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Strange Things in the Precious Metals
Issue #531, July 17, 2018

Buying Years of Retirement
Issue #530, July 09, 2018

Rent-A-Kid for Retirement
Issue #529, July 02, 2018

The Dark Side of Student Loans
Issue #528, June 25, 2018

The Cost of Out-sourcing Convenience
Issue #527, June 18, 2018

Social Security: 66 or 70?
Issue #526, June 11, 2018

Student Loans: There’s (Unfortunately) a Lot More!
Issue #525, June 04, 2018

Co-signing a Note
Issue #524A, May 31, 2018

The Knight Frank Luxury Index and Collectables
Issue #524, May 28, 2018

The Importance of Diversification: The Myth of Diversification
Issue #523, May 21, 2018

How to Save Thousands on Your Food Bill
Issue #522, May 14, 2018

MoviePass and Other Things
Issue #521A, May 10, 2018

Degree Inflation, Long Training Periods, and “Certification”  Part III
Issue #521, May 07, 2018

Degree Inflation, Long Training Periods, and Certification” Part II of III
Issue #520, April 30, 2018

Follow-up on Several Things
Issue #519A, April 25, 2018

Degree Inflation, Long Training Periods, and “Certification”: Part I of II
Issue #519, April 23, 2018

The Kids Birthday Party Hustle
Issue #518A, April 18, 2018

A Pension Question: Part II of II
Issue #518, April 16, 2018

A Physician is an Executive
Issue #517A, April 11, 2018

A Pension Question: Part I of II
Issue #517, April 09, 2018

Is the Correction Over?
Issue #516A, April 05, 2018

Used Car Dealers, Student Loans, the Chinese, and Uncle George’s Rule
Issue #516, April 02, 2018

Starter Homes
Issue #515, March 26, 2018

Redecorating: Beware!
Issue #514, March 19, 2018

NASDAQ Closes at Record High
Issue #513, March 12, 2018

A 40% Chance
Issue #512, March 05, 2018

Several Things
Issue #511, February 27, 2018

Human Capital, Education and Wealth
Issue #510, February 19, 2018

Another Stock Market Update
Issue #509A, February 18, 2018

Some Thoughts on Savings
Issue #509, February 12, 2018

A Stock Market Upfate
Issue #508S, February 10, 2018

Who Can You Trust? Part II of II
Issue #508, February 05, 2018

The Christmas Decoration Pre-worn Jeans Hustle
Issue #Interim Bulletin #507A, February 03, 2018

2018 Outlook for Financial Markets
Issue #507, January 29, 2018

Who Can You Trust? Part I of II
Issue #506, January 22, 2018

Life Insurance Settlements
Issue #505, January 15, 2018

Commodities and Buying the Breakout
Issue #504, January 08, 2018

Buffett Wins His Bet
Issue #503A, January 04, 2018

Practice Real Estate and Free Agency
Issue #503, January 01, 2018

Outlook for 2018: Part III: Stocks and Bonds
Issue #502, December 25, 2017

My Outlook for 2018: Part Ii: Precious Metals
Issue #501A, December 21, 2017

Outlook for 2018: Hard Assets: Part I of III
Issue #501, December 18, 2017

More Thoughts on Bitcoin
Issue #500A, December 14, 2017

Fees and Good Relations with Bankers
Issue #500, December 11, 2017

Salvator Mundi
Issue #499A, December 07, 2017

Should You Rent or Own a Home?
Issue #499, December 04, 2017

A Gift Subscription
Issue #Interim Bulletin #498A, December 02, 2017

Stocks vs Real Estate: Asset Allocation: Part II of II
Issue #498, November 27, 2017

When Good Enough is Fine
Issue #497A, November 22, 2017

Stocks vs Real Estate: Asset Allocation. Part I of II
Issue #497, November 20, 2017

The Saudi Arrests and the Perils of Foreign Investing
Issue #496, November 13, 2017

Gambling and Las Vegas
Issue #495, November 06, 2017

Some Tips on Auto Insurance
Issue #494, October 31, 2017

Bitcoin and the Digital (Crypto) Currencies
Issue #493, October 23, 2017

The Coming Bear Market: Part II How to Prepare
Issue #492, October 16, 2017

Some Observations on Cemeteries
Issue #Interim Bulletin #491A, October 12, 2017

The Coming Bear Market: Part I: The Myth of Buy and Hold Forever
Issue #491, October 09, 2017

