It was officially my second attempt at my first loop of the Beeline Highway. The first attempt was cut short due to time and flat tires on Brandon’s bike. His wheels require tubes with longer stems, so mine were of no use to him. After the incident we went back home and did some workout and abs with the home ab machines.
Archives for March 2009
Should I Buy New or Used Car?
Used. Always used. Buying a new car is one of the worst financial decisions I have ever made.
Monthly Payment
The monthly payment is the first thing that everyone looks at when they finance a car. Why? Because they live in a cash flow mentality. In this economy, cash is king. If you don’t have it, you can’t spend it. If you can’t spend it, you can’t make it. If you can’t make it, you won’t have it, and the circle continues.
If you’re thinking about a monthly payment, and any portion of that payment is going to be paid to anyone other than yourself (in other words, the bank), then you’ve already lost the battle, because you’re headed into debt. There may be a reasonable explanation for why you’re seeking financing for something you don’t have enough cash to purchase up front, but my advice to you is to completely avoid Bacteria Testingit altogether. In order to succeed at this, you will have to radically change your idea of what you should be driving. One of the mistakes people make when they consider their monthly payment on a new or used car is how much it really is going to cost them every month. The monthly payment every month is only the financed amount, and it hides all of the other expenses you’ll incur throughout the life of the car.
Since I’m such a nice guy, I’ll go ahead and lay out my stupidity (Dave Ramsey calls what I’m about to explain a “stupid tax”) for all to see, with no holds barred.
My Stupid New Car Buying Experience
In March of 2008, I purchased a new Honda CR-V, loaded. The only feature I didn’t buy was the All Wheel Drive. Big deal. So what did my car cost? The sticker price was $27,895. Divide this by 72 and you have a monthly payment of $387.00, right? Wrong.
When you buy a new car, you have to add to it the document fee, which in my case was $368.00, sales tax, which was $2259.50, and title and registration, which was another $514.71. These are just the up front fees. Then there’s the finance charge. My loan was at 7.9%, which over a period of 72 months is $8162.47.
Add all of these up, and the price of the car goes up to $39139.68. Divide that by 72 and you have a monthly payment of $544.00. But is that the total cost of owning the car? No.
In the first year, the car depreciates roughly $4200.00, so for the first year, you’re paying $544 per month plus $4200.00 divided by the first year (12 months) or $350.00. Color me stupid, but that’s $894.00/month. Add insurance at $1200/year and that’s another $100/month. Now we’re up to $994.00/month. Fuel for me last year, as a REALTOR, was $2937.00. That’s $244.00/month.
My vehicle, which appears to be costing me only $544/month (which by the way, is ridiculous and I should be stabbed through the eye with the very pen I signed with) is actually costing me $1238/month in real money!
The following is from Edmunds.com. It shows what you can expect to be the real cost of owning a 2009 Honda CR-V.
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The Used Car Buying Experience
Let’s assume that I decided way back at the beginning, that I would be satisfied with driving the half-way okay car that I had which was completely paid off and only representive a small amount of “inconvenience” in my life. No NAV, no fancy leather, no sun-roof…etc. Big deal right? Right. Now, with a paid for car, the bank is getting nothing.
At the time, my truck was worth $8000.00. That actually means that I could have moved from the truck into a car that was more conducive to showing property for the same price, or perhaps a bit less. But, I would have been able to set my sights on that newer car without losing $1238/month.
Here’s how it starts Lost Car Keys story. For 10 months, I would sock away $544.00 every month in my own savings account. Hey, I was willing to pay it to the bank, so why not just pay myself? After 10 months, I have $5440.00. Now I trade my $8000.00 truck, which would still have been holding its value, in to a used car dealer for a car that costs $13,440.00 (That’s $8000.00 + $5440.00.) Not bad. Yet again, I save for 10 months an additional $5440.00 and I trade my most recent car in for another car at the price of $18,880.00. 20 months into the process I’m driving a fairly nice used car. Keep in mind, I’m never buying new cars through this process and I’m always upgrading to cars that are holding their value, like a Honda or Toyota. For another 10 months, I save an additional $5440.00 and I trade my $18,880.00 car in for a used $24,320.00 car. 30 months have gone by and I haven’t paid the bank a red cent, and every 10 months I get to upgrade to a newer car, and not only that, but the $24,000 car I’m in now, was purchased by someone else NEW just 3 years earlier for a whole lot more than $24,320. Let the first owner take the depreciation. Let’s do it again. 10 more months of saving $544/month for another $5440.00 and I’m now able to trade in for a $29,760.00 car, paid for, IN FULL!
If you’ll recall, the price of my new Honda CR-V was $27,895.00. It’s been 40 months or 3.3 years, it’s 2011, and I can actually now purchase that 2008, loaded CR-V with miles on it, for much less than its original sticker price. In fact, that car that I had to have last year, would probably cost me under $20,000 in 2011, and would have all of the same features!
