, of course.

I would also want to upgrade the memory to 384 MB, which is the maximum this one supports. A cut-down XP seems to do just fine in 192 MB of RAM, but it wouldn’t do so fine with antivirus software loaded.

I still think a cut-down Windows 2000 is a better choice for this type of machine, but it’s certainly possible to run XP on it. With either OS, though, I would use Nlite to remove as much of the fluff as possible, to give yourself some space for whatever it is you really want to do with the machine. I think it would make a good PC to run educational software for kids, for example. And it’s nice to have a choice of something other than Windows 98 for that.

What I learned today about Black Friday sales

Although a lot of people, including money saver types, recommend against buying anything at all on the day after Thanksgiving, I rolled out of bed and fought the crowds early this morning.

I think I came out ahead.Having the ads ahead of time helps to plan out strategy. I don’t read Fat Wallet religiously like some people do, but earlier this week I found a link to a nice spreadsheet on Digg that listed all of the available deals, sortable by category, store, and everything else imaginable. That helped immensely.

A big part of the key is knowing what you want and sticking to it. Get into the store, get the biggest item right away, then go get the smaller items.

I nearly got burned by not planning for traffic. I figured since I left my house before 6, I should be able to zip through the commercial area to get to Office Depot in about five minutes. I was wrong; with the stoplights all on flash, it was worse than rush hour. My five-minute trip took more like 30, and the store was open by the time I got there.

I went in, but it was a waste of time. There were three things on my shopping list, and all of them were gone, including the little things. I grabbed a ticket for the printer I wanted, but when I took it to the register, I was told they were all gone, after I stood there by the register for 15 minutes. "Well, we’re a little busy now," was the smart-aleck reply I got from the stock guy when I asked why it took 15 minutes to tell me they were gone.

Lesson learned: If it doesn’t look like they have what you want and someplace else has it, leave. Immediately. It’s more productive to stand in line at a store that hasn’t opened yet.

I somehow managed to get to Office Max about half an hour before they opened. The line was already wrapped around the side of the building when I got there, but by the time the store opened, the line was much longer.

I know Office Max’s layout a lot better than Office Depot’s layout, so I actually managed to get everything on my list and get out of there quickly. The item I really wanted–the printer–cost $20 more there, but it was still a good deal at the higher price, and there weren’t any rebates for me to mess with.

If I’d been going to more than two or three places, it would have been a good idea for me to map out my route using Google Maps to eliminate any backtracking. That way, if two stores I wanted to visit were going to open at the same time, I could get to the nearest store.

The Office Max trip really drove something home: If you’re really serious about getting something, it helps to visit the store earlier in the week to get familiar with the layout, so you can get to the items on your list quickly.

Another important point: I didn’t mess with anything not on my list. Everything I bought came at a substantial discount. Part of the idea of Black Friday doorbuster sales is to get you into the store to buy other things because you’re there anyway.

And about that list: Before you put something on your list just because it looks like a good deal, ask yourself if you’d still buy it if it were full price. Last year I bought a USB flash drive and a spindle of DVD recordables because I needed them. This year I bought a bigger USB flash drive because I keep filling up the 1 GB drive I bought last year. These are things I would have bought anyway, but it was worth waiting for a good deal.

If you only use a printer once, it’s not a bargain, whether you pay $99 or $249 for it.

I also checked to make sure the price really was a good deal. Sometimes the prices at Newegg, Amazon, or some other online vendor are lower already. I didn’t buy anything that I could get cheaper online from the comfort of my living room.

Finally, you need to make sure you save enough money to make it worth your time. This year I saved more than $200, so it was worth getting up at 5:30 this morning to go do it. It’s not worth getting up at 5:30 and standing in line for 30-45 minutes to save $6 on a USB flash drive. Last year, since my savings amounted to about $20, I bought my stuff online and saved the trip. Of course the stuff ended up being backordered, so it took nearly a month for it to arrive. I was willing to live with that.

Today, I was home with my loot by 7:30. That’s as good as making $100 an hour. Actually it’s better, since it’s tax-free.

So, to recap:

1. Make a list of the things you want.
2. Make a list of the stores you’ll visit, based on the things you’re going to buy. Start with the store opening the earliest.
3. If possible, visit the stores earlier in the week and find the items on your hit list, so you’ll be able to find them quickly on Black Friday.
4. Locate the addresses of all of the stores, and plot out your route using Google Maps to avoid backtracking if possible.
5. Try to arrive at each store half an hour early. The less time you actually spend inside each store, the better. Most of the killer deals are gone within 20 minutes.

Some people recommend buying online instead of going to the stores, or buying the item earlier in the week and then price-matching it on Friday afternoon when the crowds are smaller. Make sure you know the rules; some stores won’t do this.

