Monthly Archives: February 2008

The Million Mile Pickup Truck

Posted on by  at  7:00 am
19

Earlier this week an article appeared on Yahoo featuring a man and his million mile pickup truck. You read that right; the truck actually rolled over one million miles in its seventeen year life. It struck me for a couple reasons. First, I drive a seventeen year old truck myself, but it has barely a tenth of “the old girl’s” mileage. Second, in this day of 36-month leases very few people buy and hold their cars long enough to drive them into the ground. This is good news for used car dealers, but bad news for consumers. So, if Mr. Oresnik has proven that it’s possible to drive your vehicle a million miles, why does everyone rush out and finance a new car every three or four years?

To impress people at a stop light. Seriously, think about the motivation for your last car purchase. Was safety your top priority? If you have kids it might have been. Chances are you were more impressed with the options package than the safety ratings. Were you concerned with the interest rate on the loan, or the early prepayment penalties? Probably not. Americans have had a love affair with their cars for many years. It is a concept that is perpetuated by auto manufacturers and dealers alike. Our vehicles have become an extension of ourselves, a reflection of our self-worth and an indication of our success. Some of us actually believe our cars make us better looking. I personally gave up on that idea a long time ago – I look just as ugly in a beautiful car as I do a beater!

I need a nice car for my job. Oh really? Says who? Real estate agents, contractors and other service professionals have fallen for this one. Let’s pretend I call two plumbers to come out to my home for a repair. One drives up in a brand new Hummer, the other a used pickup truck. Guess who is getting my business? You got it – give me the old pickup truck any day. Driving around in a flashy car might give your customers the idea you are successful, but it probably leaves them feeling like they are the ones paying for that ride by overpaying for your service.

I need a new car to save on gasoline. This is one of my personal favorites. I hear people all the time say, “I bought a new car because it had better gas mileage than my old gas guzzler.” Now, I can appreciate their concern for the environment. However, “green” concerns aside, there is no way you can justify financing a new automobile because of higher gas prices. How many thousands of miles a month would you have to drive to make up a $400 car payment in gasoline savings?

Bottom line, cars are simply a method of basic transportation…that’s all they are. They are assembled hunks of metal sitting on four tires designed for the purpose of transporting us safely from point A to point B. I doubt Henry Ford ever envisioned the kind of luxuries we see in today’s automobile – voice activated radio controls, heated leather seats, heads up displays, and backup cameras installed in bumpers. If families invested the $400 a month wasted on new cars into a good, growth stock mutual fund for 30 years they could easily retire millionaires. Hope you like the car!

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Reluctance to Use Emergency Funds

Posted on by  at  7:00 am
14

The first step in any good financial plan is to establish an emergency fund to handle life’s emergencies and break the cycle of turning to debt. However, some people feel a reluctance to use the fund in an emergency and turn to credit cards to cash flow each bump in the road. This phenomenon is driven largely by fear – fear that a bigger emergency will happen before adequate time to rebuild the [tag]emergency fund[/tag]. Here are a few strategies to combat that fear.

Think of your emergency as a personal line of credit. It might even help to sign up for an account that offers a debit card. I keep my emergency fund debit card in my wallet with one of those ATM card slips that says, “Break only in emergency!” When Murphy strikes I use that debit card to tap my emergency fund rather than turning to a credit card.

Hang on to your oldest, no-fee credit card until you have established several months of savings. By keeping one credit card with available credit you still have a backstop should you have the unfortunate luck of getting hit by two emergencies in the same month. Be sure that the emergencies are real emergencies – clearance items at your favorite store do not qualify.

Emergency funds should remain in a highly liquid account. The majority of your emergency funds should be socked away in a high-interest savings vehicle, like a savings account with a top online bank. We also keep a local, smaller emergency fund in an interest-bearing checking account (with debit card access). I could get a higher rate of return on this smaller amount elsewhere, but I have discovered that the higher the rate of return on my money the more pressure I feel not to touch it. This is especially true of holding an emergency fund in stocks or mutual funds. If the market is up, I don’t want to cash out because it might go higher. If the market is down, I don’t want to cash out until it goes back up again. Best to simply keep the emergency fund in easily accessible cash.

Make rebuilding your emergency fund a top priority after each expenditure. If your car died last week and the repair bill topped out at $600 you should quickly find a way to refund that $600 back to your emergency fund. Stop paying extra on your debts until that $600 has been replenished – minimum payments only. Take some extra overtime next week. Round up some old books and DVDs and sell them on EBay. The point is to make rebuilding that emergency fund your number one priority. Having that plan in place before the emergency will make it easier to swallow the $600 hit to your emergency fund, because you know it will be quickly replenished.

Restaurant Guide For Saving Money

Posted on by  at  9:21 am
15

Restaurant GuideEven the most frugal of us occasionally enjoys an evening out of the house. A dinner out is a great reward for hitting one of your financial milestones, but be sure to implement the following frugal [tag]dining tips[/tag] to avoid overpaying when eating out.

Ask for a “to-go” box up front. As soon as your meal arrives ask for a to-go box and separate about half of your meal. Restaurant meals have grown to enormous proportions over the years, and they are usually enough to feed two people.  Save the other half of your entree for lunch the next day.  Most importantly, don’t walk out and forget the to-go box (as I’ve done on many occasions).