The Market makes New Highs
Issue #490, October 02, 2017

The Importance of a New High
Issue #489, September 25, 2017

A Little Insurance: Wealth, War and Wisdom
Issue #488, September 18, 2017

Some Observations
Issue #487, September 11, 2017

How to be Successful in Your Career
Issue #486A, September 07, 2017

How NOT to Buy a Home
Issue #486, September 04, 2017

This Week in the Market
Issue #485, August 28, 2017

Is the “Trump Bump” Running Out of Gas?
Issue #484, August 21, 2017

Gold is on the Move
Issue #483, August 14, 2017

The Importance of Estimation
Issue #482, August 07, 2017

Buying Art and Collecting: Part II of II
Issue #481, July 31, 2017

Buying Art and Collecting in General, Part I of II
Issue #480, July 24, 2017

Physicians need to be More Forceful: Follow-up
Issue #479, July 17, 2017

Physicians need to be More Forceful
Issue #478, July 10, 2017

Your First “Real” Investment
Issue #477, July 03, 2017

Leasing a Watch: Don’t
Issue #476, June 26, 2017

The Importance of Your Children having a Job
Issue #475, June 16, 2017

The Problem with Medical Student Debt is—the Med Schools
Issue #474, June 12, 2017

Critters and Varmints in your Home and Yard
Issue #473A, June 07, 2017

Leveraged ETFs
Issue #472, May 29, 2017

Leasing a Vehicle: Don’t!
Issue #471, May 22, 2017

Issue #470, May 15, 2017

More on Buying Jewelry
Issue #469, May 08, 2017

Buying Jewelry: Gold, Diamonds and Pearls
Issue #468, April 30, 2017

Thomas Sowell: Part III of III
Issue #467, April 24, 2017

Thomas Sowell: Pat II of III
Issue #466, April 17, 2017

Live Close to Where You Work
Issue #465, April 10, 2017

Medtronic in Hospital Management
Issue #Interim Bulletin #464A, April 07, 2017

Thomas Sowell: Part I of II
Issue #464, April 03, 2017

A Political Contribution a an Investment: Part II of II
Issue #463, March 27, 2017

A Political Contribution as an Investment: Part I of II
Issue #462, March 20, 2017

Buffett Selling Vacation Home
Issue #461, March 13, 2017

Advanced Placement (AP) ourses
Issue #460, March 06, 2017

The Importance of a Credit History
Issue #459A, March 02, 2017

A Credit Card Scam
Issue #459, February 27, 2017

The Electronic Health Reord
Issue #458, February 20, 2017

Issue #457, February 13, 2017

Platinum and Palladium
Issue #456, February 06, 2017

Economic Outlook for 2017: Part II of II
Issue #455A, February 02, 2017

Economic Outlook for 2017: Part I of II
Issue #455, January 30, 2017

A Story From Vegas
Issue #454A, January 25, 2017

Land Donation Deals and the IRS
Issue #454, January 23, 2017

The Theory of Gambler’s Ruin
Issue #453, January 16, 2017


By Robert M. Doroghazi, M.D., F.A.C.C.

