Don't Ever Sell - Housing

 Caveat: I used to sort out mortgages for people, as a jog. Mortgage refinancer. I saw hundreds upon hundreds of applications. Interviewed people, talked to them about their finances, what they wanted, what they did. Now.. 20 years later, those thoughts have bubbled up, and I have some insights.

The Argument to not Sell.

Regardless of how the rich get richer, which I'm sure enough people have vlogged and blogged enough about, these are my thoughts on just logic and math and loans and life.

You: 1950s, have a job, a decent enough income to apply for a loan. You've gone through all the hoops, saved 20% and bought a house. Your Income is $3000 a year, and houses cost $9k (I'm averaging from across multiple sources, and rounding off for readable math). So since the advised payment was $1k a year (one third to one quarter of your income, but for simple math we'll go a third) you'd have paid it off in 15 years, dependant on you getting pay rises, interest rates, investing a little into your loan or not, and other small issues.

Lets say 15years. Its now the early 1970s, your income has climbed to $4000, and houses cost $16k. you're house is paid off, but it cost you $12k to buy it. consider.. don't compare the $16k you can sell it for, compare the $9k price tag (and the $225 stamp duty, and another $25 in bank fees)

You paid $12,250, for a $9k house. In 1970s terms, your $16k house cost you $21,700.  

You 'can' sell, you'll probably get $16k for your house, and be looking to upgrade to a $20k house, only needing a $4k loan. That may only take 5 years to pay off, but you might have paid stamp duty on the new house of $500, capital gains tax on the $16k for $2k, So, this new house is costing you $100 a year in interest, for a total 'upgrade cost' of $7k. BUT remember, you've "paid" $21700 to own this house, you're $5k equity in the hole, now with the new $7k, you're equity is $12k backwards.

How is it possible to ever make money on a house?

Well, its super tricky, and likely you never will, but if YOUR house is worth $21,700, while the rest of the market is $16k, THEN you could break even on the sale. Likely though, to do that, you'd need to not just maintain the property, but invest in it to make improvements, BUT since that costs money, and we all know, you'll never truely make back what you put in, you'll be push a rock uphill. 

Pity we can't convince the govt, that capital gains tax, doesn't take inflation into consideration. 

Lets say, your grandpa did this in the 1950s, and you're sitting in the 2010s, inherited the house, and are thinking about selling. 

That house in 2014 is now worth 300k, your income is $55k, so even after paying inheritance tax, capital gains tax, and income tax, you're looking at a take home of 2 years paycheck.. Thats worth it right? 

well no, a) because of all those taxes, b) because that's your heritage, c) you're giving up the family wealth, that could support your family for generations, just so you can make some dumb purchases? (lets be real, unless your an avid investor or businessman, in which case you probably already know this, you're not going to spend it wisely)

Most rentals go for 5% of the property price, so over 20years you'll earn back your houses worth, again. Better yet, take out a loan ON that house to buy a 2nd house, rent that out, now you can deduct the interest from the house, from the taxable income. Make repairs, even improve the house, comes out of the taxable income (and might increase rent). Use some of THAT money for your dumb purchase.

Long Term

Consider, Had your grandpa been informed of this knowledge, in 1970, he's have bought a 2nd house, instead of selling.  

Your parents, instead of paying rent to some other person, could rent out this first house, and help pay off the mortgage. This likely means grandpa could have bought a 3rd house, 10 years later, just before retirement. If you have a uncle or aunt, they could have rented that one.

By the 1990s, your family would own 3 houses, instead of paying $5k a year in rent, it'd have been invested in the family houses. now, not needing to even GET a mortgage, your dad and uncle, could both, use the equity in the houses to get an extra house each (though, in the 90s interest was so bad, maybe they would have held off) but lets say, split the difference, they bought 1 extra house, put both  their 1/4th incomes into it.. 7years and it'd be owned (even at 15% interest as it was)

by 2000, you are born, and you already own a house to move into when you're in your 20s. in the gap between then and now, your dad and uncle have bought two more houses, renovated the other four for wifi, cable, aircon, insulation, etc. and had enough left over for yearly holidays.

Your grandpa, likely passed on (god rest his soul, sorry for your loss) created a legacy for your family, you don't pay rent, but instead contribute 1/4th your income to the family (trust?) to build a healthy portfolio of property for your kids. your family owns 8 houses, lives in 4 of them and rents out 4 of them to also contribute to the trust.

