28 May 2011

Saving some money this summer

Want to save some money this summer? And be green in the process?

The summer is upon us and thus the summer travel season. Although gas prices are down a bit, they are still rather hideous, aren’t they? It has been a long time since gas dipped below the $2 per gallon mark, but it was way down there within memory, wasn’t it? So as we plan our summer travels and wistfully recall fonder gas prices, the ugly reality of $3.60 or so just won’t go away.

Fortunately, there is something you can do about it! By following a few simple guidelines, you can improve your car’s mileage and have more money to spend on other, more appropriate summer expenses.

Gas saving measures come in a couple of varieties: mainly car maintenance and driving technique.

 Keeping your car serviced is part of good ownership. It can also make a difference in your mileage, up to 5% according to www.fueleconomy.gov, provided that you have the proper grade of motor oil lubing your engine. You can also improve your mileage by keeping your tires properly inflated. Particularly before a road trip, check your tire pressure and adjust it as necessary. Don’t go overboard; overinflating tires can be dangerous. Stay within 2 or 3 pounds of the manufacturer’s recommendation. Consult your car’s owner’s manual if you are not certain about either motor oil grades or tire inflation. If you’ve lost your owner’s manual, check the internet.

Keeping your car tidy can also save miles. Sure, it can be handy to carry around your golf clubs at all times, but excess weight means excess work for your engine and less efficiency for your gasoline dollar.

There are driving techniques that can improve mileage and save money as well. The first, and least fun, is to watch your mileage. Adhering to posted speed limits in town not only makes good legal sense, it is also good manners and keeps your mileage in line. Avoid “jack-rabbit” starts and sudden braking. Both of these are inefficient uses of your engine and waste gas. Also, avoid idling whenever possible. When you are idle, you are getting zero miles per gallon.

There is an e-mail that makes the rounds every so often that purports the practices of filling up your tank in the morning and refilling when the tank is only half-empty will improve your gas mileage. The science behind this is somewhat arguable, but it isn’t like there is anything wrong with either one. Just don’t expect drastic improvements.

Getting ready for a big trip? Here are four things you can do: 1) Get your car serviced if you are within 500 miles of needing a visit to the mechanic. 2) Make sure that your tires are properly inflated. Consult your owner’s manual and do not over inflate. 3) Pack sensibly. 4) Choose a reasonable speed at which to drive.

Another word about driving speed and saving gas: there is a balance to be maintained. Sure, your car may function more efficiently at 55 mph than 75 mph, but weigh the savings against the costs. Assume that you are driving 400 miles to get to your destination and that driving 55 mph rather than 75 mph realizes a 20% savings on gas. At $3.85 per gallon, you will save over $20 for the round trip. However, you will also spend almost four more hours on the road. Saving money is good, but time is also a valuable resource, especially when you’re on vacation.

And if you choose to drive 55 mph, please, for the love of God, stay in the right hand lane. Thank you. 

13 May 2011

This Ever-changing World in which We Live in

For many years now, the conventional wisdom has been that used cars offer a better overall financial deal than used cars. Well, it took a sea change for that to become the conventional wisdom and it might be time for another look. 

My grandfather was a mechanic in a small town in Southeast Kansas. He could fix anything, be it car, truck, or farm equipment. He taught his children that buying a used car was buying somebody else’s problem. It made sense at the time. In those days, people bought cars and drove them for their useful life. If anyone was selling a car, there was probably a reason.

As our economy developed and the auto industry became more competitive, folks began to trade cars more often. It may have been conspicuous consumption, or accommodating growing families, or just wanting the latest in an ever-evolving selection of bells and whistles, but more perfectly good used cars were available in the marketplace.

More than one automobile sales professional in the past ten years has told me that the best deal in a car of any kind is a used car with a manufacturer’s warranty. These tend to be vehicles that were driven by corporate users and have been well-maintained as well as completely refurbished and evaluated by the manufacturer before being placed back into the marketplace.

Think about a sales person who works for a medical supplies company and drives around a lot visiting customers and delivering product. It is more cost efficient for their employer to buy a large number of cars directly from Ford or Toyota, distribute those cars to their sales force, and insure those cars through one policy than to manage transportation for all of their employees individually. This same company will replace these cars on a regular basis and return them to the manufacturer, who will place them into the market creating a secondary supply.

