Europe Is (Usually) Nice In Summer

Statistically, if you live in America and travel to Western Europe in the summer, the odds are that it will be cooler when you arrive than when you leave. Of course, Europe is a big place, and this depends heavily on where you go. I pulled data from London, Paris, and Amsterdam because that’s where most Americans’ first flight into Europe lands. I will also report the data in Fahrenheit because most of you who read my work are American. I used the last 10 years to average out year-to-year variations while capturing the effects of global warming.

Europe has gotten a lot hotter, but a summer vacation is still a relatively safe bet.1

I pulled data for Heathrow Airport (London), Orly Airport (Paris), and Schiphol Airport (Amsterdam). Heathrow has had 94 days over 86F/30C over my 2016-2025 10-year reference period. Paris had 192 days, and Amsterdam had 57 days. High temperatures of 86F/30C lines up with my lived experience for when heat starts to get uncomfortable without AC. This is also the threshold that most governments in Europe track for the purposes of determining heatwaves.

This summer looks to be another hot one, with a particularly long period of well-above-average weather for France in particular. If we make the simplifying assumption that summer is 90 days from June to August each year, your forecasted odds of heatwave conditions on any given summer day are 10.4% for London, 21.3% for Paris, and 6.3% for Amsterdam.2

I did the calculations myself in Excel with official weather data. So while the odds of having a heatwave in Europe during your vacation are significant, they are lower than I would have naively expected. There are some social implications to rising heat in Europe and the UK, however.

First, there will be fortunes made in retrofitting air conditioning in France and in parts of England. Last week, mobile AC units that you can buy wholesale for about $300-500 were renting for $100-150 per day in London. Both London and Paris have buildings built to trap heat, which is not good. The initial reports from Paris were that mortality skyrocketed during this month’s heatwave. Past climate data and paleontology actually seem to show that Europe did quite well during warm periods in the past 100,000 years, while areas like the US Southwest collapsed.

Second, I would expect more significant restrictions and actions around climate and pollution in general in the coming years. Collective action during COVID was a political disaster.3 The hope here is that governments don’t punish citizens with irrational policies that drive up the overall cost of sustainability, i.e., letting billionaires and data centers do whatever they want but dropping the hammer on middle-class households. For now, Americans can still freely fly to Europe without any significant government restrictions. In 10 years, this might not be the case.

Third, I expect the idea of investing in areas that benefit from a warming world to gain steam. We are already seeing significant increases in interest in places with traditionally cool weather and abundant natural resources for travel and business. If COVID is any indication, world governments will ignore the problem until it becomes blatantly obvious, and then slam on the brakes. We don’t know exactly what the future holds, but we can look at current data to forecast the future and do far better than merely guessing. Should this affect where we choose to buy property, raise kids, and invest in the future? I would think so…

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Many hard-working, reasonably intelligent people gradually find out in their twenties that their dreams are unlikely to come true. For those who don’t find an economic edge that they can reliably exploit, living in a wealthy place like New York, London, Miami, or even Texas can feel like a slow humiliation. Of course, some find business success. For those who don’t, there are plenty of escapes–ranging from booze, legal weed, dating apps, or even the gym. But life can change in an instant, for better and for worse. Match the right 6 numbers in your state’s lottery, and your life will change forever.

Next Monday, imagine your 6:45 AM phone alarm jolts you from a peaceful dream. 30 seconds ago, you were soundly asleep, immersed in sunny memories of a long-ago summer. Now you’re emptying your email inbox with fuzzy eyes as traffic and sirens blare in the distance. While you’re cleaning out your inbox, you check the lottery ticket that you bought on the way home from work on Friday. You notice the first number matches, then the second as well. Your heartbeat accelerates as you see that every damn number matches. A quick Google search later, you soon find that the pre-tax cash value of your prize is $20 million.1 Your net worth is now not far off from that of successful investors, athletes, and entrepreneurs, and you don’t have to work another day in your life if you don’t want to.

Congrats!!2

But aren’t lottery winners cursed– doomed to bankruptcy and dying alone? I dug into the research, and the consensus is that it’s a myth. For example, see this study of Swedish lottery winners, this one in Florida specifically, and this old one of US lottery winners. While it would make sense that someone with a pre-existing drug or alcohol problem does NOT need a bunch of money to enable them, most people are not addicts. To this point, research shows that the vast majority of lottery winners do not fly off the handle after winning.

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1. Quit Your Job?

Probably, yes.

After claiming your prize, I’d argue that your first order of business should be to buy back your time. Most people spend half or more of their waking hours doing stuff they’d rather not do if they weren’t paid. If you like your employer, you can certainly stick around for a couple of months to train your replacement or collect your annual bonus. And if you don’t, then who cares– you’re rich.

In finance, there is a popular concept called f*** you money, one that is a plot point in most movies made about finance. To me, this roughly means the amount of money to maintain a comfortable lifestyle without having to work. For high-earning W-2 employees and business owners, this is actually quite an interesting calculation with moving goalposts. But as a rule of thumb, if your salary + bonus is less than 3% of your net worth, there’s a fairly simple mathematical argument that your job is not meaningfully moving the needle on your net worth. At the 3% level, if you figure that 40-50% of your salary goes to income tax, you’re only tacking on 1.5% to 1.8% to your net worth each year from work. Even at an annual salary equal 5% of your net worth, it’s a close call whether you are growing your wealth much by working. This is a common scenario for late-career corporate executives, and I think many stay too long, divorces notwithstanding.

Quick math here, but if you net $12 million from your windfall after tax, I’d argue that you need to make around $400,000 in salary/bonus for it to be worth it for you to even consider keeping a W-2 job. Contrary to popular belief as well, you can get good health insurance without having a white-collar corporate job.

With the fuck you money in hand, congratulations are in order. Your new job is now managing your investments rather than trading your time for a paycheck. If you’re not sure what to do with the money, just dump it in Vanguard. Drip some into stock and bond index funds, and while you decide, the default money market fund will earn you 3.6% annual interest at today’s rate. Building a relationship with an investment bank is also a winning move if you have the sophistication to handle it.

Also, if you were burnt out before leaving your job, prepare for your body to go through a bit of a healing crisis after. Remember that evil alarm clock? You won’t need it anymore, and it’s normal to sleep 10+ hours a day for a couple of weeks while your body resets. If you were on the verge of a virus coming on, chances are that it will hit you now, so give your body a chance to rest. Use your newfound time wisely. If your friend group isn’t supportive of you, you might need to find a new one. And with family, any liquidity event will require you to have good boundaries and judgment. But at the end of the day, there are millions of people with $10-20 million out there, so no one needs to alert the tabloids. In my experience traveling the world for my previous work and doing some consulting for high-net-worth clients, they are mostly happy and do what they want to do.

2. Move Somewhere You Love?

Probably, yes.

Moving is stressful, and you probably wouldn’t want to start your journey of wealth by packing up everything and hitting the road. However, if your current living situation sucks, you might be justified in starting your journey by moving somewhere safe and nice. For most people in this situation, moving is best approached roughly 90 days after experiencing a big influx of cash. This gives time for burnout to heal, sleep deprivation to reverse, and for clarity of thinking. The way I would approach it is to keep your current place and Airbnb in several areas you’re interested in for a month at a time, cheaply learning lessons on traffic, neighborhoods, vibes, etc. If you have kids, you need to take them into account as well, but I wouldn’t stay somewhere where you aren’t reaching your full potential. Where you live is going to set the conditions for the kind of social interactions that you’re going to have.

One classic strategy is to move to a no-state-income-tax state. For example, New Yorkers tend to move to Florida, and Californians often relocate to Austin, Texas. Then you can spend the summers somewhere with cooler temperatures, either back home or somewhere like Colorado, Europe, or coastal California. This is a very common strategy, and if you do this, you will find a community of people who are doing something similar. The nicest country club near me in Texas closes for over a month in the summer because so few people stay. You don’t have to do this if you don’t want to, but the math often speaks for itself. If you make a $1,000,000 a year from investments, you’ll probably net about $120,000 more in Florida than you would in NYC. If you could trade state income tax for hanging by the pool and playing golf/tennis, why wouldn’t you? The math isn’t always this clean. In much of the US, the state income taxes are lower, and California offers a great climate and interesting people if you want to live there year-round.

But the key here is to consider the full picture. At the absolute minimum, I’d argue that you should pay up for a nice place to live in a walkable neighborhood with access to at least one decent park. If you can’t take a safe and pleasant walk for a couple of miles, then MOVE. This will have a much greater impact on your happiness than buying a Ferrari.

3. How Should You Spend Your Days?

All up to you.

You now have plenty of free time, which you can use however you wish. Here are some lifestyle suggestions to live long and prosper.

1. Build your relationships. Start with family. Choose which friendships you want to nurture. Where you water, your garden will grow. You have money now, which means you can buy drinks, pick up dinner tabs, and throw parties. Become a regular at restaurants with good food and vibes. Tip your servers and bartenders generously and sometimes in cash.

2. If you’re single, be open to dating. You don’t have to download dating apps if they stress you out. If you have a partner, either love them like you would want to be loved or break up and find someone else. One of the above studies found that most people don’t get divorced after lottery wins and had better relationships/sex lives after winning, which is comforting if it has any implications for human nature.

3. Learning to cook well is one of the most positive things you can do for yourself since it’s both an input and an output to your body’s systems. Cooking takes some brainpower, creativity, and planning, while eating healthy literally changes your body’s chemistry for the better. Use all the butter and spice you want. Get to know the best grocery store in your area and shop there regularly. Fill your kitchen with fresh fruit, nuts, and other whole foods.

4. Golf is the quintessential sport of the upper class. It’s a bit intimidating if you don’t have any experience playing, but it’s a lot of fun, you get to spend time outside, and you get to meet other people with similarities in background. Get yourself reasonably up to speed playing public courses, and then consider joining a country club. If you don’t want to spend all day golfing, playing 9 holes is a nice option. Playing at least 4-6 times a month will help you meet interesting people, get good sunshine, and put you more in tune with nature. Go when the weather is nice. If you’re not into golf, consider tennis instead.

5. Tennis/pickleball are popular as well, Harvard research shows that racket sports add the most longevity of any activity. Tennis seems to attract some nutcases (tennis women especially), but it’s also fun.

6. If you live in an area that is conducive to snow skiing, it’s a ton of fun, especially on weekdays when the resorts are less crowded.

7. Manage and track your daily steps. Shoot for at least 3 miles a day of walking. The average American gets around 1.5 miles. This is the best depression and anxiety medicine the world has to offer.

8. Sleep 7-9 hours a night, and more when your body asks for it.

9. Enforce at least 2 consecutive alcohol free days per week. If your drinking is borderline heavy, you might want to do Dry January as well. Don’t keep alcohol at home on weeknights if you can help it. If you have an issue with alcohol, then you either need to cut back or quit, and that is the hardest work you’ll ever do. Do not drive drunk. Do not be Tiger Woods…

10. Don’t do or hang out with people who do hard drugs. This is self-explanatory, and especially important if you’re going to live in Florida. The world looks a lot different from the Midwest or New England than it does from Miami/Vegas/Houston/LA.

11. Lift weights at least once a week. Research shows that you get most of the benefit of lifting weights by doing so once a week. Join the best gym in your area, and you’ll get the dual benefit of working out somewhere luxurious and access to people who think similarly. Sauna is also backed by research, particularly in the winter months. Massage has plenty of health benefits as well.

12. One of the other most positive things you can do for yourself is to learn another language. If you already speak a second language, you now have plenty of time to improve it. If not, I’d pick one and start learning, probably either Spanish or French. If you like to travel, one fun way to start is by enrolling in an adult language class in the country where the language you’re learning is spoken.

13. To this point, if you haven’t traveled much outside of your home city and country, now is the perfect time to do so. If you’re healthy, you can hit the road shortly after the money hits your account and see the world, or spread out your travel over time. If you enjoy travel, I’d aim to see 20 countries over the intermediate term.

14. Be charitable, not just with your money but with your time. Fewer people than you think have anyone who will cook for them, listen to their day, and help them when they’re in need. You can and should also give to charity and your church/religious organization. But you may get more bang for your buck by tipping the people who take care of you extra, taking care of your neighbors when they need help, and being there for your family. There’s an argument for tithing out of your windfall, but my counterargument would be that you can do more good in the long run by investing wisely and giving over time. This also allows you to give appreciated stock, which saves you money on taxes and gives you more bang for your charitable buck. Remember that just because you do something nice for someone does not mean you have to do it for everyone who asks.

15. Line up your service providers. Every red-blooded lottery winner is going to buy a couple of cars. That means you probably need a German or British car shop, because the dealership is going to try to smash your piggy bank. Similarly, you might need a maid and home maintenance people you trust. Because of the way LLMs are designed, AI like Claude is very good at finding honest businesses in your area. You’ll need a lawyer and an accountant. Do not give anyone you pay by the hour open-ended questions, and negotiate clearly and in writing when you can. Defending resources is second nature to many businesspeople, but this is an area where people who get suddenly rich tend to struggle. Reddit and AI are your best friends here; chances are that you are not the first person to have the problem you are having. If you feel you need to, take a negotiating class online or read a book.

16. Your main business is now investing– take it seriously. Subscribe to Bloomberg, WSJ, and at least one stock-market-focused site. Study up on different kinds and styles of investing. Do diversify and invest in companies you believe in. Be willing to take calculated risks. Do not place large concentrated bets or use leverage without professional supervision. If you’re going to be investing in real estate, get your license. Do not invest in franchises or open a bar or restaurant. Realize that by the time deals make it to the garden-variety wealthy people, they often have been picked over. To be successful, understand key economic concepts and behavioral finance concepts as well.

