WhatsTheCost Shows You The True Expense Of Things

I'd love to see the cost difference between iPhone, Blackberry, WindowsMobile and Nokia smartphones over a 2 year period.

I'd bet the Nokia and Blackberry costs are less.

TheFu

A shot of heroin: $50 per pop
Stronger stuff when you get addicted: $75 a pop

Getting a bail when you get busted: $10000

Losing an arm, being brutalized in jail, having your catatonic mom checked into a mental asylum and losing your gf who now does terrible things for small quantities of heroin: Priceless

[Source: Requiem For A Dream.]

@Erin Schwendemann: To be completely honest I do not worry about getting cancer. While it is a real risk, what scares me is emphysema.

Where I live at times it seems like everyone smokes. Even the people that don’t smoke, do smoke when they are out which makes it even more strange. I’m secretly waiting for the wife to try and quit and that should be enough to give me the desire to give it a shot. ;) I wouldn’t go cold turkey however as I’m sure it’s more difficult that way.

One thing I did notice this year however which got me thinking about it (I never even thought about quitting previously) is that my urge for a smoke has gone up. I used to travel for work all the time which meant I was constantly in airports where most of the time you couldn’t smoke and it never bothered me. I just flew down to NC a couple months back and we were moved to another flight which left 3 hours later. I felt something that I never felt before in all the time traveling… Urgency to smoke and it worried me that I’m starting to become far more dependant on them (even though I have been smoking for 15 years).

On the flip side, I dipped before that as I was way more athletic and smoking + running = fail. If I wasn’t smoking I’m sure I would have meth mouth from all the dip by now :P

@UnderLoK: Lol, I don't even smoke but I hate the way the media villifies smokers. I think it's disgusting myself but I think smokers get too much crap.

Toribor

@JohnnySaber: The progressively increasing payment you mention is a little more difficult, but you can play with Excel for some quick payment calculations. The payment for a 5.5% 30 yr loan for $150k is:
=PMT(5.5%/12,30*12,150000)
(answer = $851.68)

If you want to see how much quicker the loan will pay-off by paying $100 extra each month:
=NPER(5.5%/12,A1-100,150000)/12
(answer = 23.3 yrs vs. 30 yrs)

bobbo33

So... what's that new iPhone cost?

baest

@UnderLoK: As a former smoker (who misses it daily) who has a husband who quit a year ago, unless you really have the urge to quit, it's not going to happen. ;) I can do it cold turkey (both times I did it that way) but it took two pulmonary embolisms, a lung infarction and surgery to get my husband to quit.

So, you won't hear "You could just quit!" from me. LOL

Erin Schwendemann

When I need a calculator I go here: http://www.martindalecenter.com/Calculators.html

There's a calculator for things I didn't know could be calculated!

chrisp

@HurtsSoGood: If the second person was really putting the money in the bank, than it would be a good scenario as you should make sure you have a good amount of liquid savings, but in reality, the guy who is making extra payments on the house is probably the same guy who has been making sure to save for a rainy day. It doesn't have to be an either/or scenario, you can do both. In most cases the second guy who hasn't made any extra payments on his house also doesn't have a dime in the bank and has been living off his credit cards for the last 5 years.

chipper75

@sktaka22381: If you have credit card debt, absolutely, most definitely, and without a doubt, pay that off first. Paying off credit debt creates positive cashflow in the short term (which you can save or put toward other debt).

If you're in the first few years of your mortgage, you can make a huge dent in the interest paid over the life of the mortgage by paying extra to principle (and it doesn't have to be all that much).

If you're in, especially, the last half of your mortgage, aggressively paying it down is far less valuable than banking/investing that cash, unless you can bankroll at least 1/2 of what's left of your mortgage in an emergency (and that does not mean by cannibalizing your retirement either, so very few people will ever be in this position).

