Intrest Free Loan 2: A bad idea.

 I came upon this idea purely by accident. 

My car would not start one morning. I fired up YouTube to diagnose the problem since I know nothing about cars. After watching a few videos I determined that the starter needed to be replaced. Unfortunately it was Sunday so all the repair shops were closed. 

My former roommate recommended a friend who runs a mobile auto repair service. I texted him that I would like to have my starter replaced. He said he might be able to do it the following day. I told him I would walk to the nearest auto zone and buy a starter so he could install it right away the next day. 

At Auto Zone, they told me that they would have to have the part delivered from another store. Which would arrive tomorrow since it was still Sunday. I charged the $300 part to my credit card and walked home happy knowing I had taken some action. 

The next day when I woke up and the mobile mechanic said he couldn't make it. I called a tow truck instead. A truck arrived an hour later. He asked me if he could try starting the car. It started right up. Whoops. I paid the $45 service fee and drove to the nearest shop before it had a chance to die again. 

I told the mechanic that the starter was not working but he wanted to test it. Turns out it was the battery. Whoops. I paid the shop $38 dollars and drove over to Auto Zone to buy a battery. A tiny woman took out my old battery and installed a new one. The final emasculation. I was able to return my starter for a full refund placed back onto my credit card. 

The interesting thing about this was that when the refund processed a few days later I received the amount back on my card but it also reduced my outstanding balance for the month. This credit came back on my card as a payment. Effectively kicking the cost of my starter into next month. I began to wonder if this strategy could be used in the future to delay paying back a portion of my credit cards and therefore maintain an interest free loan on that amount. 

I was pretty excited about the concept so I posted a long explanation on Reddit.com in the r/frugal group. The blow back was swift. Almost 100% negative. The post was taken down after a few days by the moderators but the comments can still be viewed at with this link. 

https://www.reddit.com/r/Frugal/comments/j3b95l/no_intrest_loan_idea/?utm_source=share&utm_medium=web2x&context=3 

The general consensus was that this was at the least an irresponsible way to manage your money and at worst possibly fraudulent. That I was spending outside my means. Normal rhetoric of the alt-frugal camp. I tried to explain that I was a true believer in the frugal lifestyle. That these were special circumstances. I was drowned out by the digital mob.    

After taking their views into account I decided to try it anyway. I would buy an item around the $500 dollar range and return it a few days later. My first step was to find a company with a very loose return policy. The Apple store has a no questions asked 14 day return policy. That sounded good so I drove up to the mall. My plan was to buy an Apple watch. If the sales person questioned me about it I would say it was a gift. 

At the Apple store I was turned away. There was a big sign that said by appointment only. I asked the person standing up front if I could make an appointment. She said it must be done online and that it might take a week to secure an opening. This was a problem. I would need to make an appointment to buy the item and then another to return the item. It was possible that they wouldn't even have any appointments available during the 14 day return period. Dejected, I walked back to my car.  

I took a look at Targets return policy. It was complicated and stated that you may receive store credit. Not a great option because I didn't want to end up with the item. Finally I settled on Walmart. They have a very generous 90 day full refund return policy. 

I decided to look for a kitchen appliance. My thinking was that in the event they will not give me a refund it is something I would use in the future since I enjoy cooking. I picked up this mixer for about $410 with tax. My plan was to wait a few days until the charge clears on my card and then go return it.

After waiting 2 days I returned to the Walmart where I had purchased the mixer to return it. This was in the morning so luckily I did not have to wait in line. I told the clerk that I wanted to make a return and handed her the receipt. She asked me if anything was wrong with the item. I told her that I had not opened the box. She ended up flipping the box over to verify that the mixer was still inside and had not been replaced with heavy rocks. After she was satisfied she issued me my refund. 

 Success! The credit showed up on my card a few days later in full. It also successfully pushed that amount onto the next billing cycle. 

 Upon reflection, this was probably not a very smart thing to do. While technically not illegal in any way it certainly falls into a grey area. My bank could decide that they don't like it and cancel my lines of credit. I've spent the last 4 or 5 years building up my credit. Being flagged for something borderline fraudulent would not be great. In the future I need to take the advice of the friendly digital Reddit mob. Build up an emergency fund so that when the unexpected does happen I have money available to cover it. That and never let your car break down.

Intrest Free Loan.

 No one likes large unexpected expenses. Recently I had two unexpected car repairs in a single month. One for $2,700 and the other for $500. Not fun. Pulling $3,200 out of thin air can be a problem on short notice.

I could have just taken money out of my emergency fund. I auto-deposit $100 a week into a savings account which has built up to about $3,000 for this type of thing. This felt like more of an inconvenience than an emergency so I put it on one of my credit cards. 

