Episode-2249- Listener Calls for 7-12-18 — 18 Comments

  1. About 3 years ago I looked up the research on crumb rubber from tires, made as you described, which is used as infill in artificial turf fields (there was local concern about leaching into the public water supply). All the studies that the manufacturers cited were their own studies (pattern recognition: fox guarding henhouse). I had to look to some overseas universities – one was in the Netherlands, I think – to find independent, non-industry research.

    The upshot of these studies was concerning. The rubber crumbs contain compounds that act as endocrine disrupters. Long-term effects can be sterility, certain cancers, you name it.

    This is hard to nail down because such effects would likely not appear for quite a while. In short, we all absorb a lot of synthetic stuff from the environment as it is; why add more? The thought of trying to make rubber shreds from tires in a household setting, with children around maybe: that’s not a good idea. I’m glad you gave the answer you did, Jack. It could have been stronger and still not alarmist.

    The caller spared himself further grief by not directing his question to Steve Harris (my fellow chemist) on a Friday. That would qualify as Poking The Harris, I would think.

  2. Jack love the podcast been listening since 2010.  However, I feel that leasing the vehicles is bad advice.  Just my opinion but you’ve had a car payment constantly and the cost of ownership for a depreciating asset  is not just the payments.  You have to also factor in the amount that you could be investing instead.  Again, just my opinion but I’d rather buy a car with cash, drive it until it dies, 10-15 years and invest payments into my IRA or 401k or real estate.  To me leasing just to have  lower payment over purchasing isn’t just about the amount of payment, its about the opportunity cost  of investments you could be buying.  Again not hating on you, everyone has their own way of doing things, this is just my opinion.

    • “However, I feel that leasing the vehicles is bad advice.”

      That is because you are generalizing a complex subject into a one dimensional argument. The reality here is at least you used the right word, “feel”, yea you feel vs. know. Like I said when you build financial models for the scenario at hand you make the best financial decision for the scenario not some one size idea you attempt to retrofit into all situations.

      I have a 2005 diesel truck that I paid cash for in 2009. I will drive it till the wheels fall off, I also have a car I drive for about the cost of two really good meals out a month that would cost almost 50,000 dollars if purchased new. They serve different purposes.

      Here is a hard core reality, the higher the net worth of an individual the more likely they are to lease vs. buy a vehicle.

  3. I totally agree that the higher the net worth the more apt people are to lease vs buy.  However, many people, myself included, don’t have a high enough net worth to lease a vehicle.  Again, to me my money is better spent on IRA, 401k, or real estate rather than a leased vehicle.

    Bad advice may have been a bad choice of words, however many people will take advice to go and lease when they may not be in a position to afford a new vehicle at all.  Everyone has to look at their own financial situation.  Personally I’d rather purchase two $10,000 vehicles and then save the $314.00 per month on a lease into different investment accounts.

    Please don’t take this as an argument, I appreciate all you do on your show.  I may not agree with everything, but you do make me think and I appreciate that above all.

    • This is why I preach financial models vs. how you feel.  314 a month, how long to save up the 20,000 for those two vehicles at that rate?  63.69 months, well over 5 years.

      I would rather invest that 20,000 today and start earning 10-12% on it while I finance the same amount over those 63 months at about 2.9%.  Why?  Cuz math.

  4. Sorry to do another reply, you mention, I tried to edit the other one but I missed my window.

    On your point of the financial model one also needs to take into account opportunity cost.  One lease of 36 months at $314 months then a second for same terms comes out to $22,608 over both terms.  That is money that could be invested elsewhere.  I think that someone would be doing themselves a disservice without taking this into account in their financial model.

    Let’s face it many people don’t max out retirements or investing because they put so much money into depreciating assets such as cars. Also yes saving at the rate you mention would take that long. But if people focus their savings it wouldn’t. I know I can save about $3200 a month if i put all extra income towards it, so a little over 3 months I am where I need to be, not 5 years. Yes math is very important but so is being intentional in what you do.

    • Opportunity cost is the entire point!.

      So you are saying you can’t do better on 20K over 63 months than a gain of 2608?  Or 41 dollars a month on 20K.  That is 2.4%.  Notice where I said, “I finance the same amount over those 63 months at about 2.9%. ”

      There is a reason my even off the cuff remarks were within .4% of the number, I ran the model.  Come to think of it I do think my financing is actually 2.5%.  Cool how math works huh.

      Right now a 5 year T-bill (the safest investment on the planet) is at 2.7%.  So even as conservative as you can go keeping the 20K in pocket now and financing the loan is the most conservative play.

      This is why people don’t get wealthy, they see risk where there is safety and safety where there is risk.

      By the way I don’t see your comments as argumentative, I find this a worthwhile discussion.

  5. The curious thing is you just did some rewinds about debt free living and I agree with what you advise on that subject.  But then you are advocating people to take on financing a vehicle, and using the method with the leasing, even high demand vehicles, will put someone in debt perpetually.

    Again maybe I am reading too much into that, but those debt free living and having a car lease seem to be conflicting advice.