As for buying online, Office Max was selling its items at full price this morning. Office Depot’s web site wasn’t working, so they probably were honoring their prices but I wouldn’t have been able to buy them. Keep in mind that if you buy online, you’re at the back of the line, so you won’t get the item quickly and the store may weasel out of giving it to you at all.

Net neutrality has little to do with censorship but it\’s a good idea anyway

Pearl Jam came out in favor of net neutrality after AT&T censored a broadcast a performance they did in Chicago last Sunday. I guess AT&T didn’t like Pearl Jam’s anti-Bush message.

I don’t know if Pearl Jam’s sudden embrace of net neutrality is out of ignorance, or if it’s retaliation. It doesn’t really matter because it should help bring some more awareness to the issue.Here’s the issue with net neutrality, in a nutshell. AT&T wants to charge companies like Amazon, eBay, and Google when people like you and me access their web pages. And if the companies don’t pay, AT&T will make the web sites slower. The idea is that if one company doesn’t pay the fees but a competitor does, AT&T customers will probably opt to use the faster services.

Proponents say AT&T built the infrastructure, so they have the right to charge whoever uses it.

There are two problems with that logic.

They’re already paying to use it.

When a company decides to go online, they buy an Internet connection. That connection might be owned by AT&T, or it might be owned by some other provider. It isn’t cheap. While a 1.5-megabit cable modem connection might cost a consumer $30, a commercial-grade 1.5-megabit T1 connection will cost more on the order of $500 a month. A company like Google needs a lot more than one of these connections. Google most likely is spending hundreds of thousands of dollars, if not millions, every month for the privilege of being on the Internet.

Without content, an Internet connection has no value.

AT&T knows nothing about how online services work, because they haven’t been in the business long. Twenty years ago, if you wanted to go online, you didn’t use the Internet unless you were a college student. You subscribed to a service like AOL or Compuserve or Prodigy, who sent you a disk and a local phone number that you called with your modem, and then when you wanted to go online, you connected to their service. It had e-mail and forums and downloads and news, kind of like the Internet does today, but it was smaller. You could interact with other subscribers but that was pretty much it. E-mail was limited, for the most part, to other members of the same service.

Compuserve was the biggest and most expensive service, but it survived because it had the most features. AOL and Prodigy survived because they were easy to use. GEnie, a competing service operated by General Electric, survived primarily because it was cheaper than the others. Each had a niche. In these cases, the company providing access also provided the content. It was a closed system.

The Internet is an open system. AT&T isn’t providing all of the content. AT&T is my Internet provider, and I never touch any of their content, except when my credit card expires and I get a new one and I have to go to att.com to update my account with the new expiration date for my automatic bill-pay.

If it weren’t for the companies like eBay and Amazon and Google, nobody would want an Internet connection in the first place, because without those providers, an Internet connection is pretty much useless. The only reason the Internet took off in the first place was because companies like AOL and CompuServe couldn’t offer services that were as good as what Google and Amazon and eBay.

That’s why AOL went from a blue-chip stock to a drag on Time-Warner’s share price in less than a decade.

People buy Internet connections so they can use Google and Amazon and eBay. Very few people care about the mostly sterile content AT&T puts on the Internet. I’m sure some people enjoy watching concerts in the AT&T blue room, but I’ve never heard of anyone watching anything there. But I hear every day about what someone bought or sold on eBay, or a story that showed up on Google News or CNN.com, or a book someone bought on Amazon.

And when they use e-mail, people increasingly are using e-mail from Google or Yahoo or Microsoft instead of the one from their Internet provider. That way they can read their mail anywhere, and they can keep their e-mail address even if they move or change Internet providers. So Internet providers aren’t even the primary source of the most basic services anymore.

If anything, AT&T should be paying the companies that produce the content. Not the other way around.

AT&T isn’t selling content. It’s selling a pipe that content travels to. Lest AT&T get a big head, all AT&T has to offer is plumbing.

So what does this have to do with censorship?

Net neutrality has very little to do with censorship. I suppose someone with contrarian views operating a blog on a shoestring who can’t afford to pay for both an Internet connection and the privilege of running in AT&T’s fast lane is a victim of a form of censorship. Or if Google doesn’t pay to be in the fast lane but Yahoo does, then in a way Google is being censored in favor of Yahoo.

But if AT&T chooses to drop the audio out of a Pearl Jam concert, net neutrality isn’t going to stop that. In that case, AT&T is the provider, not just the company providing the plumbing.

But net neutrality is a good thing because without it, what’s going to happen is higher prices for the things you buy on Amazon and eBay, and less content on news sites because the news providers can’t afford as many writers because now they’re having to pay AT&T and every other company that sells digital plumbing. You get less, so that Randall Stephenson gets a higher salary and a more attractive stock options.