This.. by the way, is what I referred to at the top, about how rich families exist. When grandpa passed, all houses, re-evaluated at worth, passed on to the family trust, pay no capital gains (because you don't sell) nor inheritance (you didn't inherit) you don't pay mortgages or rent, ever, and your trust borrows money, spends it on new houses, and gives you all tax free bonuses (new cars? holidays?)

p.s. this is all just conjecture and opinion. be smart, talk to lawyers and accountants about setting this up for yourself. everyone has difference circumstances and life events to deal with.  

 

You, Me and AI

Rambling Thoughts: When ever a new technology comes along, there are people, adopters, who have an interest. Cutting edge interest. They are enthusiasts who wish to own one of the 'things', Engineers who want to understand how the new thing works, and if they're both, maybe want to make a better version. And then there is a 3rd group, who can be broken down into Entrepreneurs and Vultures.

How we need to be aware of AI, because of the Vultures

When the car came along in the 1800s, it was a great idea, to move people from location A to location B on any fairly flat surface, back then the uses may or may not have been thought of, from motorbikes, trucks, planes, pumps, submarines, the concept had so many uses. Each allowed a second, third, forth entrepreneur the ability to asses, create, test it, go to market with a Minimum Viable Product (MVP) and become profitable. 

We had time to identify the market niches, varieties and discover if was a good thing or not to develop a company to supply a product, some stayed, some left, but over all we had a good range of products. It wasn't viable to cannabalise other companies. Some smaller manufacturers created cheap ripoffs of the market, but the cost to produce a car plant was very high, it took dedication and often govt inclusion to invent a local car to resist the imports. 

When the mobile came along, We saw a range of phone being developed by companies in multiple countries, and because of the ubiquitous nature of the mobile, many could create knock offs and replicas and cheap versions, Yet it eventually boiled down to two to three main rivals, and everyone else couldn't cope with the cost involved to stay relevant. Developing a major phone, and marketing it was expensive, if you were not in, in the early days, you would struggle to bring a product to market, and gain enough share to be relevant.

Today, AI stores are live. You can create a 'store' of a concept for an AI, and go to market, and because its new its still a good time to jump in. Yet, be aware that because its so easy to create a store, many people are going to create one. the barrier of entry is low, the flow of information how to create your own is high. The best will rise to the top, and if they price themselves right, will be the be all and end all of that niche. 

What do I mean by this.

If you create a Baseball AI right now, you might be lucky to create the right kind, the right style, maybe no-one else has thought to do a baseball AI, so you'll have enough lead time on the competition, to get your product working well. Price it within the market average, say $20 a month for now, and rake in a few hundred grand, to figure out how to do it better, price it a bit lower to maintain the edge on your potential competitors, and stay relevant, as it'll come.. The vultures will begin to swirl.

The cost to enter this market is low, extremely low, I doubt any $20 a month product will stay relevant beyond a year. The race to the price floor will be swift, maybe swift enough to kill off the whole idea, but you can be sure that the companies that stay afloat will have done one of two things. Sold out [data], or Consumed the competition.

Probably Both. 

Hold up.. Are you even aware?

Incase you've been living under a rock, the generic AI that was GPT 4, is so overwhelmed with data, its slowing down, so they decided to split it into sub sets of itself, based on specific topics, and instead of doing all the effort themselves, they're 'leasing' the whole thing to us consumers, to create our own niche AIs. 

You can upload all you know about baseball to your baseball AI and have it feed back specific information about existing games, or maybe predict future games, or maybe tell stories based on game stats, what ever you decide your app will do, and then you'll promote it to consumers, to use, and pay you for the advanced versions. They'll use it to make their lives easier, and you'll be providing data to GPT to they can train their AGI better. win-win, right?

But, this will only work for the 1st Baseball AI. and maybe the 2nd. just like Android and iPhone. There will be 2 camps in the end, BaseBall-AI and AI-Baseball. Each doing the same thing, with a slightly different feel. And all the rest of the world, won't have a chance to create a baseball AI because you've already done it. The barrier of entry will not be price, not be skill, or ability, it'll be recognition of who was 'first'. The cool kids will use the main one, and that'll be it. 

Are you going to be first?  

Ai in Me - story idea

 It happened, I managed to get my internal AI to work autonomously recently, 

I was in conversation, a boring average conversation. 

I just went through the paces, and realised I had done so, without needing to do any effort.

My internal AI managed to take over at last and do it all for me. 

