Category Archives: Money

The Leasing Game

There are people in this world who hate leasing vehicles.  The reasons vary.  My favorite one is that leasing leaves you with nothing to show for the money you’ve spent.  Then comes the expense.  You’re responsible for maintenance.  You spend all this money on a car that isn’t even yours.  You pay insurance premiums that will ultimately pay out to the leasing company in the event of an accident.  They also say that you’re paying for the worst depreciation on the car — when it is first released into the wild.

I can’t deny the truths behind these arguments.  Leasing is kind-of an odd thing.  You really do insure a vehicle that you don’t own.  You really do have to maintain it on your own dime (although, a warranty will cover everything else.)  You really do have to give it back at the end of the lease term.  So, what’s the up-side?  That depends.

A car lease is a contract wherein the lessee (you) agrees to pay money for a given term in exchange for the use of a vehicle.  The amount of money you pay is determined by the purchase price of the vehicle less the residual value after the lease term.  The residual value is how much the lesser (the people leasing you the car) think the car will be worth after you have used it.  This value seems arbitrary, but it is actually based on several obvious factors: mileage, wear and tear, “gap insurance”, and supply and demand.

Mileage is the most obvious variable in the residual value equation.  A lease always includes very strict mileage allowances.  For every mile over that allowance the car has traveled, you pay extra.  So, right here — right at this very sentence — if you drive more than 12,000 miles in a year, you shouldn’t lease a vehicle.  Honestly, you shouldn’t be driving 12,000 miles a year.  Driving is a total waste of time and energy on your part.  It’s expensive.  It’s boring.  It’s dangerous.  Don’t do it.  If you drive only 3,000 miles per year, you may want to consider purchasing.  Why?  Because you won’t use the car as much as you could have, and you will be paying for utility that you do not utilize.  Just buy a car and plan on keeping it forever.

Wear and tear is also pretty obvious.  The dealer expects the car to need some work when it comes back.  This work will be minor, but it still has a cost.  That is factored in to the residual value.  After a 36,000 mile lease, the car will likely be out-of-warranty, but still very mechanically sound.  This is great for the used-car market, where “clean”, low-mileage cars actually go at a premium.  This relates to the supply and demand factor.

I use quotations on “Gap Insurance”, because the actual contract isn’t technically gap insurance.  There is a risk that a certain number of lessees will total the cars they lease.  The dealer factors that risk (and the cost of that event) into the lease.  Meanwhile, you pay regular car insurance that covers smaller accidents, medical bills, etc.

Finally, and the least obvious of the factors, is supply and demand.  The worst thing about this factor is that it is constantly changing.  The residual value of a vehicle is largely influenced by the greater used car market.  The used car market is supplied by off-lease vehicles and trade-ins.  Car lease terms range from 24-48 months, with the most common advertised term being 36 months.  Car loan terms have taken on much longer terms in recent years, as long as 72 months.  In fact, In 2010 nearly 1/3 of car buyers financed using a 6-year (72 month) car loan.

What do you know about car loans, or just loans in general?  I’m going to take a minute to explain them.  If you already know, feel free to skip ahead.  Most people know the basics of loans.  An interest rate and a term is advertised.  The interest rate is applied to the loan balance repeatedly over the life of the loan.  In many cases, the interest rate is applied monthly.  The other advertised value is the principle, or sale price, of the vehicle.  You must understand that both the interest rate AND THE TERM determine how much extra money you pay.  So often people focus on the interest rate.  The term can have as much or more influence on the total interest charged.  Furthermore, you must understand that loan payments are biased toward the balance of the interest, and gradually change bias towards the balance of the principle (the car’s sale price)

Let me try to put that in a concrete example, without getting too mathy.  Let’s say you want to finance (not lease) a $10,000 car (forget taxes for now).  The interest rate is 6.00%  The term is 36 months.  Over those 36 months you will pay $1996.81 in interest.  Great.  When you’re done paying for the car, it actually cost you $11996.81.  And, your monthly payment will likely be $333.  That’s pretty steep for a $10,000 car!

Now, let’s say you want to finance that same $10,000 with an interest rate of 3% for 72 months (6 years).  That interest rate is really attractive, right?  I mean, it’s HALF of the other interest rate.  But, the term has doubled.  Over those six years, you will pay $1969.48 in interest, and the car will have cost you $11969.48 total.  Now, your payment is only $166!  How wonderful!

But, is it wonderful?  Now that you’ve seen compounding interest in action, you need to understand depreciation.  Accountants learn that word in college, and all it means is “things lose value.”  Cars, houses, mobile homes, your computer, your tablet, your phone…  Everything you have ever bought becomes less valuable after you buy it.  They all take on wear and tear.  They all become “old”.  There is no mathematical equation that predicts depreciation in the way that we can predict interest.  The car’s value is determined by whoever is willing to buy it, and the amount they are willing to buy it for.  Car dealers buy used cars all the time, so they often have a big say in how much value a used car has.

Now, as soon as you drive your brand new $10,000 car off the lot, it has lost value.  It doesn’t lose value gradually, the value drops FAST, and then gradually sinks as the car ages.  If you owe more money on the car than what someone else is willing to pay you for it, you are “upside down” in your loan.  In other words, if you want out of the loan, you need to come up with not only the value of the car, but also the difference between that value and the balance of your loan.  If you’ve only made two payments on your $10,000 car financed for 36 months, and someone is only willing to pay you $8,000 for it, you need to come up with $1333 to cover the difference.  However, if you financed that same car for 72 months and you get the same offer, you need to come up with $1668.  Why?  Because your monthly payment for a 72 month term is only half of what it was for the 36 month term.  (36 month term payment was $333/mo, 72 month term payment was $166/mo.)

