The Decision Strategist

In it’s first (not quite whole) month, The Decision Strategist has posted 34 articles. Here are some of my favorites:

• The What am I Doing with My Life? series discusses how I am attempting to decide what to do in the near future.
• The Buy or Rent? series discusses the benefits and risks of buying a house versus renting, as well as providing a spreadsheet to calculate net worth for each option.
• How to Fight Advertising was my first post about the psychology of marketing and how consumers can turn that on their head. A strangely popular post.
• How to use Paired Comparison in Application Planning describes the process of deciding which task to tackle next as I move on with the application I’m trying to build.

Favorite missed post:

• Housing Pundits and the If-Then Fallacy describes people attempts to manipulate a simple human error for their own benefit. I really thought this post didn’t get the attention it deserved, mostly because these tactics aren’t just used by real estate agents, but also by spouses, parents, kids, and anyone trying to convince you of their point of view.

Thanks for all of you readers, especially those who took the time to leave a comment.

-zot

Popularity: 15%

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It’s not often that I see a fantastic article that is spot on, especially in syndicated media, but The Fed’s Subprime Solution, an opinion piece by James Grant at the New York Times, is excellent.

capitalism without financial failure is not capitalism at all, but a kind of socialism for the rich.

Big Business Bail Out

I’m not a fan of proposals by some presidential candidates to provide a fund to bail out people with defaulting mortgages. But I am really not a fan of the tendency by our federal government to bail out big business. Lenders and other giant credit companies are part of what got us into the current credit crunch, and they should not be able to walk away supported by the public’s tax dollars.

Part of our quest to understand and improve our own decision making must necessarily involve the examination and criticism of other’s decisions. Perhaps more importantly, it must include responsibility for our decisions. As big credit companies come to depend on a public bail out in times of stress, they increase risk and instability for us all, and cost us a lot of money in the meantime.

-zot

ps - If my writing is dense today, it’s because I’ve been reading Equality by Default, an excellent essay on the perils of modernity. The best book I’ve read in several years.

Popularity: 11%

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Money, Matter, and More Musings has an interesting article about the lack of a relationship between net worth and intelligence. By intelligence the study means IQ, which is a rather imperfect measure. For examples, see Jim Loy’s IQ test and IQ Test: Where Does It Come From and What Does It Measure?. The suggestion is that understanding finance has absolutely nothing to do with smart financial choices.

Does this surprise anyone? The post suggests that there intelligent people do not posses traits that are required for fiscal responsibility, including the following:

• Ambition
• Energy, Willpower, and Discipline
• Emotional Stability

This is a good way of looking at it, but to me it seems like the biggest reason is a combination of attention and poor impulse control.

Attention

I use attention here to mean whether or not people invest the time and energy to keep track of their finances. If they don’t care, then they aren’t going to invest much effort in trying to manage their money or build wealth. Building net worth is not a priority for some people, and there is no reason to think that people with higher IQ’s should behave any differently.

Impulsive Purchases

I like the term “poor impulse control” because it implies something bad. Granted it can lead to bad decisions, but all of us makes tons of impulsive decisions every day, and they mostly turn out well. In fact, I’m reading Blink: The Power of Thinking Without Thinking right now, and so far it’s talking about the usefulness of our quick decision making abilities.

And yet, there is something to be said for being able to resist buying something that you know you don’t want. Short term versus long term thinking is something that varies from person to person, and again doesn’t seem to have any relationship to intelligence.

Short term and long term thinking is an interesting subject, I’ll make a post about it soon.

-zot

Popularity: 9%

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After his comment on How I Chose The Wrong Car, I asked my friend A.J. for more details on his decision to convert his car to vegetable oil fuel. He responded with this great email:

The lowdown on the Grease Car:

You need to start with a diesel engine- The conversion kit starts at around $1000 (I got some extras including a computer that automatically switches between WVO [waste veggie oil] and diesel).

Having a garage install the kit runs between $800-1000. Basically, you start the car on diesel to get the engine up to temperature, then run WVO, and flush diesel back into the engine before you turn off the car. The reason is so that you don’t get congealed oil in your lines. In a hot place like Arizona you could probably get away with not flushing the lines in Summer.

Since you have two tanks, if you run out of WVO, you can still run the car on diesel. The only added maintenance is changing an extra oil filter with your normal oil change (about $5, and 3 minutes)

I get my WVO free from local restaurants, which would normally pay to have someone else cart it away, because it’s considered haz mat by the government (the gov’t does actually look out for us from time to time).
The perks are:
•You’re running mostly on free fuel. I drove from NoHo to Baltimore (400 mi), and only used maybe 1/2 gal of diesel, if that. That means my cost was the equivalent of getting 800mpg diesel at $2.89/gal.
•People claim that their engines run smoother on WVO, and that it causes even less wear than diesel.
•WVO has less emissions than diesel or gasoline (check Greasecar for the numbers).
•As I wrote above, WVO is a hazardous material, which I’m disposing of in a safe way.
•Then there are all of the socio-political implications of relying so much less on petroleum.

The downsides:
•You have to filter the grease yourself, which would be difficult if you lived in an apartment building in the city. I have a backyard of sorts, so it’s a bit easier. You don’t want to be spilling waste vegetable oil (WVO) in your
apartment.
•Potentially spilling grease in your trunk, where the tank is. There are solutions to this, but I’d say it takes a bit of thinking/practice.
•Lost trunk space. You’re carrying an extra 13-15 gallon tank. My tank fits where my spare tire goes, but now my spare is in my trunk. The benefit of doing this is that I don’t need to get to the tank (because I have a fill tube), and my spare is still accessible. This was a wash for me, because the Jetta has a significantly larger trunk than my Volvo did.
•I’ve heard of people getting pulled over in the South because they’re “not paying road taxes.” These are just stories I’ve heard, and there’s the simple solution of not advertising that it’s a greasecar (they give you a window sticker).
•If you have the manual diesel/WVO switchover kit, there’s risk of leaving WVO in your lines to congeal.

I crunched some numbers using the costs in his email, and figuring an average 43 mpg normally and 12,000 miles a year, with diesel at $2.89, it would take about 2.75 years to break even. By five years you’ve saved $1,700. This is all assuming that the cost of diesel stays the same. If you drive more than 12,000 miles a year or the price of diesel goes up, you’d recoup your initial costs much more quickly.

I also like his list of pros and cons. According to Greasecar, vegetable oil fuel emits 26% less carbon monoxide and 39% less particulate matter. That’s a big environmental savings. It sounds like the biggest negative at this point is having to filter the grease, which could be a real limit for people without the space.

What are your reasons for considering whether or not to do this? If you have done this, I’d love to hear about how it’s been.

-zot

Popularity: 29%

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