Category Archives for Saving Money & Frugal Living

What Would You Do If You Needed to Buy a Car? – Part 2 – Secure Your Car Buying Financial Details

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Back in April of this year, one of my graduate school friends asked for some advice with buying a new car. Unfortunately, since I’ve never had to go through the car-buying process myself yet in life, I wasn’t able to provide him with as much insight as I would if he asked about investing for retirement.

However, in an attempt to learn some more about car-buying in order to offer help to future inquirers, I’ve decided to roll-out a post series speaking to this important topic. In Part 1, I discussed the various considerations and steps I would take to sell my car. You can view the complete post at the link below:

What Would You Do If You Needed to Buy a Car? – Part 1 – Sell Your Current Car

Having sold my car using the steps discussed (and hopefully freed up some cash from the proceeds), it would then be time to nail down the financial picture that will be involved in purchasing my new car. Similar to buying a house, you must first determine how much car your finances can afford before you even think about setting foot on a new/used car lot.

So, let’s get started with how I would nail down the financial specifics needed to buy a car.

Step 1 – Determine What Type of Car Buyer You Are

Just like we saw in Part 1, the first step (in my opinion) to determining the financial specifics of your car purchase is to do some inner-self reflecting to determine what is important to you in a car.

The ultimate goal of this exercise should be to determine whether or not you are a used car buyer or a new car buyer. Listed below are some guidelines to help you determine which category of buyer you belong in:

New Car Buyer

• People that fall in to the new car buyer category are very similar to the “Category 1” sellers described in the first Part of this posting series. 
• New car buyers are those individuals to whom price is really not the main issue when buying a car. These people are well-off enough to be able to afford a car comfortably, with the biggest concern being that their normal life is not interrupted by the car purchase process.
• These buyers want to purchase a car quickly and can be assured that no wear has already been placed on the vehicle that would result in anything more than the car needing a routine oil change.
• Examples of people who fall in to this category are doctors, lawyers, professional workers, etc. that have enough money in their bank accounts to pay for a new car (or can easily obtain the financing required). 
• I would propose that these individuals typically receive high enough pay that the extra 10 hours of time that would be required to become a semi-expert in car value in their local area would not be worth it financially. After all, if you are a lawyer or contractor charging $300-$500 per hour, that extra 10 hours could be costing you THOUSANDS of Dollars.
• However, you could also fall in to this category if you simply do not have the will, desire, or capacity to learn about the in’s and out’s of car buying and car value. While this is perfectly acceptable, I would definitely encourage everyone to read about the used car buyer category below before deciding to which you belong.

Used Car Buyers

• While everyone (at least to some extent) probably aspires to be in the New Car Buyer category, for a large amount of the population, buying a new (unused) car is either 1) not economically justified (because the car decreases in value 30-50% by simply driving it off the lot) or 2) not financially feasible.
• For the people that fit either one of these two descriptors, we have to rely on being able to buy used (pre-owned) cars.
• Used cars cost much less up-front, but will most likely require more up-keep, maintenance, and on-going costs in general in order to stay on the road. All of this must be factored in to your decision about which car to buy.
• Furthermore, within the used car buyer category, I believe there exists two subcategories – extreme frugalists and value shoppers.
• Extreme Frugalists – This first category is for those rare special souls (like a college instructor I had) that take frugal living to the extreme! These people buy the cheapest of the cheap cars (think $1000-$2000), don’t carry collision coverage (only liability coverage), and don’t care one bit about the appearance of the car as long as it gets them to where they need to go. They are OK with it breaking down because they only drive it around town and can be picked up if needed.
• Value Shoppers – The second category is probably where most used car buyers will be. These folks need a dependable car they can take on an occasional long trip, drive to work each day, run errands, and live life in general. The car needs to be dependable enough to not break down with this normal use.  

So, take a moment and look at which category you think you fall in to before we move on. Personally, I probably fall in to the Value Shoppers used car buyer category. Being in graduate school, I don’t yet have enough money to be able to buy a new car the way I’d like to (more on this later in the post!).

Step 2 – Determine How Much Money You Have Currently to Purchase a Car

Once you’ve decided what type of car buyer you are, it’s now time to think about how you will pay for your new vehicle. To get started with this exercise, you need to take stock of all of the money you have available at the present time to go towards a car payment.

Listed below are some common places to look:

• Cash obtained from selling your car (Part 1).
• Money saved in savings accounts or taxable investing accounts (not retirement accounts).
• Important note: Your emergency fund should NOT be used to buy a car. If you got in to a wreck with your current car and needed some money to pay for medical or car insurance deductibles, that would be an acceptable use of an emergency fund. However, if you’re buying a new car, you should theoretically be able to plan far enough ahead so that you don’t have to touch your emergency cash reserves. 
• You should also not tap in to savings that you have earmarked for other purposes, such as achieving your life values or dreams, to buy a car. This may be tempting, but it really should be avoided! After all, you want to actually achieve your life dreams/values at some point correct?!
• Cash from parents or relatives that might be able to help you buy a car.

Step 3 –  Determine Your Time Frame for When You Need to Buy a Car and Automate Savings Accordingly

So, in an ideal world, all of the money a person needed for buying a car would be obtained from one of the cash sources above. However, the truth of the matter is that selling your current car may not generate all that much cash, you may not have well-off parents, and your savings may be non-existent.