Stephenson made $14.6 million last year, before he got promoted to CEO.

I don’t think you and I need to make any more sacrifices in order to give this fat cat a bigger raise.

My baseball heroes

Joe Posnanski just did an entry on his childhood baseball idols, and lots of people chimed in about their unlikely heroes. So I got to thinking about mine. When it comes to likely heroes, of course George Brett and Ryne Sandberg were on my list, but that makes me no different from about 10 million other people. Bo Jackson is more of an underdog because his career was so short, but he’s a pretty obvious choice too. There’s an old joke in Kansas City that nobody can name a current Royals player except for George Brett. I mean Bo Jackson. I mean Bret Saberhagen.

If you followed the Royals through the 1990s, it’s funny. I’m sure the overwhelming majority of people who come across this page will have to take my word for it.

Anyway, here’s my list.3. Calvin Schiraldi.

I have no connection to Boston except for a little bit of personal baggage that isn’t Boston’s fault, but in October 1986 I was a Red Sox fan. Why? They were playing the New York Mets in the World Series, and if the Mets were playing the Cuban Nationals, I’d probably root for the Cubans. The only time I root for the Mets is when they play the Yankees.

In 1986, Boston’s closer was a young fireballer named Calvin Schiraldi. Schiraldi pitched well early in the series, but not so well later on. In the fateful Game 6, an exhausted Schiraldi was the pitcher who gave up a single to Ray Knight, setting up the infamous Mookie Wilson ground ball between Bill Buckner’s legs that forced Game 7 and cost Boston the World Series. Schiraldi didn’t throw that pitch; he watched helplessly from the dugout while Bob Stanley tried to pitch out of the jam.

I still remember the images of Schiraldi sitting in the dugout afterward, his face buried in a towel.

Schiraldi took the ball again in Game 7 and took the loss in that game too.

For me, Schiraldi came to symbolize the guy who takes the ball when his team needs him, whether he has his best stuff or not, and no matter how tired he is.

I had the chance to meet him a couple of years later, but I had no idea what to say to him. I wish we’d talked baseball a little, but I don’t know what I would say if I had the opportunity again tomorrow either.

2. Ron Hassey.

I think I told this story before. Ron Hassey was a left-handed hitting catcher who worked well with pitchers and had some pop in his bat. In 1984, the Indians packaged Hassey up along with relief pitcher George Frazier and starting pitcher Rick Sutcliffe for outfielders Mel Hall and Joe Carter. Yes, Joe Carter as in the hero of the 1993 World Series.

Rick and I are related, but it’s not like he looks me up when he’s in St. Louis or anything. I’ve met him twice. Once the day after his 200th major-league win, and once at his grandmother’s funeral. (His grandmother was my great aunt.) But I digress.

The Cubs didn’t really know what to do with Ron Hassey. Jody Davis was the Cubs’ catcher, and he made the All-Star team every year as Gary Carter’s backup and he was a fan favorite. One night that summer, Hassey got a rare start at first base, which wasn’t his usual position. I don’t exactly remember how it happened, but Hassey hurt himself on a play at first base. It was either his leg or his knee. Writhing in pain, he hit the ground, but he had the ball. He had the presence of mind to literally roll over to first base and tag the bag to get the out.

I’m not sure that the team doctor approved, but I always thought that was the way baseball was supposed to be played. Play hurt and play hard.

So, for all those times I played softball trying to disguise a sore hamstring so the opposing team wouldn’t get the wrong idea… I guess you could day I got the idea from Ron Hassey.

At the end of the year, the Cubs packaged him up in a deal with the Yankees for a couple of forgotten names, Brian Dayett and Ray Fontenot. Trades involving Hassey then became something of an annual offseason tradition for the Yankees for a few years, kind of like firing Billy Martin. Eventually the Oakland Athletics got their hands on him, and he became Dennis Eckersley’s personal catcher.

1. Lyman Bostock.

There’s a lot I can say about Lyman Bostock, but I’ll start with this: Lyman Bostock is the greatest baseball player of all time that you’ve never heard of. He only played two complete seasons, but he was a contender for the batting title both years. He was kind of like Tony Gwynn, only with better speed and range.

But his final season is the reason he’s on my list. He signed with a new team and stunk up the place his first month, so he went to the owner and tried to return his salary. He refused, so Bostock announced he’d give the money to charity instead. He received thousands of requests, and personally went through all of them to see who really needed the money the most.

These days, when a free agent signs a fat contract and promptly tanks, he laughs all the way to the bank.

