Thursday, August 21, 2008

Condo Time?

As the dollar weakens and oil prices continue to rise, I constantly find myself veering toward one asset class that seems incredibly undervalued, in high supply and with relatively low demand: real estate, and specifically a condo for myself.

Every month when I pay rent, I'm realizing I'm helping someone else grow equity in their real estate. My lease is up at the end of November. I haven't really been enjoying much of the facilities here nor the general upkeep of the common areas. Coupled with falling prices and the fact that I will be here for at least another 2 years, I think it would be a great time.

My only real concern is with the availability and cost of credit. While my parents are willing to help me out with the 20% down payment, I will still have to find me a lender and that will be tough.

However, if I can manage a rate of 6% or less, I should be able to purchase between $200-$250K condo at my current rent payments. What I'm hoping for is to low ball a $250K house for about $200K and then see it pop back to its true value within a year.

I'm going to start condo hunting soon.

Sunday, August 17, 2008

Flying back

Man does it hurt to pay for internet in the airports. Of course, as an economist, I should have predicted the obvious heightened demand for internet in airports with the clear lack of supply as an obvious invitation to jack up prices. But still, $9.99 for access?

I pay maybe $40 a month at home while at the airport, its 25% of that for maybe 3-4 hours. What a great rip-off airports are pulling off, on top of the ridiculous airport fees they already charge.

But what choice do I have? I have to be here 2 hours earlier to pass security.

Oh well, at least I can log onto internet poker and try to win my money back.

PS - I'm up $10.10 and so net, I'm up 11 cents! Woo hoo.

Thursday, August 14, 2008

In the Airport

Sitting here in the airport, waiting for my United flight, I have to admit I'm a bit anxious. Their pilot's union is in a very public battle to oust their CEO Glenn Tilton. In the meantime, United has instituted a multitude of nickle and dime efforts, starting with what is now an almost industry standard: charging for checked bags.

At the checkout counter, I encountered another money-generating scheme, paying for seats in the forward cabin that have a bit more foot room but still in the economy class. As more and more of these measures become instituted, I have to wander just how far will they go?

With justifications such as high fuel costs as a reason to charge for each checked bag, I'd expect people to be subject to the same rules. Thinner people will receive discounts while the bulkier will be levied surcharges. Maybe window shades will become metered, 25 cents per 5 minutes?

Airline travel isn't what it used to be. And I think it can really only get worse.

Networth Update

Well, July's networth update was a bit late, but only because I haven't had time until now to put it up.

The results are reminiscent of my 4th grade report cards: not good, but improving.

My networth is -$10,303.66 or a rise of $306.59 month over month. While brewing my own coffee has cut down quite a bit on my food expenses, my continued eating out and altogether enjoyment of the summer months is taking a toll.

In addition, the market has not been helping out much, with my investment accounts, 401(k) and restricted stock units either taking hits or stagnating.

Overall, I am still -1.03% away from my goal.

Tuesday, August 12, 2008

Blog posts are coming...

Just hang in there folks. I've got my end of July networth update along with 3 new trading strategies I've been working out.

However, with the hooplah of Olympics and my new-found exercise regiment, its been a bit tough to get to blogging before 1AM.

Come by tomorrow, and there'll be content!

PS - Michael Phelps is doing amazing.

Tuesday, August 5, 2008

Guaranteed way to win the Powerball

It's been a while since I've posted a humorous but financial interesting post. Today at lunch, I had an interesting (and financially geeky) debate over how much the Powerball lottery would have to be to make it worthwhile to purchase every possible number combination, thereby guarateeing a Powerball win.

Powerball is won by choosing 5 numbers and the Powerball number correctly. According to the Powerball site, the odds of doing so is 1 in 146,107,962. Since every Powerball ticket costs $1, theoretically, you can spend $146,107,962 or about $146 million to acquire all possible combinations.

But of course, it's not that simple.

Assuming you had $146 million, the jackpot would need to be a lot bigger than that to provide you a return. Remember, due to inflation, the value of $146 million today is not worth the same amount of goods you can buy with $146 million 30 years from now.

So how much would it have to be?
Looking at the website, it appears they assume a 2.38% inflation rate each year. In that case, you would need the jackpot to be worth $296,164,788 just to breakeven. But of course, there is something else to think about.

Remember that money used? That is money after tax. When you win the Powerball, you still need to pay taxes. Assuming a lump sum, and applying the highest tax rate of 35% for all winnings over $357,700, you'll need a jackpot of $456,099,627.

Unfortunately, this situation hasn't occured yet. To date, the largest Powerball winnings was $365 million (link).

Additional Issues
Since it is currently a net negative return on your investment (until the jackpot is larger) to try this method of winning the lottery, I won't delve into other considerations that will require the jackpot to be substantially larger. However, here are some issues we kicked around:

  • Logisitics of storage/retreival of such an amount of lotto tickets. How much would that cost?
  • What if you have to split the winnings?
  • What if you accept an annuity and die early?
  • It's possible an out-sized purchase of 146 million tickets could balloon the overall pot, which could statistically increase the number of people buying tickets, and therefore the number of people splitting the winnings.
Suffice to say, for now, even an investment in sub-prime mortgages seems safter than an outright purchase of all 146 million powerball number combinations.

Sunday, August 3, 2008

Disputing Late Charges on Credit Cards

Don't take late charges sitting down. Credit card companies already make plenty of money from you, and if you have a legitimate reason for being a few days late on your payment, be sure to call up. They can most likely reverse the charges.

This has happened twice to me already. I pay all my credit card bills online, so on a regular basis, I submit authorizations on the credit card company's site to take money from my bank account on the payment due date. The two times I forgot to do this, I was very busy and just forgot until a few days after the payment date.

At the end of the next cycle on my most recent situation, two charges were slapped on. A late charge for $39 and a finance charge of $5. I immediately called up the credit card company and as soon as I asked about the charges, the customer rep offered to remove them while providing the helpful hint that I should pay on exactly the right time to avoid these charges.

This is great for those of you out there who can pay on time but occasionally get busy and/or forgetful. Of course, if you are unable to pay or haven't paid for over a month, this method may not help you.

But you should at least try.