Lazy Man’s post on the silly Lexus commercial that Lexus repeats around the holidays reminded me of the true cost of switching from a Toyota Camry XLE V6 to a Lexus ES350. Both are nice cars which are similar, but the Lexus has the luxury badge on the grill and a few amenities.

The cost difference between the Camry and the base Lexus is not large if you look at the sticker prices. According to my favorite car website, Edmunds, you should be able to pick up a Toyota Camry for about $28,117 (price picture). The Lexus ES350, which is the sister model to the Camry, can be purchased for about $33,976 (price picture). A difference of just $5,869. If you plan to own the car for five years, the cost difference is just $1,174 per year. You work hard, so you deserve this little luxury, right? Read the rest of this entry »

The Nintendo Wii is everywhere in the news and the blogs. I expect to find the Wii in video game blogs and in the news, but now finance blogs are covering the Wii in depth. I hear about the Wii regularly at work as the holidays approach. After Thanks giving, the excitement increased because many people went to a relative’s house where someone brought the Wii to play and the whole family love it — even grandpa loves the Wii.

The Wii is so hot that there is now a Wii options market and some retail stores have been accused of scalping their stock on eBay. Some people have complained about the forced Wii bundles of games and accessories with the console — even Nintendo is not pleased with the bundles. However, a small retailer explains why he loses money on each Wii console sold with a credit card which forces him to bundle the Wii with three games. Ouch, so the bundle may not be about price gouging like most people think.

Some finance bloggers have covered the Wii with various financial conclusions:

• The Simple Dollar calls the Nintendo Wii a luxury good, but has received so many emails on the topic that he posted a Wii Buying Guide.  Read the rest of this entry »
  

P2P lending in general is not the best investment due to income tax on P2P loan interest and I believe that there is a better list of prerequisite investments. However, Lending Club is paying out an incredible Return on Investment Bonus that may shift the equation. The Thank You bonus can bump up your returns by 5% at a minimum. If you can refer some friends, a possible return of 28% is not out of the realm of possibility.

Use my affiliate link to earn an extra $50 if you open an account with $1,000.

See Personal Loan Portfolio for more information on this bonus ROI at Lending Club and how it can potentially offer a 28% return on investment.

I love the magazine consumer reports. I have both a paper subscription and a web subscription. I like the paper subscription to read and share by hand, but the web subscription is fantastic for searching. There is a discount for the web subscription to Consumer Reports for those who have a magazine subscription. I believe that it is only $20 per year for the web-based subscription with the Consumer Reports Magazine Subscription.

If I told you how you could get a discount on a Consumer Reports Subscription, would you take me up on the offer? I hope so because I believe that Consumer Reports will save you money. I received an email due to my web-based CR subscription and it offered a 38% discount on the regular magazine subscription. This offer is technically for gifting subscriptions to Consumer reports which I think is a fantastic idea. (I thought it was good enough that I have gifted Consumer Reports in the past for friends.) However, I believe anyone can use this link toobtain the discount and either purchase subscription for themselves or give a subscription to a friend or family member.

Link: Consumer Reports Link to Discounted Subscription

I receive no commission from this link. It is personal finance trainer recommended without qualification or commission.

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Techsmith makes the best computer screen capture video creation software called Camtasia. It is easy to use and makes a quality product with small size videos for easy upload to the internet. I created this video on selecting my first Lending Club portfolio in about 1.5 hours including narration. That was my first video ever to create with Camtasia and I only needed to refer to the instructions one time to create it.

Download Camtasia Free

Techsmith is currently offering Camtasia Studio software for free! Version 5.0 of the software sells for $300. The version available for free download is Camtasia version 3.0. Once you download the software and get your free key via email, Techsmith will send you an email with an offer to upgrade to 5.0 for half price after about a week. Personally, I would skip the upgrade since 3.0 seems to be very functional and easy to use.

Download Camtasia here and request your registration key.

Update: Since I started this post, it looks like the offer may have changed for UK users instead of US users, but try it anyway.

Here is a review of Camtasia if you want to see it compared to its top competitor Captiva.

Which should you purchase Prosper P2P loans (assuming your skilled enough to earn a 12% return) or the S&P500 which has earned 13% per year over the last 20 years? The answer is not simple and it depends greatly on taxes. I will provide you with a spreadsheet to change some of my assumptions to evaluate other alternatives and propose a whole new class of currently non-existent investment with supercharged returns.

