Day By Day© by Chris Muir.


Wednesday, March 30, 2011

Compact Fluorescent Bulbs are Dangerous and Unthrifty

I stumbled on this guy Paul Wheaton's rocket stove/permaculture website the other night while looking up rocket stoves, and while scouring it I found this article about compact fluorescent bulbs being really no bargain at all and environmentally hazardous to boot.

First off, CFL bulbs contain mercury.  If you use them, and one wears out, you have to dispose of them at a recycling center that takes them.  These recycling centers tend to be in cities.  So if you live out in the country, you may have to drive some distance to dispose of your dead bulbs, wasting a lot of gas money in order to save pennies on your electric.  If you put one in the trash, eventually it will break and the mercury will get into a landfill.  If you drop one at home and break it, you're supposed to leave the house at once and leave all the windows open to let the mercury gas dissipate, and then clean it up and take it to a recycling center that takes mercury! This website describes just how poisonous CFL bulbs are. Scary!

If you have a room where you just turn the light on for a few minutes, like the bathroom or a closet, a CFL bulb is not the best choice.  They use a lot of energy right when you turn them on.  Also, turning them on and off all the time shortens their life quite a bit.  A regular light bulb is the best bet here - or maybe an LED one, although those bulbs are so expensive still.  And rather dim.

And, of course, there's this stupid law that is requiring regular light bulbs to be pulled off store shelves gradually.  I urge you to complain to your congressman/woman about it.

Tuesday, March 22, 2011

Offshore Banking Overview - Opening a Foreign Bank Account

Cold cash at Bank of Antarctica!
The following are various notes I took online about opening a foreign bank account.

This was from "The arrival of President Obama in the White House has seen the proposal of several anti-offshore initiatives, including the Foreign Account Tax Compliance Act, which has given the US Internal Revenue Service new tools to "detect, deter and discourage offshore tax abuses." The legislation, approved by Congress in March 2010: imposes a 30% withholding on US source payments to foreign financial institutions, foreign trusts, and foreign corporations that do not agree to disclose their US account holders and owners to the IRS; requires taxpayers to disclose their foreign accounts on their US tax returns; increases the statute of limitations to six years for failure to report certain offshore transactions and income; clarifies when a foreign trust is considered to have a US beneficiary; and treats substitute dividend and dividend equivalent payments to foreign persons as dividends for purposes of US withholding."

SO: I do not recommend opening a foreign bank account in order to hide money acquired in the US from Uncle Sam. You can still use a foreign bank account to protect your assets from possible creditors, lawsuits, etc., but unless you want to get taxed 30% off the top, you still have to choose a jurisdiction that discloses your identity to the IRS.

HOWEVER, opening a foreign bank account because you are doing business in a foreign country and earning money in that foreign country makes sense. The first $80K/year of your foreign income is not taxed by the US. And there are some countries that don’t tax foreign income, so what you can do is earn in one foreign country and bank in another, and keep your US citizenship.

In general:

• In most cases you must be physically present in the foreign country to open a bank account, despite the bullcrap that some websites say while trying to get your business.

• They may require extra documents that they don’t require in America and each bank is different even in the same country as to what they require, so you need to inquire at the banks before traveling

• Spammy online “offshore” law firm websites may be not law firms but really lead-generators that sell your info. If you use one even if they refer you to a lawyer you destroy the privacy of the lawyer-client relationship you could have got.

Latin America in general:

• must have an introduction to the bank from someone who is from there (a professional).

• Takes months in some cases. You can apply but then your application sits there.

• Fairly low initial deposit requirements, even lower if you deposit their currency instead of dollars or euros

Costa Rica: must have residency status. So forget that if you are in a hurry.

Panama: Decent bank privacy laws. You will need at least these documents, and possibly others.
    Notarized & apostilled copy of Passport
    Notarized & apostilled copy of Drivers License
    Bank Reference Letter
    Professional Reference Letter (from a Doctor, Dentist, Lawyer, Accountant, Real Estate Agent, Insurance Agent, etc.)

