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

The 1/10th Rule For Car Buying Everyone Must Follow

Old Car In EstoniaAfter introducing the 1/10th rule for car buying in 2009, some people changed the way they went about purchasing a car. Meanwhile, many more complained my rule was too onerous for the typical income earner.

I watched in horror as a total of 690,000 new vehicles averaging $24,000 each were sold under the Cash For Clunkers program in 2009. The government’s $4,000 rebate for trading in your car ended up hurting hundred of thousands of people’s finances instead! Your $20,000 invested in 2009 in the S&P 500 index would now be worth over $45,000!

Buying too much car is one of the easiest and biggest financial mistakes someone can make. Besides the purchase price of a car, you’ve got to also pay car insurance, maintenance, parking tickets, and traffic tickets. When you add everything up, I’m pretty sure you’ll be shocked at how much it really costs to own a car and barf!

The 1/10th rule for car buying is simple. Spend no more than 1/10th your gross annual income on the purchase price of a car. If you make the median per capita income of ~$42,000 a year, limit your vehicle purchase price to $4,200 if you must buy one. Absolutely do not go and spend the median car price of $24,000!

A median income earner buying the median priced car is financially absurd. Who spends 60% of their gross salary on the purchase price of a car? Worse yet, who spends 75% of their net income after 20% taxes on a car?

WHY YOU SHOULDN’T SPEND MORE THAN 10% OF GROSS ON A CAR

Auto Insurance Basics And Recommendations For Everyone

Car wreck

Why you need auto insurance!

Besides the purchase price of a car, one must also calculate the potential maintenance cost, and auto insurance cost. We often focus on the first two costs, but seldom do we realize the auto insurance cost differential until we’ve purchased the car!

I was so happy to negotiate $2,000 off the initial asking price of a $14,000, black on black, BBS wheels equipped 1997 M3 in 2003 that I didn’t realize my auto insurance would jump from just $500 a year to $2,000 a year!

Had I realized my auto insurance would jump so much, I probably would have negotiated even harder, or reconsidered buying a sports car altogether. Always get an auto insurance quote before you purchase a car please!

Having auto insurance is a law you don’t want to break. Accidents happen all the time whether they are your fault or not. If you end up wrecking someone else’s car and injuring a passenger, not having any car insurance could literally wipe you out financially and put you in poverty for the rest of your life! Check for a better auto insurance quote via Esurance online. They provide comparison quotes so you know you’re getting a great deal.

AUTO INSURANCE BASICS

New Or Used Car? Why I Don’t Plan To Buy Another Car Again

2013 Range RoverI’m in love with Moose, my 12 year old SUV. There, I said it! When you are in love with something, no matter how old, out of shape, slow, or dumb, you will love it unconditionally until the day it dies. Moose is like my overweight son, who eats too much, but still gets me to point B without any problems.

And lest you think that Moose is a big polluter, not so, as he passed our stringent Smog Test every year without fail. Besides, I bought him used, which means I’m more environmentally friendly than new car buyers who failed to destroy their old cars. I did not add to the car population!

In “Fighting My Car Buying Addiction,” I highlight three things everybody must do to quit splurging on things that lose value and destroy their personal finances. After all, the act of buying too much car has significantly damaged many people’s financial livelihoods. Always remember the 1/10th rule of car buying where you should consider spending no more than 1/10th your annual gross income on a car.

1) Name your car. Anthropomorphism is a powerful, powerful thing. As soon as you name your car, you give it a personality and a soul.  With a personality and a soul, you can no longer just abuse it like a ragged doll.  My truck’s name is Moose.  I love Moose. He’s handsome, reliable, and very loyal. Given he’s part of the family now, I’ve decided to keep him for as long as it makes sense. At some point, I’ll realize I should sell or donate Moose since he is turning 12 years old.  However, at this point, I’m happy to buy him new brakes, rotors, batteries and change his fluids.

2) Go to the dealer and intoxicate yourself. Moose’s private party retail value is about $3,600 from $8,500 five years ago.  When you go to a dealer, you start appreciating what you have.  Just the other day, I stopped by the Mercedes Benz dealer for fun on the way home from golf. I test drove a well-equipped $47,000 out the door 2012 C250 coupe. I loved the new car smell and the drive was exhilarating. This wasn’t even the highest end version as the C350 coupe had 100 more horsepower and cost $5,000 more. When it was time to negotiate, the salesman insulted Moose by giving him a trade in value of only $1,114!  There was no way this C250 coupe was worth 45X more than my beloved Moose! I declined his pitch and left smiling.

If you aren’t convinced how silly it is buying a new car when a used car can do perfectly fine, take a look at this picture carefully. Analyze it and soak all the data in.  Look at the monthly payments after a $4,000 down payment. Observe the Trade Allowance of $1,114 for Moose and the Net Sales Price of $46,497.98 after taxes. Ridiculous and insulting!

3) Visit a garage sale or throw your own. One of the most humbling experiences is de-cluttering and minimizing your things through a garage sale.  That golf club you spent $120 on might only get $10 now. That purse you were dying to have for $350 now is worth only $20 bucks.  The list goes on and on of things you spent way more than you should.  Once you start going to garage sales or to Goodwill, you will find so many bargains that you will seldom ever spend full or sale price ever again!

SOMETHING ELSE HAPPENED THAT SEALED THE DEAL