Deleveraging

Our business took credit cards - no question that our average sales were higher because of that. While I might have grimaced when looking at the bank statements, I know that it was simply a cost of doing business, a convenience for our clients, and made us more money. Retailers have the choice of taking credit cards or not. There is a reason that the vast majority do take those cards.

Speaking from a business owner's point of view, most of our vendors sold us goods on a 2/10/net 30 basis, meaning: we received a 2% discount if we paid for those goods by the 10th of the month, but the entire amount was always due by the 30th of the month. We always took advantage of those discounts. Some vendors took credit cards and allowed the 2% discount, which we also used to our advantage (with a rewards card).

I don't go along with the thought that everybody pays more if a business accepts credit cards (rewards or otherwise). Larger sales offset the difference in bank fees. It's been a few years since we dealt with this, but our bank/transaction fees were not higher on a rewards type card, other than American Express (and not all of those are rewards cards). Of course, one can say that, ultimately, every business expense gets paid for by the customer... but for businesses that I've been involved with, there was no increase to the customer because we accepted those cards.

These days, we avoid gas stations that have a higher price to use a credit card. And because most of our travel involves towing something heavy, we come back to that question of what rising fuel prices will do to our traveling. We use an app to find the best fuel prices while traveling... another way to try to make each dollar spent go as far as possible.

Jim B.
 
A ways back California passed a law that prohibits a merchant from offering a lower price for cash. The purpose of the law was to get the maximum use of credit cards since there was no advantage to buying for cash. I don't know for sure, but it would seem that that law was lobbied for (bribes/payoffs) by the banking industry.

Winco, a supermarket chain on the west coast, does not accept credit cards, only debit and cash. They have significantly lower prices on most items compared to Safeway, Albertsons, Haagen, Qfc, etc. Winco also does not have confusing sales and 'member card' pricing.
 
If I'm not mistaken, Arco am/pm gas stations also have a lower cash price.

When I filled one of my tanks in Friday harbor, I borrowed a gas can (I now have my own on the boat) and did three 1/2 mile round trips to the gas station up the hill (instead of dock gas) it saved me a few bucks, gave me some walking time and exercise...I live for stuff like that :)
 
A few summers back I carried lots of five gallon containers down to the boat to save 50 cents a gallon on gas. By the end of the summer I had a herniated lumbar disk. After a year and a half of conservative treatment and worsening symptoms, I had a microdiscectomy this past December. I probably saved $100 on gas but racked up $50,000 in medical bills (thank god for health insurance) and will never be able to do some activities that I could before. Be careful that you don't do anything foolish in order to save a few bucks...
 
Ouch.... that's terrible. I had back problems a few years back, and it is not fun. As we age, it's better to pay the extra bit to save wear and tear.
 
When I filled one of my tanks in Friday harbor, I borrowed a gas can (I now have my own on the boat) and did three 1/2 mile round trips to the gas station up the hill (instead of dock gas) it saved me a few bucks, gave me some walking time and exercise...I live for stuff like that
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I've have never stopped at a Marina or on-water fuel dock since we have purchased the C-Dory. We have cruised for 250+ hours - a few weeks at a time.

I fill the boat up before we splash, then I have two 5 gallon gas cans that I walk to local gas stations to fill up when needed. Most of the time, you can find a station very close and if not, I just wait for the next stop over. For some reason, it is in my blood to save that little bit (it really isn't the money, it is the "not needing to find a fuel dock") - I also go Trawler speeds both because we like to go slow and I love that we don't burn much fuel.

My family thinks I'm crazy carrying those 5 gallon gas cans to the gas station (sometimes, many trips) - but like someone said "I live for stuff like that".
 
I don't know - time spent carrying gas cans back and forth is time that IMHO could be better spent fishing, boating, drinking wine or sundowners in the cockpit, BS'ing with friends etc. I've got a finite amount of time on this planet, I don't intend to use much of it carrying gas around. Just my 2 cents worth.
 
rogerbum":xie8zwr4 said:
I don't know - time spent carrying gas cans back and forth is time that IMHO could be better spent fishing, boating, drinking wine or sundowners in the cockpit, BS'ing with friends etc. I've got a finite amount of time on this planet, I don't intend to use much of it carrying gas around. Just my 2 cents worth.
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I have to agree with you - but must be something in my blood.
 
