Shopping for a used car

First of all, for those of you wondering if my mother was shocked and/or embarrassed by me blogging about all of her risky savings habits last week, nope. She thought it was hilarious. It would take a lot more than that to embarrass MY mom.

This week I’ve been helping my brother shop for his first car. I got my first car two years ago, so I felt somewhat responsible for helping my brother with the process. We’ve been going to dealerships all week with little success, and every time he finds a car online he likes, it’s sold by the time we get there. But he’s determined to get a steal like I did – some hard-nosed negotiating got the price of my 2007 Ford Focus down by several thousand dollars.

I love that car so much.

Now, if you’ve gotten your first car yet, you know that once anyone hears that you’re in the market for a used car, everybody knows somebody who can help you, whether they’re selling a new car or they know “so much about cars” that you simply must consult their expertise. What you end up with is a long list of people to call and a bunch of contrary advice about which car to get and not get and so on.

So my first piece of advice: PICK ONE PERSON to listen to that you really think you can trust and use their advice to evaluate the cars you look at. Choose someone who is going to get you a car that lasts, not a ‘hot looking car’.

Think you can trust the internet? Prepare to be exhausted by reading reviews. Only trust reviews by professionals – if you’re looking at reviews by your average Joe, you can find a ton of negative reviews about almost any car. People like to complain online, don’t rely on them.

But you also have to do your own research. Use Kelley Blue Book to determine what a fair price for a certain car is. Use Carfax to find out if a particular car has been in an accident and how many owners it has had.

Once you get on the lot and you get to a car IN YOUR PRICE RANGE, look it over thoroughly with your resident expert at your side. (Hopefully they already know what to look for.) Look under the hood, in the trunk, at the doors, by the tires, at the amount of space in the back seat, how well the AC works, what the engine sounds like when it starts up, etc. If the interior isn’t clean or there are little scratches on the paint, the dealership will probably fix those for you if you buy the car, but make sure to remark that you expect them to. Don’t let your expert do all of the inspecting – check everything out yourself, as well. You might learn something. The last part of the inspecting process is taking it out for a drive and seeing how it handles.

Something else to consider: Is this car going to bring your insurance rates up? My brother was looking at a two-door Scion, but in the end we decided against it because it would almost double his insurance to have a two-door.

If you really love the car, it’s time to start negotiating. Go low with your first offer. The dealer will look skeptical and say “We really can’t go that low” and try to kill the idea. Make it sound like you might look somewhere else. (Hint: The price you see online is much closer to their actual ‘lowest possible price’. Remember, they at least have to profit on it.) Hmm and haw about not having that in your budget, and then try saying to your expert, “well, we saw this other car at this other dealership, we can try back there again.” The car dealer who is attending to you will then say “well let me see what I can do” and run back into the dealership to buy time and “talk to the higher ups”. He’ll come back either with a lower price or offer to do some “nice detailing” on it.

If the offer still isn’t low enough, say that you’re going to head home and think about it. The dealer will warn you that this car will go fast, and they aren’t lying, but don’t freak out too much. Either come back later in the day, or call back the next day, at the latest. Ask if they now have a better offer for you.

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Buying a home: The very basics

Man, it has been a long time. I’m really sorry about the hiatus, everyone, but spring break/school/work/senioritis got the better of me for the past two weeks. But NO MORE! Today, you are going to learn about financing your first home, and you are going to LIKE IT.

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Now, for most people out of college, you plan to rent an apartment or a little house to start out with, and that’s fine. Renting, when you don’t yet have a stable financial situation, is a smart decision. But for those of you who are going to have a much better starting salary than myself (I’m looking at you, engineering grads), buying a house is not implausible.

Just don’t be dumb about it. As my finance teacher would say, you want to avoid being “house rich and cash poor.”

Once you have a full-time job, you can go to the bank, tell them your salary, and they’ll help you calculate your monthly expenses. Once you’ve determined how much of your monthly salary can go to a mortgage payment, they’ll offer you some options. Likely, you’ll make a payment of several hundred dollars every month for the next 30 years to pay off your house, with a certain interest rate.

Now, you also have the option to buy ‘points’, which will get you a lower interest rate. If you stay in your house for a certain amount of time, the points will pay for themselves. Points usually cost a couple thousand dollars (depending on the worth of the house).

