Should I Get An Electric Vehicle (EV)?

Tesla Model S

Tesla Model S

Two things happened recently that has spurred my interest in electric vehicles: 1) Watching a Netflix show on Elon Musk’s desire to reduce our fossil fuel consumption by starting Solar City and Tesla Motors, and 2) Getting into my new tennis buddy’s Tesla Model S P85+ and being absolutely amazed! My friend used to work with Elon at Paypal, and now runs an enormous internet company. Crazy how interconnected we all are.

14-year old Moose is a gas hog with an average mpg of around 15. But as I said in a previous post, anybody who doesn’t DESTROY their old car before buying even a hybrid is adding more pollution to the Earth. Now that electric cars are a reality and Moose is becoming a safety issue, I’m wondering whether going electric is the way to go.

What Your Car Says About Your Investing Style And Money Making Acumen

This is a fun guest post from PK, a software engineer who writes at Don’t Quit Your Day Job…, a site which covers the intersection of personal finance, investing and economics. Follow DQYDJ if you care about the story behind the story.

Quick: what was the fastest production car that General Motors made in 1987?

The Corvette? A common answer – but the performance champion was the lesser known Buick GNX, which lives on today in the Buick Regal. (The Corvette lives on today in, of course, the Corvette)

Cars & Investing: A Universal Language!

So… why cars?

Well, first, I’ll be in fine company; this site has a history of well-reasoned articles about cars, what with the seminal 1/10th rule on car buying or its cousin, the 5% of net worth car buying rule. However, that’s not the full reason.

Like most engineers still in the workforce, I’ve spent a fair amount of time on Slashdot (tagline: “News for nerds, stuff that matters”) over the years. One of the tongue-in-cheek memes of that site (and, really, engineering-focused sites in general) is the venerable car analogy. No matter how complicated the topic, there will always be an argument as to how cars, trucks, traffic, roads, and other self-directed transportation-related items can somehow shine a (head)light on the topic. If the readers on those sites cared about investing, I’m sure you’d already have seen similar analogies put forward.

But, they don’t – and we do.

So, how would you describe the major classes of investors – passive, technical, growth and value – with car analogies? Let me take a shot first, then let’s hear your improvements in the comments!

Ferrari

In Ferris Bueller’s Day Off, Cameron’s Father’s ‘choice’ Ferrari 250GT California was just a replica… (Wikimedia)

 

Tax Rules For Buying A SUV Or Truck To Deduct As A Business Expense

Range Rover Sport NewAs you may have read from my Net Worth Rule For Car Buying post, I’m looking into buying the redesigned Range Rover Sport HSE to replace Moose, a 13 year old Land Rover Discovery II. The Range Rover Sport can be had for roughly $73,500 MSRP, an exorbitant amount of money for a vehicle. The last time I spent over $70,000 for a vehicle was in 2002 when I bought a $77,000 Mercedes G500. I was much poorer then, but I just got my first bonus at my second job and wanted to splurge. I told myself never again after I sold it for a nice loss a year later in order to purchase my condo. The G-Wagon didn’t fit in the garage because it was too tall!

SUVs are an anathema to eco friendly San Francisco. But I’ve long argued that if you don’t completely destroy your car before buying a new car, you are still ADDING pollution to the world. I like SUVs because they ride high so I can see what’s going on in traffic. They can go through snowstorms with ease, a necessity for when I go up to Tahoe in winter. Furthermore, I’d rather be in a larger vehicle vs. a smaller vehicle during accidents.

SUVs have become more fuel efficient thankfully. The new Range Rover Sport V6 engine produces 345 hp at 17 city / 23 highway. Just 10 years ago such an SUV would be a V8 and run around 12 city / 17 highway mpg with only 185 hp. But this is not a post to defend purchasing a large vehicle. This post’s purpose is to discuss the aspect of purchasing a vehicle for your business in order to deduct the expense!

RULES FOR SUV / TRUCK PURCHASE FOR A BUSINESS

The Net Worth Rule For Car Buying Guideline

Fantastic Car Sale13 year old Moose is starting to give me fits. His cruise control just died and I’m starting to worry about safety. I just spent $800 this summer on a new steering pump, timing belt, and 125,000 mile tune up so it’s disappointing to see another issue come up.

Besides the cruise control not working, the brakes are mushy, the airbags haven’t been serviced at the 10 year mark, the traction control and ABS lights are on, and a couple $220 M+S tires are balding. Oh yeah, the CD player doesn’t work either and there’s no bluetooth of course! My trusty mechanic of 12 years said Moose is operationally fine. The dashboard lights are just on due to a broken fuse lodged deep inside the control panel that makes it not worth replacing. Still, I have my doubts.