In the real world, we have to take a more active approach and plan/save for our upcoming vehicle purchase. Listed below are the steps I would recommend taking:

• Determine how many months from the present time you’d like to purchase a car.
• From tracking your spending and determining your monthly cash allocation needs, figure out how much extra money per month you can comfortably save for purchasing a car. In other words, make saving for your car purchase more of a priority for any extra money you have after your other monthly cash needs.
• Once you determine the amount, set up an automatic transfer for this quantity to a high yield online savings account to occur at the beginning of each pay period.
• Please note that it’s important for the transfer to take place at the beginning of the pay period so that you don’t have a chance to spend the money.

Step 4 – Determine How Much Car You Can Afford Before Looking Around + Financing Options

After you’ve gone through Steps 2-3 above, it’s time to sum up the total amount of money you will have that will be available for buying a car both from existing funds and future savings according to your automated transfer plan. Take a minute to calculate this for your situation.

Once you have added the values up, I can imagine one of two scenarios happening:

• Scenario 1 – The number you calculated is, in your opinion, sufficient to buy a decent car for your needs.
• Scenario 2 – The number you calculated is too low, in your opinion, to get a dependable car (even a cheap used one). 

If your calculations result in Scenario 1, then great! You’ve successfully secured the money you need to buy a car, and you’re ready to begin the car shopping process. This topic will be covered in Part 3 of this series (on the way soon!).

If it’s looking like you are experiencing Scenario 2, don’t feel bad! There’s still hope; you just have a little more work to do.

Step 4b. – Car Financing

Personally, I am not a big fan of taking out loans on depreciating assets (such as a vehicle that depreciates in value with each year it’s on the road). Because of this, I would try with all of my power to avoid taking out a car loan for my car purchase.

However, I also strive to be a practical person (even if I am a head-in-the-sky engineer! haha). And, the reality in today’s society is that unless you live in a big city with lots of public transit options, you need a car. And, more exactly, you need a sufficiently dependable car.


Because of the strict need for a car in today’s society and fairly favorable financing options (because it’s a secured debt), taking out a car loan isn’t as bad in my book as racking up thousands of Dollars of 25% daily-accruing credit card debt or taking out a 50% interest payday loan.

So, as I’ve mentioned, car loans aren’t all that bad. However, you do need to take some precautions in order to maximize your success with the car financing/purchasing process.

First, let’s take a look at the different possible sources you can turn to for where to get a loan for a car.

• Family/Friends
• The first option available to you for obtaining a loan for a car is your friends and/or family. 
• Personally, I would advise against obtaining this type of financing, as loans to friends/family are rarely ever paid back and often cause stress on relationships.
• If getting a loan from family/friends is absolutely your only option, it’s important to draw up an explicit loan agreement to protect both parties’ financial and legal interests.
• In-House Financing from Dealership
• Pretty much any dealership that you visit will offer some variety of in-house financing/loan options. Why is this? Because dealerships make most of their money off of 1) these loans and 2) reselling used cars. Fairly little money is made on selling new cars.
• An example of in-house dealership financing is Honda Financial Services. 
• One of the benefits of in-house financing is that promotional loan packages are often offered (you’ve probably seen them on TV or heard them on the radio!) to entice consumers to get to the dealership and buy a car. In fact, currently, on the Honda website above, they are offering a loan special for Accords for 1.9% interest financing for 24-36 months.
• Personally, I am not the biggest fan of in-house financing because I feel like they are trying to almost trick me in to buying a car. I also do not like how they try to get you paying for too expensive of a car by offering low monthly payments, but spread them out over MANY years! Why would you want to be paying off a car loan for 15 years?! This is not a house!! 
• However, if there was a SUPER low interest financing deal on a car I wanted, I would consider in-house financing, but would make sure to examine the loan details very closely. Some red flag tricks to look for are hidden loan fees, balloon payments, and/or jumps in interest rate after a certain introductory time period is up.
• Auto Loan from a Bank
• My preferred method of obtaining financing for a car purchase would be from a reliable bank. At banks, I feel like you are more likely to get unbiased loan assistance as compared to a dealer who is also selling you the car.
• If you go to the website of almost any bank in your area, you’ll most likely be able to pull up their options for auto loans. Listed below are several current loan packages I found for used car purchases from a dealer:
• Chase.com – 2.99% for 48 months
• Capital One – 3.99% for 36 months
• Bank of America – 2.99% for up to 60 months  

No matter what route you choose for obtaining an auto loan, the most important thing is that you define what you’d like your approximate monthly payments and loan payoff period to be before looking at cars. These two specifics should be defined by looking at how much cash you have on hand for a down-payment and how much free income you have each month to put towards a car payment.

To assist you in determining these specifics, I created a car loan payoff/amortization schedule spreadsheet at the link below. I’ve shared it as “view-only,” so just download it as an Excel spreadsheet so that you can adjust it to fit your specific situation.

Car Loan Amortization Schedule – Google Docs Spreadsheet

The spreadsheet can be used to determine the approximate “amount of car” you can afford by performing the following steps:

• Enter the following information in Column A – 
• Amount of cash you currently have on hand.
• Interest rate on the bank/dealership loan you are considering (or use the default value of 2.99%.
• Tentative loan term that you’d like to have (or use the default value of 36 months). Please note that if you increase the loan term, you’ll need to simply add more rows at the bottom of the calculation table.
• Next, using the Solver function in Excel, set the cell in the last row of Column G to a “value of 0” by changing your Target Car Purchase Price in cell A14. Then, click “OK.”
• The Solver function should generate the appropriate car purchase price that you can afford based on your cash savings and monthly payment specified.

Once you’ve used this spreadsheet to determine how much car you can realistically afford, you can start thinking about shopping around for your car. And, you will not lured in to buying a car that you cannot afford simply because the dealership tries to talk you in to a promotional loan package.

