Diaspar Software Services, Mexico office

We’ve written before about our impressions of Tim Ferriss’ The Four-Hour Work Week. In this book, Ferriss extols the virtues of first eliminating as much administrative work as possible, then automating the rest. For example, I have eliminated a majority of email communication by training others not to expect quick responses from me. Only the most expensive-to-ignore emails get through, and this system has given me significant peace of mind. We have automated almost all our bill payments. We have outsourced managing our rental properties. I estimate that we spend less than two hours per month on recurring administrative issues, and we can do better. For example, we have too many bank accounts, including chequing, savings, and credit. This requires moving money around each month. This summer, we will eliminate as much of the confusion as we can. I bring up elimination and automation because these two activities make it easier for us to live away from home. We have outsourced much of our administrative work to housesitters, handymen, book-keepers and accountants, but we needed to know whether we’d outsourced and automated enough to move ourselves off all critical paths. What could possibly happen at home that would require our physical presence? It turns out that we managed to handle a number of things remotely, with a combination of the internet, a tablet PC, Skype, headphones, a scanner, and MXN 10 per page for printing costs at the nearby internet cafe.

• We filed an annual return of information for our company by fax.
• We filed both corporate and personal tax returns.
• We collected significant revenue from clients by wire transfer and direct deposit.
• We invoiced a client entirely electronically, including an expense report complete with receipts.
• We even sent a tax treaty document by post to the US!

Even when the outside world insisted on receiving physical paper, we managed to make that happen with little effort: a few minutes’ walk, a USB drive, a few pesos, and a stamp. I conclude from this experience that we have made our office paperless enough to travel anywhere with an internet cafe or a printing service. We have one major annoyance to eliminate this summer: TD Canada Trust’s Euro account requires the accountholder to sign a piece of paper in a branch in Canada to transfer funds out of the account. It also does not allow withdrawing cash in Euro. We intend to try out the Euro account with HSBC bank to see whether it indeed solves those problems. With this, we’ll have provided for the vast majority of our day-to-day needs, and for the rare item that requires an unusual amount of our attention, we will have saved up more than enough energy to deal with it.

Villa Serena, Mazatlán, México

On the advice of relatives, we chose to experiment with living at Villa Serena, located in Mazatlán’s old downtown. We found a one-bedroom apartment for USD 653 per month. This price included MXN 300 worth of electricity per month, and access to the amenities, although we did have to pay an additional MXN 150 per month to use the laundry facilities and MXN 25 per 19-litre bottle of water. We ended up spending a total of CAD 1129 + MXN 13942, or approximately CAD 2280 on housing costs for three months. That makes CAD 760 per month for rent, cooling, water, cable TV, and internet. The corresponding items cost us CAD 782 per month in Summerside. That makes it possible to live in Mazatlán quite inexpensively. We love that.

Cooking with my youngest sister-in-law, Mary

We ate quite well, mostly cooking, but occasionally eating out. We certainly enjoyed a lot of Hector’s bread at Molika Bakery, which we mentioned in a previous article. We spent about CAD 2280 on food for three months, or CAD 760 per month, which makes for a telling coincidence: we value food. We spent about CAD 183 on our Molika Bakery habit, CAD 32 on coffee beans, CAD 934 on shopping at the big grocery store, CAD 156 at the local market , CAD 216 on pizza, and the rest (about CAD 759) on eating out. After we returned home, we computed what we spent on food in June unrelated to travel, and it came to just under CAD 1000.

Traveling in style with our good friend, Jen

We love how little transportation costs at home, and in Mazatán, the taxis and pulmonías didn’t disappoint. We spent CAD 136 on transportation, excluding the trips to and from the airport, which totaled an additional CAD 53. Given the flat rate of CAD 6 or 7.50 per trip in Summerside, CAD 136 would buy about 17 trips, or 8 round trips, at home. We probably use about 4 rounds trips per month at home, which costs around CAD 180-200 over three months, depending on where we need to go. While we encountered some trouble flagging down a pulmonía in Mazatlán, we found the service overall both efficient and pleasant to use. I also owe the taxistas a debt of gratitude for letting me practise Spanish with them.

