The Taxation Kill Zone

(As I got to the end of this, I realized it’s really a thesis on why we need a flat tax, with a progressive bend for lower income households. Our system is set up to be gamed, and will be gamed until we do something. I did not mean to make the post as complicated as I did, but I was hoping to educate. In my case, I am open to learning, but I just ‘don’t know what I don’t know.’ I wish I would get more comments and feedback. Eventually, my fear is that the doctor who we all depend upon, firmly in the middle of the TKZ zone, with massive education debt and huge malpractice insurance bills, is going to tell us to all piss off and go surfing)

Taxation Kill Zone is a phrase on the internet that refers to a group of people in the U.S. who pay a large tax burden as a percentage of their total income. Actually, this is probably the first time this phrase is on the internet, because I just made it up. I did it to illustrate a couple of things. First, why rich people get richer, pay less taxes, have a huge income inequality gap to the masses. Second, why lower wage earners who would like to see more taxes on the rich are un intentionally harming our most productive citizens. In the end, it is this group in the center who shoulders the burden.

The Taxation Kill Zone, TKZ from now on, is artificially made up of couples making approximately $180K to $600K per year. That is three to ten times the national median income. Their wages come from a paycheck that gets reported on a W2 at the end of the year along with interest and gains from investments, also reported on yearly tax documentation. Their deductions are minimal, most likely a mortgage and some charitable deductions. Their tax rate, including FICA, property tax, state and local tax, and federal tax is going to be solidly in the 30-40% region. We will call in 33%; if you look at progressive tax rates, and factor in FICA, and various state and locals, the majority of people in this group would call this number conservative. It is made up of well educated people, many with masters and doctorates, along with skilled tradesmen. In many cases, the income comes from two sources.

These are the people you see with a nice suburban home, and maybe some toys like an RV, boat, RZR or a 2^nd home in a vacation spot. They have some disposable income, and work hard, trickling their paycheck down in their communities. They don’t commit serious crimes. They have kids and between work, family, and some focused recreation, don’t have time for much else. Life comes at them, they pay bills, vote, and move on.

In addition to spreading their money in the community, they spread a third of their money in various government entities. They fund the roads, police, fire, schools, military, etc that is used by all. Those government entities take their cut on the both the front and back ends. Paychecks have regular State, Federal and FICA deductions on the front end. Use taxes and sales taxes come in on the back end. These people are surrounded by government entities taking their shares; they are caught in a crossfire, and all they can do is work hard and bleed. They become numb to it, and many people in the group don’t even realize their number one expense throughout their lives will be taxes.

Is a progressive tax rate like we have in the US fair? There is a fixed cost for basic needs like food and shelter, and if you earn at or below the median income level, you must pay less taxes to survive. But if you make More, or a Lot More, or a Really Lot More, should you pay More Taxes, a Lot More of taxes, or a Really Lot More taxes? That is a fascinating question, and is really a moral judgement on money and success. Step back for second and ask why do we in general think that someone who makes a lot of money should pay an extremely high tax rate? Just because they can afford it or are there other reasons? Frankly, I don’t care one way or the other; I am only interested in the result. Before we dive off into a review of Marxism versus Capitalism, lets get back to these TKZ folks.

The TKZ people fund our economy and our government, and for obvious reasons, pay a larger percentage of take home pay as taxes than those who make less. In addition, TKZrs don’t have the time and ability of the of the people in the Very Rich bracket to avoid taxes, so their take home pay as a percentage is less. Wait, what did I just say? People who make more than TKZ people have the option to less in taxes? I thought those darned Tippy Top people just wrote down what they made and sent it in! Zuck and Bezos just go to the gold vault on April 14^th, load up a couple trucks and ship it to the government, right? Wrong!!!

Instead of being caught in the crossfire of taxation, the Very Rich build fortresses, and infiltrate the enemies infrastructure, buying info and favors. They hire accountants and tax lawyers to find ways to avoid pay taxes, and they create and donate cash to political action committees, which grease the skids of government and allow flow of money to politicians. They donate to foundations created by politicians, who then work to create loopholes in tax code and build favorable business situations. This is not specific to the right wing or a left wing of government; it is the entire plane! Rather than being surrounded by tax collectors, taking fire from all sides, the Very Rich have the tax collectors surrounded!

Not to belabor this, but there is a huge difference between taxable income, and actual revenue. You have got to understand that is a key point. A person who brought in $50m can show loss and pay less taxes than a person making $500K. Politicians who want to tax the super rich are either ignorant or on the take. They must be targeting the 10 lottery winners from last year, because they are the only ones going to pay.

If you don’t believe me, I will give you a real world example. This is not someones life story, but an amalgam of some of my friends.

Robert and Sherry are classic TKZrs. Robert has a STEM degree, and has gotten a masters in business at night, and had multiple professional certifications. Sherry is a degreed physical therapist, working in a large medical organization. Between the two of them, they make $275K per year. They have a suburban house, and when they went on vacation to Park City, decided they would like to have a condo there. They bought a very nice little unit for $350K.

Scotty and Alexa are Very Rich. They made their money in the business world, and also have real estate investments, both in rentals and commercial properties. They went to Park City, loved it, and bought a condo right next to Robert and Sherry at the same price.

Simple and equivalent, right? Not even close. Let’s look at the real costs. Robert and Sherry are spending money after taxes. Every dollar they spend on this condo has over a 33% discount. In addition, they are paying local property taxes. Scotty and Alexa bought this condo thru their business and will rent this out when they are not there, and will eventually sell it and buy something else. They used what is called 1031 money, or profits from a previous real estate sale to buy the condo. That money was not taxed in any way, so it has no discount. In addition, property tax on this condo will be paid thru the business, so it is a deduction.

Hold on, it gets better. Both couples live far enough away that it only makes sense to fly there. The TKZrs book their tickets and pay with after tax money, while the Very Rich are simply on a business trip to check on their investment and view other property. Their travel and expenses will be turned over to their accountant as expenses, and will be deducted from their tax burden.

Humans are brilliant, amazing creatures, and biology dictates that we will optimize our situation given any means we can. Some deny that, but its factual, and it is built in. If you tax someone too much and they cannot afford basic needs, they will revolt. If you tax someone to the point of not getting benefit for extra effort, you eliminate motivation and they will work less. If you create ways to avoid taxes for super rich, they will pay less money for the same thing and create huge income inequalities.

I don’t think its my place to pass judgement; we have to judge ourselves. If you want someone else to pay higher taxes, but not you, is that right? Remember, we all have the option to pay extra taxes at any time. Statistically speaking, no one in the US pays extra taxes, ever. Lower wage earners who advocate higher taxes don’t kick in 50 cents. Rich people who are on TV ranting about more taxes don’t send in more. The TKZ crowd certainly does not. At the same time, $billions are donated to charities. People are voting with their wallet.

