August 12, 2011

PDC #5: Change Your Own Oil, Earn $400,000

A favorite Benjamin Franklin axiom is “Small strokes fell great oaks”. Meaning small actions, done over and over again over a long period of time, can have a meaningful and substantial impact. This is certainly the case when it comes to personal finances. Small savings here and there add up, or I should say, compound up.

One of the things I feel anyone can do to save a few bucks, here and there, over a long period is to change your own oil. It’s really a simple thing to do once you learn how. So today’s Payday Challenge is to change your own oil.

Before I get into the financial benefit of changing your own oil, let me address the most common argument against doing it: time. The common belief is going to get your oil changed at a quick lube place or a local service station saves time. Really? ‘Cause that is simply not my experience. The closest quick lube is a few miles from my house. The ride alone takes 10-15 minutes and that’s if I don’t catch any red lights on the way. Once there, for some reason the “10 minute oil change” advertised on the side of the building never seems to pan out. There’s typically a line and by the time the technicians have finished upselling me on some “Executive Service” of wiper-blade changes and new fuzzy dice for my rear view mirror, I’ve been there a half hour or more. When I have finally returned home, I’ve spent nearly an hour of my day.

A semi-experienced do-it-yourselfer however can change her own oil in 5 and certainly no more than 10 minutes without ever leaving her driveway. Now, that 45 to 60 minutes spent going to and from the quick lube spot may be worth it not to have to get a little dirty. But there’s always soap and water to remedy that situation.

Time savings aside, there is a real money savings to changing your own oil. The way I figure it, a regular oil change, with no added services typically costs about $40 in my area. On the other hand, I can purchase a 5-liter jug of Castrol High Mileage for $25 and change the oil myself. Now a $15 savings may hardly seem worth it. I mean 15 bucks barely buys a large buttered popcorn and small Diet Coke at the movies. But if you were to forego the movie popcorn and instead place the savings in a well-invested portfolio of stocks, it would make a hearty difference in your wealth over the long haul.

How long do you plan on being a driver? For most people, it’s at least 50 years. If you were to change your oil 4 times per year, invest the $15 savings in a general stock mutual fund (which return about 11% historically), at the end of your driving life, you’d have saved over $100,000. That’s the price of two or three luxury-ish cars over that period. If you were lucky enough to find an advisor or fund able to get you returns in the 15% annualized range (not unheard of), you’d have saved about $433,000 over your driving life.

Would you be willing to get a little dirt under your nails for $400,000?

Yes, fifty years is a long time. But that misses the point. Small savings, in several areas of your life, whether it be changing your oil, reducing the minutes on your cell phone, clipping coupons, foregoing a night out drinking or whatever - small changes over time mean a lot and when added together can amount to substantial savings in relatively short order. Imagine you could find 10 other cost saving actions of equal measure. Now we’re talking $4 million. Nothing to sneeze at.


"Why I'm Still Buying Stocks" by Knight Kiplinger, Editor in Chief, Kiplinger publications


Forest Laboratories Sends Open Letter to Shareholders

"Forest Labs: Proxy Firm Backs Its Entire Board Slate" by Wall Street Journal

"Forest Labs CEO Won’t Be Barred on U.S. Government Contracts, Company Says" by Jef Feeley; Bloomberg


"Sesame Workshop: Bert And Ernie Just Friends, Have No Sexual Orientation" by Eyder Peralta; NPR

"How Obama Can Win The Fall" by Andrew Sullivan; The Daily Beast

"Whatever You Do, Don't Buy an Airline Ticket On …" by Scott McCartney; Wall Street Journal

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August 11, 2011

Graham's Secret to Happiness

Security Analysis
source: Librarity

"I blame myself... for having slipped into an extravagant way of life which I hadn't the temperament or capacity to enjoy. I quickly convinced myself that the true key to material happiness lay in a modest standard of living which could be achieved with little difficulty under almost all economic conditions." - The Memoirs of the Dean of Wall Street


"Financial Turmoil Evokes Comparison to 2008 Crisis" by Nelson D. Schwartz; New York Times

It [now vs. 2008] feels completely different. I don’t think there is a U.S. debt crisis right now, and European debt is not held as broadly as mortgage debt or derivative debt was back in 2008. The prospect of a 2008-like drop in the market is remote. - Larry Kantor, the head of research at Barclays Capital.