Bottom Line

Your odds of hitting a state lottery are tens of millions to one against. But large chunks of the life you’d probably live if you hit the lottery are accessible to you now, if you have the time and energy for them. That tells us a bit about how we should properly live life, even if we don’t manage to hit. What would you do if you won $20 million? Share your thoughts in the comments!

“A man's destiny is not written in stone, but in water.”

-Pietros Maneos

December 2018

On a cold winter day in Fort Worth, Texas, a random email popped up in my inbox from a guy named Pietros Maneos. At the time, I was studying economics at TCU and working as a freelance writer for the finance website Seeking Alpha. For those of you who have never held a public-facing media job, let me set the scene– the public will bombard you with emails– hate, love, and everything in between. Thankfully, if you are good at your work and can tune out the negative, you’ll meet some interesting people along the way. I had plenty of time for research that semester–it poured rain every day for weeks, putting a serious damper on my social life. Pietros reached out about an article I had written about modeling the future prices of leveraged ETFs based on a simple mathematical model I built. The article is here, and the model is here, for those interested. Apparently, the model was a big hit because I had people reach out everywhere from Stockholm to Tokyo over the following few months, asking about how I found the information.

I told them all the same thing. It wasn’t originally my work. I got the info from a genius mathematician named Tony Cooper in New Zealand, and other Seeking Alpha writers like Greg Hudson and Dane Van Domelan had covered similar topics as well. But Tony Cooper’s research was unmatched in its detail and insight. In addition to his hedge fund work, his projects included modeling wind fields for the America’s Cup sailing races and modeling electricity demand for various allied governments. I don’t pretend to have that kind of intellectual firepower—and thankfully, you can make a nice living in America without it.

In our early conversations, Pietros shared that he went to the University of Miami, which is actually where I had started college before ending up back in Texas to be near family. He’s 15 years older than me, so we didn’t know each other in school. And while it’s far from Ivy League, Miami is a seriously underrated school, and going there allows you to meet interesting people from all over the world in a beautiful setting (no offense to Florida State). Pietros and I wrote a lot of letters back and forth over the holidays in 2018 and throughout 2019 to help design and implement these trading strategies. Importantly, Miami is the kind of school where you can meet a mentor like Pietros, who parlayed working as a personal trainer and author into a multi-million dollar real estate and stock market fortune.

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March 2020

Right before the world went to hell in a handbag, I went back to Miami on my senior year spring break. Graduating in 2020 was surreal. We went on spring break thinking everything was normal, but the world exponentially changed in just a few days, and by the time it was over, we never came back to campus. There were dozens of people whom I saw on campus on a regular basis before then and thought we were friends, but we never spoke again. After the hammer dropped and everything closed for COVID, our college president sent us a now-infamous email that our college experience had come to an “electronic end.” However, this was about 10 days before the lockdowns were announced, and we didn’t have perfect foresight to know what was going to happen yet. On Friday night, I went out with an old crush of mine and her friend. My old Miami friends obliged me by pulling strings to skip the line at the club, a favor that cost them nothing but meant the world to me as a young guy wanting to impress a pretty Texas blonde.

As the weekend ended, you could feel a subtle sense of unease in the air, and if you were anywhere near TV, you could watch the slow-motion trainwreck in action. I had been corresponding with Pietros, who was encouraging me to get out of Miami and come up to Palm Beach County. And as fate would have it, Pietros and I met in person for the first time on “Black Monday”, March 9th, 2020. The S&P 500 fell 7.6% that day, and we watched it happen in real time. We’d corresponded prior, but I didn’t really know him at first. I thought he might have been a little crazy because he had a tendency to send me poetry along with his stock picks!

But I saw there was COVID already in Miami, so I figured I’d roll the dice and make the drive up. An hour later, we’re sitting there in Boca Raton, and he’s got 100 investing books on his shelf. CNBC is a bloodbath, and the anchors look like they’re presiding over a funeral. But Pietros is buying oil stocks, and he’s even buying shares in Royal Caribbean. He’d already studied previous pandemics, and he was three steps ahead of the media. He was damn right, and he inspired me to buy Exxon stock later that year.

That day, over smoothies, Pietros explained to me that he started working as a personal trainer after graduating from Miami. He always hated the idea of working for someone else, and loved the flexibility of being able to travel and set his own daily schedule around his outside interests. His first big deal was a 40-acre property in the mountains of North Carolina. He bought the land and the old farmhouse and developed a vineyard from scratch. Creating something out of nothing is a proven way to make money in real estate, and he sold for a chunky profit. His second deal was a mobile home park in Florida, which was similarly profitable but certainly less glamorous.

The business model is similar. Buy something crappy, do a lot of work to make it nice, and then either sell or cash-out refinance. He parlayed the first mobile home park into a second, struggled with some crackhead tenants and cash flow issues, and once secure, turned his attention to the stock market. To this day, he’s one of the best value investors I’ve met in my career. He also changed my mind on Bitcoin being a good investment, something that worked out pretty well for both of us. And I’ve followed many of his stock picks. 7 times out of 10 they work, and if you can’t handle the other 3, then the stock market probably isn’t your game.

After I left Miami that week, we stayed friends and kept chatting. We expanded on those leveraged ETF formulas and added selling premiums via put options. I also introduced him to a company called Composer, they are a quant trading company that cold-called me. I told them it wasn’t my cup of tea, but I knew the perfect person for them. He ran these strategies before Composer was founded. As one of the original architects of this, I’m proud to say inception to date pretax profit on these options/ETF strategies is closing in on $1 million for him. So you know we’re not bullshitting you, WSJ profiled him here.

December 2025

Seven years after getting that cold-call email from Pietros, I again was headed up I-95 to Boca from Miami. But we’d talked and seen each other plenty in the interim. Pietros and his girlfriend, Karen, graciously let me stay with them whenever I am in town. This is an offer I’ve taken them up on about 10 times. Their house is full of art and books, like a Greek villa minus the touristic sleaze of Mykonos or Santorini.

I do always feel at home in Palm Beach County. There’s something about the manicured lawns, the flowers, the way people put Christmas lights on their palm trees, and the way they light their tennis courts so bright at night that you could see them from space. Plus, it’s never boring. Far more than Texas, it’s an international crowd. Go to the gym, and it feels like it’s half 60-year-old Jewish couples and half 22-year-old Colombian fitness influencers. People speak their minds, but they’ll tell you the truth. And step into the sauna, and you’ll step out with a stock tip or two. Just make sure you verify the financial statements after!

Pietros read about Bitcoin in the early days and bought a few thousand dollars’ worth, then promptly forgot his password to the hard wallet. As Bitcoin soared, this became more and more painful for him. There are hundreds of stories like this, for example, some poor English guy has £500 million in Bitcoin buried in a landfill, and someone else got their hard drive smashed by a jilted lover, along with it their digital fortune. Pietros’s story had a happy ending, though; his password came to him in a dream years later. He called me drunk from champagne in his pajamas at 3 pm one day, and texted me a piece of paper with a bunch of National Treasure-type stuff hand-written on it. Anyways, it worked, and he got his Bitcoin back.

One day, I got a different kind of call from Pietros. He told me he had been diagnosed with stage 3 cancer. He and Karen were devastated. Just as the life he had built was starting to compound and pay dividends, the universe was threatening to cut it short. Our stock market discussions were soon replaced with cancer discussions, doctors, and strategies. Options deltas were replaced by 5-year survival statistics. But he put his research mind to work. He quickly transferred his medical care to the University of Miami hospital system and leaned on a combination of referred knowledge and new research. He approached his treatment with the same calculated risk-taking that he had in business, opting for the strongest possible chemotherapy and then radiation.

And combined with holistic practices, it worked like magic. Less than 4 months after being diagnosed, doctors declared him cancer-free. His young age, combined with aggressive treatment, healthy eating, and fitness paid off. Just as it is in the markets, there are no guarantees. Some of you reading this may have loved ones who were less lucky through no fault of their own. But the most enduring lesson I’ve learned from being friends with Pietros is that reading and research work more often than not. And he continues to do new research on cancer prevention and treatment. If you’re reading this and want his contact, I’m happy to share it.

In December, we celebrated his cancer-free status down in Pompano Beach at a family-owned all-you-can-eat Brazilian steakhouse. And I think it suits his personality perfectly, high on substance but without any flash or pretense. After stuffing ourselves with filet mignon and grilled pineapple, we toasted to life and the pursuit of happiness. I’m excited to see what he does in his next 40 years.

I spent 8 years working full-time as an author, giving me the pleasure of spending part of my career traveling the world and writing. I spent most of this time going back and forth between London and a small town on the south coast of Spain. I miss the witty conversations with friends in London, the autumn roar of the Mediterranean sea, classy dinners and parties, cheek kisses, mini-split air conditioners, and €100 flights to places mysterious and unknown. But of all the places I’ve spent time in this world, the most entertaining is Australia.

Why Australia? The year-round weather on the east coast of Australia is unbeatable; the air is crystal clear, the coffee is the best in the world, and the food is a great mix of the best of Asian and European cuisine. And then there’s the people. On average, I find that Aussies are friendlier and less stressed than Americans, at least when comparing upper-middle-class people in each country apples-to-apples. Aussies are also known to not shy away from a party– one news article a few years back classed Australia as the “drunkest country in the world.” Do I believe this? Perhaps not, but I certainly met one girl there who pulled up the average…

The First Date

I had booked an 8 pm reservation at a trendy Italian place a block off the beach in the small resort town in Queensland where I was staying for the month. The internet reviews for the place were good, so off I went. I took a seat at the bar and ordered a glass of wine, admiring the array of tropical plants inside and the quiet, warm glow of the restaurant. Two seats to my left was a pretty brunette who looked to be around 30 years old. I don’t know if she came in before me or after me–but at some point I said something, she replied back, and we began to talk. I’m always a bit cautious when I first meet someone, but she seemed warm and friendly enough, so we ordered glasses of wine and began to talk. I picked up a slight eye roll from the bartender when her glass of wine came. For the purposes of this story, her name was Delilah.

She was a real estate agent from the city who had moved up to the quiet beach town where I rented my place. Mine was a 15-minute walk along the trail through the eucalyptus and tea trees to the main beach. She lived a little way inland after her lease on the beach ran out. I felt so at peace talking with her in the quiet beachside restaurant, like I had hit the lottery on a random chance encounter in a remote corner of the world. We ordered dinner and split a bottle of wine. Then things started to get a little off the rails.

From my travels, I find that the best test of character in someone you’re considering making a romantic or business partner is to have 2-3 drinks with them. Not everyone drinks, and that’s fine. But for those who do, it’s an easy litmus test for personality. After a few drinks, people open up and tell you what’s on their mind. If you’re lucky, they might share some of their aspirations, their past setbacks, and present secrets. And in some cases, the latent part of their personality is that they jump on a freight train to blacking out and no one can stop them. That is obviously bad news, but it’s very good information to have that will save you a lot of sleepless nights in the future.

From drinks 1-3, Delilah was one of the most charming women I’ve ever met. She was honest about her past, present, and future, and the way she told her story made you want to root for her. Bit by bit, she started to get sloppier, revealing the hidden meaning behind the bartenders’ eye rolls from before. We finished our dinner and she suggested an after-dinner drink. I’m not a particularly heavy drinker–I was done drinking at this point, but I was happy to stay and talk. Then she orders another, and then another. At this point, I am wondering whether to give her the benefit of the doubt for drinks 4-7. Perhaps she was just nervous! But perhaps not. She wants me to meet her roommates, and I oblige. She’s hammered at this point, and I was not about to drive her BMW convertible 20 minutes inland on the “wrong” side of the road after having a couple of drinks, so I called us an Uber.

She was predictably loud in the Uber, and we twisted and turned through the back roads leading out of town into the countryside. She seems to get some of her charm back, and we end up pulling into the long driveway of a quiet farmhouse. She has a surfboard leaning against her front door, and I can see the fire pit going in the backyard with her roommates. I check the time on my phone and notice my cell service alternating between no service and a single bar. At the end of the day, there were worse places to be stuck; her roommates were all good, kind people. She unfortunately finds more alcohol in the backyard, and I make sure her dogs all have plenty of food and water.

Between the lack of cell service and no willing Ubers to get me, I end up staying the night. By bedtime, she pops at least two Ambien, and her dogs seem to gravitate to me as their newly appointed protector. Her room is a disheveled mess, and I can only imagine what kind of Huntsman spiders are lurking among the cardboard boxes filled with junk in her wing of the farmhouse. I brush my teeth, she fails to brush hers, and we take opposite ends of the bed like an old married couple, and the dogs dutifully fill in the gap in the middle.

Morning comes early in Australia, and the frogs and kookaburras seemed particularly fired up that morning, calling out to each other as dawn broke. In the more tropical parts of Australia, it feels like day becomes pitch black night in a matter of minutes, and in the morning, dawn breaks just as quickly. I successfully find a phone charger, go back to bed for a bit, wake up again around 7 am, and walk up to the main road looking for cell phone reception for a ride home.

I eventually find my Uber, and my surprised driver asks why I have an accent.

“I’m from Texas,” I tell her.

She cracks a smile and looks at me in the rearview mirror.

“Do you know you called your Uber to the side of the fucking tip? (the local trash dump) You don’t really look like you work there!”

I laughed and told her the story.

The Second Date

I slept a few more hours when I got home that morning and eventually walked the path to the local coffee shop to get a cappuccino. I then halfheartedly attempted to write a financial article while there was some kind of kookaburra bird war happening outside my house. Eventually, I just gave in and bought some steaks and vegetables at the market to grill on my patio. That night, I texted Delilah just to check in. She said she was embarrassed for getting so drunk, and she’d like to have a second date if I were willing. I don’t think too long about it before accepting, and suggest a beach date in a couple of days.

