House and Car Expected Features Creep

Buyers expect much more from their homes and automobiles than when my parents were purchasing these items. Part of the increased costs of cars and houses is due to the increase in expected in these products.

In my parents first purchased house, they had all the contemporary amenities: air conditioning, dishwasher, Formica countertops, intercom system, car port, and a 1/4 acre lot in a newly build subdivision.   The first car my dad bought was a stick shift and maybe a radio.  The second car he bought had automatic transmission and a radio, which was the first car that I drove.   The third car was the same, just automatic transmission and a radio.  Finally, in the fourth car, we got air conditioning.

The first house I bought was a 70 year old fixer upper, from which I learned I wasn't good at renovating houses.  I only had the basics refrigerator, stove over an oven, Formica countertop and steel sink without a garbage disposal.  The second house, which I bought 20 years later had still had a basic kitchen, but also had a laundry room, a whole house vacuum system, whole house stereo speakers,  a finished basement and a three car garage.  It also cost 8 times more. 

The first car I bought new was a manual shift, because I wanted one, with A/C and radio which were now standard.  The second car I bought used was still a manual shift, with A/C, radio and tape deck, electric windows/mirrors and was a convertible.  My third car, was used also, added air bags, ABS brakes and multi CD player.  For my fourth vehicle, which I bought new, I regressed and bought a manual pickup truck, with air bags, ABS brakes, A/C and radio/cassette player.

 Of course, no one wants to go back to only the base features that were only available many years ago.  And I realize that a portion the increased costs for houses and automobiles may be due to features that are now expected. 

For more on Crossing Generations, check back every Thursday for a new segment.

This is not financial, car buying, nor home buying advice. Please consult a professional advisor.

Copyright © 2026 Achievement Catalyst, LLC

9-1/2 Years and 70,000 Miles

I've been driving my truck for almost 10 years and I'm still very happy with it.  It still runs well. I definitely made the right decision not using it for a $4,500 credit in the Cash for Clunkers program.

Overall, the truck is still in excellent shape.  The paint finish is in great condition other the a few dings.   There is no exterior rust.   Other than routine and scheduled maintenance, I've only replaced the tires and front brakes.  In addition, the rear bumper was replaced due to an accident, and the windshield was changed due to a crack caused by a flying pebble on the highway. I hope to get at least five more years before needing to purchase another vehicle.

For reference, my current experience is much better than my first new car purchase in 1980.  The vehicle only lasted about seven years before paint finish went bad and quarter panels were rusting.   In addition, I had replaced the clutch twice, the starter once, and the muffler once by the time it reached 13 years and 130,000 miles.

For more on Reflections and Musings, check back every Saturday for a new segment.

This is not financial or vehicle advice. Please consult a professional advisor.

Copyright © 2012 Achievement Catalyst, LLC

Should we buy a golf car?

Since writing Tax Credits for Golf Carts - Another Unintended Consequence?, I thought about whether it would be worth buying a street legal golf cart for local trips, if the cost were free. However, even with the tax credit, we can't justify owning a golf car. Here are the reasons for not buying a street legal golf cart:

Limited opportunities to use. The main road connecting to our neighborhood has a speed limit of 40mph, making it difficult to drive a golf cart (with a maximum 25mph speed) on the main roads to nearby shopping.

Ongoing yearly expenses. While the tax credit may make the purchase free, there are still yearly costs of maintenance, license plates, and liability insurance.

We don't need a third vehicle. I am a proponent of buying only what we need. Even though it might be almost free, we really do not need a third vehicle for a two driver family.

Thus, we are once again saved from spending due to a stimulus credit, the others avoided being the home buyer's credit and the cash for clunker's credit.

For more on Reflections and Musings, check back every Saturday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2009 Achievement Catalyst, LLC

Tax Credit for Golf Carts - Another Unintended Consequence?

After reading about this yesterday, I thought, "Unbelievable, taxpayers paying for golf cart purchases." Then I thought, "Nah, situation normal, another unintended consequence from government stimulus intervention."

As part of the Emergency Economic Stabilization Act (ESSA) and the American Recovery and Reinvestment Act (ARRA), two tax credits were created for plug-in electric cars, which includes neighborhood electric vehicles (NEVs). The ESSA tax credit is between $2,500 to $7,500, up to 100% the cost of the vehicle, which expires December 31, 2009. The ARRA tax credit is a maximum of $2,500 or 10% of the vehicle cost, whichever is lower, and expires December 31, 2011. Here is the IRS list of vehicles eligible for the tax credit.

Interestingly, as pointed out in Golf car credit controversy, by Kay Bell, golf carts can qualify as NEVs, if they include required safety features to make them street legal, such as side/rearview mirrors, headlights and three-point seatbelts. Although, the ESSA tax credit typically offsets about 1/2 to 2/3's of the golf car price, one manufacturer has price their golf car at $6496.53, which is precisely the amount of the tax credit. Hence, a free golf car, courtesy of a government stimulus bill.