Conclusions


So far in this post series, I’ve talked about the first two big steps I would take in buying a new car. In Part 1, I discussed how I would sell my car london. After freeing up some money from the sale, I would first nail down the financial specifics of how I would pay for my new vehicle before going shopping.

In determining these details, it’s important to consider 1) what type of buyer you are, 2) how much cash you have on hand for the purchase, 3) how long you want/can wait until buying a car, and 4) how much car you can comfortably afford, either solely from money you have or supplemented by an auto loan. By arming yourself with this information, you can make your car-buying process a more satisfying and less painful process.

How about you all? How did you go about figuring out the finances for buying your last car? Did you take out a loan? If so, did you get the loan from the dealership or a bank? 


Share your experiences by commenting below!

***Photo courtesy of http://www.flickr.com/photos/rjs1322/1009831723/sizes/l/in/photostream/

What Motivates You To Be Financially Responsible?

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Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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The following is a guest post I wrote back on April 7th of this year for KNS Financial as part of the 5th Yakezie blog swap. During April’s Yakezie Blog Swap, everyone wrote about what motivates them to be financially responsible. I wanted you all to have a copy of it here as well. Enjoy! 


You can view KNS’s swapped guest post on My Personal Finance Journey by clicking here.

There are three main things that motivate me to be financially responsible beyond all else – 1) achieving my Purpose Focused Financial Plan, 2) keeping a running financial/net worth progress update each month and making adjustments to maintain my asset allocation targets, and 3) communicating the results with the blogging community.

Let’s tackle what each of these things are one-by-one below.

1) Achieving My Purpose Focused Financial Plan

This is a system that I adopted after reading David Bach’s book, “Smart Couples Finish Rich.” A Purpose Focused Financial Plan is a very interesting personal finance strategy that David adopts with the people he advises in his financial planning business.


If you haven’t read it already, I would strongly recommend that you pick up a $0.01 (cheap!) used copy of the book from Amazon – Smart Couples Finish Rich: 9 Steps to Creating a Rich Future for You and Your Partner.

How about you all? What motivates you to keep “on-track” financially? 


Share your experiences by commenting below!

***Photo courtesy of http://wadsworthswordsmiths.net.p2.hostingprod.com/yahoo_site_admin/assets/images/mountain-top.27144516.jpg

15 Ways to Save on Car Costs

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Click here to enter my free giveaway for 3 sets of 500 business cards from AllBusinessCards.com.

The following guest post comes to us from Jessica Bosari. Jessica helps consumers learn to save money on car insurance at CarInsuranceQuotesComparison.com. Consumers can read about discounts, learn the facts about car insurance, and compare car insurance companies.

Owning a car can be expensive, especially with rising fuel costs. Here are some ways to cut your expenses without giving up your car.

1. Accelerate and Decelerate Smoothly

Quick starts and stops reduce your car’s fuel efficiency by about 3mpg each time you hit the gas or the brakes.

2. Compare Gas Quotes

Gas comparison has gone high tech. You can look at gas prices with a smart phone app that uses your GPS location to find gas stations in your vicinity, no matter what part of town you are in.

3. Avoid Idling

Unless you own a hybrid or electric vehicle, idling for a few minutes can use as much gasoline as driving for a mile. If you need to stop for more than 10 seconds, turn the car off.

4. Keep the Tires Inflated Properly

Your tires play a large role in your fuel consumption. Make sure they are always inflated properly for the best mileage.

5. Change the Oil Regularly

The oil in your car’s engine helps everything run smoothly and prevents overheating. You will face fewer breakdowns and repairs if the engine oil is always clean.

6. Use a GPS System

Getting lost can eat up time and burn up unnecessary fuel. Program your destinations into a GPS system so that you can find the fastest, most efficient route to your destination.

7. Stay as Light as Possible

Excess weight in your car will cause your car’s engine to burn gasoline faster. Avoid storing unnecessary items in your car or trunk so that your car stays as light as possible.

8. Skip Higher Octane Gas

Most engines do not require high-octane gasoline. Unless you are driving a high performance model, the less expensive options will be fine.

9. Choose Higher Deductible Insurance

You can lower your insurance rates if you choose higher deductibles. Make sure the deductibles are affordable if you need to file a claim, though.

10. Avoid Synthetic Oil

Standard engine oil will keep your engine running well as long as you have the oil changed every 3,000 miles or 3 months.

11. Leave Out Unnecessary Options

When you purchase a car, leave off any options that you don’t need for safety or comfort.

12. Shop for a Car Online

Even if you plan to buy your car from a local dealer, compare prices for similar makes and models online. Some dealerships offer special pricing for online shoppers.

13. Compare Insurance Prices

Your insurance rates can change dramatically from year to year based on several different factors. Keep track of pricing so that you can keep your insurance costs as low as possible.

14. Keep It Slow

The best speed for your gas mileage is 55mph. Driving faster will send you to the gas pump more often.

15. Choose an Independent Mechanic

Mechanics who own their shops have more flexibility when it comes to pricing. You could negotiate a better repair price with an independent mechanic.

How about you all? What methods do you use to save money on car expenses? Have you had either good or bad experiences with any of the methods discussed above?


Share your experiences by commenting below!

Jacob’s Thoughts – Listed below are my random thoughts as I was reading this article.