    I say this with all due respect.  I am not trying to start an argument just stating my opinion.  I an not trying to change your mind or anything like that.  I appreciate your show and the hard work you do for this community.  Thank you.

    • Debt can be cancer, debt is also a tool.  Leasing a car vs. buying it for cash is about total dollars and cash flow management.

      Again this is why people don’t get wealthy, they see risk where there is safety and safety where there is risk.

      Instead of just saying “debt is bad” you determine the total cost of control of an assert.  We are talking about a significant expense that is necessary for most Americans in one form or another.   Again I have a vehicle I paid cash for over 9 years ago.

      You are thinking one dimensionally, that is the source of confusion.

  6. yes opportunity cost is the point.  It is also very simple.  If I spend $314 a month on one thing I can’t spend it on something else.  In my example I saved $3k per month (rounded down) for 3 months total $9k.  Now if I paid $314 per month for twelve months it cost me $3768 per year.  It takes me 2.38 years to break even from the $9k I spent.  However I’ve now had my $9k vehicle for 5 years and after the initial investment I have not paid any payments.  (I know I said $10k just using the 9k for this example).  My only auto expenses have been oil changes and gas.

    In what you are saving is to take the lease and pay $314 per month for 36 months, turn the vehicle back in and get a new lease at the same or similar terms. In the same 5 year period you have spend $18,840. Also because you have the car payment that is $314 you don’t have to use elsewhere.

    In my life I have paid $5k for a 1998 Land Cruiser and $7k for 2004 Sequoia total of $12k.  Once those were paid for there were no other car payments.  Over 5 years later I still have the same vehicles.  The LC isn’t worth much, $4200 per KBB and the Sequoia is around $5k KBB.  That is a loss of about $3k over 5 years.  Even taking the loss into affect over the 5 years I have come out about $15k ahead if I had been paying $314 per month for one vehicle.

    I don’t owe any debt on a vehicle, I’ve come out ahead and my vehicles work fine.  Because of this I’ve been able to max IRA’s for both the wife and I because I am not a slave (debtor) to anyone else.

    I may be a simple person, but I just can’t see how owing a monthly payment is the best way to go.  Yes I see your point of leasing over buying a brand new vehicle but my point is maybe people shouldn’t be buying brand new vehicle at all, especially on payments.

    • Notice how you are defending your position by laying out a scenario.  That takes us right back to what I said in the beginning,

      “Like I said when you build financial models for the scenario at hand you make the best financial decision for the scenario not some one size idea you attempt to retrofit into all situations.”

      You are trying to answer the question “should you lease a new vehicle or buy a used one” as an always dichotomy.  A vs B.

      I am saying you answer the question by factoring every variable in the scenario.  Model those scenarios and make an informed decision.  Your debate isn’t even about the point I am making you have in essence introduced a new question and tried to debate that, and I refuse to let you.

      You are arguing why you in your situation should buy a 10K dollar car vs. lease a 45K 4-Runner.    When you really think about that given how this came up, you are telling me I should not have made a decision as a high income and high net worth individual to provide my wife with a very nice vehicle for a price we can easily afford.

      To play your game here I would need to start explaining why you should lease a 45K dollar 4 Runner.

      It is simple really, you are blinded by dogma.  My model here wasn’t should I get a beater for my wife, it was my wife wants a nice SUV, which one is best, and which is the best way to obtain control of that vehicle that has best economic model for our situation.

      You are actually fighting advice that might actually lead you to the same conclusion you made for yourself.   Do you even understand that?

  7. First I would like to say I have very much enjoyed this discussion.  I have beliefs, as do we all, and they should get challenged from time to time.

    With that being said I think we are both coming at this from different positions.  I have no right to say someone should or shouldn’t do something.  Also you mention you are a high earner and high net worth individual.  In your situation leasing a 45k 4runner is awesome and something that you should do. You have paid a price to get to where you are, built a business, sacrificed and build your life.

    The problem is there are many people who haven’t paid that price, are lower income earners or low net worth, or possibly high debt.  In that case leasing or buying a new vehicle is a bad option.  I was one of those people.  I can remember listening to you in 2010 and doing a food log, building a 1k e-fund and attacking debt.  You pointed me to Dave Ramsey and I have followed that and your advice on copy canning and building resilience in my life.

    The point is you wouldn’t tell someone who has not paid the price to go off and add more debt.  At least I assume you wouldn’t because of the message your teach everyday. That is my main point.  I know I am not yet in your position, but everyday I am getting closer, and taking on a car debt would put me back a few steps.  It wouldn’t break ma but it would slow me down.

    Now I am not a Dave Ramsey disciple in my thinking that ALL debt is evil.  I can see the benefit of leverage for certain situations.  However, I do think taking on debt for a consumer product is bad, unless you meet the criteria that you have; high net worth and high earner.

    Again thank you for the conversation.  I am sure I have taken up too much of your time already.  I appreciate you taking the time to discuss and challenge.  Keep up the good work!

  8. Re: Purifying storage tank water

    I have a 300gal tank which stores waste water from a reverse osmosis filter plus melt water from an outdoor clear ice maker.