What will the politicians think of next? Perhaps the health care reform bill will include a exercise tax credit for buying golf equipment and playing golf, making the sport a benefit that is entirely supported by government and taxpayer funds :-)

For more on Reflections and Musings, check back every Friday for a new segment.

This is not financial or transportation advice. Please consult a professional advisor.

Copyright © 2009 Achievement Catalyst, LLC

My 2003 Truck is a Clunker

I was surprised last week to find out my truck qualifies for the cash for clunkers program. No, I'm not considering buying a new vehicle. I bought the truck new in 2003 and it now has only 51,000 miles on it. I plan to keep it at least another 4 years, before I even start looking at possible replacement options. With luck, I will be able to drive this truck for another 10 years. So it doesn't make sense for me to take advantage of the Cash for Clunkers program, especially since I would need to pay an additional $12,000 for a new car.

Even if I were looking for a new car, the truck averages about $5,000 in a private sale transaction, which is higher than the $4,500 voucher I might receive. However, now I know I'm frugal since the government has made it official that I drive a clunker :-)

For more on New Beginnings, check back every Sunday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2009 Achievement Catalyst, LLC

The Vehicles of Choice for our Pre-School's Parents

Since retiring in my forties in 2007, I occasionally drive our daughter to pre-school classes. As I wait in the car line to drop her off, I've been noticing the makes of the other vehicles. Except for our car (or my truck), 100% of the vehicles were either SUVs or mini-vans.

It appears that many of the SUVs and mini-vans are loaded (e.g. leather package, built in DVD), and I estimate them to be less than three years old. We drive a compact car and a pickup truck, which are five years old. While my spouse's compact car has a upgrade package, I drive the base model truck, which has a manual transmission.

Our daughter has been asking when we will buy a mini-van. (Answer: Never, since my spouse despises the thought of a mini-van being the primary vehicle.) In the meantime, our four year old will need to settle for the occasional ride in my full size pickup truck, which she still thinks is pretty cool.

For more on Crossing Generations, check back every Thursday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2008 Achievement Catalyst, LLC

Test Driving A Maserati

A couple weeks ago, I received an invitation to test drive a Maserati. Normally, a Maserati would not be part of my set of cars under consideration, but I guess that's why "marketing" exists:-) Besides, since I retired in my forties, I have extra time for extracurricular activities like these. Also, a gift certificate for Omaha steaks was offered in return for doing a test drive.

I arranged to do a test drive within a week of receiving the information. For convenience and to save gas, I scheduled the visit around other errands I was doing in the area. Here's what I learned on the test drive of a Quattroporte:

Price - The MSRP was about $120,000. I knew the Maseratis were expensive, but didn't realize how high. Of course, this is way outside my price range and made me wonder how I made the list for receiving an invitation.

Test drive - I was a bit nervous taking out a car of this value. Fortunately, the dealership had already identified a low traffic country road to use. The car handled very well and I even briefly tested the 400 HP engine when accelerating from a stop.

Sales people - They were very courteous even though it was apparent we were not prime candidates. My friend and I showed up in shorts on our way to a golf course. In addition, they knew I was doing the test drive due to a promotion.

While I enjoyed the test drive, I won't be buying one in the near future. Although the Quattroporte is a very nice car, $120,000 is still too expensive for me to spend on regular transportation, especially since I prefer to pay cash for our cars.

For more on Reaping the Rewards, check back every Friday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2008 Achievement Catalyst, LLC

Tips To Increase Gas Mileage And Reduce Stress

With gas prices as high as $3.69 in my area, I've been considering hypermiling as technique of increasing gas mileage through various methods that reduce engine work while driving. While extreme hypermiling may include methods with potential safety concerns , there are many techniques that are safe and effective to use. Here are the ones I plan to use:

Accelerate slower. I usually accelerate to the speed limit quickly. However, this causes the engine to work harder. By accelerating slower, I can reduce the amount of gas used by the engine.

Coast when a stop is likely. I often continue to step on the gas pedal until it is necessary to use the brake. By taking my foot off the gas pedal earlier, the car slows down and I save gas. A corollary to this is to coast when going down hill.

Drive at 55 MPH on the highway. Higher speeds are less gas efficient. For local destinations, driving faster only saves 5 minutes or less.

Use cruise control. This keeps speed constant, avoids speed creep, and reduces gas usage according to Edmunds.com's research.

While I haven't gone through my first tank yet, I've already noticed a change in my driving attitude when using hypermiling techniques. I'm more relaxed and less rushed when driving to reduce gas usage. Even if I don't get many more miles per gallon, I already have a benefit.