I think I can make a strong case that Mazatlán offers us an excellent place to live, with a cost of living very similar to Summerside. We consider our experiment a financial success, at least on the surface. We couldn’t resist looking at some real estate listings, and while houses cost considerably more there than at home, we had to double-take at the property taxes those listings quoted. As a single data point, a house listed at USD 250k carried property taxes of USD 200 per year. This compares favorably to the CAD 1250 per year we pay in Summerside. Although we would need a cash infusion to move there, it appears that we could live in Mazatlán spending under our arbitrary limit of CAD 2000 per month for basic living expenses.

The glass bottles are not very portable, nor are the caps intended to be leak-proof, so they work for around the house but not so much for travel.  That’s where the Platypus bottles come in.

We purchased two of these in January 2009 and use them extensively in our travels.  Their best feature is that when empty, they pack flat.  So, there’s never any reason *not* to throw them in the suitcase.

Here’s what we like about the water bottles:

• reusable, and easy to refill
• even partially filled, they stand up so they’re great for on a desk or bedside table
• material withstands boiling (for cleaning) and freezing, BPA-free
• have never leaked (ours are about 16 months old)

Note: We have not received any compensation, financial or otherwise, for this review. No affiliate links are contained within this post.)

It seems like 98% of personal-finance material (blogs, magazines, books) focus on spending LESS — keeping a budget, saying “no, no, no” to lattes, jeans, and vacations.

Why?

Why don’t they cover earning more, or negotiating, or increasing your responsibilities at work, or understanding the psychology of your own behavior, or all the other things besides cutting down on spending?

I’m trying to formulate 3 crisp answers.

So, what do you think? Why is the vast majority of personal-finance material focused on cutting down on spending?

I answered in his comments, but I wanted to repeat that answer here. I hope you find it useful.

I learned from Your Money or Your Life that for most people, most of the time, spending less is easier than earning more. I found that to work for us, and it was a key step in retiring at 34 instead of in our 50s. Unfortunately, most people conclude that they must limit spending to a predefined budget, and find that difficult to make work. I don’t set budgets.

Budgets don’t work because there’s no such thing as a typical month. I also learned that from Your Money or Your Life. For this reason, we never budgeted, but instead, tracked our expenses, looked for wasteful expenses, then eliminated them. We asked ourselves the question, “Do I value this expenditure?” When we answered “No”, we stopped spending that expenditure. We made a quantum leap when we decided that we didn’t value living in an expensive city like Toronto any more.

Now, fortunately for us, when we reduced our expenses, we had an active profit each month, which we turned into passive income generating assets, and the compounding effect took care of the rest. Some families can’t do this. Even after eliminating expenditures they don’t value, they still run on an active deficit each month. These families need help to start earning more money, which usually demands an investment they already can’t afford.

At the same time, Rich Dad, Poor Dad has pointed our attention to the tendency of families to spend more as they earn more. As a result, earning more does not translate to increased active monthly profit (nor reduced active monthly deficit), meaning that it does not lead to increased passive income and more financial freedom.

I would conclude from all this that first focusing on spending less leads to better results than first focusing on earning more.

Take control of your recordings with Beyond TV

The bad news came when we ordered a new computer to serve as our home-brew digital video recorder (DVR). We had happily used an old Windows XP machine to do the job, but I wanted a faster machine, better capable of handling the demands of up to four shows recording at once, better capable of compressing GBs of video. I bought an Acer Q6600 and loaded it with 4 GB RAM since, as we all know, more RAM matters more than more CPU speed for most home computer users. Sadly, our TV tuners had a different idea.

After several hours of trial and error and a bit of reading, I discovered that the Hauppauge PVR-150 TV tuners we had used for years wouldn’t work on a 64-bit system with 4 GB RAM installed. Worse, rather than simply refuse to work, the tuners would randomly drop frames and freeze at random instants, making it difficult for me to isolate the problem. It took over six hours.

At that time, I worked around the problem by removing 2 GB RAM from the computer. Bear in mind that I had specifically asked for the RAM upgrade for this computer, and so I had essentially sunk some multiple of $100 into useless RAM and the wasted day getting things to work.

That was over a year ago. My, how times have changed.

