Archive for July, 2009
Friday, July 31st, 2009
Cash for Clunkers Funds
Earlier today there were reports that the Cash for Clunkers program was being suspended due to initial funding of $1 billion running out. In only one week! Wow. There’s obviously a huge demand for this program, which was intended to last up until November 1. I have to admit, I’m surprised it was so popular, and surprised cash has run out.
In a surprising move, the Obama White House chimed in with word that they are going to try and keep the program afloat with more funding. I assume this means Congress will get to work on this as soon as possible, and the Cash for Clunkers program won’t be going broke.
According to the Cash for Clunkers CARS.gov website, the program still has plenty of funds. Talk about your slow to update graphically-displayed stats FAIL.
Basics of the Cash for Clunkers Program
The Cash for Clunkers was introduced in late June as a program that would not only get more low-emission vehicles on the road (the thought being this would help the environment), but it would also help consumers (all of us waiting around to buy a new car) as well as the struggling auto industry. Three-for-one, baby!
The program works roughly by giving dealers a $3,500 or $4,500 credit that they can turn around and give to consumers who do the following: trade in a high-emission vehicle, aka “clunker”, and use the credit to buy a lower emission new vehicle. See more specifics at Cash for Clunker bill or see my Cash for Clunker Q&A.
Doubts About the Program Actually Helping Consumers
It’s obvious by the demand for the funds that the program was being used. But are the funds being put to good use? Do the people who currently own vehicles worth less than $3,500 need to go out and purchase or lease a new car? When I blogged about this program on the Quicken Online blog, I walked through the different questions to help you decide if Cash for Clunkers was for you. They were (along with my macro-economic commentary):
- Do you have a clunker? See the rules at my post on the Cash for Clunker bill.
- Is your clunker worth less than $3,500? Hopefully no one is participating in this program that could have received more for their clunker than the allotted $3,500.
- Can you negotiate? My suspicion, and the word on the street, is that dealers are pulling or de-emphasizing their own incentives and rebates. So, does the average consumer know this? Even if they’re getting a sweet deal by trading in a worthless clunker, are the dealers taking it all on the other side of the transaction by not offering normal new car deals?
- Can you afford a new car? Lastly, should the US Government be in the business of encouraging more debt? Isn’t that partly why we’re in our current recession? How many of these consumers are laying down cash for their new ride? Likely not many. And the folks rolling around in a $3,500 vehicle before the program likely should not be financing a new ride. Just my take.
It would seem to me that a small number of people actually fit the bill (pun!). So how can it be that the funds have run dry so quickly? My theory is that many who shouldn’t be involved with this are. And thus, the program is hurting most of the consumers who are involved.
What are your thoughts? Should the program be funded with more tax-payer dollars? Was it even a good idea to begin with?
Posted in Tax and Government | 13 Comments »
Wednesday, July 29th, 2009
I been receiving a ton of questions about the Cash for Clunkers or CARS program. There seems to be some confusion around the faq regarding the program. I thought I’d take today to share some of the questions and answers regarding the Cash for Clunkers program.
Q: Is Cash for Clunkers a scam?
No. The U.S. Government’s Cash for Clunkers (or CARS) Program is not a scam. It’s a legitimate program administered by the Department of Transportation. There are, however, plenty of scams popping up that are trying to take advantage of consumers looking to participate in the program. For more, see: Beware of Cash for Clunkers Scams. A better question might be, will it work? or will it be an efficient use of our tax dollars?
Q: When does the Cash for Clunkers or CARS program begin and how long does it last?
The Cars for Clunkers bill was made into law on June 25, 2009. The program was implemented on July 24, 2009. But transactions taking place between June 1, 2009 and November 1, 2009 are eligible. Note that funds for the program may run out prior to November 1, 2009.
Q: Where do I go to find the “official” government information about the CARS program?
Please visit the official Department of Transportation website at CARS.gov or call the CARS hotline at (866)-CAR-7891.
Q: Does the clunker trade-in need to have been registered and insured in your name for at least a year?
