Recently, though, interest rates have dropped so low that it’s very easy to make good use of debt. With rising inflation it’s now against one’s interest to hold cash, so for the first time in my life I am negative cash, meaning that the balance of my cash accounts (banks and brokerages) is negative on purpose.

There are annoying technical reasons why I can’t do this, but in an ideal world I would be at zero or negative cash on every account. If this sounds scary, it might be because you’re scared of the wrong things.

The most basic example of why you should be negative cash is this: you can borrow cash for 1% and reinvest it in stable safe investments to make, say, 8%. That means that if you could borrow $100k, you could get $7000 per year with almost no risk. For this reason, you should probably borrow as much cash as you can at low rates and invest it at higher rates.

I have a personal connection to a real estate developer who pays me a guaranteed 8%. I know him well and have seen many examples of his integrity and character, so I characterize this as a zero risk investment (other than the risk of not being able to access my money, since it’s a fixed term loan). Anyone could buy stable coins and earn interest on them, which I would also characterize as extremely low risk.

If you buy that premise, that you can net 7% on borrowed money, how much money should you borrow? As much as you can borrow without incurring negative consequences. That number is probably larger than the amount of cash you’d have sitting in your checking account, thus you end up with a net negative cash balance.

The primary way you get this borrowed money is by taking portfolio margin loans against stocks. If you have any non-retirement stocks you should move them to M1 or Interactive Brokers and take a margin loan against them. Interactive Brokers charges 1.6% or less and M1 charges a bit more. Stocks can and do go down, so you don’t want to borrow too close to your limit.

I go a step further and use Interactive Brokers as my main bank. Credit cards are automatically paid from it, increasing my negative cash balance every month. Income goes into it, which offsets the cash balance. I have an ATM card that gives me cash and increases the negative balance.

It is really scary to see a huge negative cash balance at your bank at first, but eventually you get used to it.

Anything that you could pay cash for, you can also try to finance. For example, I always paid cash for cars in the past because I believe you should never buy a car that you can’t pay cash for. But just because you can pay cash doesn’t mean that you should. Rather than using $15k in cash or taking up margin that could be used for investments, I financed my car at 3%.

I don’t keep an emergency fund, since that’s just uninvested cash. If I needed cash for an emergency I’d just pull it out of the margin account.

The danger of debt is that it allows you to buy things you can’t afford. I would never do this and wouldn’t advocate that anyone else does it (except possibly for a house where your net cost [lost return on down payment + mortgage payment] was the same or lower than a rental). What I’m advocating is paying banks a small amount to use their money to make a larger amount.

I’ve been really into investing and financial stuff recently, but I don’t write much about it because I don’t want this to turn into a financial blog. The reason I wrote about this is because I think it’s counterintuitive to think of having a negative cash balance as being financially prudent, and it’s a good example of why it’s important to think for yourself rather than do what everyone else is doing.

###

I am in Alaska on a cruise now! It feels so amazing to be cruising again.

Photo is a ceramic centerpiece made by Zsolnay in Budapest.

If you want the lowest Interactive Brokers interest rate, go to stockbrokers.com and use their link. It starts you at just around 1%.

Investing and gambling are the exact same thing. The difference between casinos and the stock market is that in the long run the casinos will win by a little bit and in the stock market you will win by a little bit. For my examples I will use betting, because it’s a little bit clearer, but the principles and effects are the same in investing.

Imagine that I offer you a bet. The bet is that we flip a coin, and no matter whether it’s heads or tails, we exchange no money. Not much of a bet, really. The EV of this situation is exactly zero, because even if we do this “bet” a million times, you will neither gain nor lose money. The variance is also zero, because your tally of how much you’re up or down will also never change.

Now Imagine that I offer you more normal bet, where we flip a coin and if it’s heads I give you a dollar and if it’s tails you give me a dollar. The EV of this bet is also zero, because in the long run we can expect you to have the same amount of money as when you started. It is higher variance, though, because at any given point of time you may be up or down by some amount.

If we up the ante and make it $100 per flip, the EV is still zero, but the variance is now VERY high.

Imagine that no one really understands EV or variance, but that all of them are choosing one of these bets to do every day. Someone doing the bet where nothing changes won’t think of himself as a winner or loser. Someone who happens to be up in the second one, due to variance, might believe that he’s a good gambler. Someone who happens to be down in that same bet might feel like he’s unlucky. Someone who happens to be up in the last example may feel like he’s a great gambler.

A good investor is looking for EV at the lowest variance cost. EV, or expected value, is just the amount they can expect to gain by investing. It makes sense that we would want to maximize that. It also makes sense that we would typically want to minimize variance. It’s hard to make future plans if we have no idea how much money we’ll have in the future. Lower variance makes that band of possibility narrower.

The reason people choose broad index funds or a balanced portfolio is for this very reason. It is the proven way to capture the most EV at the lowest “cost” of variance.

There are also people who choose individual stocks. They believe that they are capturing EV, but they are not. They are capturing variance.

Imagine that there are two people. One thinks that Gamestop is absurdly priced and decides to short it. The other decides that it’s going to go higher and buys it. The first thing that neither is considering is that the price is what it is for a reason, and that reason is that the price encompasses the average of all predictable possibilities.

If Gamestop goes up, the person who bought it will think that they are a good investor. They have beaten the market, which is considered to be impossible! However, what is more likely, that they knew something the entirety of the market did not know, or that they happened to be lucky and be on the positive side of variance? Well, considering that 50% of all people will be up… it’s almost certainly variance.