Luckily I have good credit. My score is hovering around 730. I have access to about $25,000 in credit  limits. The problem is these cards have high rates averaging near 18%. Putting this bill on the credit card means I have a month and change to come up with the money before I start incurring interest. Thus far I have paid all my credit cards in full each month and avoided any interest payments. This keeps my borrowing expenses low. 

Instead of paying interest I created a system where my gig job doing deliveries unknowingly extends me an interest free loan. I came up with the idea after reading about how Warren Buffet uses float in his insurance businesses. Float is money that is paid in as premiums on insurance policies and is later paid out for claims. The company can do whatever they want with the money before it needs to pay claims. If they are smart they invest it.

My system is simple. I have a gig job where I deliver food. The company I deliver for has a unique feature where I as the driver pay for all the deliveries with a debit card issued by the company. I submit a picture of the receipt and the customer is charged for the item and a delivery fee.   

Sometimes drivers lose their cards. So they added an option to pay with your own card. This feature allows the driver to pay for items themselves however they choose and the company turns around and pays out a cash reimbursement. I exploit this feature to generate cash flow to pay down my credit cards. 

I like to think of it like a debt snake that is eating it's own tail. Once my credit card locks in an amount for the month, I can charge more money on that card which will not be locked in until the following month. Then I pay for all my customers purchases up to the amount of the outstanding balance. When the company issues me a cash reimbursement I turn around and pay off my current month's balance. 

With this method I can extend the amount of time I can carry a balance indefinitely without paying interest. This does not reduce the balance, just the amount of time I now have to pay off my outstanding balance. As a bonus I get points on my card which I can also use to pay down the balance. Usually around $40 bucks a month so nothing to get excited about but still free money.

Now instead of scrambling to come up with the cash, I can pay off the repairs in a leisurely manner. I slowly shrink my debt snake over time using the income from doing deliveries. Each month I will need to charge a smaller amount of customer items to cover the remaining balance.

This system has a few potential pit falls. The cash flow I earn from deliveries and charging customer items will stop abruptly if my car needs another expensive repair. If my car goes down for an extended period I will be in a pinch. Also my credit score tends to drop when I happen to have a higher credit utilization rate than normal. My company could figure out what I'm doing and prevent me from doing it in the future for some reason. Other than that the whole thing feels pretty slick. 

Unexpected expenses are a part of life. Access to credit and some savings cannot prevent bad things from happening but will certainly smooth out the impact. At least financially. There is a lot of freedom in not having to worry about money. By putting a few systems in place you can spend your valuable time on more important things.

Hummus Manufacturing.

Hummus is delicious but a bit expensive for my taste. I started to wonder. Why don't people make their own at home? Why don't I make it at home? Garbanzo beans are cheap. How hard can it be? Turns out it's not that hard but there are plenty of upfront expenses to make that first batch. If you are only going to make one batch, forget about it. 

Online I reviewed some recipes. Each one emphasized the need for a food processor. They stressed it was essential to making it the right consistency. I was planning to mash it into a bowl with a spoon like an animal but apparently that is bad form. I asked my girlfriend if she already had one by chance I could borrow. She did not. I asked if she knew anyone who had one that she could borrow and that I could then borrow from her. Again, she did not. Looks like I would need to buy one. 

I searched around until I found this reasonably priced model. It was $30. The cost of my discount hummus was adding up quickly. It also slices and shreds things so hopefully I can get some extra utility to offset the cost.

 

 

I already had most of the other ingredients at home. dry Garbanzo Beans, Lemon Juice, Minced Garlic, Salt, Spices, Olive Oil. All I would need was the Tahini. This presented a problem. I went to the store and the shelves were bare. I went to 3 different stores and it was all the same thing, no Tahini. I asked a manager if there was more Tahini in the back or if they would be getting some soon. His response, "What's Tahini?" I thanked him for his time and briskly walked out.

Finally, I called a 4th store and they carried it. It was even in stock. The "Foodie" as they are called at this store even walked back to the aisles to confirm that yes, they had plenty.  It was at a more upscale grocery store that is basically a clone of Whole Foods. That meant the Tahini would be of the organic farm to table hand crafted fair trade variety. Which all translates as more expensive. There were two options available. Both were $7 a jar. I decided to buy both since I had spent so much time running around town. One was a Greek style Tahini and the other was made from smoked seeds so they would each have a distinct flavor. 

 

 

I had everything together and began putting it all into the food processor. I didn't realize how loud the food processor is so next time I'll be using it during the day instead of at 11 pm as a courtesy to my neighbors. It was easy and I had made about three standard hummus containers worth (12 oz) of homemade hummus. If I had decided to buy that much hummus at the store it would have cost around $12. I had spent close to $60 to put all the ingredients and equipment together. Then if you factor in all the time. I spent an hour researching hummus recipes. I spent an hour looking at various food processors. I cooked a bag of dry garbanzo beans in my Instant Pot which took another hour. I spent 4 hours driving around town searching for Tahini. I spent 20 minutes actually making the hummus. Also consider, there was no guarantee that I would get it right the first time. I have some experience cooking but am in no way a chef so I could have screwed something up and had to throw out the entire ruined batch.