It reminds me of an old saying: a Democrat can justify every dollar he took from the rich, while a Republican can justify every dollar he stole from the poor.

I feel bad for the Taxation Kill Zone folks. They are up early, dropping kids at day care, heading to work, trying to get ahead, and driving our economy forward. They are too damn busy to fill up our courts with problems, and are low impact, high return cash cows for our governments. If it wasn’t for some of them participating in the opiod crisis we wouldn’t even know they were there! They have no options but to work, pay taxes, buy stuff, and just like it says on the shampoo bottle, Rinse and Repeat.

So to them I say simply, start an LLC. Use you brain and think beyond the next paycheck. The system and the government are unlikely to change anytime soon, and its truly one of the few good options.

It’s Time for Gun Control

If you knew me personally, you would have just fallen out of your chair and hit your head. You know I come from a long line of gun owners, competitive shooters, and outdoorsmen. In addition, you would know I spend a fair amount of time at the range, shooting 45ACP rounds that I load myself. How is it that I would advocate any kind of gun control?

The government, in my opinion, is an entity entrusted to represent is citizens internationally, and provide protection for those citizens. It is not supposed to provide or distribute wealth, although with its influence over the Federal Reserve there is a responsibility to keep the economy on a positive plane. As I have stated over and over and over, the most critical mistake we can make is to give the government more power over wealth and more money. The business processes within the government are not capable of managing money and being efficient. It is a sponge on the success of capitalism and the hard work of its citizens. I may be idealistic, but I believe the vast majority of us pay that gladly for its proper role.

So if that is my opinion, that the government provides protection, then the area of gun control would fall under its scope. The argument historically from me, and most of my friends, is that the government has no right to track its citizens and their ownership of anything, as that privilege will be abused and eventually used against them. Unfortunately, it is an earned reputation. If you actually look at what Ed Snowden the traitor actually was saying, was that the government was using technology to harvest data illegally without due process. You be the judge of that. Departments of government get weaponized by both sides as new cabinet members are appointed by each president. That is factual. We do trust the government with the worlds finest, most advanced, and most competent military, and you cannot deny its success there. Why not regulate guns?

I can clearly see both sides of this argument, and I know some out there will be violently opposed to this opinion. My background leads me to this. I have gone through multiple classes and range certifications for firearms, and in receiving a carry license, I submitted to a criminal background check. So right there they know all about me, and they know I own guns. In addition, I repeated a similar process for a global travel document, and was even interviewed by secret service agents. The majority of firearms I own were purchased retail with full documentation and paperwork sent to BATF. I also don’t own any automatic weapons and if I did it would be with a full license, and things like bump triggers just sound like ways to burn expensive ammo too quickly to me. I am already in the system, been checked over thoroughly, if they wanted me to carry a card that stated as such, so what?

Who don’t we want to own guns? The mentally unstable who think shooting up a school is a good idea, and the criminal. Here is the rub. Are we going to have the fortitude to ask uncomfortable questions in the screening of gun owners? More importantly are we going to have swift and uncompromising penalties for those using guns in commission of a pre meditated crime and those distributing guns illegally? Here is where I differ from the more liberal crowd. If you gun down someone on the street, or you sell unlicensed or undisclosed firearms to a known criminal without a background check you ought to hang. To make that crystal clear: 30 days, one appeal, do the Singapore Swing. Unfortunately if you look at the demographics of gun crime by numbers, you are going to be targeting thousands of minorities. In the current climate of political correctness and identity politics, it is guaranteed that tough decisions will not be made. Sides will be chosen, and soundbites from pollsters and analysts will fill the airwaves, explaining how someone is being wronged. This will be true on both sides of the aisle.

I propose this theory, and please comment below to straighten me out. The lawful gun owner collects guns, uses them in a sporting fashion, goes to the range to practice, spends hours on the web researching the physics of the next hot cartridge, and believes he or she has a right to self defense. Those people by an overwhelming majority, I speculate above 99%, would pass any screen and will not use the weapon in commission of a crime. The problem is the government. Read that one more time, slowly: The Problem is the Government. This law making entity of our government shows no ability to work as a team and generate reasonable solutions. Social reform happens when one party owns the presidency, house and senate, and is then dismantled as soon as that changes. They do nothing on a day to day basis to earn the trust of gun owners. They fight each other and spend more time worrying about their power bases.

For those non gun owners, let me give you a real world example. Let’s say you want to ban assault rifles. You take a Black Rifle, which is an AR style weapon developed for the military in the 60’s. You can get those weapons in a 223 and 308 caliber, both very popular sporting calibers, and in amazingly accurate configurations. They are great options for hunting. Ban it from the masses. Conversely, look at a Browning BAR in 308 caliber sold as a hunting rifle. This weapon was developed in 1918 as a fully automatic high volume man killer and is a favorite in the military’s around the world. The main difference here is that the AR style is typically black in color, and the sporting BAR is brown. So we ban the black ones and ramp production on the brown ones. Make any sense?

How about banning the weapon of pure evil, the AK47. This is military gun designed by a genius in Russia, Kalashnikov. It has cheap stamped, not forged parts, very loose tolerances, and is the opposite of accurate. It is a caliber with the same bullet as the above 308, but with less powder, so it is a lot like the 30-30, a very popular deer rifle. However, with its accuracy, it really holds little interest to sportsmen. Ban it. On the other side, take the Ruger mini 14 which is almost always sold in a sporting configuration. Its a semi automatic and has the same operating principle as the previously banned AR and operates identically. So we get rid of a junk gun, and get more Rugers out there.

These are classic activities, highlighted by the media as things that will save lives but really do nothing to fix the problem. The outcome we all want is less gun deaths. There is an unfortunate truism: stupid people try to ban things. They think objects can be evil and cause problems. It makes them feel good to get rid of those things, but rarely does it impact real problems. Intelligent people realize people cause the problems. They make the hard calls to find ways to deal with problem behavior.

The overwhelming majority of law abiding gun owners will not support any form of gun control. Until something is done to add sanity, oversight, and fiscal responsibility back to our elected leaders, there is not a snowballs chance in hell that any progress is made here.

Time to head to the range!

Who is this New Environmentalist (NE) and should he be studied, monitored, and to some extent feared? How do they compare to the Old Environmentalist (OE)? What is the cause and mission? Why did I make up the term, and should you even care? Lets look as some examples.

The NE has multiple houses and enjoys the output of industry. He doesn’t know or care about the impact of the materials used or the lavish use of landscaping water, and certainly doesn’t want to hear a windmill going whump-whump next door. The OE climbed up an old growth tree, made a platform, and refused to leave when the loggers came. He tried and usually failed to build a house out of sod.