Now that I no longer have a job, I’m having a more difficult time accepting my 1/10th rule for car buying. I introduced the rule to those who still had to work for a living in order to not have to work forever for a living. It seems only fair that someone who is retired should be able to spend more than 1/10th their income on a car since they were able to cross the finish line don’t you think?

Based on the 1/10th rule for car buying, I can buy a new compact car. The problem is, I want the latest Range Rover Sport that costs $90,000! I’m not pulling in anywhere close to $900,000 a year so I’m forced to strategize and change my car buying guidelines to fit my desires. See how easy it is to justify our spending choices?

The Best Time Of The Year To Buy A Car

Black Audi R8 V8My 13 year old SUV named Moose feels like it’s on its last legs. There’s a loud whiny noise every time I turn the steering wheel, which likely means the power steering box is cracked. Moose drips engine oil everywhere he goes and now he leaks coolant!

With a Blue Book value of only around $3,000, spending ~$1,000 to fix doesn’t seem prudent. It costs around $100 to fill up his 24 gallon tank and he only gets roughly 16 miles per gallon. Luckily I only drive about 6,500 miles a year.

The other reason why I’m looking to buy a new car is due to the advancement in safety features. Better brakes, better traction control, and more airbags would be nice. I’m not even sure my airbags work after 13 years!

One of my all time favorite things to do is spend time at a car dealer. There’s nothing like inhaling that new car smell and taking the latest models for a spin for free. All told I’ve probably visited a car dealership 25 times in the last 12 months and probably over 100 times in the last five years. Call me thorough, crazy, an enthusiast, or simply a consumer who shows great constraint for not spending any money on one of his favorite things. Whatever you say there’s nothing better than finding something you love to do that’s free.

THE BEST TIME TO GET THE BEST DEALS ON A CAR

The Car Sharing Economy Is On The Rise: A Conversation With RelayRides

RelayRides Car SharingIt hit me the other day that I’ve been sitting on a goldmine of wealth and knowledge living here in San Francisco, the startup capital of the world. As a 12 year resident of the city with an entrepreneurial bug, a desire to meet more interesting people, and a personal finance blog with a yearly readership in the millions, what a great opportunity to meet up with some of the promising new companies of our generation and bring their stories to all of you. I plan on profiling at least one new startup a quarter in an assortment of industries. I hope you enjoy the new series!

For most people, your car is usually your first or second most valuable asset, and it’s also one of the fastest depreciating assets. Long time readers know that I don’t recommend anybody spend more than 1/10th of their gross income on a car if they want to build financial wealth.

Not only do you have to pay ongoing operating and maintenance costs, you’ve also got insurance costs that could easily total in the thousands of dollars a year. With the average car sitting idle 92% of the time, most folks are flushing money down the toilet with cars they don’t need.

The multiple financial meltdowns over the past 10 years have created a shift in consumer’s attitudes towards ownership. I think consumers are wisening up to the fact that tying up a lot of capital to own a car when good jobs are hard to come by is foolish. Millions of car owners with uncomfortable car payments that last long after the initial euphoria of ownership wears off are wondering how to mitigate costs.

RelayRides is trying to make these economics more favorable for their car owners by allowing them to turn this idle, depreciating asset into a source of income. For car renters who want to preserve their capital, but still want the flexibility of having a car for 20-40% cheaper than renting from a large agency like Avis or Hertz, RelayRides wants to help you as well.

A SITDOWN WITH ANDRE HADDAD, CEO OF RELAYRIDES

Supporting Our Veterans Back Home – Sponsored Video

Blue Angel In The SkyMy grandfather served in World War II and my father served in Vietnam. I on the other hand, served in no wars, making me itch for ways to give back. I feel a little unworthy as so many brave men and women each year serve to protect us back home. Perhaps bringing to light Veteran issues on this platform can help.

It’s a shocker to discover there are over 130,000 homeless veterans in America today (new reports show the figure is down by 48% since 2008 to roughly 62,000). It’s also a big disappointment to read our troops struggling to find work when they return. When a representative on behalf of Jeep contacted me to sponsor this post as we wait for the resolution of the Fiscal Cliff, I happily obliged in order to continue raising awareness. The original Jeep Bantam BRC became the primary light 4-wheel-drive vehicle of the United States Army and Allies during World War II.

In the Spring of 2012, President Obama proposed the Veterans Jobs Corps Act. The price tag for such help came at an additional $1 billion dollars a year for the already $109 billion VA budget for 2013. Does $1 billion or even $110 billion sound like a lot? It depends, given we spent $1 trillion fighting in Iraq and $3-$4 trillion if we include our fights in Afghanistan and Pakistan.

