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This article is a follow up on the previous post on Car Mileage.

A common belief amongst people is that the value of a car declines more rapidly the newer it is. Some say your car loses 25% of its’ value when you drive it off the lot. I am about to put my Craigslist data to the test to help prove whether or not this theory actually works.

In my first example I used 2001 Jettas found on Craigslist. Based on those Jettas that came up in my search, only 26 of them were qualified to be entered into the data. I did not accept any VR6, TDI or wagon Jettas. I did this in order to keep the data the most consistent. The average 2001 Jetta had 82,312 miles and was selling for a price of $8,106. I found that for 2001 Jettas, they lost on average $.0342/mile driven. If this theory is to hold true, the 2003 Jettas should decline in value more per mile than the 2001 Jetta.

Let’s take a look at the data:

Listings with a negative difference are underpriced based on the data. Listings with a positive difference are overpriced based on the data.

I took the exact same approach as I did with the first test, except this time through I searched for “2003 Jetta” on the Craigslist site for Seattle. It returned 40 matches, and of those only 21 were qualified to put into the data. For the 2003 model, the average Jetta had 64,488 miles and was selling for $10,869.

After processing the data, I find that the regression of the data points has a coefficient of -.0328, meaning that for every mile that the car is driven, it loses 3.28 cents. It turns out that this is actually less than the 3.42 cent per mile loss for the 2001. The Y-intercept for the 2003 is $12,981.62 as opposed to $10,927.01 for the 2003.

You may recall that I calculated the value of a 2001 Jetta with 80,000 miles to be worth $8191.01 from the 2001 Jetta equation. Taking the 2003 Jetta equation, we shall find out what the value of an ‘03 Jetta with equal mileage should be. We can find this by subtracting from the intercept. So: $12,981.62 - (-.0328 x 80,000) = $10,357.62. This shows us that a buyer would pay $2166.61 for a model that is two years newer, even though it has identical mileage. In order for the consumer to pay the same amount for the 2003 as they would for the 2001 with 80,000 miles on it, the 2003 would have to be at 146,055 miles.

This data seems to find that the value of a car doesn’t seem to decline quicker the newer it is. Given the somewhat small sample sizes, it is possible that the data could be a bit skewed. It would also be interesting to see what the actual sales price of these cars are, because most won’t be sold for their asking price.

For those who must have the latest and greatest though, check out the 2008 Jetta.

This image comes from Autoblog.com

The new Jetta starts at $16,990 + taxes, licensing and all that other fun stuff.

Personal Finance, Uncategorized jetta, mileage, resale, trendline, used, vw

Throughout the time that I have run this blog I have periodically chosen a few stocks and funds that I thought looked like winners. Now I am going to take the time to look and see how they have done since I first suggested them.

On 1/24 I chose Under Armour. On a 1-5 scale I gave them a 3.8. When I first recommended them they were trading at $35.66/share. The stock is currently trading at $35.48. Since I have recommended this company it has returned -.504%. During that same time period, the Dow Jones Industrial Average had a return of -.430%, and the S&P 500 has returned -1.42%.

On 1/28 I chose Generex Biotechnology. On a 1-5 scale I rated them a 2.5, right in the middle. When I first recommended them they were trading at $1.31/share. Since then, the stock has returned -12.2%. During the same time period, the Dow Jones Industrial Average returned -.472% and the S&P 500 has returned -1.56%.

On 2/4 I chose American Medical Alert Corporation. On a 1-5 scale I rated them a 3. When I first recommended them they were trading at $6.50/share. Since then they have returned 8.00%. During the same period, the Dow Jones Industrial Average has returned -2.45% and the S&P 500 has returned -3.48%.

On 2/9 I recommended Fidelity New Markets Income Fund. On a 1-5 scale I rated them a 4.5. When I first recommended them they were trading at $14.49/share. Since then they have returned .759%. In the same time period, the Dow Jones Industrial Average has returned 1.18% and the S&P 500 has returned .116%.

On 2/20 I chose Target. On a 1-5 scale I rated them a 3.2. When I first recommended the company they were trading at $53.40/share. Since then they have returned -2.68%. In the same time period, the Dow Jones Industrial Average has returned -.819% and the S&P 500 has returned -1.99%.

