How to Afford Anything
People ask me how I afford all this camera stuff. Easy: I beg, borrow, and sometimes even buy it. I certainly don't still own everything I've reviewed here since 1999. I've also had real jobs for many years which pays for what I do buy, and I live like a hermit otherwise.
That's the easy answer, but then I realized that I've always had a knack for buying expensive toys long before I'd ever had a job. Hopefully my cheapskate tricks can help you, too, which is why I share them here.
Our ability to buy expensive toys has nothing to do with how much money we do or don't earn. Like everything in life, it has everything to do with how well you use what you have.
I bought my first expensive single-lens reflex camera when I was an 11 year old kid. I saved my allowance, and still couldn't afford film. My dad was kind enough to buy me a roll every month or so if I was good.
When we were little kids, my brother asked my dad "How come Kenny always can buy expensive things, but I can't, and we get the same allowance?" My dad responded that it was because my brother insisted on going out and buying everything as soon as he wanted it, but that I waited, saved, and did my homework to find the same things for less.
Today that same brother, who has never had a real job as far as we know, has been traveling the world ever since he was in college. When asked how he does it with no particular source of income, he responds that "most people are too stupid to be poor." By that he means that most people waste what money they do have on stupid things, like new cars and eating in restaurants, and don't instead buy their food at the grocery store while traveling. He travels by carefully checking auctions for other peoples' unused weeks of time shares, so he will travel when he can bag a week in Paris or Tobago for just a couple of hundred dollars. He has to be ready to travel on a moment's notice when he wins these auctions, another advantage of having no real job.
When I was in college I bought one of the world's first digital audio recorders to record my music gigs. I had never had a real job in my life. This was in 1981, two years before the CD came out and back when digital audio was beyond the means of most professional recording studios. Digital audio recorders cost the same as a house!
I was 19. I bought the then-revolutionary new Sony PCM-F1, which sold for the amazingly low sum of $1,900 in 1981 ($4,400 in today's money). The next cheapest recorder had cost $50,000 the week before. I also had to buy a Betamax video recorder on which to save the data, an additional $1,100. Back in those days, VCRs were still as exotic as helicopters. This cost me a total of $3,000 in 1981 dollars, or $7,000 in today's money.
How the heck could I do that? For comparison, my car had cost only $650!!!
If a kid can afford toys more expensive than Nikon D3s, using their own very limited funds, anyone can.
Sorry if this article starts to read like a self-help video, but honestly, if you can't afford these things today, you're going to have to make some changes in your life if you want to. It doesn't take money. It takes the guts to be a cheapskate.
What I'll describe has always worked for me. I hope it helps you. Everyone's situations are different, but hopefully my skinflint lifestyle will give you the idea. This is all about prioritization and not wasting what you do have, so if you prioritize differently or enjoy spending money on something I consider wasteful, go right ahead. I certainly don't intend to offend anyone.
Cheap versus Frugal
I usually use the word "cheap" instead of frugal, but I mean frugal. I use "cheap" because it sounds funnier.
Cheap means buying something obviously crappy, and only stupid people do that since they usually cost themselves more in the long run. For instance, a cheap person hires the wrong person to do a job, and winds up paying more to have a competent person have to fix the damage done by the first workman. Cheap means giving your girlfriend flowers picked out of a funeral home dumpster, and leaving the wrong sympathy card attached to them, That's going to cost you a lot more than you just saved!
Frugality is entirely different. Being frugal means using your money well and not wasting. Being frugal often involves spending large sums on the right things, like hiring competent professionals to do a job, or buying a more durable, quality product that lasts far longer than a regular one.
Everywhere I use the word "cheap" below, please realize I mean "frugal."
Yes, as you may guess, I am part Scottish.
Half of being able to afford what you want is to spend your money on what you really want.
This should be obvious, but most people are suckered out of their biggest chunks of money by blowing it on the wrong things. People spend money on the wrong things because the people who take that money make it so comfortable and easy.
Never Buy a New Car
I've only bought one new car in my life. That was over 20 years ago.
When I sold it just a few years later, I had lost $15,000 in today's money. Wow. That was stupid! That was three exotic Nikons lost forever. I've never bought a new car since. Think I'm rich? Guess again!
Millions of Americans buy new cars every year. Every one of those people just pissed away much more than the price of an exotic new camera.
Sure, I drive a Mercedes. Actually, I drive two Mercedes! I bought my first Mercedes from a friend in 1992. It looked and drove as if it was brand new. I sold it to my insurance company a year and 12,000 miles later after someone drove into it for $1,000 more than it cost me. I made money on this deal, far better than losing $15,000 on my new Ford that I sold when I got that Mercedes.
I bought my second used Mercedes in 1993 for less than my sillier friends paid for a new Ford Taurus. All my pals thought I was loaded, since I was now driving what looked exactly like the new Mercedes you could buy at the dealer. Back then, Mercedes were still rare, expensive and exotic: my bottom-of-the line Mercedes sold new for the equivalent of $50,000 in today's dollars, and just like most Mercedes, looked exactly like the middle-of-the-line $80,000 (today's dollars) Mercedes of its day. I bought it after many months of searching for just the right one in perfect condition. I drove that Mercedes for 12 years and 80,000 miles, and sold it for only $6,000 less than it cost me! It still looked new, and the only reason I'm not still driving it today is because my vain wife wanted me to be in a newer looking car.
Today I drive a couple of shiny Mercedes. Big deal. Sillier people think I'm rich. One of my two Mercedes is a convertible that cost over $100,000 new, but for which I also paid less than everyone else pays for new Ford Taureses. I bought this convertible after I had been unemployed for over two months, hah! Guess what my convertible will be worth when I sell it? About what I paid for it. It's essentially a free car!
Maybe you can, but I simply can't afford to drive a Ford.
