This month is turning out to be an expensive one.  Originally, I was planning on joining the no-spend November movement given I’ll be spending more than normal during the holidays.  I’ve been tempted to buy a new or new used car for the past year since Moose is 11 years old and needs some work done.  It was basically sell Moose now and avoid the extra expenditure, or buy a new new/used car in great condition.

After much deliberation, I decided to keep Moose and do some work.  After 4 years, his brakes finally needed replacing.  My auto-mechanic of 10 years recommended I change both rotors and pads in the front since Moose is heavy up top, and just change the pads in the rear.  I followed his directions for a total cost of $705 ($400 parts, $300 labor).  $705 after tax is pretty darn good, especially after 4 years.  I’ve also heard folks spend $1,200-$1,500 on brakes before.  Expensivo!

When I went to pick Moose up, he wouldn’t start!  It turns out the battery only had a couple months left to live after 5 years.  I’m glad Moose didn’t start at the shop, rather than somewhere in the snowy Sierra Nevadas this winter!  That would have been such a disaster.  I spent another $90 for the new battery for now a total cost of $795.  Tick, tick, tick, things are getting up there.

DECIDING ON WHETHER TO FIX OR BUY A NEW CAR

The reason why I spent months deliberating on whether to fix Moose or buy a new car is because Moose only has a Bluebook value of around $4,000.  Therefore, a $800 fix equates to 20% the value of the car, and the value DOESN’T come close to going up by the amount spent.  Maybe after the new brakes and battery Moose is now worth $4,200.  So in essence, it’s almost like I’m losing money by fixing it to the tune of $600.

Five things to ask yourself before buying new:

1) Can you afford a new car?  You can only afford a new car if your income is at least 10X the value of the car you wish to purchase. This is known as the Financial Samurai 1/10th rule.  If you make less than 10X the value of the car, then you are hurting your finances.  Do you think Mark Zuckerberg drives around in a $800 million dollar car?  Heck, I was at a party with Mark Pincus, the founder of Zynga and the valet only went to retrieve a $75,000 BMW X5, and Mark is worth billions!

2) What percentage will the costs be compared to the value of your car?  Maintaining a car gets relatively more expensive as time goes on because the value of your car is always decreasing while costs generally increase due to labor and component inflation.  If a fix costs more than 30% the value of your car, and you can afford a new car, consider buying a new.  The benefit of buying a new car is that I won’t have to buy new brakes, tires, battery, etc.  Take the cost of maintenance of your old car and subtract it from the purchase price of your new car and re-calculate whether you can afford the new car.

3) Do you have any debt or other big expenses on the horizon?  Think property taxes, income taxes, trips, credit card bills, student loans, and other debt.  Best to minimize your expenditure on a depreciating asset if you have other large expenses on the horizon.  For some reason, guys right after college are especially weak at controlling themselves when buying a new car.

4) How long do you believe your old car will last, and how long do you plan on driving it?  My new brakes and battery should last at least 3 years.  My existing tires should also last another 3 years since I only drive about 7,000 miles a year.  Moose has 109,000 miles on it now, and he should have no problem going to 150,000.  Moose’s survival is consistent with the time I’d like to stay in San Francisco.  I have hope he will last for 6 years longer, which happens to be when I look to change sceneries.

5) Know your car’s maintenance cycle.  The big maintenance intervals are generally after 15,000 miles, 30,000 miles, 75,000 miles, 100,000 miles, 125,000 miles, 150,000 miles, and so forth.  You should consider selling about 5-10,000 miles BEFORE the main intervals and let the new buyer pay for maintenance.  I recently did the 100,000 mile service, and want to milk it for as long as possible.  If you don’t sell your car before it hits 100,000 miles, then you might as well keep it for as long as possible.

TAKING A GAMBLE PO BOY

Spending $795 on Moose is taking a gamble that nothing else major breaks down on a 11 year old car.  It would be quite unfortunate if an alternator blew up, costing me another $1,000.  Then Moose becomes a serious money pit as now I’m spending 50% of the value of the car on maintenance.

My desire for driving a fancy luxury car has essentially fallen to 0 given the movement against luxury and the still shaky economy.  When it’s time to make the decision again on buying a new car, I will consider safety issues as the main criteria.