It spoke about mundane things

It spoke of the weather and up coming events on the news,

I didn't need to.

My Social Life has become sentient. I can now retreat into my own mind and think more about more important things.

Its been a week and I barely noticed. 

I wonder if this is a good idea.

The Ever Swindling Supply

 1980s Christmas, for 24 days before, parents take to the shops after work, scrambling to find the toy their child asked Santa for, in hopes of getting that latest Barbie or matchbox car or science kit or light-up jump rope. Even on the 24th you could still make it to the shops to get it. Today? HA!

What's Happened?

Lets explore some of the problems I see, from supply chain to internet shopping, Santa's Letter to the night before Christmas, how stressful its amped up in the last 40 years.

December 1st, up go the decorations, before that, the Grinch would notice, steal into your house and damage things to need replacing, and you' have to double up on your spending for the year, Fear Not, no, lets stay the course and delay like good Traditional Folk to December 1st. 

Up go the Decorations. Out comes the Christmas Cheer, all the good boys and girls make up their Christmas list for Santa, post the Letter, having shown it to mum and dad for "spelling" So that mum and dad have enough time to find those toys in the stores.

Today, Shipping costs means the prices of goods, and this is 90% of goods for most places, are up as much as 50% from those shipping costs. That $30 toy you want to buy your kid, is $10 in shipping costs, if it were produced at the same cost locally, it'd have been $20. 

There is far too much choice, and at the same time, far too little ability. The cartoons that the toys are based on can come from a multitude of origins, which means the toys are not likely to be on the shelves for your kids, locally. So when little Susie says she wants a Masha and the Bear doll, well sorry, while the internet is world wide, that doll is produced for Russians.. good luck getting one of those these days.

Oh except of course, China probably does produce one of them, fake, cheap, will break in a week versions, and your kids will find that on google and ask Santa for it.

So what happens next, Your kids asks for the toy on December 1st, you quickly scan the internet that very day, and can take a chance on 21 day shipping for 50% markup, 14 day shipping for 100% markup, or 7 day shipping for 200% markup. 

Yeah, good luck if you kid takes 2 weeks to make up their mind, and another to write the letter, "Here daddy, can you post this for Santa, " on the 22nd "I want a Mongolia Sheep Herder doll, and a African Tribe Doll" which has a 31 day shipping and 2 day overnight shipping is 1000% of the dolls price, even if its cheaper than the barbies in Target/Kmart/Walmart.

So, what to do? How do you tell your kids that Santa couldn't get that doll in time, he can travel around the world overnight, and his elves (or Yetis) can make *any* toy. But he couldn't get *your*kids toys? 

Thanks Capitalism, Thanks. 

Today I learnt..

Its usually hard to pin point clarity. I think I did just now.

"Better to remain silent and be thought a fool than to speak out and remove all doubt."

I am not yet a wise man, I'm still learning. Yet today I spoke to another, the intent to help, but they were not of a mind to heed advice, and spoke ill of me.

And I thought. What an Ass. Why would he take my words in a negative manner.

I sought to placate him with words of the same meaning, but different views, so he might understand that I was not his enemy.

But, It was the internet.

And I thought.. maybe wise men don't speak, because they understand that fools with rebuke their words, and cause them harm, verbal or otherwise. Maybe in ancient times, Wise men were the ones who learned quickly to keep silent, lest the foolish king rain down blows upon them.

Yet, in today's world, there is not a backlash so harsh to keep fools quiet, so instead the bleat upon the world, drowning out anything of consequence.

I thought I would be a great orator, I look out to see what great orators exist, and they do not. The last that I can tell is Carlin, he's passed now, also, he was a Comedian.

So, Maybe that is the path to Oration. I just need to learn some jokes.

Yet, remaining silent? Its just not me. 

Backstabbed by the Business

When you're part of something, and then someone in that group, changes the rules on you, or makes things uncomfortable for you, you feel anger, betrayal, disgust. If its a project leader, and they can justify this, you might feel less of it, but its still there, but when a company, treats customers like cash cows, after they have been tried and true to your product, you are left feeling helpless.

The Problem at the end of the day, is, we have little to no power. We are nothing more than cattle, coming to the trough, unable to affect major businesses.

What am I talking about, and in what context..

