Archive for the ‘frugal’ Category

Clever stencil : bike vs. car

This one runs on money and makes you fat.

This one runs on fat and saves you money.

Filed under bicycle, culture, frugal : Comments (0) : May 5th, 2010

Zipcar : initial thoughts

I’ve relocated to Washington D.C. which means I can take advantage of a really nice mass transit system and sell my car. The Metro can get me most places I need to go within Washington and the first-ring suburbs. For those trips when I do need a car, I joined the Zipcar car-share service.

I tried a similar car-share program when I lived in Madison, WI but found that it couldn’t meet my needs. There were too few cars spaced too far apart to be convenient.

The Zipcar scene in Washington is much, much better. With hundreds of cars to choose from, many in close proximity to a Metro station, getting to and from a car is a breeze. Reservations have been plentiful as well, with multiple cars available at any given time when I want one.

The Zipcar process is pretty slick: you pay a one-time fee to join the service (for me, $25) then rent cars by the hour. The price depends on the model you want (they have everything from a Smart Car or Prius to pickup trucks and BMWs) in the range of $6.50 – $13. The casual Zipcar user also pays an annual fee (currently $50) that is waived for more frequent users who commit to a minimum monthly spend. I know I will be using Zipcar for work travel at least a few times a month so I signed up for the $75/month plan.

Reservations are done online or using a very slick iPhone app when you’re on the go. Once you arrive at the car during your reservation time, your Zipcar card unlocks the vehicle and away you go. I’ve rented a car for three trips so far and each time it’s worked perfectly.

Most of us aren’t used to paying for a car by the hour so that fee may seem high. When you factor in all that you’re getting, however, it starts to look like a real bargain. There’s the obvious stuff like the capital cost of the car itself and all maintenance/repairs. You’re covered for insurance (with a $500 deductible if you’re at fault) and the cost of parking the Zipcar. Add in the fuel costs (each car comes with a fuel card if you need to refill) and it starts too look like a real bargain.

The secret behind Zipcar is raising the capital utilization rate for their fleet of cars. Most car owners use their car for maybe 10% of the day, while it sits idle for the other 90%. The typical car ownership costs in the U.S. are $400-600 per month. You’d have to use that car for 12 hours a day to come close to the hourly rate Zipcar charges.

Of course, the Zipcar scheme won’t work for every city or every driver. It relies on a critical mass of users and is buoyed by an available mass transit system. But for urban dwellers with infrequent car needs, it can’t be beat. I’m thrilled to be giving up car ownership and relying on the Metro, Zipcar, and my feet for my transportation needs.

And finally, the sales pitch : if you are interested in trying Zipcar, use the link below. You’ll get $25 in free driving credits and I’ll get $25 for the referral.
Join Zipcar and get $25 in free driving!

Filed under Washington DC, economics, frugal, technology : Comments (0) : Jan 3rd, 2010

In Defense of Renting

It’s no secret that Americans love to buy things. Throw a dart at any newspaper from the past 12 months and you’re liable to hit an article about consumer spending, automobiles, or housing. Each of these themes is directly related to buying new stuff. New houses, new cars, new gizmos, new gadgets. The thinking, it seems, is that the key to ending the recession is buying more.

Dare I suggest we consider an alternative? There’s so much emphasis on buying that I need to give voice to the alternative: renting.

To illustrate, let’s walk through each example above.

Housing – It’s long been cited as the American Dream : owning your own home. But if you dig a little deeper, the reality isn’t quite such a happy dream. In the post-war period, almost all home purchases are done using a home mortgage. Down payments generally make up 20% of the purchase, with the remaining 80% financed by the bank and repaid over 30 years (with interest, of course). Do you really “own your own home” if you hold a mortgage? An easy test: stop paying your mortgage for a few months and you will soon find out who really owns your home!

In what could best be described as a good idea long past its welcome, home ownership is heavily subsidized by the federal government in the form of tax credits. All the interest payments for a home mortage are deducted from taxable income. Over a 30 year, $250,000 mortgage, interest payments could total $280,000. Assuming a 30% tax rate, your fellow taxpayers just handed you a check for $84,000. (Now we know where to find the true welfare queens.) Factor in the number of outstanding mortgages in the U.S. and you can start to see we’re talking about real money!

To make matters worse, the brave legislators in Washington have reacted to the downturn in the housing market by throwing even more money into that financial black hole. They’re currently offering an additional $8,000 subsidy for first-time home buyers and are discussing expanding that to $15,000 for anybody. Madness!

What’s wrong with renting? I’m all for it! I would rather not add a massive mortgage debt to my personal balance sheet. Rental properties come in all flavors, from apartments to condos to houses. No one has to know that you pay a landlord instead of a bank each month. And it sure is comforting to know that when the water heat breaks or the roof springs a leak it’s the landlord and not you who’s responsible for repairs.

My critics will counter that “if you’re paying rent you’re just throwing your money away”. When compared to the costs of owning a home, renting is often favorable from a financial perspective. Only a small portion of your mortgage payment actually goes towards building equity. The rest is taken out as interest, taxes, and fees. Even the home equity is a mediocre investment at best–a house never earns money (like the stock of a company) nor is the capital invested (like a bond). Homes are also incredibly illiquid investments, requiring many months (and many more fees) to sell. In short, it’s not the slam dunk investment that charletan real estate agents would want you to believe.

[To be continued]

Filed under culture, economics, frugal : Comments (6) : Jun 26th, 2009

Quick & Dirty Bicycle Headlight

Last night I was riding across town to fetch a drink at a new Milwaukee bar (Sugar Maple in Bayview). It’s about 5 miles from my house, so I wanted to ride my fast bicycle (as opposed to my slow-but-utilitarian bicycle). Problem is, I don’t have a headlight on that bike. What to do?

Hack.

The ingredients:

Small LED flashlight
Old bicycle innertube
3 medium zip-ties

I cut a length of rubber from an old innertube (you do save your old innertubes, right?) and wrapped it around the base of the flashlight. This would help to increase friction to make it stay put and protect my fancy bicycle from scratches. It also provided a bit of a shim to angle the light appropriately. I placed the rubber-wrapped light where my stem meets handlebars. Finally, I fastened the light securely with zip-ties so it wouldn’t fall off when I hit a pothole going 30.

In no more than 5 minutes, for no more than $5 in parts (all of which I had lying around the house [thanks to Chris for zip-ties]) I had a perfectly adequate headlight and I was off. Hurray!

Filed under frugal, hack : Comments (3) : May 8th, 2009

Pedal Powered Grocery Getter

I’m a big fan of bicycles. In most civilized countries, the bicycle is an integral part of the transportation network. Here in the U.S., it’s a relatively small part of the mix. I think this is set to change as more people realize the benefits of bicycling and cities deploy bicycle-friendly infrastructure.

One of the common reasons people like personal automobiles (and especially SUVs) is the convenience of transporting stuff like groceries. Today was a warm day in Milwaukee so I decided to make a trip to the store with only my bike. Just how much could a bicycle with two medium panniers carry? Let’s find out: