Learning to use Ebay is a great investment in clearing junk out of your house. I first decided to make the jump into Ebay a few years back after Staples had a sale whereby the rebate would pay you more than you spent on the purchase. I ended up with a bunch of Norton and McAfee software that I had no use for. So I decided to put it on Ebay. Since then I found lots of other stuff that I didn’t use that still had value on Ebay.
The first thing I had to figure out is, was it worth anything. The boxes all had their UPC’s cut out, so I found that there was actually a good market for software that was out of box but still had all its accompanying paperwork (most importantly CD key). Next I searched through completed listings for the software packages. It’s very important to search completed listings to determine prices and also volume of sales. For something that has a pretty good volume of sales on Ebay, don’t bother with reserve prices or high minimum bids as they are a waste of listing fees. There will probably be some idiot bid on your item with 6 days left for only a penny but don’t worry as your end date approaches the real buyers will show up. In fact, do not be surprised to see that the item gains most of its bids in the last hour or less of bidding.
For items that don’t have a huge volume or are unique items, I usually just set a minimum bid rather than reserve. A reserve might be useful if want you to go fishing for the price range your item is valued at and want to have the option of not selling but if you’re pretty sure you can set fair price just use a minimum bid.
It’s important to take pictures of your items (if they are a physical item, unlike software) and describe them well. Figure out what it will cost to ship your items as you don’t want to get burned on shipping. I actually bought an item once where the seller paid more to ship the item than I even paid him for the entire auction. Apparently he didn’t bother to get a shipping quote before setting his price. Be sure to investigate different shipping services. Sometimes offering overnight shipping, no matter the cost, will sell items. In America, the land of instant gratification, offering a Buy It Now with overnight shipping will entice a certain class of buyers. Also be sure to investigate budget shipping services, first class mail for items 13oz or less and media mail for books can offer you an edge in the shipping department amongst yet another class of buyers who are looking for rock bottom prices.
Another important detail is return policy. If you are offering brand new, sealed items, or software I highly recommend specifying “no returns.” You don’t want them to them to open your software, make a copy, and then return it saying it doesn’t work with their computer. I once sold a brand new, sealed wi-fi card only to have the buyer claim it was defective after opening it. I had him return it and refunded his money. It worked fine in both my Dell and IBM laptops… The reality was he probably got a better deal on one at BestBuy and had buyer’s remorse. I take more time specifying my return policy now.
I am about to delve into yet another area of Ebay: clothing sales. My fiancee has some old prom dresses and some barely used ski boots she wants to sell. I have no idea how much she will get for them. I’ve had alot of success selling her used college textbooks on Half.com, but we’ll see how clothing sales go. At the very least the result is a cleaner closet.
Jon Budget clearing out junk, ebay
I noticed this little snippet on Yahoo! Finance this morning:
“In financial news, Bear Stearns (nyse: BSC - news - people ) Chairman James Cayne sold his entire stake in the firm for $61 million. Before its collapse, his investment was valued at around $1 billion.”
Webster’s define bailout as “rescue from financial distress.” If my stock had gone from $1 billion to $61 million, I don’t think I would feel rescued. In fact that kind of loss might make me want to jump off a bridge. I’m sure everyone at Bear Stearns is still very distressed as well. The Fed certainly rescued them from collapse but distress is a another story. Bear Stearns is still very much distressed. It seems their employees are trying to head for the hills.
I commented on bailouts in an earlier post, that time in the context of bailing out troubled borrowers. Let’s look and see if the Bear Stearns “bailout” is likely to be a moral hazard. Let’s take a look at that chairman who just cashed out for pennies on the dollar. Let’s consider what his cost basis on that stock is: let’s be conservative and say he received it as compensation at $30 a share and held through the whole debacle. If he received it as compensation he owed at the time 38% + whatever his state/local tax rate is (we’ll use 5% in the example), so 43% in taxes. So he received $183 million in stock compensation and paid $78 million in taxes on it. That $61 million he received from the sale of the stock doesn’t even cover his tax bill. Mind you he now has several lifetimes worth of $3000 capital loss carryover deductions but I don’t think that will make him feel much better…
Do you really think this guy is going to repeat the same behavior again expecting a “bailout?” He paid more in taxes than he got back from the “bailout.” I really don’t think there is a moral hazard here. Clearly this guy is not going to try the same shenanigans again unless he’s too stupid to see that he paid more in taxes than he got back from the government “bailout.”
Let’s compare this to a borrower bailout scenario. The borrower has $0 in savings and buys a house creatively financed with 0% down. After 1 year the borrowers teaser rate resets and can’t make payments. The borrower screams to the media that the “the evil banks are going to take my house.” Government steps in and makes the bank lower the principle amount of the loan and finances it at a subsidized low rate. The reckless borrower gets to stay in house on the cheap and loses nothing. What disincentive is there to prevent the borrower from doing this again? There is no disincentive that I can see and this example clearly exhibits a moral hazard.