What I'm Talking About:

When I lived in Russia, Moscow specifically, you had a large range of restaurants you could visit. You could walk to something locally, and have 2-4 choices, but since the Metro was closer, you could ride the metro 2-3 stops and improve your choices by 10x. 4-5 stops and you had another 30-40 choices. Since the Metro was travelling 100km an hour underground, you could cross the city from top to bottom in 40 minutes, and could choose, on one line, from more than a thousand locations.

To put that in perspective, In my home city, If I travel for 40 minutes, I could drive to the city for a choice of 100 places, and search the northern suburbs for another 100. My home city has 3600 places to eat, Moscow, over 20,000.

So?

So, Adelaide, and Moscow (inside the metro limits) are approximately the same in size, yet little Adelaide has a little under a million, and Moscow in the vicinity of 15 million.

The point is, in Moscow, that each restaurant has, within a 5km radius, more people that it can cope with, for a year of being open. It has no need to cater to the whim of every customer. It can't. The prices of those places are exorbitant. The Average Cafe served eggs on toast with a coffee for 500 rubles, at the time, 2009, $15. Not bad for 2019, if its a good restaurant, in a western culture, with people earning 30 an hour. But Moscow, 2009, 500 rubles was double the hourly wage of an office worker. So you'd only went to cafes on dates, (or so I thought).

Yet, due to demand, the cafes were packed, they put in more chairs than were legally allowed, paid off the inspectors to turn a blind eye, and raised their prices another 20%, and they still were packed.

In Moscow, 2008-2010, You could open a restaurant, without training staff, over charging, ignore all the rules of , well anything, and you'd still be fully booked for a year.

I was regularly sitting in a place, waiting staff nowhere to be seen, food was average, paying twice what I should, surrounded by people, wondering how such a place stayed in business, surely all these people would tell their friends how sh*te it was, and the place would be empty in a month? nope.. the social power of all those people would be barely 1%, and even then, half would still go there just to see if it was as poor as their friends made it out to be..

Bad Publicity is still publicity.

So, to my context?

In The world of Board games, we are under a glut of games, Kickstarter has provided anyone the opportunity to bring their ideas to the world. These games come out, they bring fun, sometimes, they bring opportunity, and its all packaged in what seems to be a great deal... til it turns out you were just being brought to the trough, fattened up for the slaughter, and if you complain about it, if you realise you are being duped and raise your voice and squeal, you're quickly kicked out.

For every unhappy customer, there are a hundred customers who have yet to take off the rose coloured glasses.

Here is a list of games, where the creator & publisher have screwed over their Kickstarter Backers

• Gloomhaven: $154.95 (down from $220)
• The City of Kings: $85.95 (was $180)
• Pandoria: $49.95 (was $100)
• Death Note Confrontation: $25.95 (was $50)
• Sunken Sailor: $9.95 (was $40)
• Gaia Project: $109.95 (was $170)
• Root: $69.95 (was $100)
• Vast The Crystal Caverns: $50.95 (was $90)
• Burger Up: $16.95 (was $50)
• Burger Up Expansion: $5.95 (was $15)
• Kanagawa: $26.95 (was $52)
• Shipwrights of the North Sea: $29.95 (was $80)
• Kepler 3042: $48.95 (was $100)
• History of the World: $62.95 (was $120)
• Fallout New California Expansion: $37.95 (was $70)
• Petrichor: $48.95 (was $90)
• Star Wars Destiny (Two Player): $23.95 (was $50)
• Palace of Mad King Ludwig: $36.95 (was $100)
• Clash of Cultures: $75.95 (was $140)
• Gen7 A Crossroad Game: $96.95 (was $160)
• Spring Meadow: $56.95 (was $100)

That there is $1000 difference. Anyone who has bought 24 games in the last 2-3 years on kickstarter, spending $2100 on games, to find out if they'd just stuck the money in the bank 3 years ago, and when the game came out on special, bought it now, and banked $1200 ($100 savings + $200 minimum interest) would be mighty pissed.

There are arguments, they would have been playing the game all this time.. well no, most of these games only came out a year ago, or less. Even if they played each game, played twice a week, in rotation, they may have not yet, at this point in time, played more than twice some of these games.

The Argument that the game would not have been published without them, yes, and that's the point. the KS backers are the reason why the game exists. The publisher should be rewarding their backers, ensuring their backers have a reason to back it, other than just getting a copy. (which as often as not, they don't, or its poor, or its broken, missing bits, damaged, rules are poorly written, etc etc).