And then it could take weeks, unless of course you believe the spammy websites that try to get your business, they say they have an inside track.

One site said:

Offshore Bank Account Tips:
Open separate offshore Panama accounts in Euros and in USD.

Bring at least two bank references and two trade references to open your offshore Panama bank account.

Be prepared to fully describe your business activities and where the funds originated. Each reference must be addressed specifically to each bank. A general letter will not do.

Each bank reference to open the Panama Bank Account cannot be more than 30 days old.

You'll need about $5000 USD to open the Panama bank account as the initial deposit.

Choose a Panama bank where it's difficult to open the account. Banks that are known to be easy are more often scrutinized.

Hire a Panama lawyer to facilitate the opening of the offshore bank account. He or she will help with the paperwork, the introduction to the offshore bank and the explanation as to why you're opening the Panama offshore bank account.

The bank interview is face-to-face. Don't ask for a telephone interview. If a telephone interview is granted, you'll be asked to show up at the offshore bank, in Panama, within thirty to sixty days.

The best reasons for an offshore bank account, in the eyes of the bank, is to buy real estate, start a business, or start a legitimate business project.

Be prepared to answer these questions:

Where is the business? (Consider a mail forwarding service or a virtual office in Panama.)

Where is the money coming from?

What do you offer, sell, market, or distribute?

How many transactions and volume do you expect in the next six or twelve months?

Why Panama? (Shipping, internet access, infrastructure, availability of legal counsel, e-commerce, tourism)

Channel Islands: apparently you can open an account there online. But it being England would make it a poor choice for anything but asset protection.


The Royal Bank of Canada site says you can open a Canadian bank account by mail (apply online, then they mail you a welcome packet) with a US passport or drivers license and a letter of introduction from your previous (or current) bank in the US that has a signature on it. It didn’t say whether they need you to mail them the original documents or what. All your documents must have the exact same name on them, and none can be expired. If you want to open your account in US dollars, there are other requirements for ID and you need to be there in person. If you want a debit card you have to show up in person also.

Switzerland: You need to be there in person, and the minimum deposit is pretty high.

Liechtenstein: They do a lot of foreign banking there, you have to show up in person, but they recently handed a disk to the Germans with the information of a bunch of Germans who were tax-dodging by banking there. Also you can’t bank anonymously there anymore. So I’d say they’re not safe for that purpose, but as far as economies go, they seem fairly safe.

Singapore: Credit Suisse moved their international banking headquarters to Singapore in 2005. Singapore tends to only care about tax evasion if it’s their taxes.

I made this joke at the top about the Bank of Antarctica, then found out there is some joker company out there selling fake Antarctic money, here is an Antarctic dollar: LOL!

Monday, March 21, 2011

Free Heat with Rocket Stoves

tiny cooking rocket stove
Well, sort of free. Mostly free.  If you like the idea of heating your home with only a 5-gallon bucket worth of wood per day, and building this stove for perhaps less than $20.00 up to around $100.00 then read on.

Rocket stoves: A rocket stove has nothing to do with rocket science.  It is basically a small upright cylinder (or mini-chimney) with a hole in the side at the bottom for putting wood in.  The ends of the wood inside the stove are burnt and the wood sticks out of the hole.  It is more efficient and makes less pollution than the traditional 3-stone fire used in many 3rd world countries.  You can make one out of a piece of metal vent, some bricks, cement, and vermiculite.  In a pinch in the wilderness you can make one out of mud and rocks (just not river rocks.  Those tend to explode when you put them in a fire).

You can make one for cooking, in which case you want to put a rack (out of pieces of rebar, for example) a little bit down into it so that the cooking pot sits down in it.  You can also put a sheet metal sleeve around your pot so the heat gets the sides of the pot as well as the bottom.  Also, the hole for the wood doesn't have to be just out the side.  You can make the stove to be shaped like the letter J, so the wood goes in vertically.

