All posts by Jacob A Irwin
Preparing Taxes – Doing it Online vs. Hiring a Professional
It’s an annual event, one you probably hate, regardless of how your tax rate varies by the country in which you live. Of course, you probably hate the exercise not because you have to pay out money to the government, but because you need to put a lot of information and records into order.
Preparing your taxes is a painful procedure – it takes up more than a few hours of your time. It requires an ordered thought process and a knowledge of tax laws and loopholes that you can legally exploit, and it is never easy to keep track of all your records and get them all sorted out and ready to process.
It is for these reasons that most people hesitate to do their own taxes, but then, they’re also wary of hiring an accountant to help them out. How do you decide which way is better when it comes to filing your returns – online or through a professional?
Hiring an accountant could cost you money, but that’s just about the only downside to this method. When you have help from a professional, all you have to do is provide them with all your records and account statements. They help you sort them out, provide you with legal advice, inform you about any kind of deduction you’re eligible for, and most important of all, get the work done in no time at all. Also, you’re eligible for a deduction on the fee you pay your accountant or professional tax preparer.
If you’re a busy professional, it’s best you hire someone whose regular job is to help people prepare their taxes. Even if your returns are simple, getting a professional to do them for you saves you both effort and time, both of which could be put to better and more effective use at your job or business. If your returns are complicated and you run a business or own depreciating and/or appreciating assets, it’s advisable to at least seek the advice of a professional even if you prefer to do your taxes on your own.
If your returns are relatively uncomplicated, you could do them online with some help from reliable sources. Various websites offer a comprehensive list of all the information and records you’ll need while others provide advice on how to go about the task. You save yourself a few hundred dollars, and you have the satisfaction of doing your taxes all by yourself.
Some people have their own accountants while others prefer to wing it year by year – if they have time on their hands and the inclination to do their own taxes, they file them online; if not, they look around for a qualified professional and get them to do the honors. Either way, it’s your choice based on your situation.
How about you all? Do you all do your taxes online, or do you obtain the help of a tax professional? Why did you choose the method you decided upon?
What online applications do you use to help file your taxes online?
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Financial Action Steps To Take When Leaving An Employer
So, you’re getting ready to move to the next step in you life by moving on from your current employer.
Before walking out the front gate, there are many things to do and keep track of – you must turn in all of your security badges, papers/records, equipment, and computer. In addition, you must make sure that all of your projects are in a state that are ready to be handed off to the person that will complete them.
Yet another very important aspect that often gets taken too lightly (in my opinion) when leaving an employer is making sure all of your finances are taken care of.
In order to give this topic its due respect, I wanted to share some of the action steps I have taken financially over the past few weeks in order to ensure a smooth transition from leaving my current employer and going to graduate school this fall.
After thinking about what I would need to do for several minutes, I decided that the best places to start are…
- 1) My current paystub
- To create action plans for each of the current income deductions on my paycheck.
- 2) Notify employer’s benefits center of your new address (if you are moving)
- This is pretty self explanatory: you want your benefits provider to have your current address on file in the event that they need to contact you or send reimbursements.
- 3) The My Personal Finance Journey Account Hierarchy
- To ensure that all of my needs are covered, according to the proper priority order.
While #2 above is self explanatory, let’s take a look at #1 and 3 in a little more detail:
According to my latest paystub, the following items were deductions made either before or after tax. Below each item, I have listed the considerations I went through to decide what (if any) action steps are needed upon leaving my employer.
- Federal and state withholding taxes
- Someone once told me that, “There are only two things certain in life – death and taxes.”
- Accordingly, no action is needed, as I am sure that Uncle Sam will find me and charge me taxes on my income in graduate school.
- On a side note, if you haven’t already, take a look at a previous post I wrote about what taxes graduate students pay. Pretty interesting!
- Health insurance premium (PPO) – see previous post about deciding between the different types of employer sponsored health insurance plans for more information.