Thanks to Bill for starting another very thoughtful and interesting thread. The responses confirm my thoughts about the majority of C Dory owners. We are a bit different than the "average"--and this is probably why we have C Dories--most of us have owned a VW camper, and love the out of doors in any fashion. We are more likely to save, and more likely to pay cash for a boat. We are more likely to be free of debt. This goes along with other traits which bode better for this group as they age than those who have borrowed all along the way.

One item which I think was missed, and that is the increasing longivity of the population. When I was born in 1936 the life expectancy of a white male was 60 years. When medicare/medicaid came along in 1968 it was only 68 years. Today it is 78 years! That is 18 years of life expectancy increase in one generation. (It may not increase much further because much of that increase is due to elimination of infectious diseases and technical advances). But it is part of the equation of the issues which face our and the next several generations. The cost of health care is going to be overwhelming. I will avoid any political comment other than to say, there will be a two or three tier health system, and we are very close to that currently.

Leverage for us was in real estate--and we used it initially to finance our adventures cruising in sailboats. It also allowed us to retire early, and live a comfortable retirement. One of my friends is currently leveraging in real estate (he is 80 years old) He has purchased 7 houses in Phoenix area for about 25% of their highest "value"--most of these are court house step sales--and he has them all rented--making a substantial profit. So there are still places to make leveraging work well for you. Don't forget the longivity issue--if you are 70 today, your life expectancy to age 85! (white male)--if your are 50 it is slightly over 80! The Female is considerably more.

Boating--Southern Calif. has usually had a shortage of boat slips, except in recessionary times. When the good times rolled....people bought boats. When the bad times came, the boats went away. Now several harbors are planing to build the storage rack facilities that are common in the East. (Marina Del Ray and Dana Point are two that I know of). So we will see trailerable boats kept at marinas in dry storage. I think we will see more effecient hulls (Cats, boats like the C dory) take over where the deep V was dominate before. It will probably be some time before solar and hybrid technology takes over for power boats. But there are always sailboats! My family had sailboats because they could not afford power boats. Plus sail gives more lattitude in the ability to use the boat. Certainly the popularity of the Ranger Tug atests to the popularity of a upper scale boat, which is trailerable, and capable of many of the same things that the less expensive C Dory is. I think that there needs to be further "developement" of the C Dory concept--and more marketing of this.

Some times we forget that the United States is still the Worlds largest producer of goods. Our GDP is number one--We are at 14 trilli0n dollars a year. Second is China at just under 6 trillion. Is the gap narrowing? yes, but we are still on top. Yes our currancy has deminished--but again prudent policy and inventiveness can keep it on top. It is up to the people of the US to make the right decisions. I don't know if we as a collective have assessed the risks of Greece and Italy, but I hope that we have and will prevent that. We have seen what happened in Japan--and hopefully we are bright enough to learn that lesson.
 
20dauntless":li54x55v said:
A few summers back I carried lots of five gallon containers down to the boat to save 50 cents a gallon on gas. By the end of the summer I had a herniated lumbar disk. After a year and a half of conservative treatment and worsening symptoms, I had a microdiscectomy this past December. I probably saved $100 on gas but racked up $50,000 in medical bills (thank god for health insurance) and will never be able to do some activities that I could before. Be careful that you don't do anything foolish in order to save a few bucks...
Click to expand...