Readers, how do you decide when to buy a new car or keep your old one and fix?  

Best,

Sam

HIGHLIGHT POSTS FROM AROUND THE WEB

* Fixing Your Own Economy by Denver Eric.  A message on taking responsibility for one’s own actions.

* Should I Get A Prenup? by Thousandaire.  The best music video created by Kevin yet!

* Are You Obsessed With Goals? asks KrantCents.  Krant encourages us to be for those goals which are most important.

* Creative Ways To Help Charity Without Spending Any Money by Wealth Informatics.  Didn’t know there was a Google alternative called Search Kindly which donate 100% of their proceeds, and Good Search by Yahoo which donate 50% of their proceeds!

* 9 Guilt-free Ways To Rip Off Your Credit Card Company by Len Penzo.  Rule #1, never carry a balance dummy!  Lenny, are you out there?

* Top Five College Myths Dispelled by The College Investor.  If you are on the fence about going to college, don’t be.  College is more fun and easier than it seems, and you’ll theoretically make lots more money if you do!

* 10 Tips For Dealing With Pain by Everyday Tips and Thoughts.  Everybody will deal with chronic pain at some point. If you have back pain, I highly recommend you read Dr. Sarno’s book simply called, “Healing Back Pain.“  It changed my life 9 years ago.

* 1 Year Anniversary At Sustainable Personal Finance - Congrats on the 1 year and may you have many more!  Readers feel free to check it out for your chance to win $1,200 worth of prizes!

* How To Write The Whale Post on Yakezie.com.  For anybody who likes to write for public consumption, I share some thoughts on how to create memorable and meaningful traffic.

Any more good reads I’ve missed?  Let me know and I’ll put a couple more up!

Facts About Insurance For Leased Cars

Leasing a car is a convenient way to get more car for less money. But that doesn’t mean you can skimp on auto insurance – in fact, a lease may require you to buy more even coverage. Since the leasing company owns the vehicle, it wants to protect its investment in case you’re in an accident or your car is stolen.

Before you lease your next car, here are a few things to know about car insurance for leased cars.

1. Coverage is mandatory

Before you drive off the lot in your new car, make sure you’re covered. If you don’t already have car lease insurance to transfer to the new vehicle, you’ll need to buy it before you leave the dealership or leasing office. Most states require some minimum level of liability insurance, and your leasing company may require more than state-minimum levels. Find out more with our Auto Insurance Coverage Guide.

2. Your limits may be higher

Leasing companies often require high liability insurance limits for your leased car. Some may require you carry a lower deductible too, or make you put money in reserve for the duration of the lease if your deductible is higher.

3. Collision and comprehensive may be required

In addition to the basic liability insurance for leased cars that is mandated by most states, you may be required to carry collision or comprehensive car insurance, too. Collision insurance pays for damage to your vehicle if you hit someone’s car, another vehicle hits you or your vehicle rolls over, regardless of who is at fault. Comprehensive coverage helps pay for damage to your vehicle from events other than a car accident, like theft, vandalism, and certain natural disasters.

4. You’ll need to pay for original replacement parts

Some leasing companies stipulate in the lease agreement that if any repairs are made as a result of a comprehensive or collision claim, you must use only Original Equipment Manufacturer (OEM) parts, which are often more expensive than after-market parts. Fortunately, there is a low-cost option available with most car lease insurance policies that covers the difference between the cost of factory parts and generic parts.

5. Gap insurance can protect you

Gap insurance provides extra protection in addition to your basic car insurance for leased cars. If your leased vehicle is stolen or totaled in an accident, this optional coverage fills in the gap between the lease amount still due on the vehicle and what your insurance company would pay for a regular collision or comprehensive claim. Learn more about gap coverage and how it could protect you.

6. There are still ways to save on your car insurance

If you insure multiple vehicles with the same company, or if you bundle your car and homeowner’s insurance, you may qualify for substantial discounts on automobile insurance. If your driving record is clean of any accidents, or if your new vehicle comes equipped with an anti-theft device or passenger restraint system, you could save even more depending on where you live and on your insurer.

Readers, do you lease or own your car?  What other expenses about leasing might one not think about?  Why would you ever consider leasing a car if you know it’s cheaper to buy?

Regards,

Sam

One of the key decisions in deciding what car to buy is assessing how much all the other costs are that come with ownership.  Having a car payment isn’t considered an ownership cost because you don’t have a car payment.  Taking out a loan with any interest rate other than zero on a depreciating asset makes no sense.  Given that you earn 10X the value of the car based on the 1/10th rule, you should never have a problem paying cash for a vehicle.  To not do so means you simply can’t afford the car.

There are two main ownership costs to consider: maintenance and insurance.  For new cars, maintenance costs are quite minimal, unless you have a lemon and have to waste all your time going to and from the dealer.  For used cars, maintenance costs are a much bigger issue that can quickly eat into any savings you’ve made from not buying new.  We can talk about maintenance costs in more detail in another post.  For now, let’s talk about insurance costs.

I received my semi-annual car insurance premium bill the other day, and I was pleasantly surprised to discover it only costs $285 every 6 months to cover Moose.  However, by not telling you the full details of what $285 gets, it’s hard to understand whether $285 really is good value.  Let’s breakdown the line-items to better understand what car insurance options I get for my money.

UNDERSTANDING CAR INSURANCE OPTIONS

First of all, you must have car insurance if you drive a car.  It’s illegal not to, and if you so happen to cause an accident, you could very well be sued for all you have and go bankrupt.  Don’t be a donkey and not have car insurance!  There are a lot of different options to choose from, and for the sake of clarity, let’s go through each one.

Along with the expenses associated with your own damaged vehicle, you can get sued by other motorists or by the passengers in your car.  You must decide on appropriate coverage from all angles.

PROTECT YOUR FINANCIAL RESOURCES

Bodily Injury Liability:  If you hurt someone in an auto accident, the insurance company will pay a certain amount.  In my case, I elected for $300,000/$500,000 per person/per accident for a cost of $115.

Property Damage Liability: If you damage someone else’s property in an auto accident, the insurance co will pay a certain amount.  My insurance company pays $100,000 per accident to property at a cost of $84.

PROTECT YOU AND YOUR PASSENGERS

Uninsured Motorists Bodily Injury: If an uninsured or underinsured driver injures you or your passengers.  I elected $300,000/$500,000 per person/per accident for $43.

Medical Payments: Covers you or your passengers.  I have $100,000 per person at a cost of $24.06

Extended Benefits: Wage earner disability benefits, essential services disability benefits, death benefits.  I pay $5.10 for minor distribution of all three.  I have my life insurance and disability insurance from work to cover 100%.

PROTECT YOUR VEHICLE

Comprehensive: Covers damage caused by something other than another vehicle such as hail, theft, collision with Bobo the bear.  I chose not to get comprehensive coverage because Moose is worth no more than $4,000.

Collision: Covers damage to your vehicle caused by impact with an object other than an animal.  Gray area here, given this is what comprehensive is for.  I declined coverage.

Uninsured Motorists Property Damage: If an uninsured driver damages your vehicle.  If an uninsured motorist damages Moose, I will just ask him to pay for everything, otherwise, I will introduce him to my cousin Viktor, who will break his legs for non-payment.

Towing & Labor: Provides emergency roadside assistance such as towing, flat tire, jump start, and delivery of gas.  This service is a life saver!  I’ve run out of gas, had an older car not start before for some reason, blew out my tire, left my lights on, and each time needed roadside assistance.  Takes no more than 45 minutes to get everything fixed.  I recommend everybody get towing & labor.  I pay only $5.88 and I can’t believe it’s not at least $100 every 6 months.

CHEAP TO ME MIGHT NOT BE CHEAP FOR YOU

People often forget that having a nice car doesn’t stop once you pay for it in full.  New cars will always come with at least a 3-year, 36,000 mile bumper-to-bumper warranty so maintenance is not really an issue in the beginning.  It’s the insurance costs for expensive cars that really start getting to you.

Moose is almost 12 years old and isn’t worth much more than $4,000.  As a result, I don’t have comprehensive or collision since I will just write-off the $4,000 in case of an accident and buy a new car.  If I had a $165,000 Bentley Continental GT, you bet your buns I would have comprehensive and collision!  It’s really just a judgement call though, as a Bentley’s insurance will probably run in the $3-4,000 range a year for me.

A $285 car insurance premium every 6 months equates to only $47.5 a month.  That’s cheap insurance for me since I’ve paid up to $200 a month for one expensive car that I bought new some 8 years ago.  Everything is relative.

There are some grown adults who still free-ride off their parent’s policy to save money.  Good for them if they can get mom and dad to pay for it or somehow latch on as a dependent with discounted rates.  Meanwhile, there are those who have no assets, and therefore go without auto insurance to save money, even though that’s illegal.  You have to protect yourself from these motorists by getting your own insurance.  You just never know.  Finally, if you have a wealth of assets which your car insurance policy doesn’t provide enough for, you must get an Umbrella Policy that goes above and beyond your car and home property insurance.

Readers, I’m curious to know how much you pay for auto insurance every 6 months and whether you have comprehensive and collision?  If I had bought a new, or new used car my car insurance would be at least 2-3X!

If you enjoyed this article, please sign up for my RSS Feed or E-mail Feed to keep in touch.

Regards,

Sam

As you may know, my 11 year old car is dying and I’ve been unsure whether to spend up to $2,500 fixing Moose, or let him fade away.  The service dealer said I would have to spend around $1,200-$1,500 to replace the entire exhaust system below, which is around 35% of the total value of my car!  That just doesn’t seem right.

As any frugal person would do, I got a second opinion.  The auto service industry is even more shady than the insurance industry and I wanted to make absolutely sure that I wasn’t being ripped off by the dealer before spending any more.  Besides, we all know that getting your car fixed at the dealer when you’re not under warranty is seldom the cheapest, and often the most expensive way to go.

ALMOST GOT ME FOR BIG BUCKS

When I first moved out to San Francisco, I lived right next to a auto mechanic shop.  The owner’s name was Fred and we just started seeing each other everyday and chatting.  Over the course of 10 years, I’ve had him service and fix 7 different cars.  Furthermore, I’ve referred around 12 guys to his shop since he’s done such a good job.

Fred is so honest, that he’s told me on many different occasions not to fix the current problem at hand because it doesn’t really matter.  So long as everything works and safety is not compromised, fixing random things that cost a high price as a percentage of the car was not worth it.  He was very frank and never wanted me to spend more than I had to.

I brought Moose over to Fred and explained to him the slight engine leak and the rattle where the muffler is.  He immediately jacked up the car and pointed out that my muffler was fine.  Instead, what had rusted away was the bolt holding my heat guard that was above my muffler!  As a result, every time the car moved, the heat guard would grate against the muffler and cause a rattling noise.

“So the muffler is absolutely fine?“, I asked.

“Yes, no problem at all.  Let me replace your heat guard with a new one.  Its easy to weld on“, Fred responded.

“How much?” I asked.

“Does $40 dollars sound good to you?“  Fred asked.

“Hmmmmm… did he really mean to say $400 and not $40?  Does a bear poop in the woods?”, I thought to myself.  “Absolutely!“, I blurted out.  With the dealer saying I would have to spend up to $1,500 to fix the entire exhaust system, $40 was a dream come true!

I was absolutely ecstatic!  I then asked Fred to take a look at the engine leak, and he basically said my top valve was leaking a little and to just check the engine oil once a month and make sure there’s enough oil.  He recommended not trying to fix it because he would have to take off all the parts above the engine to get to the valve.  “Save your money!” he said.  “Just buy a couple quarts of engine oil, top it off every other month and you’ll be fine!”

I then asked Fred if he could see anything else wrong with Moose.  He did mention my brake pads have about 30% left on them and that he recommends changing my front rotors and pads, and my rear pads before the winter.  Because Moose is heavier up front with the engine and all, replacing the rotors in addition to the pads is a good idea.  I haven’t changed my brakes and rotors in 4 years, and the previous owner already had one year on the existing brakes so it was about time.

ALWAYS GET A SECOND OPINION

Servicing your car at the dealer is always an absolute rip off.  In San Francisco, labor is always around $100/hour vs. non-dealer auto mechanics at $50 hour.  I drove out of Fred’s shop with a handsome bill of $75 to change my oil and fix my heat guard.  If I had done stuff at the dealer, not only would I have paid $1,200-$1,500, they would have probably also found more stuff to work on.  They always do that.  You go in for an oil change, and they print you out a 25 item list of things to do.  It’s nuts!

