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Minimizing True Cost

Fushimi Inari Shrine in Kyoto, Japan. One of the most beautiful places I’ve ever seen. So I went back. September, 2014.

When I tell people how much something I own costs, or that I just bought something new, they often give me shocked looks. In the past year I’ve purchased three laptops. I’ve also bought five or more lenses, five or six cameras, and a car that I later sold. What’s the deal. Am I really horrible with money? Am I going broke? No.

The true cost of something is completely unrelated to what you pay for it. This sounds like some terrible aphorism. It’s not, and I’m not going to try to convince you that money isn’t meaningful.

Here’s the trick: If you buy things that don’t depreciate, or buy things that you know you’ll use for a long time, then they sometimes don’t cost much more than buying cheap stuff. Often things are cheaper to rent than to buy, but often they’re cheaper to buy and resell than to rent. Here are some examples:

  • I could buy a $100 lens and put it on my camera and sell it in a year for $90 after eBay or Amazon fees. Or I could buy a $1,000 lens and sell it in a year for $900 after sales fees. This works because lenses rarely depreciate, and the difference in cost between the two lenses isn’t $900 — it’s $90. In fact earlier this year I bought a lens for $900 in Japan and sold it in New York for $1,100. From my experience a $1,000 lens is often worth it, but much over $1,000 lenses get too heavy to be useful.
  • I just bought a new laptop in Japan to try out. I’m now fairly sure that I’m not going to keep it. Why am I not concerned? Because although the laptop sells for $1,800 new in Japan, it only costs $1,550 after the discounts given to an American passport holder, and it sells similarly specced for $2,800 on Dynamism. I made the decision to buy the laptop after careful research. As I see it I basically bought a laptop with the option to make money on it if I don’t like it. I expect that after eBay fees and shipping I’ll earn maybe $200 on the transaction.
  • Film cameras are dirt cheap now, especially medium format ones. Good quality film cameras like a Hasselblad 500CM have leveled out at around $800-$1,000 and are probably never going to depreciate again. These cameras cost around $5,000 when they were new, and back then $5,000 behaved a lot more like $15,000 did today. They are wonderful machines. A Hasselblad feels amazing in your hands. So I bought a Hasselblad 500CM from Australia for about $800, shot a few dozen rolls of film through it, and sold it for $850 a few months later on eBay. In this deal I actually lost a bit of money — about $10 after eBay fees and shipping — but I got to shoot one of the best camera designs ever made for $10.
  • For years I paid close attention to the Mac Buyers Guide to see when Apple would release new hardware. I’d buy Apple hardware that I wanted as soon as it was released then resell it a few months before a new design came out. Apple hardware barely depreciates as the item you’re selling is still the current generation. For example I might buy a used iMac, use it for nine months, and resell it for a $50 loss. I used to do this frequently. My worst deal overall was buying a Thunderbolt display in 2011 for $850 and selling it, used, for $640 cash in 2014. I paid $210 minus lost interest to own a monitor for two years that actually still retails for $1,000 today. This is far less than you might think when you initially see the $1,000 sticker price on a new Apple screen.

Temple on Miyajima Island, Japan. April, 2014. A local cult built their headquarters directly across the water lining up with this temple to steal its energy.

My method for this is almost subconscious, but here’s how it works. First, I do careful research to find products that everyone knows about, that everyone loves, and that people will almost always want to buy. I try to find the classic designs in each category. You can generally find these by searching for “best X” where X is whatever you’re looking for — “best camera”, “best monitor” etc. Then I try to buy that classic design either used or at as low of a cost as possible. I try to resell it before any major events happen that would cause it to depreciate. If a new laptop or camera is rumored that might cause something in my collection to depreciate I’ll unload it as soon as I can for a reasonable price on eBay or Amazon.

Some technologies depreciate slowly, others depreciate quickly. Apple produts do well used because only one company makes them and a new model comes out at most once per year. Lots of people in the world want an Apple product and there will always be a deep market. No name or very obscure electronics won’t do nearly as well, and any time you buy something above the minimum cost you can find it for — like buying on the street at full retail price — you’ve lost that money forever.

A lot of people are lazy and don’t want to sell their stuff. This drives me nuts. Right now I’m running heavy on gear: three laptops, two cameras, and two phones. In a few weeks I’ll own one camera, one laptop, and one phone. I’ll go through the steps necessary to sell these things as soon as I can. If you just let these electronics rot and depreciate in your house they’ll someday be worth nothing, but if you sell them quickly it’s more like renting than owning.