Based on this information, we can see that my stock picks mirrored the overall market fairly well. My two exceptions were Generex and American Medical Alert. Generex is an expecially risky company, while American Medical Alert has had some good things go their way over the past few months. I will try and update the performance every once in a while. The most important thing that this update shows is the value of a balanced portfolio.

Personal Finance, Stock Recommendations

If you don’t keep a close eye on your checking accounts, you could be in for some major overdraft charges. Financial institutions typically tack on a hefty fee for drawing your account negative.

There are typically two different types of overdraft options. Knowing the difference between the two can be very important to your financial well being.

The first type of overdraft “solution” is typically an overdraft transfer. What happens is that if you were to overdraw your checking account below zero, the financial institution would take funds from another specified account to cover the difference. Typically a small fee between $2 - $5 is charged. This is the best option, and I would recommend that everyone sign up for it no matter how good your account balancing skills are. The reason for this is that if you don’t have this set up you will get an NSF fee which is typically over $20.

The second type of overdraft protection acts like a line of credit. This product will allow you to overdraw your checking account up to a certain amount for a given fee. If you don’t have the funds the transaction will still go through, but it typically costs over $20 per occurrance. If you are getting low on funds and you know you are going to overdraw your checking while waiting for payday you have a few options (one much better than the other). Option one is that you can continue to weild your debit card and get charged the $20+ fee for each transaction. This will add up a lot quicker than you think. Your $4 coffee is now $24 or more.

Instead, you should take option B. If you know you are going to have to dip into the reserves, you should go into your bank and withdraw everything up to your limit in cash. This will give you the funds that you desparately need, but the best part is that you will only be charged the overwithdrawal fee once. Use cash for all of your purchases, and when you get the money bring your account back up to zero.

With interest rates near all time lows, one overwithdrawal will wipe out all of your interest earnings for the entire year. Even if interest rates were much higher, why pay more in bank fees than you really have to?

Personal Finance, Savings , banking, checking, NSF, overdraft

Do the number of miles on your car’s odometer have that much of an effect on its resale value? In this experiment I find the answer to this pressing question.

This stock photo was obtained from automotive.com

In order to find the answer to this common question, I went to Craigslist.com. There I did a search for a fairly common car, the 2001 Volkswagen Jetta. I chose this car because VWs tend to hold their value fairly well, and Jettas are a very popular model. I conducted this search under the Seattle-Tacoma Craigslist section. The search term that I used was “2001 Jetta.” This search returned 54 results for ads that were posted from 4/1/08 - 4/8/08. Of these 54 results only 26 qualified for my statistics.

There were a few major reasons that certain ads did not qualify:

• No mileage was given
• The car listed was not a Jetta or was not a 2001 model
• The Jetta was a TDI (Turbo Diesel) model. These typically have higher resale value.
• The Jetta was a VR6 model. These typically have higher resale value.

All other models including the Wolfsburg were included.

My research found some fairly predictable data. The Y-intercept was $10,927.01. This means that a 2001 Jetta with zero miles on it should have a value of $10,927.01 based on the data. The X-variable coefficient was -$.0342. This translates into a loss in value of 3.42 cents per mile driven from the initial $10,927.01.

Based on the above data, let us calculate how much a 2001 Jetta with 80,000 miles should be worth. We can find this from the following equation. $10,927.01 + (-$.0342 x 80,000). This Jetta should be worth roughly $8191.01 according to the equation that was derived from the data.

In the study, the average 2001 VW Jetta had 82,312 miles and was selling for a price of $8,106.

The following table shows the data that I collected. The miles and price were actual data from the Craigslist listings. The projected column shows what the equation projects that the price should be based on the data. The difference column shows the difference between the projected value and the asking price. Listings that have a negative number are priced under the market value for their mileage. Listing with a positive number could be said to be overpriced in comparison to the other cars in the market.

For a scatter plot of the data, click here.

As you can see from this study, you can find good deals on cars if you compare them across a broad range of listings. In a month I may redo this study on a new batch of 2001 Jettas on Craigslist to see if the data holds up or if it has drastically changed. In most cases the graph should have a negatively sloping trendline meaning that the vehicles are worth less as the accumulate more miles.