The NE is busy researching the impact of cow farts and extolling the virtues of eliminating cattle and sheep ranching. That is not to say he fears a burger or a nice lamb chop, and certainly is not going to be a vegetarian. The OE raises hell and tries to get cattle grazing away from exposed streams, where they can trample the ecosystem and urinate and defecate in the water causing downstream algae bloom. He tries to snare game birds and starves.

The NE experiences a guided raft trip down Hells Canyon in August, extolling and blogging on the virtues of nature. The OE wants Hells Canyon Damn broached, making the river generally un-raftable the majority of the year. He doesn’t really care that 100K CFS river flow in the spring and 3K CFS in August will devastate downstream communities and agriculture.

The NE enjoys a wonderful sushi dinner, noting the seaweed wraps are a sustainable product, while the OE trys to ram a Japanese whaling ship with a rubber dinghy, getting maimed in the process.

The NE flies commercial and sometimes even private jets, uses taxis and is a frequent user of UBER, while touting the virtues of carbon tax. The OE walks and rides bikes, and in some cases forgets there is such a thing as snow, wishing he had a car with a heater as his hands and feet go numb.

The NE is on a campaign to eliminate plastic straws. The OE is disgusted with the amount of plastic being dumped into the ocean in Asia, which until fall of 2018 when China stopped taking US plastic recycling, came from the NE’s recycle bin.

The NE drives a Prius because it saves the environment and uses sustainable energy. He doesn’t care that most of the energy is generated by dams and coal fired plants, but hopes dreamily to use solar and wind to power cars. He doesn’t know that converting to solar and wind will drive the price sky high and completely eliminate the value of the electric car. The OE starts an on line blog about lithium carbonate, graphite, cobalt and nickel mining in countries with well earned histories of unethical mining practices. Those are the main components in electric car batteries. Nobody reads the blog.

The NE wants to convert to solar panels. He does not understand the payback time frames and the use of a basic compound interest calculator to determine when that technology makes sense. The OE also cannot calculate paybacks on solar panels; he really just wants to get off the grid because it makes him itchy. Both are really bad at math.

The NE wants to apply carbon tax to fuel prices, extolling the virtues and touting a doctrine that financially crushes the landscape company used to mow his yards. The OE wants cheap gas to run his generator when his solar panels are not generating enough electricity to run the refrigerator. He just wants his eggs to last.

The NE is an elitist, or someone who desperately want to be elitist. She talks about the virtues of the doctrine, and doesn’t care about the costs. She doesn’t care about the working class, and if we have to stop sending plastic bottled water to people in third world countries with no clean drinking water, so be it. The carbon impact of a NE is vast and growing. She requires her cell phone, spend little to no time in nature, and to quote a term of its most famous proponent, “are forced to live in the world today”. The OE was predictable, over the edge crazy, had few friends, and lived a life that represented their values. There was almost no carbon impact from the OE. Unfortunately, in some cases, the OE participated in or at least thought about environmental terrorism, when he wasn’t freezing his ass off.

In my opinion, the NE is way more dangerous. They represent the reason why almost every similar wide spread social movement has failed. This is the creation of an elite ruling class. Citizens of the US are bombarded with the elitism of capitalist extremist, but are being slowly stabbed by between the ribs by the elitist on the left without knowing it. The majority of Americans are in the middle, trying to survive, driving to work, buying healthy groceries when they can afford it, and willing to do things to help our environment, but still have to put food on the table. The OE had less impact than they should because they could not compromise, but were damn predictable.

As always, remember to think. When someone tells you we are going to require a vast sweeping change, think about who gets left behind. The world depends upon US agriculture, innovation, and extreme drive to succeed. If we change that, everyone suffers, not just the “Tippy Top”.

Speaking of thinking, did you catch the Bern and AOC easter eggs?? Or the more subtle Teddy Kennedy egg? Please comment below!

Go Ride Bikes on some woodwork in Canada!

Go Ride Bikes is synonymous for Keep Moving. It comes from a guy at a local bike shop, who will be glad to sell you something, but his first statement is always Go Ride Bikes. He assumes if you are out riding you are going to break something, and that works for him.

For me it is more than that. We are assaulted with masses of information, news, and entertainment and make thousands of decisions every day. In addition, we have the stresses of work, family life and other obligations, both real and imagined. Even riding a mountain bike requires a host of decisions: what is the right equipment, which is the trail of choice, how are the crowds and the dirt and so on. It is very easy to put the activity in the list with waves of other things, and have it get bumped because of time. What Go Ride Bikes really means is Do It. Do it first. Throw some gear together, lace up the shoes, break out the walker for the mall, get the rods in the car, and get moving!

I mentioned in a previous post I had the opportunity to have cancer. I was one of the lucky ones that survived. A special side benefit of that was the physical degradation during the treatment process. When I was severely under the weather, I had a simple thought process. I figured if I could walk around the block, I was still alive. I did that, as best I recall, daily. Anyone foolish enough to visit me would get dragooned into walking with me. Since I couldn’t talk, I would write on my mini whiteboard, tapping violently with the pen, and how could they refuse? As I got slowly better, I would do a couple laps, eventually began to jog, and graduated to figure eight laps. If the weather was bad, I would be on the treadmill inside but with the slightest ray of sunshine I was like a moth to a street light. I never became a runner, and actually did not really care for it, rarely doing over 5K, but it triggered some sort of hormone release in my brain and became basically an addiction.

After I went back to work, I spent some time in Longmont, Colorado. As I was heading out the front door of the hotel, in a snowy muck, to go for a jog, a co-worker asked what the hell I was doing. Oddly, I couldn’t explain, other than I had to go for a quick run. A few years later, in cold, rotten spring conditions in Boise, as I headed out for a bike ride, my dad asked the same thing but added some special commentary on not overdoing things. I had the same answer, but instead I was going for a quick ride!

Over time I converted that need to get outside into bike riding, and I started in the oddest of places, jungles in Asia. I remember coming home one night and seeing a fellow resident in my apartment building working on his bike. I had the same set up, so I watched him and we chatted while he changed a bearing, as preventative maintenance on a bike that never really went outside. I had a standing offer with him to take him riding, but nary a call. My stuff, on the other hand, was continually getting rusty, my leased car had unfortunate wear marks from my bike rack, and my shoes, due to the extreme conditions, would come unglued in under a year. Of course my arrogance toward him turned around and bit me when my pedal fell off a few weeks later because the bearing seized!

My dad’s active addiction was anything outdoors, which could be exploring, hunting, fishing, gathering mushrooms, etc. However, his true addiction was fishing. He did it to a point the family would ask him why he was going in in those conditions and make comments on maybe not overdoing it. At 91 years old, if he has not been out of the house by 3pm, he is manic and insufferable to be around. As I complain about it, my wife laughs and tells me I am just like him, but my peak time is 10am. I don’t believe her though.