The people who want to sell you a new car do everything they can to make it easy to take your money. It takes a great deal of self control to resist. Let's face it: everyone deserves a new car every couple of years, and if you can afford it, why not? Simple: because it costs you tens of thousands of dollars that you could spend on more fun, or even on better cars if you do your homework and buy used.
I've never commuted by car.
Call me wishful, but I've made this happen by only applying for jobs in places near my home, or in places to which I'd enjoy moving. I would never apply for a job someplace in which I would not want to live.
I've always taken my bicycle, or walked.
Like many things, it takes longer to find something, but the savings and quality of life more than makes up for the wait.
Let's look at fast numbers. The shortest reasonable commute is 10 miles (16 km) each way. (Anything shorter is bad for your car, since it won't heat up all the way and boil off the water that condenses from the exhaust in your cold engine. This water dilutes your oil and rusts your exhaust. Engine wear is far, far greater in the few miles during engine warm up, too.)
10 miles each way is 20 miles a day. There are 250 work days a year, or 5,000 miles a year for commuting. At 50¢ a mile, the latest averages for running a car, that's $2,500 a year.
$2,500 a year???? Eliminate this expense alone and you just saved enough to buy yourself every professional Nikon camera as soon as it's announced! Honest–a new $5,000 camera comes out less than once every 2 years today. For instance, you could have bought yourself:
1957: Nikon SP
1959: Nikon F ($1,000 in today's dollars)
1971: Nikon F2 ($1,000)
1978: Nikon F2AS ($1,500)
1980: Nikon F3 ($1,500)
1988: Nikon F4 ($2,000)
1996: Nikon F5 (Less than $2,000)
1999: Nikon D1 ($5,000)
2001: Nikon D1X ($5,000)
2007: Nikon D3 ($5,000)
2012: Nikon D4 ($6,000)
This is easy. You can't spend $2,500 a year buying Nikon's top cameras even if you tried. Commute any more than 10 miles each way, and costs skyrocket. It costs an extra $250 a year for every single mile you add! Commute 40 miles each way, and that's $10,000 after-tax dollars down the drain that could have been used for toys.
But wait - $2,500 a year lets you buy and keep all these exotic new cameras. I don't know about you, but I dumped my D1H as soon as I got my D70. Sell each camera as the better one arrives, and you also greatly reduce the cost of buying them.
I once flinched when I had to spend a whole $40 for new tires for my mountain bike. I realized that if I hadn't been riding my bike to work, that I wouldn't have put all the miles and wear on my bike. Then I considered the cost if I had taken my car to work each day instead!
Another advantage of not commuting by car is the benefit to our environment. Buying a new Prius is the worst thing anyone can do for the environment, but it's exactly what big car makers want you to do. Car makers and tire makers and the oil companies want you to keep buying and using new cars. The last thing they want you to do is to do the healthy thing (take your bike,) which would make you stronger, fitter, better looking, happier and more resistant to disease simply by changing how you get to work.
Another advantage of not wasting your car to get to work is that you can have fun cars. Instead of being stuck in a boring commuter car for hours every day, you can get a real car worth driving. You won't be wearing it out. Heck; I honestly can't even remember when I last bought gas for any of the gas-sucking V8 hot rods sitting in my garage, since I drive them so infrequently. My wife's 521 horsepower twin-turbo V-8 minivan uses far less gas than any Prius, simply because she never drives it.
Don't Eat Out
I've never needed to budget because I've always been so cheap that I've never needed it.
In 2003 when I wanted to see if I could quit my real job to work on this website instead full-time, I for the first time mapped out every dollar I had spent the past year. I needed to see just how much it cost me to live.
I was amazed at how much money I spent at restaurants, and I rarely ate out. It added up to hundreds of dollars every month, and I usually cooked for myself!
Unless you're eating off the dollar menu at fast food (as I have always done), cook your own food!
Don't Buy a Big House
Live just a tiny bit below your means and you'll always have more money than you need. I always have been a cheapskate and always will be.
One rule by which I've always lived is that if you only spend 99% of what you have, you always have more money than you know what to do with. Heaven help you if you spend just a drop more than comes in, say 101%, because you now will always be in deeper and deeper debt. You're screwed!
I bought my first condo when I was 25. It was much less than I could have afforded, but so what: I'll be darned if I was going to spend money on a mortgage instead of enjoying life. I lived there for almost 20 years, and only left when my wife insisted I move into her fancy-dancy house. (Houses are her hobby just as I'm into photography, so she's had more nice houses than I've had cameras.)
My condo was so nasty that I cried when I moved in. It was awful, but it was a place I came to love as the years rolled on and I renovated it. It also meant I always had cash to burn on anything that really mattered. I also was where I wanted to live, far more important than in what you live.
But don't people always make money in real estate?
Yes and no.
After selling my condo of 17 years, sure, I sold it at the top of California's recent real estate bubble for four times what I paid. But wait: unlike a financial investment, I had to pay mortgage interest, taxes, utilities, repairs, homeowner associations and loads of other expenses. I added it all up, and I made an average of only 1% a year! If I wanted to make money, I would have been far better off putting that money in any bank savings account.
It's important to realize that the benefit received from owning real estate is being able to live in and enjoy that property. It is not financial profit, in fact, because so many innocent Americans people believed that real estate only goes up, many are now homeless.
Here in California in 2008, we see thousands of former home-owning Californians joining the ranks of the homeless as their adjustable-rate mortgages adjust to more then they can afford. Responsible salespeople would never sell someone something like this, but not all salespeople are responsible.
Just like the gigantic sales, advertising and marketing engines which make everyone buy new cars, real estate salespeople spend their lives trying to mortgage you to way beyond your means. It makes them more commission to sell you a bigger house than you can afford. Worse, if you get evicted after defaulting on your loans, real estate people earn commissions again in the foreclosure sale! Real estate salespeople, just like stock brokers, make money every time you do a transaction, regardless if you're wining or losing.