• @ Comparing gas quotes – I have mixed feelings about the benefits of doing this, probably partly because I don’t have a SmartPhone.
• Personally, my preferred method of buying gas is to find the nearest BP station and use my 5% cash back BP Visa credit card for all of my purchases. Assuming a cost of gas per gallon of $3.50, this 5% cash back equates to a savings of $0.18 per gallon. 
• In my opinion, I am likely not to find another gas station within close driving distance that will offer me cost savings beyond the $0.18 per gallon that I get at BP with my BP Visa credit card.
• Because of this, I personally don’t do too much gas price comparison when I need to buy gas.
• @ Keeping the tires properly inflated – As we saw in the post last week about saving money on cars expenses, not only can keeping your tires inflated save you money, but it also keeps you and your family safer by preventing tire blowouts! Quite worth it in my book!
• @ Keeping your car as light as possible – I have to admit that I am incredibly bad at this one!
• During my high school years, I drove around most of the time with a set of sub-woofers in my truck. These weighed in at about 70 pounds! Probably not the best fuel efficiency there! haha
• I am also bad at leaving outdoor equipment and other luggage in my car after a trip or excursion. This most likely decreases my fuel efficiency as well!
•  @ Choosing a higher deductible for car insurance – I am a big fan of having a higher deductible for insurance. After all, insurance should be used to protect yourself from catastrophic loss, not for being used to install a new sunroof! 
• For home-owners insurance I think a deductible of $2,500 is perfectly acceptable.
• For car insurance, I would probably decrease the deductible to $1,000, just because you are more likely to get in a car wreck than have your house burn down/get destroyed.
• @ Leaving out the unnecessary options – 
• My family has always been a big fan of this method. In fact, the car I am driving now is so stripped down that it does NOT have any of the following – 1) automatic locks, 2) cruise control, or 3) automatic transmission.
• It is also worthwhile mentioning that you can save about $1000 on the cost of a new vehicle simply by the manual transmission option. Stick-shifts are more fun to drive, and they are also more fuel efficient! Nice!

***Photo courtesy of http://farm4.static.flickr.com/3241/2484541616_90c9b7e9ea.jpg

Online Identity Theft – An Example of How to Protect Yourself, Your Sanity, and Your Money

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Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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Sadly, I get emails ALL OF THE TIME (probably about 1-2 per day) attempting to lure me in to entering my personal information so that fraudsters can steal my money, my credit, or worse.

These scams run the complete gamut of the personal finance realm – from eBay and PayPal to Bank of America and Social Security.gov. It really is ridiculous how far in to society these scams have perfused!

I’ve finally decided that I’ve kept these examples bottled up too long, and that it is time to share one with hopes that you can avoid these traps as well!

Background

If you’re a regular reader of my blog, you probably are aware that I use Bank of America for my only remaining brick-and-mortar bank checking account. I chose Bank of America when evaluating my different checking account options because they have thousands of branches all over the US, which come in handy since I seem to have moved a lot over the past few years.

Bank of America doesn’t have the most favorable checking (and especially savings) account options, however, I have been satisfied so far. And, I probably will stay with this bank unless they start charging a monthly account maintenance fee.

Bank of America Scam

Several days ago, I received the email shown below to an email address that is NOT linked to my Bank of America checking account (this is a good clue #1, but there will be more on that topic below). The email was supposedly sent from support@bankofamerica.com. Pretty impressive right?!

***Please do not click any of the links below***

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Dear Valued Member,

BOA Member Services Team

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Analysis of Scam and How to Know It’s a Fraudulent Email

If we closely dissect this email that I received, several things blatantly stick out that we can use to protect ourselves from falling for this terrible scam.

• Scam Clue # 1 – 2011 BOA LLC
• The first aspect of this email that makes me a little skeptical is the copyright line that says, “Copyright – BOA LLC 2011.”
• Last time I checked, Bank of America was incorporated, right?
• However, often times, these companies do have subsidiaries, so we’ll note this as a “red light” and continue on with our inspection!
• Scam Clue # 2 – Email address this was sent to
• Another clue that gives us a red light to the validity of this email is the fact that it was sent to one of my secondary email accounts that was associated with my bank account 4-5 years ago. 
• One would think that a powerhouse like Bank of America would be advanced enough that they wouldn’t need to send an email to an address that was 4 years old. Let’s get real here!
• Scam Clue # 3 – Actual URL of Link
• Clues 1 and 2 above are sufficient to give us some doubt about how valid the email is, but the definitive proof that this was a fraudulent email can be found by simply hovering your cursor over the link in the email and viewing the URL that the link is pointing to.
• If we do this, we find that the url is pointing to the following site (minus the ALL CAPS warning I added to make sure you all don’t click on this) – http://205.234.223.200/~chrystof/server/portfolio/fashion_forward/bankofamerica/bofa/update/THISISASCAM!!!!!!DONOTCLICK
• Let’s take a moment to appreciate the components of this URL, shall we? First, let’s take note that the secured sign-in website for Bank of America has the following URL – https://sitekey.bankofamerica.com/sas/signonSetup.do.
• The URL on the email, however, has a nice little IP address (probably to a server the scammer set up to make it hard to track them down) followed by some sort of personal name abbreviation! 
• Looking at this information, it is clear that this is a scam. However, if you didn’t hover your cursor over the link to see the URL and just went by the anchor text showing (www.bankofamerica.com/secured/updates), one can see why people would fall prey to this, especially less Internet-savvy folks.

So, as we all undoubtedly concluded from the information above, the correct course of action with this email would have been to permanently delete (I wish there were some sort of police you could call to report these people easily!).

However, before concluding this post, I wanted to share a fool proof way that I’ve found to avoid scams such as these. I simply make it a practice never (unless absolutely required) to click links in email that lead me to sites asking to enter personal information, passwords, etc. 


Instead, if I receive an email alerting me to take action with one of my accounts, I open up a new browser, type in the generic URL of the company’s website, and log-in from there. This ensures that your online safety is maximized.

How about you all? Do you receive many scam emails such as the one I shared above? If so, what steps do you take to identify it as fraudulent/fake? 