I ended up with a healthy addiction. If the sun it out, I need an outdoor adventure. If not, I can go a day or so, but in the end I have to move. There are a vast array of benefits and a few real downsides, too. I’ve seen amazing jungles and rice paddy fields in Asia, Tetons in Wyoming, stunning geology in the desert, the rain forest in British Columbia, every animal and reptile you can imagine, petroglyphs, and been on killer rides and enjoyed lots of great beers. I’ve also acquired sore knees, tendonitis in the elbow, an arthritic shoulder, broken fingers, burst bursa sac on the elbow, broken ribs, and collection of nicely infected leg gashes, along with other assorted scrapes and cuts. To me, those are a small price to pay; remember the words of Evel Knievel, ‘Chics dig scars.’

If you’ve read this far, you’ve made the critical mistake of what my close friend’s wife calls ‘making eye contact.’ You were unaware of your engagement, and now you get the pushy, poky, uncomfortable part for which I’m famous among friends and family. Get off your ass and do something. Hike, bike, fish, rock hunt, or like Daddy, drive to the mall and do two laps. Things that seem like requirements really aren’t. Raise your GAF level to include only the important things and make time for yourself. Skip a meal, grab some water and a granola bar and get going.

I now know the restraints of life. I had That Job. I consistently worked well over 50 hours a week for more than 30 years. Each night I would come home to a busy family life and turn into a zombie by 9pm, knowing that the whole thing would reset again at 6am the next morning. I was not good at it, and whether it’s true or not, I believe the stress of that life, along with a healthy dose of alcohol, caused the cancer. With that lifestyle, you have to pack your fun into a weekend, and just survive the week. I had to go thru that to figure out that the first thing I needed to do when I got off work was to ride, and everything else came second.

You can read a lot of studies on health and wellness and see fitness gurus on TV and the internet giving you all kinds of advice. Who knows what to believe? Keto, Atkins, low carb, low fat, Zumba, yoga herbals, CBD, fasting, and the list goes on! These people are all trying to fill a gap left by our health care industry, whose main focus is treating symptoms, not causes. After you get past the genetic problems, their answer is a pill for this and a pill for that. It’s not a question of why did you get cancer, why do you have type 2 diabetes, why do you have high blood pressure, but how we can treat it. I lived this when I was recovering from cancer. Once the docs realized I was gonna live and be alright, I was way below their GAF level. I had to manage my own return to a healthy life. Things like trying to figure out how to get enough muscle back to get to the point where I could actually build some lactic acid and feel it was on me. So you have to figure out how to fuel your body, how to burn the calories, and what activities you can do to aid in all that, which are going to keep you moving to a ripe old age.

If you show up at the docs with a problem, he or she is going to give you a maximum of 20 quality minutes, and work on that treatment for type two diabetes, high blood pressure, etc. It’s going to be along the lines of ‘take these pills, go to the gym, and eat better.’ As a first wave of attack, that works. The initial work comes in identifying the source. Maybe drop the sodas, chips, and daily Monsters, even if those cans say zero calories. Do you dread the exercise regimen, or is it something you look forward to? If you don’t like it, you are not going to do it the rest of your life. The happiest day of your life should be not when you are diagnosed and begin to treat, but when you can naturally stop the treatments. Of course, in many cases, genetic issues or issues where your body does not do something like produce insulin, you are going to have to take that pill. I, for example, had my thyroid roasted with radiation, so there is little natural production and it has to be supplemented. It’s a rare physician who has the ability to spend time with you to go beyond treatment and work wellness issues.

I have seen it firsthand. My ancient dad went through a process that has made him as astute and physically capable as he was 10+ years ago. First, he eliminated the booze, which allowed him to eliminate the blood pressure pills. Next, he dropped the sleeping pills, and after that the baby aspirin. His medication list today is a multivitamin about once per week and his blood pressure is always spot on target. Within 5 sites here in the RV park where I spend each winter, most of the dogs take more meds than the old man! I am sure they are out there, but I have yet to meet anyone who is as physically capable and mentally astute at over 90 years old.

You probably noticed an acronym mixed into the post, GAF level. There are studies, documentation, and some great TED talks on this. It stands for Give a F***. In industry, the term is GAS level, and it’s pretty common. It’s a way to filter the noise, activities, peer pressures, and all things that stand in your way. You only do the things necessary to achieve your goals, clear and simple. It may sound cold, but it’s just about the goals. In addition to Go Ride Bikes, your goals may be elder care, volunteer, foster key relationships, or build a strong family. As you free up your time, you can focus on the single most important investment in your portfolio, your health.

This is a fascinating data table. It is yearly % total returns of the SnP 500 stock index versus Fundrise, the crowdfunded private equity real estate fund. You see that Fundrise produces higher return, but also it has lower volatility. If you think of the track of real estate since the bust in 2009, its been on a steady run. I have read that the number of first time home buyers who cannot afford a house has increased from 35% to 50%, and you are certainly seeing home price inflation in many areas across the US. It appears we have entered a new world of real estate, where the value is now exceeds the majorities ability to own. Lots of people still want to own property, but the definition of that property is going to evolve to fill affordable niches, like condos and townhomes, while others are going to need apartment rentals.

Fundrise is a low cost of entry, $500 min, way for you to get into the private real estate market which has historically provided returns much higher than stocks and bonds. The theory on classical investing is evolving, and I personally buy into it. Rather than 100 minus your age for a stock bond mix, I believe it wise for you to seek investments not traditionally available through your financial advisor. I have documented my personal findings on Lending Club, a low entry peer to peer investment option, and Fundrise is another option for you to broaden your investments. I also have an income producing commercial rental building, so my total portfolio is probably broader that most.

This fund is a source of cash for real estate companies who are focused on returns. You get both debt and equity in the portfolios. As I look through my portfolio it is mainly in multi unit housing developments, with a few commercial real estate projects and a few single family homes. I like it because its hands on, has a low entry point, and I can see where every penny is invested. You can call up a single project, look at a picture, a map, the amount, who owns debt vs equity, review the market analysis, projected return and associated risk range, etc. You get more than 5 levels of Why for everything in your portfolio. Also, it auto invests across their portfolio projects, which I can control. In addition, and once again I kick the dead mule here, probably my favorite thing is that it cycles differently than the stock market.

Your should always consider the risk and downsides of each investment. Like every good business deal, its the ending and the rough times you have to prepare for. Real estate can be very regional, subject to natural disasters, and can experience its own slowdowns. When you transfer money to Fundrise, they make you state that this investment is less than 10% of your portfolio, which is wise. In addition, this is an illiquid investment, so you have to be aware of how much of your money you can actually get to in case of need. What you get is a historically high return investment that will not cycle with pig belly futures, or quarterly steel manufacturing volumes. My own personal experience confirms this, that commercial real estate brokers are focused on cap rate, and if you are not talking 8% or greater, they have little interest. With all its upsides and downsides, Fundrise is worth considering as part of your overall investment strategy.