So yes, buy a house, but do it to have a place to live. Don't do it because you think it's going to enable you to buy more toys.
If you buy and sell often as my wife has, one learns never to sell in a down market. Rent your pad out and sell in a couple of years. Today, buy in California's imploding real estate market and hold until it comes back.
If houses are your hobby, as they are to my wife, go hog-wild. If you want to have fancy cameras and travel the world enjoying them, then get a decent condo as I did.
Patience and Diligence
I take a lot of time to find what I want to buy. I waited for over twenty years before I bought my first personal computer, since I couldn't bring myself to buy one knowing next week they would be better, faster and cheaper.
I only bought my first computer when I needed a Mac to develop this website back in 2000 when the sorry windows computers my employer provided wouldn't cut it. (If all you do are email and web surfing, all I ever used were my employer's computers. I wouldn't buy my own computer for anything that I could do at work for free.)
When I buy a used car or camera, I may spend months looking until the perfect sample appears. When it does, I jump all over it, but if it doesn't, I don't worry.
Sadly digital cameras don't work this way. I buy used lenses all the time, but would never buy a used digital camera. Digital cameras go obsolete faster than their used prices drop. I certainly would sell a digital camera as soon as I finished with it, since it's not going up in value!
Don't buy Retail
Ever since I was a kid in the 1970s, I mail-ordered and phone-ordered what I needed for less money and with better service and selection than any retail store.
Today, intelligent people use the Internet, and never buy at retail.
If you plan ahead so you can wait a day or two for everything from prescription medicine to cameras and lawn furniture, it's always a better deal with better service and wider selection and lower price to buy online — and it's far more ecologically sound than driving all over town looking for something.
The only reason to pay more for less at retail is if you're an idiot who can't plan more than a day in advance, and "need" something at the last minute.
FedEx makes a mint on people's procrastination, when they could have sent something two days earlier instead of having to pay for overnight today.
Think ahead, save money, and save the environment buy only buying online.
"A luxury, once sampled, becomes a necessity."
Don't try or borrow fancy stuff. The first time you touch that new camera, you're going to think you need and deserve it.
Rent or test drive a nice new car, and suddenly your perfectly good one seems crappy.
Stay in a really nice hotel once, and suddenly you think you "need" to stay in better places.
Don't do it!
If You Must Eat Out
I'm really cheap. I always order the least expensive thing, and skip beverages and extras. This sounds silly, but if you eat out often, simply skipping these high-profit extras can buy you an expensive camera in a few years.
I eat off the dollar menu at fast food. I don't get suckered into buying a drink or fries. I love the $1 double cheeseburger at McDonalds, but if I ordered a drink or fries, I just padded the bill up to triple what it might have been.
I always drink just water. I love water! Almost every fast food and real restaurant operates a water filtration system for all its beverages and cooking. When you order water, even if you order "just tap water," it almost always is reverse-osmosis filtered and tastes great. I'm a big fan of water and notice these things.
Always Check the Check or Register Scan
Always make sure that your restaurant check has the correct items and prices. About one out of ten times we eat out, someone has tried to cheat my wife out of a few dollars here or there. Don't be embarrassed to ask to look at the menu again: when we think the price for an item on our check is off by a dollar or two, it always is.
When checking out at the supermarket, pay attention to the register as it scans. Often my local Von's wouldn't bother to update the sale prices in their computers, so less eagle-eyed shoppers wouldn't notice that items were scanning at the regular price instead of the lower sale price posted in the aisles. Your county may vary, but here in San Diego, when a scan comes out at a different price than the price marked, you're entitled to that item, FREE. That's free as in FREE, not as in at the lower price.
A lot of people get ripped off by supermarket staff and management "forgetting" to update the sale prices in the computer system, but at least a few of us get freebies.
Be polite yet firm. The whole line will have to wait while they send another checker back to check the price on the shelf. Be sure to point out to the others behind you in line that you're all having to wait because it's the store trying to rip you all off, not because you are a problem customer.
This isn't the way to win favor among women, but it is a way to save money.
I've never paid for my girlfriends, but this was more out of bad upbringing than cheapness. I never knew better.
My wife has explained this to me today as something I'll need to know if she ever croaks, although of course we still both pay our own ways.
Live with Your Parents
I'm serious: This is what I did!
If you want fancy gear and don't make much money, don't move out!
I only moved out because I wanted a garage for my fancy cars, and mom and dad already filled the garage. I also wanted to move from New York to California, and that made it a clear choice.
My fancy car at the time was a 4-speed 455 HO 1970 GTO convertible which I was restoring. It was 14 years old when I bought it.
When I first started working after college, my pals all wasted their money on new cars. They all laughed when I started driving my pre-restoration $1,100 GTO to work, complete in varying shades of primer. They poked fun of me all the time.
I then drove my first parts-getter car, my $650 1974 Plymouth Duster mentioned at the top, to work for the next few months while the GTO was in the body shop. When I drove my sparkling-new white GTO, complete with brand new bumpers and chrome to work, they all presumed I had buckled to pressure and bought a new car, but since this was 1985, they had no idea what the GTO was.
When I explained that it was the same crappy dung-heap I was driving a few months earlier, but now restored externally, they then all changed their stories to "Oh, we always liked that car." My hot-rod cost me a third of what they paid for their forgettable Japanese appliances, and what do you think a 1985 Civic is worth today compared to the GTO?
I sold the GTO in 1986 when I bought my new Ford Mustang GT convertible, which was much faster, but cost me dearly as you read above as my only new car ever. My excuse was that it honestly was the first new car in 15 years that had genuinely high performance as the first car to be designed to work well natively with all the emissions controls.