On Saturday, Delilah’s BMW convertible made another appearance outside my house, and we set off for the 5-minute drive to the beach. We go to Betty’s Burgers, the quintessential Aussie hamburger chain. She’s wonderful, back to her charming self. She opened up about her family and her business. She moved up from the city after a bad breakup and wanted to live a more peaceful life where she wasn’t defined by who her parents were. She had done a few nice real estate deals since moving up, but things had been dry lately. She said she knew she had an issue with alcohol, but was working on it. She said she’d love to do the work she needs to do on herself so that she could build a loving family. She asked if I was okay if she picked up a six-pack of some seltzers at the bottle shop for the beach, and I said that’s fine, and I’d have two, but to buy some water as well.

For the second time, Delilah was perfect from drinks 1-3. We talked about life for a few hours while the afternoon breeze swirled, sharing long kisses in the umbrella shade. In a moment of clarity, she tossed the last seltzer in the trash. Soon, we were back in her right-hand drive BMW convertible, heading back to my place. Before we can complete the 5-minute drive, she veers off and stops at the other bottle shop on the way home for champagne. 5 minutes later, out she comes with two bottles of champagne, and I’m beginning to pick up a pattern. She’s not drunk yet, so though I had noted her sins in my mental file, there was still a chance to turn things around for the evening.

With the BMW safely tucked away on the side street to my house, we head inside, toss our sandy clothes in the wash, and make our way to the shower. We kiss for what feels like an hour in the shower, but she wasn’t about to let intimacy get in the way of getting a buzz. She even brought her champagne into the shower in a plastic cup! Once out of the shower, we towel off, and she picks up the pace of drinking. At some point, I told her to stop drinking for a while, and she called me a “pussy bitch” and slapped me in the face. At this point, I am completely done with her, but she is wasted again and in my house. I keep trying to explain to her that I want to go to dinner, and she says she doesn’t want to eat.

Frustrated, I picked up on the pattern and resigned myself to staying in a hotel for the night with the hope that she would be gone in the morning. I figured I would just let her bender play out without me. I quickly grabbed my passport and work laptop and headed out the door.

The Next Day

I woke up early the next morning in slight disbelief that I had an alcoholic real estate agent who I had allowed to commandeer my house. I walked by and was hugely annoyed to see her car still outside. I called my landlord, Brooke, for help in gently evicting our unwanted tenant so I could get back to my life. Thankfully, when we went back to the house, the car was gone. I sheepishly asked Brooke to change the lock code on my back door. A former world traveler herself, she was remarkably understanding.

Once inside, I surveyed the damage. Sitting on my kitchen counter was a steak knife covered in telltale drywall. And guess where the drywall came from? From the 5 holes stabbed in my kitchen walls. Not wanting to let Brooke down (or owe her a bunch of money), I set off for Mitre 10, which is basically the Australian version of Home Depot. It thankfully wasn’t too far, and I grabbed a cart and headed inside.

Not long after wandering the aisles, a gapped-tooth Australian employee approached me.

“How ya going? What you looking for, mate?” he asked me.

“Good! I just need some drywall stuff, like spackle and a putty knife.” I said.

“Are you renovating?” he asked, somewhat seriously.

“No, this girl I’ve been seeing stabbed holes in my wall with a steak knife,” I told him.

He exploded with laughter and called over to his friend. “You gotta hear this, mate,” he said, practically on the floor with laughter. They then got on the radio and started shouting into it for the other employees to come to my aisle so I could tell them the story again. At this point, I’m a little embarrassed, but they were having so much fun with it, I figured I might as well tell the story over and over.

Their supervisor somehow managed to get a break from laughing for a few seconds. “Crazy girls need love too!”

I fixed the drywall to my landlord’s satisfaction, and there was no third date.

The Rental Car Put Option

The market for rental cars is one of the quirkier markets that everyday consumers come in contact with. It’s common knowledge for most of you reading this that flights tend to get more expensive as you get closer to the date of departure. If you need a ticket to New York in an hour, you can expect to pay a lot more than if you need one in a month. However, what’s much less commonly known is the data that rental car prices tend to drop as you get closer to the date of your trip. One study found an average ~13.4% drop in rental car prices from 90 days out to 7 days out. Anecdotally, I’ve seen and profited from drops of much more.

Does this mean you should roll the dice and wait until right before your trip to rent a car to save a few bucks? I don’t. But if your rental car contract offers free cancellation (and most traditional rental companies do as long as you give them at least 24-48 hours’ notice), there’s nothing to stop you from canceling and rebooking at a lower price. There are even online services that will automatically notify you when prices drop. You need to know what you’re doing to avoid incurring fees, but if you’re reasonably conscientious about contracts, then you’ll never have a problem. This trick has saved me quite a bit of money. Just make sure you didn’t accidentally book a nonrefundable reservation.

Historically, this same trick worked for flights until airlines started charging flight change fees to combat the practice. I believe this is also why Southwest Airlines never allowed its tickets to be sold on sites like Expedia. Because Southwest had no flight change fees, they avoided getting picked off by savvy travelers armed with algorithms.

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Welcome To The Hotel California?

You can check out any time you like, but you can never leave…

“Hotel California” by The Eagles.

Unlike the famous rock song by The Eagles, most hotel reservations are surprisingly flexible. Hotels operate their businesses much like rental car companies–they have inventory in stock that they rent out and adjust the prices accordingly. Sometimes hotels will adjust prices higher. If that happens, no worries! You already have a reservation booked at the price you agreed on. But if the price drops, you can do the same trick to rebook and get a better price. Research shows that roughly 40% of hotel rooms drop in price as they approach the booking date. Additional research shows that hotel prices are also roughly 13-14% cheaper when booked 15 days out than when booked 120 days out. This difference nearly doubles to 21.6% for luxury hotels.

If you care about your trip or getting a specific type of room, you can always make sure you have your second reservation booked before canceling your first. Anecdotally, you hear a lot of people doing this and see it from travel bloggers, and some services will notify you of hotel price drops as well. But I can almost guarantee you’ll make more money by exercising your option to rebook than you will by booking nonrefundable to save a few bucks.

Of course, your mileage may vary–I don’t want any of my readers to misread a hotel booking contract and accidentally cancel their vacation! Reading the fine print is the key to profiting from these, as well as the key to avoiding problems. And while this trick works for hotels, it won’t necessarily work for Airbnb or VRBO. In theory, it might work for Airbnb if you don’t care where you stay exactly, but since you’re renting a specific place and not a class of place from inventory, it generally won’t work in the same way.

Bottom Line

If you book rental cars and hotels in advance and have the option to cancel without being charged, you also have the opportunity to profit from fluctuations in prices. I suggest using it!

In November 1948, US newspapers erroneously reported that Thomas Dewey beat Harry Truman in the presidential election. This ended up being a multi-million-dollar misprint. In fact, Truman won. The wayward headlines from the 1948 election have since been taught to generations of journalists on the perils of publishing incorrect information regarding breaking news. But what if you want to know information faster than the risk tolerance of various news editors? They want to be 100% certain that they’re not making a mistake, but being overly timid to never be wrong is boring! But instead of staying up all night and trying to guess from the tone of the anchors at CNN and Fox News who is going to win, what if you could know in advance? The answer is that you can by using political prediction markets. As of my writing this, Zohran Momdani is crushing Andrew Cuomo in the NYC democratic primary for mayor and will likely win the vote by at least 8 percentage points. A quick scan of Google shows virtually nothing to this effect, however. Instead, there are some articles speculating about the outcome, and some hints in other article headlines.

Political Prediction Markets Are Bottled Truth

The night of the 2016 presidential election, I took my mom to Tropical Chinese, our old favorite Chinese restaurant in Miami. The public mood was a bit tense, and the traffic was heavy, even by Miami standards. We had the TV on at my place all night, but on my laptop I had a website called PredictIt, where I had placed some bets on various outcomes of the election. That night, I learned a simple truth about betting markets– they’re faster than the news. What’s more, many political prediction markets tacitly or expressly allow insider trading, meaning that insiders can make money off their knowledge and provide a valuable signal to the public at large.

While the newscasters painted counties red and blue that night, the betting markets had figured out that Donald Trump was winning big in the counties in the Florida panhandle, and would win the key state of Florida. Soon after, the odds for the entire election shifted decisively for Trump, and the rest was history. But the important thing here is that the news didn’t recognize what had happened for hours, when the smart money already knew. There’s a lot of dumb money on political prediction platforms as well, and I was able to do something called negative risk arbitrage on PredictIt for years. But when big money comes in on an event, in the political prediction world, it’s generally smart money.

This has held true for all kinds of stories lately, such as the 2024 presidential election, the fall of Bashar al-Assad, the US strikes on Iran’s nuclear program, the NYC mayor race, and pretty much any event you can think of. Offshore political prediction platform Polymarket is one of the largest markets on there, and I use real-time data on there as a party trick to tell my friends and family the news before it happens.

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Bottom Line

Do I know more about the future than you do? Probably not, but if I have a political prediction market in front of me and you don’t, I can tell you more about tomorrow’s news headlines than you can. And right now, Zohran Mamdani has over a 99% chance of being the Democratic candidate for mayor in New York City. I’ll only comment briefly on this, but New York has bounced beautifully from COVID, and I hope whoever ends up in charge doesn’t push any stew of garbage economic theories to buy votes. One could perhaps contrast New York’s resurgence with San Francisco’s well-publicized struggles. But San Francisco is now making hard choices to solve problems, while New York might be about to try to take shortcuts to appease the lowest common denominator of the voting public. Anyway, good luck to all reading this, and good night!

Over the past five years or so, large corporations have pushed the envelope in a major way on selling customer data, using aggressive algorithms to price goods and services, and generally just cutting corners in the pursuit of extra profitability. This has greatly annoyed consumers, regulators, and ultimately the courts. As such, we’re now in a golden age for consumer class action lawsuits. The public perception of these tends to be that you fill out a bunch of paperwork and get a check for $3.19 a couple of years later. The reality is far better than the perception, however! While I’m a bit cynical by nature, I’ve been pleasantly surprised by just how effective recent consumer class actions have been in hitting back at misbehaving companies. I’m now making a few thousand dollars per year with minimal effort by selectively joining strong consumer class action cases, and in this article, I’ll show how you can too.

How Do You Get in On Class Action Lawsuits?

Most of the consumer class action lawsuits that I’ve joined are the result of responding to ads on social media. The most efficient way for law firms to reach you is to advertise on social media platforms like Facebook and Instagram, because the defendants are forced to give email information on affected customers in discovery. Then you’ll see ads in your feed. There’s a nice kicker here– because these law firms have to pay to advertise, you have the benefit of “positive selection”. The more profitable a class action is likely to be for you, the more likely you are to get an ad about it on social media. This is due to the contingency structure of class actions, where the firm gets 30-40% and you get the rest. As a rule of thumb, if it’s worth it for a big law firm to pay for an ad to reach you when they’re only getting a third of your claim, the claim is generally worth doing for you as well.

I also have had great luck responding to law firms that have emailed me about class actions, under the framework that if they’re taking the time to reach out to me that the case is decent. Sometimes all you need to do is tell them where to send the money. The time investment in these is generally minimal and tops out at a few minutes per case, and there’s something to be said about waking up to random payouts every few weeks. Joining class actions is certainly not a get-rich-quick scheme, but it is an effective long-term strategy to make extra money.

You can also seek out active class action cases, for example, on www.classaction.org. You won’t have the benefit of positive selection here, but it can be a good way to get the ball rolling on some cases and get in on cases that you’ve ignored ads for in the past. It takes a good nose for common sense to identify a case that is likely to be profitable. Certain statutes allow for you to collect triple damages, and against the right defendant, where you’ve spent money for your business, the claims can get much bigger. In general, I believe that antitrust cases are the most profitable to join (because of triple damage statutes), but certain data privacy cases have been very effective lately in the courts.

Another very interesting category is securities class actions. Led by Interactive Brokers and Vanguard, certain brokerages and investment houses have set up divisions staffed with people whose job is to enroll their clients in class actions on any affected stocks. For a cut of 20%, they’ll automatically enroll you in class actions and collect the money for you. Since there’s plenty of misbehavior on Wall Street, I think these new programs are a fantastic way to claw back the toll taken by insider trading, market manipulation, and incorrect corporate disclosures. Not all brokerages have these, and this reinforces my view that Vanguard is the best in the business for long-term investors.

How Much Money Can You Make Off Of Joining Class Actions?

My smallest consumer class action settlement was literally for pennies, and my largest is pending for approximately $21,000. I get these not because I’m particularly unlucky or that the world screws me over more than my readers, but because I am willing to respond to ads and cold calls. Since you’re taking the time to read this, you probably are too, and my guess is that you’ll find it worth your time. Again, finding the right cases takes a good nose for BS. In general, the more money you’ve spent on a product, the more potential damages you can recover. The typical case will make you $10 to $100, but some consumer class actions are for orders of magnitude more.

Two notable cases right now that are on the bigger side are the RealPage antitrust case (for renters) and the Google Ads antitrust case (for businesses that advertised on Google). Both cases involve antitrust law, a lot of money changing hands, and parallel actions by government regulators. Cases that I think won’t make you much money but are still potentially worth joining are privacy cases against Google and Meta for free users of Google and Facebook. Because the products are free, the damages tend to be much more limited. This means I expect those cases to settle in the typical $10-100 per consumer range. Consumer privacy cases against companies where you’re a paying customer tend to settle higher, so you’ll want to keep your eye out for those. In all, I have dozens of cases going–most of them are related to consumer privacy violations.

Bottom Line

I’ve made quite a bit of money simply by picking up the phone in class action cases. Chances are that you can too, whether you’re a stock trader, a business owner, or simply a savvy consumer. While not every class action case is worth your time to get in on, many are. I think many of you reading this will find it well worth exploring your options.