Variance is such a likely reason for success in stock trading, that it must be assumed to be the reason unless you know exactly what your edge was.

The first guy to realize that Gamestop was subject to a short squeeze had a legitimate edge. The early people to read his theories before wall street caught on may also have had a legitimate edge. By the time hedge funds were talking about Gamestop, all further wins and losses were due to variance.

There’s on additional layer to think about, though. Not every dollar is equally valuable in terms of utility. If you give five dollars to someone who is starving and standing next to a McDonalds, he can derive a lot of practical utility out of that five dollar bill. If you give five dollars to Jeff Bezos, it has utility approaching zero.

In your own life, this is also true. Imagine that you were on the verge of bankruptcy because of a $10,000 debt that had to be paid, and you only had $500. If you bet it all on one number in roulette, which is a strictly negative-EV move, it may actually have a positive EV for you. If you lose it doesn’t matter because you were going bankrupt anyway, and if you get lucky and happen to win, you don’t have to declare bankruptcy.

If you need a life saving medical treatment and only have half the money necessary… maybe you’d bet it all on one coin toss because you’d go from a 0% chance of living to a 50% chance.

If you’re working a job with no sign of being able to retire, you might want to take on more variance just to give yourself some chance to retire early, at the cost of having a slightly lower quality of life if you lose.

Any investment other than a risk-free investment or very safe index-fund based portfolio will be higher variance. In order to accept that higher variance you must either have a defensible explanation for why it is higher EV, or you must have a reason why variance will help you. If you don’t, stick to safe investments.

###

Photo is a Maui sunset.

No tea time this week, sorry!

There are ways in which being weird is difficult. There are far fewer examples of what you should do, since no one else is in a remotely similar position. A decade ago Sebastian Marshall wrote a really poignant post about how weird people don’t get the benefits of normal life.

I don’t really think of people as being either weird or not weird, but more as whether or not they accept the inevitable truth that they’re weird. That’s just my perception, though, I’m not really sure if it’s accurate. My theory is that if you have enough freedom to explore options, and enough courage to accept that you’re weird, you’ll probably realize that you are. So when I write about being weird it’s mostly to give those in the “not weird yet” camp some clarity on why they might want to make the jump.

One of the best things about being weird is that you have far more options than normal people. It can sometimes feel as though we have fewer options, since the world isn’t designed for us. For example, at an average train station there might be zero restaurants I’m willing to eat at, even though a normal person might have many options.

If we look a little further, though, we have many more options. If someone lived a very normal life and then all of a sudden quit his job to become a professional surfer, people would think he was nuts and probably seriously worry about him. He was in a certain mold for his whole life, and so once he popped out of that mold it was a sign that something was wrong. He knows that it would be seen as crazy, so he has a massive incentive not to do something so drastic. His bubble of normalcy is self-reinforcing.

On the other hand, I dropped out of school to become a professional gambler, then a pick up artist, then an author, then a programmer, then a nomad minimalist… and no one really batted an eye. The label of “weird person” encompasses pretty much anything you’d ever want to do. Even doing normal things is ok if you’re a weird person.

This freedom allows you to consider everything objectively, rather than through the eyes of those who will judge you and try to get you back in the mainstream. I consider fairly insane options all the time, and I do so with the knowledge that I could actually end up doing them, versus a more normal person who may just daydream.

The longer you’ve lived a normal life the more difficult it would be to embrace your weirdness and live a life that you design yourself. If you do, though, you’ll find nearly unlimited options on the other side of the fence. Most of them won’t be for you, but you’ll have the freedom to find those that are perfect for you.

###

Photo is a lizard warming himself up in Hawaii

No Tea Time this week, sorry! I had a last minute schedule change. Probably next week, but I’m not sure.

There are two different ways in which I tend to begin a buying decision. The first is looking to solve a problem, and the second is upon finding an opportunity.

Take, for example, my tea set that I travel with everywhere I go. My old set was beautiful, but it was ceramic. That meant that it was heavy and also that it could break. The housekeeper on a cruise broke the lid of my gaiwan once and it made it very difficult to make tea for the rest of the trip. In this case I began the search for a new tea set that would solve this problem.

A real estate agent friend here in Vegas posted an ad for a house she listed on Instagram. It had huge decks, a fire pit, and was nestled amongst massive pine trees. It looked like the opposite of a typical house in Vegas, so I dug in and realized that you could buy houses on Mt. Charleston, which is a tall mountain right outside of Vegas. The opportunity here was that I live under an hour away from a pine forest and mountains — maybe there was a cabin I could purchase to take advantage of having access to a totally different climate.

No matter how I start the buying process, I try to establish what factors I actually care about before doing my research. These may change as I go if I learn something new, but if you don’t start knowing what you’re looking for you’re more susceptible to letting sellers tell you what you should care about, which is often not in your best interest.

In the case of the the tea set, I cared about the normal things that inspired the previous set (compact size, stacking cups so I can share with friends, good enough quality that it doesn’t drip everywhere, etc), but I also cared about something that would be much more durable.

My vision for the cabin was that I could go there in the summer to escape the heat, possibly even living there for a week at a time, and that it could serve as a base for ski trips in the winter. That meant that it had to be accessible, close to hiking and skiing, and be big enough that my wife and I could live there for a week and continue to work or bring a couple friends up for a weekend.