The Cost of Out-sourcing Convenience

Issue #527, June 18, 2018

    When a long-time subscriber helped me write “The Kids Birthday Party Hustle” (Interim Bulletin #518A, 4/20/18), he noted that paying people to organize and stage your 4 year old’s birthday party for their 20-25 friends, was an example of “out-sourcing convenience”, and that the costs for this sort of thing could escalate very quickly. $400 per party x 2 youngsters = $800 per year for birthday parties x 5 years, plus interest and dividends, was a semester’s college tuition by age 18. Then add the cost to have someone mow your lawn at $35 a pop x 25 = $875 for the summer. Then a cleaning lady, $75 for 3 hrs every 2 weeks = $1,950 per year. Add buying prepared meals on the way home, or having meals delivered via services such as Blue Apron = a lot.  Note: these are Columbia, Missouri prices. Double this (at least) if you live in Boston, NYC or SF.
    I thought a lot about this, but couldn’t figure the angle to discuss it. How much are you willing to spend? How much is your spare time worth? What example do you want to set for your children: do you want to teach them self-reliance, or to just pay others to do everything for them?
    It finally dawned on me: you can discuss nebulous things all day, and never come up with an answer: that’s why they are nebulous. (Kind of like college English class). A much better way to determine how much you are willing to spend to “outsource convenience” is: what can you afford, what is within your budget?
    Everyone, no matter where you are in life, janitor, steel worker, RN, should save at least 10% of what they make. The average physician in the US makes $250K per year. They should be saving—at least—20% of what they make per year = $50K per year. Over a 25-30 year career, compounded at 7-8%, that’s a lot of money, $3M or so. Many subspecialists, and many of the physicians who take this Newsletter make more, some substantially more, say $360K per year (You’ll see quickly why I chose that number).
    I believe physicians should aim to save one-third of their gross income, 1/3 to taxes, 1/3 to living expenses, 1/3 to savings. I did it, so you can too. This amounts to one-half of your after-tax income. $120K to taxes, $120K to living expenses, $120K to savings. This amounts to $10K per month living expenses (which includes your mortgage). .
    Here is my suggestion on “out-sourcing convenience”. Just stay within your budget. If you can afford to pay someone to do something, then it’s OK to do it. You work very hard for your money. Consider “out-sourcing convenience’ to be one of the finer things in life, a perk. Someone might prefer one or 2 fancy woman’s hand bags, someone might prefer to spend that money on a gardener, or to do the chore yourself and save the money.
    A caveat. “Out-sourcing convenience” is seductive. It gets easier and easier (and more expensive) to eat out more often than fixing supper. With my back surgery earlier this year, I had to hire a landscaper to till my garden, and a lawn service to mow the lawn. I admit, it’s pretty sweet. I’m sitting in air-conditioned comfort while they’re busting their chops in the 95 degree sun.
    It’s much easier to loosen up than it is to tighten, to cut back, when you’ve gone too far. So: it’s OK to out-source some, but not everything, and stay within your budget.   
    Just when things were looking up, the precious metals got spanked on Friday.
    RMD comment: There is a divergence: the miners are out-performing bullion. The stock I watch most closely is Royal Gold (RGLD): a royalty company, with minimal input costs: it is more closely tied to the price of the metal. Over the last 2 weeks, RGLD broke to a new high, with Wheaton Precious Metals (WPM, my favorite silver stock) not far behind. Hold for now. 
    What do John Deere tractors and CT scanners have in common?  Answer below.
    A financial advisor who agrees with me that it’s usually better to take Social Security earlier rather than later, made a point I hadn’t considered. He emphasizes the importance of looking at your Social Security statement, basically, SS’s record of your income. If they have under-recorded your income, which he tells me happens more frequently than you would think, it could cause your payments to be lower than they should be. This could even affect your decision on when to retire. 
    It was all over the national news this week that Granite City Steel (US Steel, Granite City Works) called back 500 people earlier this year to begin the 4 month process of restarting blast furnace A, and will call back 300 more to restart blast furnace B.
    RMD comment: whatever the national comment about tariffs, this is a really big deal for Granite City. When I was growing up, Granite City Steel, “The Mill” (where Grandpa Nagy worked from 1923-1963, and I worked a total of 15 months) employed more than 10,000, General Steel (where dad and Uncle George worked) employed a similar number. Add NESCO (National Enamel and Stamping Company, where Grandpa Doroghazi worked, the makers of Granite Ware, the enameled cookware that gave Granite City its name) Union Starch (the slinkiest plant in a town of a lot of stinky plants), American Steel, National Lead: and Granite City was home to tens of thousands of the kind of lower middle class jobs that made this country great.
    As of last year, GC Steel was down to a skeleton crew of 100. General Steel closed in 1974, Union Starch in the late 60s, National Lead about the same time. NESCO closed in the 50s. 
    In his 1791 “Report on Manufacturers”, Alexander Hamilton estimated that a manufacturing job generated 4 other jobs: retail clerk, delivery man, city employee teacher, maid, etc. Last I read, a manufacturing job still generates 4 other jobs, so they are very valuable. 
    Mr. Trump’s bluster aside, China does not share our sense of fair play.
    1) I again recommend China’s Great Wall of Debt: Shadow Banks, Ghost Cities, Massive Loans, and the End of the Chinese Miracle (McMahon).
    2) I talked to someone from a world-wide high tech company. To do business with China, you must manufacture there. This company partnered with a state-affiliated company. In no time at all, the Chinese stole all of their intellectual property, spun off another company to manufacture the product, and that was that.
    RMD comment: China is a Communist dictatorship. There is no freedom of speech, no elections, property is confiscated and people imprisoned at the will of the government. 
    Quote of the week. We were visiting son Mike and wife Beth in the Cleveland area on the way to Niagara Falls for the wedding. We were at a local restaurant. A grandma, her 2 daughters, the husband of one of the daughters, and 3 grandkids, age 5 and under sit down at the next table. The waitress comes up “what would you like to drink”?  Man: “We have 3 small kids, we need to order supper NOW!
    The “age” of major machinery such as a tractor is measured in hours of use. Younger son Michael, who works in the marketing division of CT scans for Philips Electronics, tells me the age of a CT scanner is measured in “scan-seconds”, the time that the tube is turned on.
    With my offer to give gift subscriptions or allow relatives to piggyback on your subscription, subscriptions have almost doubled. If you took advantage of this opportunity, follow up with your friends, associates and relatives on what they think of the Newsletter, or possible topics for discussion. 
    Next week’s Newsletter will be “The Dark Side of Student Loans”.

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