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Don’t Pay For Cable If You Don’t Need Cable

I was recently looking at basic cable TV prices and don’t know whether to be amused or shocked. I have the average cost of cable TV pegged around $83 per month plus tax, or about ~$1,100 per year. Over a 50-year period, if you keep your cable plan as is, you’re looking at around $55,000 in wealth surrendered to your cable company. Many older people know this, but I don't think it's common knowledge among my fellow millennials that you can get broadcast TV for free, simply by buying an OTA antenna.

I know this will sound to some of you like a stupid personal finance “quit drinking lattes” argument–and that’s not really what I’m about. The difference in my mind between useful advice and “stop drinking lattes” is when you can get the same benefit for less money, or more money for the same effort. 4 years ago, I solved my cable problem forever for less than $70. I went to Best Buy and bought a decently high-end indoor antenna (i.e. not the cheapest piece of shit I could find), and I set it up with my living room TV. To the untrained eye, it looks like a speaker. After a few minutes of setup, I got CBS, NBC, ABC, Fox, and about 100 other channels. Does this make me a cheapo? Maybe? But so far I’ve calculated that I’ve saved about $4,300 and counting from dropping cable. And quitting cable encouraged me to be more social, active, and healthy.

I think this particular example is instructive because so many people don’t fight for the money they deserve. Whether it’s asking their employer for a raise or reimbursed expenses, negotiating a lease renewal with your landlord, putting your money where it earns interest, or getting multiple bids on work to be done, there is plenty of extra money to be had by negotiating properly and cutting out middlemen. If cable is worth it to you, then by all means pay for it, but certainly don’t view it as a default if you can watch the same three NFL games each week for free with an antenna.

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Eyeglasses Shouldn’t Be $800!

I don’t have exact figures, but my best estimate is that designer glasses (and sunglasses) cost about $20 to manufacture in China. Then they’re shipped to the US and marked up hundreds of dollars. Here’s what a former industry executive had to say about this:

When hearing that some glasses sell for $800 in the US, he laughed. “I know. It’s ridiculous. It’s a complete rip-off.”

The fundamental reason for these crazy markups is the same in the cable TV industry as it is in the ophthalmic industry, and it’s that the markets are monopolies in one form or another. For TV, sports leagues demand huge payouts from cable companies, and historically cable companies themselves have held geographic monopolies over their customers. For eyeglasses, the main issue is that one company– EssilorLuxottica–controls enough of the market to affect the supply and demand of the entire industry. Therefore, they can manufacture glasses for $20 and sell them for $400-800. Because eyesight issues are genetic, these numbers start to really spiral if your whole family is nearsighted or has other eyesight issues.

The solution to this– I recommend using Warby Parker or a similar provider. Their glasses cost around $95 to $120, and I always have several pairs. They’re still healthily marked up from the $20 or so that it costs to manufacture them, but I like the style and the margins aren’t nearly as egregious. Keep going to your normal eye doc but don’t buy your glasses there, as eye doctors make a big chunk of their profit from selling glasses, not from selling $120 checkups.

Bottom Line

This article is somewhat of a test–I have about 10-15 more things like this that I’ve figured out over the years. If you found this beneficial, drop me a comment below. And if you know all of this already, chances are that you’re much smarter than the average bear.

Poker has long captured the imagination of the American public– from the times of cowboys and grizzled gamblers playing in saloons in the old West to today’s flashy high-stakes games in penthouse suites and internet livestreams. While there has always been interest in popular culture, the 21st-century poker boom got going in earnest when an accountant and amateur player named Chris Moneymaker won the World Series of Poker in 2003, taking down $2.5 million for first place. The event was televised on ESPN, and Moneymaker soon helped spark a boom in online poker that brought millions of people to the game, primarily to play Texas Hold’em.

Online poker became wildly popular in the early 2000s, but behind the scenes, the games weren’t quite fair. Young, tech-savvy players quickly figured out how to track their opponents’ hand histories and statistics using software packages called heads-up displays (HUDs). This was tacitly allowed by the sites and let them exploit weaker recreational players with devastating effect. The online poker boom soon started to die down, and the Bush administration moved to ban online poker in 2006. The games sort of went offshore before the U.S. government dropped the hammer again in 2011. Today, online poker is still plagued with all of the same issues, plus additional nonsense with AI and collusion by players in other countries, namely Russia. However, while less flashy than the online boom, in-person/live poker has seen steady growth throughout the last 20 years in home games, casinos, and poker clubs like those that have become common in Texas.

I play live poker at casinos, private clubs, and home games, at stakes ranging from $1/$2 to $5/$5. I play Texas Holdem, pot-limit Omaha, and double-board pot-limit Omaha because those are the games that are popular in Texas, but if other games are popular where you live, you should consider learning them. I’ve played all over the US, and in the UK and Australia as well. The games are similarly profitable anywhere where there’s a sufficient amount of disposable income in the local economy. In that regard, the more the better. Poker isn’t the NFL– instead of playing the best, I’d rather play people who want to throw money around for entertainment and have a good time.

If you apply yourself properly, poker is more profitable per hour than most jobs. I know quite a few regulars who play full-time and make six figures, as well as some strong players who only play a few hours now and then during daytime hours but make $50-$100+ per hour. I don’t play tournaments and I generally don’t play at night, but that’s the beauty of poker as a side hustle.

Is playing poker better than having a coastal six-figure remote job? Probably not. But is it better than the typical office job or blue-collar job? Absolutely! And you can play as few or as many hours as you want, with most private poker clubs running hours close to 24/7. So long as you’re reasonably smart and can handle your vices, poker is a fun way to make money.

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How To Make Money At Poker

Essentially, if you do the upfront work on studying the game, you’ll be able to win for life.

This is somewhat of a hard article for me to write because my reader base could range from people who haven’t played a hand of poker in their life to expert players. So what I’ll do instead of talking too much strategy is to share the people who I learned the game from, so anyone interested in learning to play and win at poker could follow along.

1. Take the MIT Poker Course. In my opinion, the best introduction to poker is the free MIT course on poker. The course is available for free on YouTube and allows you to build a strong foundation for poker before you start playing and picking up bad habits. I’ll link to the 2015 lectures here, and the 2016 lectures here.

2. Practice online for free and track your stats. Remember the evil HUDs I mentioned earlier? While I wouldn’t recommend playing online for real money, playing poker online is ideal for learning because you get 10x the reps in the same amount of time, and you can play for free against the computer. The benefit of this is that when you find yourself in a tough spot, you can pause and think through spots. A good free website for this is Play Great Poker, I like it because keeps a running report card for your play. Many live low-stakes players would easily flunk this, so if you can get straight A’s against the computer then you’re probably well on your way to being a winning player. The computer will play somewhat dumb, but that’s okay because your goal is to make as much as possible against it.

3. Get free coaching on YouTube. In my opinion, Jonathan Little is the best coach for beginners. Little dropped out of college in Florida to go pro at poker and found increasing success over time. Today, he is a tournament pro based in New York City with millions in tournament earnings and has a great YouTube channel. He used to play $5/10 and higher stakes games as well in Vegas for a living. Little is a great teacher. One of the best things Little does is publish game-theory-optimal preflop charts on which hands you should raise, re-raise, and fold before the flop. When you’re practicing online, you should have the charts open in front of you and you’ll eventually be able to commit them to your (mental) muscle memory. Little has a lot of great quizzes on his site as well.

4. Data mining works for live poker as well. Steve Selbrede was a tech executive in Silicon Valley who moved to Las Vegas to play poker full-time and published several books on the statistics of live and online poker. Selbrede’s work is great because he tracked how people actually play at low-stakes games in Las Vegas and applied his deep statistical knowledge to it. His articles are great and technically sound. While you obviously can’t track people’s stats in real-time playing poker, you can understand what the population tendencies are and categorize players based on them.

5. Combine psychology with math. Alex Fitzgerald is a fantastic writer who blends life lessons with poker knowledge. He came from a tough background and went pro at poker straight out of high school. He’s made millions of dollars in tournaments and cash games. His articles are great for learning how psychology and math meet in the game. Also, while I’m not huge on using physical tells, it’s important to know that money generally flows clockwise on the poker table due to the effect of position. If you can sit with bad players on your right, you’ll profit more in the long run. Ditto for keeping open seats to your right, on average, the players who come in off the street or casino floor are worse than the ones who have survived at the table for longer. To this point, I’ve found the most profitable live games are on weekday afternoons and nights, contrary to the perception that poker requires you to play Friday and Saturday nights instead of being with your friends and family.

6. Learn from livestreams. Bart Hanson is a longtime poker pro and commentator who runs a coaching site called Crush Live Poker. What’s unique about Hanson is that he commentates on live-streamed games. Thanks to technology, Hanson and the viewers know the cards the players have (on a delay). He’s been commentating on poker for a long time– having experience with watching people’s patterns when you know what their cards are is incredible. What’s more, Hanson and his team have created numerous training videos based on his commentating. I can vouch that his site is well worth the money. Bart also does niche work on bomb pots, a common feature of games at poker clubs. Lastly, he has a regular call-in show on YouTube where viewers talk over big hands they’ve played with him. Hanson made big money as a Los Angeles-based poker pro for 10+ years but now lives in Boston.

7. Learn as you go. Use free tools like range calculators, equity calculators, and Flopzilla to learn common spots or to check your intuition after playing a big hand. You’ll need to know some shorthand math as well, like what the odds are that you or your opponent will flop 2 pair-or-better or whether your opponent has trips with a pair on the board. Knowing these will tell you when you can bet and get your opponents to pay you off. Pot-limit Omaha is its own can of worms but is even more profitable than Holdem. I have my own set of people who I learned Omaha from, but that’s outside the scope of this article.

Yes, you can beat typical live poker games for a (very healthy) side hustle or for a decent living. To do so you need access to a solid number of games, which means there needs to be a good poker scene where you live. I visited my grandparents in Kansas City last year and was hit by a nasty wall of cigarette smoke when I went to the local casino. Needless to say, I left. There just isn’t a live poker scene in many smaller cities or in big cities in states that don’t allow it, so you can only make good money from live poker if you live somewhere where it’s available. If you live somewhere where there’s a scene, give poker some thought!

How About Rake?

Casinos and clubs don’t offer poker for free, but when you do the math on rake as you would for any other small business it’s not that bad. Studies indicate that around 35-40% of players win in the long run. Of those who win, however, the better players are winning far more than the median winner. If you play somewhere that rakes highly then the percentage of winners is likely to be smaller. If you play somewhere with cheap time rake like Texas where we pay about $10 per hour for the seat but can keep all the winnings on the table, more players can win. And of course, if your buddies have a home game, you will win bragging rights and more if you’re a strong player.

This data is for super low stakes online poker but it shows the distribution of winners and losers over time. Ignore the Y axis because live winrates and online winrates aren’t directly comparable (live has way more profit potential per hand), but note the shape of the distribution.

Source: Reddit

This graph tells another simple truth about poker– much of the ecosystem is fed by players who are willing to dump huge amounts of money. Poker players call them “whales”. And much of the winnings go to the best players. Before I started playing live, I did calculations on how I thought people would play and what my fixed expenses would be. I made tons of mistakes along the way playing while I was learning, but the calculations ended up being too pessimistic about how poorly so many people play poker compared to theory.

More power to them– most people playing are recreational players. Even if you’re a great player, they’ll sometimes win big pots against you and that’s okay. So many wannabe pros sit there with headphones on all day and don’t talk as if it helps them win more. Realize that if you’re playing poker at 2 pm on a Wednesday in a major US city you’re going to be playing with a lot of people who own businesses or who retired from good careers. It’s fun to talk with people. If you’re going to pursue poker as a side hustle you might as well enjoy it. If you’re pretty good and willing to get better, the rake won’t eat all your profit, nor tips, nor will drinks and food, nor will your Ubers or mileage driven to the games. But the difference between the 90th percentile and the 99th percentile in terms of how much you win is vast.

Bottom Line

You can make a lot of money playing live poker. What you get out of it largely depends on what you’re willing to put into it.

I’ve always been fascinated by international travel and the economics that make it happen. It’s a big world outside of the United States, and there’s a ton to see. We have a good idea of what our pile of dollars will buy us at home, but when you travel and exchange currency, you can get a completely different lifestyle for your dollars. As of my writing this, the US dollar is extraordinarily strong against other major currencies, making foreign travel extraordinarily cheap (once you arrive). But there are plenty of traps for the unwary. In this article, I’ll share a few, along with some tips and tricks to get the most for your money.

1. Currency Exchange

Foreign exchange is confusing by design. FX dealers and banks make billions of dollars per year exchanging one currency for another. Many consumers aren’t sensitive to price, and this ends up profiting the companies and banks offering FX services.

I’m writing this from sunny Cabo San Lucas, Mexico.

Thanks to Google, I know that the fair market exchange rate is currently 20.7 pesos per dollar. But the other night's restaurant bill offered a choice– we were quoted in pesos first, and then in dollars. The exchange rate offered was 19.5, a roughly 6.4% markup over the fair exchange rate. At dinner the following night, the restaurant offered a 9.7% markup to pay in dollars. I saved the receipt on that one, and am sharing it here so you know what to look for.

This is very common, and it even has a name in restaurants and at ATMs– “dynamic currency conversion”. When offered, over 99% of the time it’s a bad deal.

The easy rule of thumb is to always pay in local currency. If you’re paying with a credit card, all you have to do is tell the merchant you want to pay in euros/pesos/whatever the local currency is. There are sometimes exceptions for countries that are partially dollarized or that have hyperinflation, but 99% of the time for travels in Mexico, the Caribbean, or Europe you’re better off paying in local currency. For example, commonly European restaurant waiters will ask you if you’d prefer “dollars or euros,” and when they ask this always choose euros. Ditto for ATMs, which tend to have even steeper markups.

And if you want or need to pay in cash, the cheapest option to get foreign currency is in bank ATMs in the country you’re visiting.

