Stomping Wine at Home

A friend started making wine at home and sent me the costs (see below). He expects the final cost to be $20-25 / bottle, so not really cheaper than buying wine at a store – and there is the added risk of finding foot-junk in the wine.

Sometimes, it is a lot cheaper to make something at home (i.e., bread), but this is an example where it’s not really the case. Ice cream is another example. I like to make homemade ice cream because I can overload on ingredients – there never are enough marshmallows in Rocky Road – but it is usually more expensive for me to make ice cream from scratch at home rather than buy it at the store.

Wine

• Cost of grapes at $2.40 a pound = $240
• Cost of food grade barrel = $40
• Cost of beer and pizza for friends = $80

Total cost so far: $360.
Expected future costs: $50 for corker + corks; up to $50 to rent wine press

Expected output: 20-25 bottles.

Cost per bottle: $20 – $25

Small updates

An update to a recent post about possible product placement in airline safety warnings:

Long-time reader Shannon talked to her mother, a United flight attendant, who said that this is NOT an example of product placement – it is a true safety concern. I still think that this is good advertising for Sony. If I worked in advertising, I would encourage companies to advertise their products in in-flight magazines if their products are mentioned in a safety announcement (i.e., Apple-iPod and RIM-Blackberry).

AmeriCorps update:

In my AmeriCorps position, I sometimes feel like Suze Orman on Oprah. Have you seen those episodes where Suze (and Jean Chatzky, among others) goes into someone’s home to tally up all of the her debt? Suze tends to yell at the people and tell them all the horrible things they’ve been doing. I feel like Suze without the yelling.

I spent a few hours this week reading a client’s bills to tally up all of his debt. Having sat down and done this with a person in real life, I think that the yelling on Oprah is completely unnecessary. Many/most people with significant debt know they did not make the best choices in the past and are ready to make changes.

Life on an AmeriCorps Stipend: Cooking Dinner

This year, Sept 2009 – August 2010, I am serving as an AmeriCorps member in Seattle. For my commitment of 18 hours/week, I receive a stipend below minimum wage. Way below minimum wage. About a third of Washington state’s minimum wage. My small living stipend is supplemented by part-time work and (hopefully not for too long) my savings.

Before grad school got stressful and I later took a job that required long hours, I used to cook. I cooked dinner several days a week and had leftovers for lunch most days. I had friends over for home-cooked meals. For the past three years, though, I hardly cooked except for a few dinners for friends and around the holidays.

With a limited budget and lots of time, I have returned to cooking with the attitude that I will make tasty and healthy food. I started with some meals from Real Simples – they have healthy and “fast” meals. “Fast” is a relative term – it takes me at least twice as long is claimed to make most recipes.

Last weekend, I made a shrimp risotto. The raw ingredients cost under $13, and it took me 1.5 hours to make it (not the 35 minutes that the recipe stated). Though $13 does not make a “budget” 4-person meal, I think it’s pretty reasonable because

* I like the shrimp risotto more than I would at any restaurant, because
* It’s not too creamy, and
* The shrimp to serving ratio is very high.

At a restaurant, I might get 3-5 shrimp in a shrimp-risotto entree. At home, I got 1/4 pound of shrimp with each serving. Portion sizes of expensive ingredients is a great reason to cook at home.

Have you ever ordered a pineapple pizza? At a restaurant, there might be 2-5 pineapple chunks per slice. When I make pineapple pizza at home, though, I pile on the pineapple and can still make a pizza for cheaper than buying one from a restaurant.

Of course, there is a trade off with cooking at home: the time and effort. If I later take another high-paying, long-hour job, I admit that I will probably cook less. For this year, though, I will enjoy making my own food and getting it exactly how I like it.

Product Placement Where I Don’t Want It

Long-time reader Shannon talked to her mother, a United flight attendant, who said that this is NOT an example of product placement – it is a true safety concern. I still think that this is good advertising for Sony. If I worked in advertising, I would encourage companies to advertise their products in in-flight magazines if their products are mentioned in a safety announcement (i.e., Apple-iPod and RIM-Blackberry).

This past week I traveled for a business trip and flew home on United Airlines from Washington, DC to Chicago to Seattle. It was a long day.

I noticed something funny at the beginning of the first flight. And then noticed it again at the end of the flight. And again at the beginning of the next flight.

Then I explained to my colleagues what I think happened: Sony paid United Airlines to plug their product in a safety warning!

