Free Stuff

I have been trying to get rid of 2 old cellphones for the past 3 weeks. The phones are 3 years old but they are in great shape and these phones would still be considered an upgrade for many people out there. I advertised on Craigslist and Kijiji and started the price at $20 per phone. I got a couple offers and then I reduced the price to $15 after getting 2 offers that were lower than my asking price. I got a couple more bites but they didn’t end up coming to pick them up. So I got maybe 4 or 5 offers in 3 weeks or so. Then yesterday I decided enough is enough, I want to get rid of these phones so I put them up for FREE on Craigslist and Kijiji. Within the last 12 hours I have received 18 emails. I am planning on giving it to the first person who inquired but I’m leaving the ad up until them just in case they don’t show. 2 of the 18 people offered to pay me for the phones. Why did the number of inquiries (per hour) jump so much as soon as I made it free? I think the relationship between the asking price and the number of inquiries is highly non-linear when you get closer to $0. I’m curious how many inquiries I would have gotten had I posted them for $10 each (in hindsight the drop from $20 to $15 was too minuscule to make much difference).

Dividend Stocks Inside vs. Outside an RRSP

In this article, “Dividend tax breaks make blue-chips a wise buy” in the Toronto Star (linked from the Canadian Capitalist), Ellen Roseman says:

Buying blue-chip Canadian stocks can be a good strategy for do-it-yourself investors. I’m talking about the big banks, insurers, pipelines, telephone companies, gas and electrical utilities that pay dividends of 2 per cent to 4 per cent a year.

This is similar to what you earn on a high-interest savings account or fixed-term deposit. But if you hold these stocks outside of a registered plan, your income is worth more because of the tax breaks on dividends.

It almost sounds as if she is saying that, given the choice, you should hold dividend investments outside of a registered plan (RRSP) rather than inside. I think what she is saying is that if we just compare dividend stocks with interest-bearing investments such as term deposits and high-interest savings accounts, if they are both held outside of an RRSP, less tax will be paid on the dividends than on the interest from the other investments. However, dividend stocks should never be held outside an RRSP if one still has contribution room inside one’s RRSP. Putting dividend stocks inside an RRSP eliminates the taxes on the dividends. Instead, pre-income-tax dollars are invested inside the RRSP where it can grow tax free. The money is then taxed as income when the money is withdrawn later during retirement (presumably at a lower income tax rate). The double taxation of dividends/interest is avoided.

Just Bought a Car

We decided a while ago that we needed a new car. Or rather, I decided that I wanted one, because my wife needs the car all the time for work and although I bike to work sometimes, I definitely won’t be biking all winter long (yes I know, Vancouver isn’t THAT cold) and I’d like to be able to go get groceries or drive to visit my parents or do any variety of things even if my wife is out using her car. I’ve been taking the bus for about 4 years now and although I enjoy it because of the amount of reading it allows me to do, I want to get home a bit quicker sometimes without cutting into my work day.

For the past few weeks we have been looking at the 2009 Matrix as well as a few similar cars such as the 2008 Yaris Hatchback and Mazda 3. All of these cost around $20,000 including everything. It was such a big purchase that we couldn’t decide on what to get but I think we were leaning towards the Matrix. I decided to check out the Buy & Sell one day and I scanned for old Tercels, Echos, and Corollas. I eventually found a 1997 Tercel Sedan for $2700. It’s better on gas than my wife’s little car from 1997 and also better than the 2009 Matrix. I checked it out after a test drive I gave the guy $100 as a deposit and shook on it. The only downside is that it has 230,000 km on it but I really don’t see that as a problem. It has had a single owner, no accidents, and he has maintained it well. This car will last at least another 10 years. I’ve never bought a new car before (my previous vehicle’s were at 1985 Tercel and a 1986 Tercel) but I really wanted to this time. I’m so glad we didn’t $20,000 on a new car when there are so many perfectly good old cars out there.

CommunityLend Pre-Launch Site Revealed

CommunityLend is now closer to launch, with the unveiling of their new pre-launch website. CommunityLend is the Canadian version of Zopa (from the UK, but has now expaneded to other countries) and Prosper (from the US), which are P2P lending sites. In theory, by reducing the middle-man (the bank), lenders and borrowers alike should get better rates then they would through the bank.