Share your experiences by commenting below!

***Photo courtesy of http://farm3.static.flickr.com/2285/1594411528_1512b1aad5.jpg

4 Ways to Save on Gas that Really Work

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Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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Click here to enter my free giveaway for 3 sets of 500 business cards from AllBusinessCards.com.

The following guest post comes to us from Jessica Bosari. Jessica writes for CarInsuranceQuotesComparison.com. The site helps consumers compare car insurance companies with tips, information, and advice.

As gas prices continue to rise, it seems that almost every website has new tips and tricks for how to save gasoline. However, not all of those tips are really accurate or useful. The following suggestions come directly from fueleconomy.gov, a trusted federal website designed to help consumers improve their gas mileage. These tips have been tested through government research, so you can feel confident that they will work.

1. Avoid Idling for Long Periods of Time

Idling in your car can use up more gasoline than actually driving on the road. If you idle for more than 10 seconds, you will use more gas than it takes to restart the car. When you idle with the air conditioner running, you burn fuel even faster.

Remember to shut your car off if it will be in one place for more than a few seconds. Restarting the vehicle several times can cause wear and tear on your starter, but it will save you money on gasoline. If you must idle, turn off the air conditioning until the car is in motion once more.

2. Keep Your Tires Properly Inflated

Driving with tires that do not have the right pressure can cost you up to 3% more in gasoline consumption. Manufacturers place a sticker on the inside of the driver’s door that tells you how much pressure your tires should hold under normal operating conditions. The proper inflation number should also be printed on the side of each tire.

If the air hose that you are using does not have a built in tire gauge, you can pick one up for a couple of dollars at any discount or automotive store. Keeping your tires properly inflated will save you money on gasoline and make your car safer to drive.

3. Find Alternatives for Your Daily Commute

Driving to and from work is how many people use the most gasoline. You can save money on your gas costs if you find an alternative to driving your own car even one day a week. Carpool with other employees who work in your building and live in your part of town. You can alternate drivers so that each of you only drives once or twice a week.

Look into your public transportation options to see if it would be feasible for you to take the bus or the train into work sometimes. If you live closer to work, you might be able to ride a bike or walk on nicer days. Driving less can also earn you a low-mileage discount.

4. Buy a More Fuel Efficient Vehicle

Auto manufacturers have realized that the driving public needs cars with better fuel mileage. Newer cars get much better gas mileage than cars that were produced just a few years ago. Choosing a car that gets better gas mileage will save you money on gas in just a few short weeks. If you find a car that gets 10mpg better than the car you are driving today, you could save almost $1,000 in the first year of driving the new car. The website fueleconomy.gov provides detailed mileage information for cars that were produced between 1984 and 2012.

How about you all? What strategies do you use to save on fuel? So far, have the higher fuel prices changed your driving behavior at all? If not, what price would gas need to be before you REALLY made serious changes to your driving patterns? 


Share your experiences by commenting below!

Jacob’s Thoughts – Listed below are my random thoughts as I was reading this article.

• @ Avoiding idling to save gas – I didn’t know about this one. However, it does make sense that it would be this way.
• Another reason to avoid idling is because frequent idling can be hard on your car’s motor (as well as burning gas quickly!).
• @ Keeping your tires properly inflated – I have to admit that I am guilty of not airing up my tires as often as I should. Ideally, I would like to check my tire air pressure before each drive I take that is longer than 2 hours. However, I often forget.
• Not only can having low air pressure in your tires cost you more in gas, but it can also cause the tires to overheat and blow out if you go fast enough. Best to avoid this situation!
• @ Alternatives to daily commute – Although it would be nice if everyone were able to either bike or walk to work like people do in Europe, for most areas of the United States (maybe with the exception of big cities), this simply is not possible. 
• Why is this you might ask? Simple. In the US, the economy and city structure (for better or worse) is built upon the idea that everyone has a car.
• Additionally, two trends are becoming “the norm” in the US. First, in a family, it is most common to find the situation where both parents work. Since both parents work, it is tough to position the family geographically close to both persons’ jobs. Second, it is becoming more and more prevalent for an individual to change jobs upwards of 5-10 times during a career. Because of all of this change, it is nearly impossible to be able to move your family each time, often increasing the length of one’s commute.
• @ Buying a more fuel efficient car – I definitely agree that newer cars are much more fuel efficient than older ones. However, there are two important things to consider before jumping in to buying a new car..
• First, new cars can depreciate up to 30% in value by the mere act of driving the car off of the new car lot. As I discovered in my analysis last year in the post, Buying a New Car vs. a Used Car, new cars typically lose about 20% of their value in the first year of ownership and about 65% of their value in 5 years. Because of this steep depreciation curve that occurs with new cars, the amount of money saved by having a newer, more fuel-efficient car may not be financially justified overall vs. a used one. Always remember to do your homework and check this math out before buying!
• Second, it is tempting in this day and age to want to buy a “green” hybrid car (such as a Prius, etc) due to the savings in gas you will achieve and the lower environmental footprint. However, as we saw in the post, Does Being Green Make Economic Sense – Green and Hybrid Vehicles, these hybrid “green” cars come at a very high premium, and it can take up to 7 years to break even on your initial purchase from the fuel savings you experience.

***Photo courtesy of http://www.flickr.com/photos/schill/2570639630/sizes/l/in/photostream/

Online Shopping – The Risks, Benefits, and How to Stay Safe

The following is a guest post. Enjoy! 

Online Shopping Statistics

Online shopping has been the retailing revolution of the 21st century and is still increasing in popularity. Statistics produced by Forrester Research Inc. suggest that 60% of consumers shop online at least quarterly.

