Some New Wheels

You’re at the dealership and some pushy sales person is giving you the speech about how safe and reliable a car is. Then all of a sudden….

Sales Person: “If the price was right would you buy today?”
Customer: “Uh, I don’t know. I would have to (insert defense mechanism here)”
Sales Person: “Ok, I understand. Let me see if there is something we can do to earn your business.”

This happens every single day at dealerships across the country. I know this because I am the sales manager of two decently sized new car dealerships. The car buying process can be very scary for people who are not prepared or intelligent. People in the car business prey off of people when their guard is down. The saying in most sales positions is “You make %80 of your income from %20 of your customers.” To make sure you are not part of that %20 keep some of these tips in mind next time you go shopping.

1: Most manufactures that have a credit facility often offer %0 for some of their vehicles. In the case of import cars like Toyota, Honda or Nissan; these rates will help save you thousands. In the case of many domestics you may be better going through “an outside bank” and using the cash rebate. Yes you may pay some interest but a lot of domestic vehicles have some beefy cash rebates available.

2: Yes going at the end of the month does help you. I suggest starting your shopping early on in the month and finalize your deal towards the last week or so. A good sales person would have followed up with you multiple times by now.

3: If you want a very big discount you MUST be flexible with color choices and some options. Dealerships have to move what is on the lot. Switching color choices could save you tons of money.

4: KBB.Com is a great resource for having a rough estimate of what your car is worth, but only if you sold it privately. Their trade in number is usually about %20 higher than actual book value of your car. Do not be surprised when this happens.

5: Sales people are humans too. Do not forget that they are on your side and most only live off of commissions. Their job is to get an offer of any type. If you are going to hate any one person, hate the sales manager behind the glass (ie me)

6: Truecar is also a good resource however, it is under a lot of fire from manufactures for having false information. Many will not use Truecar any more or some dealer groups have left the Truecar affiliated system all together. If you do use Truecar make sure your vehicle is built properly with the right options and MSRP. Also make sure you are applying the correct rebates. The site automatically includes the cash rebate for some brands.

7: The best deals are on demos or rental fleet vehicles. Those cars with under 10k miles and are only one year old (or newer) are the best deals on the lot. They usually can be negotiated pretty heavily and sometimes they are eligible for new car incentives. It all depends on if the car was previously registered.

These are just some tips to help you along your car buying process.

Happy shopping!

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401k: The Ultimate retirement vehicle

The days of pensions being handed out at corporations is a dying trend. In its place came the 401k or 403b for you government employees. Congress passed the Revenue Act of 1978 which included a provision saying that employees could save their money with pretax dollars (aka deferred compensation). It was a huge step in the right direction for millions of Americans. Today we will cover some of the best known benefits of the 401k to maximize your returns.

1: Not receiving your match is lost money. If your company offers any sort of match, make sure you at the very minimum contribute what is needed to get the match. Consider it free money for your hard work.

2: Tax Sheltering. This is probably my favorite part of the 401k/403b. It effectively lowers your tax rate by a substantial amount. Meanwhile all the money will grow tax free for the next 30+ years. Most likely your tax bracket will be lower during retirement than your prime earning years. Maximizing the 401k also drops any capital gains tax as long as you do not withdraw money.

3: You can start taking distributions at 59 1/2 without any penalties. You will incur income taxes and state taxes depending on where you live. Anything prior to that is subject to a %10 penalty and is also taxed as income. Some plans offer a loan which you would pay back with interest for a determined amount of time. In some extreme cases you can take a hardship loan which could be used to pay for hospital expenses, back mortgage payments or funeral services. If at all possible you should never withdraw money from your 401k. You will miss out on years of compounding growth.

4: Diversify. Most 401k’s are managed by some financial planner that your employer uses. While these people are professionals remember that they also get paid on commissions which depends on where your money is allocated. Check your 401k often to make sure the performance is up to par with what is happening in the market.

5: Fees. Unfortunately this is something you cannot escape. The only thing you could possibly do is pick funds with lower expense ratios. Vanguard has the largest selection of mutual funds with extremely low expense ratios. Over many years this can save you $10,000-$100,000+. Definitely not chump change by any amount. Aim for funds with an expense ratio of less than %1.