Not long ago, I came across a short article that described a potential remedy for the problem. It suggested I configure Windows Vista to voluntarily boot with less RAM. It would never in a million years have occurred to me that Windows would do such a thing. I’d never used an operating system capable of voluntarily using less RAM than available. Before encountering the confluence of 64 bits, Vista and the PVR-150 tuner, it never occurred to me to want or need such a thing. With trepidation and excitement, I tried it.

1. Install the RAM and make sure Windows Vista booted fine. Don’t expect the TV tuners to work.
2. Configure Windows Vista to voluntarily boot to 3712 MB (3-5/8 GB) RAM. Run ‘msconfig’ from the Command Prompt, then choose the Boot tab, then choose Advanced Options…. You’ll find a “Maximum Memory” option you can enable and set the RAM Windows will boot with.
3. Reboot. Even though System Properties reported 4.00 GB RAM, I ran Beyond TV and it worked.

I include this, hoping that it will help you out there. I can’t believe I had to give up 384 MB RAM to make this work. My first five computers could run on 384 MB combined.

Convert voicemail to email

Earlier I wrote about my unfortunate experience trying to try out (yes) PhoneTag.com, a service that transcribes voicemail and forwards it as email and SMS messages. I came across PhoneTag.com in my reading of The Four Hour Workweek, and I really like the idea of reducing the number of inboxes I need to monitor. After my initial trouble setting the service up, PhoneTag.com’s CEO, Thomas Lesnick, offered me a 30-day free trial of the service, which I couldn’t pass up. I wish I could call the experience entirely smooth, but I also want to make sure PhoneTag.com gets a fair reputation for the good points they’ve earned, so I’ll describe my experience as evenly as I can here.

Rogers: elevating customer service to below the floor

First, I found out that I’d have to drop voicemail from Rogers Canada to use PhoneTag.com’s service. This turns out to reflect Rogers’ service, and so counts as a point against them, rather than against PhoneTag.com. Sadly, Rogers Canada managed to give me false information in my quest to cancel voicemail from my service. When I stopped in to a Rogers Wireless store, I asked someone to tell me how my plan price would change if I dropped voicemail. After a few clarifying questions, they told me my plan would decrease in price by $2/month. I told them a few times, “I just want to make sure the cost won’t increase because I’d go from a bundle to a-la-carte services.” Imagine my annoyance when I spoke to a CSR at Rogers on the phone, who informed me that replacing a bundle with a-la-carte services would increase my monthly costs. I managed to show just the right amount of exasperation, because a moment later, the CSR told me she could “make voicemail not work” without charging me any extra money. While I expected a decrease in price by $2/month, no change in price satisfied me, so I went along. I canceled voicemail.

Next, I forwarded all my unanswered, busy, and unavailable calls to the PhoneTag.com service’s phone number. PhoneTag.com was good enough to secure a 902 area code number for me to use. Now since my Rogers Canada plan includes pay-as-you-go call forwarding, each forwarded call would cost me about $0.20/minute, but I considered that reasonable cost to pay to try PhoneTag.com, so I went ahead. Setting up the service took only a few minutes, and I called myself through SkypeOut to test the transcription.

I first left a message without choosing the correct microphone setting in Skype, which meant no audio recorded in the message. PhoneTag.com helpfully pointed out that it recorded no discernible audio and would not charge me for hang-ups. Good for PhoneTag.com! Once I configured Skype correctly, PhoneTag.com sent me accurately transcribed messages by email, but not by SMS. This troubled me, because I wanted to receive voicemail by SMS while away from an internet connection for days at a time, if only so that my book-keeper could contact me with urgent questions. At this point, PhoneTag.com began losing my respect.

First, their support system doesn’t integrate with their service system, so I had to create a second account especially for their support system. Without this, I couldn’t track trouble tickets. I don’t mean to put this rudely, but my calendar reads “2009″, not “1999″. I find no real excuse for this inconvenience. What’s more, to sign up for a support account involves specifying my mobile phone provider, and while I can choose “Rogers Canada” for my service account, their dropdown list does not include “Rogers Canada” for the support account. Worse, when I emailed PhoneTag.com support about the issue, they couldn’t decipher my comment and I had to send them a screenshot of their own support system signup page for them to understand what I meant. Here, sadly, PhoneTag.com and Rogers Canada have roughly equally effective front-line support workers, and I don’t know whom that maligns more.

