The Most Expensive Meal In The World

Our Italian forefathers would be embarrassed

Our Italian forefathers would be embarrassed

 

It’s one of the most overwrought axioms of personal finance advice, right up there with “Create an emergency fund” and “Buy generic.” Do this one and you’ll save Gaia while keeping your belly full, the ultimate dual objectives of parsimony.

Plant a garden! What could be easier or more rewarding? A little (free) photosynthesis, a little (practically free) water, and soon you’ll be consuming nutrients as Mother Nature intended, eliminating the middlemen – Monsanto, Walmart, and all the other baleful corporations that serve only to keep the downtrodden trodden down while tightening the screws on the customers.

That wasn’t our motivation, but we succumbed, anyway. If anything, we were trying to defy Mother Nature, see if we couldn’t make something grow in a region whose annual rainfall rarely breaks 4 inches. We started ambitiously, with tomatoes and peppers, eventually adding more modest crops such as mint and basil into the mix.

That was in late May. Furthermore, we cheated. We bought the Home Depot starter kit; potted shrubs instead of seeds. Several cubic feet of soil. Plus a shovel, a wheelbarrow, and a dream.

This is hardly news to anyone who’s ever tried a garden, and we’re running the danger of being Mojave Desert-centric in our description of the events, but hear us out. For 12 weeks we watered the plants daily – 3 minutes first thing in the morning, 3 more at twilight – marveling at their steady and measurable growth. We eventually shifted to automated sprinklers, but never forgot the painstaking work involved in turning on a hose and waiting patiently, twice a day. Doing so kept us grounded, and hopeful. Then around week 10, the plants bore fruit:

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There are 6 tomatoes on that bush. You might well have mistaken them for grapes. As for the peppers, or “capsicum” for some of our Commonwealth friends, may they rest in peace. Nevada, or our little slice of it, apparently being too arid or otherwise inhospitable for such feeble vegetables.

Hothouse round tomatoes cost around $2 a pound at the local supermarket. By our estimates, the tomatoes on our winsome little bush weigh less than a pound. And cost $48.11 in cash and maybe 10 hours in time. Including building the materials for and erecting our makeshift sunscreen (that slumping canopy, suspended on polyvinyl chloride pipe.) Mercifully, we have no weevils nor potato bugs in the desert. We do, however, have rabbits. And now the rabbits have the larval peppers. God know what they’re doing with them, other than laughing at our attempts to arm the perimeter with (irritating but non-toxic) mammal repellent.

To our fellow Americans (well, fellow North Americans) reaping, threshing and winnowing their way through the vast tomato fields of the San Joaquin Valley, this post’s for you. Thanks, and thanks for helping illustrate this lucid example of Adam Smith’s invisible hand in action.

Tomatoes, born on a farm. Protected from blight by wonderful, beautiful, life-enhancing pesticides. (For everyone but the pests, anyway.) Harvested by the myriad and transported to our shores at an attractive if not incomprehensibly low price. Economies of scale in full force. Joining with our millions of neighbors to indirectly farm out (hey-oh!) our tomato cultivation to the people who are really, really good at it benefits everyone. The producers make a living growing tomatoes, several orders of magnitude more efficiently than we could do it. The consumers don’t have to curse the elements and pray for rain while their tomatoes contemplate growing.

The garden was, and is, a vanity project. Alright, that’s not fair: it’s a hobby. And like most if not all hobbies, it makes zero economic sense. It’s not supposed to, and it never was. Your stamp collection isn’t a professional endeavor, nor is your fondness for working on cars. (If it was, it wouldn’t be a hobby and you’d be a technician.) If we were to have paid ourselves minimum wage while tilling the fields on our way to and from our air-conditioned home offices, and then sold our produce at an appropriate markup at the local farmer’s market, those tomatoes would go for about $98 a pound.

Wagyu beef, the authentic Honshu stuff, sells for $35 a pound.