Next I cast a really wide net and consider as many options as possible. I searched everywhere on Mt. Charleston and actually found a neighborhood I liked better than the original one. I even drove up there to see what they felt like. For my tea set I searched for every possible type of travel tea set, considered making my own, and even considered things that weren’t meant for tea, like titanium sake cups.

When I was in the process of buying a boat I initially wanted a pontoon boat, because my main criteria was being able to drink tea on the lake and go swimming. Because I cast a wider net I discovered a whole class of boats I didn’t realize existed and were affordable, cabin cruisers, so I got everything I initially wanted but also gained the benefit of having a vessel I could do overnight trips on.

Once I finish this process, I will usually have my options narrowed down to just one or a few items. In the last phase of my buying process I consider what I would pay for the purchase and whether it would be worth it and provide more value than I could get by spending that money in other areas.

I found a great cabin, but then discoveed that it had some big hidden costs that would run to about $6k per year, and I ultimately decided that it didn’t offer enough value to justify the cost. In the case of the tea cups there was a clear winner so I just purchased it. When I’m researching for the gear post I often buy several different options so that I can make an even better decision, since I know that hundreds or thousands of people will also benefit from that small edge.

When I was in my teens my father gave me a great compliment and said that he had never met anyone who was less influenced by advertising than me. I think it’s very much due to this process, which I’ve been doing to some extent even since I was a teenager, that has allowed me to ignore advertising and hype and to buy the thing that is actually the best. You can see a real-life example of this process when I bought my car.

###

Photo is from Mary Jane Falls on Mt. Charleston

I will be doing another Tea Time with Tynan this Sunday at 10am PST. We’ll discuss buying things for the first half and open it up to any other questions for the second half. Please join us!

Just like financial investments, you want to choose your investments wisely. If you diligently save your money but invest it in random penny stocks, you won’t get much of a return. If you invest your time and effort into the wrong people, you won’t end up with the social group that you want.

It’s easy to say yes to an invitation to a party or to hang out, but it’s important to remember that you have limited time and limited focus. Even if you have nothing else going on today and you decide to spend time with someone you’re not crazy about, you may be less motivated to seek out a friend the next day.

A good rule of thumb is to think about whether you are interested in deepening a friendship. If you are, you should spend time with that person. If you’re not, you shouldn’t. If you’re not sure, you might as well hang out with them once or twice more to figure it out. The upside of a great friendship is high enough that it’s worth taking the risk.

The biggest input into a friendship is quality time, not just time. My friends and I do activities together, but the bulk of our time is spent just sitting around in conversation. That tends to be the time that deepens friendships, so it’s what we focus on. Part of why travel is so good for friendships is because it strips away the background noise and routines of life and allows for more conversation.

You can also think about how you can make your friends lives better. Each of you have different skills and experience, so you can lend that experience to each other. My friend Ben did a deep dive into crypto mining and helped me start mining ethereum. I did a lot of research on real estate in Las Vegas and he ended up buying a house down the street from me. You should always be thinking about how you can help your friends out in a way that they receive disproportional returns. That’s part of why I like buying real estate with my friends… through a bit of work and research I can help each of them get a vacation house for a fraction of the normal price and hassle.

One really high leverage activity is introducing your friends to other friends and fostering a good friend group. If we already agree that good friendships are some of the most valuable things you can have, then it follows that helping a friend have a good friendship would be a really great way to bring them value. Along those same lines, you can organize events that help friends deepen friendships. Two of my friends organized a friends’ trip to Maui this week, for example. You could also do simpler like organize a dinner or a game of frisbee together.

Good friendships build trust, and that trust allows for quality feedback to be shared. Amongst my best friends I probably have 10 or so people with whom I can give and receive very blunt feedback. If they tell me that they think I’m making a mistake, I will start with the assumption that they’re probably right and will treat it as an opportunity to improve, and they will probably do the same. That allows all of us to grow with wisdom beyond our own.

Passively investing is usually the best method for financial investments, but the opposite is true for friendships. Think about your friends, think about which friendships you want to see grow, think about how you can benefit those friends, and invest the time and effort to do so. There is probably no higher return on your time and effort.

###

Photo is my friend Noah at the driving range. Our friendship is one of the ones that has grown the most in the past couple years and I think he also does a great job of investing in friendships.

No Tea Time with Tynan this weekend or next. Hopefully soon!

When people ask why I like Vegas, the first thing that comes to my mind is that it has the highest quality of life and the lowest friction of any city I’ve been to. In other words, there is a huge range of great stuff to do and experience here, and all of it is very easily accessible, so you actually do it.

There is no traffic, you can park anywhere (usually for free), and almost everything that isn’t on the strip is reasonably priced. Because of the city’s unique geography and surplus of space, there are things you can do here that you just can’t do in most cities this size.

Nature

Especially being unable to travel during this past year, I became even more grateful for the nature activities in Vegas. Tonight we’re going to go out on the boat in Lake Mead, and then tomorrow we’re going to go skiing on Mt. Charleston. Most people probably don’t think of boating and skiing as Vegas activities, but they’re some of our favorite things to do. We also have Red Rock and Valley of Fire, which are a bit too hot in the summer, but offer great hiking for the rest of the year.

Vegas is close enough to Utah that you can do a day trip to hike around Zion, which is one of the best national parks in America, or go a little further to Bryce or Grand Canyon.