Personal Finance, Uncategorized jetta, mileage, resale, used, vw

I know I wrote a review earlier about my trading account with Optionshouse.com, but I thought that I would add some screen shots to go along with the review.

Many of these screen shots will be too large to fit into the blog properly, so if you click on them you will be able to see the full size version.

This first screen shows the options chain view. In this view you can see the bid, ask, change, volume and open interest. If you click on any of the call or put prices a black box such as this one will pull up and allow you to choose many different trade options depending on what you want to do. The screen is actually much larger, but I wanted to just show a snippet to give an idea of what the chain view looks like. One nice feature of this view is that it refreshes every five seconds and flashes a different color for each option that changed in price during the last five seconds.

The second screen showes the options ticket. This is where you can initiate your trades. It also gives you the choice of either doing one trade at a time, or you can add different legs to the trade as well. A nice feature that is shown on the bottom of this image is that the total cost of the trade automatically updates each time you alter your trade.

In the third screen, you can see the watchlist which is located on one of the sidebar tabs. The watchlist is nice because it allows you to be able to see all of the stocks you are most interested in. One downfall of the watchlist is that it has to be refreshed manually. While this may be a nuisance if you need to have the most up to date quote, I can see how it would put a strain on the site’s bandwidth if it were in real time. Either way, it is still a nice feature.

I will admit to being a terrible options trader, but I can see how this site would be a great trading platform for an experienced trader, especially with the fixed commission structure.

Personal Finance, Reviews, Websites broker, brokerage house, optionshouse

An IRA (Traditional or Roth) is a great way to start saving for retirement. The beauty of the two IRAs is the tax benefits that each program offers.

With the Traditional IRA, your contributions are tax deferred, meaning you can deduct contributions from your earned income for the year. Your deposits also grow tax free until withdrawal. The only downside with a traditional is that withdrawals are taxed at the current rate. This may benefit you if you are in a high tax bracket now and expect to be in a lower bracket upon retirement.

With a Roth IRA your contributions are not tax deductible. Your funds grow tax free, and any earnings withdrawn after a certain age are not subject to income taxes. One advantage to the Roth is that you can withdraw your contributions without penalty. This can be great if you need funds for an emergency and don’t want to have the added burden of additional fees. A drawback is that you cannot deduct your contributions from your taxes.

As you can see, each has its own unique set of advantages and disadvantages. To read the official IRS rules and regulations for each type of account, click here.

One important thing that you should be aware of though is that you are only allowed to contribute a certain amount each year. If you are under 50, the 2007 contribution is $4,000 and the 2008 contribution limit is $5000. If you are 50 or older you can contribute up to $5,000 in 2007 and $6,000 in 2008. I included the 2007 tax values because you can actually make contributions to your IRA for the previous tax year all the way up until taxes are due on April 15th, 2008. By making a 2007 contribution you are giving yourself the opportunity to maximize your total allowable contributions.

Personal Finance, Savings ira, roth, taxes, traditional

So today my girlfriend and I went to the AT&T store at the local mall and inquired about the fee that had been assessed on my account. For those of you who don’t remember, I was charged an $18 “change of account responsibility fee.” The fee seemed pretty ridiculous, especially since we were not informed of this prior to making the switch. The AT&T customer representative went back and presumably talked to the manager to get the go-ahead and came back a few minutes later. She said that I would receive a credit to my account either on this bill or the next bill. She said that she had to send an email out to make it effective. Hopefully this low-tech way of applying a credit to my account actually goes through, or else I will have to make yet another trip down to the store.

So the customer may not always be right, but I guess in this case they are. So if you get charged with this totally out of line fee, please make your way down to your local AT&T store to right their wrongs.

Personal Finance, Reviews account responsibility, at&t, cell phone, family plan, fees, wireless

Apparently my blog program only lets me type so much before it starts to freak out, so here is the rest of my post…

… I guess the main issue I had with the book was the writing style. The book didn’t seem to fully captivate my interest like a book on this topic should have. I suppose some of it could be attributed to the fact that I read it 15 pages at a time on the bus on the way home from work.