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The point to be made here is that trading pennies for hours is a moron’s game. At the very least, it’s a moron’s game if you think you’re being fiscally prudent by playing it. The gains from our tomato-farming enterprise weren’t illusory, but they were largely psychological. We learned we can grow edible food, armed with only our implements, our guile and the head start of fully developed shrubs. We justified being out in the sun doing something other than cardiovascular exercise, yoga, or lounging by the pool. And during our lonely hours tending to our nano-orchard, we had time to contemplate our and our tomatoes’ place in the universe. Made the first draft easy to write, and half a revision later, here we are.

You’re A Crucial Part of This Team

"I can't fire a broad. Looks like you got the short straw, Justin."

“I can’t fire a broad. Looks like you got the short straw, Justin.”

Another Control Your Cash® patented one-sided conservation question, one-sided since we don’t bog our site down by allowing comments. So you’ll have to answer in the comfort of wherever you’re reading this (home, maybe an airport, hopefully the office – the last of which we’ll elaborate on in a second.) The following question is not, repeat, not, rhetorical:

All things being equal, to the extent that they can be, would you be more or less inclined to work for a company whose official policy includes some variation of the following declaration?:

Employees are our most valuable asset(s).

If you answered ‘More’, there’s lots to unlearn.

“Employees are our most valuable assets.” Think about what that means. The company is profiting off them more than it is off the net receivables, or the cash and cash equivalents, or the property, plant and equipment, or any of the other assets that are supposed to stimulate cash flow and enrich the owners. $45,000 in inventories, if sold at a 100% markup, and subtracting a few dollars for warehousing costs, might realize a profit of $40,000. Meanwhile $45,000 paid to you, the deputy assistant regional manager, might realize a profit of $50,000 if you move enough product and work enough uncompensated overtime to impress the assistant regional manager: the guy whose job you claim you want to have one day.

Any company that tells you that you’re among its most valuable assets and expects you to take it seriously is patronizing you. The kind of employees who are dumb enough to swoon from and find validation in a timeworn line specifically written to make them feel that way are, self-fulfillingly, indeed pretty valuable assets. Because if being told you’re important makes a difference to you, you’re probably underpaid. Because you think you can eat non-monetary, psychological rewards such as compliments.

You negotiate in plenty of other aspects of your life, right? If you comparison shop, then you’re negotiating, kind of. You certainly wouldn’t buy something expensive like a car or a house without looking around and trying to get the seller to come down as much as is prudent. Well, what kind of lunatic determines which supermarket sells the cheapest per-unit laundry detergent, and maybe even uses a coupon, but doesn’t care how many tens of thousands of dollars her employer is making off her? (And then try to whittle that number down a little?)

Your value to your company is measurable. Of that value, or of the revenue that derives from having you around, you keep some and the rest goes to your employer. This is so obvious that it’s easy to miss, yet almost everyone does. Employees think that a salary is a product of an initial round of mediation held during an interview. Some think it’s even less complicated than that, and that a salary is simply what the employer deigns to pay you. It isn’t. Once again, it’s the difference between what you bring in and how much of that the employer decides to pocket. Even Karl Marx understood this, and Marx was one of the most overrated thinkers of all time. (Come to think of it, this was about the only thing he understood.)

Finally, as investors we could give a damn about any company that claims that its employees are #1. Your customers should come first. Well, your investors should come first, but that usually implies having customers. Satisfied ones, repeat ones, as many as possible. Brinker International, parent company of Chili’s, generated $2.82 billion in revenue last year. You know what its “most valuable assets” are? Hint: Not the flair-wearing hostesses and servers, thanks.

The beer kegs. Each one contains about 140 pints, which the restaurants can sell for 3 or 4 times what they paid. Few employees offer that kind of return, and if they could, they’d be crazy not to demand far more money. Beer kegs can’t negotiate. Nor can the soda fountains, which offer an even greater profit margin, albeit on smaller volume.