For more on Ideas You Can Use, check back every Tuesday for a new segment.

This is not financial or driving advice. Please consult a professional advisor.

Copyright © 2008 Achievement Catalyst, LLC

A Safe Car for a New Driver

Although our daughter is still 13 years away from driving, I already have picked a good car for her, a classic boxy Volvo 240 DL:-) Here are the reasons:


Built like a tank. 16 year old drivers are three times more likely to have an accident with injuries than drivers of all ages. Volvos are designed with a structural cage to protect the passenger compartment. If one uses seat belts, a Volvo will likely provide maximum protection in the event of an accident.

Not a cool car to drive. Classic Volvos, while safe, are probably not the first choice of teenagers to drive. They are pretty uncool looking. Thus, the car would not be driven frequently:-)

Safe and infrequently driven, the best of both worlds for a new teenage driver. Unfortunately since the last Volvo 240 DL was produced in 1993, it may be hard for me to find one 13 years from now:-)

Credit for the idea: Tom and Ray Magliozzi, Car Talk

For more on Crossing Generations check back every Thursday for a new segment.

Photo Credit: Wikipedia

This is not financial or parenting advice. Please consult a professional advisor.

Copyright © 2007 Achievement Catalyst, LLC

Collision and Comprehensive Car Insurance - When I Consider Dropping Them

Although I am a firm believer in having adequate insurance coverage, I also like to avoid being over insured. One of the insurances I periodically review is collision and comprehensive coverage for our cars.

Since we drive our cars for a long time, at some point they are no longer worth insuring. Liz Pulliam Weston wrote a good article about this in MSN.com titled Dump the insurance on your clunker. At some point, one should start considering stopping insurance for damage to car. Ms. Weston writes that point is when one's annual collision and comprehensive premium is equal to 10% of the car value less the deductible. For example, if one owns a $6000 car with a $500 deductible, one should consider dropping the collision and comprehensive insurance if the cost is more than $550 per year.

For me, 10% may be a little to low, since it will take 10 years of premiums to cover a totalled car in the first year. I personally like to use 20%, since that is a shorter time (5 years) to carry the risk. Also, I like to use an absolute car cost (e.g. $4000) I am willing to "self insure." When my car value drops below that amount, I will drop collision and comprehensive insurance. Finally, I consider our driving record. Luckily, we have only been involved in four car accidents in over forty years of combined driving, in which only one was at fault (by me.) Averaging only one accident every 10 years of driving lowers the probability of us to have an incident in five years.

At this time our, the collision and comprehensive premium for our cars is about 2% of the value of our cars after the deductible, primarily because of good driving records. Also, neither car is close to the threshold value at which I am willing to self insure. Therefore, it appears we will be carrying collision and comprehensive coverage for several more years.

For more on Ideas You Can Use, check back every Tuesday for a new segment.

Photo Credit: morgueFile.com, Daniel T. Yara

This is not financial or insurance advice. Please consult a professional advisor.

Copyright © 2007 Achievement Catalyst, LLC

Run-Flat Tires - Overpriced Insurance

Recently, a colleague and I were discussing our experiences with tire replacement. He owns a Honda Odyssey with run-flat tires, which allow 50-100 miles of driving after the occurrence of a flat tire. As part of routine maintenance, he was replacing the tires. To his surprise, he learned that the replacement tires would cost about 100% more (about $600 more for four tires) than normal tires. In addition, the tires were special order and needed special skills to be installed.

We discussed the merits and "problems" of run-flat tires:

Merits

1. Drive 50-100 miles after a loss of air.
2. No need to change tire, especially on busy road.

Problems

1. Limited service facilities that can repair or replace the tires.
2. High cost to replace.
3. Tires may not be in stock and need to be ordered
4. No spare if one needs to drive over 100 miles.

We concluded that run flat tires were expensive "insurance" for a low frequency problem. For me, my last flat tire was about 20 years ago. In addition, there are many reasonable and less expensive alternatives. Cell phones are ubiquitous now and can be used to call AAA or a service station. For a slow leak, one can pump up the tire and drive it to the nearest service station. In the worst case, I can use the car jack, get my hands dirty and change the tire myself:-)

For more on Ideas You Can Use , check back every Tuesday for a new segment.

Photo Credit: morgueFile.com, Alex

This is not financial or automotive advice. Please consult a professional advisor.

Copyright © 2007 Achievement Catalyst, LLC

Why I Don't Judge People By Their Car

For some reason, certain characteristics are associated with the type of car a person drives. The characteristics often are related to the type of driver or wealth status.

Type of Driver

We have two family vehicles, a full-size truck and a compact car. I've noticed that people seem to drive cautiously around my truck. I rarely get cut off, tail gated, honked at nor experience other inconsiderate actions from other drivers. When I drive my spouse’s vehicle, a compact car, it seems one of these inconsiderate actions happens to me about 50% of the time.

