Knowledge is Power

If you know how electricity prices vary over time, you may be able to use this to save money.

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The Theory

The electrical utility system is designed with a certain base output power that is sufficient to meet the demand for electricity almost all of the time.  On hot and humid August afternoons when everyone is blasting the AC on high, electricity demand may spike above what the base capacity can supply.  The utility company then has a couple options:

0) Do nothing.  The grid line voltage will drop, a state called a 'brownout'.  This may successfully reduce power consumption, but it could also cause some types of equipment to malfunction or sustain damage.

1) Manage demand with rolling blackouts.  Demand is pruned by cutting off power to some areas of the grid; which parts are shut down is 'rolled' on a schedule, announced ahead of time if possible.

2) Supplement the base supply with additional power by activating 'peaking plants'.  These power plants may use designs that are less efficient and cost-effective than the base supply plants, but they can be quickly switched on and throttled, like a jet engine, to match fluctuating demand.

And last, but not least:

3) Manage demand with good old economics.  If the utility company can collect time-of-use data with a smart meter and consumers are informed ahead of time that the price of electricity will be higher on certain days ('critical peak pricing') or at certain times of day ('time-of-use pricing'), they may adjust their behavior and temper peak demand.

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In Practice, with Pacific Gas & Electric

If you are one of Pacific Gas & Electric's 5 million+ electricity customers, you can take advantage of two peak demand reduction programs: the SmartRate Add-On and the Time-of-Use Base Plan.  I started taking advantage of these last year and it saved me 30% on my summer power generation costs.

A lot of the advice you'll come across in life has an expiration date.  This seems to be especially true in personal finance and lifestyle engineering spheres.

This site is certainly not immune to the ravages of time.  Browsing through last year's articles:

High-Efficiency Procurement:

The $0 Landline:

"This leads us to the qualifiers for the Google Voice XMPP integration with OBi devices. One Google Voice feature getting the axe is XMPP integration in Google Voice. Support for XMPP call delivery will shut off on May 15, 2014"

Cashback Credit Cards:

"In 2013 Citi pulled the plug on the regular Forward card, but continued to offer the application for college students until just recently — that too is no longer available."

Well shoot!

(somewhat amazingly, all of the apps in the External Motivation article still exist)

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So what's the punchline?

Little deals and tricks and hacks and tweaks come and go.  I've watched strategies go up in smoke that used to save me a few bucks here and there.

The net effect on my savings rate?  Absolutely negligible.  If your financial strategy is based on stealing all of the after-dinner mints at restaurants and redeeming credit card points, you've got bigger problems.

At the end of the day?  Financial independence is still based on one extremely simple concept, and you still can't afford not to invest.  Take care of those big, meaty double-digit percentage categories in your annual expenses, and everything else is just details.

The blogosphere is littered with great deals and neat tricks that don't work anymore.  When you come across one, just scoop yourself another bowl of sauerkraut and relax.  Cheers to that!

Open source software.

You're almost certainly using some of it right now!  Most of the visitors to the site browse here using Firefox, an open source project of the Mozilla Foundation; the second runner up is Google Chrome, which is just the Google-branded version of the Chromium browser open source project.
Other open source projects you may have heard of:

GNU/Linux (operating systems)
Wordpress (blogging tool)
Thunderbird (email client)
Blender (3D graphics)
VLC (media player)
FileZilla (FTP client)
Adium (chat client)
Pidgin (chat client)
Audacity (digital audio editor)
FrostWire (P2P filesharing)
OpenOffice/LibreOffice (office productivity suite)
MediaWiki (wiki software that runs Wikipedia)
phpBB (internet bulletin board)
GIMP (graphics editor)
Notepad++ (text editor)
HandBrake (media transcoder)
Calibre (ebook manager)
LaTeX (document preparation system)
Sage Math (computer algebra system)

...and the list goes on.

Even if you don't think you have any installed, most of the computers that host webpages are running the Apache HTTP Server, an open source project.  Proprietary software also reuses chunks of open-source software to accomplish common software tasks without having to write everything from scratch.  And that's one of the greatest things about the open software movement: it creates a huge bank of code that anyone is free to draw from, study, and incorporate into their own projects—once something is 'done right', the product is available to everyone, for free, forever.  This is in contrast to many proprietary software projects, where corporate policy is to patent every feature and algorithm to keep anyone else from using it for 17 years.

A windfall may come out of nowhere, coming in the form of a sudden inheritance, a chance winning, or an unexpectedly large sale.  You might abruptly find yourself with money that you have no clear plan for.

In a previous article, I extolled the virtues of Google Voice.  I told the story of how I've been phone plan free for 18 months, and how I've saved a big stack of cash as a direct result—many of my friends pay nearly $100 per month for a data plan and $200 every two years for a smartphone on a contract, so I may already be as much as $2000 ahead.  That sort of savings will buy you an Excessively Nice Racing Bicycle, pay for a couple cross-country flights, finance an international vacation, or increase my savings rate by 4.5%.