As far as I can tell, the clunker must have been registered in your name for at least one year. The CARS website says that the vehicle must have been insured for at least one year. I don’t know if there is a requirement that it must have been insured by youfor that year. So there could be a situation where the clunker is registered in your name, but insured in someone else’s name (i.e. relative) and the clunker still be eligible. I tried calling the hotline but couldn’t get through. If anyone has a definite answer on this, please let me know. Update: Reader LV was kind enough to comment on another post and answer this question:
“The ruling posted on the government website specifically states “The Act’s one year insurance requirement is satisfied so long as the trade-in vehicle is insured, irrespective of the identity of the person holding the insurance policy.”
http://www.cars.gov/files/TheRule.pdf“
Thanks for the help, LV.
Q: My clunker is really old. How old can my clunker be to meet the requirements for this program?
The clunker needs to be less than 25 years old on the date you trade it in. The date the vehicle was made is located on the safety sticker found on the frame of the driver side door. Remember also that the clunker has to be in working condition. You can’t push it in.
Q: I’m currently leasing a vehicle? Does it qualify as my clunker?
No. You need to own the vehicle for it to be eligible. But you can trade-in a clunker that you own for a new car lease.
Q: Can you trade a clunker car for credit towards a new truck? And can you trade a clunker truck for credit towards a new car?
Yes. As long as the clunker and new car meet the miles per gallon (mpg) requirements and other requirements, it doesn’t matter if it is a car or a truck.
Q: What will the dealership do with my clunker once I trade it in?
The clunker cannot be re-sold. It must be destroyed. The dealer will likely sell it to a scrap yard. It’s possible some parts may be stripped from the cars. But the main body and drive chain must be destroyed.
Q: Can I get a “new to me” used car with the Cash for Clunkers program?
No. You must buy or lease (for 5 years) a brand new vehicle. Used cars are not allowed.
Q: Can I get a new 2008 vehicle?
Yes. As long as it’s new, not used, it is eligible.
Q: Can I trade in a clunker for a new motorcycle?
No. This only applied to autos.
More Cash for Clunker Q&A
If your question wasn’t answered above, please check out my previous post on the Cash for Clunkers program, or visit the Department of Transportation website for the program at CARS.gov.
Posted in Tax and Government | 13 Comments »
Monday, July 27th, 2009
So I thought I’d take the opportunity during this quickhits post to update you on a few of my own recent personal finance experiences.
It’s Hard to Get Life Insurance
My “just get life insurance already” effort is still underway. A month or two ago I called Zander Insurance (Dave Ramsey’s ELP) and requested a quote on 30 year term life insurance. They showed me the best rate and sent me all the paperwork. I filled out an application and waited a few weeks for the required medical exam. I thought I was done. Apparently, due to the international travel related to my full-time job, I’m required to complete an extra form. So, that’s what I’m doing now. I should have life insurance by September at this rate.
I’m really surprised at how long this process has taken. Kind of morbid of me, but I can’t help but wonder how many people have died while applying for life insurance.
Researching College Savings 529 Plans
We’d like to start something up for our little one for college expenses. To be honest, I’ve been bogged down in the many choices and types of plans there are available. I don’t want to let that slow us down anymore though. I’ve got the program description for the Utah Education Savings Plan out and in front of me. In a few different places I’ve seen this plan recommended as one of the best 529 savings plans. It seems to have the lower costs and many investment options. I also don’t have state taxes to worry about since I’m here in Texas. We’re close to opening this account, setting up the automatic deposit and being done with it.
Quick Hits
Here’s a few blog posts I found especially interesting last week. Enjoy!
Tough Money Love celebrated his first full year of blogging by inviting others to share the Personal Finance Lesson Learned the Hard Way.
Frugal Dad shared a great story and video about people Living Off the Grid with Kids. A very interesting look at a very different lifestyle.
Bargaineering presents a nice read about Supermarket Psychology. Includes some good tips for shopping and 7 items to skip.