By 2015, over 200 million consumers will shop online, according to eMarketer. The increase is due to the many benefits of online shopping, although according to statistics from the Lieberman Research Group, 51% of users are concerned about internet security.

How to Stay Safe While Shopping Online

There are many ways to reduce the risks of shopping online and staying safe in the process. There are many advantages to purchasing online, including convenience, speed, pricing and access to the best financial products available.

For instance, there are numerous sites that will give honest reviews on a range of consumer products.

Gone are the days when consumers had to fit in a trip to the shops or carry home heavy shopping. With a click of the mouse, you can have any product delivered from anywhere in the world. And, a lot of the time, the products purchased online will be cheaper than those in local stores!

Types of Scams to Watch Out For

This quick and easy process has also unfortunately encouraged fraudsters to use the internet for their criminal activities. Many different types of scams are used by these individuals.

A frequent scam is to set up a web store offering designer goods at seemingly bargain prices. The consumer, hoping for a good price, may be tempted to purchase from here. By purchasing from this store, the consumer will, in essence, hand his or her financial information to the criminals behind it. Within moments, the consumer’s bank account will be cleared of funds by the criminals.

How to Evade These Scams

There are many ways to avoid falling victim to this trap. Firstly, only purchase from stores that appear reputable. Check online to see if any comments have been made about the store to verify its authenticity. Always keep updated with the latest version of your browser as it may contain an Extended Validation SSL Certificate. This technology will turn the address bar green to show you are visiting a secure site. Then, look at the URL address bar when you begin your purchase. A secure site will begin with the letters HTTPS, rather than just HTTP and may also show a locked padlock icon.

Always pay with a credit card rather than a debit card, so that if information is obtained by criminals, they will only be able to spend the credit card limit. Whereas with a debit card, criminals can access your bank account too and cause greater damage. Both banks and credit card providers are constantly alert for signs of fraud.

Due to monitoring accounts to check for suspicious activity, do not be surprised if you are asked for the three or four card digit on the back of your card. The reasoning is that criminals may possess your name and the card number but they are unlikely to have the card in front of them, so will not be able to answer this question.

Always create difficult-to-guess passwords, so do not include family names or dates of birth. Use a different password for each site you visit and combine letters and numbers to make it harder to crack.

Finally, trust your instincts. If something does not feel right, shut the site down immediately. Purchasing online is easy and convenient, and with these hints, you can be safe too.

How about you all? How do you protect your security online? 

Share your experiences by commenting below!

Jacob’s Thoughts – Listed below are my random thoughts as I was reading this article.

• @ Statistic showing 60% of shoppers shop online each quarter – I’m surprised this isn’t more! I probably shop online (especially Amazon – which is the most buyer friendler out of the Amazon/eBay pair) more than shopping at a brick-and-mortar mall.
• @ Secure sites beginning with HTTPS:// – I actually didn’t know this was what https stood for! You learn something new every day. I’ll know to watch out for this going forward.
• How I Stay Safe Shopping Online – This is a great article over a topic which I think is relevant to us all. The main way that I stay safe online is to always use either 1) PayPal or 2) my credit card for online purchases (not my debit card, bank account direct transfer, or Western Union). Both PayPal and your credit card enable you to dispute any fraudulent charges and get your money back if you feel you’ve been scammed. By doing this, I feel pretty comfortable purchasing things online!

***Photo courtesy of http://s0.geograph.org.uk/photos/22/99/229953_59d4b5e6.jpg

Top 10 Money Saving Tips

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The following is a guest post from Joe Lewis. Enjoy!

1. Cut the price of your fuel bills

It’s no secret that fuel prices are getting more and more expensive. But that doesn’t mean you have to pay ridiculously high energy bills. That’s why it’s so important for you to keep an eye out for cheaper energy suppliers and compare gas and electricity prices – meaning you pay less!

2. Home DIY

Before spending sky-high prices on home extensions and builder’s fees, turn your creative hand to DIY tasks and save yourself a small fortune!

3. Consider generic goods

Buying supermarket brand-name food can become very expensive, so why not turn your attention to economy foods and cut your weekly shopping budget down to size.

4. Compost your waste

If you’re a keen gardener, you’ll know all too well about the high cost of soil additives. To save money on soil additives, go green and collect all your garden and food waste in a biodegradable box outside your home. Wait a few months and let Mother Nature take its course. You’ll have nutrient rich matter you can use in your garden or vegetable beds for free!

5. Replace your bulbs with CFLs –

It’s no secret that many eco-friendly experts are suggesting that you should change conventional bulbs for CFLs to save on both energy and cost. What you waiting for?

6. Use ceiling fans in the winter

Believe it or not, ceiling fans can be used not only in the summer but also when you have the heat on. Simply, set the fans to move clockwise and turn them on at a low setting. Hot air rises, so the fans help to push down and circulate that air you paid to have heated.

7. Get cheaper broadband deals

Keep your eyes peeled for the cheapest broadband deals available. There are some great deals available, so make sure you don’t miss out on the latest offers. It really does pay to shop around and secure that fantastic broadband package!

8. Consider renting equipment instead of buying

Renting equipment is a great way of saving money! If you can’t afford something then why not rent it and save yourself a small fortune?

9. Late shopping

Get down to your local supermarket and purchase food with “sell by” dates for that day. The reductions are labelled in yellow and you can pick up food for nearly three quarters of the original price!

10. Farmer’s markets

Nothing tastes nicer than scrumptious local produce. With this in mind, buy fresh organic fruit and vegetables at your local farmer’s market that are a lot cheaper than those found in your large corporate supermarket chains and save some serious money.