Seasons

Surprisingly, I’ve come to love the seasons of Vegas. The summer is hot, of course, but even if you don’t have your own swimming pool, it’s easy to get access at some of the casinos. Many houses come with pools here, all apartment complexes have them, and there are two water parks, one within 15 minutes of the strip. We moved into a house with a pool this year, and I jumped in just about every day and we went boating and swimming in Lake Mead once or twice a week.

Out of curiousity I looked to see how much houses with pools cost in Austin, and anything in any reasonable location was 1-2M. Here in Vegas a huge portion of houses in the $300-400k range have pools.

The heat in Vegas is a dry heat, which means you must drink a ton of water in the summer, but it also means that you never feel sticky and gross like you would in New York in the summer. It’s very unpleasant if you’re standing in direct sunlight, but if you’re in shade or doing some sort of water activity, it feels great.

Spring and Fall are perfect, as you might imagine. Weather is in the 60s-80s and with so much nature around it’s easy to enjoy those seasons. We also have almost no bugs, so you can eat outdoors or leave your doors open to have a nice breeze come through.

Even the winter here is great. You can see snow-capped mountains in the distance, and can drive up to them to ski, sled, or just hike through the pine trees. It’s chilly for a lot of winter, but never so cold that you need to seriously bundle up and avoid being outdoors. A lot of houses here have fire places, and it’s nice to get a chance to use them.

I also discovered, through researching solar, that Vegas has more sunshine per year than any other city in the US. What do you think that does for your mood?

Airport

I think Las Vegas has perhaps the best airport / airport location in the US.

Flying to LA or SF is so cheap (often $20-30) and quick (45-75 minutes) that it may as well be a more comfortable bus ride. I’ve actually flown to SF just to have a meal with friends before.

LAX and SFO are two major hubs, but so are DEN and PHX, meaning that within 1.5 hours you have access to four major hubs. Vegas isn’t an airport hub (unless you count Allegiant), but because it’s a unique tourist destination within the US it has a ton of direct flights to just about anywhere. I haven’t actually checked, but I bet it has more direct flights to domestic locations than any other non-hub city.

Flights to and from Vegas are usually cheaper than from anywhere else, even when you connect through a bigger hub. This may be because it’s not a common business route, but I’m not sure.

The airport is also 10-15 minutes away from where I live (and the strip), so it’s trivially easy to go there and back to fly or to pick up friends. You don’t even need to go on a highway. Contrast that to most cities where it can be 30+ minutes each way. Before we moved I lived 8 minutes from the airport and once didn’t leave my living room until I got the alert that the flight was boarding!

Las Vegas airport also has an Amex Centurion Lounge and you can access all gates once you get behind security (a pet peeve of mine is when you have to leave security and go back in to get to a different area).

Housing

There is no housing crisis in Vegas. We bought a four bedroom 3000 square foot house with a pool and large backyard for $350k. There are quality condos in good areas available for under $150k. It always annoys me when people complain that younger generations can’t afford to buy houses — they can, they just have to move to cities where it makes sense. If you don’t want to buy, rent is also very cheap with tons of good options under $1000 a month.

Having an affordable city also leads to diversity. Places like SF that consider themselves to be diverse are generally diverse in race, but dominated by wealthy liberals who all think more-or-less the same. In Vegas I find that in my regular course of activities I’m surrounded by all sorts of people across many different spectrums. I’m friends with rich people, poor people, liberals, conservatives, tech people, artists, and everything in between.

The one bad thing I’d say about housing here is that the vast majority of houses seem to be designed by people with horrible taste. I don’t think I’ve ever seen so many horrendous interiors as when we were looking for a house, and it took a long time to find one that was good enough that we could imagine how to get it to look good.

Food

A friend was visiting Vegas last week and he said, “With New York shut down, I think Vegas might be the best food city in the US right now”. I think he might be right! Not only do we have world-class food here, but it’s also largely very affordable, thanks to cheap rent and lower labor costs than many cities. What’s particularly great about Vegas food is that we have everything from tiny hole-in-the-wall places all the way up to some of the fanciest restaurants in the US.

One cool trend I’ve noticed recently is that many restaurants established elsewhere are starting to open branches in Vegas. Din Tai Fung is among the best dim sum in the world. Before opening in Vegas they only had locations in Seattle, Oregon, and California. Giordano’s deep dish Chicago pizza is only in a few states, but they’re here. Taco Stand, an amazing San Diego taco place, is only in California, Miami, and Vegas.

Every celebrity chef has a top-level restaurant on the strip. We rarely go to them, but once in a while we go to Rivea by Alain Ducasse, or Bobby Flay’s Mesa. It’s fun being able to go eat anywhere from a tiny mom and pop hole in the wall chinese restaurant to some of the most famous restaurants in the world. Very few cities have that entire range. Best of all, they’re all within about 15 minutes from our house and there are no traffic or parking issues.

Oh, and I forgot to mention all-you-can-eat restaurants. We have AYCE sushi, korean bbq, hot pot, and many other types of food. You would think the quality would be bad, but it’s actually amazingly good. We took our raised-in-Japan Japanese friend to our favorite AYCE sushi place and she loved it so much she started going every week.