People in the neighboring rows heard me, and I saw a few heads nod. The specific ad safety warning was not repeated at the conclusion of the flight. I wonder if it is because a flight attendant heard my observation.

Just before take off, a flight attendant usually makes an announcement to remind everyone to

• Return tray tables and seat backs to the upright position,
• Turn off all electronic devices, including laptops and cell phones, and
• That includes your noise-canceling headphones.

What? Remember to turn off your noise canceling headphones? I know *one* person who has ever bought noise-canceling headphones. I have never seen a plane full of people wearing them.

Flipping through United’s magazine, I came across a full page, splashy ad for Sony’s noise-canceling headphones. Sony’s name is not mentioned explicitly in the safety warning, but Sony has a large, well-placed ad in the in-flight magazine. Hmmmmmmmm.

It’s pretty clever of Sony and United to advertise in a safety warning, but it feels wrong. I want my flight crew to focus on keeping passengers safe – not on promoting headphones.

I haven’t found any news stories about this possible deal. What do you think? Do you think Sony found a new way to advertise? Or are there just a few creative flight attendants who like noise-canceling headphones? If you fly United soon, notice if you hear any special warnings.

Renting a ZipCar

For various reasons that I did not anticipate, I ended up in Seattle without my car. It is here now, thanks to my generous parents who drove it all the way from Texas.

Before I had my car though, I needed to get around Seattle to

• look at apartments
• go to job interviews
• transport my stuff between friends’ apartments

Seattle has wonderful public transportation, but it is still sometimes easier to have a car. That’s where ZipCar comes in.

ZipCar is a private company that buys/rents parking spaces around big cities and parks cars there. The cars are wirelessly connected to a computer system that tracks their locations and decides when to lock and unlock the doors.

If I want to rent a ZipCar, this is what happens:

1. I make a reservation online.
2. I go to the car’s location and tap my “Zip Card” on the dashboard. The doors unlock.
3. I hop in and drive away.

For occasional driving, ZipCar is an affordable option.

The fee for not returning a car is pretty stiff: $50 for being even a few minutes late. Obviously, for the system to work, people need to be able to count on a car being available when it is reserved. In a large city, though, traffic can be slow and sometimes unpredictable. I would hate to be late because I underestimated how long traffic would take.

This relatively large penalty creates the dilemma of whether or not to reserve the car for extra time. Initially, my impulse was to just add on an extra hour to each reservation (at an additional cost of $9-10 per reservation). But, that is equivalent to using ZipCar 5 times and being late exactly once. When in reality, maybe I wouldn’t have been late at all.

With my last two rentals, I added an extra hour to each, and each time, I returned the car 1.5 hours early – so I wasted almost $30.

On the other hand, while apartment hunting, I extended my rental by an hour in order to fill out a rental application. It is very easy to extend a reservation with a cell phone, as long as no one else has the car reserved already. If I had not been able to extend the reservation, I would have had to return the car, and then return to the apartment later that day or the following day – possibly missing my spot in line for the apartment.

A rational analysis of my past ZipCar rentals would say that it is better to just reserve the car for the expected time and to occasionally deal with late penalties. Despite having a Ph. D. in Applied math, I readily admit I sometimes do not make rational decisions.

Would you reserve the extra time with a ZipCar? Are there other situations where you’ve faced a similar decision?

Childhood lessons about money

Not infrequently, I read something about teaching money skills to kids. Since I do not have kids, I understand that some people may think I have no authority to talk on the subject. Having once been a kid, though, I can talk about my experiences learning about personal finances.

I have two distinct memories of when I learned something about money from my mom.

Back in the ’80s, my elementary school offered “spirit sweatshirts” for the price of $20. I came home and asked my mom for $20. She pulled out her check book and wrote a check for $100. She gave me the check and a note to my teacher saying something like this: “I’d like to buy one sweatshirt for Katy and four sweatshirts for other children in the school whose families cannot afford to buy them.”

I was so proud when I took the check and note into school the next day. It’s funny – I have no memory of the sweatshirt itself, only the act of charity I saw.

In the ’90s, my mom came into an inheritance and invested it in the stock market. I remember her reading the Wall Street Journal. She showed me how to read the opening and closing prices of stocks. I’m really glad she did that because otherwise, I might not know that once upon a time Yahoo! did not provide data on stock prices, and this information had to be found in a newspaper.

For a few days, I felt very important looking up quotes of my favorite companies in the WSJ.