Yes I'll be careful, but can't it just as easily be argued that if you don't use it you lose it? Perhaps my hoofing it (no, I don't really HAVE to) keeps me fit, strong, what-have-you. There's many examples of this I practice in my life even though I don't HAVE to do it for $$ reasons. I use a hand auger when I ice fish (yeap, it works up a sweat) I split, haul and chop wood all summer and burn it all winter (my furnace does just fine too. My cabin is 700 sq. ft. and well insulated) I save approx. 50 bucks a month burning wood...that's my property taxes more/less! I drive a geo metro a lot. I had a Toyota Yaris for a while, but it felt too decadent so I sold it to a friend. In many ways I already feel "retired" because I don't need all that much. My goal is to spend twice the time with my son and half the money...not always easy when you're the parent on the visitation side of things.

Maybe it's the midwest that does it? :) It has always been "in my blood" but has only gotten thicker since living out here. Like the song says, "Everyone should live in Northern California, but leave before they get too soft" :)

Brenton
 
The Wall Street Journal recently carried an article, "Why the Dollar's Reign is Near an End," by Dr. Eichengreen, professor of economics and political science at Berkeley. He predicts the euro and yuan will become strong competitors for being the world's main reserve currency, which of course our dollar is today.

Currently, global foreign-exchange transactions show the U.S. Dollar to make up 84.9 % of exchanges based on 200% (two currencies in each exchange) But with our "federal debt..approaching 75% of GDP,"...the dollar will have to share its safe-haven status with other currencies."

Dr. Eichengreen predicts that in the future our government will not be able to finance our budget deficits as cheaply, meaning our dollar's value will be reduced. Not cheerful news for any of us. Go read his article. I just googled today's The Wall Street Journal and found it.

My grasp of economic issues is rudimentariy at best. Yet I believe our continuous growth and consumption habits may not be sustainable with all the obstacles (many self inflicted by regulations) which we cannot dodge.

Our kind of boating is essentially recreational, and by definition not essential. In order to maintain what we do, in the future I predict there will have to be prioritization of sorts. Fuel cost are going to go up, and inflation cannot be tamped down forever. Food costs will continue to rise, and everything connected with boating is going to be more expensive.

Let us hope we don't reach the point where we have to make the best of bad choices.

I recall over 30 years ago our academics were predicting all kinds of problems with over population. China has slowed their numbers down, but not the rest of the world which is out of control. More people, obviously, want a higher standard of living which means consuming more. But as we all understand that comes with a cost to our environment.

Having proximity to boating areas may become very, very important as expense of transporting our kinds of boats becomes a significant cost factor.

John
 
Just read an economist's essay about the end of the 60-Year Supercycle. His contention, supported with what appears to be good data, states that for the past 60 years we have been living in a "leveraged" era. During the 90's, we bought, bought, bought - and we produced so many goods under the assumption that folks had the money and would continue buying (of course, much of that money was from credit cards or loans). From 2002-2007, Americans spent $2.3 trillion purchasing homes using equity loan or refinancing - often without down payments - and now those homes have lost much of their 'value' and it isn't over yet. Our net worth in those heady days seemed almost unbelievable (due to the increase in the perceived value of our house), even though our savings accounts were often negative when credit card debt and car and house loans were accounted for. Now the Supercycle is over. We have returned to reality and it often isn't so pretty - house values have plunged (and still going down in most parts of the country) and the true value of our net worth has hit us in the face.

Not all have seen this reality - a Pew poll shows that 2/3 of Americans believe the economy will return 'to the good ol' days' within 3 years. However, on the larger scale, national economies and currencies are seen to be at risk- Iceland, Greece, Ireland ... and most communities, states, and national governments are seeing the necessity to balance their budgets. More regulations (both government and corporate) are controlling the availability of credit and loans. There is a new reality now and the Supercycle is done (according to many economists). We all are (or should be) adjusting to the new reality where the word frugal is seen as a positive.

There are many positives with the new cycle we are entering - as mentioned by many in the postings on this subject, friendships and family become more valued as material things diminish in importance. Owning a practical boat becomes a great 'excuse' for sharing wonderful moments with family and friends.

Economists talk of opportunity cost. Put simply, when you spend a buck for something you have foregone something else worth a buck. Or, even more importantly, that buck invested wisely may someday be worth two bucks - so by spending the buck today you lost the opportunity to buy something worth two bucks in the future. For instance - you make the choice not to spend a buck today on a gizmo and instead put that buck into the IRA so you will have more bucks in the future after retiring so you will have more choices then. El and I call a dollar a "freedom chip."

