Bad Examples | Control Your Cash: Making Money Make Sense

Now Trent Hamm’s Just Daring Us To Name Him Financial Retard of the Month

April 27, 2012

There's GOLD in them there textile fibers!

By far our favorite punching bag here at Control Your Cash is Trent Hamm, the hyperfrugal crazy person who runs The Simple Dollar. 14 times a week, he writes about compulsive, creepy, maniacal methods for shaving undetectable amounts off your expenses. Meanwhile he writes next to nothing about how to increase your revenue, which is swell because we don’t need the competition.

In previous posts he’s recommended bypassing the toothpaste aisle at the drugstore so you can collect the ingredients to make your own inferior version, and also told female readers that they should never spend more than $3 on a swimsuit. When a commenter pointed out that $3 swimsuits don’t exist, Trent helpfully suggested that women swim in their underwear. Yet people still continue to read this corn-fed monster of impracticality, and not always for the undeniable comedic value. That he has any audience at all is testament to the axiom that stupidity begets stupidity. Also, people = sheep.

By the way, Trent Hamm didn’t suggest homemade toothpaste brewing as a fun craft project for the kids on a night when the TV and the internet are down. He suggests it as a legitimate way to save money. And dozens of his devotees cyber-chime in to nod their empty heads.

One of his latest money-saving tips is so bizarre, so utterly immersed in minutiae, so microscopically unhelpful, that we had to let it sink in for a few weeks before choosing the right way to poke fun at it. Here, we’ll let Trent take it away:

Several months ago, I was curious about how much heat was lost when I opened up the oven to inspect a dish cooking in there. I put an oven thermometer in the oven, waited until the dish I was cooking was almost finished (a casserole cooking at 400º), then opened the oven door for about ten seconds to inspect it.
During those ten seconds, the thermometer dropped almost 20º. When I closed the door, the temperature slowly returned to 400º, but during that period, the oven had to put in some extra work to return that heat.
How much? It’s really difficult to exactly calculate that without a meter running specifically for the oven. My best estimate, using a lot of math and thermodynamics, is that you lose about 2¢ worth of energy every time you open the oven door.
My solution? I turn on the oven light when I’m cooking anything in the oven. That way, I just lean over and check what I’m cooking without opening the oven door.

Where to start? With his discovery of the oven light? It’s not quite the game-changer that Leif Ericsson landing in the New World was, but it’s close.

How about that! Those forward-thinking engineers in the appliance industry researched the problem and put a light, a source of illumination, INSIDE the oven. Combined with a glass window that sits between the interior of the oven and the outside world, that means you can look at your food as it’s cooking.

Trent? You know we’ve sent men to the moon and back, right? That was 43 years ago.

Now that we’ve made fun of his stunning appreciation for the glaringly obvious, let’s not forget Mr. Hamm’s bread-and-butter: the cheapness that would put Hetty Green to shame.

It costs 2¢ to open the oven door. Even if you’re opening the oven door for no better reason than to warm up the kitchen a little…well, you don’t need us to tell you that 2¢ isn’t going to bankrupt anyone who can afford an oven, electricity, and food. We wonder how long it took him to calculate the 2¢ figure, and whether he could have spent that time earning money instead.

Throughout your life, how many times have you opened an oven to check on a dish before it was ready? Does 100 sound about right? If you have, that’s 2 WHOLE DOLLARS you figuratively flushed down the drain. You could have used that money to buy several servings of Trent Hamm’s homemade laundry detergent. Instead, you just tossed it away like it grows on trees. Nice going, you wasteful pig.

Nor does Mr. Hamm show his “math and thermodynamics”, presumably because he thinks the rest of us will flee at the sight of an equation or two. Then again, given his readers’ intelligence, that presumption might be the most rational thought Trent Hamm has ever had.

But wait. Light bulbs don’t power themselves. So where’s he getting the money to turn the oven light on with?

The light bulb uses less than a cent of energy per hour of use …”

Well, that’s a relief. Measuring the difference between the two, you can replace your daily regimen of oven-opening with one of light-keeping-on and be on your way to economic self-sufficiency in no time.

Mr. Hamm isn’t just taking his obsession over minute amounts of money to its nadir, he could be indirectly responsible for the deaths of millions. Why, he’s openly encouraging his readers to die of trichinosis:

If your recipe says “Preheat the oven to 400º” and then later says “Bake for 30 minutes,” don’t preheat the oven at all. Instead, put your food in the oven, then set the temperature to 400º. Then, add about half of the preheat time to the cooking time. Why? When you open a preheated oven to put in your dish, it’s no different than opening the oven to check the food near the end of the cooking time. You lose that 2¢.

(Italics and boldfacing ours.)