2. Credit Cards

While avoiding dynamic currency conversion and bad FX rates is a good first step towards being a savvy traveler, you also have to watch out for banks and credit card companies back home. Many banks and credit card companies charge a 3% fee on foreign transactions– and these fees are almost universally charged when using debit cards abroad. You can easily sidestep these fees by selecting a credit card that lacks foreign transaction fees and using it when abroad. I tend to use my Chase Sapphire for this (they currently have a nice signup bonus as well worth about $750), but there are other good options from American Express and Bank of America as well. Airline credit cards tend to not have foreign transaction fees either.

The general rule of thumb for traveling is that card payments tend to be cheaper than cash, although cash is heavily used in some countries so you may need to get some. This gap tends to grow when you account for cash back on American credit cards, which can be 2% or more of the value of your purchases. For getting cash, I have a debit card from Charles Schwab that has no foreign transaction fees and also reimburses ATM fees worldwide. It’s another great tool for expats or frequent travelers.

3. Airline Games

Airlines are an interesting business because while everyone flies on the same plane, customers pay vastly different prices for their tickets. On a typical flight, you might have a few people paying for business class/first class in cash, people flying in first/business who get upgraded for status, frequent fliers flying on points, and even airline employees or friends & family flying on buddy passes.

To get started playing the game, the first step is generally to sign up for an airline credit card. Pick whatever airline has the most direct flights out of your home airport and fire off an application. They’ll generally give you a bonus worth $500 to $750 that you can redeem for flight credit, and you get more miles as you go when you spend on the card or fly qualifying flights.

From there, the trick to getting the most out of your miles is to understand their value. Most airline miles are valued at around a penny per mile, and travel bloggers update spreadsheets periodically on their value and where there may be good deals. For example, if you find a flight for 25,000 miles that would be $500 cash, then you’re getting a good value for your miles. But if you use those same miles for a flight that’s $119, then you’re getting poor value according to the model and are better off paying cash now and using your miles for a future purchase.

In my experience, the best value you can get for miles tends to be on long-haul flights or on popular routes that can get bid up.

Beyond just using miles, you can also use cash to upgrade flights. A favorite trick of mine (if you’re somewhat flexible) is to buy a premium economy ticket on a transatlantic flight and then call before to upgrade it to business class. It’s all supply and demand to their airlines, but 90% of the time it allows me to score business class upgrades for a significant discount to paying cash upfront for a business class seat. Airlines will also often contact you with upgrade offers, which you can either accept or reject. For this to work, you need to start with a premium economy ticket, however, as it’s fairly difficult to upgrade certain classes of coach to business.

Another trick I like to use– booking one-way flights. Especially outside the US, one-way flights tend to be cheaper than round-trip. This also often applies to tourist-heavy routes in the US, like Miami and Las Vegas.

4. VAT Refunds

One of the great perks of going abroad is the ability to buy certain goods cheaper than they would be back home. Luxury items in the US often sell for substantial premiums to what they go for abroad. The cherry on top is that you can often get a refund for all or part of the sales tax (VAT) that you pay when abroad. I wouldn’t bother for anything inexpensive, but if you’re buying luxury goods or jewelry you can get substantial refunds on top of the savings you already get due to the currently strong dollar. These refunds tend to average around 10% of the purchase price of the goods you buy. Notably, the UK did away with this, but VAT refunds are alive and well in Europe, Asia, and Australia. There’s a process to follow and paperwork to fill out, but it’s well worth it if you’re buying luxury items abroad.

If you buy substantial amounts of goods outside of the US, do note that you’re legally required to report them to US Customs when returning. Not everyone does so when returning from buying luxury goods abroad, but the duties for personal imports tend to be quite low and often are reported to be waived if you get the right agent on the right day.

Bottom Line

The dollar is quite strong at the moment, opening up fantastic opportunities for foreign travel and purchases. And if you follow the advice here, your dollars will go even further. Thanks for reading!

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When I gave an investment talk in New York City this summer at Seeking Alpha’s Investing Summit, I shared simple tactics with participants to make more money and invest more efficiently. One statistic I quoted was that only around 7% of savers were getting within 100 bps of the wholesale Fed Funds rate on their savings, while over half were getting zero. For most people, the quickest way to fix this is to open an account with Vanguard and deposit money– their default money market fund that you’re automatically invested in is virtually unmatched for how much interest is passed through to you. The difference adds up to thousands of dollars per year for many savers with no additional risk.

On the other side of the spectrum, there are forums on websites like Vanguard forum Bogleheads where a lot of people in their 30s and 40s who are retired early from tech tend to congregate. Users on Bogleheads built a spreadsheet that not only optimizes the amount of interest you can earn, but it automatically pulls real-time data and optimizes for what earns you the highest amount of after-tax interest after federal and state income taxes. And this spreadsheet is free, created by Bogleheads user “retiringwhen”. I love it!

Here I’ll share a link to the Bogleheads spreadsheet for Vanguard and Fidelity. It’s in Google Sheets, it won’t function properly in Excel due to the need to pull real-time data, but Google Sheets works just as well. The full discussion on the spreadsheets is here, and if you go to the most recent part of the thread you’ll be able to find future updates. They also have another spreadsheet that covers the entire universe of money market funds and ETFs.

There are instructions on how to use it on the first page, but I’ll reiterate.

1. The master spreadsheet is read-only, you need to make a copy of the spreadsheet so you can use the data yourself.

2. Then, go to the My Summary page and enter your state of residence and tax rates.

3. Go to the VG Charts page to see the backtest.

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Example #1– Top Tax Bracket In Texas

The first example I’ll give is for high earners making $1 million-plus in Texas or Florida. Because the top income tax rate on interest is currently 40.8% (37% income tax plus 3.8% medicare surtax), there is a benefit to using municipal money market funds like VMSXX, which Vanguard offers.

I did some research into this– at first I thought municipal money market funds were a slam dunk, then I looked and thought they were useless, and now with the full spreadsheet I can tell you that they’re moderately useful. The reason why this is– due to wonky SEC reporting requirements, published yields you see when you get quotes on municipal money market funds are unreliable and fluctuate throughout the month. You need a spreadsheet like this to make an accurate backtest and understand whether you’re likely to come out ahead or not.

The Finance Buff has a good article explaining this in more detail, but I’ll share the key insight into what this means in a picture.

Source: The Finance Buff

As you can see here, the 7-day municipal money market yields fluctuate throughout the month due to the timing of the interest payments, while the taxable yields are steady. Whether you make more or less after tax depends on your income tax rate.

My research has found that if you’re in the top-income tax bracket and in a no-income-tax state, you’re going to do better by investing in Vanguard’s municipal money market fund (VMSXX).

Here you can see that the municipal money market yield is above the taxable yield on average.

I ran the numbers for someone holding $250,000 in cash in their investment account, and you come out about $500 per year better, or 20 bps. To be fair, this is lunch money. Also, if you’re in the 35% bracket, it’s basically a wash. Below that, you’re clearly better in Vanguard’s default money market fund (VMFXX).

There are plenty of high earners out there who aren’t even earning any interest at all on their cash– I know a few, and they’re leaving $5-10k annually on the table. However, if instead you want to rigorously optimize, this is how it’s done. There are also some scenarios where you might compound your advantage and this might be more useful. For example, if you sold a business for a few million dollars and planned on buying into the stock market over time, using the municipal money market fund would save you tens of thousands of dollars in taxes.

So this does have some use– if you’re in the top tax bracket it will generally save you some money to use Vanguard’s municipal money market fund. And you can easily quantify how much using the spreadsheet. As you’re about to see though, the real punishment on interest earnings comes from state income taxes, and fortunately, that part is easier to get around.

Example #2: Top Tax Bracket In California

I thought this was an interesting example as well– I ran the same numbers for California household earning $1,000,000 or so per year. That means that your top tax bracket would be 40.8% federal plus 13.3% California. California taxes interest as well, but they’re not allowed to tax interest from Treasuries and a few other select types of government obligations. This flips the tax incentive, California investors actually do best by investing in a Treasury-only money market fund. Standard money market funds make a lot of investments in the repo market, and California, New York, and other states tax the interest from these transactions. Also notable is that California is allowed to tax the interest on municipal bonds, which makes municipal bond strategies far less effective in general, but especially for money market funds.

Here we can see a persistent advantage for Vanguard’s Treasury money market fund due to avoiding California tax.

But what about the special California municipal money market funds that Vanguard offers? It doesn’t offer any value– the yields are too low to offset the taxes. Vanguard has a New York money market fund that seems to offer a bit of value over Treasuries for very-high-income NYC residents, but it’s not much. Note that Vanguard only has state-specific funds for NY and California.

For the same parameters, the California taxpayer underperforms VUSXX by about $700 per year in munis, and the California money market fund is even worse.

Example #3: Typical Affluent Household With State Income Tax

For my third example, I’ll plug in the numbers for a typical affluent household making $200-300k and in a state with an income tax. If you’re married, this generally puts you in the 24% tax bracket federally, your state taxes depend on what state you live in.

We’ll go back to the well with California here since there are so many affluent households there. Here the Vanguard Treasury money market fund out-earns the typical money market fund by 20 bps, and the municipal money market funds by a whopping 100 bps.

The red here is Vanguard’s Treasury Money Market Fund (VUSXX), you can see that it crushes the other funds. I ran the numbers for Virginia, Connecticut, Maryland, and New Jersey as well, and the conclusion is essentially the same– Treasury money market funds win if your state taxes interest.

Findings:

1. Earners in the top federal tax bracket in Texas, Florida, and other states with no income tax gain some benefits from municipal money market funds, especially if they hold a lot of cash.

2. Households in the 35% tax bracket and below in no-income-tax states are best served by Vanguard’s default money market fund (VMFXX).

3. Earners of all income levels should use Treasury-only money market funds (VUSXX) if their state charges an income tax. Those in high-tax states like California and New York benefit more.

4. These findings are based on backtests, and you should run the numbers for yourself with the spreadsheet here.

Bottom Line

Most people I encounter are leaving a few thousand dollars per year on the table by keeping cash in accounts that pay zero or low interest. At the other end of the spectrum, there are people with spreadsheets to milk every after-tax penny out of the market. For those who want to truly maximize the amount of interest they get on an after-tax basis, this spreadsheet is golden. And remember that I’m not your financial advisor, so consult with yours.

High-net-worth investors in the US historically owned their homes outright. But when mortgage rates were at record lows in the 2010s, it became fashionable (and smart) to take out a cheap mortgage instead of paying cash for your home. But recent changes in interest rates and tax law have meant that the numbers have changed quicker than the fashion. Jumbo mortgage rates are now near 7%, over double what they were during the pandemic. Additionally, mortgage amounts over $750,000 have not been tax deductible federally since 2017, effectively creating a double tax on high earners who choose to borrow over the limit. State taxes can pile on the pain as well.

For a quick example– let’s take a hypothetical high-net-worth household in California who recently bought a house for $3,000,000 with a $2,000,000 mortgage.

Pretax income: $800,000 per year, salary/bonus.

Assets:

Primary Home, $3,000,000

Taxable Investments, $1,500,000 (60% stock, 40% bonds)

Retirement Investments, $1,000,000

Potential Assets–unvested stock, accounted for in annual income above.

Liabilities:

Mortgage, -$2,000,000 @6.75%

No other debt.

This is pretty standard stuff for high-earning W-2 employees. Careers tend to accelerate faster than the ability to save, so it’s very common to have incomes close to seven figures but still need a mortgage.

This balance sheet looks completely standard, but can you spot the mistake? It’s not obvious, but I calculate that the portion of the mortgage over $750,000 carries an effective interest rate of 14.3%! How could this be?

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The reason why is that the excess part of the mortgage is not tax-deductible, while your investment returns are taxable. The calculations get extremely complicated here because the rate of tax on investment income for high earners varies from 36.1% to 53.1% in California and California lets you write off slightly higher mortgage amounts for state income tax purposes, but these numbers are broadly correct. The numbers aren’t quite as bad for older, cheaper mortgages, but they’re generally still unfavorable.

If you’re earning 5% interest on your bond portfolio (for a round number), California will knock that down to 2.35% after taxes. Your mortgage costs 6.75%, so you’re losing $33,000 per year if you have the entire amount of what you could use for your mortgage in bonds. If you’re in stocks, the calculations change because of the huge amount of volatility so you could win or lose big by taking a mortgage and letting your stocks ride, but even assuming the best possible tax treatment on your investments, you would need to earn 10.6% annually. Few investors would willingly borrow from their broker for 10.6% interest, but that’s exactly what the economic equivalent is here.

This is a very high bar to clear, and you’re almost always better off not having a jumbo mortgage over the amount that’s tax-deductible. Given that most investors attempt to run balanced asset allocations, high-net-worth investors in the US who have large jumbo mortgages are facing effective interest rates of 10-14% on the amount of their mortgage over $750,000, depending on how they invest and their state of residence. The solution here is to pay the mortgage down to $750,000, preserving the full mortgage interest deduction.

Why is this so common? There’s a simple conflict of interest between financial advisors and their clients here. Financial advisors almost always earn money on assets under management, so they rarely tell clients to pull money out of investments to pay off debt! Doing so would decrease their earnings. This is a massive blind spot for high-earning investors who rely on their advisors. And investors who self-manage their investments generally don’t connect the dots either, because the costs of their decision are hidden in their annual tax bill.

Bottom Line

Jumbo mortgages are expensive and currently not tax deductible above the $750,000 threshold, and many investors who could otherwise pay them off don’t realize how much it’s costing them. This isn’t intended to serve as personalized legal, tax, or investing advice, but if you or a family member is a high-net-worth investor with a large mortgage, consider whether you’re falling into this common trap. Paying attention to cost of capital avoids unnecessarily bleeding money to the government.