- Health insurance is an ABSOLUTE MUST for everyone.
- I am lucky in the fact that my graduate assistantship is going to be paying for my health insurance coverage through the University-sponsored plan.
- However, the University health insurance coverage doesn’t start until August 15, and as such, I need to make sure I am covered during the interim period of unemployment.
- To remedy this, I had to contact my employer’s benefits department and request COBRA insurance, which is a type of insurance law that allows for health benefits to be extended to individuals for a short period of time after leaving an employer.
- Even though this type of insurance will require that I pay 100% of the premium (much more than what I paid with my past employer), it will still be better than being caught without healthcare coverage.
- Vision insurance
- Vision insurance is much less obligatory than general health insurance coverage because it typically only covers one annual optometrist visit and a pair of glasses or contacts.
- The general rule of thumb is that you should not seek out vision insurance unless it is offered very cheaply through your employer.
- Because of this, I do not need to take any action on obtaining vision insurance.
- Dental insurance
- Dental insurance falls in the same general category as vision insurance in that it is not totally obligatory because it generally covers a limited set of operations and routine maintenance.
- Because of this, I do not need to take any action on obtaining dental insurance, unless it is offered at a good price through the University plan.
- 401k retirement contribution (monthly)
- My, my, my – how I will miss my past employer’s 401k plan. It even had a matching program!!! Twas’ sweet!
- The University that I will be attending for graduate school does not offer a 401k plan that I am aware of.
- Therefore, I will most likely have to settle for just contributing to my Roth IRA. In all honesty, this should be sufficient since I will be making approximately 67% less income as a graduate student than in my past job.
- However, I do need to take some action regarding the 401k that I currently have with my previous employer. What I need to do is roll-over the 401k funds to a Rollover IRA account that I will create with Vanguard.
- I am inclined to do this because Vanguard IRA mutual funds are far superior to 401k mutual funds, stemming from the lower expense ratios/fees and a greater selection of index funds.
- For more information on the reasons for creating a Rollover IRA and transferring your 401k funds, please read a previous post I wrote at the following link – What do you do with your 401k funds if you are leaving your employer?
- Flexible HealthCare Spending Account (FSA)
- A Flexible Spending Account, or FSA, is another one of those “nice-to-have’s” that some employers offer. If you’re not familiar with what this type of account is, click the following link – My Personal Finance Journey – Flexible Spending Accounts and Should I Sign Up For One?
- Because of this, I don’t need to actively seek out obtaining one, unless it is provided by the University health insurance plan that I will under.
- However, I do need to take some action with my existing FSA account to make sure that I have spent all of the money in the account. If I do not spend the money I have deposited thus far this year, it will be lost at year end. This is undesirable, obviously.
- To take care of this, I simply log in to my FSA account online, view the balance, and mark myself a reminder on my Outlook Calendar to spend some of the money each month on a qualified expense.
So, simply by printing out your last paystub and reviewing it line by line, you can create an action plan for the majority of financial matters that require your attention stemming from leaving an employer. However, just to make sure all of our bases are covered, let’s take a quick peek at the Account Hierarchy to ensure our needs are met.
3) My Personal Finance Journey Account Hierarchy
- Priority 1 – Health insurance – Check
- This will be covered by my University assistantship.
- Priority 2 – Emergency fund – Check – not directly affected by leaving my employer.
- However, since I will have much less income, I will need to monitor the level of my emergency fund to ensure that I keep 6-9 months worth of expenses on hand.
- Priority 3 – Get rid of credit card debt – Check
- I have no credit card debt.
- Priority 4 – Pay monthly mortgage payment – Check – not directly affected by leaving my employer.
- This is something that I will make sure to do going forward.
- Priority 5 – 10 – Investing in a 401k and IRA accounts. – These topics were covered above.
- However, one thing I will have to make sure that I do is to not contribute greater than the combined $5000 limit for both my Roth IRA and Rollover IRA (now that I’ll have both).