Even if you can't throw out your phone completely, you can still use Google Voice to eliminate ridiculous text messaging fees.

As I discovered over the weekend, you can also use Google Voice to get rid of that ridiculous landline!

Very, very, very occasionally I find a blogger that's so good, by the end of an article or two, I:

1. consider my life materially improved
2. subscribe to the RSS feed
3. schedule a time to dig into the article backlog
4. definitely want to meet this person.

While some might claim that they're 'eating for the flavor', at the end of the day... we're all eating for the calories.  It's our never-ending quest for calories that keeps even the most frugal of us coming back to the kitchen and the grocery store.

Our senses of touch and sight allow us to evaluate our food in terms of how much space it takes up and how much it weighs.  We're unable to gauge caloric content so easily.

Take this quarter-cup of extra-virgin olive oil:


How many calories do you think this contains?  One hundred calories?  Two hundred?

500 calories.

(this is easily verified: 1/4 cup = 60 milliliters, vegetable oil has a density of ~0.92 grams per milliliter [1], and lipids have an energy density of around nine food calories per gram)

Extra virgin olive oil is expensive, right?

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This information has gone stale!

Fortunately, alternative means have become available for automating your Craigslist searching.

Check out the Craigslist channel on IFTTT: https://ifttt.com/craigslist

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If your Craigslist hunting strategy involves hitting 'refresh' a whole bunch of times, there is a Better Way.

Not everyone knows about List Alert: http://www.list-alert.com/.

This needs to change.

Setting up a Craigslist alert to find me a bread machine in the East Bay is as easy as:


After hitting 'Search', you can type your email into the box and hit 'Create Alert'.  You'll have to confirm your email address to start things up.  Creating an account is optional, but it gives you the ability to quickly and easily create and edit alerts from http://www.list-alert.com/search/my_searches.cfm.

I created this alert at the beginning of the week.  Taken yesterday evening:

Bread-y success!

I haven't turned the alert off yet, so they keep coming in:


If you're an EBay user, you can do something very similar by saving a search and selecting 'sign up for emails'.

Happy robo-baking!

(or happy... whatever it is you do on Craigslist)

Mmmmm. (X1)

While growing up, my family kept a vegetable garden in the corner of our suburban lawn.  The garden was not huge - we've expanded it slightly almost every year to the present, but back back then it was maybe 12 feet on each side.  In typical suburban lawn fashion, the developers had scraped away and sold all but the two inches of topsoil necessary to cover the place in a resource-intensive grass lawn; below that was mostly hard, red clay.  My dad raised the beds with railroad ties, started a compost pile, and began turning the soil religiously.  Within a few years, most of the rocks had been picked out and the clay slowly gave way to richer soil.

We grew the typical garden fare: tomatoes, carrots, onions, bell peppers, broccoli, sweet peas, salad greens, beets, herbs.  Even in this modest plot, the yields could be pretty impressive.  Many years we would return from our state park vacation to find our tomato plants bent to the ground with juicy red fruit.

Too much juicy red fruit.

Chances are, you weren't always a Mustachian.

No.  Chances are, in your former life, you didn't really appreciate the cost of your day-to-day luxury purchases.  You may have even gone through a phase where buying things temporarily eclipsed making and accomplishing things.  Or perhaps it wasn't quite that bad, but over a rather extended period you were rather less careful with your money than you would now have liked.

That era may be past, but the effects remain.  You certainly have less money than you would otherwise.  If you spent primarily on experiences, you have memories, consequences, and outcomes; if you spent primarily on durable goods, you may have quite a bit of stuff.  This article focuses on the latter situation.

I spy with my little eye...

So, what to do?

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Sell It

There is a strong argument for getting rid of the extraneous stuff you don't use.  Stuff takes up space, meaning that you are spending more on living space than you need to in order to store it.  Stuff also has mass and volume, and serious mass and volume can set you back serious dollars (and serious time and effort) every single time you move.  Many types of stuff also require some form of management or maintenance: cleaning the stuff, organizing the stuff, keeping the stuff in working order.  If the stuff has little utility to you, that time, money, and effort is yielding a very poor return on investment.

Before you go the commercial route, hit up your friends.  You might not get top dollar, but selling to friends is fast and convenient.

It's extremely easy to sell stuff on Craigslist, Ebay, and Amazon.