“Damn it, don’t you people understand? Those 2¢ increments are valuable! You wasteful reprobates probably keep your toasters plugged in when you’re not using them, too.”*

And if that doesn’t beat all, this will. Here’s another excerpt from The Simple Dollar archives, from February 26, 2009:

There’s also a group of what I would call “frugality extremists.” These are the Ziploc bag washers, the people who will gladly invest quite a bit of time to save a dollar or two. I find these people and their ideas interesting, but not necessarily applicable to my life.

Got that, everyone? Washing a Ziploc bag is going over the line, but calculating that it costs 2¢ every time you open your oven door to check on what you’re cooking is completely normal. Trent Hamm, you’re magical. Since we have to pick a Retard of the Month 12 times a year (a calculation which required lots of math, not so much thermodynamics), promise us you’ll never change.

*Of course, he’s written about this too.

Filed Under: Bad Examples, Financial Retard of the Month Tagged With: crazy man, frugal, Frugality, lunatic, simple dollar, trent hamm

Think locally. Act locally.

April 20, 2012

Nothing meaningful happens in Davos. (Except, it seems, the kick-ass Friday night costume party.)

(No, this isn’t a call to eschew big corporations for mom-and-pop shops. You don’t know us very well, do you?)

“If you spend 15 minutes a year studying the economy, that’s 10 minutes too much.”
-Peter Lynch

Three above-the-fold headlines from this week’s financial news:

Spain might default on its debt, requiring yet another bailout from the European Union, which would threaten the stability of the euro and perhaps result in the reinstatement of the peseta.

New Jersey’s ex-governor Jon Corzine can’t explain why someone transferred money out of customer accounts in the final days of MF Global, the firm he ran for a year and a half before it fell into a bankruptcy of historic proportions and he quit.

Retail sales increased .8% in March. So for every dollar you spent in February, you spent a dollar and 4/5 of a penny in March. (Of course the population also increased over that month, while inflation increased too, meaning that your spending is close to unchanged in real dollars.)

What does any of that mean to you? Nothing.

Just like most of the non-financial headlines (“Amanda Bynes Gets DUI”, “Scientists Find Connection Between Diet, Weight”, “Some Chick Casts Aspersions on Ann Romney”), the financial headlines are there largely to take up space. Legitimately important financial items – this county to increase its sales tax rate, this state to float bonds it won’t be able to cover – get buried because they’re even more mundane than the stuff that makes it to the headlines.

Look at those above examples. The first one’s crucial only if you’re Spanish, Andorran, or Gibraltarian. The second one is intriguing because it involves a semi-famous politician who first derived fame for being rich. The third one is obligatory, like the weather. The Department of Commerce releases the data, the financial media feels obligated to report them. It doesn’t matter if the data are meaningful or mundane. That .8 could have been almost anything – .7, -.2, 0 – and the toner-stained wretches who write the copy would have reported it with the same austerity and import.

The point of all this is that you first need to take care of your own business. Granted, that’s harder to do when the government confiscates more of your money and spends future generations’ inheritances to buy shiny new toys, but look at what you can control:

-What you spend your money on

-What you finance

-Where you invest

-What seemingly obligatory roadblocks you throw in your own path, just because society recommends them and you’re a sheep

-Where you choose to live, to the extent that each jurisdiction has different tax policies and different costs of living.

Say it again. Take care of your own business. The corollary to that is to let other people do the same thing. If everyone followed this easy directive, the world would be something approaching perfect.

Complaining about financial events beyond your control is worse than pointless, it’s counterproductive. At least some economically meaningless activities have a non-economic benefit. For instance, this NBA game we’re watching right now has little impact on us. It features two unremarkable teams counting down the days to an early summer vacation (Detroit and Minnesota). We don’t know any of the 24 players personally. We’re not breaking down the game film because we have to play one team or the other next week. No, we’re just enjoying the artistry and the competition, and wondering if Greg Monroe should have spent another year in college.

So yeah, watching a basketball game has some purpose. Reading (and by extension, fretting over) the financial headlines has no purpose. It’s just a way to cause yourself irrational hope, or possible pain and discomfort.

Which isn’t to say that you should never read the financial news. Especially if you’re new to this. If anything, just being immersed in the environment will give you greater proficiency in the jargon. It’s like learning Italian by moving to Naples and listening to other people talk. The content of the dialogue is less important than the form. By reading the financial news you’ll be exposed to some concepts and phrasing that you wouldn’t otherwise have. Once you get good at this, you can separate the worthwhile news from the worthless.

(Note: it’s almost all worthless, which means it’s just like any other compendium of information. Google’s stated purpose is to organize and make available the world’s information, which is laudable, but how much of it do you actually use? Significantly less than 1%, of course.)

In conclusion: The micro > the macro. The greatest determinant of your financial health, present and future, isn’t the Spanish Public Treasury. Nor is it an odd-looking man who flushed hundreds of millions of customers’ deposits down a toilet. Nor is it the miniscule increase in the money your neighbors spent last month. Your financial health is dictated by you more than it is anyone else.