Again according to Pew, 1 out of 2 Americans say they are saving more today after the economic meltdown than previously - more future opportunity - a wonderful positive in our culture.

It has been interesting reading the posts by Brats in "the pub." Compared with most other economic reading about 'our culture,' we are indeed a unique group.
 
Not that I'm crying but our first month long vacation ever and fuel prices are through the roof. I almost feel bad traveling dragging a relatively new boat down the east coast to Florida with a late model pickup truck. So many people hurting. I wonder if I should have bought an aluminum trailer as I worry if someone will steal it and sell it for scrap. The good part is at least I look like I earned it. Not being ever mistaken as a natty dresser blue jeans and a dark blue t-shirt with sneakers is my uniform of the day. I checked marina fuel prices in Florida gas 4.20 a gallon at least it has no ethanol at most marinas. Having two thirty gallon tanks I guess a fill up on the boat could hit 200.00. Diesel for the truck could be close to 130 as that holds almost forty gallons. At 62 I'm just going to go for it. Leveraging and deleveraging it's all one vicious cycle of life. You thought you needed it now you realize you don't.
D.D.
 
El and Bill wrote:

"a Pew poll shows that 2/3 of Americans believe the economy will return 'to the good ol' days' within 3 years."

Americans have had a chauvinistic outlook toward the world which sees this country as almighty in economic, political, and military endeavors, reigning supreme with God's blessing and guidance.

Nice view of the world up until now!

How long it will take some to realize how much the rest of the world has changed and how much our relative position has declined as well as how little we can afford to continue our practices of the past is an interesting question, but it may take a decade or two for some to make this realization and to follow it though with re-thinking all of our personal and group decision making.

From this perspective, the next several decades harbor a great deal of turmoil as we adjust to this new reality. Actually, many in the younger generations have already sensed this, and show it in their different attitudes towards education, careers, and personal values.

To expect the American economy to return to "normal' in the next few years is absurd, to say the least!

It's a New World, get used to it!

Joe. :disgust :thup
 
I could type pages on this subject, but I won't.

I agree with El and Bill, the economy as we've known it is NOT coming back. This will be painful for many many people, it already is. As I look around my age group/friends/cohorts, almost without exception they are broke, struggling, living at home, on couches (sometimes mine!) depressed, without direction or even a plan to move toward some sort of sustainable lifestyle. It's popular to blame them as lazy and unmotivated ("WE did it, why can't you?") it's a statistical fact that every generation born after the boomers are worse off...and this is the first time in US history that has happened.

I'm personally banking on this survival tactic: be as absolutely frugal as possible without compromising ALL the pleasures in life. I scrutinize every dollar I spend, for I know how hard it is to make them these days.

There are tricks to having others subsidize your fuel costs if you have the notion to do so. For example: I'm delivering three puppies from two different breeders on my upcoming trip from Mn. to the PNW. This will cover all off my travel cost. I will most likely have one or possibly two riders via craigslist, which will fill the boat tanks once I get there. Is it a minor hassle to tend to puppies while driving 2k miles? yeap, but so is earning $500 bucks doing brake jobs and oil changes. Is it strange or scary meeting and dealing with strangers from craigslist, sort of, but I'm still here, and with the exception of one person, I've met nothing but interesting people, some still friends.

Food: This is going to be the next kicker in people's budgets. Americans have never had to consider it a problem until now. My survival tactic for that (if anyone cares): never eat anything that comes in a box. Prepare your meals, keep them simple, oats, rice and beans, potatoes (Roger grows good ones!) etc. etc. I try to eat like the third world who's budget is two bucks a day. One will be healthy for it to ironically enough.

Wild foods and game are also God sends on the budget. I've been known to harvest fresh venison via roadkill here in a part of the world where every other driver has at least one smashed up fender on their car. Somehow I've escaped this directly.