This post on tax efficiency is written as a follow up to the discussion on Lazy Man and Money related to Prosper Loans who posted in reference to Free Money Finance’s Criticism of Prosper as an investment. Personally, I have a laundry list of prerequisites to P2P lending.

Tax Basics: Income Versus Capital Gains

Interest income on loans such Prosper.com loans are taxed as income tax which is a higher rate than capital gains. You must pay income tax in the year you earn it, but it can be written off against valid expenses. Current income tax rates can be found at the IRS web site — my personal marginal rate is 29% which I will use for calculations below.

Capital gains taxes apply to both capital gains and stock dividends. The current US Capital Gains tax rate is 15%. More on the US capital gains tax can be found at Wikipedia. The most important aspect of capital gains, in addition to the lower rate than income tax, is that capital gains (except for dividends) can be differed. You only must pay the capital gains tax when the gain is realized. Additionally, this gain can be written off against other capital losses.

The Investments for Comparison Purposes

For comparison, I will use three real investments and one entirely fictitious investment to measure the tax impact on various returns.

1. I will use the S&P 500 and the actual returns from the last 20 years as a non tax protected investment.
2. I will use the same actual S&P 500 data with the investment going into a tax protected Roth IRA.
3. Prosper.com lenders often quote a 12% return as possible so I am going to take a huge flying leap and extrapolate that over 20 years to compare with the other options. The returns on this investment are taxable as income.
4. Finally, I will invent a new investment which does not exist — the Prosper.com Roth IRA. It is a tax protected investment using the same extrapolated 12% return across 20 years.

Which is the best investment?

After taking into account taxes Read the rest of this entry »

CNN posted an list of the most and least cost effective hybrid cars based upon typical usage and the cost of ownership information at Edmunds.com. The question they are trying to answer is does paying extra for the hybrid car pay off in gasoline savings?

The Toyota Prius is the number one most cost effective which takes less than 5 years to recover your investment by saving on gasoline. The Prius is no longer eligible for the federal tax credit on hybrids, but it still comes out on top of the list.

There was a high roller in the bunch — the Lexus LS600h L — it would take over 3,700 years to pay off the $15,000 premium that you must pay for the hybrid. But if you are buying a $105,000 Lexus, the return on your investment is probably not at the top of your concerns.

As the Lexus example points out, the purpose of purchasing a hybrid car may not only be about the satisfactions of saving money on gas. For some people, it may be more about just using less gasoline.

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I am running a poll over the next few days to allow you to decide where I invest my next $500. The options are various P2P lending sites including Prosper, Lending Club, and Zopa. The alternative choice is to invest in the total stock market index. So which investment should I take?

Read the rest of this entry »

On Friday December 7th, Wal-Mart is hosting a second black Friday sale event through Sunday December 9th. Link to Wal-Mart’s secret sale.

Update: I found a better deal on Amazon.com for the HD-DVD Player. Amazon is offering a total of 10 free HD-DVDs with the same player for $75 less which leaves you only two DVDs short of the Wal-Mart deal for a savings of $75 plus tax.  I prefer the Toshiba HD-A30 because it offers full 1080p for only $50 more.

My favorite item is the Toshiba HD-DVD Player HD-A3. This player is also available at Amazon.com for $75 less than Wal-Mart. However, during this sale, Wal-Mart is giving away an additional 5 HD-DVDs with the purchase so it comes with a total of 12 disks (five by mail-in rebate).

Another good electronic item offered in the sale is the Sonly Playstation 3 (40GB) with a $50 Wal-mart gift card. IMO, a Wal-Mart gift card is as good as cash since you can buy necessities there.

Financial Hack did not support the regular Black Friday, neither did MyMicroFinance (and neither do I), but I imagine this second Black Friday might be a very calm and elbow-throwing free shopping event.

Newegg.com is also holding a sale on some electronics.

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IN addition to Wal-Mart’s second Black Friday event, Newegg is offering some great promotions including:

• The Canon Digital Rebel XTi 10MP with a free digital frame for $599 (original $629). Hopefully, you will still receive the regular New Egg special of a free 1GB CF card. Amazon regularly offers the Digital Rebel XTi for $597, but without the card and frame.
• Philips 32″ 720p LCD TV, model 32PFL5332D is on sale for $699 which is $100 off the normal price. This HD-TV is well-rated at Amazon, but costs nearly $800 there.

Use this New Egg Promotion link to receive the discount codes for these and more great deals.
sale, shopping, newegg, camera, hdtv, lcdtv, electronics, black friday

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