Ohio High Schools to Include Personal Finance Courses

According to this article, Ohio high schools to include personal finance courses as of 2010. The article says:

Last year alone, BGSU students borrowed $129 million to attend school. Their debt worries don’t end here. Many are piling up bills they can’t pay on credit cards. The solution: mandatory personal finance classes in high school. That’s going to happen in 2010, the result of a bill sponsored by Ohio Treasurer Richard Cordray.

When I was in high school in BC we had a Business Education class in Grade 12. That included some personal finance topics such as preparing tax returns and investing in the stock market (those are the two I remember anyways). I had heard that the program was scrapped the year after I graduated and sure enough, the most recent google hit I can find is from 1997 or 1998 so they must have gotten rid of it. It’s too bad, as it was a good course. I know that I am definitely going to teach my kids about personal finance and investing even if they aren’t taught it in school. But I feel bad for all the kids out there who learn about some of the basics because it is not included in most school curricula.

Air Miles Blows

I have blogged about Air Miles a few times. I am seriously thinking about getting rid of Air Miles once we use up our remaining miles. We tried to use up half of them for some upcoming flights but once again, they did not have flights that worked for our schedule. We even called over 3 months ahead of time. This is the third or fourth time this has happened. This just makes me detest “Rewards Programs” even more. Some of the other tricks they do include making the flights worth more per mile than the non-travel items (such as gift cards and other merchandise). This makes it psychologically difficult to go after the non-travel items since they are valued at half the cost per mile compared to flights (sometimes worse). Seriously, on my last statement from Air Miles I got like 100 miles. Their statements are sent quarterly and 100 miles is worth like $10-20 depending on what valuation you use. So that’s like less than $10 a month. Are you f$cking kidding me? The only way to get serious miles is to rack up seriously huge credit card statements or shop like crazy at Air Miles retailers, which we are never going to do. So they pay me less than $10 a month so I can go through this hassle of calling Air Miles every time I want to fly to see if they have any flights I want (which they never do), carry an extra card in my wallet, receive an extra statement, and waste my time writing a blog article about it. No thanks.

Peer-to-Peer Lending Coming to Canada

Following in the footsteps of UK’s Zopa and the U.S.’s Proper, Canada’s own CommunityLend is set to launch some time in Fall 2007. If you check out for example, you can get some handsome rates of return if you’re willing to lend someone a bit of money. Even lending to someone with an AA credit rating can net you 12.5% return. I would expect that both lender and borrower gain some advantage here as they avoid the spreads from the middle-man (the banks). Instead the middle-man is a website that probably charges some low rate fee in addition to collecting revenue from advertising.

Quicken 2007 XG

I bought Quicken 2007 XG the other day. I wanted it for the detailed investment performance reporting using IRR (internal rate of return). It seems to deliver on that for the most part although I have only loaded in some investment transactions. I actually loaded in my first transactions ever! I still had my transactions from 1996-1999 when I was purchasing the AIC Advantage Fund. I’ll talk more about that investment and what I found out from Quicken’s reports. I looked at the options in the investment performance report and it looks very flexible in terms of showing results for only certain accounts or investments, and for all dates (not just 1,3,5 years). The part that sucks about Quicken is that it’s still a Mickey Mouse program because it doesn’t to double-entry accounting. When I was entering “Bought” transactions there seemed to be an associated cash account that was going negative, but I couldn’t choose the account. Nor do I remember creating this account. I used the BoughtX transaction type instead, and then I could choose an account to fund the purchase. I have been using Gnucash up until now and was very satisfied with it but wanted better investment reporting. I love Gnucash’s double-entry accounting, and it is too bad that Quicken doesn’t have that capability. I thought about getting QuickBooks but it didn’t seem like QuickBooks had any investment support, although I could be wrong. The other annoyance is that Quicken has such a cluttered interface. Gnucash was so simple, just a list of accounts and a ledger. I’ll have to see if I can customize the interface in Quicken at all, but I doubt it. I have made a tentative decision to stop tracking individual transactions in my chequing accounts and just track investments instead. Not sure if I’ll go ahead with it, I’ll have to see how easy it is to import transactions from statements downloaded from online banking sites into Quicken. Only 1 of our 3 institutions allows us to connect right from Quicken. For the other 2 I have to go to the website myself, and click on “download statement.”