Craigslist is by far the easiest - hop on the site or the Android or iOS app, enter a price, description, and location and upload some photos, and you're done.  If you live in or near an urban area with a lot of Craigslist activity, you may be free of the item and holding a stack of cash by the end of the day.  Finding a buyer might take longer in less-active regions.  Also, be prepared to do some negotiating - some people will take your stuff at the listed price without hassling you, but others may try to haggle it down.  If the price isn't negotiable, put that fact in your ad!  Mr. Money Mustache has written his own love letter to Craigslist with some good tips on buying and selling.

With Ebay and Amazon, your customer base - and your potential price range - expand at the cost of more complexity.  You'll have to create an account and set up a bunch of stuff before you can start selling, and you'll have to deal with - and pay for - shipping.  The benefits only outweigh the costs for someone planning to sell a lot of stuff, or stuff that is likely to have a limited local customer base.

If you have junk that no one is likely to be willing to pay money for, put it in the 'Free' section on Craigslist or donate it to a local school or charity.

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Use It

When you bought your stuff, you probably had a plan beyond storing it in your closet.  As you scale back your spending, it's likely you'll find yourself with more time available for doing.

Books you've never read?  Tools in mint condition?  Art supplies still in the plastic?  Photography equipment?  Exercise hardware?  Musical instruments?

An often-neglected key to low-cost living is having lots of hobbies that require more time, effort, and thought than they require cash.  Perhaps you once considered exploring a hobby, but you got too busy and you never got around to it.  Especially if you already own what you'd need to get started, why not give it a shot?

One happy side-effect of the explosive growth and maturation of the Internet is that it's much, much easier to learn how to do something new today than it was a decade ago - jump online, run some Google searches, read the Wikipedia page, find a forum (or subreddit, or Google+ Community, or Facebook group, or email list...) dedicated to the topic, and jump in!  You may find that there is still tons of utility and many hours of fun locked away in the neglected stuff that you already own.

Of course, you might spend a few days trying to play the clarinet and suddenly realize why you had shoved it in the back of that drawer.  No personal utility?  Sell it on Craiglist!

If you're a total gym-o-holic and your gym activities are a huge part of your free time, social life, and personal image, you'll probably read this article and think, "yeah, but it's worth it!"  If you're in that camp and a gym membership is one of your thoughtfully-chosen luxuries, have at it.  For the other 99.9% of us...

According to StatisticsBrain, fitness gyms are a $20 billion dollar industry.  45 million people pay an average of $55 per month to for gym memberships.  But fitness is good and it's totally worth it, right?

pumping some serious iron

67% of people with a gym membership never visit the gym.

Cooking is one of those life skills that can very easily save you hundreds of thousands of dollars over your lifetime, for a relatively minimal initial investment of time and money.

Let's look at the numbers:

Say you're saving and investing 40% of your income and planning to retire in approximately 20 years.  If the market average return is in the vicinity of 7% (and this is very reasonable), that puts your Future Value Factors (FVFs) at approximately 4x, 40x, 500x, and 15500x for one-time, annual, monthly, and daily purchases, respectively.  Let's say that you're considering changing your lifestyle so that four days a week, you cook dinner instead of eating out ($10 saved) and you have leftovers that you can bring into work the next day ($5 saved).  At $60/week, this is equivalent to saving $8.50 a day.  At the daily-purchase FVF of 15500x, this simple act will put an extra $130,000 in your bank account at your 20-year retirement goal.

Saving less than 40% and retiring in more than 20 years?  Due to the power of compound interest, your savings will be even greater.  Look up your Future Value Factors here.

Have a significant other?  If you can double the total saved on food per week, that's now $260,000 extra saved at retirement time.  If you have friends living nearby and you can coordinate regular potlucks and foodshares, the savings can be even greater for less work on your part.

Maybe it's time to learn how to cook.

I am a fanatical follower of Mr. Money Mustache.  This rather amazing specimen of an INTJ used financial common sense and a very uncommon amount of Life Wisdom to embrace a frugal, environmentally-conservative, socially-engaged lifestyle that freed him and his wife and young son from an empty existence of endless consumer consumption and ultimately, at the age of 30, from the need for full-time employment.  No inheritance, no investment windfalls, no magic - just the intellect to know that just because you make $70,000 doesn't mean you have to spend $70,000 (and the discipline and organizational acumen to follow through!).

Respect the 'Stash

Mr. Money Mustache - MMM for short - preaches a gospel of riding your bike, buying used, cooking your own food, frequenting the library, cooperating with your neighbors, tracking your habits and optimizing away the trivial.  He's not some crazy survivalist living an ultra-spartan existence in the woods somewhere - he's a devoted family man with a huge list of hobbies and pretty much the greatest life I can imagine.  He owns a home and a car and he travels with regularity, supporting it all on $27,000 a year through careful consideration of what's actually important. He's breaking into the mainstream because he addresses something that most personal finance gurus neglect: maximizing money for money's sake is a fruitless endeavor, and personal finance is only really useful when applied as a tool for maximizing happiness.