When was the last time you actually wore something out? I’m not talking about socks or underwear or things you use for work. I’m also not talking about things that could be repaired like a TV with a failed component that costs too much to replace. I’m talking about the things that usually gets “upgraded” or replaced before they have been used up. I’m talking about the things you own, where all components exhibit enough wear that it either breaks completely in an irrepairable fashion or where the parts are so worn down that they do not function anymore.

So what have you worn out recently?

Did you decide to replace it or did you already have a “backup”?

Bonus question: What is the oldest thing you own that you use daily?

Originally posted 2008-09-07 08:27:24.

Here’s a notorious example of dealing with the unseen that other people see.

“You are at a game show. There are three doors. One door hides a car and two doors each hide a goat(*). Presumably you want the car. The game show host as you to pick one door without opening. After opening the door, the game show host selects a door and opens it showing a goat. He now asks you if you want to stick with your choice of door or whether you want to change it. Should you change it?”

This problem causes endless confusion because its answer depends on how it is phrased.

(*) Sometimes the car is the road to freedom and the goats are tigers. I’m not sure what is worse. Being nibbled at by a goat or being eaten by a tiger.

Let’s look at the unseen.

There are currently three possible outcomes: OOX, OXO, and XOO.

Without loss of generality, we can assume that you always pick the first door. At this point, your chance is 1 in 3 or 1/3 as one of them has the X at the first position.

The game show host now opens one of the other doors. There are four ways he can do it: O=X, OX=, XO=, and X=O. If the notation is not obvious at this point, then X is the car, O is a goat, and = is an open door.

If he intentionally selects a door with a goat behind it, there are, however, only three ways he can do it. Here’s why. If your door currently has a goat behind it, he has to reveal the other goat. The leaves a car behind the other choice. If your door currently has a car behind it, he can reveal any of the two goats. Hence there are 3 outcomes and 2 of them leads to the car if you change your choice. Hence, you should elect to change your choice. The point of confusion lies in the fact that if your door is currently hiding a car, then the host’s choice of door does not change the conditional probability; he could choose either one.

Now suppose the game show host does not intentionally pick the goat. Then there are 6 outcomes: O=X, OO=, OX=, O=O, XO=, X=O, some of which reveals the car. Now assume that the outcome shows a goat that was randomly selected by the host. The following outcomes then apply. O=X, OX=, XO=, X=0. You will note that with your choice of the first door, the probability is 2/4 or 50%.

Just for fun, this can be extended to a game show with four doors. In that case: OOOX, OOXO, OXOO, and XOOO.

A selecting host will create O=OX and OO=X out of the first. O=XO and OOX= out of the second. OX=O and OXO= out of the third and X=OO, XO=O, and XOO= out of the fourth.

It is however still only important what kind of choices he’s giving you. There are only four effective choices! One choice from each of the four above.

OO=X, OOX=, OXO=, and XOO=

In three out of four cases, you will have 1/2 chance if you change. This gives you a combined probability of 3/4*1/2=3/8 if you change your choice. If you stick with your original choice, you remain at 1/4.

Originally posted 2008-11-20 07:27:38.

Yesterday, I asked if anyone was interested in sharing their plans for early retirement. TL Black, whom you may know from the comments on this blog and who blogs on The Simple Life in France, was quick to respond, and so here is her story.

In 2006, we made $100,000 a year and spent $30,000 or about $2,500 a month. Our goal: to buy house in the French countryside in three years, cash.

I wondered if I could survive three years. The pressure of my career compounded by the increasing philosophical dissonance I felt at work made me sick—literally. When you spend 60-70 hours a week working and your spare time at the doctor’s trying to deal with stress-related illnesses, your are on borrowed time.

We’d already figured out that the extra money and consumer benefits couldn’t make us happy—or even distract us from our misery. We’d long since cut way back on eating out, shopping, and keeping lots of crap around. Every day, I had a harder time justifying our lifestyle.

In January 2007 I just snapped. I told my husband I was going to look for a much less stressful job—I found one very shortly and took a significant pay cut. My husband values my health and happiness more than his dream of a big house, so he supported my decision.

“Why not move to France now?” That was his response to my third-life crisis.

For years we’d been putting off returning to DH’s home country because of the money my career brought in—and, frankly, because of my need to identify myself as a ‘professional’ and a ‘hard-worker.’ Well, to hell with all that, is what I finally decided. We gave our notice, sold our stuff and moved back overseas.

Our financial plan now that we’re over the ‘big house dream’: retire ASAP.

Use our current savings (thankfully in Euros!) to buy a small home within the next few years. I vote for buying ‘cash.’ DH votes for taking out a loan that would lead to expenses no more than 650 euros a month (our current rent), so we can afford a place with some land. Given the current state of the global economy and environment, having your own land for growing food sounds wiser all the time, but we’ll see.

Take advantage of my time without work to rethink the way we spend money. This is a project I’ll be working on full-time for the next few months. Our initial goal was to make it on only my husband’s salary. We did this easily in October even with a 300 euro “fun” category. Our next step is to start saving on DH’s salary alone. Within 6 months, I hope to have us saving 500 euros a month and closer to 800-1,000 euros a month in a year’s time.

In the next year I hope to find an income source of about 800 euros a month. Why so low? So that I can afford to do something that won’t make me wish I were dead—perhaps even starting my own business. If I can make more without becoming a miserable human being again, then I’m not against that either.

How long will it take?
Assuming we keep expenses low, and that I find an income source in the near-future, AND assuming we continue to be able to make a 4% return on our investment* we’ll need roughly 300,000 to retire with1200 euros/month. That’s slightly less than what we can get by with now because we won’t need a car anymore once we’re no longer working.

IF DH agreed to buy an apartment ‘cash’ housing should cost us no more than 200 euros a month (we’ll need some money for taxes and maintenance). We ought to be able to retire in 10-12 years.

If we decided not to buy at all, I suppose we could get there even faster, but DH doesn’t like that plan for now. I say, let the man have his dreams. He compromises with me a lot.

*We’re not the savviest investors, just lucky so far. We need to learn some new tricks.

Originally posted 2009-11-06 04:41:35.