A rocket stove mass heater is for home heating, but you can also design it so it can heat food as well as your house.  With the mass heater, the exhaust from the fire, instead of going straight up the mini-chimney, takes a downward bend after that (usually they put a barrel over the chimney with a sideways vent coming out of the barrel - the top of the barrel being where you could do cooking) and goes into a horizontal thermal mass that works like a bench, and then out sideways.  By thermal mass, they mean you take vent pipe and build a bench out of clay you dig out of the ground and rubble (broken bricks and the like), and surround the vent pipe with this bench.  The heat from the stove dries the clay, but basically you don't want to ever get it wet after that. (so don't build your stove where it floods).  This thermal mass can be made into a built-in bench, or platforms for beds, or even a floor.

Here are a couple of websites about rocket stoves.  Some have videos: Specs in a PDF format


Sunday, March 20, 2011

Economic Crash Links

image from Wikipedia
Here are some economic crash links. Chris Martenson's Crash Course.  This series of videos, which resembles a Powerpoint presentation and totals about 3 hours, outlines why Chris Martenson thinks the economy is going to crash in the next few years.  Mr. Martenson had a yuppie job and lifestyle and cashed in his chips to move out to the country and develop a more self-sufficient lifestyle.  His video series examines inflation, peak oil and other energy, peak other resources, statistical tricks perpetrated by various US government agencies that obscures the severity of the problem, etc.  It's very persuasive, but it's also a good education in basic economics. I just watched the whole thing.

He contends that inflation has really been around 13%, not the government-reported 4%.  That explains a lot, like why fixed incomes haven't kept up even though they have an adjustment for inflation (at 4%), and so forth.  If what he says about peak energy is right, then gas prices have nowhere to go but up, and with them, the price of just about everything else.  (that's in addition to wartime inflation which is due to the "Quantitative Easing" printing of money that has been going on.)

Some of his website is about what you can do about it for yourself.  It is basic prepper advice and covers water, food, energy, health, asset protection, and community.  Conspicuously missing from his guide is anything about arming oneself. Not sure why.  (If you want to read about guns, go down in my blog on the right hand side to the blog link for the Western Rifle Shooters.  They seem to know an awful lot about guns.) This website takes the current government economic statistics and corrects against the various massagings of data that have accrued in each administration.  For example, the Consumer Price Index since Nixon doesn't include oil or food.  What???  Since when did we not eat or drive?  Almost every administration, both D and R, have altered how statistics are reported to make the picture seem rosier. This website strips all the BS out and tells it like it is.  Prepare to be scared!

Saturday, March 19, 2011

US Cost of Living at All Time High

The Labor Department has created a consumer price index of its own which takes into account gas and food. (the CPI does not). This new index is called the Chained Consumer Price Index. According to this index, which is of course a lot more accurate for people who eat and drive, prices are higher than they were even before the financial crisis.

Here is the link to the story.

Friday, March 11, 2011

More on Alternative Construction

Building an alternative construction home for cheap

First thing you have to do is locate an area you want to live that has little to no building codes.  Likely this will be in a very rural place with no jobs and possibly no water, however.  Texas and Colorado keep coming up.  One area I read about is Delta County, Colorado. 

Now, if you mostly travel around selling things at festivals, or if you're retired/are a snowbird, or if you have some kind of online business that doesn't involve driving into town to the post office all the time, you might do OK having a house out in the sticks.  Of course you might need to pay for satellite internet if you get too far out there, but if you have no house payment, you might be able to afford the satellite internet.

Terry Herb has written a book (2010) that is a compendium on these areas. See this is a document on how to get a local building dept. on your side when suggesting you build a house with alternative construction.
This website has a lot of book suggestions on building codes, plus that No Building Codes book.
alternative power website, lots of info including 1:1 CAD drawings of turbines you can make

Thursday, March 10, 2011

Earth bag home for cheap

I just had to repost this thing I saw on the Survivalist Blog.  This couple in Canada is building a dome home out of bags of dirt.  They first built themselves a dome sauna to get the feel of it, and now they're building a house that is 5 domes stuck together.  Their total construction cost (except for plumbing and electric) is about $5K.  WOW.