As with most things, make sure you get the lowest interest rate that you can, and pay it off as quickly as possible. Down the road, whenever you’re making more money in, say, 10 years or so, you may want to refinance so that you can make larger payments per month in order to pay it off more quickly. Remember, houses cost a LOT of money, so refinancing could potentially save you tens of thousands of dollars.

Do you like the little drawing I did for this post? See the little contented-looking dude next to the house? That could be you, if you’re a smart home buyer.

Man it feels good to be posting again! I’ll see you all again next week!

Bad Monetary Advice

I’m not saying that I know everything about money. I’m really just learning by doing, and by doing my research. Here are some of the things that I have heard or read that will definitely hurt your finances more than they help them.

– If you see some hot shoes you really want, just buy them, but keep the receipt. When the shopper’s high wears off, you can decide if you really want them, and return them if you don’t.

If you don’t have the self discipline to not impulse buy in the first place, you won’t have the self discipline to go back to the store when you realize you don’t need those sexy shoes anymore. I’ve done this myself – I’m honestly just too lazy to return things. It just seems too arduous to drive to the store I got the shoes from, and then give them my address and all of my information all so that I can get the opposite of a shopper’s high. So now, I just avoid all that drama by being smart and not impulse buying in the first place.

– Get a credit card and pay the minimum every month. Because you obviously wouldn’t want to give the credit card companies more than you have to.

People seriously think this. Most people following my blog are already fairly aware of the evils of credit cards, but in case you haven’t heard – ONLY USE CREDIT CARDS FOR EMERGENCIES, because the interest on them adds up fast. And always always pay above the minimum, because the faster you pay off your credit card purchases, the less interest you pay overall. Now is definitely not the time to get swamped with credit card debt. Or ever.

– Eating out is cheaper than cooking, because with cooking you have to buy all of the ingredients, and you always end up buying more than you use in a recipe.

I think that this is a rather short-sighted assumption. Cooking is cheaper than going out to eat the majority of the time, because any ingredients you don’t use you can always save for later use. And leftovers of cooked meals are great for lunch the next day. When you go to a restaurant, you don’t just pay for the food, but for the person cooking it and the establishment itself, etc.

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So I’ve been thinking about my subject matter, and the fact is, finances are a lot simpler when you’re in college than when you enter the real world. I do anticipate keeping this blog going once I’ve graduated, but it can’t hurt to prepare ourselves for when that day comes. So, from now on, I’m going to incorporate occasional lessons about financial concerns that you’re likely to have after college, such as insurance, taxes, and a mortgage. I don’t know about these things on an experiential level, but I’ll do my research the best I can and hopefully bring the things that I learn to my readers in a convenient, easy-to-understand way. Until next time,

Rachel

Cheap Ways to Have Fun

Unfortunately, WordPress doesn’t like me today, so I’m going to have to tell you these tips without pictures until I can make it work later.

So I know I’ve talked before about how bad my roommates and I are about saving money on groceries, but they are pretty skilled at saving money in other ways. Probably the most impressive money saving skill we have mastered is the art of having a great time while spending little to no money. Oh sure, we like to eat at a restaurant or see a movie or go shopping or clubbing every so often, but a surprising amount of the time, the adventures that spawn the fondest memories don’t take much cash. 

For instance, one day my roommate kept complaining that she and her boyfriend were bored and didn’t know what to do. He wanted to go watch a movie with her, but I impulsively told them to buy me seven things at Walmart that added up to exactly $5.25. They liked the idea, and when they came back they seemed like they had a blast, doing what was essentially a scavenger hunt that uses math (they’re dorks). They proudly presented to me seven knick-knacks and a receipt, which I pinned to my bulletin board. 

Another thing we’ve done more than once that you don’t even have to leave your apartment for: Building a fort. My friends and I got really into it, and by the time we were done, we could fit like eight people in there. And surprisingly, it took like three minutes to un-assemble and put the furniture back. 

One of my roomies is really into photography. We do a lot of impulsive photo shoots. It’s fun to look all cute and take goofy pictures and find fun or pretty settings to take them in. We’ve even gone a step further and made up fantastical adventure stories, then set up and took photos to go with them. We then made it into a storybook album on facebook. 

Those are just a few examples, but I could tell you more, from water balloon fights to pumpkin carving competitions to scavenger hunts to movies we’ve made to (non-malicious) pranks we’ve pulled on people at Walmart. If your friends are cool, they will be so down for something like that. And I’ve had such a good time doing them, saving money is really just the cherry on top of the hot fudge sundae.