I’m trying to paint a picture here that shows you why financing anything is a terrible idea.

To make it even worse, loans are designed such that you pay more towards the interest at the beginning, and more towards the principle toward the end.  For example, 90% of your first payment goes towards the interest you own, and 10% goes toward the principle.  These rates gradually swap over the loan term, until your last payment is 10% interest and 90% principle.  What does that mean?  Well, number one, it means that the finance people want their interest first and foremost.  And, number two, it means that you actually aren’t paying much toward the car’s actual cost.  It’s another way to keep you upside down in the loan and to keep you from selling the car before you’re done paying the interest (which is where the bankers make their profits).

Jeez.  This is a long post.  Go grab a cup of coffee or tea and meet me back here.  I’m about to start talking about leasing.

So, we’ve established that long financing terms are bad, even at lower interest rates.  We’ve described how loans are set up to keep you from being able to sell the car before the loan term is over.  (And, at 6 years, you’re probably stuck with a car that is falling apart.)  We’ve shown that a low payment is both a blessing and curse.

Now, on to leasing!  LEASING IS STILL A FORM OF FINANCING.  You pay interest on a lease, but it has a different name.  This is the “money factor”, and it is basically an interest rate.  So, yes, leasing is just as bad as financing.  But, when you lease, you agree to pay for only the portion of the car that you use.  No, you don’t only pay for the driver’s seat and the steering wheel.  You pay for the car’s loss of value.  So, if that $10,000 car is only worth $6000 after a 36 month lease, you have only payed $4000.  $4000 divided over those 36 months is an $111.11 per month payment (not including the interest).  That’s ridiculously low, right?  I was just talking about how a low payment was a bad thing.  Well, in this case it still is.  The car is still losing value as you drive it.  More on that later.

Most lease advertisements include a “down payment” amount.  It’s a payment that goes directly toward the price of the car, and often times includes a sort of security deposit.  The portion that goes directly to the car is basically a pre-paid amount toward the lease.  This is good and bad.  Paying money down brings the monthly cost down.  For example, if you put $1000 down payment on your $10,000 car lease (36 month term), your payment drops to $83.33 (not including interest).  Holy cow!  That’s all fine and good.  But, what if you’re driving along and some joker runs a red light.  He hits your brand new leased car that you just drove off the lot and totals it.  You walk away form the accident unscathed, but you’re now carless.  You know what else you are?  You’re out $1000.  That’s right.  Your down payment gets carried away on a flatbed truck.  That’s why my advice is to never, ever put a down payment on a lease.  But, I don’t trust other drivers at all.

So, is that all there is to leasing?  Yeah, basically.  But, no, there’s much more.  You should be aware that car dealers lease cars from each other all the time.  In fact, they lease cars and then they sell them.  Sounds shady, right?  It’s not.  Basically, they pay a monthly payment to keep the car on their lot.  When the car sells, they pay off the lease balance and pocket the difference between the sale price and that lease balance.  The best part of this is that you can do it, too.

Car dealers don’t want you to do it, though.  They want you to pay the lease payment every month (because you’re paying interest) and then turn the car back in when you’re done.  The problem with this is that they will change the tires, give it a fresh coat of turtle wax, and then re-sell it for a much higher price than the residual value.  But, hey, that’s the business.

Remember, though, that cars depreciate faster than most people can make payments toward their financing.  A lease works in the same way.  But, because you’re only paying for a portion of the car’s overall price, and because you’re guaranteed a certain residual value at the end of the lease, you have the opportunity to out-pace the depreciation.  In fact, a 36 month lease can be set up in such a way that you beat the depreciation around the 24 month mark.  Now, understand, at 24 months you may only be breaking even with the car’s resale value.  And, also understand that you may have to sell the car privately in order to break even.  (This is because private sales are higher than dealer trade-ins.)  However, many dealerships offer incentives if you defect from one brand to another.  For example, if you take your Honda to a Ford dealership, Ford sometimes offers an incentive for first-time Ford buyers to trade in their other-brand cars.

All of these things can help you beat the depreciation on the car, and you can escape a 36 month lease after only 24 (or so) months.

HOWEVER, and this is a big deal, you must have negotiated a very good lease contract to begin with.  A dealer can AND WILL overcharge you for both leasing and finance.  You must go to the dealership knowing how much you plan to pay, and be willing to walk away from the deal.  This is another reason to not wait for the lease term to end before getting rid of the car.  If you have no ride home, the dealer has leverage on his side.  Are you gonna take a taxi home?

The internet is chock-full of car lease calculators.  Most manufacturer websites also list the terms of the lease contracts in the “incentives” and “offers” section.  What you need to do is go to these sites and look for the lease offers for the car you want.  Find what the sale price and the residual value are (IN THE FINE PRINT) and plug those into a lease calculator.  The calculators typically give you a money factor, and the manufacturers often hide that.  Calculate a lease payment, with or without down payment and trade-in value, and then have that number burned into your brain when you go to negotiate the deal.  (Also, double check your number.  Make sure you have input all the information.  Check your calculation against the lease offers to see how realistic it is.)

If they bring you a quotation that is wildly out of proportion with your calculated number, you need to get angry with them.  Or, laugh in their face.  Get them as close to your number as possible.  I had a Ford dealer bring me a quotation of $300/mo for a Ford Fiesta!  I knew from my research that I could get the car for $200/mo easily.  And, $200/mo would be a fair deal to us and to them.  We had already told the guy what we were willing to pay, and he insulted us with his ridiculous offer.  We insisted that our number was fair, and that if he came back with anything different that the deal was off.  Sure enough, they came back at $218 (which included tax of $15/mo).