From a purely economic perspective this is not an economically efficient activity. This graph shows the cost of each batch, which I worked out to be about $1.51 in materials. Then I amortized the cost of the food processor across all the batches to get a cost per batch estimate. Turns out I'll be breaking even around the 11 batch point. After that each batch I produce will be cheaper to produce at home as long as you don't include my labor costs. If you did it would push out the BEB (Break Even Batch) out further. Clearly making hummus at home isn't in the best interest of the average person.

 

Of course there are other non-economic reasons to do things. I enjoy cooking and it is a creative outlet that I enjoy. For me this brings in additional entertainment utility that helps offset some of the cost. I was proud to share some of my homemade hummus with my girlfriend. There is also the benefit of tailoring the product to my taste. Maybe the wider consumer market doesn't like as much garlic as I do so I couldn't buy a heavy garlic version of my favorite hummus because it simply isn't made. Not everyone has the time either. Luckily I do. 

 

Turned out pretty good. Ten batches to go.

 

 

Refrigerated.

While doing research for trivia I needed to find out if it cost less in electricity if your refrigerator is full. There are two main ways to save money with your refrigerator. The first is to open the door as little as possible. Every time you open the door to take a look you are spilling nickels on the floor. This makes me wonder why they don't have a clear door like at the supermarket. Then you could look in before you open it up. Now I get everything out of the refrigerator all at once and then put it all back at once so that I am reducing the amount of time the door is open.

Turns out it is also cheaper to maintain the temperature in the refrigerator if there is less empty space. The article refereed to the food items acting as thermal ballast. Once the item is brought down to the temperature of the refrigerator then it helps maintain that temperature. They stated that each time you add an item there would be a cost to cool it but then it will help prevent future fluctuation.

I live alone so I am the only one using an entire family sized refrigerator. Look at all this empty space. I probably spent a fifty cent piece to take this photo.

I could just pack it up with a months worth of food but I like to go shopping every couple of days so my food is fresher. To prevent the expense of food waste I like to buy only what I think I can eat in a few days and then eat all of it. The more you try to buy ahead the more likely things will go bad or you just don't feel like eating it before it does. I could also freeze more things. The covid-19 has made me modify this practice a little bit. I now have a supply of canned and dry food in my pantry but the level of ready food in my refrigerator has remained about constant.

I decided the solution is to fill the empty space up with containers of water. I don't want to go out and buy money saving water containers because that would defeat the purpose of saving money. There were a few bags I had laying around the house that could be filled with water and used for making ice in the freezer. 

That bag of water will soon transform into a money saving block of ice. I will continue to fill up the freezer with such bags but leave enough room for my frozen food. In the refrigerator I am going to collect some jugs and fill those up with water too. Probably not a bad idea to have some extra water handy.

For the first time in years I cannot wait to open up my utility bill next month and see how much of a difference this will make.

Satisfaction Guaranteed II

Saturday is my cheat day so I can eat anything. A few weekends ago I decided it would be fun to make some fried chicken wings. It's pretty easy. I looked up a recipe on google then went to the HEB and bought all the supplies. There was a section where they recommended buying a thermometer so you could keep the fry oil at a constant 350 as much as possible. They had a candy thermometer for sale which cost about $5.

I took it all over to my girlfriends apartment and got to cooking. After breading the wings and getting them ready to fry I put the oil in a sauce pan and turned up the heat. The oil heated up quickly. I put the thermometer into the oil and waited. It only took a few seconds for the thermometer to show it had reached 350, but then it shot past that and kept going. Before I knew what was happening, I heard a pop. I looked pulled out the thermometer and it had looked like it exploded near the bottom. The external shell was fine but the inner tube had burst near where the led balls were. Lucky it didn't crack and spill out into the oil because it could have become contaminated.

A few days later I decided I would try my luck at returning the broken thermometer. I did not have a receipt for the item but I did have the credit card I used to buy it which had worked in the past. The regular service desk was closed since it was in the evening so I stood in a regular check out line. That's when I spotted my first obstacle. There was a posted sign listing items that would not be eligible for return during the quarantine. I scanned the list and Thermometer was listed. Top right corner where anyone could see it.

Then I remembered my days working as a bagger at a grocery store when I was 14. I never even glanced at company memos. I was pretty sure that these cashiers maintained the same policy. There was still a chance. I presented the broken thermometer to the cashier and explained that I would like to return it since it was broken. Never said that I broke it but that it was broken. Using the passive voice. The cashier called the manager and we went through the same dance again. Clearly the entire interaction was really interesting to him because he began to yawn. He asked me for my card to verify that I had indeed purchased it at an HEB. Then he said the magic words. Would you like cash or to have the amount returned to your card? Success! HEB, you're too good to me.