One more thing: I would not recommend buying and reselling things as a way to make money. The risk is high and the earnings are unpredictable. But buying things to try them out and selling them if you don’t like them is a totally appropriate action. Your true cost of ownership isn’t what you paid for something — it’s what you paid minus what you get back after selling, plus lost interest. Compare that to the enjoyment and fulfillment you get out of something and decide if it’s worth it.

Lifestyle Deflation

St. Louis, Missouri.

Have you heard of “lifestyle inflation?” As your career progresses and you make more money it’s easy to adjust and spend all of that extra income. I’ve met people who make more than two hundred thousand dollars per year but don’t have enough savings to take a few weeks away from work. These people probably didn’t make two hundred thousand at their first job, they just allowed increases in income to raise their standard of living until it was uncomfortable to save.

Although it’s easy for lifestyle inflation to hit you it’s also easy to prevent. When I started my first job out of college I had $50 in my checking account and $500 in credit card debt. Today I’ve saved enough to travel around the world for a year or more. Most of that savings was by preventing lifestyle inflation.

For years whenever I got a raise or a bonus I put almost all of the extra money into savings. I was living on basically the same amount of money per month when I quit Facebook as I was during my first year of working at CarMax1. It was not painful as it sounds. I still bought all kinds of nice things for myself, took vacations, and spent money on friends and family. I just budgeted my money carefully and spent it on what brought me the most happiness per dollar. If you’re curious about this check out the book Your Money or Your Life to learn if you’re spending money in a way that makes you truly happy.

The upshot of lifestyle inflation being easy is that lifestyle deflation works the same way. It’s a little painful, but I’ve found that once something is gone I rarely miss it.

Before I left San Francisco I sold or gave away almost everything I owned. Today my possessions are just two big boxes of clothes and a thirteen pound backpack 2. Everything else is rented.

For me most things that are out of sight are out of mind. I’ll agonize over getting rid of something for a few days and then once it’s gone I just never think about it again. Sometimes I do miss something from my old apartment: when that happens I just remind myself that I can buy it again if I need it someday and then reflect on my newfound freedom to travel the world and do what I love for a year (or two?).


  1. Aside from cutting myself breaks for rent in San Francisco, US dollar inflation, and a few percentage points per year as a raise to myself. [return]
  2. I’m actually considering ditching another pair of socks and shirt from my pack to lighten the load. I know that as long as I own these I’ll think about them, but once they are gone I’ll probably never think about them again. [return]

How I Sold Everything Online

Update: If you want to follow along on my trip please sign up for travel updates. At most one email per week with writing, pictures, and no spam. Read the first update about leaving California.

Over the past three months I’ve sold almost everything I own: electronics, cameras, furniture, my car, and even some high end clothes. Soon I’ll own only a large duffel bag, which I’ll leave with my dad, and a 26 liter Tom Bihn backpack that I will use to travel around the world.

Other than the car I sold about $14,000 worth of possessions and got 78% of what I paid for them back even after Amazon, eBay and PayPal fees. Below are a few tips on how to sell your own stuff and get the most money for it.

Once you master selling things online you’ll feel comfortable buying anything you want, trying it out, and returning or selling it if it doesn’t meet your needs. I cycle through products constantly, my friends tease me about it, but I also effectively rented a $3,000 digital SLR and lens kit for 10 months for only $400. I love trying out different products without fear of commiting to them forever.

A tip that applies everywhere: Take multiple high quality pictures of your stuff in natural light. Describe it accurately and list all the flaws and scratches. The more in depth your description the more confidence the buyer has that you are an honest seller.

Craigslist

Will a lot of people near you be looking for it? Is it large and expensive? Sell it on Craigslist and you’ll save 10-15% in eBay and Amazon fees. I generally list things on Craigslist for 10% more than I think they are worth and lower the price by 5-10% every week until they sell. This takes a bit longer than a fire sale but lets me know that I’m getting the highest price I can.

Feel free to test the waters on Craigslist too. Unlike Amazon and eBay you have no commitment to sell, so list something at any price you want and gauge if the price is too high or low by the volume of emails you get.

People on Craigslist can be a pain. Ignore the dozen emails you’ll get offering to buy for half of asking price. Before a buyer comes over send them an email or call them and say “I just want to make sure you’re going to pay $100 for this so we don’t have to negotiate on the spot. I have a few others interested at $100 and don’t want to waste my time.”