The value of a trustworthy auto mechanic is worth as much as a trustworthy doctor.  In other words, the value is almost priceless because what you want is peace of mind that you aren’t getting ripped off or given the wrong diagnosis.  Getting ripped off is horrible, and something mechanics have a reputation of doing since we common people don’t know much about cars.

The main tips for getting a trustworthy auto mechanic and not getting scammed are:

1) Do your research on the issue online first and make it sound like you know what you are talking about

2) Be courteous and straight forward.  Once they sense fear and/or rudeness, it’s all over.  They will make it a mission to gaug you like a Roman sport.  Even bringing them a piece of candy or a cookie will save you hundreds if not thousands.

3) Offer to refer a lot of new clients their way.  If they know you are well-connected, there is no way they are going to screw you.  They also love free advertising, so if you have a blog, then you’re really golden!

I always tell anybody in the service industry that if they do a good job, I will refer them to all my friends.  I’ve done this with my mortgage guy, and I’ve done it with Fred the auto mechanic.  It always works, and you should always do it.  Repeat business is what it’s all about, especially during times of economic turbulence.  The value of a customer is not just that one visit.  It is the value of all his subsequent visits plus all his friends he’s referred so that your business is always humming along!

I was mentally prepared to spend $1,500 to fix Moose, but instead, spent $40, with the might-as-well $35 oil change since I was there.  That’s a huge win in my book.  As a result of this incredible savings, the only thing I have left to spend is ~$600 for new brakes.  Not a bad idea with snowboarding season in Tahoe coming up.  So I guess I’ve answered my question on what to do with Moose.  I’m keeping him for as long as possible!  If anybody needs a good auto mechanic in San Francisco, please shoot me an e-mail!

Readers, how do you ensure you get a trustworthy auto mechanic?  Have you ever been scammed by the dealer or any auto mechanic in general?  What did you do to fix the situation?

Regards,

Sam

In a rush to get to a meeting, I managed to bash Moose’s right side mirror into a garage side wall and blow the mirror off.  Crap.  That’s what happens when you have a large car, in a small garage, and do things in a hurry.  This little accident cost $135 to fix and 30 minutes of time.

While I was at the dealer, I used the opportunity to ask several other questions regarding what’s wrong with Moose.  For the past 12 months, there’s been a progressively louder rattling sound every time I drive, or slam the door shut.  After a little inspection, the service agent said that it looks like my middle muffler connected to my catalytic converter is wearing out and needs changing.  OK, good to know.  “How much?”, I asked.  The service agent said around $1,200-$1,500!  YOWZA!

LET MOOSE LIVE OR DIE?

$1,200 to fix a muffler is ridiculous.  The service agent agreed and recommend I just go to a muffler shop and have them replace just the middle portion.  Parts plus labor will probably equal to $600 instead.  OK, that’s somewhat more reasonable I guess.  I certainly don’t want the muffler to fall off while I’m on my way to Tahoe when it’s dumping snow!

The issue is, Moose is an 11 year old SUV that is worth maybe $4,000.  My main concern is operability and safety, hence the muffler should be fixed.  In addition to the muffler problem, I’ve got three yellow lights on my dashboard that is indicating the traction control, ABS, and hill decent functions are out!  The reality is all three functions are working, it’s just the switchboard fuse that is broken.  I’ve tested all three and reconfirmed with a mechanic friend of mine.  To fix the switchboard, that will probably cost another $1,200 bucks which is not worth it.  Instead, I just got some black tap and stuck it around the dashboard glass to block the lights so I don’t see them!  Finally, my brakes only have 30% left on them and will likely need replacing in 6 months.  That’s another $600-700 that must be spent.

All in, I will have to spend a minimum of $600 (14% value of the car), and perhaps up to $2,500 (62% value of the car) to get things nice and good again.  Oh yeah, I also got my DMV car registration renewal yesterday to the tune of $109.  Adding everything up, it just doesn’t seem worth it…. or does it?