Key Takeaways and Summarized Action Plan
So, I have gone through a lot of my thought process in this post. However, all of the actions I need to take can be summarized in to 6 simple steps below:
1) Sign up for the University health insurance plan.
2) Obtain temporary COBRA insurance from my previous employer.
3) See if University health plan offers dental or vision insurance.
4) Roll-over 401k to a Rollover IRA with Vanguard.
5) Exhaust Flexible Spending Account funds by December 31, 2010.
6) Monitor level of my emergency fund to ensure 6-9 months of expenses are included.
Did I miss any financial action steps that I need to look at with leaving my employer? How about you all? Have you had any interesting experiences with this process?
If so, please share by commenting below!
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Hamster Revolution Email and Electronic File Management System
My Personal Finance Journey Homepage
(see the following link for details – My Personal Finance Journey Financial Organization System).
by David Allen and The Hamster Revolution
by Mike Song, et al. Since this system has improved my life and time management ability significantly, I wanted to share it with you all as well.. Overall, the book (which I highly recommend you reading – just click on the link above to buy a cheap used copy from Amazon.com for $0.02!!!) is organized in to 5 sections, as described below.
- How to reduce email volume
- How to improve email quality
- Organizing information (email, hard drive, shared drives, teamsites, anywhere!)
- How to coach others on email
- Answers to further questions
To read the complete summary of the book, click on the Google Docs / Word document link below.
While all of the book’s sections offer great advice, I wanted to focus mainly on the “Organizing information” section, as this is what has contributed the most value to my life.
- Too many overlapping categories and/or categorization methods exist.
- There are too many primary folders in your system.
- Different shared drives, personal drives, and team sites employ mismatched folder systems, making it impossible to know where to store or find the information when you need it.
The COTAP System is an email and data/information management system that Mike invented after studying many different types of business and what sorts of information flows within these organizations.
What he found was that in all industries, all email and/or information fits in to one of 5 categories – Clients, Output, Teams, Admin, and Personal. I am a big believer in this philosophy. I have found that both at home and at work, all of my information really does fall in to one of these 5 categories.
Furthermore, I have found this system to be effective not only for my emails but also for organizing my electronic files on my hard drive.
How do I implement the COTAP System?
To create the COTAP folder system on your computer, simply follow the guidelines below, creating folders for each main category and subcategory.
- Clients – Your team’s internal or external clients
- Create a subfolder for each one of your clients
- Output – Your team’s products and services
- Create a folder for each product, project, or service you are involved in.
- Also create “general output” folder
- Teams – Your team
- Create a folder for each team of which you are a member.
- Examples would include budget teams, new pharmaceutical drug team, etc.
- Admin – Your non-core-job responsibilities
- Create a folder for each non-core-job responsibility
- Examples would include training, benefits, etc.
- Personal – Personal information that is non-job related.
- Examples would include Toastmaster’s public speaking club, Jonny’s karate schedule, cycling team, etc.
- After creating all of your respective folders, place desktop shortcuts to all of your main COTAP folders so that you can access them quickly.
Show below is a screen shot/example of the COTAP system set up on my Outlook email account. Proof that you can do it too!
| My COTAP Folders |
Weekly Roundup – Back to School Edition – Week of July 26th
My Personal Finance Journey Homepage
It was also a very active week for My Personal Finance Journey. Five of our articles were selected to participate in blog carnivals throughout the blogosphere.
Check out the posts that were selected, as well as the other very informative articles that were selected in the contests, by clicking on any one of the links below.