However, in since the recession, the landscape has changed again. The market for used cars, particularly the high-quality, manufacturer’s warranted type, has become increasingly competitive. When looking for a small, fuel-efficient car last summer, my husband and I found that the difference between new and used in our car category of choice was minimal. All of the great bargains in used cars were in the luxury segment, or in minivans. We bought a new Honda Fit and plan on driving it for at least five years, although based on my personal history our little Scooter doesn’t have to worry about being traded until 2020 or beyond.

Used cars are not the rejects of my grandfather’s era, but they cannot universally be considered better deals financially than new units. If you are looking to buy or replace a car, certainly give used cars a chance, but don’t discard the possibility of buying a new car out of hand. This advice particularly applies to fuel efficient vehicles that you plan to own for at least five years.  

For more information, check out this article from Kiplinger: http://kiplinger.com/columns/kiptips/archives/when-it-pays-to-buy-a-new-car.html

08 May 2011

Why Bother?

It is hard to drive around Tuscaloosa and not be stricken by the randomness of the destruction. Beautiful homes were destroyed; housing projects were destroyed; family-owned businesses were destroyed. Yet, across the street, or even next door, life appears untouched.

One of the saddest stories heard from a survivor came from an older gentleman who was on the radio the other day. He is the owner of a small business that has seen diminished cash flow since the economic downturn started. After thirty (30!) years of paying on a mortgage for his home, he made his final payment last summer. Once the mortgage was paid, once there was no longer a mortgage holder who required that he have homeowner’s insurance in place, he stopped paying for it. He had been there for thirty (30!) years and no tornado. No one was making him pay for homeowner’s insurance anymore, so he didn’t pay for it.

So now, today, after a lifetime of paying for a home, he is left with nothing. Nada. Bupkes. I don’t know what his monthly payments were; I do not know what his annual premium would have been. I only know that he is left with nothing to show for all of those years of paying for his home. It is so sad, and it was so preventable.

It is also a story somewhat similar to my own, with lots of differences. And hopefully a happier ending.

I grew up in the leafy suburbs with a professional father, a stay-at-home mother, and relatively few cares in this world other than stuff like braces, the swim team, and music lessons. My father was the sole proprietor of a health care practice. My mother took care of us and was active in our community. All in all, it was a pretty idyllic existence.

Then one day, my dad got sick. And then he died. There was no disability insurance to help us out during his lengthy illness. There was no life insurance to replace his income which supported my mother and was to educate my older brother and me. Didn’t my father love us? Oh, my God, yes he did; that was never in doubt. But he was not a person who planned things. He figured that one day it would be time for him to stop working, so he would sell the practice and he and mom would have a nice retirement on the proceeds. I suppose that does amount to a plan. It just wasn’t a very good one.

So my life changed. We did sell the practice, and there was enough to pay off the house and provide a nest egg for my mother. She had been working at the local University library for a couple of years, which was a blessing. It allowed her to maintain her standard of living and save for her retirement through the University’s plan. She had never really expected to be a widow at 53, but there it was.

Not only did I lose a father, I lost the opportunity to make choices that I had once taken for granted. No, I didn’t go to a small private college where I had been accepted. Even with financial aid, the difference was too great to bridge. I stuck it out in the dorms instead of living in more expensive, and socially desirable, Greek housing. When I graduated on time, thanks to a full academic scholarship, I got a job instead of going to graduate or professional school. Am I any worse for the wear and tear? Who knows? I think that I’m a fairly happy and well-adjusted person. I know that God has been good to me. I have a savings account, several retirement accounts, disability insurance, life insurance, and substantial emergency savings.

This is why I bother: I want to have choices and, although I have not been blessed with children, I do not want to deprive anyone else of choices should something happen to me. 

Oh, we don’t have a will yet. Since we live in a joint tenancy state and have no dependents, and absolutely no bloody fear of bumping up against the estate tax limit, it may not be terribly necessary. But there are other estate documents that need to be attended to, and will. Feel free to keep bothering me about that.