THE ALTERNATIVES

I’ve been thinking about buying a new car for the past couple of years.  It’s just that every time I see a new model, I get bored of it in one year, which means spending tens of thousands of dollars on a car is not a good idea.  When the BMW 335i coupe first came out in 2007 for $47,000 I was determined to have one.  By the time 2008 rolled around I was bored because I saw the new Audi S5 coupe roll out for the similar price.  And then I got over it because something better kept coming along.  It’s a never ending cycle of desires.

It’s strange, but to cure my car-lust, I go to car dealerships.  Sometimes, I just slide on into one of them babies and inhale the intoxicating new car small as I pretend she’s mine.  Other times, thanks to very aggressive salespeople, I always respond “Oh, twist my arm and my nipples, OK!” when they ask me to go for a test drive.  By the end of the session, I am so thrilled, that the desire to spend any money on a car dissipates!

So let’s say your car is dying, you are by nature a frugal person, but fulfill the important 1/10th rule and can pay cash for whatever car it is that you desire.  Do you spend 20-62% of the value of the car ($500-$2,500) fixing it to a level which can last another 5 years?  Or, do you spend perhaps 35-150X that amount and buy a new, safer, more reliable car which has a 4 year, worry-free warranty?  OK fine, I could also spend $20-$30,000 and buy a cheaper car too, but then I’ll really get bored with the car after a year.  By the way, don’t forget about higher car insurance, crying if you ding your new car, sobbing if your girlfriend or boyfriend dings your new car, and never feeling at ease when you park at the grocery store!

Readers, what would you do?  Save Moose, or spend $20,000-$50,000 on a new or new used car?  How often do you change cars?

Regards,

Sam

If you are in the market for a new car—and have ruled out buying used for whatever reason—and you are on this site then you are probably concerned about getting the best deal possible.  After all, nobody wants to overpay.  Even a financial fool appreciates knowing that the value they’re getting from their purchase is up to par and that they didn’t make an embarrassing deal.  It is imperative that you strike a compromise between affordability and practicality if you’re looking for a set of bargain wheels. This has been said a million times in the past, but the current offerings of both foreign and domestic automakers
makes this easier than ever.

Many Americans are turning towards cars that can be bought for relatively cheap but still want something new and something that has the basic comforts and amenities we’ve grown accustomed to.  Everyone’s situation is different, but purchasing an inexpensive car is a great idea for if you need a second car or a commuter; or you simply need a cheap car period.  If you’re looking for your primary mode of transportation for you and the family though, it’s best to err on the side of a larger car than having to buy another one down the road when finances improve or you outgrow it.

THE CHEAPEST CARS FOR 2011

1) The Hyundai Accent is an inexpensive but reliable car that can be bought for around 10,000-$12,000.  This car is great for people that need a decent form of transportation they can count on without worrying about it breaking down.  Long gone are the bad Hyundai stereotypes of unreliability and such.  With the low price tag comes a few sacrifices, however.  No car at this price will not come loaded, and features such as a sun roof, nice wheels and paddle shift transmission are absent. However, the car is not totally deprived of options.  A peppy 110-horsepower engine is standard, along with safety features such as a low tire pressure indicator and seat belt pre-tensioners. If you are looking for the least expensive vehicular option to point A to point B, the Hyundai Accent is a viable option. (Official Hyundai pricing and Specs at Automotive.com)

2) The Nissan Versa can be bought for just slightly more than the Accent, but offers a few more options. The inexpensive Versa will come with things such as power windows and power locks, and it is a larger car.  However, the downside of buying an absolute base Versa is that things such as a CD stereo system and air conditioning are not included.  Pay a grand or so more though and you’ll get it. In addition, the color choices on the basic Versa are limited to just blue, silver and black.  Overall the good news is that if you are willing to pay a few extra dollars you can get more features for not that much more money. Plus
it’s a larger car than the Accent.

3) The Chevy Aveo is GM’s entry-level car and costs under $13,000. The least expensive Aveo’s do not include many options, however, they do come with a stereo system as well as a few nice colors that you can choose from. The all-new 2012 Aveo will be a completely revamped model, so if you’re planning on getting a deal now, go for the 2011 and take advantage of the discounts and incentives. You may be able to get a 2011 2LT model with MP3 player, XM radio and keyless entry today for the price you would have paid for a base model last year.