Amateur Asset Allocator shares his thoughts on why Your Employer-Sponsored Health Insurance isn’t Necessarily the Best Deal. I thought this was a timely read considering all the chatter that’s been going on around the proposed Govt sponsored plan.
Carnivals from Last Week
Thanks to all the hosts! Have a great week everyone.
Posted in Personal Finance Links | 4 Comments »
Monday, July 27th, 2009
We’re well into the dog days of summer. Summer vacations (or stay-cations) have come and gone. The heat is still rising, along with energy bills. But don’t sweat it. I’ve got plenty of debt reduction posts to keep you cool and motivated to get rid of your debts.
If this is your first time visiting Prime Time Money, I’d encourage you to check out my posts on Debt Reduction and consider signing up for the free updates.
Without further delay, I present the Carnival of Debt Reduction #202 – Dog Days of Summer Edition. First up, some of my favorites.
Top Dogs
There were plenty of excellent submissions to this week’s carnival, but a few really focused on specific steps you can take to get rid of your excess debt.
Cool Dogs
Looking for a little get out of debt inspiration? Check out these super cool posts:
Chill Dogs
These posts discuss different strategies around debt reduction, credit scores, and credit cards. Don’t work hard. Work smart. Then kick back and watch your debts go away.
Good Dogs
Here’s a few more good reads. While not directly related to debt reduction, the money management, frugality, and investing information below provide a great supplement to your efforts on the way to debt freedom.
Thanks for reading, everyone! If you’d like to participate in a future edition of the carnival visit the Carnival of Debt Reduction website and submit your posts. You can also submit your posts at Blog Carnival.
Photos by: Zenera, Rodrigo Basaure, Pacdog, lecates, TheGiantVermin
Posted in Debt Reduction | 17 Comments »
Friday, July 24th, 2009
Although I don’t mention him much, I’m a huge fan of Dave Ramsey. I’ve been following him online and on the radio for at least six years now. He actually played a huge role in helping me get my own finances in order.
I like Dave for the tough, straight-forward message that he brings. Sometimes you just need someone to tell you how it is. Dave does that well. I also like Dave’s application of Christian principles in his message.
Who is Dave Ramsey?
I know a little about Dave’s past; mostly from what I’ve heard him tell though. Basically he was a real estate entrepreneur that made a ton of money, but also racked up a bunch of debt. He went through a bankruptcy, and came out of that experience smarter about his finances and with a passion to help others. He then started his radio show and wrote a book, Financial Peace
, which really got him established in the world of personal finance.
Dave is now the ultimate “get out of debt” guru. I would guess that no other person has helped more people payoff debt. Dave is the man.
The Dave Ramsey Show
The best way I’ve connected with Dave over the years is by listening to his show. The show has a little bit of everything going on. Dave takes questions from people struggling with money issues, people who are finally debt free, and even throws in some occasional commentary on the economy and politics. If you listen, you’ll end up agreeing with what he says as a whole, but you’ll be left with the feeling that you got punched in the gut. He definitely calls you to action.
You can listen to it over the radio (check local listings), or stream it online. When I first started listening to Dave, I listened to the online podcast. I liked it because I could skip around to the parts that applied to me and skip the commercials as well. Check out his radio show page.
Financial Peace University
If you want to really get to know Dave Ramsey’s approach, sign up for his Financial Peace University (FPU). The 13 week video series takes you through all that Dave has to offer. Plus, you get to experience it with others going through the process. The accountability has to be the best part of this program. The best place to find a Financial Peace University is at your local church or community center. Unless your church is offering to pay, this will cost you around $100. Pete from Bible Money Matters recently shared his experience with Financial Peace University. It’s definitely worth checking out if you’re interested in doing the full course.
Total Money Makeover
Dave’s biggest achievement to date has to be the success of his book, The Total Money Makeover
. In the book, Dave outlines his approach to helping you get out of debt and the seven baby steps that you need to use to get started. This is likely the best way to approach Dave’s methods if you’re not ready for the full FPU and don’t have him on the radio.
The 7 Baby Steps
Dave’s message can be boiled down to seven steps that you need to follow in order to have financial peace.