I think the claims of calling for bailouts of borrowers to go along with bailouts of banks are unfounded. Hopefully the media will get the picture.
Jon Economy bailout, bear stearns, tax
My 2003 Mazda6 was in the shop again yesterday. It was just there last month… It started with some misfiring cylinders which I probably could have fixed myself but it’s still winter here in New England and I don’t have a garage. Because figuring out which cylinders are misfiring involves using the car’s computer, I figured it was best left to the dealer service to take care of. Unfortunately getting to the rear bank of cylinders involves quite a bit of labor and resulted in a $500 bill for 3 new coils and 6 new plugs (at 70K its due) and the labor to replace them.
While it was in for that service they do a maintenance check on the car and found the front pads in very low condition which was no surprise to me as they are at 35K. I knew the rotors were warped pretty bad but he thought that he could still resurface them, he tried and failed. Fortunately because of this, he gave me the rotors at parts store price instead of dealer markup. So $400 for 2 pads and 2 rotors and the labor involved.
Then on Monday I notice a vibration from the front end, it felt almost like a wheel weight had fallen off or a lug nut was loose. I checked all the wheels and found nothing. Tuesday the vibration was still occurring and I checked again, this time I noticed that the front driver’s side wheel was really hot while all the other wheels were cool. I put the car in neutral and jacked it up, sure enough the wheel was not turning freely. My suspicion, which was confirmed by the dealer, seized caliper, which he explained was common after replacing pads. Apparently rust builds up in the area where the piston is not traveling with the old low pads then when new pads are put on the piston is pushed back into this rusty area and gets hung up, he recommended replacing both front calipers. $587 later I’ve got 2 new calipers and fresh brake fluid.
The reality is I probably could have saved 30-50% by having this service done elsewhere (70% if I had done the service myself). However by getting this service done at the dealer with factory parts, I figure I’ll get at least another 70K miles out of all the parts that were replaced. As the car gets older, however, buying another 70K miles from parts seems like a waste when the car nears end of life. I’ve already decided that this is the last dealer brake job for this car. The only remaining thing I may return to the dealer for is the timing belt, then it will be all independent shop for this car.
Jon Budget
I’ve been banking with E*Trade Bank for almost 4 years now. I really can’t remember how I got along without them. People (especially older people) ask me how I use a bank that has no brick and mortar branches and no ATMs. The reality is it works out quite well.
How do you deposit money?
Two ways: ACH transfers and by mail. I primarily use ACH transfers and E*Trade excels at this. You can push money into and pull money from virtually any account with an ACH compatible routing and account number. They seem to allow unlimited number of links and you don’t have to send them a check like other institutions like ING or EmigrantDirect. To deposit money by mail, simply stuff you checks into an envelope and stick on a provided address sticker and postage. 4-5 days later your funds are available in your account. In the past they provided postage paid envelopes but last time I called them for more they said they were discontinued, $0.41 is still less than the gas it costs to drive to the bank, unless you can walk to your bank.
How do you take money out?
Again ACH is great to get money to other accounts. To get cash go to any ATM. Don’t worry about fees because E*Trade will reimburse you immediately for any fees paid to the ATM. No more worrying about the $5 ATM fee on the cruise ship, in the casino, or in the local pub. No more worrying about stopping to get cash on your way out for the night as the machine at your destination is just as good as any. This is by far the feature I like most about this account. I even used the ATM card to get cash in Europe and received the best exchange rate of the entire trip and I couldn’t find any fee that was charged.
How are the interest rates?
Best in the business as far as I am concerned. Their high yield savings is currently 3.45% and a leader among online banks. They beat brick and mortar banks by a large margin. They don’t seem to have “loss leader” teaser CD’s like the brick and mortars but their CD rates beat non-promotional rates any day. An added bonus is that you don’t need to actually go to the bank to cash in a CD before it auto-renews, simply call them. Every brick and mortar that I have dealt with requires you to actually go to the bank to cash in your CD.
The one and only problem with the account?
There is no way to deposit cash. Honestly I never deposit cash anyway but for this reason only I have a checking account with Citizens Bank to fill the hole. I chose Citizens because they have supermarket branches that are open evenings and weekends unlike virtually every other bank, so it offers nearly the same convenience as E*Trade but at the expense of not earning interest on checking and not having a competitive high yield savings account.
Jon Finance ATM, banks, high yield savings
At this point its fairly clear that the housing market is crashing. It’s also clear that the lending markets have tightened substantially. Many people are poised to have their homes foreclosed upon. Unfortunately I can’t help but cheer for this housing crash. As someone who is currently renting due to what I perceive as absurd prices, declining prices do nothing but benefit me. It’s an anomaly that prices in Massachusetts went up at all since the population actually decreased during the years of the housing boom. In economics speak, the supply of housing went up and the demand went down, this is supposed to result in decreasing prices. Obviously something was wrong and we are now finding out just what was wrong.