There’s a good reason why Bostock isn’t in the Hall of Fame, and it’s the same reason you’ve never heard of him. Toward the end of the 1978 season, he was visiting his uncle in Gary, Indiana. Bostock’s uncle pulled up to a stoplight with his goddaughter in the front seat of his car and Bostock in the back. The goddaughter’s estranged husband walked up to the car and fired a shotgun blast into the car. The shot hit Bostock in the head and he died two hours later.

I never actually saw Bostock play, seeing as he died when I was 3, but he posthumously became one of my heroes. He wasn’t just the kind of guy a father can point to and tell his son, "Play baseball like him." He was the kind of guy a father should point to and tell his son, "Live your life like him."

Take some steps to improve your health today

So Michael Moore has a new movie out, this time taking on the touchy topic of health care. I was a very outspoken opponent of Hillary Clinton’s plan 15 years ago. I’m extremely disappointed that the alternative plans crafted by the Republicans dropped as soon as the Clinton plan died.

I won’t argue that the U.S. health care system is terrible now. I will argue that some of the fault belongs to the person in our mirrors though. (And I don’t want to be rude, but Michael Moore needs to take some personal responsibility too.)The best editorial I ever saw about the Clinton plan was written by Andy Rooney. What he said then is even more true today: We drag our lard butts to the doctor because we won’t eat right, and we complain when the doctors can’t cure our problems which are to at least a certain degree, self-inflicted. Then he twisted the knife a bit, pointing out that Clinton was fond of going to McDonald’s with camera crews in tow. He said something like, “Health care is in trouble. Now excuse me while I go have a triple-cheesy-greasy with double fries. Do as I day, not as I do.”

Now to be entirely fair, society encourages us to eat out a lot. It tells us that’s how to be good parents, it’s a good way to take a load off and relieve stress, and who knows how many messages–most of which aren’t true. Remember, the originator of the message is selling something. Always always remember that.

I remember John C. Dvorak once remarking on his blog, “Someone wants us fat.” Give the little man a big cigar! The food industry wants us fat because we’ll eat more. The drug industry wants us fat because we’ll take more drugs. And once both of them get us up on that treadmill, they stand to make billions. If not trillions.

I still believe, with everything I have, that the American diet (if it can be called that) is largely to blame. We eat a lot of empty food that does our bodies no good, but does plenty of harm. Dad was saying 30 years ago that biscuits and gravy cause cancer. Today, guess what? They’re saying that sausages and gravies and highly cooked fats cause cancer. Sausage gravy does all the wrong things about as well as anything, but hot dogs are another good example.

Fast-food hamburgers may not necessarily cause cancer, but they sure do a dandy job of giving you a heart attack.

Vegetarians say they have the answer, but I’m not entirely convinced vegetarianism is absolutely necessary, nor is it a panacea. I see plenty of vegetarian cookbooks that do nothing but douse the vegetables in butter and cheese. Eat like that, and you won’t be any thinner or healthier than anyone else.

I do believe the main reason healthy vegetarians are healthy is because they pay attention. They look at the ingredients to make sure there’s no meat in there, and if there’s anything in the ingredients that they can’t pronounce, they probably end up putting it back since they can’t prove it didn’t come from an animal. And as a result, they tend to end up eating lots of fresh fruits and vegetables, breads that don’t have a lot of ingredients in them, and other things that provide a lot of nutrition in their calories.

I’m also convinced this is why most fad diets work initially. If you hopped on the Atkins bandwagon in the early 1990s before it became hugely popular (it had actually been around since the early 1970s), it was entirely possible to lose weight, because you would be limited largely to unprocessed meats and vegetables. But I noticed around 2000 or 2001 that a lot of people were on Atkins and weren’t losing any weight at all on it. Atkins was still saying the same things, but it wasn’t working anymore. The difference? Everyone and his uncle was peddling Atkins-friendly junk foods. Instead of being limited to meats and vegetables you cooked yourself, you could microwave processed Atkins-friendly TV dinners and gorge yourself afterward on Atkins-friendly cookies and ice cream.

People stopped losing weight, their cholesterol soared, and lots of companies made lots of money. Then the gravy train ended, but that’s OK because there’s always another one.

This is a boom for drug companies too. When your cholesterol goes sky-high, the commercials say there’s no need to change your diet. You can just pop an anti-cholesterol pill. What they don’t tell you is that the pill not only lowers your cholesterol, it also wipes out your B vitamins. So now your cholesterol is lowered, but you’re depressed and have carpal tunnel syndrome (just two things a deficiency in B vitamins can cause). So now you need another pill. Funny, the same company that makes the most popular drug for cholesterol also makes one of the most popular drugs for depression.

And that popular drug has some side effects such as abdominal pain and/or headache, sexual disfunction, and other things. But there are pills for that too.

Is it any wonder we never really get better? We take a pill for one thing, and the pill fixes that, but then we get something else. The domino effect starts, and it’s possible to go from being on no drugs to being on five in a matter of months.