Sirpuddingfoot

@fatbob: Yes, tell all the people who have lost 30% of their home value and now owe far more than it is worth how it is an "appreciating asset"

chipper75

@fatbob: I agree with this to a point. While it's true that you should focus first on savings (especially for security) and paying off higher interest debt such as on credit cards, if you can afford to have just an appreciating asset without having even the low interest debt, why not? Especially for those of us who have security money and no credit card debt. If the contest is between buying that new toy or making an extra payment on your mortgage, I think the mortgage easily wins. Unless you're keeping it around for some tax advantage, which would largely vary by state and even city. But in that case the situation is very different because keeping your mortgage actually helps you save money, which is what you're trying to do by paying it off faster in the first place. As long as the tax advantage actually exceeds the savings from paying in half the time and reducing your interest, go for it.

JohnnySaber

@HurtsSoGood: Well said! I actually had the EXACT same conversation with my wife when we got married. Since she had an influx of income she figured it would be used to pay off everything right off the bat. She just didn't understand that while being debt free is great, in the event of an emergency being debt free doesn't pay the bills or get you out of a jam.

Now if you did have the cash to pay off your house this is what I would do. I would refinance and put money down to buy a point (more than 50% down) on a 15 year mortgage. Doing this enables you to keep the write off plus it lowers your rate while freeing up cash from your check. I would then take the difference and up my 401k contribution so that Uncle Sam can’t get his mitts on my newly found cash.

In the broad strokes it will take you 6-8 years to earn that money back, but remember the $600-$800 (on a $200k house and depends on your current rate) a month you save going into a 401 also saves you an additional 30% as it can’t be taxed (yet). If you invested that 101k instead of putting it into your house and managed to make $10000 off of it Uncle Sam takes 30% (depending on your income level and where the money went obviously) so you actually made $7000 while paying $7200-$9600 more for your mortgage!

Now I fully understand that there is far more to it and the above is a gross generalization as I’m not compounding etc, but truth be told that paying off your house is usually the wrong thing to do. If you are faced with the choice (assuming you just aren’t stone loaded) take your time to figure out what works best for you. Some people can’t see down the road and for them it might be best to just pay off all debt. Others like to take more risks and would rather hope to crank out 30%+ YOY in interest. And yet others want a long term savings plan that doesn’t rely on maybes, guessing, or what a bag of tea in China sold for today.

@HurtsSoGood: so u should pay off credit debt and keep min payment on mortgage?

sktaka22381

Where's the calculator to figure out how much money my f**king wife spends on clothes and shoes?

PickledEgg

@HurtsSoGood: Good points. It is definitely not a good idea to attempt to pay extra money towards debt at the expense of having security savings (at _least_ three months' worth). These are an essential that are all-too-often overlooked.

By the same token, assuming you don't make the mistake of aggressively paying off your mortgage at the expense of security savings or accruing credit card debt, accelerating your mortgage payments is a good idea. You propose a hypothetical about two people getting laid off -- well which of those two is more likely to get kicked out if one of them has already paid his off?

Edit: As well, in your example you mention one person paying off debt and the other saving an equal amount of money instead. I'm not sure this is entirely realistic, even though it is wise. For many, however, extra cash per month is not automatically invested in a high-yield account for a rainy day -- it gets spent on penny whistles and moon-pies. Or fancy cars. Again, not saying that your rebuttal lacks any validity. I am just pointing out that there are (at least) two sides to every issue.

JohnnySaber

If you are a smoker you can save serious cash by packing your own smokes (buy the tubes, a machine, and the tobacco). Last year we (Wife and I) saved a monstrous $2200. Michigan just doubled the taxes on tobacco so next year the savings will be more like $1700.

Another option would be those e-cigs…

Before you say "You could just quit!" know that I’m a grown ass man with hair in all the wrong places so I know full well what risk I’m taking. One day I might get the urge to quit, but it has yet to happen.

@JohnnySaber: I find this mistake a lot in solar-electricity payback calculators - they don't account for the opportunity cost but they do account for inflation in energy costs. Of course, as the period gets longer, whatever number you plug in for inflation becomes more critical and less certain.

