Editor’s Note: Our offices are closed this week in observance of the holidays, so we want to share a timeless six-part series from Bill. In it, he gives enduring advice on how you can live simply and build long-term wealth.
PARIS – We took the Eurostar train back to Paris from London last night.
In our wagon was a group of Chinese businessmen.
Drinking, laughing… They were a bit uncouth by European standards. But they were having a good time.
While we were in London, the cabbies were remonstrating against something – the ride-sharing app Uber, we suppose. A dozen cabs must have passed before one stopped to pick us up on our way to St. Pancras railway station.
Arriving at the Gare du Nord, we feared something similar.
We’ve never seen a line of people we wanted to join. The long file waiting for cabs was another of them. So we walked across the street to have dinner at the famous Terminus Nord.
This proved a good choice. The old brasserie must be one of the best in the city – lively, bright, with good service and good food.
And by the time our dinner was complete – oysters followed by magret de canard – there were plenty of taxis and few people waiting for them.
We used to live here in Paris. And we had a business in London, too. So we made the same trip every week for more than five years.
But four years ago, we left the Paris-London commute behind. Now, as T.S. Eliot put it, we’ve returned to the place where we began and knew it for the first time.
This morning, we sit again in the Café Poussin, reading the Financial Times.
Yesterday, we noted that practically everyone writing in the “pink paper” was a moron. We’re disheartened to say so. But it appears that a night’s sleep has done them no good.
On the front page, we learn that the “FBI scouts for younger class of cyber sleuths.”
We need to read no further. This is a program that is doomed to fail.
Teenagers’ personalities are still unformed. As they evolve, security clearances in hand, they will encounter sex, drugs, and politics. They will inevitably be led into lives of radical crime or honesty – both of which are verboten to the feds.
Over on page two of the FT, we discover that the European Central Bank has learned nothing over the last quarter-century.
“Eurozone deflation stokes talk of quantitative easing boost…,” says the headline.
Haven’t they been following what happened in Japan?
Apparently not. The Japanese have been fighting deflation for 25 years – with quantitative easing, ZIRP, and other claptrap. And what are consumer prices doing in Japan today?
Falling! QE doesn’t boost inflation on Main Street. But that doesn’t make it unpopular… especially with the bankers and cronies on Wall Street who benefit from rising asset prices.
And on page four, we find Christine Lagarde in the news again. The IMF chief is probably a good bureaucrat. She may even be a good lawyer and a nice drinking companion. A pity she knows nothing about economics.
Yesterday, she told the world “the rapid drop in commodity prices is posing problems for resource-based economies.”
The crowd must have fallen silent, each person wondering if she would be able to come up with something even more obvious, self-evident, and banal.
As it turned out, she warned about “volatility” and “decelerating growth.” Speaking for half an hour in Washington, she managed to come up with not a single spark of insight or information worth reporting.
One of the most incredible stories was not in the Financial Times, but in Global Mining Observer (GMO).
The source tells us that insiders at Anglo-Swiss commodities giant Glencore are planning to poke naïve shareholders in the eye.
This is a perfect example of why Wall Street is no place for innocent mom-and-pop investors.
Glencore cronies took the company public in May 2011 at $59 billion… loaded it up with debt… and used the money to fix themselves up with huge bonuses, payouts, fees, and options.
According to GMO, having enjoyed the choice pieces of meat, they are now planning to dump the carcass on good ’ol Mom and Pop.
“What a colossal piece of black-hearted chicanery,” says colleague Dan Denning in our London office. This will go down as one of the “greatest pump-and-dump schemes ever.”
The insiders are now planning to take Glencore private again. Having sold at the top, they will buy back the assets at what appears to be the bottom.
Glencore’s share price is now at about $136 – down from $790 at its 2011 IPO.
We continue to get emails from readers who have suffered fender benders – or serious accidents – on life’s financial highway.
More than any other factor, divorce seems to leave the pavement slick and treacherous. Now readers report that they are at or near retirement age… with few resources.
What should they do?
You will not miss the irony: Your editor is not a poor man, far from it. How dare he give advice to people who scrimp and save?
But he remembers with fondness the poverty of his youth. And he uses his imagination to think about how he might recapture the poverty, if not the youth.
He put the question to his crack team of researchers: What if you wanted to live well on $500 a month? What would you do?
We take $500 as a starting point. Most of the readers we’ve heard from report struggling to live on around $1,000 a month in income.
We will aim to live on $500… and save $500. In five years, we will have $30,000, which we’ll use for a down payment on a better place!
Our researcher Nick Rokke responded quickly:
Buy a used motor home. I found a 1998 Four Winds Windsport for $14,500. You can finance that over 12 years at 5% interest for a monthly payment of $135. You can get insurance for as little as $65 a month.
Your accommodation expenses = $200 a month.
A spot in a trailer park can run upward of $200 a month. But some people apparently don’t bother. Some say they find places where they can park for free. Mall lots, for example.
They even are able to buy past-expiration food at a discount. By eating cheap, you could reasonably feed yourself for $150 a month. Include a multivitamin if you’re worried about malnutrition.
Total house and food expenses = $350 a month.
You are going to need a bike to get around to places. You can’t take your RV out for leisure rides. This will be important for errands or visiting friends. And to use a different bathroom to avoid getting funny looks from Walmart employees.
I found a used bike online for $1.
Other odds and ends:
$50 a month for RV and bike maintenance
$25 a month for gas – that will get you 10 gallons of gas or about 80 miles in the average motor home
$10 for a gym membership (you need to shower somewhere)
$10 for prepaid phone through TracFone
$0 for internet – go to the library or other public area… or use data services such as Skype for your calls
$10 for batteries to power things at night in your motor home
$10 for soap and toiletries
$35 for miscellaneous expenses
Total = $500
The idea of living in an old RV does not appeal to your editor. It does not seem to meet his requirement to “live well.”
But he’s seen worse. At one point early in his career, he lived in an attic room, rented for $30 a month.
This recollection triggers a moment of thought and reflection. We’ve lived in many “substandard” houses, including a barn… a house built of mud and stone without running water, heat, or electricity… and in an “underground house.” We’ve also lived in a 25-bedroom French chateau and a luxurious oceanfront villa.
Where have we been happiest? Hard to say…
Further Reading: The poverty stricken shouldn’t apply, but you can get into the highest-level membership at Bonner & Partners for far less than $500 per month. You’ll get everything, the moment it’s published, at an astonishing discount of more than 95%. See for yourself right here.
This “trifecta” of gold events is creating a perfect setup for gold investors… one that will see the price of gold explode higher. And that’s why we want to share a special message from Casey Report Editor E.B. Tucker. He put together a special presentation to help readers take advantage of this once-in-a-decade opportunity.