Unexpected Costs Increases

Today’s lunch-time reading brings a trio of stories about price increases, and why they are occurring:

  • Birthday Balloons. If you want to give floating balloons for a special event, expect to be paying a lot more. Helium is in increasingly short supply and its price is rising dramatically. Forget oil. We can find natural substitutes for oil. Helium, on the other hand, is a nonrenewable resource produced by the radioactive decay of thorium and uranium, and there aren’t really good substitutes (Hydrogen is too explosive, and you can’t go too far up the table before you hit Oxygen). Why do we have less helium. Blame the natural gas surplus. The most economical way to capture helium is to separate it from natural gas. And producing less natural gas also means less helium.
  • Dry Cleaning. Where do you think the costs are in dry cleaning? The labor? The chemicals? The machines? The plastic bags? One hidden cost no one thinks of are the wire-hangers. The prices of the (usually vietnamese made) wire hangers are going up, and thus dry cleaning prices are going up.
  • Funerals. You can’t even escape cost increases when you die, because the cost of funerals are going up. The average cost is up over 17.5%… and that doesn’t include the cost of the grave space and opening and closing a grave ($2,500), a headstone ($2,000) or grave marker ($1,000), making the average closer to $8,000 to $10,000.



Saving for College

As I’ve written about before, our daughter will be going to UC Berkeley in the fall. This, of course, means we’ll be paying for college for a few years. So, in addition to our daughter working on the scholarship side, I’ve been doing a bit of work on the expense reduction side. I’m pleased to report it is bearing fruit:

  • We have a HARP refinance in process. This will take our interest rate down from 5.125% to 3.875%. This will be a fair chunk of change each month.
  • We just changed auto insurers. We had been with AAA, and they wanted $2765 for 6 months. Other quotes we were getting were equally outrageous: eSurance was $2988, Safeco was $2666, Liberty Mutual (with the UCLA Alumni discount!) was $4135.60, and Progressive was $5,530. However, GEICO was much less — $1690, plus about $400 to add umbrella liability coverage.
  • The County Assessor sent us some mixed news: our housing value has gone down (the bad), but the good is they reassessed us at the lower value, meaning our property taxes will go down

We’re still looking into some other avenues to reduce monthly costs, plus our food and fuel costs will assuredly go down once the teen is esconced up at Berkeley.

Music: American Idiot (Green Day): Jesus Of Suburbia / City Of The Damned / I Don’t Care / Dearly Beloved / Tales Of Another Broken Home

Variability of Insurance

Today I had planned on doing laundry. But we’ve got a house full of teens who wanted a safe haven from the post-prom parties, and now the plumbing has backed up. So while I wait, I decided to shop auto insurance. The variability has me amazed.

As background: This year our daughter started driving. This drastically increased our policy. Her turning 16.5 took our policy from $1916 per year to $3688 per year. The transitional year was difficult to change, but this year I decided to look around. As background, she did have a chargable accident her second time out on her learners permit (under $2K in damage, just our car), and she’s been stellar ever since. Her driving has also upped the mileage on our cars this year as she went back and forth to high school; that will go away in the next policy year as she’ll be at UC Berkeley with no car. Based on that, I estimated using 2/3rd of this year’s monthly mileage.

So how varied were the quotes? Remember, our AAA number from last year was $1844 for six months. GEICO came in with an amazing $843.40 for six months (I don’t know how much that will change if Karen would be a homemaker vs. retired engineer). Esurance came in at $1,494 for six months. They also estimated some other companies–in particular, $1,333 for six months from Safeco, and $1,505 for six months from 21st Century… but it looks like they didn’t get deductable numbers right. Progressive, which advertises as saving money, came in at a whopping $2765 for six months, the bulk of that being just one car at $2189. I’ve still got to call State Farm.

For a few hour exercise, it was worth it. When I get this year’s information from AAA, I’ll call them and give them one chance–otherwise we may just switch back to GEICO (we were with them many many years ago).

Music: Till I Loved You (Barbra Streisand): Love Light


Friday Cleanin’ Out The Links: Financial News, Food News, Robocalls, and Theatre Notes

Well, it’s Friday, and you know what that means: Time to clear out the links over lunch…

P.S.: Something for me to look into: A local small production of Spring Awakening, at the Arena for the Arts stage in Hollywood, which is where we saw Gypsy. Everyone seems to be doing Spring Awakening these days: even Simi Valley Repertory is doing it (October 2012). I also need to look into the next Pasadena Playhouse production: Heiress“, which will star Richard Chamberlain, Heather Tom, and Julia Duffy. This was recently broadcast on LA Theatre Works, and I enjoyed the story. The trick is finding time for these shows during this busy Spring: there are already numerous shows (such as this, this or that) that I just can’t seem to work in.