In a recent conversation with my parents, I remembered a time when my dad scared me to death because of money. I had played Solitaire on the computer and “lost” a lot of money. I asked my dad if I would have to pay the money (several thousands of dollars), and he said “yes.” I was very sad and talked to my mom, who explained the situation to me. Maybe that’s why I don’t like gambling.

Renting an apartment

It is a lot more difficult to get an apartment when your monthly income is $250 than when your monthly income is $9K.

Potential landlords may say something like this:

• “Your income is xx?!?!?!?”
• “Maybe your parents could co-sign the lease.”
• “You only worked for 6 months? That’s not a long enough work history.”
• “I need to see official bank statements to ensure that you are not committing identity theft.”

While looking for an apartment in Seattle, I ran into one obstacle. My regular paycheck is now very small, in fact not even one third of what I will be paying in rent each month. This regular income is/will be augmented through some other part time work (that pays well hourly but is not guaranteed). Potential landlords tend not to like the sound of that.

But I did find an apartment that I think I will be very happy in (great location, on the right bus route, and stainless steel appliances). Despite the low salary, there were several things going in my favor:

• I have significant savings.
• Two people offered to co-sign my lease if I needed a guarantor.

Without those resources, it may have been a lot more difficult to get into an apartment that I liked. Without the savings, I do not think I would have passed a background/credit check; I probably still would have been ok because I could get someone to co-sign my lease.

In my recent move to Seattle, I only brought two suitcases, a laptop bag, and a bag pack. I left many, many things behind, including my checkbook. As I talked with potential landlords, not only did I have to report very little income, but also that I have to pay by money order. The potential landlords did not seem to mind money orders at all.

The USPS issues money orders up to $1,000, and it is easy to get three money orders a day. It is possible to get more than three a day, but more ID is required. To secure my apartment, I had to put down $2,200 (first, last, and a deposit). After ordering the three money orders at the post office, the friendly postal employee asked if I wanted cash back on my debit card transaction. I laughed and said “no.” She laughed and said,  “There’s nothing left!”

Who does that?

Most personal finance books aimed at 20-somethings talk about Alice and Betty. Alice saved money every year in her 20s and then stopped at her 30th birthday. Betty started saving in her 30s and saved until retirement. Who has more money in the end? Surprisingly, Alice (due to the magic of compound interest). But who is Alice?

Whenever I see these examples, I wonder why someone would stop saving – especially someone who had saved so diligently. Who is that person?

It’s me!

Today I took a half-time AmeriCorps position that pays less than $4 per hour. Though my savings rate will take a nose dive, my goal is to continue saving something. I am very excited about this opportunity, and I will tell you more about it as it develops – I start in a few weeks.

How would you spend $20 K?

Over the past year, each of my parents independently received about $20,000. This money was not included in their expected income for the year; they already had enough to cover all the monthly bills. They did not discuss their plans for spending the money together, and each  decided to spend (or has already spent) the money in a very different way.

My father received the money in regular intervals throughout the year. He took the amounts in cash and spent the money on groceries, gasoline, spending money on trips, and other household items. And, admittedly, he slipped some money my way, which I spent primarily on groceries and gas.

My mother received the money in a few big chunks and is using it to completely pay off their joint mortgage.

How would you spend an extra $20 K that was not expected and was not a planned part of your budget?

The Modern Way to Float

Decades ago, it was common to float a check. For my reader(s?) born after 1990, here are two examples:

• I go to the grocery store and write a check for $200, even though I know I only have $150 in my bank account. I expect to receive my paycheck tomorrow, so I can count on the paycheck being deposited before the grocery store cashes my check (it used to take several days to a week).
• Watch the Leonardo DiCaprio movie, Catch Me If You Can.

With the rise of debit cards and check scanning technology, the time between writing a check and the funds being withdrawn has shrunk from a span of days and weeks to a span of seconds and minutes.

The modern way to float a check is to use a credit card.

Credit card users fall into two buckets:

• “floaters” who use the card for its various perks (rewards, convenience, consumer protection, etc.) and pay the balance in full each month
• - “debtors” who don’t have the money to pay the balance in full each month

When talking with “debtors,” I have sometimes had trouble explaining how I use my credit card, but now I found a good way to explain it: I use my card the same way people used to float checks. For each transaction, I used to have a grace period of 2-6 weeks to pay for the transaction. With recent legislation (sec. 163), the grace period is now 3-7 weeks!