In many ways I am referring to myself here. Lets look at a some facts:

*The average investor earned 1.9% over the last 20 years, while a stock/bond mix was around 5%.

*Studies show that giving people money doesn’t make them better off.

*The majority of wealthy athletes become former athletes who are broke.

*People who win the lottery are not happier and usually end up broke.

*Student loan debt is in the trillions, as people are getting boutique degrees with free money and massive loans, not degrees that train them to earn money.

I reference a lot of things here, and this is a blog, not journalism, so you can choose to believe me or not. People are educated in a lot of things, but are rarely educated in money. Unfortunately, if your lifestyle today is living with financial struggles, no matter how hard you work, or how much money other people give you, in the end it is very unlikely to change throughout your entire life.

Now for a quick political aside: if you hear someone giving away wealth or redistributing income, and let me assure you this happens on both sides of the aisle, you are either looking at a functioning moron, or someone who is buying votes with your tax money. Beware!

I developed many bad habits throughout my career and a few good ones. Of the few good ones, three stand out. Whenever I received any financial windfall, like a sale of an item or a bonus, I used a rule of thirds. I paid bills and debt down with 1/3, invested 1/3 and blew 1/3 on things that did not buy any more debt, but were fun. Secondly, I always paid extra on my home mortgage. It was like a game, and it turns out in the end it really paid off. And lastly, from the moment the program became available at my work, I contributed the max to a 401K. There were a few months where we got in a bind with young babies and had to back off, but that is the only exception.

Financial education is a journey, and one that few actually take. Advise comes from all angles, but the sources of that advice in a lot of cases are flawed. Take a close look at your broker: is he ultra rich, sporting a Rolex Daytona watch, owns an awesome house, and always on vacation, or is he in a $200 suit wearing a Seiko? You are assaulted on the internet about companies that will help you achieve wealth or eliminate your debt. Do you suppose they really want you to succeed or are they looking to reallocate some of your assets into their pockets? Your sources of information need to be many, and from people that can be trusted. In my personal research, I find bits of useful information in may places, and in all cases that information can be substantiated by multiple sources.

Lets assume you know the basics: Debt is evil and will not allow you any financial freedom, taxes are the single biggest expense in your life, lack of savings will ensure you live on Social Security in retirement, and you have to get your spend under control. Do you have that down yet? Lets review.

You have got to eliminate any debt other than mortgage debt, and that mortgage debt needs to be gone on the day you stop working, whether you are 35 years old or 59 years old. If you have debt, work to consolidate at lower interest rates, either thru special offers, services, or even consider a home equity for a short term boost. Note that none of this works if you continue to acquire more debt. Pay extra on your mortgage whenever you can. If you ever come across a windfall of money, step one is always to eliminate debt.

Taxes are tricky, and you can do what you can to gather deductions, but really you have to step out of the box if you want to impact this. The most common way is an income producing LLC that allows decent deductions. Rentals of things, not limited to real estate is a viable option, but the deductions can be somewhat limited. The question here is will you have time to do this along with hold a job, or could this possibly become your job. In business there is also high risk. As a rule of thumb, the first owner of a business bears the brunt of the costs for infrastructure setup, etc. After that, the business is evaluated on revenue, or the wholesale value of the assets when bankrupt. My preference here it to be a follower, unless you have that light bulb idea, but I have been involved in both models and I believe the decision is personal.

Savings are necessary. The first rule of savings is to put aside every penny you can afford pre tax, or avoid tax on gains, as an IRA or 401K. Legally avoiding taxes in every way is critical. Beyond that, post tax savings will set you free. If you cant afford much, do a little. Think of it like exercise, where a walk leads to a jog, and jog to a run, and a run to marathon, its okay to start small. Build a habit. There are a vast selection of on line places to put small amounts of money that gain interest so if its $25 a week, so be it.

As far as spend, we have previously discussed methods to set goals, cut back, and monitor progress. I want to emphasize again that you strongly need to consider being mobile. Living in a state with high cost of living that includes high housing cost, high local taxes, high property taxes, high state taxes, and high fuel costs in any combinations is a fast way to limit wealth, no matter your pay rate. I didn’t even have to write ‘California’ or ‘Washington’ or ‘New York’ for you to get that, right?

Now on to some more subtle points.

Assets can be a confusing topic. Classically, an asset is anything that has value, but forget that NOW, as its a trap to keep you from financial freedom. A quality asset is something that does not loose value, but gains value or produces income. A car, furniture, electronics, powersports toys, bicycles, RV’s etc are not quality assets. Those are things like property, stocks, bonds, gold, quality watches, etc. Remember the comments on the broker? I did not mention him owning a fancy car, but I did mention him owing a Rolex watch. Those are great examples of the bad versus good assets. If you do a little research, you will actually see high end watches appreciate nicely and cars do the opposite.

You have to have some depreciating assets, like a car, motorcycle, or in my case a high end bicycle. Consider a used model with low mileage, or a demo bike instead of a new shiny bike, to let someone else take the depreciation hit. My last bike purchase was a year old demo, at 50% original cost, but it was still expensive! I personally believe in owning depreciating assets that enable my lifestyle and health, but limiting my lifestyle to a few activities that I love to do. The next thing to do is keep them, until they are unrepairable, or the repair costs are bigger than the asset value. My wife is sad when something becomes unrepairable, but I do the happy dance, because I know we have extracted all the value from that item.

When I think of the importance of rapidly depreciating assets, I have a conversation burned in my head between a close friend and his wife. Her shoes she was wearing were pretty ratty. He asked her when she was going to get new ones, and she said she wanted to stretch them to a year of life. The backstory is that she is an avid trail runner at a very high level and those shoes are logging hundreds of miles month. I thought about my high end runners in my closet which in no way had over 50 miles on them. As a matter of fact, we interrupt this blog so I can go for a run… So as you purchase assets, remember what is really your number one asset. You. Your health, your mental stability, and your low stress level are everything. If that takes a $200 pair of running shoes you are going to put hundreds of miles, $4k bike you are going to ride for thousands of miles, a $20K side by side that it going to take you deep into the back country, that is not an asset but a tool. The key is to use it to its fullest.

The topic of investing has been covered before, and there are masses of information on the web in this area. At least a third of the opinions on the web are either wrong, or a means to extract your cash. A person who charges you for seminars on how to be successful is usually not successful in the areas you need help. Look for people and groups that live it. People who live off passive investments and are experts like Sam at Financial Samurai, people who built wealth from nothing like Robert Kiyosaki, full timers in RV’s, retired persons with no pension, and people who are living off the grid in a tiny home or a van. If you want a lesson, walk around and talk to full timers in RV parks. I have yet to meet one that can’t describe tax structures, health care, and optimal temperatures in great detail! These are people who invest in themselves, and have tidbits of knowledge that are valuable.

