Mighty Bargain Hunter

The joy — and relief — of giving things away

My wife and I have been enjoying a couple of localized Facebook pages that serve as ongoing virtual yard sales.  People know each other to some extent, people post pictures, people raise their hand if they want something, and people deliver the goods.  We’ve gotten some neat things, and we’ve gotten rid of some of our stuff that had past its usefulness.

Overall, a good time is had by all.

It’s not fun to have an expensive item that you can’t sell

A little over a year ago I bought a parlor grand piano on Facebook from a local person.  I regretted buying it even before as they were moving it off of the truck.  (Two things that I learned from this experience: (1) trust your gut, and (2) if you’re buying a bulky item, don’t let the seller bring it over to show it to you before you’ve bought it, because that creates a sense of indebtedness that weakens your negotiation.)

So, I had this piano that really wasn’t what I wanted.  It was taking up a lot of room.  It was old, and the more I researched how much it would take to fix it so that it played even passably well, the more depressed I got about it.  I truly had bought a dog, and I disliked looking at the thing, which was displayed prominently in our foyer.  I couldn’t avoid looking at it every day.

So, I proceeded to try to sell it.  First, I asked friends.  A few looked at it, but everyone turned it down, even at a price far less than what I paid for it.  I tried selling it to piano dealers, but they wanted nothing to do with something that old.  I tried selling it on the Facebook bargain sites that my wife and I were frequenting.  (The person who sold me the piano was on those sites.  How’s that for eating crow?)  Several people said that it was beautiful, but I was thinking: “I don’t care that you think it’s pretty, blah blah blah.  Just buy it.”  I tried Craigslist, but all I managed to do was attract a bunch of people trying to scam me with fake cashiers’ checks.

Giving something away is more than just the money

After the last person who was mildly interested in the piano didn’t bite, I decided to take getting rid of the thing seriously.  I had slowly resigned myself to having to take a big loss on it, and now I just wanted it to be gone so I could get the space back.  I had gotten I put the piano on Freecycle.org.

Free is a powerful word.  It took only two days to be rid of that beast.  No scammers, no window shopping, no anything.  The new owner picked it up for me, brought some help, and it was gone.

If you give something away — especially something that you don’t really want anymore — it doesn’t matter that there’s no money exchanged.  The fact that it’s gone is enough.

Posted in Deals and Steals, Free Stuff, Uncategorized | 4 Comments »

If the tax deduction for mortgage interest goes away, so what?

The mortgage interest tax deduction is one of the best sales tools that real estate agents have at their disposal. It costs them nothing to mention that in all but the most expensive homes, all of the mortgage interest on a primary residence is a federal tax deduction if you itemize your deductions.

Sounds fantastic, but the catch is that the interest is a tax deduction, not a tax credit.  So if you pay $10,000 in primary residence mortgage interest during the tax year, you don’t get $10,000 off of your tax bill.  You get $10,000 times your marginal tax rate, or at most a few thousand dollars.  It’s a bit like paying a dollar for a quarter.

On the chopping block.  Is it really a disaster?

Flexo over at Consumerism Commentary mentioned that the mortgage interest deduction was on the chopping block at the national level.  The deduction is definitely in the sights at different levels, from state offices to federal congressional supercommittees.

This could be a personal disaster for homeowners that are depending on the deduction to make ends meet, as it can amount to several hundred dollars or even over a thousand dollars per month (annualized).  For everyone else, it will spell the end of a nice kickback from Uncle Sam.  In the long run, though, the removal of this subsidy (just like the removal of any subsidy) will affect home prices for everyone.  Removal of the mortgage interest deduction makes homes marginally less affordable, which pulls the price down a bit across the board.  So, it’s pay higher prices with a deduction, or pay lower prices without a deduction (and have a lower mortgage payment).

The deduction is irrelevant

What is relevant, though, is that rates are extremely low, still.  As of this post, 15-year mortgage rates and 30-year fixed mortgage rates are 3% and 4%, respectively.  Fixed, as in your payment will still be the same at the end of the mortgage, but it will hurt far less than it does now.  They may go down further, but they can’t go down much further.  (I doubt banks will ever pay us to borrow money.)

So pay no worries to the federal tax deduction for mortgage interest.  Watch instead the rates themselves.  It’s a great time to borrow for the purchase of a house if everything else makes good financial sense.

Posted in Mortgages, Taxes | 5 Comments »

Mr. Rebates is turning 10 … and giving away $10,000

I’ve talked about Mr. Rebates before many times.  This website, which has now been around ten years, allows you to save money online through thousands of stores simply by clicking through Mr. Rebates on the way to the online store.  The rebates accumulate until you reach $10.00, and then you can request them through PayPal.

After you sign up, they’ll even kick in $5.00 toward your first payout.  Got friends?  If they sign up through you, then whatever rebates they earn will trigger a 20% commission to you.  Forever.  (It doesn’t reduce their rebate at all.  This is a thank-you bonus from Mr. Rebates to you.)

For the Valentine’s Day season, over 200 stores — like 1800Flowers.com, Ghirardelli Chocolates, ICE.com, ProFlowers, and many more — have increased rebates.

Finally, to celebrate Mr. Rebates’ 10-year anniversary, they’ll be giving away $10,000 to one lucky winner who visits Mr. Rebates while they’re logged in.  One entry for one visit per day through the end of February, 2012, so there’s the opportunity for another 22 entries into this sweepstakes if you sign up today!

Posted in Rewards | 2 Comments »

The magic of compounding has left the building?

You’ve heard of the magic of compounding, right?

If not, here’s a quick version.  Let’s say you have a savings account that earns 1% per month.  (Don’t laugh too hard.  My dad had one that paid this rate at one point.)  Let’s say also that you put in $1,000 at the start of 2012, and never add anything more.  According to the Rule of 72, after about 72 months, I’ll have about $2,000.  In another 72 months, I’ll have $4,000.  In another 72, $8,000.  The amount in the account doubles each 72 months it sits there.  This happens because the amount that I’m basing the 1% earnings on increases a little bit each month, until some day, it gets really fun.  Almost like magic.

The amount of magic depends on the amount of the rate

Are you still laughing about when I proposed an account that earns 1% per month?  I wouldn’t blame you.  Some of the higher interest rates for checking accounts now are about 1% per year.  About all we can say about these kinds of rates is that they’re better than nothing.  (If you’re earning nothing on your money, try to earn something on it.)

At rates of 1% per year (or less) the magic still happens, but the magic isn’t exactly making-a-jet-plane-disappear magic.  The doubling would still happen, but it would be almost the end of the century before that happened.  And to boot, your $2,000 might only barely buy a nice suit.  Break out the champagne!

Banks are scared to lend now.  They’re reeling from the shakeout in 2008.  As a result, interest rates on savings accounts and checking accounts goes down as well.  And the fees get tacked on.  It’s just not a magical time to be a saver.

What’s the key to building wealth, then, if it’s not through saving money?

Putting money in the bank is low-risk, but it’s also low-reward.  Now, it’s extremely low-reward.

The key, I think, is to take calculated risks, and work to produce something.  Find a need, and serve customers to fill the need.  If you can deliver on time for the price agreed on, that’s a lot more than many businesses do.

This isn’t “stick money in a bank account and it grows while you watch Twilight” easy, but that’s what the times demand.  There’s barely any reward for doing it this way today.

Maybe the magic will come back into compounding, but until then, make your own magic.

Posted in Banking, Investing, Making Money | 4 Comments »