Now, the problem with this strategy all comes back to the supply and demand factor.  As I said before, the used car market is supplied by off-lease vehicles.  When more people lease vehicles, more vehicles flood the used card market.  When there are a lot of used vehicles for sale, their prices all come down.  Why?  Because supply is higher than demand.  They become harder to sell when you have too many.  Furthermore, when people end a lease, many of them start a new lease.  And, as more people move into leasing instead of buying, used car sales drop.  How does this affect leasing?  Well, as used car prices drop because of oversupply, residual values on leases also drop.  Therefore, leases become more expensive.  Furthermore, as demand for leases increases, car dealers start to charge more.  So, leasing becomes even MORE expensive.  Eventually, these supply and demand forces hit another tipping point, and it all goes in reverse.  Where are we right now, as of mid-2015?  We’re moving toward an over-supply of used cars and more popular leases.  The leasing game may be getting harder to play.

And, when that happens, it becomes more attractive to purchase lightly used car.

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How to build a true Solidworks Workstation for about $300.

I’ve written before about building the Cheapest Solidworks Workstation.  Things have changed a lot since then.  Firstly, my budget has increased slightly.  Secondly, my knowledge has increased greatly.  In that post I claimed that modern Intel i5 and AMD FX chips could handle Solidworks.  They will, but not in the best way.

In another post, I describe some things I learned about error-checking components and the “big picture” concept behind true workstations.  In short, if you’re serious about using Solidworks (or some other machine-crushing software), you need a true workstation.  The good news is that it can be had for a reasonable amount of money.  We’re talking $300-$600 for something that won’t disappoint.

The bad news is that you’re going to have to shop, and you may have to get your hands dirty.  I’m going to share with you the “Workstation Algorithm”, wherein we try to get the best performing, true Workstation for the least cost (not including the cost of your time).  If you’re like me, you spend a lot of time looking before you leap.  If you’re REALLY like me, you look and look and finally choose not to leap at all.

Let’s leap, though.  I’m serious about building my own rig and doing CAD work freelance.  I’m even serious about helping other people get CAD rigs.  CAD is the future.  3D printing is here, and it’s getting ever better and ever cheaper.  I hope my kids will be designing their own toys.  It’s totally possible.

First off, you’re going to need some shopping music.  Might I recommend this Pandora station, or perhaps this album?  (I just did.)

Second, you’re going to need to understand what we’re looking for:

Shopping List
Processors/Cooling System  (Notice the plurality?  You need more than one.)
Dual Socket Motherboard
ECC Memory
Graphics Card
Power Supply
Case

I’ll leave the monitor/keyboard/mouse situation up to you.  You know what you like, and you can find used monitors for reasonable prices at several places online.

Now, there are multiple approaches to this endeavor.  We’re going to take the hard road first, because we’re math people and math people always do things the hard way first and then learn the shortcuts that make them say to themselves, “WHY DID I JUST SUFFER THROUGH ALL OF THAT HARD WORK WHEN I COULD HAVE JUST _______?”  (Everyone does that, right?)

Approach 1: Build your workstation from piece parts!

Alright, I know that some of you are scrolling right past this section.  You might just want the easy way out, or you might have a fear of tinkering with computers.  No matter how you go about this, to get the best workstation for the lowest price, you’re going to have to open a computer case and replace some things.  Later on, we’ll buy an existing workstation and upgrade it to “modern standards of performance.”  Now, if you can’t handle that, feel free to bail on this whole project.  It’s cool.  Just go.  You don’t want it bad enough.

1. Processors (YES, TWO OR MORE PROCESSORS)

If you read the other posts about this project, you know that you need processors that know what to do with error-checking RAM.  In other words, you know that you need actual workstation/server processors.  Intel makes the Xeon line, and AMD makes the Opteron line.  I’ve already abandoned AMD, because I found it difficult to find Operton processors with the performance I needed at the price I wanted.

So, in this post we’re basically only going to shop for Xeon processors.  First, open up http://www.cpubenchmark.net/multi_cpu.html.  You’re looking at a list of benchmarked systems running multiple processors.  At the top of the list, you’ll see the latest and greatest processors smashing through benchmarks with ratings somewhere around 30,000.  You can’t afford these processors.  On the right side of the list you’ll notice the prices.  The price shown is the total for two processors.

As a starting point, the workstation I use at work ranks around 8,000 on the benchmark list.  It runs Solidworks 2014 while I have tons of other stuff going on.  I max out all of the cores when I render, and rendering takes a while.  So, start your search for a set of processors around the 8,000 range.  You’ll quickly notice that even some of these are expensive as hell.  Don’t worry.  These processors are typically 3-5 years old, and can be found used for reasonable prices.  However, YOU ARE GOING TO HAVE TO DO SOME LEG WORK to find out what can be had for what price.

But, because I’m a pretty cool guy, who doesn’t afraid of anythin, I’ll do a little bit of the work for you.  The table below shows an ESTIMATED cost for 2ea of the processor described, the benchmark listed at cpubenchmark.net, and the socket.  (All values are as of 5/31/15, and are not guaranteed to be accurate.)  The socket is important because it will determine what motherboard you can use.  Please be aware: You need a workstation motherboard, not a server motherboard.  This is important when you go shopping for motherboards, which is coming up next.  Just to jump ahead some: The X7350 at the top of the list uses Socket 604.  This is an old, old processor, and it supports old, old technology.  The RAM you need will be relatively slow, the motherboard will be hard to find, etc.  It looks like an amazing deal, but it’s likely to be more trouble than its worth.