"Looking for the bottom" by Buttonwood; The Economist

How does one tell when the markets are cheap?... The best measure is the cyclically-adjusted p/e ratio which averages profits over a decade and pointed to market tops in 1929 and 2000, as well as the early 1980s. According to Professor Shiller, the ratio was 20.7 at the end of last week, whicn makes it around 19.5 after yesterday's fall. That is still above the long-term average of 16.4. The dividend yield is between 2 and 2.5%, on the FT's various measures; even adding 0.5-1% for buy-backs doesn't make that look cheap.


"Target and the New Frugal " by Michael Shulan; Seeking Alpha

"Target, other retailers deliver solid sales gains" by Thomas Lee; Star Tribune


"Want to Remember Everything You'll Ever Learn? Surrender to This Algorithm" by Gary Wolf; Wired Magazine

"Is Frugality Dead?" by Robyn Griggs Lawrence; Mother Earth News

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January 19, 2011

Not Fortune Telling, Just Good Sense

Crystall Ball

About two years ago, actually the date was November 10, 2008, I got the following email from a client and friend. It read:

Hey Ben,

Hope all is going well. Everything is going well here. I need your input on house that my wife and I are looking at. My wife and I are looking at a buying a foreclosure. We have submit an offer as soon as possible. My proposal is to use a substantial amount of my account as a down payment and then replace the money in my account when our current house is sold. I'm thinking that my current house may take a month to sale. Do you see any issues with this plan?... I look forward to hearing from you.


Client X

My response was:

Hey Client X,

Sorry you couldn't reach me. Feel free to call me on my cell at anytime. The voicemail was full because as you might guess, I've been getting a lot of calls lately...

I would really like to answer your question thoroughly. So that I cover most of the pro and cons of this financial decision, I will take a little more time to write something up. But, for your immediate gratification, let me say that I think the plan you have laid out has significant financial downside. That is not to say executing your plan the way you've spelled it out won't be the right thing for you and your spouse to do. It may suit your immediate lifestyle and emotional needs. However, financially, there are much better ways to approach the purchase of a new home given your circumstances and the current environment. In a nutshell, I think the plan as laid out would set you back financially but that your finances are not the only factors that should be considered. There are the lifestyle/emotional factors as well.

I will write something up for you that will explain more thoroughly the financial downsides tonight and email you promptly. I will be available to speak by phone anytime after 3pm tomorrow.

Til then,


The letter in its entirety can be found here. My advice then:

Continue reading "Not Fortune Telling, Just Good Sense" »

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November 19, 2008

5 Things To Be Thankful For In This Market (Part 1)

Source: Flickr by Trackrecord;

With the Thanksgiving holiday coming up and people somewhat depressed about the market and the economy, I tried to find some things to be thankful for in a tough environment like this. I thought I’d list a few, at least five, leading up to the holiday. The following is #1:

1.     The Teachings of Benjamin Graham:

Benjamin Graham is perhaps best known today from frequent references made to him by billionaire investor Warren Buffett. Besides giving us Security Analysis in 1934 and his 1949 classic, The Intelligent Investor, he gave us short but meaningful quips about keeping our collective heads as investors in any market, let alone a bear market where we have seen a 52% drop. Some of my favorites are: 

“Confronted with a challenge to distill the secret of sound investment into three words, we venture the motto, Margin of Safety.”

“Price fluctuations have only one significant meaning for the true investor. They provide him with an opportunity to buy wisely when prices fall sharply and to sell wisely when they advance a great deal. At other times he will do better if he forgets about the stock market and pays attention to…the operating results of his companies.”