@HurtsSoGood: I tell people this whenever the subject comes up and they look at me like I've got 2 heads :) It's a low-interest debt on an appreciating asset - you should keep it for as long as you can.

@JohnnySaber: Two people just got laid off. One has been making extra payments to his mortgage lender for years. The other put all that money in the bank. Which one is less likely to get kicked out of his house by the bank.

This is easy Personal Finance 101 stuff. You keep your mortgage (good debt) so you can put money in the bank, or at the very least, manage and pay down bad debt like credit cards.

I told my wife this, who wants to start aggressively paying down our mortgage. I would say unless you have enough money in the bank to completely pay off your mortgage (unlikely), it's probably an iffy idea at best.

HurtsSoGood

It should probably be noted that $289,883 30 years from now is NOT the same thing as $150,000 today. I'm not saying that the calculator is not useful, I'm just pointing out that you have to be careful when using it for long spreads of time like that.

I remember from one of my math classes in high school that there's a simple way to calculate how much of each mortgage payment is interest and how much is principle. In the beginning of a mortgage you're primarily paying off interest, but this is only charged each month. So if you know what goes to your principle you can make an extra payment for that amount and it'll knock off one full payment. This means that if you commit to making extra payments each month you halve the term of your mortgage. The beauty of it is that this only requires a small amount of extra cash set aside each month in the beginning, not nearly a double payment. By the end, you're pretty much doubling your payments, but it is much more reasonable to expect to have the extra cash to do that 15 years from now than today. Why? Two reasons: 1) You'll probably have gotten promotions, raises, etc. by then and have more savings and less big things to buy and 2) inflation, when you're a debtor, is your friend.

Are there any accountants or just good math students on here that remember how to do that little formula?

JohnnySaber

Buying house and ignoring the mortgage costs has always been a curiosity to me.
People buy a house, say for $150,000, then when they sell it the people usually ignore the interest costs when figuring their "profit" on the sale.
For example: "I bought the house for $150,000 30 years ago and sold it for $250,000 and made a profit of $100,000".
No, the person "lost" $39,883. If they would have paid $150,000 up front then they could make the profit boast, but the forget the interest costs.

LysanderGebian

@Sirpuddingfoot: I don't think that it makes any difference where you are in the mortgage - if you give the mortgage company the money early, you lose access to it for longer, which more than compensates for the interest savings (provided that you invest it, of course)

@chipper75: in the case that this happens (house depreciation), you should be even happier that you didn't give the mortgage company the money :)

@JohnnySaber: the choice is between paying extra money on your mortgage or investing it. if you really want to pay off your house, you can do it when the investment account = your remaining principal.

imho, the only reason to give the mortgage company that money is if you don't trust yourself with it.

I wonder what the cost of a Toyota Prius is after 10 years. Think about, you save money on gas, but the car is a bit more expensive. Also after about 8 years you have to replace the batteries which from what I have been told equals about the money you saved on gas.

@MostlyHarmless: i don't know where you're getting your smack, but you sure are getting ripped off.

mokey

This is brilliant! I just started writing a blog series this week on budgeting and finances, and this calculator is fantastic. I'll be shouting out to this tomorrow, probably. Thanks!

@TheFu: Your wish is my command, alright so it's iPhone vs. Pre vs. Andriod: http://fortunebrainstormtech.files.wordpress.com/2009/06/nextgenphones_final41.png

@dragonsbait: Edmunds.com has a very nice "true cost to own" calculation for cars that factors in things like average insurance costs, repair bills, fuel costs, and even average depreciation.

After five years, a new 2009 Prius will most likely have cost you about $38,000, they say. Of course, this includes $11,800 of depreciation, meaning you still have $14,000 left of value in the car (originally $26,000 for the base level) to be used or sold.

JohnnySaber

@UnderLoK: Just remember Mark Twain's famous quote about smoking:

"It's easy to quit smoking. I've done it hundreds of times."