Entertainment

Besides all of the nature stuff, Vegas is a world-class entertainment city. And once you live here and figure out a few tricks, you end up being able to go to shows either for free or at a big discount. The shows have been canceled this year, but I’d say that in the past we went to 25-50 shows per year, ranging from huge concerts like Justin Timberlake and Nicki Minaj to small community theater shows, to Cirque du Soleil, to magic shows.

If you’re into sports, we are the center of the UFC universe, we have a great hockey team, and a great football team. As a bonus, the T-Mobile Arena (UFC / hockey) and the Allegiant Stadium (football) were just built recently, so both are state of the art facilities where every seat is good.

And, of course, all of these shows and sporting events are 10-15 minutes away and don’t require you to deal with parking or traffic.

Finances

Frankly, it just doesn’t get any better. Every city and state needs revenue, and we are unique in that most of that revenue comes from tourists. We have no state income tax, and extremely low property tax. Our sales tax is 8.25%, but I’m actually happy about that because I think sales tax is the best tax.

Housing is cheap, food can be cheap, flights are cheap, and solar is so cheap here that it’s a no-brainer for everyone. Nevada is always ranked as one of the most small-business friendly jurisdictions. Early into living together in Vegas my wife said, “Vegas is so good and so cheap I don’t think we could ever live anywhere else”. I agreed.

Politics

I don’t know much about the politics (I couldn’t tell you what party any of our elected officials are), but I know that we’re somewhat moderate and not radicalized to either side. The way we handled COVID seemed about right to me (strong shut downs at first, reasonable reopening, easy access to testing / vaccinations), and generally the city feels well run. We don’t have extreme homeless or wealth inequality issues, and I find that most people are open minded when talking about politics, no matter which side they’re on. It’s refreshing.

The Bad

There are two major problems with Vegas. The first is that if you need a local job, you’re going to have a tough time finding it here. We have higher unemployment than other similar cities, and there just aren’t a ton of high paying tech jobs like other cities. The other problem is that the public schools are very bad. There are a ton of great private schools (including one that is taught in Japanese!), but obviously paying for one of those offsets some of the cost savings of living in Vegas.

Why Vegas Will Win

Part of the reason I’m always yammering about Vegas rather than just living here quietly is because it is so obvious to me that it’s an amazing opportunity.

Even if you erase any financial incentives, I think the quality of life in Vegas is higher than anywhere else in the US. There are just so many things that we do regularly that we either couldn’t do in any other city or that would be too much of a hassle to do regularly.

Vegas is massively underrated. No one considers moving here without a big shove from someone who is already here, because the reputation of the city is wildly divorced from the experience of living here (though it is accurate for tourism). It took a lot of convincing to get a couple of my friends to move here (they now live 3 minutes away), and even though they liked Vegas enough to move, they continued to be surprised by how great it was in the following months. I went here regularly, sometimes monthly, for a decade before moving here, and still had no idea about most of the benefits of it.

As other major cities decline (SF, maybe NY) or become overpriced (Austin), I think more and more people will realize how great Vegas is. At some point you just have to expand your search area. As more people are able to work remotely, the arbitrage opportunity becomes ever greater, and people will look for places with low taxes, high quality of life, and a cheap commute back to Silicon Valley.

In a more general sense, every city I visit in the US (and I primarily visit “good” cities) feels like a poor value. They all have great things in them, but it comes at too high of a cost. Vegas is the opposite, where it feels too good to be true.

The reason I see Vegas as a big opportunity right now is because you can actually buy a house or condo that makes financial sense. You lock in a really high quality of life and know that the taxes aren’t going to force you out eventually. If you want to start a brick-and-mortar business, you can do it inexpensively here and it can grow with the city. Other cities feel like dead ends to me in a way that Vegas doesn’t.

###

Photo is from Lake Mead. I just don’t take a lot of photos in Vegas except when I’m on the lake.

Tea Time with Tynan #4 is this Sunday at 11am PST and my good friend Noah Kagan will be joining me. Come chat with us!

I was very surprised to learn just how quickly some things pay for themselves and how much of a no-brainer certain things are. The government as well as local utilities also have a bunch of rebates, making things an ever better deal. Here is some of what I’ve learned

Solar

Solar in Las Vegas is a complete no-brainer as the city has more hours of sunshine per year than any other major city in the US. The payback period varies, but it’s around 7 years. However, panels do add some value to your house for resale, so the payback period is shorter than that in reality.

You can finance solar at such low rates that your solar system payment will be about half of what your electricity bill would be. So if you know you’re going to live in the house for a long time, it’s definitely worth it.

One interesting hack is that the solar company will give you extremely low rates (we got .99%) but add points to the purchase to make it more expensive. Once you get your federal rebate you’re supposed to pay it back to the financing company to lower your payment, but it is dumb to pay off .99% loans, so you can actually just invest it in something safe and use the interest to pay off the solar loan, making it even cheaper.

When you create electricity in excess of your house’s needs, you are credited with 75% of the value of that electricity. The trick is that during peak summer hours electricity is worth 35 cents per kWh, but during other hours it’s worth only 3.5 cents. So every kWh you can generate during those hours will give you 7.5kwH of off-peak time. This is especially good for travelers, as a few weeks away from home in the summer could generate six months of bill credits.

I have also implemented some home-automation tasks like turning off my EV charger during peak hours.

We went with a 12.24kW system, which was a total guess. What I learned is that if you generate too many bill credits you can’t cash them in, but if you aren’t generated enough solar you can always add panels at the same price per watt, or possibly cheaper if/when prices fall.

