If you are having trouble convincing yourself or someone else that your next big purchase is really worth it, here’s a strategy to add to your arsenal – depreciation.
Sticker prices aren’t the only costs we need to consider when making a purchase. Depreciation rates (not just business lingo anymore) can make the most expensive purchases look cheap and should be a driving force in your next big buy. It doesn’t matter if you’re buying a car or DVD, understanding depreciation can save you money while getting more.
When Depreciation Works for You
Depreciation is the opposite of appreciation. An appreciating asset can be hard to find, but is when the value of what you own increases over time. Houses before the housing bubble burst appreciated every year and made the only real cost the interest you paid and the opportunities you gave up. Depreciation is never an investment, but does decrease the real cost of an item from what you see on your receipt.
- Fast Depreciation – Lots of new items like cars and top of the line electronics often lose half their value in the first year or two you own them. If you try to resell a new car or TV a couple of years down the road for half the original cost then you effectively paid the other half for your two years of use.
- Slow Depreciation – Used items have already seen their fast depreciation days pass by and start to depreciate more slowly. A few years with a used item may only see a 10% drop in value meaning if you resell it then you pay only 10% of the sticker price for a few years of use.
It’s Cheaper Than You Think
If an item that you are looking to buy first seems expensive (or not), consider how it depreciates. Don’t worry, it’s not as complicated as it sounds. Here are some examples.
- Cars – We all hear that cars lose thousands of dollars when you drive them off the lot. The Motley Fool suggests that new cars lose 20% or more of their value the first year followed by 15% in year 2, 13% in year 3, and 12% in year 4. Since a newer car depreciates faster than a used car, you will end up paying more per year to drive a new car than a used car of the same price. More importantly, if your loan only pays down principal slower than the car depreciates then you won’t be able to sell your car for enough money to cover the loan. Avoid this by putting down at least 30-50% of the car value as a down payment.
- iPhone – Although you may be a cheapskate, don’t think that holding off on an iPhone upgrade is a good deal. Most iPhones sell for $200 upfront plus a service plan. Since the service plan is used to subsidize the phone, its value is much more than $200 and after two years of depreciation the iPhone is still worth around $200 (just check out eBay for the two year old iPhone 3G). What this means for you is that if you don’t upgrade, you are subsidizing a phone for no reason. Instead, you should sell the old one and upgrade to a better phone for “free”.
- TiVo – Most people complain that buying a TiVo is too expensive especially when you consider the monthly fees just to get access to the TV guide. Worse yet, a lifetime TiVo plan costs $400. Of course, that’s unless you consider depreciation. Some quick research on eBay reveals that while the box may depreciate as fast as any other electronic, the lifetime service depreciates slowly. Even after three years of owning a TiVo, the lifetime service may only depreciate by $100 making the monthly cost a more realistic $3/month (and much cheaper than cable). Take it a step further by buying a used TiVo with lifetime service and when considering the resell value, the service is practically free.
- Books & DVDs – With sites like Half.com, eBay, and Amazon, it is very easy for anyone to sell their old books and movies. Better yet, if you don’t want to wait for all the DVDs on that boxed set television series to come in on Netflix, consider buying the whole thing on Half.com. After a few days of non-stop 24 or Lost, you can sell them back for approximately the same price you bought them minus some fees. This slow depreciation makes watching the used DVDs almost free.
Considering how your next purchase may depreciate can dramatically change how you perceive its value. Taking advantage of the ease of reselling online through eBay, Amazon, or Craigslist makes reselling your used purchases more practical than ever.
This post is featured in the Festival of Frugality at SimplyForties
(photo credit maczter)
I recently received an invitation to start using Comcast’s new online DVR scheduler. The myDVR manager from Comcast finally provides a service that AT&T U-verse and Tivo users have long held dear, and until now, the missing service had been another problem in the string of complaints about Comcast. Thankfully, the service is here and next time you’re stuck in a meeting or bank robbery you can be confident that the overdone ESPN episode of an over-glorified NBA player’s free agent signing is available for viewing later.
- First, you must be a Comcast High-Speed Internet User
- Have your Comcast.net username and password
- Have a Comcast DVR (service in your area may or may not be ready)
- Any internet browser should work but Comcast only lists IE and Firefox
Go to www.fancast.com/mydvr and follow the links to activate your myDVR service. You’ll be taken through a few pages to sign in and check availability in your area. Finally, you’ll choose to activate your DVR which may take up to 24 hours.