How about you all? What are the main ways you use money? Have you successfully been able to incorporate any of the tactics mentioned above in to your personal finances? 


Share your experiences by commenting below!

Jacob’s Thoughts – Listed below are my random thoughts as I was reading this article.

• @ Keeping an eye out for cheaper energy suppliers – This is a good idea, but for most people, I don’t believe it’s possible. This is due to the fact that most of the time, when you move in to a place, the energy supplier is fixed. So, you simply cannot just change. Prices are regulated by the government to prevent price gauging stemming from the “necessary monopoly” the energy companies have.
• @ Home DIY – Also a very good idea! However, it’s important to know when to draw the line when it comes to your expertise (or lack of in my case) around the house. 
• For little things though like fixing a light or recaulking something in the bathroom, it can save money to do it yourself.
• However, if you were to fix something and find out that you did it wrong and that it will cost $10000 to repair, most likely, it would have been cheaper to pay a professional for the job.
• @ Generic goods – This is one of my favorite ways to save money! I am a big Wal-Mart shopping fan, and I have probably saved thousands of Dollars over the years by buying Great Value brand items. The quality has gotten surprisingly good over the past few years! You should also give them a try!
• @ Replacing bulbs with CFL’s – Great idea here, and also something that I need to work on.
• Currently, about half of the bulbs in my house are CFL’s. They work perfectly well and never burn out it seems! 
• The ones that are the “old type” I’m just waiting to burn out so that they can be replaced.
• @ Cheaper broadband Internet deals – This is also a good idea, in theory. However, in most of the areas I’ve lived, a specific neighborhood (especially apartment complexes) will have a deal set up for one company to be the sole supplier of Internet and TV/cable. But, it can’t hurt to compare prices to be able to bargain for a better deal with your current supplier!
• @ Late shopping – I’ve scored some killer deals on bread this way. It works well for me since I buy a lot of bread at once and freeze it for an extended period of time before using it to make sandwiches for lunch at work. It’s not rare to find the prices marked down 50%!

***Photo courtesy of http://www.flickr.com/photos/acrider/4337122047/sizes/l/in/photostream/

How To Save Your Family $1000 On Your Next Vacation – Pay For The Rental Car With Your Credit Card

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Recently, I took a trip down to Raleigh, North Carolina to celebrate my grandfather’s 90th birthday.

After arriving at the party location, our gathered family began to eat dinner and share interesting and funny stories about my grandfather over the past half century or so.

During the dinner, a fairly fierce wind started to blow outside. However, our family didn’t think much of it because little to no rain was coming down.

Needless to say, we were very shocked when we strolled outside after dinner to find the tree in the picture below laying on top of my Dad’s Enterprise rental car. Apparently, the tree had been loosened by a semi-tornado that came through Raleigh a week or so before, and the wind was all that it needed to fall down nearly 30 feet on to my Dad’s car. Yikes!!!

After having a little laugh about how strange the situation was (what are the odds of having a tree fall on your car in a parking lot after all?!), I began to think about how the situation would be handled from a financial/insurance perspective because I know that my Dad is smart and never gets the rental car insurance coverage.

What Happens If Your Car Gets Damaged And You Did Not Buy The Rental Car Insurance Coverage?

Rental car companies almost annoyingly push the sale of insurance policies covering any damage incurred to rental cars while under your care. In fact, they try to push the sale of the coverage so hard that they make you feel almost reckless if you decline the coverage. Talk about tricky!

However, is this coverage really necessary?

The question to this is a resounding, “NO,” (with one exception) for two primary reasons.

Reason # 1 Why Rental Car Insurance Is Not Needed – Your Existing Car Insurance Already Covers You

That’s right folks, if you already have a comprehensive car insurance plan for your normal car, you are most likely already covered under that policy for any damage that gets inflicted to the car while under your watch-full care.

However, it is important to remember that you will still be responsible for paying your deductible on your car insurance before your full policy takes effect. This is just another important reason why you should have an adequate emergency fund.

Reason # 2 Why Rental Car Insurance Is Not Needed – Your Credit Card Covers You (if you paid for your rental car with the credit card)

A very powerful, useful, but somewhat unknown perk of many credit cards is either providing primary or secondary insurance for rental cars rented using the credit card.

If the card has primary coverage, it will pay the full cost of repair or replacement of the car, without even having to access your regular car insurance policy. If the credit card offers secondary coverage, it will pay your deductible and any replacement or repair costs not covered by your normal car insurance, but will require you to file a claim with your main car insurance.

Regardless of whether your credit card carries primary or secondary rental car insurance coverage, this is a very cool perk that is offered, and definitely one that I would recommend you follow up on.

In my Dad’s case, he called up his credit card company and found out that he has primary coverage. Because he had used his credit card to pay for the rental car, he avoided having to spend $1000 to pay for his deductible on his regular car insurance policy.

Follow up Action Item – I would recommend calling your different credit card companies and finding out which one(s) offer rental car coverage. After you find out, you can make sure to bring that card(s) with you on your next trip and pay for the rental car with it. Just make sure you smile for me when you decline the rental car insurance coverage!

The One Exception For When Rental Car Insurance Is Recommended

How about you all? Do you buy the rental car insurance coverage offered by many companies? Why or why not? Do you think it’s worth the money? Share your experiences by commenting below!

***Photo courtesy of http://www.flickr.com/photos/jefield/37133848/lightbox/

What Different Types of Credit Cards Are Available?

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The following is a guest post by Chris Philp. Enjoy!

There’s a vast array of credit cards available in the marketplace today. Searching for a ‘credit card’ online brings up a huge list of offers, each with a number of benefits and rewards. If you are searching online though, you should be sure to check the differences between each card to ensure you find the right card and type of benefits for you.