Cooling

You will need a cooling system for these processors!  Browse your favorite computer retailer’s website for Heatsink/fan combinations that are compatible with the processor’s socket.  Also, keep in mind form-factor.  Just for example, an LGA1366 heatsink with fan costs about $30.

Processor prices are round-about, and do not include heat sinks/cooling systems.

Processor Socket Price (for 2) Benchmark Benchmark/$ Link
X7350 @ 2.93GHz 604 $25.00 9,238 369.5 http://rover.ebay.com/rover/1/711-53200-19255-0/1?icep_ff3=9&pub=5575127758&toolid=10001&campid=5337702912&customid=&icep_uq=X7350&icep_sellerId=&icep_ex_kw=&icep_sortBy=12&icep_catId=&icep_minPrice=&icep_maxPrice=&ipn=psmain&icep_vectorid=229466&kwid=902099&mtid=824&kw=lg
X5560 @ 2.80GHz LGA1366 $40.00 9515 237.9 http://rover.ebay.com/rover/1/711-53200-19255-0/1?icep_ff3=9&pub=5575127758&toolid=10001&campid=5337702912&customid=&icep_uq=X5560&icep_sellerId=&icep_ex_kw=&icep_sortBy=12&icep_catId=&icep_minPrice=&icep_maxPrice=&ipn=psmain&icep_vectorid=229466&kwid=902099&mtid=824&kw=lg
X5550 @ 2.67GHz LGA1366 $40.00 9,233 230.8 http://www.amazon.com/s/ref=as_li_ss_tl?_encoding=UTF8&camp=1789&creative=390957&field-keywords=X5550&linkCode=ur2&rh=n%3A172282%2Cn%3A541966%2Cn%3A193870011%2Cn%3A229189%2Ck%3AX5550&tag=wharyolitorin-20&url=node%3D229189&linkId=MVNV5T2CW7D35AP7
E5620 @ 2.40GHz LGA1366 $40.00 8,286 207.2 http://rover.ebay.com/rover/1/711-53200-19255-0/1?icep_ff3=9&pub=5575127758&toolid=10001&campid=5337702912&customid=&icep_uq=E5620&icep_sellerId=&icep_ex_kw=&icep_sortBy=12&icep_catId=&icep_minPrice=&icep_maxPrice=&ipn=psmain&icep_vectorid=229466&kwid=902099&mtid=824&kw=lg
E5540 @ 2.53GHz LGA1366 $40.00 8,079 202.0 http://rover.ebay.com/rover/1/711-53200-19255-0/1?icep_ff3=9&pub=5575127758&toolid=10001&campid=5337702912&customid=&icep_uq=E5540&icep_sellerId=&icep_ex_kw=&icep_sortBy=12&icep_catId=&icep_minPrice=&icep_maxPrice=&ipn=psmain&icep_vectorid=229466&kwid=902099&mtid=824&kw=lg
X5570 @ 2.93GHz LGA1366 $55.90 9696 173.5 http://rover.ebay.com/rover/1/711-53200-19255-0/1?icep_ff3=9&pub=5575127758&toolid=10001&campid=5337702912&customid=&icep_uq=X5570&icep_sellerId=&icep_ex_kw=&icep_sortBy=12&icep_catId=&icep_minPrice=&icep_maxPrice=&ipn=psmain&icep_vectorid=229466&kwid=902099&mtid=824&kw=lg
X5460 @ 3.16GHz LGA771 $60.00 8,158 136.0 http://rover.ebay.com/rover/1/711-53200-19255-0/1?icep_ff3=9&pub=5575127758&toolid=10001&campid=5337702912&customid=&icep_uq=X5460&icep_sellerId=&icep_ex_kw=&icep_sortBy=12&icep_catId=&icep_minPrice=&icep_maxPrice=&ipn=psmain&icep_vectorid=229466&kwid=902099&mtid=824&kw=lg
E5640 @ 2.67GHz LGA1366 $80.00 8,897 111.2 http://rover.ebay.com/rover/1/711-53200-19255-0/1?icep_ff3=9&pub=5575127758&toolid=10001&campid=5337702912&customid=&icep_uq=e5640&icep_sellerId=&icep_ex_kw=&icep_sortBy=12&icep_catId=&icep_minPrice=&icep_maxPrice=&ipn=psmain&icep_vectorid=229466&kwid=902099&mtid=824&kw=lg
X5647 @ 2.93GHz LGA1366 $100.00 10,132 101.3 http://rover.ebay.com/rover/1/711-53200-19255-0/1?icep_ff3=9&pub=5575127758&toolid=10001&campid=5337702912&customid=&icep_uq=x5647&icep_sellerId=&icep_ex_kw=&icep_sortBy=12&icep_catId=&icep_minPrice=&icep_maxPrice=&ipn=psmain&icep_vectorid=229466&kwid=902099&mtid=824&kw=lg
E5630 @ 2.53GHz LGA1366 $90.00 8,666 96.3 http://rover.ebay.com/rover/1/711-53200-19255-0/1?icep_ff3=9&pub=5575127758&toolid=10001&campid=5337702912&customid=&icep_uq=e5630&icep_sellerId=&icep_ex_kw=&icep_sortBy=12&icep_catId=&icep_minPrice=&icep_maxPrice=&ipn=psmain&icep_vectorid=229466&kwid=902099&mtid=824&kw=lg
W5590 @ 3.33GHz LGA1366 $120.00 10,646 88.7 http://rover.ebay.com/rover/1/711-53200-19255-0/1?icep_ff3=9&pub=5575127758&toolid=10001&campid=5337702912&customid=&icep_uq=w5590&icep_sellerId=&icep_ex_kw=&icep_sortBy=12&icep_catId=&icep_minPrice=&icep_maxPrice=&ipn=psmain&icep_vectorid=229466&kwid=902099&mtid=824&kw=lg