Using myDVR Online from Comcast
Using the myDVR Manager online is very simple and easy to use, and Comcast will enjoy getting more visitors on their fancast site. On the site you’ll find a TV guide similar to what you see on your TV. You can look up shows by channel and time plus filter by popular groups like Movies, Sports, and HD. Once you find a show you want to record, select it and then click “Record Episode” or “Record Series”. Next you will find an interface similar to that on your DVR box where options on how often to record and what to keep are available. The myDVR Manager button (below) is always available and lets you manage the priority of shows and see what upcoming recordings you have.
Mobile Access to myDVR
Best of all, the Comcast myDVR service is available via the Comcast Mobile app on the iPhone and iPad. The app has a guide similar to the one online where you select the shows you want to record and then “Schedule a Recording”. The mobile services are essential to making this service great and have been executed well. I can’t believe I’m thanking Comcast for something, but this is a service I plan to use. What about you? Let other readers know in the comments below.
iPhone apps at AppStoreHQ
ING Direct is my favorite online bank. They offer decent rates with excellent services. They have been lagging, though, in the mobile banking market until recently when they unveiled a great new iPhone app. The app provides core services like checking your balance and transferring money, and it only lacks a few small options that would make it nearly perfect.
Getting Started with ING Mobile
The ING iPhone app is a significant improvement over their previous app offering which simply forwarded the user to their online website. Now ING customers will find a familiar login screen that requires a username, picture verification, a few questions, and a PIN. Similar to the online website, you can allow the app to save your username and skip to the PIN when you open the app on your iPhone. This allows for a quick sign on, but may be a security concern on the mobile platform.
ING Direct iPhone App Features
After logging into the app, you’ll be happy to find a simple and clean interface. Just swipe right or left at the menu on the top to access accounts balances, bill pay options, customer support, and a “Refer a Friend” link. The bill pay option allows you to send checks to friends when you owe them money making it easy to pay back friends on the spot (similar to Venmo). One feature I found lacking was the inability to add a friend to your bill pay list via the mobile app. Only those people who you have added to your online address book are available which is a significant setback to making this iPhone app very useful. Additionally, the app doesn’t integrate an ATM finder which exists as a standalone app.
- Account balances
- Bill pay and friend pay
- Refer a friend for a commission
All together this app is a great start for ING Direct as they enter the mobile market, and it is helpful to those concerned about their current balance while considering their next big impulse purchase. Loyal users will enjoy the friendly comments like “Hang On” and “Sorry, we thought you left & signed ya out” that have made the web version an enjoyable experience. Since ING users tend to like banking online this is a necessary step to maintaining their online reputation, but until options like adding friends to the bill pay address book are available via the phone this app is incomplete.
Are you an ING customer? Have you tried the iPhone app from ING or other banks and what do you think/expect from mobile banking? Let me know your thoughts below.
iPhone apps at AppStoreHQ
Saving money helps us make the most of the money we have no matter if it’s a lot or a little. Sometimes saving money may not be worth it if it takes hours to save a few bucks, but generally we all benefit from easy ways to save money and this can be done everyday. Continue reading Deal Sites That Help You Save Money Every Day
Most of us have a bunch of old electronics lying around. If they still work you may be able to recoup some value from them by selling them online, and if they don’t work you can recycle them for free. There are a score of websites out there that you can use to sell or recycle your old electronics which is great both for you and the environment.
When I bought an iPhone, one of the selling points was that it replaced my regular cell phone and iPod. These still worked well and I didn’t want them to just go to waste. I knew they had some value but wasn’t sure how to get it from them. Here are some tips I found when researching ways to extract value from old electronics.
What You Can Sell or Recycle Online
Almost any electronic you have can be sold online. The better the condition the more money, but even if it is broken you will probably enjoy clearing out space in your office or closets by getting rid of old electronics. Here are some of the most common items you can sell online.
- Cell phones
- Digital cameras
- Gaming devices
Where to Sell Them
Online recycling sites ask questions regarding the condition of your device to determine value and will pay for your shipping costs. They do almost all the work for you making the process of cleaning out your old electronics extremely easy. I tested the interfaces and value calculators with an old iPod mini that I am planning to sell or recycle.