For most out there, investing using the classical model of 100 minus your age for a stock/bond mix will provide return well above inflation. If you are doing this, be wary of any financial advisor that delivers this as the sole product. Use a low impact Roboadvisor like Betterment or Fidelity Go, which are typically run 66% or more less fees, and provide more flexibility and access. I have been in situations where meeting my financial advisor is like getting an audience with the Pope, and I get the impression he is confused over who owns my money. You will find with some research you have the ability to manage your own money. Also, see previous blogs explainging you should invest in some things that don’t cycle with the SnP 500. That could be real estate and rentals, which are not my favorite due to high initial cost but can provide large returns, crowdfunded real estate equity (Fundrise), peer to peer lending (Lending Club), high interest savings (Ally), layered high interest CDs (Ally and many others). That list seems overwhelming, but its really not. When, not if, you are saving a few dollars, open a Roboadvisor account and use a classical investing model for risk. On top of that, pick another low entry point investment vehicle that is diverse from stock market and stick with it.

Simplify your life down to the things you want to do, use your knowledge to gain wealth, and shine the rest on. I ride bikes with a retired engineer who is 62 years old. He owns two homes in highly desirable locations, one in St George Utah and one in Cour d’Alene Idaho. He makes me look like a cheapskate when it comes to bikes. His stuff is ultra high end all carbon fiber, meticulously maintained, and he can easily outride me, even though he is 62 years old. In contrast, he drives a 19 year old van, proudly furnishes his house in the most minimal fashion, and repairs things until they are unusable. His thought process is to save money in all aspects so he can spend money where he wants. He has limited activities but does them at a very high level. He is the ZEN master of retiring well.

Health care is the topic on every retired persons mind, and those getting close are becoming more aware of it all the time. As the need for health care goes up, the cost is skyrocketing. It is often described as the number one expense for the retired. One option to mitigate this cost is the Affordable Care Act, or Obamacare.

After moving from Corporate health care to Cobra, then to the real world health care, I was shocked. I was looking at a transition from paying $450 a month for a family of 3 for a $1300 deductible plan to $950 a month for a family of two for a $6500 deductible plan.

Using on line research, a visit to my tax advisor, and an engagement with a local health insurance broker, I was able to get approved for ACA. I engaged a broker at Intermountain Agency in Boise, Idaho who placed multiple calls to different agencies, cleaning up my scattered accounts and linking them up. Choosing the health care policy was simple and took about 10 minutes. The signups, linkups and approvals along with repeated followup took many more times that level of effort. I had already applied on line for the subsidy and been approved. However, I had no recent history at this income level and the government required follow up and proof. At my brokers suggestion, I went to my tax advisor and had him generate the response, sending a letter that stated my income as he understood it for the year. An ironic note is that the most tardy piece of information for this summary was from my biggest brokerage account at JP Morgan, who pushed tax form delivery to within a week of the required date; my full service broker performed as expected. I believe without the engagement of my insurance broker at Intermountain Agency and my tax advisor, I would have been unlikely to execute all the necessary steps to get this done.

To qualify for Obamacare you must earn between 100-400% of the Federal Poverty Level. For a family of two, that is approximately $16K to $65K. If you are below that level, you need to use Medicare, and above that level you are on your own. Your taxable income is based on wages, tips, interest, capital gains both long and short term, and any other reportable income like rentals, businesses, etc. Your 401K or any other pre tax retirement is not included until you begin to withdraw. Each income point along that spectrum has a subsidy value, between 2-10% of your income. In addition, you cannot have access to a government or employer based health care program.

Lets talk about taxable income. If you have money in an investment account, it’s not based on the growth of the funds, but when the managers sell a security that has increased in value, creating an a capital gain. For large funds like JP Morgan this can be a random number generator and you need to monitor it monthly. Toward the end of the year, hopefully you can make requests to adjust if you need, either selling loosers or winners. The fund managers also make their own adjustments at the end of the year also. One of my roboadvisor accounts, Betterment, offers a tax harvesting service, where they select a security that has lost value and sell it creating a capital loss, and replace it with a similar security. For me, this is a process of income management is going to take a couple years to master.

Your estimated income for the year sets the subsidy. If you end up earning more than that, you have to pay it back to the government, and if you earn less, you can earn a credit. My tax advisor strongly urged the use of an income number that was very conservative; he had many cases of people getting to the end of the year and having to pay the entire subsidy back to the feds. You are basically settling up the account on your year end taxes.

Some question the morality of getting a government subsidy for health are when people have what most would call a sizable sum of savings. I, along with most retirees, don’t think about this for a second. That sizable sum is effectively my personal pension, and the principal and interest make up the money for my wife to live off until for the rest of the years. After years of giving egregious amounts of money to the government in the form of taxes, receiving a pittance of that back while living on lower middle class wages makes perfect sense. In addition, I always like to remember our amazing elected federal officials, who don’t need to worry about this as they get their health care on a silver platter and refused all pressure to participate in this program.

Addressing health care as a retiree, unless you have a pension provided policy, has got to be your top concern. Unfortunately, the Affordable Care Act is currently struggling. The premise that adding 20 million people to insurance roles, which would be subsidized by forcing young healthy people to buy insurance who otherwise would not, was known to be a fallacy from the beginning. The penalty for those not buying insurance has now been eliminated, and the entire plan is back on the table. You should of course watch this as it evolves, but also sign up for all you are eligible for today.

In one of my searches on side hustles, I found an interesting niche of peer to peer lending, or what is basically crowd funding of unsecured loans. My first reaction was not positive. I had watched documentaries of the sketchy behavior of unsecured loan companies, where people who were in tough spots were taken advantage, and basically had their life ruined. Title loans, pawn shops, and payday loans all fell into the same category for me: business that charge ridiculous interest rates to people that can’t afford basic living expenses. As I dug into this more, my opinion swayed.

The most recommended site appeared to be Lending Club. This is a crowd funding site where investors fund unsecured loans which are graded and managed. The rates charged here are based on probable ability to repay. Interest rates range from 6-8% for grade A loans, to 23-30%, but the effective rate after defaults for all grades is just less than 5%. Thats a fascinating number. Those in the low grade loans have massive default rates, so to achieve a reasonable return, the high rate is clearly justified. Lending Club provides stats, by class, and adjust loan criteria regularly to ensure that performance. I did not know this!

I started investing here, with my favorite method, which is a small amount and get a feel for performance, access and information, and have become a huge fan.

Loans, graded from A to G, with 5 sub grades each, are given to applicants with interest rates that range from 6% to 30%. The interest rate of my personal portfolio today is 11.6%, meaning I choose the higher grade loans, focused on A and B level. After non payments, or charge offs as they call them, that 12% should eventually hit 4.7%. In the first year, my return has been over 10%, but most loans don’t get charged off till later, and with 1-2 year terms, it takes over a year to see the actual returns.