By living with my parents I saved gazillions of dollars, which let me buy whatever toys I wanted. Unless I was getting married or buying my own place, this is a huge money-saver.
Don't Buy on Credit or Take out Loans
Only buy what you can afford. Don't buy anything until you have the cash to pay for it.
Half of America doesn't get that, and spends all its money barely making the minimum monthly interest payments on their credit cards each month. GAG!
This is awful. Few people have enough self control not to spend. We get all the pleasure by whipping out our card and satisfying ourselves today, while the payment part is way off in the future.
Sadly this is the genius plan of credit card companies, for whom your 30-day future becomes every day for the rest of your life making interest payments. They want you to get in so deep you'll never be able to get out!
When it comes time to pay, VISA or Mastercard doesn't want your money! They want you to make the bare minimum payment and get in deeper. They love charging you far more interest than any other loan would. The credit card companies collect 18% interest from you, while the money they loan to you costs them only a few percent.
They easily take in 10% profit per year from you on every dollar you have racked up.
They love it when you max out your cards and have no possible way to pay off the balance. This is the slavery condition in which they would love to have every cardholder. That's why they give away cards like candy, especially to students and other people they know can't possibly pay them off.
The few people that they do break (bankrupt) aren't a concern. These companies make so much money on the other people that it easily covers the defaults.
Don't let this happen to you. The only way to use a credit card is to pay it off in full each and every month. Never buy anything for which you don't have cash ready to pay the bill when it becomes due. I always have, and have never paid one penny of credit card interest my entire life! Credit card companies have a insiders word for people like me: freeloaders. Tough, call me whatever names you want, I'm not going to fall into their credit-card Hell.
Never, ever use a credit card for credit, simply because the interest rates are too high. If you need a loan, go get one, and pay it off fast.
If you can't afford it, don't buy it. That's the most important rule here.
Read and Understand the Fine Print
You can screw yourself with variable-rate loans. When I bought my condo in 1988 I had an adjustable rate mortgage (ARM) at 13%. It could adjust up by up to 5%, but it never did.
If it did, my rate would have been 18%. Not good, but not catastrophic for me since before I signed any papers I made sure I could pay my mortgage even if it hit 18%. My payments would have been less than 50% above what they were at the start.
People are defaulting on loans and becoming homeless today in California because they were stretched too far by shifty short-time salespeople into ARM loans at 3%. This was great and helped them to qualify, and if the market only went up, all would be fine since if they really got tight they could sell their home for a profit.
Of course the market also goes down. These recent ARMs also had adjustment caps of about 5%, but that means that the interest rate could adjust from 3% to 8%. Whoops! That means that the monthly payment could more than double. People, already stretched too far, can't find two or three times as much for their monthly payments, and are evicted from their houses which are now worth less than the paid. Whoops! The people who sold them these loans probably never explained that part!
I've never rented a house or apartment. Whenever I've moved to a new city I've always just rented a room in house from the owner who also lived there, even when I had real jobs that paid me six fat figures, before I bought something myself.
Rent is money pissed away and never seen again. If you have a good time or it's a business expense which makes you more money, great, but if you want to have more money than you need, this is not a good idea.
Renting a room is cheap. Renting an apartment. or a house is serious money never seen again.
It costs about $500,000 - $1,000,000 to produce a network TV spot, and at least $10,000 to broadcast it each and every time you see it. If it's network TV, it costs at least $50,000 to air it each time, and if it's the Superbowl, it might cost another $500,000 just to broadcast it again!
Print ads? Last I looked in the 1980s, it cost $10,000 for a full-page ad in a typical trade magazine, and a lot more in a widely-read consumer magazine.
Who pays for all this? Doesn't the company pay for the advertising? No! It's the people who buy the product!
While the company may write the check to the TV network, the only money any company has is from the people who've bought its products. When Toyota spends a BILLION dollars in just three months to pitch its new cars, it's the people buying the new cars who are paying for that - not Toyota. Jeeze, as I write this, a Toyota ad just popped on my radio!
If you buy anything you see advertised anywhere, you are paying for these advertisements!
Instead, buy another brand you haven't seen advertised.
I won't buy a Montblanc pen (get Waterman instead), and you certainly don't want to buy a Rolex or Breitling watch. I wear an automatic mechanical Swiss Mondaine watch, which after owning it for twenty years still keeps better time than the COSC chronometer standard, (COSC is also just another marketing ploy).
Do you think watch brands using my money to sponsor air races or yacht racing does anything to build me a better watch? Absolutely not.
Why do sports greats make so much money? Sponsorships. What's that? That's when Nike or whoever pays money to someone to wear their shoes or wear a hat with their logo on it. These players get paid not to play, but to be seen wearing the gear. Tiger Woods made over $50 million dollars in a year even after he fell out of the public eye. Who pays Tiger $50 million a year? People buying Nike shoes, not Nike.
There is almost always a better alternative to what you see advertised, but obviously it may take you a little while to discover the just-as-good or better brands. I prefer brands that use my money to make me a better product, instead of using it to buy advertising or sponsoring fluff.
Only brands with similar competition have to advertise (Coke vs. Pepsi, Toyota vs. Honda, Chevy vs. Ford, etc.) Brands that stand alone, like Ferrari, don't need to advertise, so you never see Ferrari ads. Back before the 1990s, you never saw Mercedes ads either, because a Mercedes cost three times what a normal car did, and everyone already knew they were the best. We only see Mercedes ads today because they are about the same as everyone else; not three times the price.
In the case of cars, the ads are for new cars. Buy a used car from your neighbor, and he paid for the ads, not you.
Don't Worry About Being Embarrassed
The people who want to take your money want to embarrass you into paying full price, embarrass you not to use coupons while out on a date, embarrass you into not wanting to make returns or ask for a deal.
