I found this article on The Simple Dollar: Why Netflix Doesn’t Work For Us - And How We Found A Cost-Effective Alternative and it raised an interesting idea. They said that they buy and resell their DVDs on eBay and find it a more practical method than using Netflix.
Trent at The Simple Dollar mainly watches TV series which come in boxed sets. For them it is relatively cheap and more convenient for them to buy and resell used boxed sets of TV series. I thought it was a great idea. I decided to see if it might work for myself.
As an example I researched the cost of the movie The Pursuit of Happyness on a few online sites. The DVD runs about $2 + $3 s/h if you buy it used on Amazon marketplace. On eBay the cheapest I found it was $3.5 for cost + s/h. Half.com has it for about $4 including s/h. So you're generally looking at a price around $3-5 for a used DVD if you buy them online. The
shipping/handling cost is the bulk of the cost and it typically runs $2-3. If you then resell the DVD you might get back $1-2 of that cost. So your net cost is in the $1-4 range per DVD.
SwapADVD is another alternative. Through that program you can swap your used DVDs with other members and basically only pay postage one direction for about $2. Net cost is $2 per DVD.
With a net cost of $1-4 for buying and reselling used DVDs or $2 net cost for Swapping DVDs you're still paying as much or more than if you just rented a DVD for 1 day at RedBox. Net cost at Redbox is $1 per day.
Trent at The Simple Dollar has a unique approach to watching DVDs that works well for their needs. But I still think that in general for most people a combination of Redbox and/or a 1-2 disc Netflix plan would be the most cost effective means of renting DVDs.
August 7, 2008
Buying and reselling DVDs instead of renting them?
$25 at Restaurant.com for $5 - ends today August 7th
This promotion is now expired.
I only saw this offer today and it ends today:
August 5th thru 7th, 50% off $25 Gift Certificates. Pay $5 when you use the code GAMES.
I've used Restaurant.com at my local steak house and its a pretty good deal. Just make sure you know what restaurants accept the certificates and pay attention to the restrictions before buying. For example in my area only one decent restaurant that I'd want to go to accepts them (the steak house) and they require a $50 minimum purchase. It works out pretty good for us since we would dine at the steak house anyway and we save $15-20 with the gift certificate.
For more on saving money at restaurants see my older posts:
August 6, 2008
When to Downsize Your Car
Consumer Reports has an article on MSN titled : When to Downsize Your Car. A little while back I discussed fuel efficient used cars and I know a lot of Americans are probably thinking of trading in their gas guzzler for something with a bit better fuel economy. Better MPG is going to save you money of course but you should also consider other potential costs before you run out and trade in your car. The Consumer Reports article looks at it from the perspective of those that still owe towards their car loan and whether or not it makes sense to trade in a car before its paid off. They say:
So, according to CR's analysis, the amount a typical, payment-making owner could save in fuel costs by trading in early at three years, even with a big jump in miles per gallon, is significantly less than the amount the person will save in depreciation by keeping the vehicle another two years. After five years, trading in for a smaller car makes more economic sense.
This makes sense to me, basically in general you want to avoid trading in your car too frequently. Because the depreciation and interest are higher at the start of your purchase, if you trade in too often you eat too much in depreciation and interest costs. If you bought a new car with a loan and traded it in for another new car every 2 years you'd be blowing a lot of money on interest and depreciation. For the same reason you don't want to trade in a newer car for a more fuel efficient model too soon.
August 5, 2008
How to adjust for inflation?
Generally when we talk about financial planning we do not typically adjust numbers for inflation. If someone discusses the power of compound interest they might state how $1,000 invested annually at x% over 40 years could grow to over $1 million dollars. But $1 million dollars 40 years from now won't be worth the same as $1 million is today. So it can be important to adjust our figures to take into account the impact that inflation has.
There are a couple main ways that I'd use to adjust for inflation. 1) use an online calculator service or 2) crunch the numbers manually.
Using an online calculator
The BLS has an inflation calculator that you can use to figure out what a dollar value from a previous year would equate to in todays dollars. So for example if your father bought a house in 1962 for $15,000 you could plug in $15000 for the dollar amount at 1962 for the year and it will tell you that it would be worth $108,682.95 in 2008 dollars.
The calculator at MeasuringWorth will let you take a dollar value from one year and equate it to a value from another year. You can either go backwards or forwards.
These calculators are handy if you are looking to adjust the value of values from the past to equate them to todays dollars.
Calculating inflation adjustment manually
You can calculate an approximate inflation adjustment manually by using a set value for inflation over time.
To find the present value of future amount:
Present value = Future amount / (1 + % inflation ) ^ number of years
For example if you assume a future inflation rate of 3% annually and you expect to have $1 million dollars 40 years from now then the calculation would be:
present value = 1,000,000 / (1+.03)^40 = 1,000,000 / 3.262 = $306,556
On the other hand to find the current value of a past amount you simply flip the formula around:
Future amount = Present value * (1+ % inflation) ^ number of years
So for example if we have $1,000,000 today and we want to see what that would equate to in 2048 if we assume 3% inflation then the calculation would be :
future amount = $1,000,000 * (1.03) ^ 40 = 1,000,000 * 3.262 = $3,262,000
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