It’s like politicians who say “children are our most valuable resource”, a proverb which was cloying if inaccurate back when people started saying it in the 1970s, and which should only incur scorn today.

From an employee’s perspective, you want the profit margin on you to be as low as possible. Not so low that it costs money to keep you around – in which case the sensible thing to do is fire you – but low enough that you’re earning a lot relative to your value.

Every commodity – beer, soda, cigarettes, labor – has a markup. People think that the last one shouldn’t be on the list for some reason, or that jobs can’t be quantified and subjected to cost-benefit analysis the same way that non-human assets can. But of course they can. No employee has ever been fired because he made too little money. In fact, the opposite is true. Employees who make “too little” (which, obviously, management would never cop to) are instead held up as emblematic of something larger: the “valuable assets” worthy of mention in the company mission statement. Or vision statement, whichever. Meanwhile, every hour of every day some employees somewhere get fired because management can no longer justify their salaries. Short of stealing company secrets or having sex on the photocopier, overpayment is the #1 reason for being let go.

With the possible exception of pack animals, no asset was ever more valuable than a slave. You got your cotton picked, you got musical entertainment, and you didn’t even have to pay a living wage.

We’re Not Your G.D. Friends

"I wish I'd spent more time at strategy meetings."

“I wish I’d spent more time at strategy meetings.”

 

And we never will be.

This site isn’t “a place where you can share your thoughts freely on all things personal finance related,” or “a daily recap of our struggle with debt,” or any of that crap. If that’s what you’re looking for, God knows it’s out there and not difficult to find. Commiserate somewhere else. If you’re not here to get rich, get lost.

Because for our purposes, and hopefully for yours, building wealth is all that matters. We’ll even make the argument that building wealth is the highest possible worldly endeavor. The more you make, then the more highly the marketplace of consumers has valued the goods and services you’ve chosen to create. Though that money can buy you stuff, more importantly (to quote one sharp thinker) it can buy you the most precious commodity there is: time. All the other activities that people prioritize – reproducing, being kind to animals, taking a bus to Washington so you can stand outside the Supreme Court with a placard telling passersby your opinion on homosexual marriage – is swell once you’ve got your financial house in order. Until then, Matthew 7:3-5. Take care of your own business first.

Grandiose ideas (and even ordinary ideas) undertaken while suffering from negative net worth almost never materialize.

Sure, J.K. Rowling wrote her first book as a single welfare mother. Good for her. Thousands upon thousands of other aspiring writers wrote their first (and only) manuscripts while on welfare, and never came close to selling them. Or they gave up halfway through Chapter 2. Or they never got beyond the outline stage. But regardless of where those failures ended up, what does it prove to cite the one example who beat historically long odds? What moron makes the argument “That person succeeded as a 100-million-to-1 shot, so I can too”? Isn’t it infinitely better to undertake a path where success is likely, or at least not exceedingly unlikely?

Most personal finance sites love to share first-person stories. Here are some pictures of my new wedding dress and a sidebar about how much it cost me.

I had a ton of consumer debt at the start of the month, but now I have 1998 pounds of consumer debt. I think I’m doing an awesome job, and will punctuate that assessment with an exclamation point!

Now it’s time for 800 words on how I bought discount school supplies for my kids. Oh, and you should look at price tags before you buy things. In my opinion, the smaller the number, the better it is for you.

These people aren’t true personal finance bloggers. They’re merely diarists, interested more in the catharsis of getting their small thoughts down in a semi-permanent form than in writing anything interesting, entertaining, or beneficial. Besides, Samuel Pepys already perfected that literary form 350 years ago.