- $1,000 to start an Emergency Fund
- Pay off all debt using the Debt Snowball
- Three to six months of expenses in savings
- Invest 15 percent of household income into Roth IRAs and pre-tax retirement
- College funding for children
- Pay off home early
- Build wealth and give! Invest in mutual funds and real estate
Where do you find yourself on the list of baby steps?
Endorsed Local Providers
A big benefit of being a Dave Ramsey fan has been learning about his Endorsed Local Providers (ELP). ELPs are essentially financial companies that Dave has hand picked to endorse. From this list, I was able able to find a real estate agent in my area I could trust. And most recently, I recently used Zander Insurance (an ELP) to help find the lowest quotes on life insurance. Dave gives these ELPs his stamp of approval and holds them accountable for their service.
Dave Ramsey is Bad at Math
Because of Dave’s Debt Snowball (paying down debts using lowest balance vs highest interest rate) he’s been accused of being bad at math, or dumbing-down his methods for the masses. While I don’t personally subscribe to all of his methods, I know they work for the people who use them. Whatever your thoughts are on his specific methods, you’ve got to admit it’s resonating with a bunch of people and truly helping them.
Why Dave Ramsey Works
I never been a strict follower of Dave’s steps and to be honest, I haven’t even read his books. But I’ve absorbed his message over the years through his radio show and been moved to make a change with the amount and type of debt I was carrying. And each day, hundreds more are experiencing Dave for the first time. What they’re getting is an honest, no-gimic approach to getting to financial peace. That’s the best you can hope for, and that’s what Dave brings.
Posted in Debt Reduction, Money Books | 6 Comments »
Wednesday, July 22nd, 2009
Happy Living
People who aren’t practicing a frugal life often have negative ideas associated with frugality. They think of this as a penny-pinching lifestyle which results in unhappiness. However, frugal people are probably actually happier on the whole than their free-spending counterparts. This happiness has to do in large part with the fact that they are likely to be healthier and safer than people who spend their money willy-nilly. It also has to do with the fact that they are making conscious choices in their lives which allows them to realize the goals that create happiness for them.
Healthy Living
Many people find that their lives start to become healthier when they start living frugally. They cut back on grocery spending by reducing their consumption of meats and packaged goods. This results in a better diet of fresh produce. Frugal people reduce driving to save money and get the benefit of more frequent exercising since they walk or bike to work. Frugal people get themselves out of debt, reducing significant levels of stress in their life. This stress reduction improves both short-term and long-term health. On the whole, a frugal life is a healthy one.
Safer Living
A frugal life may also be more conducive to living safely. Frugal people often place an emphasis on building a community around them. They save money by bartering for what they need. They spend time with people instead of spending money on them. This results in being surrounded by friends and acquaintances that are truly part of a community. Being part of a community increases your sense of safety. Knowing the people who live around you decreases the chance that they will harm you. Plus you have people to turn to when you need help.
Frugal Living
Living a healthy life as part of a community leads to increased happiness compared with being unhealthy and isolated. But frugal living also creates happiness in a more fundamental way. At its core, frugal living is all about making conscious choices instead of just spending money without thinking about it. Learning to make conscious choices allows you to really decide what you want in your life. You can more clearly identify what does and does not make you happy and then make choices based on that information. This is how living frugally can really lead you from a state of automation to a state of bliss.
Guest post by Kathryn Vercillo. Kathryn is a writer for Promotionalcodes.org.uk which gives away free codes (like this La Senza promotional code) and also publishes a save money blog.
Photo by: kennymatic
Posted in Frugal Living | 6 Comments »
Monday, July 20th, 2009
Today’s post comes from Danny Kofke, a school teacher with a family of four that he raises on his salary. His wife is a former teacher and now stay-at-home mother to his two young daughters. Despite earning a moderate income, he has no debt except the mortgage, has a 12-month emergency fund, invest so that they are on track to retire with a sizeable nest egg, and lives a financially secure life on a teacher’s salary.