E5649 @ 2.53GHz LGA1366 $130.00 10,709 82.4 http://www.amazon.com/s/ref=as_li_ss_tl?_encoding=UTF8&camp=1789&creative=390957&field-keywords=E5649&linkCode=ur2&rh=n%3A172282%2Cn%3A541966%2Cn%3A193870011%2Cn%3A229189%2Ck%3AE5649&tag=wharyolitorin-20&url=node%3D229189&linkId=UQUZZQB5Z7R4UNOM
L5640 @ 2.27GHz LGA1366 $133.98 10341 77.2 http://rover.ebay.com/rover/1/711-53200-19255-0/1?icep_ff3=9&pub=5575127758&toolid=10001&campid=5337702912&customid=&icep_uq=l5640&icep_sellerId=&icep_ex_kw=&icep_sortBy=12&icep_catId=&icep_minPrice=&icep_maxPrice=&ipn=psmain&icep_vectorid=229466&kwid=902099&mtid=824&kw=lg
X5650 @ 2.67GHz LGA1366 $158.00 11687 74.0 http://www.amazon.com/s/ref=as_li_ss_tl?_encoding=UTF8&bbn=541966&camp=1789&creative=390957&keywords=x5650&linkCode=ur2&qid=1433103905&rh=n%3A172282%2Cn%3A541966%2Ck%3Ax5650%2Cp_n_feature_four_browse-bin%3A1264445011&sort=price-asc-rank&tag=wharyolitorin-20&linkId=GGFO3FSCM76I6AI6
X5482 @ 3.20GHz LGA771 $120.00 8,578 71.5 http://rover.ebay.com/rover/1/711-53200-19255-0/1?icep_ff3=9&pub=5575127758&toolid=10001&campid=5337702912&customid=&icep_uq=x5482&icep_sellerId=&icep_ex_kw=&icep_sortBy=12&icep_catId=&icep_minPrice=&icep_maxPrice=&ipn=psmain&icep_vectorid=229466&kwid=902099&mtid=824&kw=lg
W5580 @ 3.20GHz LGA1366 $140.00 8,845 63.2 http://rover.ebay.com/rover/1/711-53200-19255-0/1?icep_ff3=9&pub=5575127758&toolid=10001&campid=5337702912&customid=&icep_uq=w5580&icep_sellerId=&icep_ex_kw=&icep_sortBy=12&icep_catId=&icep_minPrice=&icep_maxPrice=&ipn=psmain&icep_vectorid=229466&kwid=902099&mtid=824&kw=lg
L5639 @ 2.13GHz LGA1366 $170.00 9,697 57.0 http://rover.ebay.com/rover/1/711-53200-19255-0/1?icep_ff3=9&pub=5575127758&toolid=10001&campid=5337702912&customid=&icep_uq=l5639&icep_sellerId=&icep_ex_kw=&icep_sortBy=12&icep_catId=&icep_minPrice=&icep_maxPrice=&ipn=psmain&icep_vectorid=229466&kwid=902099&mtid=824&kw=lg
X5667 @ 3.07GHz LGA1366 $160.00 8,809 55.1 http://www.amazon.com/s/ref=sr_st_price-asc-rank?keywords=X5667&rh=n%3A172282%2Cn%3A541966%2Cn%3A193870011%2Cn%3A229189%2Ck%3AX5667&qid=1433107777&sort=price-asc-rank
X5470 @ 3.33GHz LGA771 $160.00 8,651 54.1 http://rover.ebay.com/rover/1/711-53200-19255-0/1?icep_ff3=9&pub=5575127758&toolid=10001&campid=5337702912&customid=&icep_uq=x5470&icep_sellerId=&icep_ex_kw=&icep_sortBy=12&icep_catId=&icep_minPrice=&icep_maxPrice=&ipn=psmain&icep_vectorid=229466&kwid=902099&mtid=824&kw=lg
L5638 @ 2.00GHz LGA1366 $180.00 8,930 49.6 http://rover.ebay.com/rover/1/711-53200-19255-0/1?icep_ff3=9&pub=5575127758&toolid=10001&campid=5337702912&customid=&icep_uq=l5638&icep_sellerId=&icep_ex_kw=&icep_sortBy=12&icep_catId=&icep_minPrice=&icep_maxPrice=&ipn=psmain&icep_vectorid=229466&kwid=902099&mtid=824&kw=lg
X5492 @ 3.40GHz LGA771 $200.00 9,099 45.5 http://rover.ebay.com/rover/1/711-53200-19255-0/1?icep_ff3=9&pub=5575127758&toolid=10001&campid=5337702912&customid=&icep_uq=x5492&icep_sellerId=&icep_ex_kw=&icep_sortBy=12&icep_catId=&icep_minPrice=&icep_maxPrice=&ipn=psmain&icep_vectorid=229466&kwid=902099&mtid=824&kw=lg
X7560 @ 2.27GHz LGA1567 $400.00 11,631 29.1 http://www.amazon.com/s/ref=as_li_ss_tl?_encoding=UTF8&camp=1789&creative=390957&keywords=X7560&linkCode=ur2&qid=1433106119&rh=n%3A172282%2Cn%3A541966%2Cn%3A193870011%2Cn%3A229189%2Ck%3AX7560&sort=price-asc-rank&tag=wharyolitorin-20&linkId=HXNRCDNHAXLGFOTS
E5645 @ 2.40GHz LGA1366 $400.00 10,515 26.3 http://www.amazon.com/s/ref=as_li_ss_tl?_encoding=UTF8&camp=1789&creative=390957&keywords=E5645&linkCode=ur2&qid=1433106442&rh=n%3A172282%2Cn%3A541966%2Cn%3A193870011%2Cn%3A229189%2Ck%3AE5645&sort=price-asc-rank&tag=wharyolitorin-20&linkId=DUMKSYWINFAUORF4
E5-2609 v2 @ 2.50GHz LGA2011 $450.00 8,705 19.3 http://rover.ebay.com/rover/1/711-53200-19255-0/1?icep_ff3=9&pub=5575127758&toolid=10001&campid=5337702912&customid=&icep_uq=e5-2609+v2&icep_sellerId=&icep_ex_kw=&icep_sortBy=12&icep_catId=&icep_minPrice=&icep_maxPrice=&ipn=psmain&icep_vectorid=229466&kwid=902099&mtid=824&kw=lg