4) Next up, the Kia Rio. It will cost right around $13,000 for the base model sedan. This Rio, however, is devoid of any and all options. The base model does not include a stereo, air conditioning or even floor mats. In addition, the color choices are very limited. For the price you would pay for a stripped down Rio the sensible thing to do would be to purchase a Hyundai Accent that included a few upgrades. Since the Rio is so stripped down it would take an additional $2,000 dollars or so to get the car with some decent upgrades in it. The car is decent sized however, larger inside than the Aveo and the Accent and with more cargo room. (All new Kia prices and dealer quotes at Automotive.com)

5) Finally, the last on our list is the Toyota Yaris, though certainly not least. Offered as a sedan or three door hatch, this little Japanese import packs more base features than any of the aforementioned. For the price of $14,000 it’s one of the best deals, especially when considering the versatile interior and customizable ordering options. However, the Yaris rides on the shortest wheelbase in its class, and has smaller cabin room than the offerings from Korea and the U.S. When buying any Toyota though you’ll for sure know that you are getting a reliable vehicle that will stand up the test of time. All Toyotas are well made and have a reputation for reliability. The Yaris is no different.

BURNT RUBBER

With gas prices regularly over $4 a gallon now, you’ll appreciate these inexpensive, fuel sippers.  Our European brothers and sisters pay US$8+ a gallon for gas and if you ever go, you too, will start to appreciate the beauty of small vehicles.  The above five cars are perfect for one’s budget, especially if you follow the 1/10th rule for car buying.  You probably aren’t going to be turning many heads and picking up babes with these cars. But, what you will turn is a new page in your journey towards financial freedom.

Readers, anybody thinking about buying a new, economical car this year?  Had $4+ gas prices swayed you to buying more economical?  Whenever I go to Europe and come back, all I talk about is getting one of these mini cars!

Best,

Sam

I’ve been neglecting Moose for a couple weeks since I’ve been traveling so much.  But, I took him out for a spin the other day and was absolutely shocked to see that gas prices have ROCKETED to $4.11, $4.29, and $4.39 for regular, plus, and supreme at my neighborhood Chevron station!  I know WTI oil prices have risen to $112, but it really didn’t hit me until I saw and paid for the latest gasoline prices.

As a city dweller, I take the bus to and from work, and try and ride the bus as much as possible on the weekends.  The only times I really drive is to and from the tennis club, and up to Tahoe which is about 180 miles away.  Overall, I drive about 6,500 miles a year which is not that much compared to the national average of 15,500 miles a year.  With Moose getting roughly 17 mpg, I spend around $2,145 a year in gasoline, up from just $1,750 this time last year.

IF I’M SHOCKED, WHY AREN’T YOU SHOCKED TOO?

When gas prices were only $3.50/gallon, my yearly gas bill would be roughly $1,750 for 6,500 miles.  $395 more in gas costs isn’t exactly going to break the budget for me, or for most people ($33 more a month), yet I’m pretty shocked nonetheless.  I’m so shocked that I’ve decided to asset allocate out of equities and back into cash and selective bonds in my 401K because I’m worried high energy prices, along with problematic state government deficits will ignite another sell-off.  I’m happy to lock in 6.8% performance YTD in my mothership fund and play it safe.

In addition, I’m looking to cut an additional $100-$200/month out of my expenses to counteract $4+ gas prices, which only costs $33 more a month.  Skip a lunch here, cut down on gym usage there, drink more water are all things I plan on doing.  In other words, thanks to oil, I’m looking to slash spending by 3-6X more!

In my world, everything is rational.  The reason why gasoline prices are as high as they are is because people are willing to pay for it.  If people weren’t willing to pay for it, prices would be lower.  I, therefore must be an anomaly to believe that $4.11-$4.39/gallon is a painful level.  I’m consciously reducing my gas consumption, even it it only costs me $395-500 a year because I’m mentally revolting at paying so much.

