Blog

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

I am priced out

I was walking through my local Target store when I noticed a 20 ounce bottle of Coke now costs $3.19? And that is before tax! I am old enough to remember when 20 ounce bottles were 99 cent. A dollar bill at the vending machine was enough to obey your thirst.

Talk about things I am priced out of. Buying soda drinks at a store is one of them. Filtered water is just fine, thank you very much.

But then people would argue that saving that three dollar on a daily soda (or four dollars on a daily coffee) is not going to get me to buying a house. The math on that in the San Francisco Bay Area is indeed tragic. Those people are right: keeping that $3 in my pocket is merely pissing in the wind of houses that start at a million dollars.

A better use for that $3 is to buy the lottery. At least there’s a infinitesimal chance!

In the grand scheme of things, buying a soda bottle here and there is not going to monetarily affect me one bit. But it’s the mindset that counts here. We can all agree that spending money is easy. The American credit system is fantastic in that regard. Therefore I think we have to train our resistance muscles (not to be confused with resisting a certain presidency). The calculus has to be more than: can I afford it, if yes, then buy!

Saying no to the $4 coffee helps me say no to a new iPad Air I’ve been eyeing, or a newer laptop to replace this “aging” M1 MacBook Pro. Those are the money decisions that really slice chunks: the hundreds and thousands of dollars at a time. Money that can otherwise grow significantly if put to proper investing.

If I really want to drink soda, I’d go buy in bulk from Costco.

No magic pill

Personal finance is easy. Spend less than you make. Put that extra money into the market in a low-cost index fund. Rinse and repeat every single month for decades, until you are ready to retire. You can say it all fits on an index card.

But like losing weight - eat less than you expend in energy, what’s easy on paper is difficult for people to execute. That’s why American obesity rate is top 10 in the world. (GLP1 agonists to the rescue!) And consumer credit card debt is at an all time high.

From watching personal finance shows like Caleb Hammer, what I am seeing is that people do understand what needs to be done, but the salience of that action is buried under a pile of emotions hijacking the brain. That forthcoming vacation is way more exciting to think about. The DoorDash delivery person is coming soon with that burrito you deserve after a long day at work. Why yes you absolutely should spend a year’s salary on a brand new car.

The boring and unexciting slog of wealth accumulation never stood a chance against those positive emotions. Just like the cozy and comfortable couch beckons you to abandon your difficult and tiresome workout plans for the day.

It can’t be all down to willpower, right? To mentally fight against the easy and pick the hard. Because we all know that willpower is fleeting. Our marvelous minds can convince and rationalize us of (and out of) anything. Spend six-figures on a car? Of course! I am a card-carrying car enthusiast. Hashtag man maths.

Unfortunately, unlike weight loss, there’s no magic pill for debt.

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.

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.