I find it far more embarrassing not to be able to afford something I need because I was too weak to stand up for myself in front of strangers. Do it.
Don't Worry About What You Own
Rule one: How rich you are is determined by how much money you have, not by what you own.
What you own is how much money you've given away to others! Once you've bought this junk, you no longer have your money.
I like nice cars, and work on them as my hobby so they don't cost me anything as I've explained above. When one group did a survey a few years ago, they discovered that the most popular car owned by millionaires was a Ford. Why? Simple: the people who still had and grew their money didn't waste it on luxuries to show off. All showing off does is make others spend more effort trying to scam you.
Don't be Afraid to Ask for a Deal
Americans are the only people on the planet who walk into a store and pay the price on the sign.
My wife and I always ask for the deal. I've gotten price concessions even at Sears! I love my wife because she is such a deal-getter. I couldn't afford not to have her, for instance, last week she haggled a mattress store down to half of their bottom-basement posted sales price on a floor sample! She paid about one-third the new sales price of the item. Few Americans have the mettle to haggle as well as she does.
Deals happen when you're the only buyer, usually for oddball stuff like floor samples and slightly-damaged or discontinued merchandise. We also shop bad neighborhoods, where we can get deals on premium merchandise that won't move in the disenfranchised areas.
We love Wal-Mart and Costco. They have the best prices on almost everything. We're not afraid to admit it; we think people who shop boutiques to buy the same things in fancier surroundings are stupid. Now that we've been so cheap for so many years, we own far more fancy stuff than our vainer acquaintances who threw their money away.
Deals don't happen for new, hard-to-get items for which there are waiting lists, like new digital cameras. People offering deals on these are scams.
My favorite book about getting a better price anywhere is Herb Cohen's classic You Can Negotiate Anything. This $8 book has saved me tens of thousands of dollars. For instance, it saved me $20,000 on my condo back in 1988 when I made a ridiculous offer, and the seller took it! (I didn't pay $8 for the book; I borrowed it from the public library for free, and later bought a copy for $1 from their discard rack.)
Return What You Don't Want or Don't Need
I return what I don't need. It's always a little embarrassing, since stores don't want to take your returns and most people are too shy to admit they screwed up.
I've returned a $50,000 BMW after 9 months for full price, and my wife, the "Return Queen," not to be out done by an amateur like me, once returned a $2.8 million dollar house.
The BMW, used of course, had been damaged by the dealer after I bought it. It took nine months of persistence, but they took it back.
Warning: It is fraudulent to buy something with the intent to return it when you are finished using it. Return-fraud costs retailers billions of dollars each year. The losers who used to kid about "renting" a camcorder from Circuit City have now made it more difficult for the greater majority of real customers like me to return something that genuinely needs to be returned.
Only Buy from Stores that Give Full Cash Refunds
I've been buying from Adorama and B&H since the 1970s not only because they have the best prices, but also because if something doesn't work as well as I'd like it to, I can return it for a full refund.
I never get stuck with something that doesn't measure up to the expectations set by advertising.
If a store charges restocking fees, avoid them.
Of course the places that do offer refunds require you return the item exactly as you bought it. I never throw away my boxes, and in fact have never even opened the printed manuals and software for my years-old Nikon D70 with the view of eventual resale. (I get all the software and manuals online.)
Do I use coupons at restaurants? Yes! Did I use them when I was on dates? YES! Would I use a two-for-one coupon for the $1.50 hot dogs at Costco? YES!, if they offered them.
I have a pal who retired from being very high-up in one of San Diego's largest businesses. We never chatted about it, but since most rank-and file employees there had been multimillionaires from stock options for many years, and he was there for decades longer, for all I know, he's a billionaire.
One time we set up a double-date, and he asked me "are you far along with this girl for us to use coupons?" I busted out laughing, and pointed out that I used coupons on the first date!
An even better story was from a friend who was out golfing in Arizona. A weird little old guy who looked vaguely familiar came up to them, and was all excited at the coupon he had just used to save $10 off his greens fee. He was so excited and friendly he offered them a couple of the extra coupons he had. They thanked him and didn't think much of it until they were reading the paper a few days later and recognized a picture of the funny old guy. He was a local billionaire!
Don't whine to me if you think coupons are below you. They are only below me when they take more time to collect and manage than the money saved.
I use coupons because I like to keep my money. It impresses no one if you're silly enough to throw money away that you don't have to.
Investments versus Expenditures
Some things, like cameras and houses, can be resold. Their real cost is what you pay minus what you can get for it later.
As you've seen, I'm crafty enough to drive my Mercedes for free, since I spend a lot of time finding used ones in new condition and keeping them that way.
Otherwise, cars are always an expenditure. Beware some car makers that lie to us pretending that buying a car is some sort of financial strategy: it isn't.
Cars are always an expenditure. Even though I often don't lose anything selling a car or motorcycle (I sold my BMW motorcycle 20 years later for exactly what I had paid for it), I enjoy my toys and expend considerable energy on their upkeep and finding them in the first place. This harkens back to what my dad said about me doing my homework: doing homework costs time.
Cameras can be almost free. My friend, humanitarian photojournalist Karl Grobl, first observed this a decade ago when he sold his Nikon N6006 after a few years of hauling it all over the world and getting a huge amount of use out of it. It was expensive when he bought it new, but he sold it, after much use, for not much less than he paid for it. After that, he realized that cameras, especially if you use them to earn your living as he does today, don't cost much at all.
Karl also was smart enough to invest in lenses, not cameras. The N6006 was a cheap body, but he used the professional 80-200mm f/2.8 and 20-35mm f/2.8 lenses with it, which he used with his next Nikon, and would still work flawlessly today on the D3.
