Financial Samurai

Slicing Through Money's Mysteries

Opportunity Cost Is A Spender’s Greatest Enemy: My Tesla Story

Posted by 24 Comments

Opportunity cost is a spender’s greatest enemy. Given America has a spending problem, our country will constantly be in grave danger without adopting better financial habits.

Back in 2018, I decided to join a Meetup softball league in San Francisco. I was one year into being a stay at home father and I needed to get out of the house more. Tennis had always been my sport, but I thought it would be nice to mix things up.

The softball league turned out to be a great outlet. I met people from various parts of the Bay Area from different socioeconomic backgrounds. The person I developed the best relationship with was with the organizer named Bob.

Bob is a preschool teacher who helps manage some of his parents’ properties. As a property fanatic myself we talked about various investment opportunities.

Of course, I shared my enthusiasm for ocean view properties in San Francisco. Then I mentioned my heartland of America investment thesis. Who knew that today’s global pandemic would accelerate the demographic migration towards lower-cost areas of the country.



Read More…

Multiple Options For Terminating A Car Lease Early

Posted by 37 Comments

Are you looking options for terminating a car lease early? Since the pandemic began, there’s been an increase in people looking to terminate a car lease early to save money. In difficult times, it’s important to cut costs. Terminating a car lease early is a logical solution, however, there are costs associated with doing so.

During my latest car hunting process, one of the questions I had was what to do with my three-year lease agreement with 12 months remaining.

I decided to lease a Honda Fit for my business for only $235/month after tax. About 80% of the cost is deductible since I primarily use Rhino for going to conferences, visiting consulting clients, and giving the occasional Uber ride when they are going my way.

When I was in my 20s, I’d always just pay cash for a vehicle and flip it a year or two later for even money or a small profit. I loved the hunt and the negotiation process. As I got wealthier, I put more value on time and simplicity. I wanted minimal maintenance headaches. I also wanted the option of just handing the keys in when my lease term was up.

But due to the desire of owning a mid-life crisis car and only having one indoor parking spot, I wanted to learn what my options were for an early lease termination.

Here are your options for terminating a car lease early after speaking at length with a couple vehicle leasing department personnel.



Read More…

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

Posted by 1,102 Comments

Old Car In Estonia

If you’re looking for a car buying rule, you’ve come to the right place. I’ve come up with a car buying rule that will help you spend responsibly, reduce your car ownership stress, and boost your net worth over time.

In 2009, I watched in horror as a total of 690,000 new vehicles averaging $24,000 each were sold under the Cash For Clunkers program.

The government’s $4,000 rebate for trading in your car ended up hurting hundred of thousands of people’s finances instead. With a median household income of only around $50,221 at the time, spending $24,000 on a new car was clearly too much.

Instead of buying a $24,000 car in 2009, if you had invested the $24,000 in the S&P 500, you would now have roughly $70,000 in 2020. That’s quite an opportunity cost for buying a new car!

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 hurl.



Read More…

Auto Insurance Basics And Recommendations For Everyone

Posted by 46 Comments

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

Back in 2012, 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! If you really want to feel good affording a car, follow my 1/10th rule for car buying that states that you shouldn’t spend more than 10% of your annual gross income on the purchase price of a car.

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.



Read More…

Pay By Cash Or Credit Card? Deciding The Best Way To Save Money

Posted by 55 Comments

Whenever you buy something, it’s good to ask yourself whether to pay by cash or credit card? There are pros and cons of each. This article will highlight which was is best.

Pay By Cash Or Credit Card Fixing A Car

After six months of a progressively louder clicking sound emitting from my engine, I decided to take my car in for a free inspection.

After only about five minutes, the auto-mechanic mentioned that he was sure my fan unit was broken and needed replacing. Great. “How much?” I asked.

His brother, the operations manager, got back to me and said, “$925 before tax, which is about $1,004 after tax.” Sales tax is 8.5% in San Francisco.

Phew! I was mentally preparing for some $3,000+ bill because the clicking sound was near the engine. When you go on the car forums, you always read about the worst situations. Here’s a short recording if you’re curious.

The operations manager told me I’d have to come back next week because he’d have to order the entire fan unit. No problem. In the meantime, I decided to do what any rational person would do and check what fan units would cost online.

A bunch of options came up that were 30% lower than the shop’s quoted price. The next week, I gave the shop owner a ring and asked why such a huge price difference. He said the difference was between an original part from the manufacturer and a replica without a warranty.

Sensing his weakness over the phone, I asked him if there was any way we could get the price down. After stumbling through some umms and awws, he responded, “Why yes, if you pay ‘cash cash,’ not check, I’ll knock the price down to $750 out the door.“

“Will I still get a receipt and the warranty?” I asked.

“Absolutely,” he replied.

Enticing! What would you do?



Read More…

The Average New Car Price Is Unbelievably High

Posted by 191 Comments

the average new car price

If you were to guess what the average new car price is nowadays, what would you guess? I guessed $23,000, since my Honda Fit is sweet and only costs $19,600 new. Given I’m frugal, leaving a 20% upside pricing buffer seemed logical. Too bad I was way off!

According to the valuation analysts at Kelley Blue Book reported the estimated average transaction price for a light vehicle in the United States was $37,876 in February 2020. New-vehicle prices increased $975 (up 2.6%) from February 2019, while falling $126 (down 0.3%) from last month.

Are you kidding me? The average new car price in 2020 is now almost $38,000? I guess we must all be quite wealthy because I don’t know many people with a median household income of $65,000 who can afford such a price.



Read More…

Tips and Tricks to Getting Auto Insurance Discounts

Posted by 34 Comments

Badly Damaged Car

One of the most important things people overlook when they are about to buy a fancy European automobile is how much car insurance will cost. Auto insurance discounts can save you a lot of money over time. I should know. I’m a recovering car fanatic who has literally bought and sold 8 different cars in the past 10 years. I’ve come to appreciate the intricacies of getting a good deal. And getting car insurance discounts is a big part of that.

On an absolute dollar level, driving a $50,000 car could cost anywhere between $2,000-$3,000 a year, depending on your record. At 4-6% of the annual cost of your car, car insurance is a big deal! 

Cost Of Auto Insurance Vs The Car Itself

The irony is, the cheaper the car you buy, generally the higher car insurance is as a percentage of your total cost.



Read More…

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

Posted by 165 Comments

If you own a business, you should know the tax rules for buying a SUV or a truck. You can and should deduct the operating expense of your vehicle if you use it for your business. This article will highlight the latest automobile tax deduction rules for the new decade.

As you may have read from my Net Worth Rule For Car Buying post, I’m looking into buying the latest Range Rover Sport HSE to replace Moose, a 15 year old Land Rover Discovery II. The 2020 Range Rover Sport can be had for roughly $75,000 MSRP, an exorbitant amount of money for a vehicle.

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. As a parent now, safety is paramount.

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.

With the tax reform act passed at the end of 2017, buying a truck or an SUV that is over 6000 pounds has become more favorable for 2018 and beyond.



Read More…