I know, all this is common knowledge to smart people like us, it's always good to be reminded...and remind myself int eh process.

Brenton
 
I hate to interject a note of optimism into this thread, but while I don't disagree with the long term concerns, the economy is coming back. Productivity is very high and manufacturing is booming. Most of my suppliers of production line equipment have big order backlogs. My customers in agriculture are doing well for the first time in years. Oil prices are up because demand is up. Although it's a limited time window, I still think we have time to make the changes needed to reduce our national debt load.

However, I hope the old bubble economy doesn't come back. It was unsustainable in many ways, and we sank lower after each bubble. It's a good thing that individuals are saving more and reducing debt. I tell younger people that the banks are the devil and I'm only half kidding.

Brenton, while I agree it may be tougher to get established now than it was 30 years ago, I also think maybe part of the problem is that you and your friends are too highly educated. I say this because my 30 year old daughter and her friends are all highly educated in fields like social work, public administration, humanities and the arts. They are a bunch of great people and I enjoy spending time with them, but it's hard to make a living in those fields.

At the same time, our business is hiring young graduates from a local trade school that are trained in instrumentation, electronics and IT. They are doing interesting work and making enough money to buy houses and cars and go on vacations. We just spoke to an IT class yesterday, and there is a lot of opportunity for the class graduating in June. I think your generation and mine were both sold a bill of goods by the universities that all you had to do was get a liberal arts education and all would be well.

So, I think the economy is coming back, but hopefully at a lower and more sustainable level. I think hiring is picking up, but the openings are going to be for more specific skills. I think any of us that can afford any kind of boat are very lucky and many will find ways to continue boating. I think the last 2-3 years have been frightening and humbling for many people, but Americans are a resilient bunch and we are bouncing back.
Lyle
 
MilesandMiles":a7gm7az7 said:
Food: This is going to be the next kicker in people's budgets. Americans have never had to consider it a problem until now.

Brenton
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Brenton, I suppose I'm taking this out of context but I think a lot of Americans see food prices as a kicker in their budgets, and have for a long time. We wouldn't have food banks and things like that if they didn't. I know food prices are going up (again), they have gone up and down, mostly up for a long tome.

What am I missing about your comment?

Charlie
 
One thing that baffles me is seeing folks at the fuel pumps complaining about the cost of fuel while they are sipping down their $4.00 plus grande cup of "fu fu" specialty coffee. :roll: (Wonder how much that works out to per gallon?)
 
Captains Cat":1yvodc0m said:
MilesandMiles":1yvodc0m said:
Food: This is going to be the next kicker in people's budgets. Americans have never had to consider it a problem until now.

Brenton
Click to expand...

Brenton, I suppose I'm taking this out of context but I think a lot of Americans see food prices as a kicker in their budgets, and have for a long time. We wouldn't have food banks and things like that if they didn't. I know food prices are going up (again), they have gone up and down, mostly up for a long tome.

What am I missing about your comment?

Charlie
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Fair enough to ask me to clarify this statement.

I'm talking about people who won't or don't go to food banks. Working families as they generically call them, those that just get by (a larger and larger group). Food prices only go down when seller consolidation goes up (wal-mart model) and selling in volume allows slightly lower prices for a while (until they've undercut all local competition, then it's monopoly capitalism again)

Personal example: I usually grab the same items at the store, and can predict within a few bucks what my bill at check out will be. I noticed the past few visits it jumping up significantly, so I woke up to the ring out process again...whoa! kale jumped $1.50 in a week! My favorite yogurt over a buck too! This happened overnight. I personally can adjust and absorb it due to lifestyle and expenses, but many others either cut from elsewhere or put it back.

I doubt most here sit on the line like this, and it's easy to forget what it's like to.

Food, like all commodities, have become controlled by middle-man speculation and market futures, squeezing both the growers and the consumers. When a pinch point develops, prices become the whims and motive of the few.

Another little secret, I'm not above dumster diving, you might be amazed at what's thrown away :)

Brenton
 
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