So here is the link:

I guess the trick to doing this would be to get land where your alternative construction methods don't run up against an annoying building inspector.  Perhaps farm zoning would help.  Does anyone have any comments about that?

Oh, while I'm here I'll mention I also once saw a cool way to make a mold for pouring basement walls.  You cut trenches in the ground, and use the earth itself as a mold.  Then when your walls are cast, you dig out the dirt in the middle and I would imagine then pour the floor.  One could do that and then put one of these earth bag homes on top, and have it be partly underground, which would help keep the house an even temperature.

Saturday, March 5, 2011

Things that Eat your Gains

A few things that will really eat into your gains are emergencies, taxes, inflation, loads and bubbles.

Before putting any money into retirement, you should budget for emergencies.  Look back at the last year or two and see what kinds of unexpected expenses you have had to deal with.  Typical are car breakdowns, getting sick, home maintenance, big winter heat bills, and the like. Those are really not emergencies but things you need to realize just happen.  Figure out about how much they cost you average per month and include it in your budget. Take the money for these contingencies and put it in a savings account.  Keep it separate from the money you spend on regular stuff.  By separating it from your "everyday" money, you avoid the temptation to spend it when you notice it accumulating in the absence of a crisis.

If your budget doesn't have any room for this stuff, you need to cut something else because they are going to happen whether you like it or not.  And then after you are done finding the money for these things, then find some money to save up for real emergencies and put that aside too. What is enough emergency money?  I'd say anywhere from 1 to 6 months' expenses.  At least get 1 month together, you can always add to it.

There are many ways of minimizing taxes.  You can get rid of some of the taxes on your retirement gains by using an IRA.  If you get a self-directed IRA (the link is to a list of the handful of administrators of them that exist) you can invest in real estate, stocks, franchises, partnerships, and tax liens.  You can't buy metals, antiques, stamps, life insurance, alcoholic beverages or artwork in a self-directed IRA.  You also have to be careful of self-dealing or dealing with relatives.  Most IRA's are administered by banks and they might call them "self directed" but really you can only invest in mutual funds and other standard type investments with them, so if you want to do, say, real estate in your IRA you need to find a truly self-directed one.

For beating inflation, you can try investing in something that goes up with inflation: oil and other commodities, real estate and the like.  (Or short term, some food for your pantry.  Your stomach will not send you a 1099 later when you eat it.)

Real estate, even outside of an IRA, has advantages.  One is, you get to depreciate your basis over time, as if it were a piece of machinery or something else that would wear out.  Some improvements to real estate need to be amortized, but not if an improvement can be considered a repair rather than a capital improvement.  Your investment might appreciate (if you buy it in an appreciating area) while you get to depreciate it on paper.  But when you sell the property, the IRS recaptures your depreciation, unless you use a 1031 like-kind exchange and buy another piece of real estate.  Last I checked, you can also trade in real estate for shares in a REIT in a 1031 exchange, but you might want to confirm that for yourself before trying it.

Loads (management fees on investments) are easily avoided by simply not investing in mutual funds or other investments that have loads, and not putting yourself in a position where you are paying someone to manage your money for you.  There are a couple hundred corporations out there that will sell their stocks directly to you without a middleman.

There are some fees you might not be able to avoid.  For example, I assume that the aforementioned self-directed IRA companies have fees (otherwise why would they exist?), so find the cheapest one.

Beware of bubbles.  Any time an investment becomes “hot” and people who don't normally think about investing start getting involved in it, don't get into it!  It's time to get out because it will burst soon.  (Recent example: real estate.  But now that it's down again and nobody's buying, it's worth a look again.  And I'm beginning to wonder if gold is in a bubble, since there are so many websites promoting it.)