Suddenly, spending 1/40th the amount we spent on three wars to help our soldiers doesn’t seem like much at all. What the spending ratio tells me is that there is a way for the US government to do more if they choose. Here is some information from WhiteHouse.gov on what they are doing for Veterans.

THE VETERANS JOBS CORPS

Desire Is The Cause Of Suffering

Porsche Carrera GT

Since I was a kid, my mother taught me that desire is the cause of suffering. Despite her teachings and the teachings of The Dhamapada, I could not root out the desire for nice things once I graduated from college. I bought multiple motorbikes, cars, expensive watches, vacation properties, and nice clothes in my 20’s. I told myself that I deserved nice things since I worked so hard. There was no denying materialism.

Only unti I turned 30 did I really start slowing down my consumption habits. I was starting to tire from working 60-70 hours a week. I knew my spending habits had to change given I didn’t plan to work forever. Things that once excited my spirit no longer captured my interests. Instead, I started to systematically purge everything I owned that wasn’t a necessity.

What I discovered from donating literally 20 bags worth of stuff to the Salvation Army one year is how liberating it felt to have less! The house is much cleaner now and I no longer have to stuff my drawers tightly due to a lack of space. By driving a $5,000 car instead of an $80,000 car, I no longer worry about anybody denting my doors. By not wearing expensive clothes, I can roll around freely. This 2007 white Macbook I’m using sure has traveled a long way. Things are better now. Just don’t put me in front of all those toys I couldn’t afford when I was a kid! I’ll probably end up buying everything.

The man in the picture reminds me that desire is suffering. He’s sitting down, sobbing as he stupidly tried to do a 180 in the middle of a residential intersection at 65 miles per hour. He lost control of his $500,000 Porsche Carrera GT and fishtailed into two parked cars. He told me his car was classified as “non-operable,” meaning his insurance would not cover his damages. “The only pearl white GT in North America is ruined!” he whimpered.

My life has been going so bad these past few years. I can’t catch a break,” the owner continued to say. When you have enough money to own a car worth half a million dollars, how horrible can life be? Very bad I guess. I felt sorry for him and told him at least he didn’t injure anybody. He thanked me for the encouragement and began to cry some more.

Money doesn’t buy happiness, but you know that already. This picture is just a reminder not to let money take over your life. Now if only we knew where the passenger with his three year old kid on his lap went. They ran away before the cops arrived.

Regards,

Sam

Should I Get Roadside Assistance Coverage Insurance? Hell Yeah!

1989 BMW 335i CoupeEvery winter, I make the 180 mile trek from San Francisco to Squaw Valley, Lake Tahoe to enjoy the epic snow. There is truly nothing more magical than spending hours riding on powder and having a beer or two in the outdoor hot tub when you’re finished! Oh, the stories I could tell you about what happens in the hot tub.

On the other hand, there’s nothing more frustrating than getting a flat tire at night in the mountains while it’s snowing. I know how to change a tire, but I sure as hell don’t plan to risk my life changing a tire in darkness on a one lane road in the mountains while cars zoom by. I might get a nice settlement if I do get into an accident. But, I also might lose a leg in the process!

Every month, I spend 98 cents to get roadside assistance insurance for Moose. Add up the cost over 84 months of ownership, and we’re talking $83 worth of premiums. And you know what? My roadside assistance insurance is worth every penny! I already mentioned how my alternator died just as I was pulling into my garage thank goodness. A tow truck came when I got back from vacation to follow me to my mechanic thanks to roadside assistance. What I haven’t told you about are my other more traumatic incidences!

IT WAS A DARK AND STORMY NIGHT

Never Go To The Car Dealer For Service

Red Battery Light Warning SymbolThe other day, Moose’s battery light went on. Unlike the three other yellow error lights on the dashboard, the battery light was ominous red. Thinking it was no big deal, I decided to leave the light unattended for a couple days. After all, I just spent $85 on a new Diehard battery 6 months ago!

As I pulled into my garage, Moose suddenly lost power. The entire dashboard went out and pressing the gas pedal revved no engine. Oh no! Moose, don’t die on me old buddy!

Thankfully I was in my garage when the power went out. Otherwise, I would probably be stuck in the middle of the street somewhere. I called USAA roadside assistance for a jump. I cannot tell you how worth it getting any kind of roadside assistance is. For around $5 bucks a month, I get free jumpstarts and tows to anywhere! I’ve had to use them 5-6 times in the past 10 years, and each time was a life saver.

Roadside assistance came about 45 minutes later and Moose was back in business. I read the manual to review what happened, and it wrote, “If battery light goes on, see dealer service immediately!” OK, I guess I shouldn’t have been so nonchalant, but I couldn’t go see my mechanic since they were closed on the weekends. My flight to Hawaii was the next day and I wouldn’t be back for a week.

Another Close Call