JohnnySaber

@fatbob: Not so, because you're still locked in to pay whatever you bought the house for back in the day, plus interest. And, by studiously avoiding making extra payments to accelerate the schedule you've really only made sure to _increase_ the total price of the house overall.

JohnnySaber

@fatbob: I'd been thinking about what you said about how you want to keep fixed-rate, low-interest loans for as long as possible, and I think I get where you're coming from now. Because the rate of interest on the money is lower than that which you could earn by investing your money in say, stocks, you should do that instead of trying to pay off the mortgage. Then, once that brings in enough cash to pay off the mortgage all at once, do it. Is that pretty much it?

That also makes sense to me, but for those people who are more risk averse that might not be the best option. For instance, many people lost many different things in this economy, ranging from jobs to value in their homes, to stock investments. When everything hits at once, some people would just feel better knowing that they have prepared for it by making sure to pay off their house and save easy-access cash in non-risk-bearing securities.

As well, I do think there's a certain element of people paying off their houses because they don't trust themselves with extra money. I'm pretty good with my cash, but if I had _almost_ enough money to pay off my mortgage (but not quite) and a great deal on a boat came along...

JohnnySaber

@bobbo33: Thanks, bobbo. This is mostly what I'm talking about, but actually last night I think I discovered an even easier way to figure out what percentage of each payment goes where -- use a depreciation/amortization calculator from any of the many mortgage calculators. They show how each individual payment affects principle. So it would be easy to just double the amount each time that goes to principle and thus make two payments for every one, while only paying interest once.

JohnnySaber

@Sirpuddingfoot: This idea makes a lot of sense to me, because you get sort of the best of both worlds. In the beginning of your mortgage you get to take advantage of the small, extra payments that go directly to principle without being too big of a sacrifice, yet still dramatically reduce the length (and sum total) of your loan. Then, later on, you can go back to making normal payments and focus on investing that extra cash.

JohnnySaber

@chipper75: Well, you have to keep in mind that even if your house dips in value temporarily (like now), most likely that simply means its value was being inflated for a while anyway. We had a pretty big housing bubble that had to burst in this country, but the fact is that over time housing values are still rising. Just like a diversified portfolio of stocks, housing is something you need to hold onto for a while to realize a gain on; the idea that flipping houses is _the_ way to get rich quick is part of the reason why we're in this mess to begin with.

JohnnySaber

@TheFu: Look at this article: http://www.pcworld.com/article/168486/how_much_does_it_really_cost_to_own_a_smartphone.html

http://www.pcworld.com/zoom?id=168486&page=1&zoomIdx=1

persei7

@TheFu: This one is at PC World. If their numbers are right, it's worse than I thought.

How Much Does It Really Cost to Own a Smartphone?

paintbox

@TheFu: I agree -Nokia will win NO DOUBT

Syed Bilal Hussain

A mortgage for $150,000 at 5% over a standard 30 year repayment plan will cost you $289, 883.
---------------
That's debatable, around 2-3% of that is the inflation rate so the real "cost" of borrowing is actually sitting around 2%~

I think it should at least point that out to the average joe before he jumps up at the total repayment amount.

Faizan Abid

@JohnnySaber: Actually, I just realized that I misspoke above. I don't know what I was thinking, but I accidentally referred to depreciation as an added expense on top of the purchase price of the car. This is not the case.

In fact, depreciation is just a way to expense an asset over its useful life so it's not -26k in year one and then 0 for the next ten years. So basically the True Cost to Own calculations count only the amount of value you lose by driving the car each year, which makes much more sense (otherwise you'd be adding it up twice -- once when you spent the money to buy the car and again when you "depreciated" it).

What that means is that I was wrong to say that after five years you'd have spent $38,000 on a Prius and could then sell it to earn about $14k back. No, this means that you'd have spent $38,000 on your Prius after five years if you actually did sell it for $14,000 after.

I'm surprised nobody caught me on that. Maybe I'm the only one who cares about this article anymore.

JohnnySaber