About a year ago, my wife was out talking to someone. She mentioned she was diabetic. The elderly gentleman she was conversing with said he was too. They talked some more, and it turned out he became diabetic as a teenager, just as she had. He seemed like he’d lived a long and healthy life to her, so she asked if he had any secrets to share. He did. “Stay away from junk food, and you’ll be fine.”

Good advice. Simple advice. Unfortunately it’s difficult to follow, seeing as every other commercial between the hours of 4 and 8 is for junk food. Most of the rest are for drugs, with the occasional car commercial thrown in.

Here are some starting points my wife and I have picked up from the books of Dr. Mark Hyman.

1. Avoid processed food. Buy your groceries from the outer ring of the grocery store, staying out of the aisles.

2. Avoid high-fructose corn syrup. This ultra-common sweetener is very cheap, but your body doesn’t know what to do with it. Eat lots of sugar and eventually you feel full, but if you eat the same amount of high fructose corn syrup, you’ll only crave more. Is it any wonder food companies love this stuff? It costs half as much, and you eat twice as much. What’s that mean? Profit!

And guess what? Just about anything that comes in a box or a package has lots of it. When I went in search of a loaf of bread that didn’t have high fructose corn syrup in it, I was only able to find one kind, and that included all of the premium brands that promote themselves as healthy. So what did we do? We bake our own bread in a breadmaker now instead.

3. Avoid trans-fats and hydrogenated oils. Partially hydrogenated is just as bad, it just sounds a little better. This process makes food last longer on the shelf, which decreases costs, but again, your body doesn’t know what to do with it. It raises cholesterol levels but gives no nutritional benefit.

Once again, most products that come in a package have lots of them. Fortunately the tide is turning against this trend. Hopefully it lasts.

4. Eat smaller portions of meat and larger portions of fruits and vegetables. Meats aren’t necessarily all bad, although there’s little question that the hormones and other things the animals are given aren’t exactly good for us. There’s also no reason you have to eat meat at every meal, other than status. I usually have meat at one meal.

Fresh fruits and vegetables give more nutrients than meat and fewer undesirable side effects like higher cholesterol.

5. Eat whole foods that are as fresh as possible. Bleached white flour loses its nutrients. Canned vegetables lose most of their nutrients. Cook fresh, in-season vegetables and you’ll be healthier.

6. Watch the salads. How is it that people can eat salads all the time and still not lose any weight? Look at a McDonald’s nutritional guide and you’ll see most of their salads have as many calories as one of their sandwiches. Or more. They put the same junk in their salads as their sandwiches. It just looks healthy.

And even if you have a simple, traditional salad of lettuce, tomatoes, cucumbers and shredded carrots, watch the dressings. A tablespoon of any of the common, traditional dressings has anywhere from 50-75 calories, and odds are you’ll use at least three of them. Possibly more. You could waste 10 percent of a 1,500 calorie diet on a condiment.

I don’t disagree that there’s something wrong with our medical system. That much is obvious. But the health problems that we’re creating and perpetuating with our current lifestyle would bring any medical system to its knees.

Trust me. The doctors aren’t all happy. My dad was one. He told me that if I ever told him I wanted to be a doctor, he’d lock me in my room for 7 years. Dad didn’t mind being a doctor, but he hated dealing with insurance companies and the government.

One day one of my coworkers was arguing with an insurance adjustor about a medical procedure his wife needed. The doctor said she needed it. The insurance adjustor said she didn’t, and insurance wasn’t going to cover it.

I told him to ask the insurance adjustor where he went to medical school.

Doctors go to school for a minimum of six years. I searched for an insurance adjustor job to see what the qualifications were. A two-year degree was all that was necessary. It didn’t specify that two-year degree had to be in biology or anything else relevant.

The current system is great for the drug industry, the insurance industry, and the food industry. If the system changes, I don’t expect it will get any worse for them. They have lots of lobbyists, and lots of money at stake.

I don’t expect it will get all that much better for us. The best thing for us to do is to take steps to need to use it less.

And ironically, if we use the system less and reduce the burden on it, it should get better.

"I don’t have enough saved up for repairs on a used car…"

I found myself involved in discussion about cars today. Two people are looking to buy something. One’s leaning toward a used car, while the other is bound and determined to buy a new car.

I know which will be retiring first.The logic behind buying used: There are lots of very low-mileage used cars out there, some of which are even recertified, have the bulk of the factory warranty on them, are eligible for an extended warranty, and cost $4,000-$5,000 less than a new car.

The logic behind buying new: For "only" a few thousand more, you get new car with a 100,000 mile warranty in its entirety.