If you have an electric vehicle you also get about 10% off all power from 10pm to 8am, including non EV power.

Electric Vehicle

As I previously wrote, I bought a BMW i3. It’s the absolute perfect EV for city driving because it can go 60-70 miles on battery, but it also has a little generator to charge itself so you don’t have to worry about running out of range. It also happens to be one of the most efficient EVs ever made. It costs me .8 cents to travel one mile, versus about 10 cents per mile in a regular gas car (or 40 cents in the Bentley). The car will never pay for itself in savings, but it does save hundreds per year in costs. If you’re like a normal person who buys a car, drives it for a while, and then resells it, those hundreds saved may actually cover the depreciation.

It’s also more satisfying than I thought it would be to have a closed loop system where photons hit my roof, are converted to electricity, are stored in my car, and then allow me to drive around. I also like knowing that I’m always at full range and probably only have to go to a gas station once every year or two for a couple gallons.

Pool Pump

I was shocked to discover that pool pumps pay off more quickly than anything else! Pool pumps serve two functions, the first is to skim debris off the surface of the pool and the second is to move the water around enough to avoid algae. Skimming takes 2-3 hours per day, but water needs to be moving for at least 12 hours per day to keep the water from growing algae.

Almost every pool pump is one speed, and because skimming requires a lot of water movement, that speed is high. A variable speed pump can run for 2-3 hours on high for the skimming and then revert to very low flow for 12 hours to prevent algae build up. Low flow uses only about 10% of the power of high. I bought a $500 variable pump on ebay, tried to install it myself, failed, hired a pro to do it, and even after paying him it will pay off in about 1-1.5 years.

Even better, it is silent on low, even if you’re right next to it. Before you could hear the loud pool pump in our backyard at all times. Now I have it run on high in the middle of the night for a couple hours, then putter around on low all day.

Hybrid Water Heater

My friend found a crazy deal on a hybrid water heater. Normally it went for $1700, but with coupons and rebates we could get it for only $400. Our water heater was nearing the end of its service life, so I jumped on the deal.

In researching this water heater, I learned something absolutely fascinating. How efficient do you think a heater can be? I would have bet everything on 99-100%, because I know that heating elements are 100% efficient. They convert 100% of electricity into heat. As it turns out, heat pumps are MORE than 100% efficient. How? They “carry” heat from the air (all air has heat because it’s above 0 degrees Kelvin), and are able to carry more BTUs of heat than they could create with the same amount of electricity.

This absolutely blew my mind. AC units that we have on our houses are heat pumps (they carry heat out of our house), and they run on reverse to heat the house, carrying heat in. This is why space heaters are SO expensive compared to central units.

A hybrid water heater is a typical tank heater except that it has a heat pump on the top. It is so much more efficient than a regular water heater that it will pay itself off in about 1-1.5 years for the deal I got, and around 5 years normally. It may only save a few hundred per year, but I am so enamored with the technology that at least once a week I think about our water heater and how much I love it.

LED Light Bulbs

This is a no brainer and I’m sure everyone here has LED light bulbs. Something interesting to note is that running an LED light bulb at really low dimness settings uses nearly no electricity but can create usable light. I have all of our lights in the house on all evening at 5-10%, mostly in warm orange colors, and it creates great atmosphere.

I feel good that the changes we made to our house our good for the environment, but I’ve focused mostly on the cost savings and other benefits because I think those are the factors by which we make most decisions. As someone who is a little bit obsessed with runway and low living costs, I also like that we can spend a little bit of money up front to permanently lower our costs.

###

Photo is the Hoover Dam from Lake Mead. How cool is hydroelectricity?

This Sunday at 12pm PST I wil be hosting Tea Time with Tynan #3! We will have a loose topic of home improvement / home automation / workspace / etc, but you can come on and ask about anything. Please join!

I started blogging because I decided to do the polyphasic sleep schedule. I had tried twice before and failed, and all of that time was such a blur that I resolved on my third attempt to record it as it happened. I was successful, and the topic was rather trendy at the time, so about 100 people started following my blog.

After a while I gave up on polyphasic, but felt that I had an obligation to my readers. Luckily I had spent the first half of my twenties doing insane things like putting a swimming pool in my living room, climbing radio towers, breaking in to the tunnels under UT Austin, a exploring a cave, etc., so I had plenty of crazy stories.

The swimming pool post made it to the front of Digg, which was like reddit back then, and it remained one of the top ten stories on the site for a year or so. After that I had about a thousand people reading. I hate breaking streaks, and I never wanted to let readers down, so I just kept writing. I went through phases where I posted every day, two years where I wrote every single day (but posted once a week), and some phases where I didn’t quite write every week. But I don’t think in that time there’s ever been a gap of more than two weeks, and for many years I haven’t missed a single week.

As my topics switched from polyphasic sleep to crazy stories to pickup to self improvement I gained and lost a lot of readers. People would get really upset sometimes that they had grown attached to this blog about crazy stories and now I was telling them how to eat healthy food. Some people stuck around the whole time, which sort of blows my mind. Some of you have really watched me grow up over fifteen years.

Even as readers have come and gone, I’ve always felt like I had a big group of people distributed around the world who cared about me. It’s a weird feeling, almost like having an imaginary friend. I know that any project I start will immediately have some level of success because I’ve built up trust over these fifteen years and readers will at least take a look at whatever I create.

