Tagged: personal finance

that time “custom” was cheaper

maggie-5I love my dog.

I really do.

But, she has taken a fancy to chewing on the corner of my foyer area rug.  In the four years we have owned our yellow Labrador named Maggie, she hasn’t chewed anything else it the house.  I think chewing on the rug is fun for her because it is a woven rug and every time she attacks it she pulls a new string out.  

We have repaired the damage to the rug a few times, but it is also threadbare and ready for replacement.

My wife and I have been searching high and low for a new area rug.  We don’t want to spend a lot of money in case Maggie chews on the new one as well.  We have looked at online stores like Overstock and Wayfair.  We have searched Ikea and Target.  

We have fairly specific requirements on color, pattern, and pile height and were unable to find what we were looking for.

When we felt like we exhausted all options online, we went to a local design center that specializes in tile and flooring.  

We searched all of the area rugs on display and still did not find any that we liked.

On the way out of the store a sign caught my eye.  We were walking through the carpet section and I saw a banner that said any carpet could be cut to area rug size!  Who knew!?!

We worked with a salesperson to find a carpet that met our design requirements and also our price range.  Most area rugs that we were looking at were 5×8 feet and cost between $225-300.

It was a great surprise that the cost of our custom rug would actually come in UNDER that price point!

When we ordered the carpet we need to purchase a 12 feet wide segment as a minimum and then 5 feet long.  The company will cut the correct size and then bind the edges at a cost of $2.50 per linear foot.  Since the carpet only cost $1.79 per square foot our total for the custom rug will be about $175 and we are getting EXACTLY what we want.  

Some of you might be wondering about the excess carpet that may be discarded in the process.  Well, we also have a need for a small rug in our mud room and we will have a segment of the leftover carpet bound for use as an additional area rug

I walked away from this experience with two takeaways.

  • Be observant, talk to experts, and don’t be afraid to engage in conversation.
  • Our world is designed for convenience and off the rack shopping.  There are still a lot of expert trades people out there.  If you find them you will probably be much happier with your end product.

Have you had custom work done recently?  Were you happier with the result like I was?

PS – The picture is “before”.

 

the sneaky “value inflation”

I remember it all started with ice cream.  

I picked up a container and although the price was basically the same, the quantity had been reduced from half a gallon to 1.5qt.  For my European friends that equates to a 25% reduction of product for the same cost.  Although the price didn’t actually rise, the cost per unit rose an astonishing 25% overnight!  This is the definition of “value inflation”.

Since that fateful day I have been noticing more and more instances of value inflation and it usually happens in the supermarket.  

My favorite brand of hot dogs only have 7 units per package, although most bakeries still package 8 buns.  

My favorite orange juice squeezed a full glass out of their typical package by reducing the typical 64oz bottle down to 58oz or less.

And in my opinion the entirety of Whole Foods participates in value inflation.  If you look at something packaged like potato chips the cost of the bag is not overly expensive, but then you compare unit cost and realize that the bag at Whole Foods may be effectively 30% more expensive than your Wegman’s market based upon the price per ounce. (Health and Organics notwithstanding).

The scary thing is that the government continues to tell us that inflation is below 3%.  We all know that the US Bureau of Labor Statistics (BLS) calculations do not reflect a true measure of how an average American spends his or her money.  Their calculations on core inflation leave out major areas of expenditures such as food or energy.

To get a different and perhaps more accurate view of inflation check out the Chapwood Index which claims to measure actual real life inflation based upon approximately 4000 items and expenditures that Americans deal with every day.

You may be surprised to find your real rate of inflation to be closer to 10% and not the 2% that the BLS keeps telling us about.

Inflation is all around us.  Some of it is obvious like taxes and healthcare but you also need to be aware of the hidden inflation especially at the supermarket.  Value inflation is just as impactful to your bottom line even though it gets a lot less attention.

refinance, reinvest, and retire

Refinance, reinvest, and retire

I am coming to the point in my life when I am working toward more aggressive financial goals in order to secure my retirement.  It is no longer enough for me to work and save and hope for the best.  I need to have my money make money.

I typically read a few financial books each year and the most recent one gave me a kick in the pants to get moving.  After reading “The Richest Man in Babylon” written by George Samuel Clason, I decided to take action.  Two of the most impactful lessons in his stories that stood out to me were to fatten thy purse  and make thy gold multiply.  I was already investing and saving a large part of my income so how could I do even more?

I decided to take advantage of historically low interest rates to refinance my primary house, which will reduce my payment by about $800 per month and help secure my future.  The refinance process went very smoothly and we closed using a notary/title agency at my kitchen table.

This monthly windfall will help give me the ability to build a portfolio of rental income properties.  I know that some of you may be yelling at your screen incredulously because some schools of thought teach us to pay down debt as fast as possible, especially our primary residence.  I look at it differently.  I see the primary home as a highly illiquid asset and I have no interest in aggressively paying it off.  I choose to trade interest payments for improved cash flow and opportunity.  When I combine the monthly savings plus the time horizon of 20 years to retirement, I can grow my wealth far more than paying off my primary mortgage.  The upside far outweighs the additional interest I will be paying over the term of the loan.

A wise man once said “If you think you own your home, stop paying property taxes and see what happens.”