Not surprising, in the wake of foreclosures, there have been many calls for a bailout. Certainly there are arguments in favor of a bailout. Substantial wealth has been created by the housing boom and if the markets are left to their own devices its possible that most of that wealth will be destroyed. If the foreclosures continue many people will be forced out of their homes.
On the flipside, we see the problems with a bailout. People who really never should have been homeowners in the first place get a free ride at the expense of those who are not homeowners. Those who were irresponsible have been rewarded for their behavior, possibly leading them to expect future bailouts the next time they are irresponsible. This problem is described as a moral hazard. It’s been claimed that people simply did not know what they were doing, I think this is far from the truth. Public records searches on homeowners show far more than is typically reported: such as patterns of cashing out equity and second loans. In one well known case in the Boston area, the woman claiming she didn’t know what she was doing was actually a licensed real estate agent!
There are those who describe the Bear Stearns rescue plan as a bailout. I agree that it is a bailout but nonetheless the investors have paid a substantial price. At the beginning of 2008 Bear stock was trading at over $100 a share, it’s currently going for just over $10 a share, sure this is more than the $0 it would be worth without the bailout but its still a hefty price to pay for investors.
What has been proposed to bailout homeowners does not seem to involve any price/penalty to the homeowners. The plans suggest that lenders simply write off the lost equity and reduce the payments to a level that the homeowner can pay. The homeowner gets to stay in the house and pays nothing for their irresponsible behavior. While I’m not exactly sure of a solution, I know a bailout is not it. If there can somehow be a way to hold the borrower accountable for the entire loan we must do it. If there is no way the homeowner can ever meet the obligation, they must be evicted.
Jon Economy foreclusures, housing bubble, moral hazard
I made an observation in an earlier post about mall parking lots as an economic indicator. Well this weekend provided yet another indicator for me. I went to one of the smaller malls near me (which still has a large parking lot) because it contains a Market Basket grocery store. I actually circled around the entire parking lot without finding a spot! I even circled the far away overflow section and was unable to locate a spot. Mind you that I am not the type to slowly follow somebody who appears to be walking back to their car and then sit there blocking traffic while they load their car. So what I did was leave. I’ll come back on a weeknight.
Upon returning home I talked to my fiancee who had justed returned from Target and was complaining about how long it took her to find a space. I know Targets in more urbanized areas have smaller lots which also tend to be parasitized by people parking and walking. This Target is not in an urban location, just your typical suburban Target with huge parking lot. Yet she had trouble finding a spot.
Is it Easter that caused this surge of consumerism, typically associated with Christmas? While it may be understandable that the grocery store might be somewhat busier in advance of the holiday, its really hard to explain Target and the rest of the mall.
What I take away from this observation is significant doubt about what is being reported in the media about the slowing economy. Whatever slowdown we are looking at here is bound to be short lived. I also have to wonder if the “bad” state of the economy is nothing more than imagined. There are people (particularly in the media) that want nothing more than a change of political party in the executive office. They will convince themselves that the economy is “bad” and attempt to convince others. But unless they can convince corporate America to downsize its workforce, this recession will be nothing more than psychological. Hold on to your stocks, it’s going to be a rough ride, but there is light at the end of the tunnel.
Jon Economy
I live in an apartment in an old (1870) house that has been subdivided into 2 units. It has 2 rooms with virtually no insulation and leaks heat like a sieve. My gas bill from December 15-January 15 was over $400. Today I received my heating bill for the last billing period, roughly February 14-March 14 for $338. Not surprisingly it was less than last month, for 2 reasons: the average temperature was 35 degrees vs. 32 last month and the billing period was 2 days shorter due to February being a short month.
So how do I actually compare energy efficiency with so many variables at work? My natural gas provider, Keyspan, provides degree day information on their website. If your provider doesn’t have this information its relatively easy to find at sources like weatherunderground.com. So I find that in the current period I used 207 therms to provide heat for 846 degree days = 0.245 therms/degree day. In the previous period I used 229 therms to provide heat for 993 degree days = 0.231 therms/degree day. So my apartment was actually more efficient in January/February then February/March. Hmmmm… Not good.
My theories behind this are that my fiancee and I went on vacation 2/9-2/12, so the thermostat was set to 60 degrees for 4 straight days in the previous period. Also, I traveled by myself to visit family March 7-10, and my fiancee is not nearly as conscientious about reducing the basement thermostat at night in addition to the fact that it tends to drift up to over 70 degrees (by itself?) when I am not around…
Jon Budget
In my previous post I highlighted how spending 10 minutes to save $3 is a wise use of one’s time unless one is very highly compensated. You’ll noticed that my calculation included an adjustment to account for cost savings using after-tax dollars.