I use automated investing, and the loan positions are only $25, so I have hundreds of loans. The more loans you have, the less variation and less risk to an individual charge off. The site has good analytics to show you this model. Payments received each month are re-invested, based on my % of loan grade choices. Its no effort, but I still look at it regularly and play with analytics they have available. Based on these analytics, I chose a higher grade portfolio for risk reduction, and after I was comfortable with the site and its functions, quickly invested enough to get over the 200 loan mark to reduce variation. I have currently gone well beyond the 200 loan threshold. Lending Club has a $44 billion dollar history, and regularly reviews loan grading methods, and has analytics on major economic upturns and downturns. I find this history, and their publications, a valuable source of information that I don’t get elsewhere. If the SnP 500 or the Dow take a 20% dip, it doesn’t translate to a dip in these returns. This fund is not impacted by auto sell triggers which are so prevelant in the market today. If you see unemployment spike on the other hand, you can expect to get hit.

I have a ‘pattern’ in which I like to invest. I want to try something out at a low commit level, and proves it does as advertised. If all is well, the performance is as stated, and it looks like they provide simple and easy tools I can navigate, I increase my exposure. If I don’t like it, then see you later. Also, I look for things that tend to cycle at different times. I don’t want my entire portfolio to cycle as the stock market cycles. The current corellation between the bond and stock market is very high, so standard portfolio theory, 100 minus your age for stock exposure, is no longer the gold standard. If you do have to invest like that, you better being doing it with a low fee account.

With the focus of the industry on the millennial investor who is extremely comfortable on line, there is a growing industry of on line high tech investment options, like Lending Club, but also in Private Equity, which previously was relegated to the $multi million portfolios. These tend to be low entry point to start, with high on line content and control, and almost always have an app on your phone where you can transact at least 80% of your business. If you are smack in the middle of the investment world, with a standard portfolio of stocks and bonds, not getting access to private equities or other high end investment options, you now have ways to get out from under the standard Financial Advisor model. These things were just not available 10 years ago.

Solid returns, hands on modeling data, little work required, and vast financial history, so whats not to like about Lending Club? These funds differ from my investment portfolio in that I cannot put in a request, and over the course of a week, get access to my money. You can trade your loans, but risk loosing money. If you want your cash, you terminate auto re-invest and let the money come in as payments are made and the loans clear. I put this in my bucket of illiquid investments and treat it as such. Its not the largest part of my portfolio, but it may actually be the most enjoyable, while delivering great returns.

The answer is simple: use a Financial Advisor as your sole source of investment income. Their fees can eliminate 25% or more of your profits if you are not careful.   As I have have studied this more and more, and studied people who are actively making money from investments, I see one common thread: their eggs are in multiple baskets, and they are personally active in their investments.  

Caveat 1: I am a slow learner;  I have to be hit with something multiple times to sink in.  This blog has forced me to be introspective and helped to accelerate evolution.

Caveat 2:  I also believe in ‘eating your own dogfood’, which is a technical term for using your own work product, not just spouting BS.    As I write this blogs, I feel an obligation to understand  the things I talk about, and do this by actually using them.  So these topics will evolve and be reposted as more information comes in.  

Caveat 3: My plan may not work for you.  The first step is always to Think!!

The focus here is the money that the government had already taxed, and you have in your savings, investment account, buried in the back yard, etc.   

I hope there is a nugget or two in here that can help in your search for higher returns.  Most of these options here allow you to dabble at very small amounts, around $1000 or less, to get a feel.  That is always how I start, and as I become comfortable, I may or may not choose to increase.    All investment has risk; in the case of a recession, market bubble burst,  real estate tragedy,  etc all bets are off and these returns will not be there.  

*Roboadvisor.   A roboadvisor is an on line investment account that typically targets smaller investors and boasts very low fees.   I have held one for a few years called Fidelity Go.  I adjust the risk a little every now and then, and it generally follows the SnP based on how heavily I am into stocks. Its easy to manage, move money, and check performance.  I can do things at my leisure any evening or weekend, and have them start working the next business day.  I have proven over time that my performance is equivalent or better than my FA, and the fees range between .35% and .4%.  Thats is $600 per $100K invested per year savings over my standard account.   I have also recently opened an account with Betterment.  Multiple sources indicate this is the gold standard in roboadvisor, for both low fees and good service.   I will update as I learn more.  These funds will go as the market goes, so expect no better or worse.   My personal target is 4% gain after all fees.

*Peer to Peer Lending.  This is a way to use your money as a source of unsecured loans.   Most people are using these loans to consolidate debt or to pay medical expenses.  I have an account with Lendingclub, and with over $40B of history, I find it delivers as it states.   You select loans based on grade, A thru E, and can set up auto invest based on those grades.    Grades determine risk and risk determines interest rate.  Interest rates range from 8% up to 28%, but the key here is effective interest rates. Those are actual returns after defaults, or charge offs as they call them.   That rate is targeted at 5% for all grades of loans.  In my first year, the return is high, over 8%, but all data indicates this will settle around 5% after charge offs.  This is because most loans are 1-2 year terms.    I auto invest, so each payments generate new loans, each of which is only a $25 position, so my risk is mitigated by having hundreds of loans.  The website has lots of fun analytics, history, and information so its also very informative.   This fund has been through major economic downturns and upturns and can model those results.   My personal target is to net over 5% on my funds. 

*REIT.   This is real estate investment trust; I have recently started to use Fundraise, which is a low entry point crowdfunding site.  These funds have typically outperformed the market, and enjoy an advantaged tax structure.  This fund does not target single owner homes, but larger complexes, so you are tied to the market.  I like it because I can enter at much lower amounts than going out and buying a property on my own.  I am new to the platform but its history since inception is over 8% return.  This fund has not been through a real estate bubble burst and does not model those results effectively, and also the funds are determined to be illiquid, meaning you should plan to leave them over long periods of time.  My personal target is to net 6% on my funds.

*Commercial Real Estate.   Circumstances dictated (lets just say divorce) that I own a piece of commercial real estate, with 11 rental units.  After taking over the property, I became intimately aware of all expenses, improvements needed and rent values.   I put the building on the market after a couple years, which forced me again to review profit and loss, understand caprate,  and develop a deeper understanding of the current rental market.  I keep all the books, do the vast share of maintenance, and write all the leases; your skill set here needs to cover the spectrum from Quickbooks to fixing a broken window.  Anything you can’t do becomes quite costly.   My biggest expense is a property manager who collects rent and deals with day to day issues, which I have to keep in place because I am not present about 50% of the time due to travel.  My income, due to the nature of my renters, is tied to disposable income that will be at risk in a major recession.  After going through all this, my investment is currently returning around 6% net. 