The problem I have with that logic is that I’ve never sunk $4,000 on repairs into a car. The most expensive repair bill I’ve ever faced was $800 for a blown head gasket, and that was on a car that had well over 100,000 miles on it. If you’re paranoid about repairs, you’re much better off, from a financial standpoint, to buy the used car, figure out what the payments on a new car would be, and sock that money away in a bank account so you have it if and when you ever need it.

The person arguing in favor of a new car also argued a new car is more reliable. But not necessarily. A warranty isn’t a guarantee you won’t have problems. It just means that if the problem you have happens to be covered under the warranty, someone else is footing the bill. And no, most warranties don’t cover everything. Sometimes you get a choice between a power train warranty or a bumper-to-bumper warranty which will cover pretty much everything, but that bumper-to-bumper warranty will be a lot shorter.

And a lemon is a lemon, whether it’s new or old. You’re much better off researching what models are reliable and buying one with a little age to it rather than buying something assuming that it’ll be reliable because it’s new. The last thing you need is to get stuck with a lemon and be making high payments on it. Then you have the worst of all possible worlds.

Car companies have programmed us to think we need new cars all the time. It’s a pretty nice scam they have going. They sell us a car, sell us expensive preventative maintenance on it to keep the warranty good, charge a nice fat interest rate on the loan, and then in 3-4 years they convince us it’s time to trade it in for a new one. Then they get to sell the car for a big markup to some other sucker and the cycle starts all over again. Meanwhile, the consumer has nothing tangible or useful to show for it.

Somehow they’re still losing billions of dollars in spite of having one of the sweetest business models ever concocted, but that’s their problem. It shouldn’t be yours.

With proper maintenance (we’re talking things like regular oil changes here), most cars on the road today can go for 200,000 miles. If you’re concerned about breakdowns, carry a cellular phone at all times and get a AAA membership so you’ll have roadside assistance. The cell phone is something most people have anyway, and the AAA membership is a lot cheaper than perpetually making payments on new cars you don’t need.

That’s why the last car I bought was a Honda Civic with about 26,000 miles on it, and I doubt I’ll ever buy a new car again.

Buy a reliable car that you can pay off quickly, and then you can pay your house and other debts off that much more quickly because you won’t be sinking $400 down a bottomless pit every month for the rest of your life.

Give me a little time to process what I just saw…

I finally got around to seeing Supersize Me, the documentary film where the filmmaker ate three meals a day at McDonald’s for 30 days to see what would happen.I need to think more about what I saw. But here are some random thoughts that occur to me after seeing it.

The first thing that comes to mind is Rod Carew. Carew was the second-greatest hitter of his era (since I’m a Kansas City Royals fan, of course he can’t be as good as George Brett). Early in his career, Carew was slumping. He asked his hitting coach what was wrong. He happened to be eating ice cream. The coach ripped the container of ice cream from his hand, threw it in the nearest trash can, and told Carew to quit eating junk. He tried it. He quit eating junk food and quit drinking soda. He was 38 before his batting average dipped below .300 again.

I know I’ve read several times on John C. Dvorak’s blog the comment, “Someone wants us fat.”

When I worked in fast food, if we didn’t try to “suggestive sell”–that is, when someone ordered a soda, ask, “Is that a large?” or something similar, we could be reprimanded. I didn’t upsell unless the manager was in earshot. I was always in trouble. I know for a fact the reason I didn’t get fired was because they didn’t want me talking–I knew lots of things that company didn’t want getting out. (None of that matters now; the company folded in 1993.)

In the film, Morgan Spurlock visited a school of troublesome kids. The school served healthy lunches–fresh fruits and vegetables and foods that were prepared fresh, rather than out of a box. The behavior problems largely disappeared. Television and video games get a lot of the blame for the rash of ADD and ADHD. And maybe kids do watch more TV and play more video games than we did 20 years ago when I was a kid. But kids today do eat a lot less healthy than we did. We ate out a couple of times a month, generally. Kids today eat out a lot more than that, and there are a lot more convenience foods in the grocery stores now than there were then.

Spurlock experienced depression. Depression is almost an epidemic. All I have to do to get hits on my web site is write about depression. In college I became a hero when I wrote about depression in my weekly newspaper column–professors were asking me to lunch, asking me to guest-lecture classes, and students I didn’t know from Adam were stopping me and thanking me. I thought I was the only one who ever felt depressed. Turns out it was the people who didn’t ever get depressed who were weird! And every time I write about depression here, I get tons and tons of hits. People are desperate enough to solicit advice from some guy they never met who isn’t a doctor and hasn’t so much as taken a biology class since Gulf War I–me. Maybe the problem is what they eat.

