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?


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.


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!


Don’t Let Your Emotions Get The Best Of You When Buying A Car

Car Buying EmotionsThe 6th grade was when I first laid eyes on her. She was a 1989 BMW 635i Coupe who did donuts in the school’s parking lot after class thanks to an obnoxious, rich kid driver in the 11th grade.  The driver was the son of a royal family who lived in a royal house filled with a fleet of the most luxurious automobiles.

I was immediately smitten and promised myself one day I’d be able to buy such a car as soon as I started working.

The new 6 series BMW came out in 2005 and all the memories came rushing back.  What cost only $35,000 then now cost $75,000 thanks to inflation and the infinite amount of new features.  I don’t know about you, but  $75,000 is a big chunk of change and my absolute upper limit for what I’d ever spend on a car.

Instead of spending $75,000, why not go back in time and actually buy that 1989 635i Coupe instead!  My brilliant idea led me to Craigslist where I found my true dream car listed in “Fantastic condition with only 160,000 miles”!  That’s only 8,000 miles a year I rationed and off I went to see the seller.

The sand dune colored BMW was in great condition and the seller was only asking $3,800.  After a test drive and over 1 hour of negotiating, I got him down to just $2,500.  What a bargain I thought knowing that even if the car blew up the next day, I’d only be down $2,500.  I gleefully drove back home in my dream mobile I had waited for almost 20 years!  Of course, as soon as I got home this is where all the trouble began.