They’re all idiots, every one of them. (We listed most of the exceptions here. Late addenda: 101 Centavos and Hull Financial Planning. Oh, and Reach Financial Independence.) The grad student with $90,000 in tuition loans but a $1,000 “emergency fund.” The aspiring filmmaker who moves his family around the globe from rental home to rental home, cranking out kids he can’t afford while telling you that selling your excess stuff on eBay is the surest path to riches, and who then finally gives up and hands the blog over to someone in even worse financial shape. The pseudonymous Credit Suisse trader, since fired, who brags about living the baller lifestyle while downsizing his home and trying to convince others that there’s no such thing as a bad financial decision if your heart tells you so.

What makes us different? We know what we’re talking about. We already made the (minimal and non-catastrophic) mistakes, saving you the trouble of repeating them. Unless you want to repeat them, in which case knock yourself out. We’ve also enjoyed the successes, which we experienced largely because we knew how to capitalize on them when we saw them a-coming.

That’s also an indirect explanation of why we don’t take comments. First, 99% of commenters (not just on personal finance sites, but on the internet in toto) have nothing to say. Second, we’re not here to facilitate dialogue. It’s a monologue, and you’re the listeners. For the most part, anything posted as a response in a publicly viewable forum isn’t worth repeating. If you want to talk to us, send us an email or a tweet.

Why do we insist on forbidding comments, which runs counter to almost every other site in the universe? For an answer, take an important subject we have little proficiency in: for instance, medicine. Who are we to go to the WebMD entry on diabetes mellitus and offer our subjective opinions on insulin therapy and high-fiber diets? The licensed professionals who wrote the article aren’t interested, and the WebMD readers shouldn’t be, either. Or we could just write “Awesome post!” in a flawless impersonation of any of the awful personal finance bloggers we referenced above, who leave comments only to microscopically improve their own sites’ Google PageRank.

Look. You want to get rich but have no idea where to start? Here’s a list of criteria neither necessary nor sufficient to build wealth:

  • A college education
  • Legacy money
  • Upward corporate mobility
  • The ability to be the last one out of the office every day and the first one in the next morning.

Here’s what will come in handy. Best of all, these are available to anyone. Most of them are practically your birthright:

  • Secondary, passive sources of income
  • Patience (when it’s warranted)
  • Conviction (when patience isn’t warranted)
  • The ability to avoid doing moronic things (for an illustration of these, enter “retard” in the search box at the top right of the page)
  • Boldness. Not rashness, but rather the confidence to say “Lots of other people are rich. I can do this, even if it means discarding ingrained societal notions of getting a job I’m going to hate and working my way up a ladder I’d just as soon not be on.” In other words, the inverse mindset to obsessing over “What if I lose everything?”

And finally

  • The purchase of assets
  • The sale of liabilities.

Exercise all those and, we’ll say it again, you’ll get rich in spite of yourself.

Too vague? Here are some specific steps. Eliminate all your consumer debt as quickly as possible, without regard for any short-term pain you’ll incur. Put money aside for growth, not for contingencies. Contribute the maximum to your 401(k). Get your employer to match it. Get as little withheld from your checks as possible, so that you can write the IRS a check on April 15 instead of the other way around. (If you don’t know why you want to do that, you really need to read our book.) Get out of that rental you’re living in and get a fixed-rate mortgage. Don’t just buy low and sell high, do so when your feelings are telling you otherwise. Quit drinking. Start your own business. Organize it as a limited liability company. (Again, if you don’t know how to do this, read our book.) Keep and organize your receipts. Buy a 2nd home and rent it out to someone who’s never going to read this paragraph. Don’t waste time on piddly nonsense like selling your DVDs on Craig’s List for a functional wage of 77¢ an hour. Value your time by concentrating on its most lucrative uses – half a day researching car prices can save you thousands before you negotiate. Get a price out of the other party first. Figure out what they’re after and how much they stand to profit vs. how much you do. Walk away if you don’t like a deal. Ignore emotion at every turn.

None of those are particularly hard, except for the house-buying one. It’s simply doing this stuff, instead of wallowing in doubt and partaking in the fellowship of the damned, that scares most people off.

And thank God for that, because it makes the path a whole lot less crowded for the rest of us.