Generally I’m totally upfront with Craigslist buyers that I’m running a dutch auction. ”$900 is too low, I’m asking $1,000 now and will be down to $900 in a few weeks and I’ll let you know. You can also come get it today for $1,000.” Treat these people with respect and follow up with them. I often sell to people who come with a firm cash offer about 10% below asking after a few weeks of trying to get more.

Amazon

If you’re selling something small and common, low in value, or something that no one is likely to be looking for on Craigslist first consider selling it on Amazon. Amazon lets you mail big boxes of books, electronics, camera gear, or almost anything else Amazon sells to a warehouse using the Fulfillment by Amazon (FBA) service. Amazon sells your items, ships them with Amazon Prime, and handles returns for roughly a 10% fee.

The big upshot with Amazon FBA is that people love two day Prime shipping. You can often charge 5-10% more than everyone else who isn’t using Prime and still sell your stuff promptly.

If I could sell everything through FBA I would because it’s so painless. Earlier this year I sent forty pounds of books, a Canon EOS 6D, five lenses, and a bunch of camera cases and straps to Amazon. Every few days now I get an email telling me that Amazon sold something of mine, shipped it to the buyer, and will deposit earnings into my checking account within two weeks.

eBay

For rare stuff like shoes, leather jackets, customized computers or old film cameras you’ll probably have to sell them on eBay.

If it’s really rare and people are not necessarily going to be shopping for it every week set a Buy It Now price and wait. Lower the price 5-10% two weeks until it sells. It’s much better to wait out a Buy It Now sale for a few weeks than to sell an item in a failed auction. Selling rare stuff through auctions can be a disaster: I lost $200 on a rare Mamiya 6 medium format rangefinder when the auction didn’t take off as I expected. One time I even sold shoes for $0.99 with free shipping and lost money.

Tip on selling film cameras: include a scan of a picture you took with the camera. People like seeing that the camera actually works.

Depreciation

After all this selling I’ve learned a bit about how items depreciate.

  1. Excellent products like Tom Bihn Luggage and Herman Miller chairs barely depreciate at all. I sold a Tom Bihn Aeronaut which cost $250 new for $248 on eBay. In the future I’ll try to buy only high end stuff, which doesn’t depreciate, or low end stuff that I’ll be comfortable giving away when I’m done with it.
  2. Camera lenses and old film cameras can sell for 90-105% of they cost used. New lens designs only come out every 10-15 years and as long as you take care of them there’s no reason they aren’t as good as a new lens.
  3. Apple products maintain their value very well and have predictable release cycles. Ideally you can game these release cycles and sell things before a new version comes out and their value drops. My 10 month old Mac Mini and two year old Thunderbolt Display sold for 90% and 70% of what they cost new because I sold them before new versions were released.
  4. Digital cameras aren’t as predictable but I have sold them for 70% of their value a year or so after buying them.
  5. PC computers, furniture and clothes depreciate the most (40%-90%). Just try to buy them used or not spend a lot on them upfront.

What am I keeping?

Since I’m traveling for a long time I’m only keeping things that I’d be willing to buy and put in storage at the price I can sell them for now. This is basically just clothes. No one wants my old t-shirts or my suit and selling them for a pennies on the dollar isn’t attractive since I’ll definitely need them again someday.

Ask anyone who has put things in storage and they’ll generally tell you that storage wasn’t worth it. My couch and bed would probably smell terrible after a year in a storage unit, and a bed can be ordered again any time in the future with free two day shipping. For everything else I’m not even sure if I’ll need it in the future. I’d rather have the cash now than pay to store it for a year and then come back only to have to sell it anyway.

Software I Love

Great software is so good that it’s easy to forget that you even use it and it’s hard to live without. Here is what I install as soon as I get a new computer or phone.

Most of this is Mac or iPhone software, but a few work on PC as well.

#f.luxLCD screens have a lot of blue light that wakes you up and keeps you awake late at night. f.lux (Mac/PC/Linux) is a free program that changes the color temperature of your monitor at night and makes it easier to fall asleep. If you don’t believe me wait until the sun is down and then install this program. Watch as your monitor gets slightly more orange and feel yourself get tired.

Progressive Alarm Clock

In general I hate alarm clocks. Since I normally wake up at the first noise my phone makes, a blaring chorus needlessly startles me and stresses me out.

Progressive Alarm Clock (iPhone) lets you set bells to start quiet and gradually get louder and louder until you finally wake up. The bells are far enough apart that you can actuallyenjoy lying in bed for a few minutes listening to them instead of jumping up to turn off the alarm.

#You Need a BudgetYou Need A Budget (Mac/PC) is budgeting and cashflow management software. No other program I have tried imports data from all my banks, lets me use envelope accounting, and lets me project cashflow into the future. This program saves me lots of money.