But hey. There’s big, big money in depression. I did a quick Google search, and 90 tablets of the low dosage of Paxil (let’s see what ads that gets me) costs $189 in Canada. Of course, in the United States, we pay more. Assuming 90 tablets is three months’ worth, that’s $2.10 a day. I know what GlaxoSmithKline’s saying: ba-da-ba-ba-ba, I’m lovin’ it!

And of course the fast-food companies want us fat. When we’re fat, we order more. We eat larger portions more frequently. The less healthy we are, the more they benefit. And the more the drug companies benefit.

Another symptom Spurlock experienced was fatigue. That’s another common problem. And who benefits from that? Coca-Cola, Pepsico, and Starbucks, mostly. Who can function anymore without that jolt of caffeine in the morning?

I’m not saying it’s a big conspiracy. I’m not real big on conspiracies. I’m perfectly willing to believe the fast-food phenomenon happened and the companies that sell drugs and caffeine were the lucky beneficieries.

I’ll tell you something: I gave up fast food at 25, when my dad’s cousin started having serious health problems. That was a reality check for me: my closest male relative died at just over twice my age, and then when another one of my closest male relatives reached that age, it was just a lucky break that he didn’t die also. I woke up one morning, looked in the mirror, asked myself if I wanted my life to be half over, and started eating turkey sandwiches from Subway (with just veggies and mustard–hold the fatty crap) for lunch pretty much every day.

And a lot of times when things have started going wrong, I haven’t been eating as well. I know that’s true for me right now.

I’ve seen Dr. Mark Himan on TV a couple of times the past few months. The things he says make a lot of sense. My wife and I have one of his books and another one on order. I think it’s time for me to read the one we have. I’m 31 now, and sometimes I feel like I’m losing my edge. Maybe I should do what Rod Carew did, and see if I get it back.

Nickel and dime your way to prosperity

An old friend and I have been talking a lot about debt elimination these past few weeks. With any luck, both of us will be completely debt-free by age 45 at the very most, and probably sooner.

The trick is to dump as much money as possible into debt retirement. As recently as November, the interest on my Honda Civic was costing me $1.40 a day. Think what you could do with that $540 a year you’re paying in needless interest.

The challenge is finding the money to use to retire debt.Some of these tricks will only save you a few cents. You must get yourself over the it’s-only-25-cents mentality. That quarter can either work for you or against you. A quarter paid at the beginning of a 30-year mortgage saves you more than a dollar by the end of the loan. Can you find a safer way to quadruple your money? I doubt it.

If and when you have no debt, dump those pennies, nickels, dimes, and quarters into an index fund. An index fund just buys you the same stocks that are in the Dow Jones Industrial Average, or some other index. Historically, these funds double in value every seven years. Great Depression, Schmeat Schmepression. Dump a quarter into an index fund and don’t touch the investment, and in 28 years, it’s $4.

So let’s find some creative ways to get some quarters.

1. Pay your bills online. This potentially does more than save you the 37 cents in postage. My gas and electric companies both have arrangements with checkfree.com to allow online payments free of charge. I was invariably late in paying them, which subjected me to interest payments. The other nice thing about Checkfree is that it schedules the payment for the due date. So if by chance you have an interest-bearing checking account, that money can work for you until the last possible day. You probably won’t save more than a couple of bucks a month this way, but that’s $25 over the course of a year. If someone offered you $25 without any strings attached, I doubt you’d turn it down.

2. Make car and mortgage payments as soon as possible. I may be showing my ignorance here, but interest paid to me on most accounts I’ve had is calculated monthly. Interest on my car is calculated daily. So, making that payment as soon as my paycheck shows up in my checking account reduces the principle, thus reducing my interest payments by a few pennies a few days early. It’s only pennies? I’d rather they be my pennies than Honda’s.

3. Use credit wisely. I remember one day a few years ago, I was at the grocery store and instead of pulling out my debit card, I pulled out a credit card accidentally. I thought how awful it would be to have to pay for life’s necessities on credit.

But if you’re disciplined, and you have a credit card with rewards–and we should be talking cash here, not merchandise–then it makes sense to pay for life’s necessities on credit. Take a look at my Discover Card bill, and you’ll see the bulk of it is things like gasoline, groceries, my telephone bill, and $20 trips to Kmart, which means I was probably buying stuff like toothpaste and deodorant and other household necessities. I pay the balance in full every month, so the result is essentially some bank paying me to buy the things I’d need to buy anyway. This nets me about $80 a year. I never see a dime of it–I apply it directly to the card’s balance.

4. Buy a programmable thermostat. The cheapest programmable thermostats cost about $30. They can easily save you that much in a month. During my 8-hour workday, my thermostat only heats the house to 56 degrees in the winter time. It cools it to 82 in the summer. During waking hours and on weekends, it keeps the house at 70 degrees in the winter and 75 in the summer. During sleeping hours the temperature raises or lowers by 5 degrees depending on whether it’s summer or winter. I used to have $300 heating bills in the winter months. Now I have $175 bills. That’s still ridiculous, but it leaves me money to actually do something about it.