People must think that drivers of trucks have different characteristics that drivers of compact cars. I don’t drive any differently nor do I personally look any different. So I figure the difference must be due to my vehicle.

Financial Status

A few years ago, I purchased a used luxury vehicle for a very good price (less than $20,000). When the wife of a friend saw the car, her first comment was, "Wow, you must have received a really big raise." Actually, nothing had changed. Same pay, same house, and same standard of living. Again, the only difference was my vehicle.

Of course, while wealthy people do drive expensive cars, people who drive expensive cars are not necessarily wealthy. The mistake some people make is to live by the second assumption - i.e. driving an expensive car means that one is wealthy.

My Wealth Builder Situation

I'm doomed to life of being perceived as an dangerous driver who is not wealthy :-) My truck, which only has the basics, is 3.5 years old and has 37K miles on it. I'll probably drive it 7 -10 more years, and perhaps 15 more years if it holds up.

In reality, we are safe drivers (e.g. accident free discounts), and saving 20% of our income. So please don't judge me by what I drive :-)

For more on Ideas You Can Use , check back every Tuesday for a new segment.

Photo Credit: morgueFile.com, Matt Geyer

This is not financial advice. Please consult a professional advisor.

Copyright © 2007 Achievement Catalyst, LLC

Why I Pay Cash For A Car

One of the personal finance practices I use is to pay cash for my cars. After a house, a car is generally the largest single expenditure that is made. Thus, a car is also the largest opportunity for me to reduce spending. Paying cash causes me to spend less when buying a car. (For more coverage on the cost of cars and the impact on personal finances, see recent articles in MSN.com and Yahoo! Finance.)

However, it is often easier to spend more, versus less, when buying a car. One reason is that the cost can be spread out over 4 to 6 years of monthly payments. At a loan rate of 7%, the cost of an extra $1000 is between $17.05 per month (for a 6 year loan) to $23.95 per month (for a 4 year loan). It's easy to justify a premium stereo for "only" $17 to $24 a month. That's barely the cost a meal. The salesman knows that, the finance manager knows that, and the buyer knows that. Before long, one is paying about $200 more per month to get a car that cost $8000 more.

For me, the solution is to get the comparison back to the real numbers. That's where paying cash for a car helps. It puts the decision on the real money difference, not the monthly difference. It's not $24 a month more for a premium stereo, it's $1000. For $24, I barely think about it. For $1000, I think hard about it and pass. Paying cash causes me to ask the question, "Do I really need that?" when considering car options.

So how can one save enough to buy a car? It's easy if one is already making a car payment. The secret to keep the car several years after it is paid off AND keep making "car payments" to one's savings account. Thus, after 5 to 6 years, there is enough money to purchase the next car with cash.

Here's an example of how it can work. After paying off the car loan in three years, I continued to make "car payments" to myself. Because I kept the car for 10 years, I made $232 "car payments" to a savings account for 7 years, resulting in over $19,000 saved. That money was used as a cash payment for our next car.

For more on The Practice of Personal Finance, check back every Wednesday for a new segment.

Photo Credit: morgueFile.com, Daniel T. Yara

This is not financial advice. Please consult a professional advisor.

Copyright © 2007 Achievement , LLC

Why Drive a Truck

During my driving lifetime, I have owned, in chronological order, the family 13 year old hand-me-down, a sports sedan, a convertible, full size luxury car, and a full size pickup truck. While I have enjoyed all of these vehicles, my favorite is the truck because it is a great combination of practical and economical. Here the reasons I choose a truck as my top pick:

Better View, Safer Driving. I am seated above most drivers. By sitting at a higher elevation, I can see the overall traffic on the road much better. In particular, I can see the bad drivers and avoid being near them.

Savings on Delivery Charges. My truck has tremendous cargo capacity. I can haul just about anything, anywhere. We moved two chairs and a couch from my in-law’s house to ours using my truck. Fifty bags of mulch fit comfortably in the truck bed. We regularly haul large items home from Costco. Even a full size car couldn’t handle a quarter of the items I regularly transport.

Low Cosmetic Maintenance. For example, dings don’t matter to me. Even though the truck was purchased new, I have never worried about getting a ding, nick or scratch. My philosophy is, “It’s a truck.” Trucks are supposed to have dings, nicks and scratches. Or else it’s not a truck:-)

Overall, the truck has been a great everyday vehicle for me. It is a six cylinder, manual transmission, base model truck that is very reliable. It gets about 20 miles to the gallon, costs $22 for oil changes (only maintenance so far) at the dealer, and has saved me several local delivery charges.

Photo Credit: morgueFile.com, Ruth Harris

This is not financial advice. Please consult a professional advisor.

Copyright © 2006 Achievement Catalyst, LLC