How I use it:

  1. I keep exact budgets for expected expenses like rent and utilities.
  2. I keep low budgets for unhealthy snacks and coffee. I blow past these budgets every month, but it serves as a reminder that I want to spend money in more meaningful ways.
  3. In general I budget based on life goals and name my budgets to remind me of those goals. Examples: “meals with friends,” “educated and well read,” “good food in my body,” “get outside,” “strong and fit,” “gifts for friends”, “well dressed man,” and “helping others (charity).” These budget titles are dorky but they remind me of why I am spending money and make me comfortable with it. They force me to think about if the expense is really working toward the intention of the money.

nvAlt

nvAlt (Mac) is simple and free note taking app with formatting on your Mac. The best feature is that you hit Command-L to search, type the name of a note you want to find, and if it doesn’t exist you create it immediately by hitting enter.

I keep all my notes in a folder called “Notes” in my Dropbox account and can view and edit them on my phone using PlainText 2 (iPhone).

#DropboxIt goes without saying and you probably already have it, but Dropbox (Mac/PC) is by far the easiest way to sync files between computers. I opt for the pro account ($9.99/month for 100GB) and keep all my pictures, notes, and documents in there for immediate backup whenever they are changed or added to my computer.

Some good uses:

  1. Folders called “Interesting to Read” and “Interesting to Watch” where I save documents and movies from my home computer to watch later on my iPad or work computer during commutes.
  2. A folder called “Files to Print” where save PDFs of anything that needs to be printed and access it from FedEx office or a friend’s computer.

Dropbox is worth it for the backup alone, for sharing large files with friends, or for syncronizing files between computers.

I keep my core set of files (and a lot of pictures!) under 100GB so I can get this seamless backup. It’s not much of a sacrifice.

#Real Backup: Super Duper and BackBlazeWhile we’re in the topic of backup, just get SuperDuper (Mac, $28) and BackBlaze (Mac, $5/month) too.

SuperDuper makes a full bootable backup of your hard drive onto an external disk. This is invaluable when a hard drive fails. It’s fast, easy to use, and worth paying full price to get incremental backups instead of doing the full disk over and over.

BackBlaze makes another full disk copy remotely to servers somewhere else on the planet. It’s only $5/month.

The full Mac paranoid backup plan is: DropBox to sync and version files over the intenet, Time Machine (Mac, free) for local backups and accidentally deleting single files, Super Duper for bootable clones, and BackBlaze for when your house burns down. It’s not as much work as it sounds: all of these are automated for me.

TextExpander

I type the same things a lot. Text Expander (Mac, $35) lets me automate that extra typing with keyboard shortcuts. In the past two years it’s saved me a full day of typing.

How I use it:

  1. Typing “myphone” autocompletes to my phone number.
  2. Typing “myaddr” autocompletes to my mailing address.
  3. Typing “dsyd” auto completes to the SQL statementds = “2014-03-01” with whatever day yesterday was inside the quotes.
    1. Typing “ds5day” does the same thing:ds <= “2014-03-01” and ds >= “2013-02-25”, but automated for the last five days.

It’s easy to come up with a bunch of other shortcuts like this so you can save your hands for more important things.

#Adobe LightroomI don’t have enough time to mess around with editing pictures in Photoshop. Adobe Lightroom (Mac/PC, about $110) makes it easy to import, cull, edit, manage, and publish photos from a Mac or PC. You can generally get Lightroom a little cheaper from Amazon than directly from Adobe’s website.

Honorable mentions

  1. Textmate is my favorite coding text editor.
  2. Byword is my favorite writing environment.
  3. iTerm is my favorite terminal.

That’s it. Someday I’ll add to this list, but for now I only want to recommend the software I absolutely install first on every computer I use.

Measuring My Life

I’ve been measuring a bunch about my life for around a year now. People often ask me how to get started and what to buy. These are my recommendations.

#Set and Track Basic Goals

You’re probably measuring your life because you want to change something. As a first step toward change I recommend using 42 Goals. Set up a very simple boolean (yes or no) goal like “opened a book,” “went for a walk” or “went to sleep by 11 pm”.

If the goal is successful for a day make sure you give yourself a positive reward image — my favorite is the picture of the hamburger. If the goal doesn’t work out don’t give yourself a negative checkmark — just move on. Don’t punish yourself for missing the goal and treat each day as a new one.