Danny recently wrote a book, “How To Survive (and perhaps thrive) On A Teacher’s Salary“, to show others how they can make the most out of their salaries. You can pick it up for yourself in paperback ($9.99) and digital download ($5.99).
Tips to Live on a Small Income
It seems like everywhere we look these days we see something telling us how bad the economy is and how tough times are. I agree that it has become more difficult for some but also feel that this a great learning opportunity for many. Here are some tips that have enabled my family to live on a teacher’s salary:
Get a New Cell Phone Plan
This might not apply to all, but we only use our cell phone for emergencies. A few years ago we had a plan in which we were paying $50/month and barely using it. We switched providers and now spend an average of only $10/month.
Look Into Changing Your Home Phone Plan Too
A lot of people are now using their cell phones in place of a home phone. If you still find yourself in need of a home phone, it is important to analyze your plan and make sure you are signed up for what you really need. I once analyzed my bill and realized we had too many options that we were not using. I changed my plan to the basics and saved almost $25/month by doing so.
Use Cash
Cash is king these days. Most stores are hurting and are willing to negotiate prices – especially if you are using cash. I recently had a friend that wanted to buy a new tv that was listed for around $1,000. I told her to walk into the store with $700 in cash and say that she really wanted the television but could only spend the money she had. Well, after some talk, she walked out with this TV for the money she had in her purse. Not all stores will do this, but, with the economy where it is, it doesn’t hurt to ask.
Use Your Local Library
We all know that the library is a great place to get books for free but most do not realize that many libraries also have CDs and DVDs that you can check out. Instead of renting or buying many videos for my children, we visit our local library and check them out for free. You can also use the library to get passes to activities in your area. We have checked out a book that contained free passes to state parks. This enabled us to have a fun and, better yet, free family day.
Make Your Own Halloween Costumes
Tracy has made my oldest daughter’s Halloween costumes the past two years. Two years ago, Ava saw a skeleton costume in a Pottery Barn catalog and wanted that to be her costume. Instead of buying this, Tracy made an identical-looking costume using a tee-shirt and felt material. This homemade costume saved us $50. Tracy did the same thing last Halloween with a butterfly costume.
Ask for Free Stuff
Okay, this might surprise you, but we have The NFL Sunday Ticket. This is one splurge that is important to us – we have family time together watching football on Sundays (plus I never miss a Miami Dolphins game). I saw an add in a local magazine saying that new subscribers to this service would receive an added feature worth $99 for free. I called up my satellite company and said that I already subscribed and wanted this free feature too. Well, after about 15 minutes of being placed on hold and being told that I probably would not be able to receive this free item, I got it free and clear. It never hurts to ask.
Save Money on the Weekends
I know there are some people that go out every weekend to dinner and a movie. Let’s say the cost of this night out totals $50 – this is probably too little an amount. Instead of going out every weekend, just stay home one Saturday night and rent a movie and order pizza. This one act alone can save you at least $35! If you do it more than once a month your savings goes up. For even greater savings on movies check out Netflix.
Save a Little Every Day
There are some things you can do each day to save a little money that will add up over time. Make your own coffee at home. Some buy their coffee from a store on the way to work. This practice can easily add up to over $100 a month. If you instead make your own coffee at home, you can save up to $25 a week which adds up to over $1,000 a year! Another way to save is to bring your lunch to work. On average, you will spend at least $5.00 eating a fast food lunch – more if it is a sit-down restaurant. Instead of eating out everyday, bring leftovers from home only 2 days a week. You still get to eat out a majority of the work week and will save over $40 each month.
These are some of the tactics we use to get the most out of my paycheck. For most people, it is not how much you make but, rather, how well you plan and spend your money that leads to financial success. This philosophy has enabled us to live a very wealthy life on a moderate income.
Thanks for the great tips, Danny. As a husband to a teacher, I can attest to the hard work you go through, and how tough it is to make it on that salary. Kudos to you for having your family in such good shape financially, and for sharing your tips above and in your book.
Posted in Frugal Living, Money Stories | 2 Comments »