2. Motherboard

So, you did some leg work and found a processor that is going to kick Solidworks in the pants.  You’re far from done.  The next step is to find a workstation motherboard that will actually take that processor.  As mentioned before the processor table, you need to take the Socket into account.  The sockets in the table in order of oldest to newest: 604, LGA771, LGA1366, LGA2011 (v1-v3).  Now, you need to make a decision.  It’s a tough one.  This motherboard is going to determine the overall performance of your entire system.

Older technology is just slower.  Moore’s law implies that processing power improves exponentially.  Topping out your budget will help ensure that the system you build is fortified against future performance demands.  The list of processors clearly shows newer technology that is slower than older technology.  Don’t let that fool you.  The newer, slower tech is low-end compared to the older, faster tech.  The main difference is that you could upgrade your Socket 2011 CPU later on to something that will make your top-end LGA1366 feel slow.  You wouldn’t be building a workstation if you weren’t planning on making money.  So, plan ahead.  It may be expensive and “slow” (relative to its benchmark neighbors), but in a year when you need more power, you could drop another $200-$400 and possibly double your power on the same rig.

The motherboard is also going to determine how much RAM you can cram in, how many video cards you can use, and how big those cards can be.  The processor also plays a part in the RAM, as the RAM’s speed will be limited by the processor’s bus speed.  Furthermore, DDR ram has gone through four generations of improvements.  Your processor/motherboard combination is going to determine which generation can you use.

So, let’s get on to shopping for motherboards.  Here’s what to search for: “Dual Socket XXXXXX Workstation Motherboard”.  Fill in “XXXXXX” with whatever socket your processor is.  Oh, hell, I’ll just do it for you:

Socket 604
Socket LGA771
Socket LGA1366
Socket LGA2011 (be careful here, LGA2011 went through 3 versions, and the -0, -1 and v3 processors require -0, -1, and v3 sockets, respectively.  Check your processor before committing!)

You’re going to be shocked by the cost of motherboards.  This is where you step back and say, “Well, maybe older tech is okay, because it’s still pretty fast and relatively cheap!”  And, you’re right to say that.  LGA1366 motherboards can be had for about $90.  If you chose the cheapest LGA1366 processors (with two $30 heat sinks), your total thus far would be about $190 and your benchmark rating could be about 9,000.  For comparison, a brand new AMD FX8350 costs about $165 alone (no motherboard), and has a benchmark rating of 8,982 at the time of this writing.  We’re winning!

ECC Memory

Alright, now for the kicker.  ECC Memory isn’t cheap.  It can also be kind-of hard to find.  You need to know the maximum bus speed that your chosen processor can handle.  You may have to google and dig for it.  You also need to know the pin count of the slots on your motherboard.  Since you’re support two processors, each one has a set of memory slots.  That implies that you need to supply memory in pairs, not just one big single stick.

You’ll be happy to know that it gets more complicated.  Some memory is buffered, and some is not buffered.  Some motherboards can take either.  You really only need buffered memory if you’re planning to use a ridiculous amount.  For example, some motherboard can handle 24GB of un-buffered memory on its own.  BUT!  If you use buffered memory, the motherboard could handle 96GB OF MEMORY.  Imagine needing that.  You won’t.  Don’t think too hard about it.

When you’re searching, many listings will say “Non-ECC”, which is both helpful and annoying as hell.  It’s annoying, because if you wanted non-ECC memory, you would just search for “memory” instead of “ECC memory”.  Anyway, just include “-Non-ECC” into the search and jog on.  Oh, you’re too lazy?  Argh!  Jeez!  Here, I’ll just do it for you again:

DDR2 ECC (old stuff)
DDR3 ECC (this is where you’re likely to find what you need)
DDR4 ECC (you won’t need this, and the price is ridiculous)

Remember, Solidworks is a memory hog.  You want between 12-16GB as a baseline.  That’s easily $120 worth of DDR3, which is almost as much as you’re spending on the processors and cooling.  But, it’s super important to ensure that everything runs smoothly, and you don’t waste time waiting for Solidworks to …work.  (Keeping tabs?  We’re at roughly $400 for a workstation at this point.  But, I said $300 in the title.  Don’t worry, that comes later.)

So, why do you need ECC memory again?  Because, you’re going to be using Solidworks, and you’re going to have clients.  The clients want the job done fast, and they want it done right.  You want to do some finite element analysis to make sure your parts don’t break and kill someone.  So, you set up a really thorough simulation and set it to run.  It runs… FOR HOURS.  So, you go to sleep.  A typical desktop processor/memory combination might come across some corrupt data and plow through it, crashing Solidworks, the simulation, maybe the entire computer.  You lose everything.  You have to restart the simulation, but will it fail again?  ECC memory helps prevent that.  It’s checking for corrupt data as the data is accessed.  It can even correct corrupt data is some instances.  You want this.  This will ultimately save you time and money, in the long run.  Just trust me.