Backing games, is somewhat a lottery. You don't always get great games, you don't always get anything, but you're in it to win it, you back 20 games, one will never come, 2 will arrive with downgraded quality goods, 2 will have strange rulebooks that don't make sense, but 3 will be great games that you want to play every weekend, and 1 will be an awesome game that always comes out to be played.

Just now, you could have waited til everyone said how great those top 4 games were, bought them at 50% sale, and not even bought all those other duds, and gone on holiday with your awesome game, and played with friends on the beach.

The Capitalism, the Commercialism, has infected the creative industry, again, and Its sickening. again. 

Sad State of Affairs

There was once a golden age, its time has come and gone, and the worst part is, those of us who grew up in that age, remember it. As time goes by, and things become less golden, the sheen wears off, it peels back to reveal maybe layers of lead, we start to fight, but its often too late.

At some point in time, we worked from 8 to death, we gathered food, tilled soil, fed animals, built our own farms, attended festivals, met friends, made enemies, had no expenses to deal with, just the gnawing stomach when times were lean and the fear of lean times when times were plentiful.

Then we left the farms, put on shirts, studied in school from 5 to 12, got city jobs to pay for food, and realised we had whole afternoons, lit with candles to entertain ourselves. Musical Instruments? Local friends? maybe some home-still juice? everything we needed.

But Winters were still cold, they needed wood from the forests delivered, or gas piped into the house. This cost money, so incomes needed to increase, so jobs needed higher pays, but through badly managed economies, we needed the elderly to leave work to allow young people to start, else they'd be unemployable, so now the retirement age came in.

Then we started to create entertainment, and whole industries of entertainment, but we needed money for entertainment, this meant more studies, so we went to school from 4 to 21, to get better paid jobs, but we needed electricity for entertainment, so we needed to create bigger plants, more power, more logistics, more grids, more networks, til now, its all one big network, called the Internet.

So, we're all entertained, so much so, that we don't have time for anything else, we're all connected, so much we don't want to connect.

Its like when I traveled overseas for years and years, I was not here, so when I visited, everyone wanted to see me, talk to me, visit me, because I was not available, but when I moved back here, 'we'll catch up' can mean not seeing friends for years and years, yet they live a stones throw away.

A Lack of something, creates desire for something.

Now, things have gone past this spectrum, we've passed through the eye of the storm, and things are taking a turn for the worst. instead of making lives better for everyone, we're reverting back to the old ways.

Old people, need to work longer to pay the bills, so they push for older retirement limits, this often provides governments with more income as unretired 60+yr olds are usually on the higher spectrum of incomes = more taxes. So the age of retirement creeps from 60, to 65, to 70.

Soon enough people will be working while in school, but because they're doing it all part time, they'll be in school longer, til 30 or worse.

They'll be unable to earn enough to start saving enough to create a nest, let alone a nest egg, so they won't be able to retire, as the prices of house climbs up and up beyond the means of any 30-40yr old.

The price of schools, education, healthcare, medical aid, living, gas, electricity, banking fees, transfer fees, it'll all go pear shaped as the cost to live will outdo the cost to die. the middle class will be squeezed, having children will be so expensive, only the top 1% will be able to put their kids through schools, the rest will go back to working menial jobs, curating videos or likes on entertainment social media for pittance, just to afford food, while living in sweat boxes.. better than outside in the cold.

The poor will be trapped in the never ending cycle of economical slavery, the middle class struggling to make do, with the rare few rising from the pile to greatness, giving hope to the rest, but its all part of the system in place to ensure the mass middle class don't rise up to topple the system. The few elite might cease to exist, as they slowly but surely put all the decisions into the hands of AI, too fast to be unplugged, the elite slip back down into the system themselves, unable to stop any changes.

Just like those babyboomers, realising now that they messed up so much, they're unable to make any changes, the system is a runaway train. The young are too engrossed in their mobile entertainment wallets to notice the chains being clamped around their feet.

How to escape? and where to escape to? remote forests? back to nature? I don't want to escape all of it, just the part where bills became more dominant than income, where people paid for entertainment, than make their own with their voices, their instruments, their hands and their minds.

The Goal?

I'd prefer a future where electricity is free, solar panels and watermills take care of it all. People work 20 hour weeks, study 10 more all their lives, can afford to buy a place to live by the time they are 30, so they can devote the next 20 years to something bigger than mortgages, bigger than themselves, 'Sundays' are forced offline, enjoy a full day off where shops and offices and banks and everything is shut, and TV is off and people have no choice but to get outdoors and just be.

Can we work towards that? please?