- Why Following Hot Mutual Fund Managers Doesn’t Work included in the Best of Money Carnival at Canajun Finances
- Home Based Business Opportunities included in the Carnival of Financial Independence at Ditch The Boss
- How I Decided Between HMO, PPO, and POS Health Insurance Coverage included in the Carnival of Money Stories at No Debt Plan.net
- Does Being Green Make Economic Sense – Part 1 – Green and Hybrid Cars included in the Carnival of Personal Finance at Beating Broke
- How Does Home Ownership Fit in to Your Overall Asset Allocation? included Real Estate Investing Carnival at The Income Blog
Additionally, listed below are several blog articles that caught my eye (and I commented on) throughout the week. Stop by their respective blogs and take a look!
- You Need an Emergency Fund by Moolanomy
- Afraid to Retire by BucksomeBoomer
- Tax Deductible Moving Expenses by Five Cent Nickel
- Alternatives to Blogger’s Default Comment System by WebUpd8
Keep on learning!
How about you all? Did any big events in your financial lives happen this week? Did you participate in any of these blog carnivals?
Are there any blog carnivals I am missing submitting articles to? Let me know!
Did you like this article? You can get the complete text of all the latest articles at My Personal Finance Journey in your email inbox each evening by clicking the link below and entering your email address. Your address will only be used for mailing you the articles, and each one will include a link so you can unsubscribe at any time.
Help a Reader: To Refinance a Car or Not?
My Personal Finance Journey Homepage
I have a financial question for you.
Currently, the interest rate of my car loan is 5.75% per year. And, I am wondering if I should refinance my car loan with a 3.99% interest per year loan that I found with my company’s credit union.
I have paid off 50% of the original loan amount, and only have ~$7,000 left to pay.
At the current rate I am paying off the loan, I will pay off the loan completely in 3 years from now. I have a good job and a steady paycheck each month, and am 23 years old.
Would it be a good financial move for me to refinance with this lower interest rate loan? Any help would be appreciated.
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Related articles about helping readers at my favorite personal finance blogs:
Free Money Finance – Help a Reader – Paying off a House
Free Money Finance – Help a Reader – To Refinance My Home Or Not
What Would You Do If You Had Credit Card Debt?
I have also given real life examples of how I respond to the Account Hierarchy as I track my portfolio and net worth each month.
What’s the big deal? What makes credit card debt so bad?
A recent guest post (A Credit Card Debt Saga – And How I Survived) described in bloody detail what contributes to making credit card debt the worst debt we can have.
However, the long and the short of it is that this type of debt is bad because 1) credit cards carry high interest rates and 2) the interest is compounded daily.
How I would handle credit card debt
Now that we’ve gotten through the introduction of the topic, I wanted to walk through an example of how I would handle tackling credit card debt, if I was unfortunate enough to have accumulated it.
Assumptions
According to CreditCards.com, the average household credit card debt is ~$16,000. Wow!!!! This is incredible.
We’ll assume that this is the amount of credit card debt that I racked up with some emergency medical treatment I received while being airlifted off of the back country slope of a skiing mountain in Colorado (not covered under insurance). We’ll assume that I was completely free of credit card debt before this happened.
Additionally, we’ll also assume that I make an income of $50,000 per year ($4,200 per month) and do not pay taxes, for simplicity.
Action Steps
As you might have guessed, to tackle paying off this balance, I would start with the highest priority in the Account Hierarchy and work my way down from there.
- Priority #1 – Make sure that I have health insurance.
- Check – I currently have health insurance through my employer-sponsored PPO plan. Move to next priority.
- Priority #2 – Ensure that I have an emergency fund of sufficient amount to cover my expenses.
- Check. Move to next priority.
- Priority #3 – Pay off credit card debt.
- Ok – I know I need to pay this off. So, let’s skip this one and come back to it for now.
- Priority #4 – Pay off monthly mortgage payment.
- Check. Move to next priority.
- Priorities # 5-9 – Involve investing in your employer’s 401K, an Individual Retirement Account, and an individual taxable mutual fund account (in that priority order).
- Before getting hurt in the skiing accident, I was contributing 25% of my monthly salary ($1,041) to max out my 401K.