Finally, PhoneTag.com informed me that in order to receive transcribed voicemails by SMS, Rogers Canada would charge me extra, because of the gateway PhoneTag.com uses to send transcribed voicemails by SMS.

This really bothered me.

When I signed up at PhoneTag.com for a service account, they knew I used Rogers Canada as a mobile phone provider. They should have disclosed the extra fees to receive transcribed messages by SMS at that point! I wouldn’t mind them blaming Rogers Canada for the extra fees, but I don’t appreciate finding out after I’d already signed up for a PhoneTag.com account. The fact that they extended me a 30-day free trial makes their lack of disclosure cost me less, but it doesn’t erase the time I’ve wasted setting up their service and dealing with Rogers Canada and their inept customer service. I notified PhoneTag.com and Mr. Lesnick about my disappointment, telling them that this makes it less likely that I will continue to use the service past the free trial. Shame, too, because I like their core service so far.

So I like PhoneTag.com’s core service so far, although I find PhoneTag.com’s customer service and fee disclosure policy a little shaky. If you care deeply about receiving your voicemails as SMS, and you’re on Rogers, then you might find PhoneTag.com too expensive. If you really only need voicemails by email, then you’ll find PhoneTag.com more cost effective. I’ll know more when I see my next Rogers Wireless bill. I don’t look forward to seeing how they screwed it up.

Froth Cafe

Sarah’s family has a few cottages littered throughout the township of Tiny, Ontario. During this trip back to Ontario, while the Blue Jays have traveled out of town, we’ve spent most of our “down time” in and among those cottages. I have really enjoyed the disconnected time, as it has given me the chance to read The Four Hour Workweek and come up with some new ideas for the next phase of our retirement.

More than this, we recently found out about Froth Cafe, located on Main St in Penetanguishene, about 15 km from the cottages. We’ve only managed two trips there so far, but early returns have looked good for the fledgling cafe.

In short: very good espresso drinks, fresh and bright decor, very pleasant staff, commitment to quality over speed.

Sarah and I visited Froth looking for espresso drinks: Sarah her cappuccino and I my latte. We walked into the shop and immediately noticed the bright, airy feel. Light-colored wood and clean glass dominate the decor. On the blackboard behind the counter, the cafe’s proprietors set a relaxed tone: if you want fast food, then please go elsewhere. I loved it straight away. We ordered our coffees, chatted with the staff for about 10 minutes, and enjoyed what we drank.

We visited a second time, me bringing some technology to keep me busy while Sarah and her family went shopping for clothing for an upcoming wedding. I found it a delightfully relaxing place to sip a latte or two while working away, seated on one of their big, comfortable lounging chairs.

Overall, I really enjoy Froth Cafe, and find it a shame that we might not have the chance to visit it again soon. If you have a cottage in the Penetang area, please visit them and buy some coffee and food. If you live in the area, please support this fine new establishment to help them survive the winter and provide the community with something better than fast food and burnt coffee.

Tim Ferriss' "Four-Hour Work Week"

I have started reading The Four-Hour Work Week by Tim Ferriss. When I’d read descriptions and reviews of the book, I formed the opinion that I already intuitively understood many of the principles at work, particularly as regards his steps of elimination and automation. Reading it confirmed what I’d suspected: I had already used these techniques and even counseled others to use them in my work as a classroom trainer and consultant. It sprang to mind a particular success story from my early software career.

I worked as a student-on-call at IBM in Toronto in 1997. I started on the Visual Age for RPG project, which entailed my comparing error messages between the older RPG compiler and the newer Visual Age RPG compiler. While they had automated the test that produced all the error messages they wanted to check, they hadn’t automated checking the messages from the two compilers to each other. Instead, I started doing that. I began with 50-page printouts: a master copy and printouts from each test run. I compared the two copies, then reported a defect when I found an unacceptable difference between the two. It took a few days to learn which differences they could tolerate and which ones they decided warranted a fix. It took me several hours to compare the printouts, and I resented the tedium. After a week, I had the thought that all successful people have: there has to be a better way.