    Quick back story: I had an outdoor bar/kitchen built a few years ago and wanted crystal clear ice for drinks etc. especially whiskey!  So initially purchased the RO filter to feed the ice maker.  The RO filter came with a counter-top faucet so we installed that in the bar-top and stopped buying bottled water, double bonus.  The bar wasn’t plumbed to sewage so waste water ran out through a drain to the street, causing a constant trickle and eventually grew algae along the gutter.  Rather than waste decent water I decided to store it and now have water for  gardening, car washing, etc. not to mention preparedness.  More bonuses!  All because I wanted good ice for my whiskey!  🙂

    Anyway, once the caller follows Jack’s recommendation on pre-filtering to get his water to a reasonably sediment-free state he could pretty much emulate the rest of my water rig…

    I use a Shurflo RV pump and accumulator on the exit spout which provides on-demand water up to 55psi and 3gal/min.  Output from this is split; one side going directly to a garden hose for high volume uses, the other to a step-down pressure regulator then to a triple “big blue” style canister filter for hydroponics and Earthbox food production where slow half-gal/min flow is plenty.  I could get more flow, but the Earthbox automatic watering system doesn’t work properly over 25psi, the caller could probably skip the pressure regulator and get decent flow rates for cleaning his veggies.

    Output from the filtered side isn’t technically potable so I have swimming pool chlorine tablets and an ozone generator which I will use if/when I need to drink the water.  I’d prefer to use the ozone generator but it requires power.  The chlorine tablets are my power-free fallback option.

    Optional: The caller could use an RO filter on the output side too.  If he wants bottled water quality drinking water, or excellent ice for his drink of choice 😉

  9. Jack, you mentioned that the dealership said they would give you $2000 when you turned in the 4Runner. Is this something they just offered to you? As in, “Oh by the way, when the lease is over we will give you $2000”. Or was it negotiated?

    • It was math, it was based on the value of the vehicle so long as we didn’t go over the millage, damage it seriously in some way and as long as we did all scheduled maintenance.  Which by the way 2 years of the 3 year term was maintenance included.  So for the first two year of service, we just dropped it off and picked it up and paid nothing extra. It was actually something like 2300 or such and that was the guarantee.

      However that was the guarantee, we ended up getting a bit more.  This was because were were meticulous in our care of the vehicle, did all the maintenance at the dealership and again they had our vehicle sold before we turned it in.  It is based on what you paid off (payments less interest) minus the value of the vehicle at the time you turn it in.

      Again this only works with strategically buying the right vehicle and your credit needs to be about perfect to get such a low payment.    And somehow my credit is very high in spite of not having a credit card balance in 12 years.

  10. Re: working remote – A few years back I decided I was tired of my current job, even though I was making decent money.  The 2 main reasons were my dislike of dealing with people and the 50 minute commute each way, as I really wanted more time with the family.  This was right about the time I started listening to your show, and also after our 3rd son was born.  I had a buddy who has worked in Web Design since the late 1990s and he worked from home and made fantastic money.  I spent a couple months learning very basic HTML and PHP.

    My wife decided to quit her low-paying job to stay home with the baby and I was able to convince my buddy to pay me to do menial, data-entry type work for him on a part-time basis.

    Fast forward 3 years and I am working not only 100% remote, but 100% FOR MYSELF.  I have clients, instead of a boss.  I see my boys all day long, can run out to work on the garden when I need to and could work from anywhere in the world, assuming I have my laptop and a decent internet connection.  My wife also has a successful cleaning business, including a couple part-time employees because she has more work than she can handle.

    None of this happened overnight, and even still it’s a struggle, as I constantly need to make sure that when one project is up I have another one (or 2) ready to replace that income.  We are finally getting to a point where we shouldn’t be worrying about how each bill is going to be paid but it’s taken awhile to get to here.

    For anyone looking into getting into programming the first thing I will say is it’s very difficult, so make sure you understand this will not happen overnight.  I thought I was a fairly intelligent person but I still feel like a beginner at times.  Also, I would highly recommend focusing on becoming a back-end developer.  This way there’s little chance of you getting competition from WordPress developers who are willing to work for $10 or less per hour.  Software, not websites, is where the money is.

    As far as other remote opportunities I know a teacher who made decent money working a part-time gig teaching English to Chinese children.  They used Skype or something similar to communicate with a room full of children on the other side of the planet.  How cool is that?

  11. Fire ants: When I lived in Waco, I decided to fight fire with fire and put cayenne pepper and chili powder in a quart of water, let it sit a short while, and poured it into the center of the fire ant mound.  I stirred the mound the next day and no live ants.  If they moved, it was not in our yard because we did not get any ants returning for a long time.

    Shredded tires as mulch: The hospital system I work at in NE Ohio used it once.  It smelled unpleasantly a lot when fresh and again when it warmed up.  After just a couple years it no longer covered properly and had to be replaced, happily not with more shredded tires.  I would never use it.


  12. On ants and bait…  We put ant bait around the house perimeter in plastic peanut butter jars with holes in the lid to keep the dogs and rain out of it.  Laid on their side, they work great. Of course, we don’t have fire ants yet…