Along with your first goal I also recommend setting a meta-goal of “Checked into 42 Goals.” Stick that in your calendar or as a reminder on your phone for a few weeks to make sure you’re doing checking in every day. Once the habit starts you can layer all kinds of minor positive lifestyle modifications into the system.

I try to check into 42goals every morning and review the previous day. Right now I’ve got 19 “goals” but all of them are just minor behavior modifications, and only a few of them do I really make sure I hit daily.

Credit for using 42Goals solely goes to my friend Will Benjamin who helped me set all of this up back in 2011. It’s become an amazing part of my life.

#Measure Your Weight

The biggest payoff I’ve seen is from tracking my body weight every day. There’s something really powerful about having quantitative evidence showing where you are, and even though body weight isn’t a perfect measurement it’s a really good one. When I started doing this my mind had tricked itself for months that I was losing weight. Once I bought my Withings Scale and laid down a few months of data the evidence was pretty clear that not only was I not losing weight, it was actually going up. (How I lost weight is a topic for another day.)

You might start with the Fitbit Aria scale. It’s cheaper than the Withings scale and it probably syncs with other Fitbit data.

#Count Your Exercise

There are a bunch of devices for measuring exercise but the only ones I’ve owned are the Jawbone UP and the Fitbit Ultra (no longer sold, the best current product is the Fitbit Force which is delayed 2-4 weeks for shipping. The Fitbit Flex is almost the same thing but without a clock.).

The UP is great for tracking sleep and exercise and has a nice app, but not many people have the device and it lacks a website. It’s also frustrating that the UP is a computer I wear on my wrist that lacks a clock.

The Fitbit Ultra is my favorite of the two. I just leave it in my pocket all week, it syncs wirelessly to my computer, and the battery rarely needs to be charged. Mine has even been through the clothes washer and survived. Fitbit is building a pretty large social network around exercise. Living in San Francisco makes me an outlier but I have 15 friends on their network and it’s cool to compare step counts.

Fitbit seems to have nailed the gamification of exercise and is now sending me push notifications when I hit or am close to my goals. For 2012 my average daily steps were just slightly over my goal of 10,000 — this tells me Fitbit is doing a great job keeping me exercising.

If I had to buy one device today I think it would be the Fitbit Flex. It looks like the Flex combines the best aspects of the UP and the pocketable Fitbit (frustratingly it also lacks a clock…). The Flex is available for preorder.

#Sleep

Tracking sleep is new for me and I’ve only been doing it since December. My best recommendation is the app Sleep Cycle. You just slip the phone under your pillow and it wakes you up within a specified 30 minute time range in the morning.

For me this means running an extension cord from the wall to my bed with a small iPhone charger next to me at night.

Once nice feature is you can program in questions about your day that get asked every day before bed. Mine include whether I ate late, took Melatonin, went for a walk, went to the gym, drank coffee, drank Red Bull, meditated before bed, or had a “stressful day”.

Sleep Cycle’s statistics page gives basic time series of total time slept, time to bed, and the impact of different sleep notes on sleep quality. I found a few months ago that drinking Red Bull destroyed any chance I had of getting a good night’s sleep and propagated tiredness into the next day — so I largely cut it out of my diet. Things that help me sleep are going to the gym, eating late, and meditating before bed.

Another thing Sleep Cycle can do is ask your mood every morning. This data is not super actionable yet. Sleep Cycle lets you export to CSV and I’ve found no relationship between my time in bed or my “sleep quality” and my mood in the morning.

Ironically I think I sleep better on nights when I’m not tracking my sleep. I’ll have to dig into this more later.

#Pictures and Video

This is bonus points. I use the app EveryDay to take a daily snapshot of my face. This was really cool in early 2012 when I lost a bunch of weight and could see my face melt away in the exported video. More recently it just shows me what clothes I wear habitually (I was once prone to wear the same shirt every Thursday).

Tying these systems together: I’ve had a goal in 42 goals since last March to take my EveryDay picture.

A bunch of my friends are using One Second Everyday to create videos of their lives. I haven’t gotten into the habit of taking a daily video.

#Summary

I do a lot of this measurement and have more planned. Mostly I find the historical aspects of the data most interesting, they help me remember the story of my life. My data acts like a black box and makes it easier to remember what night I stayed out late, what day I took a long walk, and what day I did nothing. The data lets me put my life and goals in context and figure out which ones I’m progressing on and which ones are stalling.

Honestly the crux of the whole system is 42Goals. It keeps me accountable for minor healthy habits (meditation, eating salads, going to the gym, opening OmniFocus). Without this anchor of binary goal tracking most of the other stuff would fall apart.