First, I asked whether I could use e-copies of both the master copy and the test runs. They arranged for that with little effort. As I waited for that, I looked for patterns in the text I compared by hand, learning how to extract the messages from the surrounding text and how to describe meaningful and meaningless differences. Once I received e-copies of the master copy and a single test run, I started writing a computer program to load the two files, compare them, then summarize the differences, highlighting the meaningful ones as “almost certainly defects” and the meaningless ones as “probably not defects”. This gave me an opportunity to write my first truly useful programs in C, a language I hadn’t much used before, but one that I imagined would benefit me as a professional programmer. I don’t recall how long it took me, but I don’t remember anyone becoming impatient with me, so the time I spent must not have made me a bottleneck.

The first day, I used my new program to on the next test run, but verified the results by hand. I noticed that my program took about 30 minutes to run: I had an old computer, I didn’t know how to write particularly quick programs, and don’t forget the test runs amounted to 50 printed pages. At first, I looked around the office while my program ran for something to do, as I didn’t have access to the internet on my computer. I flipped through a few manuals, including a C manual that I thought might help me. That day I processed two test runs, the same as any other day, but noticed that my manual checking went quicker, because I could check the meaningful differences first, then the meaningless ones, then double-check the rest of the document to ensure that program didn’t miss any defects. To my delight, it performed more than well enough for me to start trusting it within a week.

Now the time had come to harvest my productivity crop. I collected that day’s test run and a new master copy, loaded them into my program, ran it, then wandered around the building, knowing I had about 30 minutes. I hadn’t realized the size and complexity of the old IBM building in Toronto. I began to understand the need for its intricate room addressing system, right down to numbering hallways, odd numbers running north-south and even numbers running east-west. I walked back to my office after about an hour of wandering to look at my program’s result. I reported two defects, then wondered what to do next. I had to wait for the next test run, and they wouldn’t run one for another couple of hours. I wandered the building some more and stumbled upon something of interest: a dart board in the cafeteria.

I started playing darts.

In less than two weeks, I’d gone from a terrifically tedious job checking two 50-page documents to one another by hand to IBM paying me roughly $150/hour (as a starving undergraduate student!) for about one hour per day, with seven hours of playing darts, reading, or generally relaxing. All this by finding an ineffective work process and streamlining it with a little elimination and a little automation. I had gained some relative mobility, as I only needed to spend about an hour a day in my office, reporting defects or fixing my test program.

Now I need to confess something: my program did not operate perfectly. Every two weeks or so, I’d notice something my program missed: a difference that my program interpreted as meaningless that I needed to report as a defect. This meant that, every so often, I reported a defect later than I could have. I was performing at far less than 100% efficiency. Funnily enough, it did not matter at all! I didn’t understand the theory at the time, but I experienced it then: the project had a bottleneck somewhere else in the system that moved more slowly than I reported defects, so I could generate no extra value by reporting those defects more efficiently!

Imagine that: producing better results wouldn’t have mattered at all, so it didn’t matter that I produced my results less than perfectly efficiently.

Since I didn’t understand bottlenecks at the time, I felt bad about “cheating” and added more rules to my program to handle these increasingly subtle distinctions between meaningful and meaningless differences. The resulting program did work better and did automate my work even more, allowing me to go from one hour of work per day to closer to 45 minutes; but if I hadn’t been refining a skill I would use later to make a lot of money, then I would have looked back on that as a waste of time. Had I known any better, I might not have bothered at all, and simply played more darts!

Long before I started reading The Four-Hour Work Week, I managed to use some of the principles he describes to turn an $18/hour job into a $150/hour, one-hour-per-day job where I got to play darts, read, and otherwise relax most of the day. I didn’t wait to perfect my time-saving system; I just started using it as soon as I reasonably could, even though it cost me extra time for the first week! Since then, I’ve managed to combine the goal of mobility with the principles of elimination to retire at 34 on passive income streams worth 1.5 times my family’s essential living expenses. You can do it, too, and I recommend The Four-Hour Work Week for beginners to read to help form their vision of a new life, and then to re-read a year or two later to refine your approach to freedom from the tyranny of tedium.