*High Interest Savings and CDs.   This is further down on my list, and I do not have an account here, so I am NOT eating my own dogfood just yet,  but for many this is a large part of their portfolio.  The online platform that appears to be very good, and one of the OGs on this blog currently uses, is Ally.  You can get savings rates over 2.5%, and CD’s over 3% currently.  Its a great place to keep cash where you need quick access.    I would expect to earn 2.75% net from this if I were invested here.  

These passive investments require more work than one would think, and amount to a part time job.    If you can do that and maintain your focus on your passions, its a great situation!    

I have always wondered why the old guy at the hardware store was always so happy.  I get it now.  He realizes life is really pretty simple; you just need money for the basics, and funds for those things to keep you moving!    

Of all this posts so far, I predict this will be the most controversial.  I have taken off handed shots at Socialism, Federal Spending, and Financial Advisors.   But a choice of vehicle brand can be fighting words.   

To set the stage, lets narrow the evaluation to a specific vehicle with a specific purpose, and give a bit of context.  What we are discussing is a 3/4 ton or 1 ton pickup with a diesel motor, and nothing outside of that.  This pickup is the most popular vehicle for towing 5th wheel trailers.  Its also very popular among the people towing larger bumper pull trailers, and larger snowmobile and ATV trailers.   There are a few reasons for this.   First, your towing capacity can be over 22000 lbs.  Thats eleven tons!   Second, for the fifth wheel crowd, you can put large amounts of weight over the rear axle, over 4000 lbs.   Third, the diesel motor delivers massive torque which is required for these loads. The current monsters on the market all deliver over 900 ft/lbs of torque.   And fourth, this type of vehicle can look really cool!  You can buy today a fifth wheel that uses all of this capability and some, with full size home appliances, massive slide outs, tile floors, etc!   These ultra heavy RVs have mimic’d the increasing load capacity of the vehicles.   If you put one of these new RV’s on my 1993 Dodge 3/4 ton pickup, you would crush the rear axle and the 180hp/210torque motor would struggle to get it out of the parking lot.

This type of truck can cost from $45K all the way up to $90K, so its no small choice.  Lets look at the important factors which I deem to be comfort, drivetrain reliability and drivetrain effectivity.

Comfort can be subjective.   You are buying a consumer vehicle that has the equivalent drive train and capacity of a medium duty semi.  Yes, you are looking at a delivery truck with a nice radio!  People rarely use this capacity the majority of the time; I tow a lot, enough to wear out a set of 10 ply tires on a yearly basis, and that still only amounts to about 1/3 of the miles being with a load.   So for 2/3 of the time, I am dealing with a large vehicle that has a wide turning radius, a rough ride, and an interior that struggles to get beyond its drag racing and farm truck heritage.   Yes, you guessed it, I drive a Dodge.!!

None of these vehicles ride like a car, nor even a half ton truck.  If you have no weight on the back axle, you are bouncing off the stops.  That means a speed bump can bounce a rear seat passenger to the roof.  Oh well, I don’t ride in the back seat.  The interior of the Ford is very plush and purported to have best soundproofing.   I can tell you from experience Chevy delivery a nicer interior than Dodge.    At some point, however, you are going to have to park these in a tight lot.  In this case, you will cuss a little less with a Dodge, which has the best turning radius, and most with a Ford, which is the worst.

On to the heart of the issue, and this is where my decision always went, which is the drive train.  All three companies realized at some point they needed to partner with a motor company that had diesel DNA.   Dodge chose first, in 1989 picking Cummins as their choice and that remains in place today.  Ford created a partnership with International, called Navistar.  Chevy jumped in with Detroit Diesel, which thankfully was replaced by Isuzu in 2001 to form Duramax. Two of three partnerships are still in place, with Ford making the choice to go it alone in 2011, after years of struggling with reliability on the Navistar platform.

Cummins was founded in 1919 and has been a major player in the diesel market since WWII.  Their motors in this truck have not been without fault, with the ‘exploding dowel pin’  and ‘53 block cracking”,  along the way.   It is not unreasonable for you to believe  that you can by a new Dodge pickup with a motor that will last 500K miles.  You can find examples of this all over the internet.   Where you are at risk here is the transmission.  The 68RFE auto trans has history of sketchy reliability and just does not match up to the capability of the motor.  I always went with manuals to avoid those problems.  Manual transmission is not the future in over the road semis, nor is it in this segment.   The latest trans, now available on consumer grade pickups, is the Aisen.   Thats a purpose built unit from a Japanese specialist who is 30% owned by Toyota and been around since 1949.   Reviews on reliability and capability under load have been good, but driving it unloaded gives you a bit of the farm truck feel. 

Isuzu also has a vast history of diesel, being founded in 1926.   Duramax motors have a solid history of reliability, similar to Dodge, and I see no edge to either.   The Allison transmission is the gold standard in this segment. Allison was founded in 1909 and is the most sought after name in the transmission market. Note however in the latest 2020 offering, the transmission is no longer Allison built, but Chevy built and Allison branded.  Woops.

Ford dumped Navistar in 2011, and has had some early reliability struggles on their own, but as always are working to improve.  One thing you don’t see on the the internet are the red flag issues, with motors grenading, so that is a good sign.   The transmission is also in the same boat, built in house, appearing to have solid reliability.  I really don’t have any notes, nor do I see a lot of info on the Ford trans either way.   I think what this comes down to is that if you like Ford, you are going to buy it no matter what.   And really, there is no evidence out there to say you will regret the decision!

Before final conclusions, let me state this.   In all three brands, you are going to get a torque monster that will likely go 400K miles.   Most people are not going to tow to the capacity of the vehicle, and few are going to put more than 1/3 the miles on while towing.   I embrace this, try to keep my mileage low and focusing on towing, so I also have a small car to drive that allows me in and out of the grocery store without being angry. In addition, if you want to hit 400K, maintain the the vehicle very well.  One more thing that is now in the manuals: always let your vehicle idle for a few minutes before you shut off when you have ran it hard.  Bringing all those temps down slowly does your entire engine bay a big favor. Exhaust manifolds are seeing 1300 degrees, cylinders are water jacketed at 200 degrees, and incoming fuel is ambient temp; let it even out.

In conclusion there is a ‘fuzzy’ winner and in 2020 its a Dodge.   Given all motors and towing capabilities are very close, you have to look at comfort and reliability.   I would put the Dodge last in comfort, but first in reliability. Note if Chevy had not in-sourced their transmission, I would put it solidly in first place. Ford just cannot compete with years of learning of Cummins, Isuzu, Allison, and Aisen. This takes into account a lot of internet content and some personal experience; I have owned 5 pickups in this segment.  The depth of the overall drivetrain partnerships with Dodge is far and away the clear winner.  In this particular vehicle, that is what I am buying.