Selling a Used Car, Part 1: Preparation

Filed under: Spending  | Keywords:

This is the first installment of a 4-part series about my recent experience in selling my used, ahem, pre-owned car. The other posts in the series are:

I wanted to replace my car. I've owned it for seven years and driven it for 90,000 miles. It has given me good service but because I often drive to remote places for backpacking and skiing in the mountains, I'd like to have a more reliable vehicle. I checked with a few dealerships about trading in the car when I buy a new car, but the most they offered me was the the Kelley Blue Book Trade-In Value, which was about $6,000. Meanwhile the Kelley Blue Book Private Party Value is about $8,000 and the Kelley Blue Book Suggested Retail Value is over $10,000. This means the dealership would buy my car for $6,000, clean it up and sell it for close to $10,000. That's a much larger profit on a used car than what they make on selling a new car. With the encouragement from a few co-workers who sold their cars privately, I decided to split the difference with the buyer. The Blue Book Private Party Value sits in the middle between trade-in and retail. I get a higher price than trade-in and the buyer gets a lower price than what the dealerships charge. A true win-win.

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Is Inflation Dead?

Filed under: Investing  | Keywords:

Bob Brinker, host of a nationally syndicated radio program Money Talk, opened his show a few weeks ago by observing that the year over year inflation rate as of October 2006 is only 1.31% as measured by the Consumer Price Index. He went on to say that the Federal Reserve was mistaken about worrying about inflation and that they went too far in raising the short-term interest rate. I don't know if the Fed's concern about inflation is right or not, but I'd like to give them the benefit of the doubt rather than believing a radio show host. The low inflation number in October is a special case. It appears low when compared to a high number last fall due to Hurricane Katrina. You only have to go back a few more months to see that the 1.31% number is not a good indication that inflation is dead. Using the Consumer Price Index data from U.S. Department of Labor, here are the annualized inflation rate over the last X months as of October 2006:

  • 12 months: 1.31%
  • 13 months: 1.39%
  • 14 months: 2.35%
  • 15 months: 2.61%
  • 16 months: 2.80%
  • 17 months: 2.67%
  • 18 months: 2.45%
  • 19 months: 2.76%
  • 20 months: 3.10%
  • 21 months: 3.29%
  • 22 months: 3.25%
  • 23 months: 2.91%
  • 24 months: 2.82%
  • 25 months: 2.96%
  • 26 months: 2.95%
  • 27 months: 2.86%
  • 28 months: 2.69%
  • 29 months: 2.73%
  • 30 months: 2.87%

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Carnival of Personal Finance #75

Filed under: News  | Keywords:

Everybody Loves Your Money hosts Carnival of Personal Finance #75 this week. Under the theme of a used car dealership, there are more than 60 excellent posts. My post about the finance charge in insurance payment plans is included in the host's picks in the front. My favorite posts so far include:

Check out the carnival!

Employee Stock Purchase Plan (ESPP) Is A Fantastic Deal

Filed under: Investing  | Keywords: ,

If you work for a publicly traded company which offers an Employee Stock Purchase Plan (ESPP), you've got yourself a fantastic deal. An ESPP typically works this way:

  1. You contribute to the ESPP from 1% to 10% of your salary. The contribution is taken out from your paycheck. This is calculated on pre-tax salary but taken after tax (unlike 401k, no tax deduction on ESPP contributions).
  2. At the end of a "purchase period," usually every 6 months, the employer will purchase company stock for you using your contributions during the purchase period. You get a 15% discount on the purchase price. The employer takes the price of the company stock at the beginning of the purchase period and the price at the end of the purchase period, whichever is lower, and THEN gives you a 15% discount from that price.
  3. You can sell the purchased stock right away or hold on to them longer for preferential tax treatment.

Your plan may work a little differently. Check with your employer for details.

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Carnival of Personal Finance #74

Filed under: News  | Keywords:

A Geek's World is hosting Carnival of Personal Finance #74. My Open Enrollment mini series is among 70 other great posts in this week's carnival. There are two many to enumerate. Check it out yourself!

Open Enrollment, Part 4: Flexible Spending Account

Filed under: Insurance  | Keywords:

This is the fourth installment of the Open Enrollment mini series. Previous posts in the series were

I cover flexible spending accounts in this post.

A Flexible Spending Account (FSA) allows you to set aside money before tax and pay for health care and dependent/child care using pre-tax dollars. It's a great deal because you get to use pre-tax dollars. Not only you don't have to pay federal and state income tax on your deposits to the flexible spending accounts, you also get to avoid Social Security and Medicare tax. The only catch is "use it or lose it" — you lose what you can't use. Because there are many ways to spend the flexible spending account money, and because the tax savings is substantial, you have to be way off in your estimate to lose money in an FSA. For 2007, you also have 2.5 months more time to use up your FSA. If you find yourself sitting on a big balance in your FSA next November, just reduce your contribution for 2008 and use up you existing balance by March 15 2008. » Read more …

Carnivals: Week of 11/6/2006

Filed under: News  | Keywords:

Carnival of Personal Finance #73 is up at City Girl's Financial Blog. I contributed I Love Southwest Airlines which pointed out the Southwest Airlines' friendly no-change-fee policy. While I'm still going through the long list of gems contributed by other bloggers, this post at Growth in Value caught my attention:

Squeezing out the last 0.05% from your savings account sure helps but you also have to be extra careful in big dollar transactions.

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Open Enrollment, Part 3: Disability Insurance

Filed under: Insurance  | Keywords:

This is the third installment of the Open Enrollment mini series. I cover disability insurance in this post. Other posts in the series are:

1. Short Term Disability (STD)

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Open Enrollment, Part 2: Life Insurance and AD&D

Filed under: Insurance  | Keywords:

This is the second installment of the Open Enrollment mini series. I cover life and disability insurances in this post. Other posts in this series are:

1. Basic Life Insurance

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Open Enrollment, Part 1: Health Care

Filed under: Insurance  | Keywords:

Open Enrollment is coming up next week. This is a period of time when you can make choices for your benefit plans for next year. In a previous job, I worked in the employee benefits department at a Fortune 100 company. So I know a thing or two about these benefits. Over the next few days I'm going to write about my choices. Please note the benefits and premiums vary greatly from employer to employer. I'm writing from the perspective of an employee working for a large company with comprehensive and heavily subsidized benefits.

The first post in the series is about health insurance — medical, dental and vision. If you'd like to jump ahead, here are the follow up posts in this series:

» Read more …

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