There are two ways to look at cost savings, either A. you are simply diverting spend from somewhere else or B. equivalent amount of time worked to achieve the same outcome. So if saving $3 at a toll means you have $3 less beer money for the bar later, the money was already allocated for spending and therefore there is no need to calculate its pre-tax value. You have simply traded a beer for 10 minutes of time. If spending $3 on a toll does not reduce other spending, you need to look at how long it would take you to earn that money back which would be pre-tax dollars.
Using a pre-tax dollars is a great way to determine is something is really as valuable as it seems. The calculation is easy as well.
After-tax value / ( 1 - effective tax rate) = Pre-tax value
Example: $250 / (1 - .3795) = $402
Something to think about when considering a discretionary purchase.
Jon Finance
Here in New England we have many toll roads, bridges, tunnels, etc. While I find tolls extremely wasteful (tolls are a decidedly inefficient means of collecting revenue), it doesn’t seem they will be going away anytime soon. One particularly annoying toll is the toll to leave East Boston, the location of Boston-Logan International Airport.
I’m fortunate because I live north of Boston and areas to the north have several non-tolled options, while a viable southern/western toll bypass is much less obvious to me. For those northeast of the airport, Route 1A is an obvious solution. For those to the north and northwest, taking several backroads up to Route 16 is the preferred alternative. I’ve found that this route adds about 10 minutes to the trip but saves a $3 toll.
Earning $3 in 10 minutes is equivalent to earning $18($3 x 6) an hour after tax. As I am in the 25% tax bracket and not yet over the payroll tax cap, my total tax rate is 25% fed + 5.3% state + 7.65% SS/Medicare = 37.95%. $18 / (1 - .3795) = $29 an hour pretax earnings.
Considering I only earn the salaried equivalent of $36 an hour pretax at my day job which requires skill far greater than simply driving on local roads, this is a pretty darn good pay rate. If I could get paid for working 10 extra minutes at work, that would be the better value but unfortunately since I am an exempt salaried employee, 10 extra minutes earns me $0. It’s also worth noting that the bypass route I devised is shorter in total mileage, though you will be getting city fuel economy instead of highway, so it’s likely fuel usage is equivalent in either route.
I should note that I didn’t do the above calculation first before trying this route, I simply made an observation. Taxi cabs drivers without passengers almost always seemed to leave the airport using the route I devised that bypasses the toll. Taxi’s carrying passengers universally used the toll road since the passenger was paying the toll. Taxi drivers know the roads better than anyone, clearly they would choose the route in their economic interest.
Jon Budget, Travel
Two of my local grocery stores, Stop & Shop and Shaws are typically more expensive for everyday purchases. Their redeeming quality, however, is their sales which can be quite good. This particular week, Stop & Shop has some great deals. Getting these great deals requires a bit of creativity.
A catalina is that strip of paper with coupons on it that prints out at the register. It gets the name catalina because of the company that produces the machines, Catalina Technologies. This particular week, there is a promotion by the manufacturer on Kellogg’s cereal, when you buy a certain number of boxes a catalina coupon will print out for a certain number of dollars off your next order, specifically 3-4 boxes = $3 coupon, 5-6 boxes = $6 coupon, 7+ boxes = $10 coupon. This week there is a second promotion by the store, buy 4 boxes get $4 off instantly. So a little math, 5 boxes = $6 coupon + $4 instant = $2 off per box or 7 boxes = $10 coupon + $4 instant = $2 off per box. To make the deal even better there are currently newspaper inserts coupons for $0.70 off 1 box, since Stop & Shop doubles up to $0.99, this yields another $1.40 off per box for a total of $3.40 off per box. You can get these coupons on Ebay or thecouponclippers.com for a small service charge if you don’t have them.
Needless to say there are boxes of cereal that cost less $3.40 so they are “paying” you to take the cereal home. My breakfasts will be free for several months with this promotion by which time another promotion is likely to come up.
Also this week there is a catalina deal on Unilever products, get a $7 coupon when you spend $20. The trick is here that $20 is before sale prices and coupons, so if regular price on a item is $5 but is on sale for $4 you only need to buy 4 ($5 x 4 = $20) to trigger the coupon thus your out of pocket cost is $16. The rest is left as an exercise to the reader to figure out how to make a deal out of this…
Occasionally things don’t work quite right and some item isn’t programmed properly or the machine is broken, usually you are out of luck at this point as they will claim you didn’t meet some term of the promotion. This is where internet forums come to the rescue where people post items that did and didn’t work, my favorite is www.hotcouponworld.com.
Good luck!
Jon Deals