- On top of that, I was contributing another 27% of my monthly salary ($1,134) to a Roth IRA and taxable mutual fund account.
So, that’s how I would handle credit card debt in that situation.
How about you all? Would you have acted differently in the scenario above?
Do you prioritize your savings/spending in a similar order as this? Let me know!
Did you like this article? You can get the complete text of all the latest articles at My Personal Finance Journey in your email inbox each evening by clicking the link below and entering your email address. Your address will only be used for mailing you the articles, and each one will include a link so you can unsubscribe at any time.
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Related articles about credit card debt at several of my favorite personal finance blogs:
The Digerati Life – A Success Story About Paying Off Credit Card Debt
Blogging Away Debt – How I Reduced My Credit Card Interest Rates
First Time Visitor Start Page Now Ready!
My Personal Finance Journey Homepage
Is there anything else that should be included that I might have overlooked? Let me know by commenting below!
Your feedback helps!
Did you like this article? You can get the complete text of all the latest articles at My Personal Finance Journey in your email inbox each evening by clicking the link below and entering your email address. Your address will only be used for mailing you the articles, and each one will include a link so you can unsubscribe at any time.
Personal Finance and Investing Magazines
My Personal Finance Journey Homepage
, I came across a brief look at several new financial products the government was developing when the book was published back in 2007.-
SmartMoney Magazine
– $10 for 1 year -
Kiplinger’s Personal Finance magazine – $12 for 1 year
-
Money (1-year) – $19
– $10 for 1 year
– $12 for 1 year
– $19
How about you all? Which money/investing/personal finance magazines do you have a subscription for?
How did you decide which one to pick?
Did you like this article? You can get the complete text of all the latest articles at My Personal Finance Journey in your email inbox each evening by clicking the link below and entering your email address. Your address will only be used for mailing you the articles, and each one will include a link so you can unsubscribe at any time.
Does Being Green Make Economic Sense? – Part 2 – Recycled Paper and Reusable Batteries
My Personal Finance Journey Homepage
So, let’s get started.
Is it economically beneficial to purchase recycled paper?
Recently, as I was reading an article on the internet, it mentioned that the majority of major corporations nowadays (even in the “green” era) are still using non-recycled printer paper for the their managed printing jobs company-wide.
This got me thinking what the driver was behind this and what the difference in price is between recycled and non-recycled paper. And more importantly, is the gap indeed big enough that it would cause a company to go with the non-environmentally friendly route?
To do this analysis, we need to get the prices of several types of paper. In looking around Staples.com, it appears that a good standard order size is 20 lbs / 5000 sheets of paper. Using this as the common size, I found the following prices on the Staples website.
- Staples 100% Recycled Paper – 20 lb Case – $56.99
- Staples 30% Recycled Paper – 20 lb Case – $45.99
- Staples Regular Non-Recycled Paper – 20 lb Case – $37.99
Geez, this is not looking to promising for recycled paper. If you wanted to purchase 100% recycled paper, you would be committing to paying nearly a 50% premium! What’s goin’ on here?
So, let’s now look at the difference in cost of using recycled and non-recycled paper using a real world example.
According to the link below, University of Washington uses 625 tons of paper per year. In terms of lbs, this equates to 1,250,000 lbs of paper. Wow! This is wild, but not surprising.
University of Washington Printer Paper Usage
After running the numbers (see table below), I figured that University of Washington can save $1.2 Million by using the non-recycled paper.
So, from the evidence we have seen here, it appears that it most definitely does not (unfortunately) make sense economically to purchase recycled paper.
To me, this is sort of sad news to hear. However, I don’t mean to get every one down. I feel that by having this knowledge in hand, we can more actively work towards creating a solution for this.
At this point, you may also be asking yourself, “why does recycled paper cost more than non-recycled?”