Sounds to drive to.

I want something to listen to in the car. I do not want to pay for it. The eternal struggle as the ancient  Greeks referred to it. There are plenty of free music services available. The radio is free. They extract their payment through forcing the listener to absorb advertising. There is a cost to everything.

My solution was to buy a thumb drive for my KIA and load up a bunch of MP3s. The cost to this is that it takes a little time and knowledge. It can be a pain to organize all the files and make sure they are compatible with my car. Initially I put a bunch of .wav, .wma and .ogg onto the device and then wondered why I couldn't find any of my files. What a fool I was. The MP3 seems to work so I have stuck with that. Other file types can be converted. Now I just have to track down some files. 

Any video you watch on YouTube can be covered into an MP3 with a third party website. I spend a lot of time driving around can listen to a song that is an hour or longer. The bulk of my content consists of Podcasts such as The Joe Rogan Experience, Comedians Comedian and Bigger pockets, as well as some Vaporwave tracks. Some JRE podcasts can last 3 or more hours. Perfect for those long days of delivery.

Is there a famous person you follow? I'm sure they have a TED talk on YouTube that you haven't had time to watch. Download it an put in on your thumb drive. Maybe you want to learn about world history? Audio book? It can all be converted into an MP3 and put into your car for free if you know where to look. 

Should I be concerned that I'm not learning about the latest and greatest whatever thing is on the market? No. There are so many ways we are being advertised to today that if something is really important and interesting, it will find its way to you. We only have so much time and attention in this life. We shouldn't just give it to some advertiser. Give me a dollar, then I'll subject myself to your advertisement. Right now people have it backwards. Pay for a subscription and then you can have an ad. free experience. As if that was possible. There are advertisements right in the content.

Very few people can live an advertisement free existence in America anymore. The best we can do is try to keep out as many as we can. That's what I like about Vaporwave music. I turn on an hour long collection of beats and random sounds then it takes me away into imagination land. I don't need another advertisement for Jared, the Galleria of Jewelry in my life. Ever.  

Coin Hunting.

Most people will not bother to pick up a coin. I've seen teenagers receive change then just throw their coins on the ground. Paper money is on the way out too so coins are even more of an inconvenience. I walked by an area where people often stand to pan handle and there was a pile of coins on the ground. Even the homeless and destitute view coins as too much of a hassle.

In the age of Covid-19, the idea of picking up a coin that could contain the virus is not increasing the appeal of coin collecting. At least not from a common parking lot or sidewalk. That is where I swoop in and collect the free money.

Where are people likely to drop coins? You have to think like a coin. If people bother keeping a coin they usually put it into their front pocket along with their keys. When they enter their car after making the nightly trip to 7-11 to buy Malt Liquor and Cheese sticks they pull their keys out of their pocket and inadvertently spill their coins onto the ground. If you go into a parking lot early in the morning or late at night you can walk up and down the area were people exit their cars to increase your odds of finding something. Refer to the diagram below.

  
Sometimes you get lucky if you keep your eyes open. I was waiting outside a fancy grocery store in the nice part of town when I saw a woman walking out of the store. She had an envelope full of cash and coupons. As she was fiddling with her purse, all the coins in the envelope spilled out. After years of training I could tell by the distinct sound of the coins striking the ground that one of them was a quarter. My excitement was pronounced as I imagined putting that same quarter into a washing machine at the laundry mat a block away from my apartment later tonight. That would come to almost 8% off a load of laundry. Tantalizing.

I walked over to put myself into position before anyone else did. My heart quickened as she stopped. It seemed that she might turn around and pick up those coins. Then I realized with great relief that she was just retracing her steps in an attempt to remember where she parked. I skulked over and picked up a cool 28 cents. The three pennies would fit nicely into the coffee tin I keep by my counter. I fill it up with lose coins and take it to my credit union where I can convert it into digital currency anytime they decide to finally let the public enter the building. By that time I should have quite a collection.

If you walk up to a fountain, is it illegal to extract the coins small children and the superstitious have used to make wishes for your own personal gain? I did a little research and found out that it is not illegal to take money out of public fountains. That money usually goes to a local charity. Don't think of it as taking money from people who don't want it. Instead, think of it as taking food out of the mouths of the needy. The problem is that if you handed them those same coins they would likely toss them back on the ground and ask you for some paper money instead. 

I should take some time to vigorously wash my hands. 20 seconds is the new standard but I think I might need to up that to 25 or 26. If you use the sink at the grocery store then the soap is free too. Good thing I live right next door to a nice one.