- BuyMyTronics.com – offers great value, erases all data, and is environmentally friendly
- NextWorth.com – offers the simplest interface and good value
- Gazelle.com – offers good value and tries to predict value trends of your product
- YouRenew.com – offers low value but will always recycle
For a little more work and potentially more value, check out the online auction site eBay. On eBay you will have to go through the process of setting up an auction, receiving money, and shipping the item, but it may be worth it. Research recent auctions to determine the going price and decide if it’s worth your time.
Where Old Gadgets Go to Breathe New Life
Top 5 Ways to Trade in Your iPod
Cash is a great system that helps many people control their spending, but for those who have taken hold of their budget there is a great benefit of cashless systems like online banking. The newest method of exchanging money that may lead the way in the next decade is paying over your mobile phone via text message. One of the best young companies to offer the service is Venmo.
Try out Venmo now by using invite code “obsessed-25“.
How Do I Pay With Text
Paying via text is very similar to paying via email and online with PayPal. You essentially tell Venmo who you want to pay and how much and Venmo will arrange the transaction. This requires an account to be set up with Venmo prior to or following the transaction so that you can move the money into your normal checking account.
The format for sending money with texts is fairly intuitive.
Pay <number or username> <amount> for <memo line>
For example, if you need to send me $10 for dinner you would text the following to Venmo (646-863-9557)
Pay ryank 10 for dinner last night
Benefits and Concerns of Paying With Text
Paying with a text message offers a number of great benefits.
- Quick – Payback friends or businesses instantly without carrying cash.
- Free – Unlike PayPal, transactions are free when using the Venmo network.
- Easy – Request money from people who owe you (Venmo has a “Trust” feature to instantly charge friends in your network for money)
There are also some concerns with paying via text, but hopefully these will get cleared up as the concept becomes more mainstream.
- Security – Is it safe? Venmo helps by letting users cancel transactions within 24 hours online and recommends that users use a PIN to lock their phone. Other competitors require a PIN for each transaction to help add a level of security.
- Simplicity – Not everyone wants to set up another account online to manage money, but Venmo helps make this easy by allowing users to sync bank accounts straight from the phone
- Ubiquity – Until the service gets popular it may be hard to explain to your friends why they should pay with text. The concept has gained more familiarity, though, with the “Text to Haiti” campaign which helped raise over $50M.
Try It Out
Venmo is available via private invitations only right now, but has provided me with 25 invitations for my readers. Use the invite code “obsessed-25” to try it out. After signing up, let me know what you think or send the following text message to Venmo (646-863-9557) to donate $1 to the blog.
Pay ryank 1 for cool blog
Other Reviews Online
Venmo review on AllThingsD
Venmo review at Thrillist
Venmo – The Future of Payments
Venmo’s Simple Loaded Premise – Pay Your Friends from Your Phone
Venmo Possibly Abolishing Friendly IOU
Venmo – SMS Based Payments
I love the utility of the iPhone 3GS, but am often scared the shiny screen won’t last. I decided to try out a state of the art screen protector to protect my state of the art device. The ZAGG invisibleSHIELD is a highly marketed screen protector for the iPhone and other similar gadgets. In the over-supplied world of iPhone accessories – and particularly screen protectors – the ZAGG invisibleSHIELD tries to distinguish itself by claiming to be the “gold standard” of screen protectors. The dilemma I decided to tackle was to find out if the high price ($24.95 retail) was worth it.
I have always loved the idea of public transportation. You get to sit there and not worry about navigating traffic. You have time to read or if you have an iPhone you can even play games and catch up on the news. Recently, I decided trying public transportation for a week would be a great social experiment. Believe it or not I survived, and after looking back, I realize I learned a lot about myself, people, and public transportation in Atlanta. Here are the highlights.
My loyalty to all things Apple all started a few years back when I first wanted a MP3 player. Like iPhones today, iPods were the craze. Of course, I knew back then that the only reason people had iPods was to be cool and show off how much money they had. So in my quest to be unpopular and cheap, I decided to take the path less traveled by getting a Creative mp3 player. With great joy, I spent my first 10 hours with the device trying to sync it with my computer. Crap! Creative had forgotten to install some software on the device before selling it and it didn’t work out of the box. With some hacking around my computer, I downloaded it myself, installed it, and then was ready to enjoy. Continue reading How the iPhone Changed My Life