Over the past few years, sports betting has come out of the shadows and into the mainstream– flip your TV to ESPN on some days and it feels like you’re in a casino. As with the casino, most people do not make any money from sports betting– opulent casino buildings don’t get built because everyone wins! However, the difference between sports and slot machines is that if you’re good at betting sports, you can consistently win money. How would you go about that? I’m about to show you, with a particular emphasis on NFL and college football.

Know Thy Enemy: How Do Sportsbooks Make Money?

Our first step to understanding how someone would go about winning money on sports betting is to understand how sportsbooks make money. If you’re reading this I’m going to assume that you have basic knowledge of money lines, point spreads, and sports in general– if not then you may want to bring yourself up to speed elsewhere (though feel free to keep this tab open and come back).

Essentially, most sportsbooks in the US charge a 10% commission on winning bets (known as “juice”). In other words, you need to bet $110 to profit $100. This effectively works out to a ~4.5% house edge on sports bets.1 Moneyline bets are generally priced similarly, and you can run them in online calculators to see the implied house edge. This also means that you need to win 52.4% of your bets to break even betting on point spreads at -110.

Our first line of attack here is that there isn’t one sportsbook that sets all the lines for the market– they all have their own opinions. There are tons of apps and websites that publish the lines that every major sportsbook is currently offering. This lets you always get the best price for your bets. Does this take some extra work? Yes. But you can seriously whittle into the sportsbooks’ advantage this way. For example, this is a selection of baseball games for the day I wrote this and the odds that each major sportsbook is offering.

Source: Action Network

For example, if you like the Astros they’re -150 at BetMGM and -152 BetRivers, but only -140 on Caesars (betting 140 to win 100). If you’re in a state where you have access to all of these books, it’s an easy proposition to bet the Astros at Caesars for the best price. Conversely, if you like the Red Sox, you’d want to bet them at BetRivers, and you’d make $12 more than you would at Ceasars. By price shopping, my calculations show that we’ve cut the edge from 4.5% to a much more manageable 1.8%. If you’re able to do this systematically, the money quickly adds up. Also, since sportsbooks tend to pay hefty bonuses for signing up, you’re profiting from signup bonuses and not giving anything back if you’re good at betting. Also, there are actually arbitrage services like Oddsjam that find where sportsbooks have negative profit margins, allowing you to go out and systematically bet them.

We can also apply this same logic to point spreads. By using a tool known as a push chart, we can see that a half-point difference in point spread is worth anywhere from 1 to 7%. A more user-friendly way to express this is to plug numbers into a half-point calculator and see what the difference is. And if we’re really ambitious, we can compare moneylines to point spreads at different books using a linear regression to get the absolute best price. For example, some books have the Kansas City Chiefs at -3 vs. Baltimore for Week 1, but others have them at -2.5. We can apply the same tactics here and find the best line with the half-point converter, but a more clever way to do this is to run a linear regression to see what the money line should be and then compare those prices too.

The regression says that a fair money line at -2.5 is -144/+119 and at -3 it should be -165/+136. Some books have the Chiefs around -145, which is clearly your best bet if you like them. If you’re taking the Chiefs at -2.5 on the point spread, the books are pricing it at -120 instead of the normal -110, so taking the money line instead sidesteps this issue of paying double commission. And if you like Baltimore, I think your best move is also to take the money line on them at another book, for example, if you shop around some books are offering +135. I’d probably also bet Baltimore close to the game because I’d expect a lot of money to come in on Kansas City in the days and hours before the game and move the line.

This is also probably an instructive point because it shows something professional bettors know a lot about, which is exploitative pricing by sportsbooks. If most of the money is going to come in on Kansas City no matter where the book sets the line, the book will maximize its profit by shading the line against Kansas City and towards Baltimore. Smart bettors will win more money but it won’t matter because maximum bet sizes are limited and the public will bet more on Kansas City on average. Sportsbooks don’t set their lines to be actuarially perfect. They set their lines to maximize their profit. Instead of holding 4.5% on the KC game, I would venture a guess that by shading the line against KC the books will make 6-7% on average against the public. And you can exploit that.

Handicapping NFL and College Football

So now we know how to use basic strategy to get the best price on our bets. But in order to get a positive return on investment, we generally need to not only get the best price but also to get the best price when sportsbooks have mispriced a game in the first place. Fortunately for us, sportsbook pricing tends to fall into general patterns. Teams that are favored to win tend to get more point spread bets than underdogs (while the reverse is true for money lines). As such, favorites tend to cover the point spread at a bit less than 50% historically. At least for American football, bettors have a slight bias toward betting totals to go over, which is exploited by sportsbooks setting lines a little too high on average. Most importantly, popular teams tend to get more money bet on them than unpopular teams.

We can use this as a starting point for our handicapping. We don’t have to start from scratch. Fortunately for us, long-time Wall Street quant Aaron Brown designed a really great NFL model that he built in his spare time. Brown was high up at Morgan Stanley and later at AQR (one of the world’s largest hedge funds). Unlike many sports betting “experts”, Brown doesn’t need your money and isn’t selling picks, he designed the system and gave his picks away for free for 10+ years, hitting a bit over 55% historically against the spread.

If you’re interested in reading more about his model, his documentation is here.

NFL Demonstration Aaron Brown

88.5KB ∙ PDF file

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First, Brown designed a simple power index that suggests a line for each game. What we find is that the market is generally wrong when it deviates from what the “value” of each team should be. The power index worked roughly 52% of the time against the spread in the sample, not enough to beat the juice, but enough to roughly break even against sportsbooks. You don’t have to design your own power index though, you can get free power indices from providers like ESPN.

Here, the Chiefs are +5.0 on the power index, but Baltimore is +4.8. The way you use a power index is to take the difference to get what the point spread would be on a neutral field. Here, if the Chiefs were to play Baltimore on a neutral field, we would expect the Chiefs to be favored by 0.2 points. However, we always need to account for home-field advantage. The current line of thinking is that home field advantage is worth 2.5 points in the NFL and college football. I’d lean towards giving 3 points for a tough crowd or inclement weather, but only 2 points for a more corporate or fair-weather crowd. Chiefs tickets have gotten more expensive over the years and the crowds seem to have mellowed out, so I think we should assign a standard 2.5 points here. That gets us to an expected line of Chiefs -2.7, which is right in line with what Vegas thinks. The line will likely move closer to the game based on what talking heads on TV are saying, and that’s where we might find some value. I don’t see much of a bet here yet, I think Baltimore is about a breakeven proposition, whereas the Chiefs are about a -9% EV. If the line swings another half point or so I’d be inclined to take Baltimore based on the best price I could find, all else being equal.

You do need to be somewhat careful with power indexes. For example, if the spreads are large then they tend to overestimate how much the better team will win by. This is important in college football, where sometimes there are enormous spreads with big-name schools and weaker opponents. Key injuries also can come into play if your provider doesn’t update its model. But used correctly, power indexes hit more than 50% on average vs. the sportsbooks because people betting are irrational and sportsbooks price their lines to take advantage. In general, most moves in sportsbook pricing are noise.

The second part of Brown’s model is that turnovers are fairly random, at least when the level of competition is high. Betting on teams that have experienced turnovers in previous games tends to be +EV, while teams that have avoided turnovers in their previous few games are often getting lucky and aren’t as good as they look. The third part of his model deals with mean reversion– teams that haven’t covered the point spread much so far in the year tend to catch up, while teams that have been hot tend to fall back.

It may sound silly, but combining these 5 factors (power index, home turnover, away turnover, home ATS record, and away ATS record) went 1004-814, for a 55.2% win rate since 1983. I doubt that this specific model is the absolute best out there, but it shows that you can handicap sports and make money. It’s not a get-rich-quick scheme– your ROI on each bet would have been around 5.9%, but it adds up over time, and you can scale up your bets after you continually win. Brown also provided a spreadsheet that you can use to make your own model, which you can download below. You’d need to add your own data though.

Nfl System 2019 Week 21 (2)

1.18MB ∙ XLSX file

Download

Download

For NFL week 1, I’d just bet off of line shopping and power indexes, and then you can add turnovers and covers to your methodology the following week.

Bottom Line

It’s possible to make money betting on NFL and college football, and on other sports as well. It’s not really all that hard to make a few hundred dollars per month betting with a few minutes per week of work– if you know what you’re doing. Sports betting isn’t for everyone, but if you are the kind of person who is disciplined in other aspects of your life, it can be a nice tool to have in your arsenal.

Did you enjoy this article? If there is good feedback on this article, I'm happy to share a part 2 covering my most profitable NFL betting strategy, known as the Wong Teaser. Wong teasers have a higher profit margin than standard NFL/college handicapping and there’s a fun Reddit group devoted to betting them.

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Recent estimates show that Americans collectively have around $70 billion in unclaimed property. State law typically requires unclaimed property to be held for its rightful owner, sometimes for decades. The average claim is about $2,000, but this obscures the fact that the claims range from a few cents in value at the low end to millions of dollars at the high end. The amount of money is often surprising– in some cases, interest has been compounding on the funds for decades. Common sources of unclaimed property include abandoned bank accounts, uncashed money orders, insurance overpayments, payroll checks, gift cards, dividends, and mineral interests.

Tens of millions of Americans have unclaimed property. There is a very useful website named missingmoney.com, run by a collection of U.S. and Canadian states/provinces. The website serves as a sort of master list of unclaimed property in North America. Just today, I put in a claim for $50 on a long-lost expired gift card, and the state of Missouri is now mailing me a check.

I promise this isn’t any kind of scam. I’ve told skeptical friends and neighbors about this. They’ve put in claims, and to their shock, the checks come in the mail not long after, and they clear. In my experience, most people over 40 that I’ve helped with this have had at least $100 that’s easily claimed. And if you or your family has or had a business or significant investments, then the amounts tend to go up from there. My family has recovered tens of thousands of dollars worth of unclaimed property over the years.

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How To Find Unclaimed Property

1. Go to missingmoney.com.

2. Type in your first and last name in the search function.

Source: Missingmoney.com

3. Sift through to match the list of unclaimed property with property that corresponds with cities and/or addresses you’ve lived. For example, this is the $50 in expired gift card money I scored today.

Source: Missingmoney.com

4. Once you’ve identified property that belongs to you, you generally have to go to the corresponding state Treasurer’s website to file a claim, although sometimes you can file a claim directly on the missingmoney website. If your social security number and other info matches the state’s records, that’s usually all you need to do. They’ll simply mail you a check and you cash it.

5. A substantial portion of missing money is decades old, and you’ll often be entitled to missing money as an heir as well. To maximize the amount of money you can make, you’ll want to search for your current name, your maiden name if you have one, and for the names of deceased relatives. These claims are somewhat more complicated as you’ll often have to send in proof of marriage or death certificates, but older claims can often be for far more money as well. It may be a bit daunting at first, but it’s really not that hard. Your hourly return on the time you spend on this will almost always be over $50 per hour, and usually over $100 per hour as well. If you find money for your living relatives, the states won’t give it to you directly, but you can tell them to file claims as well, and probably at least demand a bottle of wine out of it if the money is enough!

Bottom Line

That’s really all there is to it. As always, I have nothing to sell you, and I hope you find this useful. Go forth and find your long-lost money!

I titled my first-ever article on Substack “The Tyranny of Commuting,” using simple math to show that most workers underestimate the true cost of commuting. A common theme in economics is that people tend to understand explicit benefits and costs but don’t tend to understand implicit ones. To this point, daycare is a prime example of an implicit cost. If you have one or more kids, someone is morally and legally responsible for taking care of them while you work. And even if your kids are school-age, kids generally get summer and holidays off and the school day almost universally ends earlier than the typical workday.

A few friends were telling me about their childcare dilemmas, so I pulled data from the U.S. Department of Labor from hundreds of counties on earnings and childcare costs. After sifting through the data, what I can tell you is that the childcare situation in America is an absolute dumpster fire. In particular, daycare costs have risen much faster than women’s earnings over the past 20-25 years. At the same time, government subsidies for childcare have decreased when adjusted for inflation.

The numbers are a bit shocking. For example, in San Diego County, California, women’s median earnings were $30,766 for 2023, while infant daycare for one child cost a median of $20,097. In my county in Texas (Montgomery), women earned $30,414, while daycare cost $10,751. In Manhattan, the median woman made $52,940, while daycare cost an average of $24,304. In every county I looked at, males earned a lot more on average, although the size of the gap is much bigger in Texas and California than it is for Manhattan (to this point, women in Manhattan make more than men in San Diego).

One thing that I think people need to understand is that their salary is simply the revenue that they bring in, and things like commuting costs, taxes, and daycare need to be subtracted to figure out what their real net income is. You could even make the argument that things like dry cleaning should be counted against your personal P/L if you work and your employer isn’t picking up the tab.

People are notorious for not understanding implicit costs. For example, Uber drivers see the revenue that they get by picking up rides but generally don’t fully take into account the costs of gas, maintenance, and insurance. Before Uber, the taxi industry was notorious for paying effectively under minimum wage (for example, consider the 2000s taxi medallion bubble in New York City– immigrants were sold the idea of the American dream by lenders financing outrageous purchase prices at high interest rates. It didn’t work out for them, and even if Uber hadn’t been founded I think their purchases were irrational based on what they could expect to earn.

To these points, I made a spreadsheet that can help you work through whether you come out ahead financially by working or staying home with children.

On the revenue side, we have two main sources of inflows.

1. Gross salary.

2. The federal childcare tax credit (generally worth $600 to $1200).

On the cost side, we have four sources of costs.

1. Commuting costs (using the current IRS figure of 67 cents per mile).1

2. Taxes (using the couple’s marginal income tax rate). This especially comes into play when one spouse earns a lot more than the other. If your spouse is a high earner, in the US you’ll generally be taxed as one also, even if you’re not a high earner yourself.