See also Lenses vs. Cameras: Where the Smart Money Goes. Digital bodies are always a bad monetary investment, and lenses are almost always good long-term photographic investments. Where you spend you money is all about your prioritization; see also Is It Worth It?
Always Think Long-Term
The best way to get poor is to buy everything now, without considering its long-term impact on your finances.
The very best way to get poor is to do all this on credit cards, which puts you on the fast track to credit-card slavery.
When you consider spending money on something, ask yourself how much money you can get out of it later when you don't need it. Buying quality things have real value if you want to sell them later, while buying merely "good enough" probably means that it won't have any value later.
Buying quality means you won't have to replace it in ten or twenty years. LEICA cameras are expensive as heck, but as LEICA truthfully advertised in the 1950s, a LEICA camera is a lifetime investment in perfect photography. I'm still using LEICA cameras from the 1950s, and they work great!
Remember in the bible where Esau sold his inheritance to get a bowl of soup? It is stupid to sell something of eternal value, like real estate, to pay for something fleeting, like repaving a parking lot or buying a new car.
This is one of the many ways that smart people get richer, and stupider people get poorer. There are always smarter people waiting to take valuable things in exchange for trivial payments that seem more important to people with short-term outlooks.
If you enjoy something so much that you're wiling to sacrifice other things, go for it. If not, don't fall prey to addictive drugs used to keep you buying products you don't need.
Playing stocks, bonds and institutionalized financial investments is just Las Vegas for the middle class. Exactly like Las Vegas, the only people who win long-term are the salespeople, who call themselves things like "brokers" and "financial consultants."
All the rich people I know are honest, and admit that they've only lost money in the stock market, long term.
Just like Las Vegas, most people are always bragging about how much they won on one day, but will never tell anyone about what they lost another day.
I made over a million dollars in the great tech stock run-up from the 1980s through the great NASDAQ crash of April, 2000. That is, I would have made a million dollars if I has sold just before the crash on 15 April 2000.
I didn't, and the entire NASDAQ crashed from 5,700 to about 1,700 in a few weeks. I lost everything I had put in. Everything. I lost all my fun money that I had set aside for about 15 years. It's all gone, forever. I never collected the million dollars; all the stocks I owned became worthless and I was out everything.
If the NASDAQ only crashed to 1,700 from 5,700, how could I have lost everything?
I never realized it, but the Dow Jones, the S&P 500 and the NASDAQ are all "cooked" numbers. They are not the "market," but instead merely averages of whatever stocks the creators of those numbers (Dow Jones or Standard & Poor's, etc.) choose for their indices to keep the "market" looking good to attract unwary investors.
When Kodak was a strong company, it was part of the Dow Jones Industrial Average (DJIA). As digital replaced film, Kodak died, and was removed from the DJIA index in 2004.
Market indices therefore overrepresent the markets, since these indices are chosen to include only the best-performing parts of the markets they claim to represent.
As I learned all too hard, even though the NASDAQ index only crashed by 70%, the stocks I happened to own went down by 99.9%. My stocks were traded on NASDAQ, but were not part of that index.
All I lost was everything. Even stupider people borrowed money from stock brokerage houses with which to gamble, and wound up owing money they never even had! This is called "buying on margin," and when things go south, can leave you in debt to the brokerage houses to whom you had done nothing but give money for years!
Over long periods of time, which are the only time periods that matter, market indices do not represent the markets which they claim to represent. They overrepresent the returns from that market.
Even if indices were honest, let's be even more honest. The DJIA was 11,000 back in 1999, and today in 2010, it's even less. Your stocks have probably done worse.
Stocks only make money for the people selling them to you. People love to gamble, and the house always wins.
I once got 20 minutes alone with the Chief Financial Officer of the multi-billion-dollar corporation for which I used to work. He had just given an hour-long presentation on how he presented our corporation's NYSE-traded stock to make it look good to the institutional investors to whom he tried to sell our stock. He was talking about things that I, as an investor with decades of experience, had never heard. He was big-time, knowing kinds of numbers and ways to evaluate, analyze and present stocks to the fund managers at places like Fidelity, who invest by the billions of dollars.
When I asked him how I could have made such great returns on my own portfolio for 15 years (I turned $100,000 into $1,000,000 in 15 years), and then lose everything (back to $0 in 15 days), he knew exactly what happened.
He told me that, just like Las Vegas, I wasn't all that smart, but that I had had a lucky streak. Everyone gets them, and starts to feel smart. When things go the other way, these people, like me, never even know what hit them.
He then went on to explain how the stock market is all a competition where the smarter people take money from the great majority of more gullible people.
The smarter people are the fund managers at major institutions. These guys have PhDs from Yale and Harvard in Economics, and earn seven and eight figure incomes precisely because they are smart enough to outsmart everyone else, long-term.
It's not that difficult to outperform the market for years on end. Some people are just lucky. I did that.
The smarter guys are those who can outperform the market for decades and decades at a time, and not go negative.
These guys are few and far between. Everyone else, meaning me, are among the stupider people whose money pays these smarter guys.
My brilliant CFO colleague, who knows every in and out of the stock market, confided that unless you're good enough to outsmart these other guys, that if you buy individual stocks, you will always lose against them, long term.
If my CFO colleague won't buy individual stocks, even though he knows every possible in and out, then what was his advice to me? Pick a mutual fund managed by a good institution (like Fidelity or Vanguard), and stick with it. Even more enlightening was him explaining that past performance really has nothing to do with the future, so it didn't really even matter which fund you chose! He did the same thing; he wouldn't buy individual stocks with his own money.
The stock market, or indexes and mutual funds, usually only make money for the people selling them to you.
The rich people I know play the stock market as they'll play Vegas: purely for fun. To make a profit, they invest their money in something they can control: their own businesses.
The reason you never hear any of this in commercial media is simple: the stock brokerage houses pay a lot of money to advertise. You'll never hear the truth that giving them your money is about as unprofitable as a trip to Vegas, just slower.