The opposite of a bubble, a dip, is a converse danger.  If the price of an investment falls, many investors will then sell it to try and avoid the value of their portfolio falling further.  But by doing so they are taking a loss. If the investment has fallen in price because of a market swing, and the market is just going to come back, then it is time to buy more rather than sell.

Many people know this intellectually, but then they go and do the opposite because people make decisions emotionally instead of with their logic.

Wednesday, March 2, 2011

Using Online Financial Calculators to Plan for Retirement

To help plan your retirement you can use online calculators. Here are 4 you might need.  I must say however, that your personal situation may be more complicated than this and you should not base your financial decisions merely on some online calculators.  But they can get you started thinking about it.  The assumptions here are that you are working for your income, you plan to stop working before you die, and you want to have money you can live off of when you stop working.
  1. Life expectancy. Figure out statistically how long you are likely to live based on your age, weight, accident-proneness, and smoking and drinking habits. Then be optimistic/conservative and add 5 or 10 years (see #4 for why). There are also calculators based on the insurance industry's statistics.  I tried both of these and came up with the same age expectancy for myself.  By the way, some disabilities or mental illnesses can affect your life expectancy, so if that's your situation, look that up too.

  2. Mortgage calculator. (if you have a mortgage). With this you can calculate the effects of overpaying your mortgage to get it paid off faster. It really pays to pay off a mortgage faster. If you don't have a lot of extra money, then it may be silly to open a retirement account, but you can always overpay a little bit on your mortgage.  An overpayment of just $25 a month will save you $25,000 in interest on your average $100,000 30-year loan. Also, often the interest you pay on debt is higher than the interest you can get on investments, so killing debt pays more than investing the same money. (plus you're not taxed on the interest you don't pay, but you can be taxed on interest you earn)

    Don't bother with the programs to overpay your mortgage or pay it biweekly that you may be offered in the mail.  Those often have fees associated with them.  You can do it yourself just fine.  Also I'd rather do it voluntarily than sign up for a program and then have to.

  3. Investment calculator. This calculates the return on an investment with variables like how much you start with, inflation, rate of return, how much you put in per month, etc.

  4. Retirement calculator. This will help you figure out how long your money will last when you stop working and start drawing on it. There are variables for inflation, how long you want the money to last, how much you have to start with, how much you are drawing, and what interest you are making on it. Here is where optimism in life expectancy is being conservative. You don't want to run out of money before you run out of life, if you can help it.
Other Guidelines:

Most financial planner types say you will need 85% of your employed income when you retire. You can probably get it down lower than that, by paying off your mortgage, downsizing to a smaller house, getting rid of cars you don't need, moving to a cheaper part of the country (or world), etc.

They also say that because of traditional rates of inflation and interest, you can spend only 4% of your nest egg per year if you want to keep your principal. This assumes these rates will stay the same! Also this is only good if you've got so much money that you can afford to leave some to your heirs. Otherwise you can figure out how long you might live and try to time it so when you die you've pretty much used it up.

A side benefit of using up your money is your descendants won't be squabbling over what you might leave them. I'm also of the opinion that if you want to give people money, do it while you're still alive. Then you can watch them enjoy it, and they won't turn into sycophant vultures waiting for you to die.

Rule of 72: If you are thinking about investments and you're not near a financial calculator, basically the time it will take a lump sum investment to double in value is 72 years divided by the interest rate. So if you are making 6%, your investment will double in 12 years. If you are making 12% it will double in 6 years, and so forth.

One last thing: If you prefer a physical, handheld financial calculator, the variables are PV (Present Value), FV (Future Value), I (Interest), P (Payment), and N (Number of periods, usually months). You can usually program the calculator as to whether you want interest calculated at the beginning or end of the month.  You can also use a financial calculator to calculate a mortgage.  One way the payment is a positive number and the other it's a negative one.  (I don't remember which, but they do come with instructions.)