Music: Pachebel Canon and other Baroque Music: Rondeau From Sinfonies de Fanfares



Unanticipated Effects: Deficit Reduction, Digital Photography, Coin Composition

[Remember: Pick your birthday song here]

Today’s late lunchtime news chum brings together three articles, all dealing with unanticipated effects:

  • Reducing the Deficit. Good news. The US deficit is expected to top $1 trillion… which is down substantially from the worst days of the “Great Recession”. This means the budget-cutters are getting their wish: we are slowly getting the deficit down (but remember: we don’t want it to be gone entirely, because then bad things will happen). But of course, there a side effect the reducing the deficit: by keeping spending down, we’re also raising the unemployment numbers and slowing down the economic recovery. More government spending would mean more government jobs and government funding, which would mean people could spend more. We’ve stifled that, so fiscal responsibility means we prolong the pain of the recession.
  • Digital Photos. Here in Los Angeles, we have yet another case of a teacher sexually-abusing their students. What caught my eye was how this fellow saw caught: a photo-processing lab detected the images on a roll of 35mm film he was having developed. Here then, is our unanticipated effects: as we move to digital photography, how many of these abusers are going to be missed because they are just doing things digitally?
  • Making Money from Money. A congresscritter from a steel-producing state has introduced a bill to make coins from steel, in order to save money. The goal, of course, is to have the cost to produce a coin be less than the face value of that coin, which isn’t true for 1¢ and 5¢ coins. The problem is, however, instead of letting the treasury decide the best composition, the bill is dictating a composition. This creates a number of problems, such as a lack of flexibility when metal prices changes, plus the fact that differing compositions and weights has a significant effect on coin counting and vending machines that use weight and magnetic characteristics to determine valid coins.

Music: Time to Think (Kingston Trio): These Seven Men



A Tour Around the Corporate World

Today’s lunchtime newschum brings together a collection of things, all having to do with the corporate world or the current economy:

  • Where Do You Buy Electronics? I might as well comment on this, as everyone and their brother is posting the Forbes article on why Best Buy is killing themselves. Here are my thoughts: First, I avoid Fry’s, due to bad experiences of their restocking returned products and not indicating them as such, and having poorer quality. I do shop at Best Buy. They have the advantage that I can actually go and see the item, and… in person… compare different looks and feels. That’s a hassle to do with an online retailer. They also have regular 0%-for-18 months promotions, and I’m more than willing to use cash flow instead of savings. They aren’t perfect (and I don’t fully trust Geek Squad, given my experiences). I just avoid their salescritters unless I need them.
  • Ch-ch-ch-changes. A number of articles relating changes in the corporate world. First, Orchard Supply has come out from under the thumb of Sears Holdings–this is a good thing, in general, as Sears was holding OSH back. Alas, you probably won’t be able to use your Sears card there anymore, and who knows about Craftsman tools. 3M is purchasing Avery Dennison’s office supply business (which, if you didn’t know, includes Hi-Lighters, binders, labels, filing and indexing products, and writing instruments as well as their pressure-sensitive labels and such). The Avery name will remain for those products. In the fashion world, Liz Claiborne is changing their name to Fifth & Pacific, reflecting the fact they sold Claiborne to JC Penny. Lastly, Macy’s is closing 5 Macy’s and 4 Bloomie’s stores, none in California.
  • Truly (Artifically) Scrumptious. The war to sell you fake sweetners is intensifying. The WSJ is reporting that Truvia (owned by Cargill) is readying another salvo in the war between white, pink, yellow, blue, and green packets. It’s a battle indeed, with Truvia trying to figure out how to prevent people from taking the pricy green packets, as well as battling for supremacy (it is currently #2) and knockoffs, such as Pepsi’s PureVia, which is also Stevia based.
  • Blue Diamonds Aren’t Just For Vinkus Royalty. The Sacramento Bee has an interesting article on the Blue Diamond Almond manufacturing plant near Sacramento. The plant operates for 20 to 22 hours a day, shutting down only for routine cleaning. Six-ounce cans are filled with almonds, labeled and packed at a rate of 250 to 260 a minute. What I found interesting was that almonds pass through X-ray equipment to pick out foreign objects like buckshot – sometimes the spray of pellets from a hunter’s shotgun can lodge inside an almond.
  • Borrowing from the Government. You may not realize this, but most people are dependent on government debt. They put their money in safe Treasury Bills (one of the safest investments around), and purchase Savings Bonds (as an aside: do you realize those would all go away is the US had no government debt–and that would be a bad thing). What you might not know is that the government did away with paper savings bonds. You can only purchase them electronically at treasurydirect.gov, and can’t really gift them. However, you can now buy more of them because the government has restored the previous savings bonds purchase limits. By the way, unlike paper bonds, which can be replaced if lost or stolen, if someone gains access to your TreasuryDirect account and steals your bonds, there is no guarantee the Treasury will replace them.



Banks Charge Fees for the Same Reason Dogs Lick Their Balls and Politicians Cheat…

… because they can. Don’t believe me? Read this article from the New York Times. It details how, even though they are annoyed by the fees, people are not switching banks because there is too much hassle in changing all the electronic bill paying arrangements. Banks knew this, A 2008 study showed that customers who made five or more payments online a month were 95 percent less likely “to churn,” while consumers who didn’t bank online were 43 percent more likely to leave. So why do they charge fees… because they know you won’t leave.

By the way, this is the same reason Facebook feels free to change its interface without losing customers. Once you have a large number of friends on the service, you’ll put up with the changes because your friends aren’t on the competing services. This is why G+ is having trouble taking off, and why even though periodically folks threaten to move from LiveJournal to DreamWidth, folks still stay on Livejournal or mirror their posts there… because that is where their friends are.

Businesses aren’t stupid. Greedy, yes. Stupid, no.