Split a drink, or just go with water. At most restaurants a glass of tea or a soft drink can run as much as $1.50 a glass.  That’s $6.00 for a family of four.  I recommend Mom and Dad share a drink, but splurge on small drinks for the kids.  Kids are notorious for passing germs back and forth, so best to keep their drinks separate.  Water is usually offered for free, but skip the lemons.  Lemons are often sitting out around uncooked meats and are handled with bare hands, both conduscive for passing harmful bacterias.

Order an appetizer as an entree. Appetizers are usually cheaper than entrees.  Look for appetizers that offer a variety of food groups, such as nachos or quesidillas (meat, cheese, greens, sour cream, etc.).  It’s tough to make an entire meal out of fried cheese sticks.

Stick to the dollar menu, and  hold the fries. At fast food restaurants the dollar menus offer pretty good deals if ordered properly.  McDonalds double cheeseburgers were a welcomed addition to the dollar menu, though Trent at the Simple Dollar has proven you can cook a tastier, more nutritional burger at home.  Still, if you are on the go and must stop for lunch, stick to the dollar menu and skip the fries.  French fries are probably the worst possible choice based on nutritional content.  As an alternative look for a side salad, chili or baked potato.

Ask for as many “extras” as you can get, for free. When we make our weekly stop at Subway I load up on as many condiments and sandwich components as they will give me (for free).  Ask for extra lettuce to bulk up the sandwich a bit.  Try your sub with “the works” which includes all vegetables.  If you are like me and split the footlong into two meals, hold the mayo, oil and vinegar as it makes the next day’s lunch a little soggy.  You can add these yourself at home.

Don’t order from the kids menu. Some kids practically live on Happy Meals (we’ve bought our share).  At larger restaurants we’ve found it pays to skip ordering meals for the kids and simply sharing a few bites from our entrees.  This doesn’t work too well if you order backfire spicy buffalo wings, so stick to something kid-friendly like plain chicken fingers and a baked potato.

Skip dessert. Even a couple scoops of ice cream can cost three or four dollars at most restaurants.  If you really are in the mood for dessert, pay your bill and head over to a local fast food restaurant for an ice cream cone.  McDonalds offers an excellent, low-fat, soft-serve ice cream for less than a $1.00.

Don’t be a cheapskate when tipping. You might think the Frugal Dad would advocate cutting costs wherever possible.  Well, that is typically true.  However, [tag]tipping[/tag] is an area where I am generous.  If your server has been exceptional calculate 10% of the bill in your head and then double it, rounding up to the nearest dollar.  On that same subject, don’t forget to tip the pizza delivery person.  They braved traffic to drive to your home in the elements and walked your dinner all the way to your door.  Who knows, they may even be trying to get out of debt, too.

Five Excuses for Not Calling in Sick

Posted on by  at  10:35 am
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I woke up this morning feeling awful – no energy, sore throat, headache, congestion, etc.  This wasn’t just a typical case of the “Mondays,” I really didn’t feel like getting out of bed.  After several games of tag with the snooze button I finally made myself get moving.  After a shower and a light breakfast I was feeling better.  A quick check of my temperature revealed no fever, so whatever I was incubating probably wasn’t contagious.  On the drive to work I reflected on my motivation for not making [tag]excuses to call in sick[/tag]. 

  1. Conserve paid sick leave for more serious illnesses.  As a father of two kids I know how easily kids can come down with colds.  My kids also have fall seasonal allergies, inherited from their dad, that make us regulars at the pediatrician’s office from October to March each year.  For this reason I try to conserve my own sick time so I can help with their care.  Sometimes my wife manages to come down with whatever ailment is affecting the kids and needs some reinforcement.  Other times it is my wife who is sick and I get to play Mr. Mom while my wife recuperates. 
  2. Set a good example for your kids.  As a parent, there are times when the “do as I say, not as I do” manta just doesn’t fly.  Kids who watch their parents stay home may grow into little Ferris Buellers, taking advantage of every opportunity to play hooky from school.  Modeling a strong work ethic for your children helps them become more productive citizens later on. 
  3. Impress the boss.  Let’s face it, today’s culture rewards “presenteeism.”  People who come to work the day after breaking their leg are called “dedicated.”  Someone who drags themselves to the office on their deathbed is “driven.”  I personally draw the line when it comes to contagious illnesses, because spreading germs around the office hurts overall productivity, and doesn’t make many friends amongst coworkers.
  4. Going to work may actually make you feel better.  When I am suffering from the common cold, anything to get my mind off my symptoms seems to help.  If I stay at home the chances are high that I’m going to lay around in bed, watch some mindless television show and crave some form of fast food.  None of these activities are going to aid my financial turnaround.  If I have the flu, or some other serious illness requiring rest, I’ll stay home to recover.  If it is a headcold and a scratchy throat I say load up on some OTC cold medicine and tough it out.
  5. Missing out on important decisions.  Ever notice when you stay home sick someone quickly throws together a meeting to make an important decision, or a big announcement?  At my last employer I came down with strep throat and was out of the office for three days.  I came back the next Monday to find my badge no longer worked on the outside card reader.  For a sinking moment I thought I had been canned.  Turns out the division I worked for had been bought by another firm and badges had been reissued.  The lesson here is to try and stay in touch with colleagues even if you are home sick via an occasional email, or a phone call in the evening just to catch up on the day’s events.

Where do you draw the line between “presenteeism” and putting your health first?

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