I didn’t meet readers for many years, mostly because I was worried that I wouldn’t like my readers. I knew that if I didn’t like and respect the people for whom I was writing, I would lose all motivation to write.

I had a few meetups in the early days, have run into a couple dozen people randomly over the years, and have met dozens of people through the live events I was hosting before COVID happened. My fears turned out to be completely unfounded and the people who read my blog turned out to be extremely high quality people. Every event I have leaves me totally humbled by the quality of person that cares what I have to say. That knowledge has kept me writing all these years, because I really do think it’s a privilege and honor to have smart and kind people read my work.

The other big reason I keep writing is because it forces me to crystallize and challenge my thoughts and ideas. There have been a couple times that I’ve written something a little too hastily and tons of people have let me know that I was off the mark. Knowing that keeps me diligent.

I also like scrolling back a few years, because if I read a post I wrote back then I can immediately remember what my life was like then and what I was thinking about. It’s like a mental time machine.

I’m not sure what the future of the blog will be. On one hand I can’t imagine that I’ll ever stop writing. It’s always been a positive thing for me, and I also feel a debt of gratitude to my readers. You’re the ones who bought my books and got the ball rolling on Amazon, and you’re the ones who signed up for coaching and live events. I still benefit from those things today, so I feel like I should keep writing.

On the other hand, I no longer feel like I’m bursting at the seams with things to write. When I wrote 730 posts in two years I felt like I really got burnt out on coming up with post ideas. These days I feel like I sometimes rehash the same concepts over and over again, but then people write me and tell me they had an impact, so I think maybe that’s ok. I’ve thought about taking a year off just to see what it feels like and to see if I recharge. I can’t decide whether not having as many new ideas is a sign that I’ve settled on a winning formula or that I’ve stopped growing. Maybe it’s the same thing.

I used to ask people to fill out a survey every year, but I stopped doing it ten years ago. I took the results very seriously and made big changes to the blog (even changing the name once), and it helped me understand my readers better.

I’d like to ask you to help me out by filling out a survey. Most of the questions are optional, but please help me by filling out as many as you can. I rarely fill out surveys because I don’t care about being a tiny voice in a crowd, but I promise you my survey isn’t like that. I read each one at least once and really try to take the answers to heart to understand you better.

Please answer the survey here!

###

Photo is the chair lift at Lee Canyon. Did you know you can ski in Vegas?

I accidentally upgraded to PHP 8.0 on my server and it messed up Sett and a bunch of it’s dependencies. If you haven’t been getting notifications, that’s why (and if you didn’t get one on this post but were expecting to, please let me know)

I have a 15 year old minivan, but in the Bentley’s absence I found myself driving my wife’s Nissan more than the van, just because it gets better gas mileage and is newer and nicer. Upon realizing that I’d never drive the Bentley again, I decided to get another car.

At this point probably 90% of the people I know would only consider buying a Tesla. And to give credit where it’s due, Teslas are truly incredible cars. They’re very fast and fun to drive and they have excellent range. They also have the best charger network (though any EV can easily use those chargers too). I think Elon is a genius and I think it’s pretty obvious that electric cars in general would be a decade behind if it weren’t for him.

That said, I think Teslas are massively overhyped and (partially as a result) a poor value unless you really need the range (or really need to go 0-60 in 2 seconds). For most people’s use cases there are much better values. For example, if you care about range, you can get a 2017 Chevy Bolt which gets ~240 miles on a charge for $13k.

Vegas is such a convenient place to live that most drives here are short. Most restaurants I go to are about 10 minutes away, with my furthest usual trips being 20 minutes away. Lake Mead is about 30 miles away, and that’s the farthest destination I go to regularly. My interest in going fast or accelerating quickly is about zero. In the past year I drove a Ludicrous Mode Tesla and a Lamborghini. I floored both of them, each put a huge smile on my face, and 5 minutes later I’d had my fill.

I’ll admit, though, I do like having a nice interior. That’s what I loved about the Bentley– everything was soft top quality leather or hand finished wood. I looked at the Nissan Leaf, which is an incredibly value, but really didn’t like the interior. The Chevy Bolt was better, and had great range, so I considered it. Then I saw the BMW i3 and the Mercedes b250e.

The b250e was a pretty basic Mercedes outfitted with a good EV system, and it was the frontrunner for a while. I’ve had three Mercedes before and loved them, and never really liked the BMW equivalents as much. But then I learned more about the i3 and it was a pretty easy decision.

The i3 looks unlike any car I’ve ever seen. It’s not beautiful like the Bentley or sleek like a Tesla, but I like the look. Even the 2014 model (the one I ended up getting), looks like it’s a concept car from the future. It isn’t just for show, though. The BMW engineers said that since they weren’t building a normal combustion car, they decided to start from the ground up rather than try to make it look like one.

The chassis is carbon fiber. The front wheels are tall but narrow. The rear doors open backwards and there’s solid glass in the back. All but one of the colorways are two-tone. The car lights up blue when you unlock it, but the lights fade to white when you open the door. It just feels like it’s from the future.

More impressive are the stats, though. They come in 22kw and 33kw models (and newer ~42kw). Mine is a 22kw model, which gets me about 65-70 miles of range. Because the car is so light, it actually gets the best range per kWh of any EV, so the running cost is extremely inexpensive. However, mine is a “Range Extender”, which means that it has a trick up its sleeve. Under the trunk in the rear is a tiny engine that acts like a generator. If the battery gets too low it whirs to life and its little 2.4 gallon gas tank can keep the car charged for an extra 80+ miles.