Graphics Card(s)

You don’t need two graphics cards.  But, you do need a workstation-quality graphics card.  Remember the last paragraph the of the last section on ECC memory?  That’s why.  These cards aren’t meant for gaming, and they won’t do well on typical gaming benchmarks.  They’re meant heaving data around at incredible rates.  So, you’re already buying old technology, and the strategy here is the same.  Recall the very first blog post about cheap workstations:  Solidworks is CPU-heavy and GPU-light.  (I use the word “light” very loosely.)  The GPU will keep you moving through the complex geometry as its being continuously rendered, but the CPU is going to be doing the brunt of the work.  My suggestion:  Go to http://www.videocardbenchmark.net/mid_range_gpus.html and look for the Quadro FX or AMD Firepro series in the 600-800 benchmark range.  What?  Are you kidding me?  You want me to list them for you?  …  Fine:

GPU Price Benchmark Benchmark/$ Link
Quadro FX 4600 $30.00 608 20.3 http://rover.ebay.com/rover/1/711-53200-19255-0/1?icep_ff3=9&pub=5575127758&toolid=10001&campid=5337702912&customid=&icep_uq=Quadro+FX+4600&icep_sellerId=&icep_ex_kw=&icep_sortBy=12&icep_catId=&icep_minPrice=&icep_maxPrice=&ipn=psmain&icep_vectorid=229466&kwid=902099&mtid=824&kw=lg
Quadro 600 $35.00 681 19.5 http://rover.ebay.com/rover/1/711-53200-19255-0/1?icep_ff3=9&pub=5575127758&toolid=10001&campid=5337702912&customid=&icep_uq=Quadro+600&icep_sellerId=&icep_ex_kw=&icep_sortBy=12&icep_catId=&icep_minPrice=&icep_maxPrice=&ipn=psmain&icep_vectorid=229466&kwid=902099&mtid=824&kw=lg
Quadro FX 3700 $35.00 639 18.3 http://rover.ebay.com/rover/1/711-53200-19255-0/1?icep_ff3=9&pub=5575127758&toolid=10001&campid=5337702912&customid=&icep_uq=Quadro+FX+3700&icep_sellerId=&icep_ex_kw=&icep_sortBy=12&icep_catId=&icep_minPrice=&icep_maxPrice=&ipn=psmain&icep_vectorid=229466&kwid=902099&mtid=824&kw=lg
Quadro FX 5600 $100.00 699 7.0 http://rover.ebay.com/rover/1/711-53200-19255-0/1?icep_ff3=9&pub=5575127758&toolid=10001&campid=5337702912&customid=&icep_uq=Quadro+FX+5600&icep_sellerId=&icep_ex_kw=&icep_sortBy=12&icep_catId=&icep_minPrice=&icep_maxPrice=&ipn=psmain&icep_vectorid=229466&kwid=902099&mtid=824&kw=lg

Surprisingly, they can be had very cheap.  The reason is because lots of companies lease their workstations and servers.  Then, when the lease is up, the stuff gets sold off to the highest bidder.  The market is flooded with these components, so their price is super low.  Honestly, you don’t need to over-think this aspect.  $35 for a graphics card is a steal, no matter which one you choose.

Power Supply

Workstations use a lot of power.  They use server CPUs, heavy-duty GPUs, heavy-duty ECC memory, and require a fair amount of cooling.  You need a power supply that matches.  To be safe, don’t get anything less than 800W.  But, to be safer, dig up the specs on the motherboard you’ve chosen and get the power supply specified by the manufacturer.  You can’t miss it.  This can be made even easier, which we’ll explore a little bit later.

Case

Alright.  The ruse must end.  You’re going to start searching for workstation cases, and you’re going to find that they are rather hard to find (but not impossible).  This doesn’t make a lot of sense, because their innards are all over the place.  So, why not just buy an old, off-lease workstation and use the knowledge gained in the previous sections to perform upgrades?  This will be the easiest path to take.  It’s also probably cheaper, as no one will have to be paid to remove all those components from various systems.  But, what workstation to buy?

Modifying an off-lease Workstation

Well, you have only a few big suppliers of workstations.  HP, Dell, and Lenovo.  I’m biased toward HP, because that’s what I use at work.  HP offered the Z600 and Z800 with dual sockets.  I honestly don’t know what Dell and Lenovo offer, so I’m not going to pretend like I can point you in the right direction there.  However, the strategy here is to find a workstation with lackluster specs, and verify that it can be upgraded to meet your needs.  In the case of the Z600 and Z800, some of them only have one CPU, leaving one socket empty.  In some other cases, the existing CPU is worth keeping, and then you’re only on the hook for one CPU and the ECC memory.  The money saved can be spent upgrading the hard disk to SSD, which Solidworks will LOVE.

For example, I’m looking at an ebay listing for “HP Workstation Z800 1x Quad Core X5550 2.67GHz 8GB RAM 4x 250GB HDD FX1800 768MB”.  Its starting bid is $200.  The Xeon X5550 benchmarks at 5398/ The Quadro FX1800 benchmarks at 595.  Added another X5550 and heat sink for about $50, and you’re now benchmarking at 9,233.  Throw another 8GB of ram at the new processor for $50, and you’ve got your Solidworks rig for about $300, assuming no one bids the base unit up.