This is an absolute no brainer. When you buy a new car, you lose, no matter what. If you’re in a financial position to be able to take that loss, in other words, if you have the money to blow, then you can buy a new car, but you lose. It’s a mathematical fact. Most of us do not have that money because we jump in before we look at the facts. So here’s where I am now, as a result of my impatience. I have a one-year-old car with 20K miles that’s worth about $22,000. My monthly payment is $544, but as we’ve seen, the actual cost of ownership this first year has been over $1200/month. I still owe $27,000 on the car, which is a hair under the sticker price, and the only way out is to sell it and take a note for the difference.
Instead of having a paid for Honda CR-V in 40 months, I have to get rid of it and take an $8000.00 loss, which means I’ll be paying off nothing for a while. Are you as stupid as me?
Borrowing Your Life Away
One For One Exchange
Imagine two men in a field, each holding something the other needs. Both men put a reasonable amount of time into acquiring the items. Eventually they will come to an agreement about them and will exchange the items. The value placed on each item is called utility, which is a measure of the relative satisfaction one derives from a good or service. In this particular example, neither men will be exchanging more than just the item, which means no monetary value can be placed on them. In fact, the reason they are both willing to part with their item, is because of the perception that each of them will increase their utility through the exchange. If both men believe their utility will increase, then we’ll probably see an even trade where both men will walk away satisfied. It also may indicate that they are the only two people interested in those items, and that there may be no way to measure a market value based on a currency system.
One For Many Exchange
Let’s give these two characters a name. We’ll call them Joe and Bill. In this instance, when Joe and Bill meet, Joe sees that Bill has something that he could really use, which would increase Joe’s utility significantly, but Bill looks at what Joe has and decides that he could use what Joe has, but doesn’t necessarily need it, and isn’t really excited about it. Bill’s utility isn’t going to increase much. Something has to give at this point. This is where negotiation comes in. It’s likely that Joe is going to have to offer more than just his item to Bill in order to get Bill to make the exchange. So, Joe gives Bill his item plus a few other things, or perhaps whatever is being used in that day for currency. Of course, we have to consider that in times when government has failed, people revert to a system of bartering, where goods and services become the currency until a government that the people can trust defines a new monetary system.
In the U.S., we have our American dollar, and we agree that it holds value, but it rests upon nothing. Not even gold. If you think about the value of Gold, remind yourself of the last time any civilization traded Gold when the economy failed. It hasn’t happened for many centuries, and won’t happen in the future. Dave Ramsey spoke about this in one of his recent podcasts, outlining that the most recent brush with a completely failed economy that we have seen was what happened in New Orleans after the hurricane. You didn’t see people trading gold, you saw them trading goods and services. You give me a gallon of water, I give you a gallon of gas, etc.
Many For Many Exchange
The many for many exchange is just a bloated form of the One for One exchange where it simply takes more items to reach a one to one exchange. I’ll trade you this, this, and this for that, that, and that. More volume, but balanced out, just like all of the exchanges. Again, as long as there is a perceived increase in utility for both parties to the transaction, then the details of the transaction just become pieces on the balancing scale of negotiation.
Borrowing Your Life Away
The three examples above are very basic micro economic facts of life. There’s one common theme that runs throughout, however, and that’s that the exchanges that took place above assumed that each participant actually had something to trade. They had worked hard to find what they needed to trade, and when they found someone with which to trade, they succeeded, and walked away from the transaction happy. Each item was owned by the other.
But what if you were standing in the middle of that field and you wanted something the other person had, yet you had nothing to offer in return, except your word that you would eventually return something to them that may satisfy them? What would they be thinking? They might look at this situation and think that there’s a greater opportunity to them increase utility through this transaction than if we simply traded up front. What happens? Well, in this case, Joe offers to Bill an item that Bill cannot pay for now, in exchange for a greater payment later, because both are now bound by time. Bill is now obligated to increase Joe’s utility over a longer period of time, and Joe has to wait to be paid, and may be tempted to skim as much as possible because Bill isn’t going to be able to pay him right away. Bill may have a percieved increase in utility for the “new car” he just bought, but it’s short term, because Bill has forgotten that he has agreed to pay far more than he believes the item is actually worth to him, all for the sake of having it now, for just a little bit, instead of later, for the full value.
Welcome to debt. The bible talks about this in Proverbs 22:7 – “The rich rule over the poor, and the borrower is servant to the lender.” When was the last time you chose to be someone’s slave? There is a simple solution to debt. It’s called savings. The reason you may be in debt is because you are not patient enough to save. When you borrow money, you pay more than you should pay for something, and you lock yourself into a pattern of slavery until you pay off the debt.
We Aren’t Supposed to Be Broken
The bottom line? Broken relationships hurt.