(And if that’s not a commercial for The Greatest Personal Finance Book Ever Written, nothing is.)

This article is featured in:

**The Carnival of Financial Camaraderie #31-Lend a Helping Hand**

Filed Under: Bad Examples, Book Promotion Tagged With: financial news

Hop On And Rotate

April 13, 2012

Red always beats black. Or is it the other way around? Damn, so confusing

The vast majority of people on a casino floor, outside of the troglodyte simpletons populating the banks of slot machines, have no idea what they’re doing. We’re serious. Most blackjack players at least comprehend the idea of approaching 21 without going over, but don’t understand about insurance, splitting pairs and doubling down.

Most craps players don’t grasp the rules of the game, couldn’t tell you the payouts, and aren’t in the least dissuaded that they’re resting their fortunes on a literal roll of the dice. Show them the Wikipedia entry for craps, and they’d give up before the 4^th paragraph. They just want the shooter to not roll a 7 or 11 (or if they’re being contrarian, to roll a 7 or 11.)

If the jargon in this post is already too much for you, good for you. We mean that. Consider yourself advanced, if not “lucky”, that you don’t know how these ridiculous games of chance operate. Lotteries are stupid, but they’re an unsubtle form of stupidity. Casino games, most of which are slightly more complicated than lotteries, fool the more innumerate among us into thinking that they have a chance.

To summarize, if you don’t feel like reading any further: there are only two places in the casino where you can make money gambling, and even in each of those it’s an overwhelming challenge. That’d be the race & sports book, and the poker tables. There are good reasons why there are scatteringly few professional race/sports bettors and poker players.

In the former case, the margins are tiny. You need to hit 55% to break even (on pointspread sports bets), which means you might as well find a way to spend your time that’ll cause you less heartburn. At 56%, betting on sports is barely worth your while. At 59%, you’re one of the best in the world, and no one on the planet can consistently hit 60%.

As for the latter, poker, indeed there’s an element of skill to the game. You have to read your opponents, and calculate odds faster than a dealer can deal. But the single biggest determinant of who’ll win any particular hand is still random chance. An inept player holding pocket aces is in a far better position than is Scott Seiver with an unsuited deuce and 7. In some form, that’s another example of a tiny margin. At a table full of pros, there are few consistent winners. But at a table full of pros with a single non-pro, there’s one consistent loser. Do you really want to take the chance that it won’t be you?

That’s why so many neophyte and “intermediate” gamblers gravitate toward roulette. It’s got a big shiny wheel. It’s suspenseful, the ball’s counterclockwise spin building anticipation as it decelerates. Roulette just feels like gambling.

It’s also crushingly stupid.

38 spaces, each of which is as likely to be hit as the next. (That’s the integers from 1 to 36 – each of which is either red or black – plus 0 and 00.) And each of which pays the same – 36 to 1.

We’d say “think about that”, but there isn’t much to think about. Put $1 down, and you’ll lose. Put another $1 down, you’ll lose again. Do it 38 times in a row, and you’ll win. You’ll win $36.

Makes it all worthwhile, doesn’t it? Collect $36 for every $38 you spend? How can you lose?

For the really, really mathematically disinclined among you – like Chelsea, the Utah 80 mph girl – this is bad. You’re losing $1 out of every $19. And there’s nothing at all you can do to improve your odds.

Any red (or any black) pays even money, as does any odd (or any even). There are several other bets you can make that incorporate multiple numbers. For instance, you can place a bet on all the numbers from 1 to 12 (or 13 to 24, or 25 to 36.) Each of those comprises exactly one-third of the numbered spaces, and pays 2-to-1. Which would appear to be fair on the surface, if you were to discount the 0 and 00.
And why wouldn’t you discount them? They have zeroes on them! Doesn’t that make them meaningless?

Those zeroes make the house rich. And make you correspondingly poor.

“Yes, but what if you win?” Fine, what if you win. Last week we lambasted the idiots who waited in line for Mega Millions tickets: here in Nevada, which doesn’t participate in lotteries, residents of Las Vegas had to drive 70 miles round-trip to the California border (or 100 to the Arizona border) to spend up to 4 hours waiting for tickets. The 3 people who won can make fun of us. The other dozens of millions of losers who bought tickets can grab a piece of this and slide off.

Dumber than smoking? Maybe. At least gambling doesn’t directly impact your health, although you might think twice about that if you spend a few minutes breathing the fumes at the Golden Nugget.

If you make $57,000 a year, betting on roulette is the equivalent of having an intruder poke a revolver in your ribs and walk off with $3000. Happy gambling.

This article is featured in:

**The Carnival of Financial Camaraderie #30**

Filed Under: Bad Examples, Math Tagged With: gambling, roulette, stupidity