How cool is that? I can drive this thing and never worry about the battery because it has a built in generator.

I also love the interior. There are a few options, but mine is the “Giga” trim. The seats are made of a blend of wool and recycled plastic bottles with leather accents. The dashboard is a giant slab of eucalyptus wood. There’s a small screen that serves a dashboard and then a bigger 10″ screen in the middle for media and maps. I find the Tesla touchscreen interface to be really annoying while driving (though maybe you get used to it), but the BMW controls are pretty good and I like that climate control and presets are plastic buttons (speaking of presets, the presets can be radio stations, or literally any option or screen in the car!). The remote control features aren’t as good as Tesla, but you can lock / unlock / set climate control / etc.

It has adaptive cruise, which is a primitive version of AutoPilot. It just starts and stops based on the car in front of you. I actually prefer this, though, as my experiences with AutoPilot were really terrifying. It worked like magic for most of the time, and then once tried to exit where there wasn’t an exit, and twice tried to drive straight through a turn lane. The BMW can also parallel park by itself and you can install a ~$150 module to enable it to stay in a lane while following the car in front of you.

Best of all? My 2014 BMW i3 with every option (besides the cool sunroof!) only cost $13.5k. It has enough range for 95% of the trips I take, and the little backup engine will kick in for the remaining few. If I really need to take it to some remote place with no EV charging, I can still run on gas (albeit with annoying stops every 60-90 minutes).

Two points here, first the BMW i3 is probably a better car than you think it is (if you’ve ever thought about it at all), and second that like so many other things, the mainstream most hyped option is often good, but never the best for each individual. It’s cool that we live in a world with so many different choices that we can find the perfect thing for each of us if we just do a little bit of research.

###

Photo is my car!

After making a little bit of money buying and selling these things I had some savings and could start buying things for myself. As you might imagine, I used the same principles in buying those things and still tried to save the most amount of money possible.

I started all this in high school and college, and a lot of my peers were frugal, though often in different ways. I noticed that most frugal people care about absolute price rather than value, whereas I only ever cared about value.

As I grew up, though, I noticed that most of my peers stopped being frugal entirely. Frugality was a response to not having enough money, not to wanting money to buy them more utility. Once they had enough money to buy things, the frugality switch turned off.

To some degree, that makes sense. I used to scour the internet to save a few dollars on a purchase, but now I’ll just buy most inexpensive things on Amazon.

On the other hand, I still apply some ingenuity to all big purchases. I’ve never bought any car that was newer than 15 years old (except for a shared van in Hawaii that was 10 years old). I’ve split 4 different properties across the world with 6-10 friends each, but besides splitting the cost I did a ton of research on each one to find incredible deals. The average purchase price per property across our island and apartments in Vegas, Tokyo, Hawaii, and Budapest was around $75k (not per person, total).

Those are some of the biggest purchases, but I also do this for medium level purchases. When we bought solar panels for our house I got on the phone with all of the well-rated shops in town and negotiated the price. The price we paid to have our floors redone was 1/2 of the first quote I got. I wanted a solid wood door so I watched Craigslist until I found an awesome one for $80, instead of paying the $500-1000 a good solid wood door would cost at home depot. I waited to find the exact hot tub I wanted on OfferUp and got it for $500 vs $3000.

If you’re thinking, “yeah, but the whole reason I make money is so that I don’t have to save a few bucks here and there”, you’re totally missing the point. Frugality when you have money isn’t intended to make ends meet, it’s to multiply what your money can do for you.

If you develop the habit of trying to maximize the value you get for your money (above a certain threshold), you can have an incredibly luxurious life for less money than most people spend for a very average lifestyle. Or you can have an average lifestyle but save enough money that you can retire decades earlier.

How do you actually do this? The first is to think about purchases in terms of value. How much better is a new car than a car that’s 10 years old? It’s better, sure, but is it 3x better? If it’s not, then why buy it? Is it worth 10x the real estate prices and an extra income tax to live in California? If you can make 10X the money there than it probably is, but if you make the same money elsewhere, it may not be.

Next, be willing to put a little bit of time and effort into finding deals. The effort should be proportional to the value you will get out of it. The value of owning a private island was, to me, almost infinite, so I looked at every single island for sale within my price range. If I’m going to buy a pool pump and can save a maximum of $200, maybe I’ll put in 15-20 minutes.

At first finding deals feels like a hassle, but once you get good at it, just like most things, it becomes fun. I actually have to stop myself from going down rabbit holes to save small amounts of money because I enjoy it so much.

Many people follow the fallacy of “I make $X/hr at work, so anything that saves me less than that isn’t worth it”. While it’s true that you shouldn’t take an hour off of work to save half your hourly wage, that’s usually not the trade-off. Most of us have some underutilized time that could be spent saving money and dramatically increasing our lifestyles. For me the trade-off is more like, “Is it worth looking for deals or researching a big purchase instead of reading Reddit or Hacker News?”

Any time you’re making a big purchase, think about its value and what you could do to either increase its value for the same price or to lower the price you have to pay. Take pride in being frugal not because you have to be, but because it enables you to live a better life with less stress.

###

I just got back from Cabo, Mexico, where we got to go whale watching. This is the closest I’ve ever been to a whale and it was really cool.