As far as I could find, the main reasons for recycled paper costing more are 1) there isn’t as much supply of recycled paper (as in we has individuals need to work more at recycling all of the paper that we can) and 2) the supply chain for recycled paper is not as established and profitable yet as normal, non-recycled paper. Since it is not as profitable, the paper companies have to pass on the added cost to the consumers for now.
A quick side note/question: I recently heard somewhere that even though recycled copy paper/writing paper is more expensive than non-recycled, the recycled version of toilet paper is actually less expensive. Can anyone validate this?
Ok, so now on to our 2nd topic of the day…
Is it economically beneficial to purchase rechargeable batteries?
Several years ago, I purchased a pack of Energizer Rechargeable Batteries
with the intention of using them to replace regular disposable AA batteries around the house.
I have used them every-so-often, but I always seem to find myself mixing in the use disposable AA’s either due to convenience, or the fact that regular AA batteries were available wherever I was at the time I needed them. I figured that by doing a good job investigating this today, it would not only educate me, but also help you all reading this as well.
To do this, as is usually the case, we’ll need to obtain pricing information for 1) rechargeable AA batteries and the associated charging device and 2) regular dispoable AA batteries. Both will be the same brand, Energizer, and we will assume that electricity costs involved with recharging batteries are negligible, in order to simplify the comparison.
Given these assumptions, I found the following prices shown below for rechargeable batteries:
-
24 Energizer Rechargeable Batteries – $78
- I chose 24 AA batteries because this seemed to a be a good estimate of the number of AA batteries I have in devices at my house at any one time.
-
Battery Recharger – $32
- Total price = $110
- From the information shown at the product description, these batteries can be recharged 250 times, and each charge features 2,500 mA-hours of run time.
- This equals 625,000 mA-hours of total run time.
– $32
For regular AA Energizer batterie
s, I found the following information:
- 24 Energizer AA batteries = $15
- 2,450 mA-hours per battery – Energizer.com
- 625,000 mA-hours / 2,450 mA-hours per battery = 255 batteries total
- 255 batteries total x $15 / 24 batteries = $159 total
Ok, great! So, finally, we have found that it does make economic sense to purchase rechargeable batteries/be environmentally friendly. Great news! You save $50 in the long run by purchasing rechargeable batteries.
In the next Part of this series, we’ll look at the different ways that you can make your home environmentally friendly and see how the financials stack up! Until the next time!
How about you all? Does the company you work for use recycled paper? Do you use recycled paper at home? Do you use rechargeable batteries?
Are there any incentives that I might have missed reading for using environmentally friendly products?
Did you like this article? You can get the complete text of all the latest articles at My Personal Finance Journey in your email inbox each evening by clicking the link below and entering your email address. Your address will only be used for mailing you the articles, and each one will include a link so you can unsubscribe at any time.
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Related articles about green products at several of my favorite personal finance blogs:
Why Recycled Paper Costs More – Money Changes Things
Save Money on Toilet Paper – Ultimate Money Blog
Does Being Green Make Economic Sense? – Part 1 – Green and Hybrid Automobiles
It is clear these days to most people that being “green,” or living in a way that is not harmful to the environment, is the appropriate course and absolutely the right thing to do.
However, are we at a point yet that it makes sense economically to do so? In other words, are you punished economically by your urge to live properly?
In my opinion, if being green is truly ever going to be adopted by the majority of the population, it has to be made financially beneficially to do so (even though I wish it weren’t this way – it is just the way things are).
In this series, we will go through several analyses to take a look at if you are rewarded financially (or at least not punished by spending more) for living “green”.
Today, in Part 1, I want to take a look at the interesting subject of if buying “green” / hybrid cars is financially equivalent, more expensive, or less expensive than buying a regular gas-powered car.
To perform this analysis, we’ll compare three new cars – a Toyota Prius, a Toyota Corolla, and a Toyota Camry.
How does purchase price compare?
To start off, let’s get an idea of how much each of these cars costs.
After examining the prices at the links below from Toyota.com for the most basic models of all of these cars, we find the results below.