5. Cut out the sodas and snacks. I used to routinely spend $1.50-$2.00 a day at the vending machine and the cafeteria at work, buying coffee, soda, and snacks. Over a 240-workday year, well, do the math. The 34.5-ounce can of coffee in my fridge (it lasts longer when stored there) is marked 9-26, the date I bought it. I expect it will last me until the end of the month. So that can of coffee will last me five months. I buy the off brand, so I can sometimes get one of those cans for between $3 and $3.50. So my morning coffee costs me 2.3 cents. I quit drinking soda entirely and I pack a granola bar in my lunch. Over the course of the past year I am sure I’ve saved $300.

6. Pack your lunch. Lunch at a sit-down restaurant almost always costs you $7. Fast food usually costs at least $5. The cafeteria at work is usually $3-$4. Sometimes I pack leftovers that would otherwise get thrown away, so they’re essentially free. It’s fairly easy to pack a lunch for $2. Again, do the math over 240 days. Do you want to spend a house payment on lunch every year, or do you want to spend a car payment instead?

7. Eat out less. A couple of years ago I was dating a girl who had to eat out 3-4 times a week, at least. Usually it was places where I was lucky to get out for under $20. I always paid, of course. I couldn’t figure out why I didn’t have any money. But with a little creativity, it’s entirely possible to make dinner for two for $4. You can make a fairly impressive dinner for two for $10.

8. Shop the cheap stores. St. Louis has five different chains of grocery stores. At the top of the ladder is Dierbergs, followed by Schnucks. A third local chain, Shop ‘n’ Save, generally beats the Schnucks and Dierbergs prices by a few percent. But now I do most of my shopping at two stores that white-collar professionals rarely visit: Aldi and Save-a-Lot. In most cases the quality of the product is the same. But when I can get a loaf of bread for $.99 versus $1.59, the difference adds up quickly. For the things Aldi and Save-a-Lot don’t carry, I still go to Dierbergs, but I rarely spend more than $10 at Dierbergs now, unless they’re running a big sale on something.

8. Buy generics. A lot of people are afraid of generic products because they feel they might be getting ripped off. You’re actually a lot more likely to get taken with a costlier brand name. I’ve found the quality of most generics to be as good as the name brands. When it isn’t, I try a different generic the next time. Eventually I’ll find a generic that’s as good as the big name brand, and save a bundle. I’ll buy the name brands when they’re on sale, but aside from that, my pantry is full of generics and I don’t care who knows about it.

9. Don’t spend a dollar to get 14 cents. A common excuse for not paying down your house is that the interest is tax deductible. That may be, but you’re getting pennies on the dollar. My car payment was costing me $1.40 a day until I paid it way down.

It’s tax time. That means you have a piece of paper that tells you exactly how much interest you paid on your house last year. Are you paying $14 a day to inhabit a house you supposedly own? That tax deduction only reduces the net cost to $12. I can think of better things to do with $12, and I’ll bet you can too.

10. Don’t spend your windfall all at once. Are you getting a tax refund? Did you get a bonus? Have you been working a lot of overtime lately? It’s OK to reward yourself and/or your family. But don’t blow all of it indulging yourself. Spend 10 percent of it, tithe 10 percent of it, and use the rest to retire debt, and dream of the day when you have no mortgage payment and no car payment and every paycheck is a windfall.

11. Save your pennies. Coinstar, the makers of those change-converting machines in grocery stores, says the average household has $90 in loose change scattered about the house. A fairly painless way to save money is to dump your change into a jar at the end of the day, rather than spending it on frivolous things. At some point, convert the money into a more usable form, then apply the windfall rule to it.

12. Cascade your debt. I pay extra on my car every month. When the car is paid off, I’m going to start adding that amount to my mortgage payment every month, except in case of emergency. I estimate I can have my house paid off in about five years by doing this.

13. What will I have to show for this purchase? This is key. Before you spend even a quarter, consider what you will have to show for it by buying it. Just because you walk past a candy store in the mall doesn’t mean you have to go in and buy something. If you’re lucky, all it’ll do is rot your teeth and make you fat. You could have paid that quarter into your mortgage and turned it into a dollar.

Some purchases are unavoidable. In a couple of months, I’m going to need new tires. I can think of a million things I’d rather do with that money, but I need it. That’s OK. I’ll have it.

The trick isn’t to live in total self-denial, but to exercise restraint. Most of us live like millionaires, but the problem is that we’re spending our million dollars instead of letting it work hard so we don’t have to work as much. And it’s killing us.

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