6: Auto Escalations. Some 401k plans offer an auto escalation setup. If at all possible sign up for this. Set it up for %1- %2 increases every year until it maxes out. This should keep pace with your yearly raises due to inflation.

These are just some of the great things about 401k’s. Before pumping all of your money into these accounts do make sure your financial house is all in order first. I would advise not to increase contributions if you are saddled with high interest debt of any sort.

Feel free to post any questions below!

Rich vs Poor

“Its not about how much money you make, its about how much you keep.” – Rich Dad, Poor Dad

 

Just let that settle into your brain for a little bit.  It makes you wonder about all the times you have spent that extra money you “earned” from your bonus or return check on frivolous things.  Constantly finding yourself asking “what if?” with nothing to show in the long run can get pretty upsetting after awhile.  We have all heard of the professional athletes that seem to swim in millions of dollars only to declare a chapter 7 bankruptcy 5 years later.

Where did the money go?

There is one thing that separates the rich from the poor more than anything else, and that is assets.  The poor only acquire liabilities and the rich acquire assets.  Its really that simple.  The dwindling middle class (or whats left of it) THINK they acquire assets, but in reality they are just liabilities.  Most people complicate what the terms asset and liability mean, and some may not even know what I am talking about.  Simply put, assets put money in your pocket and liabilities take money out of your pocket.  Having said that, if you have more money going into your pocket than going out, you will have more money in your pocket to acquire more assets.

To become rich you must have things that constantly make you money.  Over time these will all compound.  That is how the beauty of a dividend portfolio works or how a buy and hold real estate strategy operates.  Time is your biggest and most precious asset.  Don’t go and waste it.

 

Credit Card Discipline

Ah, paying off the credit cards.  Most Americans are saddled with way more credit card debt than they would like.  The average household has $15,762 in credit card debt and totals roughly $733 Billion as a nation.  Those numbers are from 2015 so hopefully they have gone down since then.  But for those who are reading and trying to figure out how to get out from this endless trap I will say one thing;  It starts with you.   Follow these steps to help payoff credit cards in a fast manner.  And take yourself one step closer to financial freedom!

Chart showing average credit card debt by age.

 

Step 1:  Cut up or lock away your credit cards.  Leave only one in case of emergency situations.

Step 2 (depends on credit):   Apply for a %0 balance transfer/ %0 APR credit card.  Then transfer all your highest APR credit cards over to that single card.  Try to consolidate all the smaller card balances on this card, it will help with the snow ball effect I teach later.  Citi has a card that has %0 for 21 months that I recommend.

Step 3:  Pay only the minimum amount on the balance transfer card for the next few months.  During this time you will use the %0 offer for as long as possible to delay paying that lovely interest charge.

Step 4: Start with a card that has the highest APR and lowest balance.  Put all the money you have budgeted for the other card payments towards this one card.  All other cards will be paid using the minimum payment.

Step 5: Once one is paid off, move onto the next one!  Using the “snowball method” people save thousands of dollars on interest that is paid.  Once your 0% offer runs out on the one balance transfer card, if you still have a large balance just transfer it to another balance transfer card.  Tip: you cannot do a balance transfer for 0% in the same company.  Example: Discover to a new Discover card.

 

Best of luck!

 

 

 

 

Welcome

Welcome all!

This being our very first post I just wanted to first say thank you for visiting our site.  I know personal finance can be a very tricky (and scary) topic for people of all ages.  If you are a millennial the words “personal finance” probably did not enter your vocabulary until your first rent check was due in one week and you had zero groceries in the fridge.  My goal is to help you not have that happen again.  Our site is written by a millennial who has 15 years experience in the stock market as well as other financial knowledge (insurance, real estate) that can be used by anyone regardless of age.  Some articles may pertain to the Baby Boomers that follow us, and some may be more suitable for millennials.  I will try to spread evenly the contributions for both.  You will hear us mention one key phrase all the time and it is the ultimate gauge of your financial health.  Net Worth.  All your assets minus your debts.  Pretty simple, but can get complicated when taking multiple accounts and people into equation.  This number is used by many as a tool to see when they can “comfortably” retire.  However, the rules have changed in the last ten years for what it means to retire. People are living longer, having fewer children, remaining in the workforce, transitioning careers later in life, etc.  Our goal here is to make your net worth grow through all channels and help guide you to an early retirement!

 

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