- Toyota Prius II = $22,800
- Toyota Corolla = $15,450
- Toyota Camry = $19,595
- It is also interesting to note that the hybrid version of the Camry is $26,400. Quite a bit more expensive than the regular car!
Prius Hybrid Price and Gas Mileage – Toyota.com
Camry Price and Gas Mileage – Toyota.com
Corolla Price and Gas Mileage – Toyota.com
So, to summarize, it looks like we will have to spend an extra $3,205 to purchase the basic model of the Toyota Prius over the Camry and an extra $7,350 over the Corolla.
How does the gas mileage compare?
To see if this makes economic sense, we need to now know what sort of gas mileage each car gets. Using the references above from Toyota.com, we find the following gas mileage results. For simplicity, I have taken the average of the city and highway gas mileage rated by the manufacturer.
- Prius average city/highway gas mileage = 50 miles per gallon (mpg)
- Camry average city/highway gas mileage = 28 miles per gallon (mpg)
- Corolla average city/highway gas mileage = 31 miles per gallon (mpg)
Do you get any tax benefits or other financial bonuses for owning a green car?
As a matter of thoroughness, I also want to make sure to include any kind of bonuses you get from owning a green car (tax credits, etc).
I was fairly disappointed to find out that the tax credits you are eligible to receive from purchasing a hybrid vehicle are becoming less and less common.
In fact, according to the links below, the Ford Fusion and the Mercury Milan hybrids were the only cars that were eligible for a tax credit in 2010. The Prius has not been eligible for this credit since 2004. Sad…
Alternativefuels.com – Hybrid Vehicle Tax Credits
Hybridcars.com – Federal Incentives for Environmentally Friendly Cars
How long would you have to own the Prius to break even financially?
So, with no tax credits, we will have to rely on gas savings only to see if buying an environmentally responsible car makes economic sense.
To analyze this, we’ll have to first lay out some assumptions to use.
Assumptions
- Car will be driven 1,000 miles per month, or 12,000 miles per year.
- The cost of gas is $2.50 per gallon.
- Prius gas mileage = 50 mpg, Camry gas mileage = 28 mpg, Corolla = 31 mpg.
Results of Analysis
Due to the higher fuel economy with the Prius, given the assumptions above, it equates to a $472 per year cost savings in fuel purchases with the Prius over the Camry and only a $367 per year cost savings over the Corolla.
With this magnitude of cost savings per year, it will take almost 7 years of owning the Toyota Prius to break even financially over the Camry, and a whopping 20 years over the Corolla.
The details of this calculation can be seen in the Google Docs spreadsheet below that I put together.
Google Docs – Does it Make Sense Financially to Purchase a Toyota Prius or Camry?
This is quite an unfortunate find due to the fact that after you have owned a car for 7 years (let alone 20 years), you are most likely getting ready and/or thinking about selling it.
Bottom Line
So, from today’s investigation, I think our findings can be summarized as follows
- 1) “Green” cars are much more expensive than regular cars
- 2) Even though hybrid cars get good gas mileage, it still takes quite a few years to recoup your investment
- 3) Purchasing a “green” car does not make financial sense in 2010 unless you are able to receive a tax credit for doing so.
Are there any other costs to maintain a hybrid car that I missed? Are there any other financial benefits of hybrid cars (tax breaks from government, etc) that I might have missed?
If you performed an economic analysis similar to this when you bought a car, what was your line of thinking?
Share your thoughts by commenting below!
Part 2 of this series analyzes if it is economically justifiable to use recycled paper and use rechargeable batteries.
Did you like this article? You can get the complete text of all the latest articles at My Personal Finance Journey in your email inbox each evening by clicking the link below and entering your email address. Your address will only be used for mailing you the articles, and each one will include a link so you can unsubscribe at any time.
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Related articles about green living at several of my favorite personal finance blogs:
Is a Hybrid Worth It? – Omninerd.com