So, to get the absolute lowest price workstation that can REALLY handle Solidworks, you need to know some stuff.  The information I’ve provided is really just a road map.  There are lot of details you need to discover on your own in order to make this work.  The people who skipped this paragraph will run off and make some uninformed decisions, and possibly end up with components that don’t work together.  But, you won’t.  You’re diligent, persistent, and determined.  You’re going to take everything I said here with a grain of salt, and assume that I screwed up somewhere and told you something wrong.  (Don’t feel guilty, I’m going to assume that as well.)

Go forth, build a workstation, do CAD.

Making money like a lower middle class layperson

tony_robbinsTony Robbins is touting “How to make money like a billionaire” all over the interwebs right now.  He’s an eloquent, inspiring speaker, but I’m pretty sure he is no billionaire.  He surely has made millions, though.  Still, I was taught to speak from experience.  Without having the experience of being a billionaire, I dare not tell anyone how to become one.  However, I have been lower middle class for most of my life.  And, I think I may even be an expert on how to be lower middle class.  I’m pretty good at it.

When I say I’m good at being lower middle class, I mean that I’m good at undermining my own financial goals, at not accounting for future cost increases, and at taking on too much responsibility.  I’m also good at convincing myself that the wages I earn are fair.  And, did I mention that I can’t help but find myself NEEDING debt just to get by?

Because I am so good at trying really hard and ultimately just digging myself deeper into mud, I figured I should share with you the reasons for and methods of my success at achieving net zero.

middle_class_0226Firstly, and probably most importantly, be born into a lower-middle class family.  I am the third of three children.  Both of my parents worked.  My father worked the night shift at a truck dealership, while my mother worked various office-support type jobs.  Both had some college, but no degrees.  Understand that my childhood was not unhappy, that I did not go without the necessities.  I was not neglected, and I don’t intend to imply that being a lower middle class child is anything but just fine.

That said, the story told to me by my parents (who are divorced and have not spoken in many years) is that my mother handled the household budget.  She employed a budgeting method — very similar to the U.S. government’s — called deficit spending.  In deficit spending, ones’ hands writes checks that ones’ ass cannot cash.  This was back when you could write a check and date it so that it would not be cashed until that date.  So, you could pay bills when you had no money in the bank, and technically carry a negative balance.  This drove my dad nuts, and was cited to me as one of the issues that lead to divorce.  It is also very telling as to how much money a lower-middle class family makes.

Studies show that lower class children are less likely to escape the income tax bracket into which they were born.  Why?  Because, it’s difficult to achieve more when you have less.  Its easier to achieve more when you have more.  Therefore, the poor folks stay poor and the rich folks stay rich (generally speaking; there are exceptions to every rule).  The doctor’s son has the resources to attend medical school, and doesn’t need to hold a job while attending.  The truck parts salesman’s son does not have the resources to attend medical school.  His parents can only provide so much for him, and the rest must be made up either with debt or work.  This kid is much more likely to achieve about the same income as his parents.  The best thing you can do to succeed at being lower-middle class is to be born into it.

too-rich-for-financial-aidThat brings me to the second way to succeed at being lower-middle class:  Attend college, with or without loans.  I attend college on (mostly) my own dime, and have been doing so part-time for nearly a decade.  I didn’t take out loans.  Instead, I paid cash for everything.  Unfortunately, life is expensive and it doesn’t care if you have money in the bank or not.  So, there have been a few times when my lower-middle class family has helped me attend.  I have been living paycheck to paycheck for 10 years in order to attend college part time.  Take note: the second most important thing to ensure success at being lower middle class is to have dreams that are just out of reach.  If you read the study, a college education is the key to upward economic mobility.  Unfortunately, it’s also the carrot dangling in front of my nose.  If I reach just a little bit farther, someday I’ll get that carrot and all the glorious middle-middle-class things that come with it.  Or, maybe it’ll just dangle there indefinitely.

As you all are probably aware, my generation is the most educated and least employed.  On top of that, this cohort has also paid more for that education than any in recent history.  Despite that, no matter whose son or daughter you were, you could go to college.  A few extremely smart and hard working poor people have been given a hand up, while an enormous mass of your median not-doing-great-but-still-above-the-poverty-line people have taken on huge loans in an attempt to escape their parents’ tax bracket. Many succeeded in earning those degrees.  Many did not.  Many of those who did were then unable to find the appropriate jobs.  Many of those jobs have quietly sailed away, without much hope of returning.  So, whether you attend college with cash or with loans, you’ve got a great chance of successfully achieving lower-middle class status!  Way to go!

PB9d7The third most important thing to being successful at being lower-middle class is to take on as many responsibilities as you can handle. How many can you handle? You won’t find out until you have too many. By responsibilities, I am referring to things like children, pets, real estate, jobs, classes,vehicles, etc. Anything that requires your time is a responsibility, and most responsibilities also require money. And, as we all know, time IS money.  As a successful lower-middle class layperson, you should have very little time to be void. You should feel guilty about every self-indulgent minute you have. Your time should always belong to someone or something else. And, you should be trading your time for money, so that you can turn around and trade that money to a university for the opportunity to spend your time solving the university’s puzzles.  In this way, you will ensure that you learn to find joy in the work grind, the homework grind, and the housework grind, among other grinds.

Speaking of grinds, take a moment each day to consume a ridiculous amount of coffee. Don’t do it because you enjoy coffee, but because you need to prevent fatigue. Looking fatigued at work is a sure-fire way to get on your boss’s bad side.

If you find yourself with spare time, you risk a moment of lucidity. This could lead to an existential crisis wherein you realize that you may never escape the purgatory that you have built around yourself.  If ever you feel yourself wanting to do more, to be more, to achieve the American dream, then just sit down and turn on television. Let the fictional characters on the bright, shiny screen do the living for you.  It’s far easier to watch someone else try and fail than to try and fail yourself.