3. Daycare costs, using county averages or specific quotes.

4. Miscellaneous costs. These can arise due to unexpected expenses from daycare. I would budget something for this line item, especially considering that kids seem to get sick much more often at daycare. Another example of a miscellaneous expense might be for something like dry cleaning if your work requires it.

You can probably see where I’m going with this, but the calculation on whether you’re better off having a spouse stay home is more complex than gross salary vs. daycare cost. There are also implicit costs like commuting, taxes, and miscellaneous costs.

Here’s a link to my spreadsheet. It’s 100% free with no restrictions on using it. You’re welcome to use this to help make decisions. It’s not the prettiest spreadsheet–I put this together in an afternoon but I knew where to get the data and have years of experience from studying applied economics.

Daycare True Cost Spreadsheet

10.8KB ∙ XLSX file

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Download

With spreadsheet in hand, we can play with a few different scenarios. I’ll do 3 to illustrate.

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How To Lose Money By Working in Texas

Let’s take a look at daycare costs for the median couple in my county in Texas (Montgomery County).

The DoL numbers were for 2023, so I’ll round up in some cases and pull fresher data where possible.

Husband Income $58,000

Wife Income $32,000

2 kids under 4 years old.

We have two main sources of inflows here, salary and the childcare tax credit (it’s not nothing but it’s kind of a joke at $1,200 per year). For outflows, we have daycare costs, federal income tax, FICA, commuting costs for a 17.5-mile commute, and $1,000 in miscellaneous expenses. I made a line item to give a 15% discount for the second child. In the end, the net income for the woman is -$809.

It’s not rocket science to understand that earning $32,000 and having two kids in daycare is unprofitable. What I think is less intuitive is that the naive expectation would be that you’re coming out slightly ahead when in reality you’re losing money to work. I didn’t cherry-pick these numbers at all, I just pulled median data from my county.

That’s the problem, but what’s the solution? If you or your spouse can earn even a few hundred per month from home while watching the kids, then you’re coming out ahead financially, even if it seems like you’re making 10x more money at a job. $1,000 or more per month from home is generally a slam dunk. Also, there are other ways to bring your overhead down– for example, it’s much easier to cook healthy meals without a 9-5 job and commute.

California Dreaming?

Here I will cherry-pick the numbers a bit, but not in the way you think. I’ll rerun the numbers with a high-earning couple in a high-tax, high-cost state to illustrate how taxes, commuting, and daycare costs can surprise you. California is known for being high in all three areas. I added in calculations for state income tax and upped the commute to 20 miles each way.2

Husband income: $190,000

Wife income: $70,000

2 kids under 4 years old.

A few things have changed here. First, one spouse has a much higher income, so the tax brackets are different. In fact, I calculated a ~41% marginal income tax rate for this couple (24% federal income tax, 7.65% FICA, and 9.3% to California). The wife makes a lot more, but it’s offset by the higher cost of daycare and tax rate. Interestingly, the wife is bringing in $70,000 in revenue, but that’s more than offset by the $37,000 or so in daycare costs, $6,700 in commuting costs, $28,700 in taxes, and $1,000 in miscellaneous expenses.

The final net income here is actually worse, with our San Diego wife earning minus-$2,400 by working. This is due to a higher tax rate and cost of living/childcare. With these parameters, $70,000 in salary becomes a net negative to your final bottom line. While it’s still a net-win to have one kid in daycare and work, once you get to two you’re losing money on average by working.

(Not Much) Sex In The City

Earlier, I noted that women in Manhattan make more than men in San Diego. Manhattan is known for having a lot of high-earning women, so my intuition would be that daycare might make more sense there. Let’s dig into the numbers to see. Here we’ll make the husband’s income the same but increase the wife’s income to $110,000.

Husband income: $190,000

Wife income: $110,000

2 kids under 4.

Here the numbers start to make sense. Here, total inflows for the wife are about $111,200, while on the expense side, I hard-coded a lower commuting cost of $1,512 for the wife. Here, I’m assuming that both spouses can either walk or take the subway to work. I budgeted roughly $45,000 for daycare for 2 kids– though some people certainly pay more.

Here we have a positive net income of about $17,400. It’s still closer than I would have thought. The idea here is that childcare costs likely go down over time, while both partner’s careers likely get better, so netting less for a few years might be okay. That’s something that the data tells us happens in Manhattan, you can see it in the income data. But it requires a fairly high level of income for it to make sense for both spouses to work.

Other Considerations

The data doesn’t really care about the culture wars around families and gender roles. While it’s less true in big cities, a strong majority of high earners nationwide are men. Of course, in specific situations where the wife is a high earner and the husband is a low earner, it would make sense for the man to stay home and take care of the kids. This only works if the baby is old enough to be left home alone with dad.

Another concern I see is the fear of having a resume gap. I think people irrationally fear resume gaps. Anecdotally, conscientiousness (staying on top of stuff) correlates more with business success than anything else. It’s not worth it to lose money at a W-2 when any money brought in online would positively impact net income. If you’re smart enough to understand this you’re smart enough to be useful to an employer in the future. The San Diego example is probably the most instructive here because it’s so unintuitive that a $70,000 salary isn’t enough to cover a $37,000 annual daycare bill.

A more nuanced argument is that by having both spouses work, they’re able to earn higher social security benefits in the future. This is sometimes true, but since spouses are entitled to 50% of their spouse’s social security, common scenarios like the Texas and California couples actually mean that there may be no additional benefit to the lower-earning spouse working at all. In this case, Social Security on the lower-earning spouse is a pure tax rather than an entitlement. Additionally, having one spouse not work can sometimes unlock bigger subsidies for healthcare, and you can use stuff like spousal IRAs as tax shelters even if one spouse stays home.

Key Takeaways

1. Daycare is horrendously expensive– to the point where when you fully count for the implicit costs of working, many families are actually losing money by having both spouses work.

2. Understanding how and why this is will help you improve your bottom-line net income. If either you or your spouse is able to stay home and earn money online, you’re no longer losing money to commuting costs and daycare.

3. Understanding implicit costs can help you make better decisions more broadly, in both your business and personal life.

A small minority of consumers are fanatical about earning cash back, while many leave thousands of dollars per year on the table. For consumers with $100,000 per year in income, a 25% tax rate, and 25% of gross income spent on housing, that leaves roughly $50,000 in spendable income. Those who know the basics of how to play the cash-back game properly can earn $1,000 to $1,250 per year in cash-back here compared with someone who is simply using a debit card.

$1,000 per year may not sound like a lot, and it isn’t. But if setting up better credit cards takes you only a few hours, then you’re profiting over $100 per hour based on your time spent. Also, there are different levers you can push to increase your earnings.

1. You can take advantage of signup bonuses of anywhere from $200 to $800 for signing up for a new card, and swing your spending from company to company to maximize the amount of bonuses you get. Also, having multiple credit cards gives you more outs to maximize your cash back if you know where to allocate certain categories of spending. Would you move your checking account for $300? If it takes you 3 hours to switch your vendors, then that’s $100 per hour again, which is probably worth your time.

2. You can take advantage of 0% APR situations and float your spending accordingly. Gradually putting $10,000 in spending on a card while putting the money you would use to pay off the card in a Vanguard money market fund can profit you about $500 in interest over a 12-18 month period. Credit cards also have a key benefit which is allowing you to float expenses for 30-60 days. By putting your hypothetical $4,000 per month expenses on a card, you get to keep $4,000 in a money market that you would have to part with otherwise, for another $200 per year in profit. (Update March 2025– while this is a valid strategy, running a high credit utilization can make it hard to get new credit, so your mileage may vary on this tactic).

3. Building on the second point, you can arrange your cash and accounts payable to earn as much interest as possible for you while ensuring you pay as little as possible in interest on the other side. This isn’t rocket science, but if you have $50,000 in cash you can earn about $2,700 per year in interest at Vanguard, whereas most megabanks are paying 0%.

4. By applying for credit when you don’t need it, you build a cushion that you can rely on if you lose your job or suffer an emergency. Credit card interest rates are quite punitive, but they work well for short-term borrowing needs.

By pulling the right levers here, playing the cashback game goes from a roughly $1,000 per year opportunity to a $4,000-$5,000 per year opportunity, with a total return on time of over $100 per hour. If you think this isn’t worth your time because you make too much money, consider that your higher level of financial resources means that playing cashback is even more important. Earning $250,000 to $500,000 per year with regular business travel can skyrocket your earnings from clever planning to hundreds of dollars per hour, mostly tax-free.

Step 1: Target Credit Cards For Bonuses

If you’re reading this, you likely have decent credit and some earnings. Credit card companies spend billions on marketing each year, and you should aim to get a piece. I’m assuming you’re American because most of my readers are, but I also have some notes for UK citizens as well. Some people don’t care about cashback and prefer to use their AmEx platinum cards as status symbols, but the cash back on those is quite poor and the fees are quite high. Let them look flashy while you get money in your pocket!

For an example of pocketing some bonuses, the Chase Sapphire Preferred is a popular card that offers a healthy bonus. Right now they’re offering a $600 bonus on it. If you’re interested, here’s a signup link that compensates me as well as you. You don’t have to limit yourself to one card either with Chase, they also have a Chase Freedom Card that’ll pay you $200 to sign up. This is pretty typical– sign up for a couple of credit cards, clear their conditions (usually by spending $1,000 to $4,000 on the card over the course of a few months), and profit. The higher bonus cards generally carry an annual fee of about $100. But down the road, you can always close the account if it’s not profiting you.

You can start to see how this becomes more profitable when you add different companies to the mix. If you’re at BofA you can get a lot of money by moving to Chase, and if you’re at Chase you can get a lot of money by moving to BofA. While you’re at it, why not take some free money from American Express (if you sign up here you and I both get paid as well). Also, if you fly a lot, holding the credit card of your home hub airline is generally advantageous and can score you several free flights for signing up.

You won’t want to go too crazy applying for new cards, but if you do this right you can sign up for 2-3 credit cards in a month and 5-6 in a year, pocketing bonuses each time. This also will get you 0% APR deals where you can float expenses while keeping your money in a money market. I’m intimately familiar with the US credit card system but don’t know much about other countries, although anecdotally I know people in the UK who claim to be able to earn decent amounts of cash back.

Step 2: Build Your Banking Infrastructure

Step 1 focused on getting “outs” for spending. This allows you to build your credit infrastructure. At the same time, to maximize the amount of money you can make off this, you need to build your banking infrastructure as well.

1. Your first goal here is similar, and it’s to pocket bonuses by moving your checking account. For example, Chase and BofA also compete for checking, and both generally offer bonuses. I made $300 from this for about 3 hours of work as well.

2. Your second goal is to find the highest-paying interest-bearing account possible. Economic theory says that banks are middlemen, so your best bet is likely to be a money market fund. Vanguard is the best for this, paying US customers 5.5% currently in money market with no effort required. When you need money, you can redeem it and get it in your checking account within about 3 days. Because you’re getting 30-60 days on your credit cards (or 12-18 months on 0% APR offers), this allows you to create a nice profit engine where you owe money at 0% interest and hold cash earning 5.5%. If credit card bonuses and credit card cashback are your offense, this is your defense by allowing you to hold as much cash as possible earning interest, while delaying paying your creditors as long as possible. I do this each month, earning a profit between the 0% I pay on promo offers and the 5.5% I earn in Vanguard. All you have to do is make the minimum payments and you’re golden. Vanguard offers a US money market fund, and also a UK one. I don’t know about Canada or Australia off the top of my head, but I believe they offer a similar deal. It effectively functions like a savings account, but pays much more interest. I know in Continental Europe it’s much harder to properly earn money in money market funds, there the banks are profiting hugely by keeping interest rates low for depositors while earning increasingly elevated levels of interest.

3. Another consideration for frequent travelers is to see if you need a debit card that waives ATM fees domestically and internationally. US-based Charles Schwab has the best account for this, which has saved me a ton of money in foreign transaction fees on cash I withdraw abroad.

Sample Action Plan

1. Sign up for the Chase Sapphire, and pocket $600 in bonus minus the $95 annual fee for a $505 profit. If you’re already at Chase, consider BofA’s suite of cards.

2. Sign up for the Chase Freedom Card and the AmEx everyday cash cards, pocketing $200 each and the option to float your spending.

3. Switch your checking account and make $300.

4. Switch your 0% savings account to a Vanguard account and make $2,700 per year on $50,000 in savings.

5. Float $20,000 in spending on 0% APR cards over the next year (you can push this as far as you want, if at any point you want to pay it off you have the cash). I’ll assume you don’t do it all right away so I’ll assume an average balance of $9,000 for the year and a profit of $495.

6. Sign up for an airline card and get 3 free round-trip flights worth about $700 after clearing the bonus.

Total profit–$5,100* in one year.

Total time–perhaps 15 hours of time spent setting up accounts and managing them over the year.

Profit per hour, $340.

*This ignores the effect of increased levels of cash back, which if you assume you’re earning an average of roughly 1.5% before and 2.4% after, then you’re earning another $450 in passive profit on $50,000 in spending. The interest is taxable here, but the cashback is generally tax-free under US tax law. So you might need to earn about $7,000 or so at your job to get the same amount of money as playing some cash-back games.

Bottom Line

You might look at some of this and like some of the ideas but think others are too much effort. And that’s okay! You don’t need to get every piece of turkey off the bone. Do as much as you feel comfortable with. But being smart about my credit and banking infrastructure has supported my ability to travel the world as a business owner in my 20s, and it can help you achieve your goals too, with hourly rates of profit that are very high compared to typical salaries. The nice thing about doing stuff like this is that it actually responds to savvy and hard work, which was not my experience briefly working in Corporate America. Take the money where you can get it!