Flashy stock houses, just like flashy Las Vegas casinos, fund all their fancy buildings from the profits then take from gamblers.
If you do invest in stocks or companies, don't invest in your employer's company for retirement. If they go south, not only have you lost your job, you lose your nest egg at the same time.
Many Americans each waste many dollars every day on products laced with addictive narcotics.
Caffeine is an addictive drug called 1,3,7-trimethylxanthine by scientists. It has the same effects and addictive qualities as its sister drug, cocaine. Coffee and cola products come from the same fields in Central America. Coca-Cola is named after the first four letters of cocaine.
Caffeine is added to products to addict us to ensure we keep buying more. As I recall, Consumer Reports drove across to Canada and bought some drug-free versions of cola products. CU then ran taste-tests against the dope-laden American versions, no one could taste the difference in blind tests!
Please forgive my self-help tone here, but I prefer to wake up before dawn and get plenty of sleep.
I'm always loaded with energy precisely because I don't drink Coke or Pepsi products during the day, and I certainly don't drug myself with coffee in the morning.
I love the taste of cola. When I've drunk it for lunch, I get the high from it that afternoon, but it's harder to settle down and get to sleep. When I try to get up the next day, I'm tired from less sleep from the night before. By lunch the next, day, the best-feeling thing to do is drink more Coke or Pepsi to jolt myself back up.
Most Americans do this to themselves every morning with coffee.
When I enforced my own ban on caffeine, after a day or two I was astounded at how much better I felt. I pop out of bed before dawn raring to go, and I fall right to sleep at bedtime. I get far more done, and feel far, far better.
If you save $5 a day by skipping a latte, you'll feel better, make more money, have more fun and save almost $2,000 every year. I don't know how much Starbucks actually charges for each dose, but give it up for a couple of years and you again just paid for a free new exotic camera.
I won't even go here. You people know who you are.
I have a friend who beat her addiction simply by stopping and toughing it out. She is from Texas; I don't know if mere Americans are tough enough to beat nicotine this way.
Government isn't here to help you. The only way to beat this is on your own.
If big business has its way, which it usually does since those with the gold make the rules, business will suck every penny you have out of you until you can't earn any more and are left dead or dying. This is the way a competitive economy works: there are winners and there are losers.
The great thing about America is that anyone who wants to can achieve anything, limited only by their imaginations, but the bad thing is that those who just want to slide along in life usually slide off a cliff to the benefit of those who are paying attention.
I spent decades working in television, but I haven't watched TV since the 1960s. It's like people who work in a rat poison plant: they would never actually eat the product themselves.
Watching television makes you stupid.
More serious than long-term stupidity is that you fall behind when you waste your time watching TV or playing video games. For every second that one person wastes watching TV, another person is using that same time learning or doing something productive. In a free economy, life is a race. If you're not moving, you're falling behind.
When I was seven years old I realized that although I enjoyed great shows like "The Beverly Hillbillies," "Star Trek," "The Munsters" and "Get Smart," that watching them wasn't making me any smarter or more interesting.
Today's TV is far worse. Just don't watch TV, and that goes double for PBS. PBS makes you just as stupid, even if it lets you pretend that you're smarter than other people. If you enjoy comedy as I do, go watch one of those shows I mentioned that we all considered stupid back then. By today's standards, they are fine classic theater. They have intelligent humor, plots and real storylines that make it through the entire show.
I'm serious about not watching TV. I haven't owned a TV since the 1960s.
If you must watch TV, watch kid's cartoons. Kid's cartoons still have plots and characters. Try Sponge Bob and The Fairly Odd Parents.
Forget Extended Warranties
In fact, forget any sort of insurance for any loss you could cover out-of pocket.
It always costs more to pay money into a system, have them manage it, and hope that they pay out when needed.
Extended warranties on electronics are always just to make more money for stores.
Personally I love getting the factory extended-warranties for my Mercedes, but that's because Mercedes really does stand behind it, and the presence of a factory warranty makes a car very easy to buy or sell. It makes me feel good, but costs me more than paying for any repairs if needed.
When I bought my own health insurance, I had a plan that was inexpensive, but had a $5,000 annual deductible. If I had a serious problem, I could find $5,000. I saved about $3,600 in annual premium (I paid $300 a month less for this insurance) by not having a small deductible, and always came out ahead. Never ask an insurance company to pay something you could afford to pay for yourself. You pay heavily for that privilege, if they pay out at all.
If you have your own business, then taxes may change this. Ask your accountant, not me.
The Poor Man Pays Twice
If you really want something, buy it, or wait until you can.
Don't buy something that isn't what you really want. If you do, you'll keep dreaming about what you really wanted, and eventually get it. When you do, you've just paid twice.
Worse, as mentioned at the top, if you have a job done by the lowest bidder, you're going to need to pay the highest bidder double to fix the damage done by the first guy.
I always tip big. Anyone who is helping me out and to whom I don't have to pay anything deserves a huge tip.
Tipping isn't an expense: it's an investment in good times for all. If you can afford the service, then you can afford an even fatter tip.
If you're on expense account, tipping costs you nothing: you're tipping with other people's money.
People who receive tips almost always appreciate the tip far more than you do, effectively magnifying your money. When I drop a $10 tip on a $40 meal, that $10 means more like $20 to the server. I've turned $10 into $20. You can't afford not to tip.
Single guys: women don't give a crap what kind of car you have. They don't even know what it is, besides the color. They do look very closely at how you tip. They look closely because it tells everything about your character. Since tipping is optional after a service is rendered and after the person providing the service has no way to get you back if you don't tip, the fact that you tip big or small is far more important than your weiner. A Porsche tells every woman that you're a little short in some areas; a big tip just made points. (Not that I really know any of this stuff about women!)