Standard Credit Cards

When applying for a standard credit card, the applicant and provider both determine the appropriate fixed credit card limit. The balance for the card can be paid as soon as you’ve used your card. In order to avoid any charges, balance repayments should be made within your interest free period (usually 30 days or so). You can however, if willing to incur the agreed interest fee charges, spread the payment over a period of time. The minimum repayments for the card must be paid in order to avoid penalties and further charges.

Travel Reward Cards

Rewards cards, such as travel rewards cards, include benefits specially designed to suit the spending needs of frequent flyers or travellers. Credit card providers often have relationships with other companies in order to provide the card holders with special benefits from membership reward programs. These benefits can allow you to earn rewards points as you spend. Points can be redeemed for cash, or go towards paying for flights with a number of different global airlines. Some cards are also linked to specific airlines and partnered companies, often giving the card holder other rewards to benefit from.

Charge Cards

As charge cards do not have pre-set spending limits, they are regarded as more flexible, allowing card holders to determine their limits based on their spending habits. Anything spent is expected to be repaid each month as agreed by the provider’s terms and the cardholder. If card holders have a remaining outstanding balance on their card, a fee is charged. This fee is typically a percentage of the overall remaining outstanding balance.

So, remember, if you’re searching online for credit cards, make sure you take the time for find the best and most appropriate type of card for you. Applying for credit cards online also affords applicants the flexibility of applying outside of the normal bricks and mortar bank opening and closing times.

Different credit cards offer a number of benefits and rewards, so why not see what’s available to you!

How about you all? What type of credit card do you use? What type of credit card is best suited for you? Have you ever used charge cards? 


Share your experiences by commenting below!

Jacob’s Thoughts – Listed below are my random thoughts as I was reading this article.

• Thanks for sharing this article, Chris! I enjoyed it, and credit cards are a very important component of the majority of consumers’ spending lives.
• When you’re just starting to look for a credit card, it can be very intimidating due to the copious number of options available. Every credit card provider seems to be desperately pushing for your business/debt these days!
• The most useful credit card comparison site I have found/use is Creditcards.com.
  • I like the layout of the site because it allows you to screen credit cards based on certain criteria, such as cash back cards, cards with balance transfer offers, travel rewards cards, and no annual fee cards.
  • This screening feature is important to me because I have a very specific type of credit card that I like.
• For me personally, the two most important features of a credit card are 1) no annual fee and 2) cash-back rewards. The two cards that I’ve found best suited to my needs are two Chase cards.
  • For general, everyday purchases, I use the Chase Freedom credit card. It has no annual fee, and provides 3-5% cash back in rotating categories throughout the year. Nice!
  • For gas purchases, I use the BP Rewards Visa card. It provides 5% cash back for all purchases at BP gas stations, all for the price of FREE (no annual fee).
• In deciding which type of credit card to apply for, it’s important to consider your spending habits and financial tendencies. For example, if you have the tendency to accumulate a credit card balance, the most important factor in your credit card search is finding a low-interest rate (APR). If you like to participate in balance transfers, you will need to search for cards with low balance transfer interest rates and fees.
  • However, the one universal trait that I would encourage all consumers to look for in their credit cards is that the card does not have an annual fee. I’m not convinced that cards with annual fees provide any added benefit in today’s competitive bank environment.
• @ Airline credit cards- Airline credit cards generally carry annual fees, so you’d need to examine if the rewards you accumulate through the use of an airline credit card will warrant the annual fee. Typically, if you are traveling all of the time (particularly on business where you’re being reimbursed for the plane tickets by your company), an airline card will be an effective purchase. However, if you only fly sporadically, I’d recommend a cash-back card.
• @ Charge cards – Charge cards, in my opinion, are a fairly dangerous thing for most consumers. This stems from the fact that you are obligated to pay back the entire balance each month, and if you don’t come through on this, you can be charged a large amount of fees and interest.

***Photo courtesy of flickr.com

Why Do Balance Transfers Make Sense?

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The following is a guest post. Enjoy!

How about you all? Have you ever used a balance transfer to help pay off credit card debt? Was it effective? Did you pay down the balance before the 0% balance transfer period ended? How did you use the card after the 0% balance transfer period ended?


Share your experiences by commenting below!

Jacob’s Thoughts – Listed below are my random thoughts as I was reading this article.

• I have been very fortunate so far in life to avoid student or credit card debt (let’s keep our fingers crossed that it stays this way), so I have never personally had to use one of these 0% balance transfer offers/deals.
• However, I do think that they can be a very useful strategy for reducing your debt, as long as you are disciplined and follow the advice given in this article.
• One other utility of these 0% balance transfer offers is that they can be used as bargaining chips when talking with your credit card company to negotiate a lower interest rate over the phone. This can be done by telling your current credit card company that you will transfer your balance to a 0% balance transfer offer if they don’t give you a lower rate. Nice right?!
• This article is definitely correct regarding the advice that before using a 0% balance transfer offer, you need to read through the details very closely to determine what fees will be charged.
  • The normal type of fee that is charged with balance transfers is an up-front fee of 3-5% of the balance being transferred.
  • Even though this may seem like quite a bit at first, it will most likely be less than paying 10-20% APR on a balance that compounds daily! Yikes!
  • Jonathan @ My Money Blog provides a good list of 0% balance transfer offers with fairly low fees at the following link – Best Pre-Screened 0% Balance Transfer Credit Cards. This list would be a good place to start if you are thinking about embarking on the 0% balance transfer journey.

***Photo courtesy of http://farm4.static.flickr.com/3276/3027534098_f568868b9e.jpg