Crossing Over

Ok, I normally only do net worth updates every second month, but this month is an exception.  I ran the numbers to confirm not my net worth, but rather what my investment net worth .  So in total my investment net worth is $108,300 which is now more than my mortgage balance $107,900.  So as you can see below I hit a cross over point of the yellow and blue lines (click image to see a larger version).


This cross over isn’t nearly exciting of a cross over as being financially independent, but it is exciting to me regardless.  Since it represents my mortgage is on such a decline I could sell every investment I own and nearly pay it off (I would be short the tax penalty from taking out of my RRSP’s).  I don’t plan on doing that, but it is merely an option.

In some regards this is meaningless number with just two lines crossing over on a graph.  Yet I’ve gave it meaning in order to keep me motivated on this path.  I’ve always found I do better with longer term goals is I have little steps on the way there.

So as I go into this long weekend I intend to celebrate a bit on making it to this point.  I’ve got a long way to go, but at least I’m getting there.  (By the way, no posts on Friday or next Monday I’m taking the weekend off.)

An Energy Game Changer?

Cheap, clean energy has been the goal of many separate companies over the years.  In high school Economics (about 15 years ago) I researched Ballard Power (BLD.TO) which was supposed to provide energy using a hydrogen fuel cell and emitting only water.  At the time, the company stood on the forefront of technology and had various contracts with car manufacturers and power providers, a quick view of how it’s stock has been doing since the technology crash 10 years ago shows that if it does have some kind of super technology, nobody is really buying it, which to me is a failure.  On 60 minutes a few weeks ago I saw a feature on Bloom Energy.  This company is making similar claims as Ballard Power (and other fuel cell companies have made) of clean, cheap power.

Fuel cells have been around since the 1830s – generally they require super expensive materials like platinum and are prone to breakdowns.  According to the 60-minutes report, this fuel cell is different – it uses beach sand and cheap alloys as part of the box and the fuel cell uses various fuels, such as biogas, piped-in natural gas, and solar power, along with oxygen to create power.  The creator of the box thinks that within 10 years, these boxes (assuming efficiencies gained through production) should cost approximately $3,000.

Here’s what I see as a few of the implications of this technology:

Energy costs could be fixed: Right now, consumers don’t know how much energy will cost in 5 to 10 years.  If these boxes were able to do what is claimed, a “Bloom Box” coupled with electric vehicle technology could significantly reduce or at least fix individual and business energy costs, which is not the case right now.  If oil were to spike to $200 a barrel, consumers could have the opportunity to insulate themselves from this cost.

Poorer areas in the world could have electricity: Much like many areas in the world never set up phone lines and skipped directly to the use of cell phones, this technology could have the ability to reach countries and communities that could not afford the initial infrastructure of power plants, lines, transfer stations and the maintenance of a conventional electric grid could perhaps afford these power blocks.  The addition of cheap electricity to these poor areas could lead to a higher standard of living and the possibility of a better life.

Carbon Emissions could Decrease: The use of alternative fuels in what could be called “micro-generation” of electricity could decrease carbon emissions for by 40 – 100% vs. conventional power generation depending on what kind of fuel input is used.

To me, this technology is very exciting.  Whether or not it works is a question that will take a few years to see, but the potential is enormous.  Already private investors have poured $400 million into the company (where anything over $100 million is deemed extreme in Silicon Valley).  I am generally a pessimist when it comes to technology like this, but I would like to think that we as a planet could come up with something better to power our houses then the current mix, which is pretty dirty.  While wind, solar and other  “clean” electrical generation methods work, they are not incredibly efficient – you need a ton of windmills or solar panels to power a small city – wouldn’t it be nice to have a “silver bullet” in the coming years, as peak oil creates significant increases in the cost of power?

Maybe I’m the only one, but does anyone else get excited about seeing projects like this?  Would you invest in this company given the chance? Are there any “green” companies you are currently invested in that have interesting technology that are showing potential?

Creative Personal Finance

Over the years of writing this blog I’ve struggled to explain why personal finance is so difficult for some people to get. Some people know what the right thing to do is but often can’t seem to do it or get frustrated with the huge volume of choices.  Then I read a quote the other day that I think helps explain my problem.  I won’t give you an exact quote, but the gist was economics is not a science, but rather an art since it lacks one of the basic science requirements: predictable outcomes.  Personal finance therefore is perhaps better described as a form of art.

In most forms of art there are some general rules to follow.  Plays usually have acts and novels have beginnings, middles and ends while paintings have certain classes like landscapes or abstracts.  In personal finance we have rules of thumb such as spend less than you earn, but like all art itself even the general rules can be broken at times.  For example, a novel starts at the end and then flash back to the beginning or using the Smith Maneuver may result in you spending more than you earn.  Granted with a Smith you are spending money on investments, but you could still be breaking the general rule.

Yet in the past people have been treating personal finance as a science by focusing on the numbers which would imply there are only a certain number of ways to achieve a particular outcome.  Yet the truth is there are no limits in art, you can do just about anything you can come up with.    So you might know that you are better off to invest than pay down your mortgage, but still choose to pay down the mortgage.

Thus we have a problem of we have been teaching personal finance the wrong way.  Learning any art is not typically done from just one teacher but rather several, since each teacher will treat things differently and teach you different things.  Personal finance should be much the same way.  Each writer will typically have their particular views on the world and methods on dealing with it and will teach you different things.  For example, I’ve never had a problem with credit card debt and as such don’t have much to say on it.  On the other hand I do fairly well on eating well on a limited budget so I’ve written a fair bit about that.

Perhaps the issue is people are not accepting the fact that we need to get creative with our finances and find a method or system that works for you even if it appears to break the rules.  It might be odd, awkward or even a bit silly, but if it works for you to help achieve your goals then DO IT!

In the end, there is not ‘right’ way to achieve your goals, but rather just some guidelines that have been developed over the years from trial and error.  So take what you need from others and get creative with solutions for you.  You will make some mistakes, but that happens in all art.  Keep trying and keep working to your goal and you will find a way to get there.

How do you see personal finance: art or science and why?