In short, the Virsnieks plan is to essentially buy low, sell high, and use the rent from your tenants to pay the mortgate. To seasoned real estate investors this probably seem like a no brainer. If you fall into this category I would not suggest this book to read. If this seems like a groundbreaking idea, then this book would probably be a great read for you. Personally, I had a teacher in high school of all places enlighten me on this idea first, so the majority of the ideas covered in the book weren’t really much of a surprise to me. I felt that I got some good words of wisdom from the book, but not enough to justify the amount of time invested in it. I wish I would have just read a few choice chapters and been done with it.

Personal Finance, Real Estate, Reviews condo, condominiums, landlord, real estate, rental unit

As I mentioned a few posts back I read a book called “How to invest in Condominiums” by Andris Virsnieks. I did not finish this book entirely, but this is mainly because the book did not fully captivate my attention. Mind you that I read this book because I have been very interested in investing in real estate in one form or another for quite some time.

According to the title of the book, it covers such topics like:

• Select the right condo
• Make the real estate market work for you
• Attain positive cash flow
• Reduce your tax basis through depreciation
• Live rent-free and retire early

Judging by the cover it seemed like an interesting read. After getting a ways into the book it seemed to cover the same stuff over and over again. I guess that since I had been thinking about investing in real estate for so long I had already thought about many of the strategies that Virsnieks covers in the book.

The basic investment plan suggested by Virsnieks essentially goes a bit like this. First you must select a brand new condo. A remodel or apartment conversion just will not do. He does not believe in buying an older unit to upgrade into a more valuable one. Not only must the condo be new, but it also must have high demand for the units. If there is not high demand for them, then it may be harder to sell them later. The other main point that the author reiterates throughout the book is the value of hiring a property management company to take care of all the dirty work for you. Virsnieks claims that the management company typically takes about 9% of the rent for their services, but it is well worth not dealing with all of the hassles. He says that by purchasing a new condo and hiring a property manager, then you will only have to spend about 40 minutes a month on your investment. That 40 minutes will be spend going over the property management statement and depositing the check in the bank.

Virsnieks makes the whole process sound quite easy in the book, and indeed it should be. There are a few problems that I have with how the book is set up though. The majority of his purchases were made back in the 1970s, so it is somewhat hard to wrap my head around the purchase of a $23,950 condo in Seattle that rents for $265/month. These days a cheap livable condo in Seattle goes for about $175,000 or more. He also makes mention of mortgage payments in the 13%+ range, which is unheard of these days. If you applied everything on a strict percentage basis, it would all probably match up about the same, although in Seattle I believe that condo prices have increased more than rents have.

Personal Finance, Real Estate, Reviews condo, invest, landlord, real estate, rent, tenant

I normally don’t use this blog to rant about a company, but AT&T wireless especially pissed me off today. For the past few months my girlfriend of about 2 1/2 years have been thinking about switching her phone over from her dad’s family plan to a family plan with me. It just seemed to make sense for us, especially since I don’t go through a ton of minutes and she was sharing hers with three other people on her old one. So just last week we went into AT&T to get everything moved over.

It seemed like a pretty painless process. All in all it took about five minutes. They checked all of our IDs and got our numbers and then transferred her number over to my plan and set us up with a new minutes plan. It all sounds good until I took a look at my bill this morning.

Apparently AT&T charges what they refer to as a “Transfer of Service Responsibility Fee” which costs $18.00! $18.00 to move a number on a computer from one account to another. No credit or background checks needed to be done, just a straight transfer! It seems like they should be encouraging you to sign up with the family plan since you will most likely keep your service there longer. Instead they just penalize you! Rediculous! I wonder if they charged her dad as well?

One more thing that made me pretty upset was that they got rid of almost all of my rollover minutes. Over the past 12 months I had accumulated over 3,000 rollover minutes. When I switched over to the family plan they took away all of those minutes except for 700. What happened to keep the minutes that you pay for?

The account summaries that are posted along with this article are taken from my actual bill, so I am not making this stuff up. I’d be curious to hear if anyone else has had similar experiences with AT&T and whether or not this is standard practice on the other wireless carriers.

Personal Finance, Random, Reviews at&t, family plan, rant, rollover