Moving to a new place during summer before the school year starts is a time-honored tradition, and if you live in my home state of Texas, chances are good that you’ve had the “pleasure” of moving in triple-digit summer heat at least once in your life. Roughly 10% of Americans move in any given year, and roughly 80% of those who do end up doing so between April 1st and October 1st.

Markets are set by supply and demand. Since demand for moving is highest in the summer, this is reflected in the cost of movers, rent, and even in home prices. Sometimes you don’t have a choice of when to move, for example, if you’re going to college in a new place or are accepting a job offer in a new city. However, if you can be flexible, you can use the constraints of the rest of the market to save thousands of dollars per year.

The Costs Of Movers Is Seasonal

Due to the supply and demand dynamics, most sources I’ve checked indicate that movers cost about 20-30% less in the fall and winter than they do during peak season. I don’t have amazing data sources on this, but multiple people have told me this, and internet sources have indicated the same. Additionally, avoiding moving on Friday seems to save some money as well. The typical out-of-state move costs about $5,000, so moving off-season could save you somewhere around $1,000 to $1,500 on average.

Percentage of moves by month

Source: Nexus Transport

The Price of Rent Is Seasonal

Apartment occupancy drops in the winter of each year. It surged during the pandemic because of eviction moratoriums and stimulus, but now it’s tanking as high prices cause demand destruction. This is working to bring prices back into balance.

Accordingly, rent prices fluctuate seasonally as well. In northern areas with colder weather, average rent tends to be about 4-5% cheaper if you start your lease term in winter, whereas in sunbelt states the effect is milder, about 2-3%. This is important because most leases are from 12-18 months, so getting every month of your lease cheaper adds up to $1,000 or more per year for many tenants. It also helps give you leverage to avoid big rent increases, as landlords are reluctant to lose a tenant when demand is at its lowest, or their place could be vacant until summer.

Source: RentHop

The Housing Market Is Also Seasonal

Just as demand for movers and rent is seasonal, so too is demand for mortgages and single-family houses for sale.

Mortgages are about 10-20 basis points cheaper in winter than in summer. On a $500,000 mortgage, that’s about $500 to $1,000 cheaper per year.

Source: Haus

Listing prices are lower in winter as well, although inventory rises in the spring, so sometimes you can get a better deal by waiting until March or April to buy. Here’s an example I pulled off Google from a random market, Louisville, Kentucky.

Source: Tre Pryor

This pattern holds across markets but my research has found that it is most pronounced in northern states. Prices generally peak right before school starts in late August or early September, bottom out in February or March, and start to rapidly rise in May. The chaos of the pandemic threw a wrench in some of these long-held patterns, but by and large, they’re now returning.

Why is this the case? Again, kids going to college are a big part of this, but it’s also so common for families to avoid moving their kids during the school year to the point where it literally distorts the supply and demand of the housing market. In some ways, it’s not so different than everyone taking vacations during summer or on Christmas break. However, this is worse because moving tends to create structurally higher recurring expenses like higher rent and mortgage payments, so unless you absolutely have to move in the summer, it’s best to avoid it.

Bottom Line

Moving is most expensive in summer and cheapest in winter and early spring. Moreover, avoiding peak moving season can reduce your stress, help you avoid bidding wars, and structurally lower your recurring expenses of rent and mortgages. If you’re single and not in school moving during the off-season is a no-brainer. People are afraid to move their kids during the school year, but if you’re brave, then you might find that your kids will be just fine with the transition, while your whole family can benefit from the increased flexibility offered by getting a better value for your money.

In the world of finance, things are often not quite what they seem. One of my goals in writing this is to help readers challenge long-held assumptions with data and logic. What you do from there is up to you, but I like to frame questions to readers in ways that make them think critically about the world.

Why Would You Have A Mortgage But Invest In Bonds?

The average 30-year fixed mortgage hit 6% last month. While there’s been a bit of relief lately with rates pulling back, that’s a fairly high return for the bank and a drain on you. At the same time, financial orthodoxy suggests investors invest a large portion of their portfolio in bonds. Commonly recommended allocations are for an asset allocation of 60-80% stocks and 20-40% bonds. But the 10-year Treasury yields a bit less than 3% as of my writing this. This means many investors are effectively borrowing some money at close to 6% to invest it at close to 3%.

This creates several contradictions:

• Why not pay down some of your mortgage instead of investing in bonds? You’ll save interest on the principal you pay. As a bonus, the cash flow you save by paying down your mortgage is tax-free.1

• The risk-free rate is different for someone who has a mortgage than for someone who is debt free. If you owe $5,000 from your vacation last winter at 18% interest, then your risk-free rate is 18%!

• From a balance sheet perspective, under most circumstances, taking out a mortgage is roughly identical to taking out a margin loan (I’ll link to some interesting calculations here). The main difference is the mortgage is fixed for 30 years, can’t be called, but generally costs you 300 basis points more or so in annual interest.

The main advantage of the 30-year fixed mortgage is that no one can call your mortgage if the value of the collateral drops. You pay for this privilege in the form of a higher interest rate though. Of course, one reason to have a mortgage and invest in bonds is that the mortgage is fixed with an option to refinance, so if rates fall, then you can refinance the mortgage, but if rates rise, then you’re locked in. But taking advantage of this does not require you to invest in bonds on the other end. Bonds can help provide liquidity– if your net worth were $500,000 for example and your house is worth $500,000, then you might rather have an investment portfolio of $300,000 and a $300,000 mortgage than $0 in investments but a paid-off house, even if you have some bonds in there.

The weirdness here isn’t owning equities in the hopes of beating your mortgage rate over the long run (and possibly refinancing down the road if rates fall), but rather how an asset allocation includes bonds when they pay less than your mortgage. On one hand, mortgages are a relatively expensive but flexible way to borrow money. On the other hand, bonds are a safe investment that pays less than a mortgage costs. They don’t seem to work too well together.

Let’s give an example: Let’s say you’re moving to a new city and buying a million-dollar home. You sold your old house and have a total net worth of $1.5 million. The common way to do this would be to put 25% down, have $1.25 million in the market (60 stocks/40 bonds), and have a mortgage of $750,000. Your mortgage rate is 5.5%, which is costing you $41,250 in annual interest.2 At the same time, you’re carrying $500,000 in bonds paying you 3% annually. You’re collecting $15,000 in interest from that $500,000 but paying out $27,500 on your mortgage. Also, your mortgage company is getting nice fees for underwriting you, the government is getting a fat new fee that they’re imposing on home purchases to try to slow the market down, and if you have your money with a wealth manager or in mutual funds they’re getting fees on it as well.

I wouldn’t do this. I’d pay cash for the million-dollar home and avoid having the mortgage payment, or if you want to lever up, invest the money in something that you’re pretty confident can return higher than 5.5% annually (this is not super easy to do by the way). And if you don’t have the money upfront to pay cash for the house– for example, if much of your money is tied up in retirement accounts, then you can still apply this. Instead of 60/40 or 80/20, you can allocate the bond portion to paying down your mortgage, and when you get new money to invest you can allocate it along the same lines. For example, if you get a $50,000 stock bonus from working in tech or finance, you could take $40,000 and put it in stocks and use $10,000 to pay mortgage principal instead of going 80% stocks and 20% bonds with the new money. The expected value is thus better than putting some of the money in bonds. At the very least, finance theory would tell you to try to match the duration of your assets with the duration of your liabilities, helping close this yield gap.

This brings up another point here. There’s a really interesting conflict of interest connected to this to be aware of for those with wealth managers. Financial advisors and wealth management companies are almost always paid in some way connected to their assets under management. The more assets you have under management with them, the more they earn. Therefore, this setup where you have more assets but also more liabilities serves to benefit the financial industry (both your mortgage company on the liability side and your bank/broker/financial advisor on the asset side). However, doing the expected value on pen and paper often favors eliminating liabilities instead! If you’re paying 100 basis points (again, not tax-deductible) to a wealth manager to try to beat a mortgage costing you 550 basis points a year, you’ve got a pretty high bar to clear.

Key Takeaways

• Mortgages are a lot more expensive than they used to be, highlighting an old puzzle in finance about simultaneously holding a mortgage while owning bonds.

• While it’s possible to cherry-pick scenarios where you would benefit from borrowing with a mortgage while holding a substantial bond allocation, this will rarely pencil in reality when accounting for investment returns, taxes, and fees. 3

• Borrowing money fixed for 30 years with an option to refinance if rates drop can be attractive, but only if you use the money to invest in things that pay a higher return than the rate you’re paying in interest and have a lot of patience, luck, or both.

• Consider redefining your asset allocation to pay down your mortgage with existing and future money and come out ahead of using that money to invest in bonds. Financial advisors tend to not recommend this because it would cost them fees.

• Having fewer liabilities can provide you with greater financial flexibility and simplicity than focusing on increasing assets without regard for your overall balance sheet.

Do you agree? Feel free to share your thoughts in the comment section.

“The thing is, Bob, it’s not that I’m lazy, it’s that I just don’t care.” 

― Peter Gibbons, Office Space (1999)

Commuting to work sucks. And unless you hit the coworker lottery, chances are you’re spending money to get to somewhere you don’t want to be anyway. However, since the internet era, you can often choose a job that doesn’t require you to commute to an office. When you do the math, you might be surprised at how the numbers come out!

How Much Does Commuting Cost?

If you don’t know, you’re not alone. The mainstream media prefers to focus on visible costs like avocado toast and Hulu subscriptions, but hidden costs like commuting are a much bigger deal in terms of your overall spending. Estimates vary, but the average American commutes about 16 miles to work each way, and the overwhelming majority do so by car.

You can make a ballpark estimate of your per-mile costs pretty easily– the IRS hires consulting firms to create a standard mileage cost estimate, which can be cross-checked with sources like AAA. The standard mileage deduction currently sits at 62.5 cents per mile as of 2022. My research has indicated this number is fair, although commuting costs may be a bit lower for sedan drivers and higher for SUVs and trucks.

Next, we can assume you work Monday-Friday on non-holidays. This generally adds up to 252 days per year. 1 Therefore, the total cost of the average commute is (16 x 2) *(0.625), or ~$20 per day. For the year, this will cost you $5,040. Finally, commuting is not tax-deductible either for income tax purposes or FICA, so assuming a 25% federal, state, and local tax rate means the average commute costs $6,720 of pretax income. That’s a lot of avocado toast, and this is without even considering the time cost of commuting!

These numbers can get crazier, in large part because they’re poorly understood. Imagine you’re a young couple who finds a house 30 miles outside of town. Property has skyrocketed in value in many areas, so it’s quite common for people to look further out, even if they’re commuting to a downtown area every day. If both spouses commute 30 miles each way 252 days per year, the estimated cost is $18,900, which eats up an astounding $25,200 in pre-tax income, assuming a 25% combined tax rate. On the other hand, living close to work literally gives you the equivalent of a tax-free yield in cost savings. For a couple earning $100,000 combined, this is an easy and hidden trap to fall into–costing an astounding 25% of their after-tax household income. The cost of a dual-income household commuting completely swamps more popular ways to save money that get far more attention. Far from being cheap, buying a far-out house is a value trap that saddles you with steep ongoing expenses. The experience of the 2008 housing bubble showed that these were some of the hardest hit areas in the crash (i.e. the Inland Empire of LA, and inland areas of South Florida saw price declines of 60-70%).

If you push the hypothetical further, it’s actually possible to lose money at your job! The most common way this happens is a long commute for a minimum wage job. The second most common way this happens is when both spouses work and there’s no real benefit to the lower-earning spouse working after accounting for costs like taxes, daycare, and commuting.2

Working From Home Saves A Lot Of Money

If that same couple from above both worked from home, then they’re putting an extra $18,900 annually in their pocket after taxes. Not everyone can or should work from home–the pandemic made this clear. But if you’re part of the knowledge economy, there’s an excellent chance you will have the chance to choose between a job that allows you to work from home and one that doesn’t. And the way to figure out what is best is to run the numbers. And even if you work in a traditional job that requires you to commute to the office, this will help you determine whether living closer or further from work is the best move.

I’ve attached a free spreadsheet for your convenience to help you decide what maximizes your “net income.” By treating your job like a business and treating commuting costs, housing, and state/local taxes as your expenses, it’s much easier to get clarity on where to work, where to live, and so on.

Relocation Spreadsheet

10.4KB ∙ XLSX file

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The ability to work from home, combined with knowledge of cost of living differences and state & local tax differences creates clear opportunities to build wealth.

There are different ways to approach this.

One way to approach this is to move to a lower-cost-of-living area if you’re not required to commute (like my home state of Texas, as we have no state income tax). You can even push this further by considering working abroad as many “digital nomads” have done. I will note that the cost of living in Texas has risen dramatically to the point where you can look on Zillow and see that houses in nice areas of Dallas are more expensive than houses in nice NYC suburbs 3. Runaway property tax increases and rising energy costs will soak up income similarly to commuting, so you need to look at the full picture here. These are all pros and cons, but you can effectively boil these down to a spreadsheet to compare the value of different job opportunities and locations.

Another way of thinking about this is that property in coastal areas of places like California is more expensive, but potentially a better value. When you dig into hidden commuting costs, worse weather & A/C bills, worse air quality inland, and desirability for resale–the obvious implication is that properties that are more expensive are likely better than they appear at first glance. Spreadsheets like mine can’t tell you where you’ll be happiest, but what they’re good at is telling you where the value is and where potential value traps are.

Key Takeaways

• Commuting is more expensive than you think and is rarely tax-deductible.

• Living close to work essentially gives you a tax-free yield.

• Working remotely saves a lot of money, and the amount it saves can be quantified, helping you make lifestyle choices like where to live and work.

• Think about your job like a business, considering taxes, commuting costs, and housing–what’s left over is your net income. This will help you maximize what you keep.

• Doing business or working on the internet allows you to arbitrage some great opportunities between income and cost of living in the US or abroad, or alternately can free up money to live in more desirable areas.

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