We Aren’t Supposed to be Broken
I had a Honda Civic years ago, and with Honda’s being one of the world’s most reliable cars, I thought that there would never be a problem with it. I loved how it sat low to the ground, had a fast engine, and a great sound system, and I loved how reliable it was. It never broke down and I depended on it every day to carry me there and back. It never even showed signs of breaking, then one day, it broke. I never saw it coming.
Grinding the Axle
I have been entrepreneurial most of my life. In high school I sold candy before class that I had purchase from Revco. It was very profitable. Every day I would turn 10 suckers for $1.00 into $2.25. Not bad. Not long after that, I purchased a Honda Spree scooter that was pretty beat up for $75.00 and sold it for $300.00 after cleaning it up. Then, I caught wind of a go-cart that was for sale. I had always wanted one and this was a perfect opportunity. $100.00 later, I had a functioning go-cart. At least that’s what I thought.
I was delivering newspaper at the time on a bicycle, and I saw the go-cart as an opportunity to be on the cutting edge. I wasn’t thinking I would be re-selling it, I was thinking about using it as a business asset. And I did. With minimal expense, I had the mini-car up and running as my primary paper delivery vehicle. Never mind how dangerous or illegal it was. What I didn’t know, was that the left rear wheel, which was nothing more than the type of wheel you see on a Home Depot hand cart, was engineered to require two separate bearings, one on each side of the wheel’s hub. Bearings allow the wheel to spin freely while keeping the axle centered so the wheel doesn’t wobble. I only had one bearing, and the inside hub, unbeknownst to me, was rubbing the axle. My go-cart, with which I had a great relationship, was slowly failing over time, and I had no idea it was happening. The wheel was grinding away the axle, which wasn’t a replaceable part. Eventually the wheel fell off and the go-cart was broken, as was my relationship with it.
Wear and tear will do that to a car, or go-kart, and it will also do that to a relationship, especially when we fail to pay attention our own personal maintenance needs. In many cases, maintenance works, but what if there are deeper problems that we don’t even know exist? What if the problems that are causing the grinding are so damaging, that they permanently render the relationship broken?
Building on Sand
Building a relationship with someone requires certain tools and materials. When we start building a house without a foundation, with the wrong tools and the wrong materials, it falls over, and we have to start over again…repeatedly. Until we lay a foundation that can withstand the forces that move against a structure under that structure, it will continue to fall. Even if we build the house out of bent and broken material, if we assemble it in a meaningful and secure way, no matter what happens, the foundation will remain in tact to catch the pieces if they happen to crumble at times. All of us have a store of bent 2×4’s in our lives; past relationships that didn’t work very well, marriages that caved under the pressure, abuse, death in the family, addictions, you name it, we have them. That bent material contributes to the path that we travel on every day.
Don’t Give Me No Lippr About Blippr
It was a few years back that I met Chris Heald when he began playing bass guitar in our church band at New Valley Church, and to this day, he is quite possible the tallest person on the planet. That’s not actually true…but he carries a commanding presence around with him, and her name is Bryanne, his very loving and supportive wife.
The reason I stress supportive, is because I know how much work Chris has put into this project and continues to put into it. He’s probably one of the most over-dedicated coders on the planet, and he just gets it, and to top it off, he has a great ear which makes it very easy for him to pick up a new song whenever we play one.
Now that the startup that he has been working on has been acquired by Mashable.com, a feat that we at New Valley are all very proud of (congratulations Chris), it appears that his future has been brightened exponentially. Not only will his future be bright, but the future of the internet will be influenced by the hard work he has put into Blippr.com.
Blippr.com is a sort of micro-review site that allows you to, in a Twitteresque way, post a review of your favorite book, movie, musician, software application, or video game in 160 characters or less. Most notably about the site is the user experience. It’s one of the only sites that I have come across that seems to interact with you, like a human, providing quick and clever feedback on every action you perform. It’s clever and actually fun to use, and ultimately, very effective. As far as value, it all lies in the ability to receive representative recommendations that actually matter to you because they are so closely tied with friends that you already trust. Give it a try today.
Here’s to innovation, Chris! I’m thankful to know you and have you as a friend and I can’t wait to see what you turn out over the next few years.
Dear Mister God
I’m a member of Microsoft Task Market and occasionally I receive notifications of new tasks being added to the website. It’s a freelance website where you can post a task and give it a value, then potential freelancers can take the task and get paid.
Today, I received a task notification that didn’t suit my skill set, but I decided to look through the tasks to see if there was something good. Microsoft Task Market is not very well known, so there are hardly any tasks to choose from.
There was one task, however, that was entitled “Website Logo” and it paid $75.00. It was posted by someone by the name of God.
Here is the task:
I need a website logo. Simple, vectored image for secure-computing.net, which is a forum/wiki for computer tips, etc.
Here is the first response by a potential freelancer:
Dear Mr. God, please allow me to work on this creative task. I’m a pro in photoshop and will convert your imagination to your website logo. I’m a regular task solver of this community, please check my profile.
It made me laugh…