Tip big. When you get to apply for entrance into Heaven, your tipping records are among the first things reviewed. They are reviewed for Christian Heaven, Hindu Karma, and probably every religion on earth. Tipping is always a great idea. Some things are more important than saving a few bucks now - stingy tips are always a bad idea.
If you can't afford the tip, then you can't afford the service. Stay home and go out when you can, which saves even more money.
If service sucks, which it rarely does, hold back, but be sure you give what you held-back to the next person you tip.
This isn't about marrying someone rich–that's marrying well.
Marrying smart means to marry someone as cheap as you are.
Your woman is always in charge. If she's as silly with her money as most people, after you're married, you can forget about having any money ever again.
A woman's job is to spend your money. If she hasn't shown that she can spend her own money well, she certainly won't spend yours any better.
I got lucky with my wife. She's even cheaper than I am, but she's rare.
Want to know how cheap she is? She hates flowers because she can't bear knowing that they die in a week and then the money is gone. She'd rather just have the money. I sometimes leave a $20 on the counter. When she asks "what's this?" I respond "flowers." She then gets all smiley. Marriage is weird.
Don't Have Kids
I won't go here either. Kids today are an expensive luxury. It's not 200 years ago when we all lived on farms and needed them to help with the milking.
Not only are they scaldingly expensive, they are the root cause of all pollution and environmental destruction.
Think about it. Do you have any idea from where more people come for whom we need more oil and for whom we need to bulldoze more virgin landscapes to build tract homes for them to live and raise more kids?
Sure, my kid is special: it's not my kid, but everyone else's kids that cause pollution, poverty, shortage and crowding. Think again.
Kids go far deeper than the thousands of disposable diapers each consumes. The worst environmental crime any individual can commit is making more people. Sure, my kid might cure cancer, but we are up to something like 7 billion people on this planet and no one's kid has cured it yet. My kid is far more likely to degrade your environment and cause more cancer than he is ever likely to cure it. Isn't hope grand?
Even more expensive than the monetary cost is that they consume any time you ever thought you might have to better your personal and professional development. They are far worse than watching TV.
Ever wonder why half the ads on TV are for baby stuff? Because half our economy goes into paying for that baby stuff.
Sorry, Ryan, I said I wouldn't go here, so I won't.
How to Make Money
I saved this for last because how much money one makes has nothing to do with much of anything. In fact, I had a lot more fun when I made a lot less money. When you have a lot of money, it's a pain to deal with. Jesus wasn't kidding when he told us that the way to Heaven is to sell all your crap and give it to the poor.
As you may have noticed, I would probably scrape along just fine with no money at all. I've only worked real jobs because I've enjoyed them, not because I owe anyone anything. As I've said, I quit my last real job in 2004 so I could piddle around on this website full time instead of working for a living.
Don't Become a Photographer
According to Education Portal in 2002, the average annual salary of people employed as photographers was $24,040. See more about why becoming a pro photographer is a bad way to make money at How to Go Pro.
Gag! If you want to make real money, get a real job. That's how I have always afforded everything!
Go to College and Get a Real Job
In high school, I wanted to graduate and become a photographer, a musician, a radio/TV broadcast or studio design engineer, or a music recording studio recording or design engineer. In high school I already had the skills to make good money doing any of these.
My dad, who had a real engineering degree, advised that no matter what I wanted to do, that I invest a few years in a real 4-year engineering degree. This is because, regardless of what I eventually did, I'd get paid double simply because I had the degree.
I really wanted to start making the big money immediately and skip college, but I knew my dad was always right.
I got my real BSEE degree at a real four-year university.
Dad was absolutely right. I made far more than I had ever dreamed.
Even if you skipped college, I suggest doing whatever you have to to get your degree today. I think it was my uncle who decided to go off and earn money right out of high school, and then had to spend many more years of night school getting his real degree. It took a long time, but it was worth it.
In America today, unless you're running your own business and really good at it, a minimum of a four-year college degree is mandatory if you plan on working for anyone else and making decent money. Do whatever you have to to get it. Never give up!
Go to College and Go Yachting!
Luxury yacht captain Tedd Greenwald wrote me to share his hot tip for the new millennium.
He says the real deal now is get your 4 year degree then take a job on a big yacht as a mate. You will start at $60K/year (tax-free take-home) with room, board and uniforms included.
Get your captain's ticket in 2 years with some course work and sea time. Entry level captains now start at $90-120K/year, and the work is tons of fun, presuming you enjoy always being in the sun with lots of girls in bathing suits. Do this when you're young and in 10 years you should have been able to save $250K and blow the rest on motorcycles and stuff. It's the best deal going.
The captain who wrote me is on his 8th year. Pro photography is not a good way to go. Working pros can't afford the really cool gear like they can.
In 2008, 916 verified yachts over 80 feet are being built, up from 777 in 2007 and 688 in 2006. Are you seeing the trend here? The demand for crew is causing a "crewing crisis."
The captain is very happy with his 6-figure income. Look on Craigslist. You find up-and-coming high school kids with D300's advertising to shoot your wedding for $100, and they are pretty good! Screw pro photography. While you're young, get aboard the gravy train of big yachts. We don't have enough crew for the boats, plus fields that service boats like air conditioner repair, watermaker technicians, painters, welders, professional chefs are all in serious demand. Haul your butt to Fort Lauderdale or Monaco. The Caribbean is better when you come home with a ton of cash. Just don't buy your camera gear down there, get it from B&H.
Thus spake the captain.
More Information: Kinko's founder Paul Orfalea linked to this article from his personal blog article Rainy Day Role Models. I agree with him that even I don't agree with everything I've said above either! Reading Paul Orfalea's Blog I find it loaded with great stuff – much better than what I write. Check it out.
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