Please, bother to plan. Bother for yourself, bother for your partner and children, bother for anyone else who might lose the ability to make choices if you are not here. Or if a tornado happens. 

07 May 2011

Moving Unknowns, both Known and Unknown

My husband and I are in the process of moving. We’ve been in an apartment in Tuscaloosa for almost two years but we found a really terrific house, so we bought it. And we are in the process of moving. This will be, I think, my 19th mailing address, and hopefully one of the last.

This is the third house I’ve bought, so I should know the ropes by now, right? Not so fast, my friend. We knew that there would be some expenses. Got to pay the movers, we want to upgrade some furniture, got to have shelf paper and stuff. Still, there have been some unanticipated expenses. So, for the edification of future homebuyers, I will start a list of Unknowns.

Mailbox We should have seen this one coming. Our new neighborhood is an older one, with homes dating back to the 1930’s. I never noticed before, but some of them have curbside mailboxes while others have the type that connects directly to the house. You know, the more convenient type. Well, it seems that the U.S. Post Office has determined that all new residents of the community will have curbside post delivery. This means us. The very cool folks we bought our house from had lived there for over fifteen years, so were evidently grandfathered into the handy variety of mailbox. With us, not so much.

Funny thing about a mailbox – you get to pay for it (and its installation and maintenance), but the space inside of it belongs to the U.S. Post Office. They are rather particular about things, too. The post must be sunk so deep into the ground. The opening for the mail box must be at just exactly a certain level, for their convenience. And the innards of your mail box may not be used for anything except U.S. Mail. Them’s the rules, as they say.

This is not cheap. The most cost effective mailbox at Home Depot will set you back about $15. The post itself runs about $40. There is also a gizmo called a post anchor that runs another $35 or so. Also, one must prepare the ground and set the post anchor before the post can be installed and the mailbox attached. If you want your address and/or name in cheesy lettering, expect to pay $1.25 per number or letter. So $95 or so in materials and an unknown investment in labor and possible medical/chiropractic care. Or you can subcontract the whole thing out to your local iron monger and get something nice, stylish, and professionally installed for $200. We are still in the evaluation process.

Water setup and deposit We will be dealing with a new water company in the new house. Never mind that we have been ideal customers, paying on a timely basis and not causing any troubles. Our new water provider is unimpressed, so we have had to pay a $75 deposit and $25 setup fee so that they can send us our bills. I hope we have a functioning mailbox by the time the first bill arrives.

The one I hate to complain about.  An F4 tornado swept through our community at 5pm the evening before our scheduled close. More than forty people lost their lives. Thousands lost their homes. We had to do without cable for maybe 36 hours. So this is not a complaint. It is merely an Unknown. Our lender required a drive-by appraisal after the storm to verify that our new house had not been destroyed. Our bill $100. I am very happy to pay this.

That’s about it so far. I’m sure there will be more. And should I classify the fact that I suddenly want a stainless steel kitchen trash can to match my spiffy new stainless appliances as an Unknown? Or should I just try to bury it in the budget?

Here it goes...

Welcome to my new blog!

Hello, my name is Ann and I teach people about personal finance. This is my blog.

American families are increasingly financially stressed. The baby boom generation is getting ready to retire, and they might not be ready. Our health care system is constantly changing, and no one is sure when, or if, it will ever stabilize. One thing can be said, though, with a fair amount of certainty: you and I are increasingly responsible for making decisions that affect our families’ quality of life now, and in our uncertain futures.

I live in Tuscaloosa, Alabama, home of the University of Alabama and site of a devastating tornado last month. I hope to have a link to Recover Tuscaloosa installed on this blog, but until I can cross that techno-hurdle, I will ask that you please consider making a contribution to relief efforts via this link: http://www.recovertuscaloosa.com/ Roll Tide.

As time goes by, I hope to share here various and sundry bits of advice and life wisdom that I hope others will find useful in managing their family resources. There will be links to articles, book reviews, and general commentary. I also hope that there will be some discussion. However, be forewarned that I am a schoolteacher and certain types of behavior will not be tolerated. Think of this as an extension of my classroom. When it comes to the determination of proper behavior, etiquette, and content, I am the final arbiter.

So welcome to the blog! I hope that this turns out to be fun and informative for all of us.