I was broke, the hotel insisted on a deposit and it was raining … hard.
I don’t mean broke as in “I left my wallet at home.” I mean there was nothing in the bank — at all. The puny limit on my only credit card was maxed out.
I stood in front of an unimpressed hotel clerk in a modest establishment about two miles from the city center. My employer had sent me to a conference at the last minute. My flight landed after dark, the taxi took an hour to get downtown through the downpour and they wouldn’t let me in unless I gave them the deposit that my office forgot to arrange.
That was the moment when I swore to myself that I’d never be one of the “salaried poor” again…
I haven’t always been a hotshot financial newsletter writer.
In fact, I spent most of my working life in the nonprofit sector. My work was unusual — there aren’t that many libertarian housing organizations for low-income communities out there — but that didn’t make it pay any better. I made a principled choice, and I’d do it again.
7 Tips for Avoiding a Crisis
But that life did teach me some critical lessons … some that I learned quickly and intuitively, and some that life had to beat into me like a 19th-century schoolmaster. Those lessons usually revolved around not spending money, or spending less than others did for the same things.
Here are my seven favorites:
- Learn how to do things for yourself: I didn’t start having my cars serviced by a mechanic until I was well into my 30s. Before then, I taught myself to do pretty much everything, up to and including suspension work. I’ll never forget stripping a junked 1967 Ford Econoline van looking for a brake rotor. I did the same thing with musical instruments, electronics and computers. You don’t have to do everything yourself, but at least learn the basics so you can tell when someone is proposing to rip you off for repairs.
- Use your bank — don’t let it use you: I don’t like banks, period. Overall, I think banks are good at providing basic financial services, but they inevitably look to create and maintain market imperfections in order to extract “rent” from us. One of the most egregious things they do is to charge for other banks’ ATMs, which leads to an arms race to see who can have the fewest possible in their network (to maximize fee income). I beat that by seeking out a bank that has no ATMs of its own — one that refunds all ATM fees charged by other banks instead.
- Don’t take the add-ons: Up-selling can be a valuable thing — I sincerely hope you’ll give my Bauman Letter a try after reading this, for example — but in many cases they’re just a rank rip-off. Rental car insurance, trip cancellation insurance and extended warranties are all examples of things that are empirically shown to add little or no value to anything but the merchant’s bottom line. Acquire a credit card that offers rental coverage and purchase warranties instead — there are plenty out there.
- Get rid of obsolete technologies: A relative, whom I won’t name for obvious reasons, has a big collection of videodiscs and videodisc players. Once he invested in the discs, he was locked into the players, which are now obsolete and cost a fortune to fix. You may not be aware of it. But compact audio discs and DVDs are essentially at the end of their technological life. Digitize those collections, and save yourself some space and future repair bills.
- Retire to a state with a low cost of living, affordable health care, plenty of cheap entertainment options and low property crime. States to target (in order of preference) are Florida, Wyoming, South Dakota, South Carolina, Colorado, Idaho, Texas, Montana, Nevada and Virginia. Those to avoid (again descending in order) are Rhode Island, the District of Columbia, Hawaii, Connecticut, Vermont, New Jersey, West Virginia, New York, Alaska and — alas — my home state of Maryland.
- Use the information revolution to get bargains: I very rarely buy any big-ticket items brand-new. Instead I seek out “warehouse deals,” overstock items, late-model used cars and similar items that can’t be sold new but basically are. For example, after some dedicated Internet sleuthing, I just scored a new car that had been a sponsor vehicle for the Georgia Tech football coaching staff (sorry, Bulldog fans). It had all the options I wanted, a full warranty, less than 15,000 miles on the clock and cost me less than 60% of the price of a new model.
- Seek out and act on good advice: Above all, look for sources of information that aren’t vested in that information. Don’t ask a tire dealer about new tires. Go to review websites like this one and then use a price comparison tool like this. Those sites make their living by giving reliable quality advice, not selling the product in question.
Come to think of it, that’s what I do as well … so if you want to make, save and preserve your money, give The Bauman Letter a whirl. It will be worth it: That’s my promise to you.
Editor, The Bauman Letter