“…in the short run, the market is a voting machine but in the long run it is a weighing machine.”

I wonder where Buffett would be without Graham.

Disclosure: none

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May 04, 2008

Handle Your Emotions

Benjamin Graham
"Individuals who cannot master their emotions are ill-suited to profit from the investment process."

-Benjamin Graham





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March 25, 2008

When Buffett Speaks, Obama Listens

Buffett & ObamaIn a recent interview with CNBC, "Money Honey" Maria Bartiromo asked Barack Obama, "How do you plan to change the tax code when it comes to capital gains? How high will that 15 percent rate go?" Obama answered with the following:

"Well, you know, I haven't given a firm number. Here's my belief, that we can't go back to some of the, you know, confiscatory rates that existed in the past that distorted sound economics. And I certainly would not go above what existed under Bill Clinton, which was the 28 percent. I would — and my guess would be it would be significantly lower than that. I think that we can have a capital gains rate that is higher than 15 percent. If it — and if it, you know — when I talk to people like Warren Buffet or others and I ask them, you know, what's — how much of a difference is it going to be if it's 20 or 25 percent, they say, look, if it's within that range then it's not going to distort, I think, economic decision making.

On the other hand, what it will also do is first of all help out the federal treasury, which is running a credit card up with the bank of China and other countries. What it will also do, I think, is allow us to make investments in basic scientific research, in infrastructure, in broadband lines, in green energy and will allow us to give us — give some relief to middle class and working class families who have been driving this economy as consumers but have been doing it through credit cards and home equity loans. They're not going to be able to do that. And if we want the economy to continue to go strong, then we've got to make sure that they're getting a little relief as well."

Obama went on to further state that he'd be open to some sort of exemption for people making under a certain amount of money. I'm sure the Republican party will shout, "Obama will raise your taxes!" But at least Obama is listening to the right advisor.


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March 23, 2008

The Lure of the Lottery

Warren E. Buffett

"People would rather be promised a (presumably) winning lottery ticket next week than an opportunity to get rich slowly."

- Warren Buffett




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February 05, 2008

Buffett on Active Trading

Warren E. Buffett"We believe that according the name 'investors' to institutions that trade actively is like calling someone who repeatedly engages in one-night stands a 'romantic."

- Warren Buffett

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November 10, 2007

Eat Your Own Cooking

GhandiA popular story passed on about Mahatma Gandhi goes something like this: A woman brought her son to see Gandhi because he was eating too much sugar. And despite her vigilance, the boy could not seem to give up eating sugar, even though it was bad for him. And so the woman asked Gandhi if he would speak with the boy about his problem. Gandhi replied, “No, but bring him back in a week.” And so in a week the woman returned and once again petitioned Gandhi to speak with her son about his rather bad habit of eating too much sugar. Gandhi welcomed the boy and had a discussion with him about giving up sugar. The boy seemed affected by Gandhi’s advice and the woman thanked him deeply. As she turned to leave she asked him one final question, “Why did you see him today and not last week?” And Gandhi replied, “Because last week I was eating sugar.”

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October 18, 2007

Stand Apart from the Crowd

Benjamin Graham
"You are neither right nor wrong because the crowd disagrees with you. You are right because your data and reasoning are right."
- Benjamin Graham

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September 12, 2007

Fear Not

Sean "P. Diddy" Combs"Scared money don't make none."

 - Sean "P. Diddy" Combs




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July 28, 2007

Temperment, Not Intelligence

Albert Einstein

"Long ago, Sir Isaac Newton gave us three laws of motion, which were the work of genius. But Sir Isaac's talents didn't extend to investing: He lost a bundle in the South Sea Bubble, explaining later, 'I can calculate the movement of the stars, but not the madness of men.' If he had not been traumatized by this loss, Sir Isaac might well have gone on to discover the Fourth Law of Motion: For investors as a whole, returns decrease as motion increases."