But now, as I think rationally still…. if someone like me, who drives half as much as the average American and has a steady flow of income is clamping down consumption, then it’s logical to assume that other people will also start tightening as well.  It’s not like I can’t afford an extra $33/month, it just annoys me that prices have gone up so quickly.  I’m mentally going on strike and just going to take the bus everywhere now, even if it does take longer.  I figure, why not use this time to reduce my global footprint, reduce traffic, and save some money in the process?

MAYBE THERE’S ANOTHER REASON

There’s one important variable that we should recognize.  The job market has come back in force as predicted!  People are getting raises and getting jobs again.  Why else would traffic be as horrendous as it has been in SF in a long while?  There are plenty of positive anecdotes that suggest things are drastically improving in addition to the government labor statistics.  Fellow blogger’s online incomes have skyrocketed in March, flight loads are soaring, the markets are at 3 year highs, and head hunters are calling out the wazoo.

Despite it all, I’m still cutting down on energy consumption and re-balancing my portfolio.  I’m happy to see the economy and the markets continue to improve, even if I’m not fully invested anymore.  Call me conservative, or too easily satisfied.  The older I get, the less I really need.

Readers, do you feel the pain at the pump?  If not, how come?  If so, are you cutting down your consumption?  How many miles a year do you drive on average?

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Regards,

Sam

I have to admit, I’m having withdrawals from not driving a different car for over 3 years now.  I used to get a new (used) car every year by wheeling and dealing on Craigslist, but I stopped once I found Moose.  Moose is so handsome and adventurous, even the ladies love him.  I picked up a friend of mine one evening to go grab some grub, and she mentioned a week later that her stalking neighbor, who has a crush on her said he’s frustrated that guys who own “Moose-like” cars always gets the girl.  Maybe buddy, it’s the creepy way you stare out the corner of your window to spy on women that makes you still single?!

A year ago, Moose’s passenger side electronics seat stopped working to my dismay.  Luckily, the seat was in a comfortable, semi-reclined position so I let it be.  I told myself then that it might be time to start looking for another car soon as fixing the thing might cost $500+ dollars.  And so, I made a decision that as soon as the driver’s seat electronics also stopped working, I’d go and buy me another car.

Each week that went by, I started secretly hoping my seat would stop working.  I was hoping for something bad, but not too bad to happen, so I could justify buying something new!  Screw it, I thought.  I’m going to go visit the dealer and check out the new rides anyway.  Moose ain’t ever gonna fail me!

THE BENEVOLENT DEALER

As I was inhaling the wonderful rich smell of leather and glue, a service man came up to me and asked if I wanted to consider trading-in Moose for something new.  I started feeling horrible since Moose and I had grown so attached.  But, I did tell the serviceman I’d consider it.  I revealed the only problem with Moose was the non working passenger side seat, and he said not to worry.  He came back 5 minutes later, opened up a compartment under the seat, and swapped out a fuse.

“Your car is as good as new!” the service man shouts.

“Sweet crap,” I think to myself as now I have no reason to exchange Moose for anything else.  I also wondered why I didn’t go into the service department to buy a $1 fuse long ago.  I told the serviceman that given my car was “as good as new“, I’m good to go and am not interested in spending $58,000 for a new Moose.  Now I realize why car dealerships keep Service & Sales separate!

CONCLUSION

If Moose is a babe magnet, handsome, reliable, and inexpensive, why do I long for something new?  Change is human nature and unavoidable so it seems.  It’s just like asking why Tiger Woods can’t just be happy with Elin, his family, and his mega millions?  The longing for something different is so hard to conquer.  It’s almost like an addiction.

Changing cars frequently is one of the stupidest things you can do if you don’t have the financial capacity.  You pay taxes with each purchase, often lose money with each sale, your auto insurance may go up, and you never quite know what you are going to get.  Cars are money pits, which is why I seriously recommend you never spend more than 1/10th your annual gross income on the purchase of a car.  If you find a car that gives you little-to-no problems, cherish it completely and forever.

Readers, have you ever hopped something of yours would break so you can go out and get something new?  Is it cheating if you think it, but not do it??

What are some of your tips to curb your material desires?

If you have more than enough money to fund your material desires, is it bad to splurge?  Is it bad to deny yourselves pleasures?

Regards,

Sam @ Financial Samurai – “Slicing Through Money’s Mysteries”