-Warren Buffett

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June 27, 2007

Keep It Simple

Warren E. Buffett"[Value investing] ideas seem so simple and commonplace. It seems like a waste of time to go to school and get a PhD in economics. It's a little like spending eight years in divinity school and having someone tell you the ten commandments are all that matter."

 - Warren E. Buffett

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May 20, 2007

Chris Rock on "Black" Wealth

Chris Rock

''We got no wealthy black people. We got rich people. Shaq is rich. The guy who signs his check is wealthy. Here you go Shaq! Go buy yourself a bouncin' car. Bling Bling!"

"If Bill Gates woke up with Oprah's money, he'd throw himself out the mother-bleeping-ing window.''

"Wealth will set us bleep-ing free, okay? 'Cause wealth is empowering, wealth can uplift communities from poverty, okay? A white man gets wealthy, he builds Wal-Marts and makes other white people have some mother-bleep-ing money. A brother gets rich, he buys some mother-bleep-ing jewelry."

 - Chris Rock

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November 26, 2006

Pay Your Taxes

Warren E. Buffett"Charlie [Munger] and I have absolutely no complaints about these taxes. We work in a market-based economy that rewards our efforts far more bountifully than it does the efforts of other whose output is of equal or greater benefit to society. Taxation should, and does, partially redress this inequity. But we remain extraordinarily well treated."

- Warren E. Buffett

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July 15, 2006

Buffett Gives It Away

Warren E. Buffett

[Fortune] Even so, you and Susie (Buffett) set up the Buffett Foundation way back in the 1960s, which means you obviously expected to be giving away money sometime. What was your thinking back then?

[Warren E. Buffett] Well, when we got married in 1952, I told Susie I was going to be rich. That wasn't going to be because of any special virtues of mine or even because of hard work, but simply because I was born with the right skills in the right place at the right time.

I was wired at birth to allocate capital and was lucky enough to have people around me early on - my parents and teachers and Susie - who helped me to make the most of that.

In any case, Susie didn't get very excited when I told her we were going to get rich. She either didn't care or didn't believe me - probably both, in fact. But to the extent we did amass wealth, we were totally in sync about what to do with it - and that was to give it back to society.

In that, we agreed with Andrew Carnegie, who said that huge fortunes that flow in large part from society should in large part be returned to society. In my case, the ability to allocate capital would have had little utility unless I lived in a rich, populous country in which enormous quantities of marketable securities were traded and were sometimes ridiculously mispriced. And fortunately for me, that describes the U.S. in the second half of the last century.

Certainly neither Susie nor I ever thought we should pass huge amounts of money along to our children. Our kids are great. But I would argue that when your kids have all the advantages anyway, in terms of how they grow up and the opportunities they have for education, including what they learn at home - I would say it's neither right nor rational to be flooding them with money.

In effect, they've had a gigantic headstart in a society that aspires to be a meritocracy. Dynastic mega-wealth would further tilt the playing field that we ought to be trying instead to level.

Read the entire article by clicking here.

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April 26, 2006

Wealth and the Commonwealth

I cannot see how the unequal representation which is given to masses on account of wealth becomes the means of preserving the equipoise and the tranquillity of the commonwealth. -- Edmund Burke, "Reflections on The Revolution In France"

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April 16, 2006

Franklin on Value Investing

Benjamin Franklin"I conceive that the great part of the miseries of mankind are brought upon them by false estimates they have made of the value of things."

-Benjamin Franklin






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March 18, 2006

Business and Reputation

Warren E. Buffett"When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact.

-Warren E. Buffett

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June 27, 2005

Use Your Head

"Money without brains is always dangerous."
- Napoleon Hill

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About Brick Financial Management, LLC

Blogged by Brick Financial

160 Maplewood Ave, P.O. Box 263
Maplewood, NJ 07040
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Brick Financial Management, LLC specializes in providing investment management services to individuals, families, organizations and institutions. We implement highly focused stock, bond, and balanced portfolios using an investment approach commonly referred to as value investing. Disclosure


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