Archive for the ‘Finance’ Category
So I bought a new car last month.
Well, not entirely new. It’s a used car. But it certainly feels new.
But let me set the scene. Last month, Viet and I were driving home from a night out with friends. I got in the car and before putting the key in the ignition I noticed the lights on the window switches were on. This would normally be odd due to the key still being in my hand, but those little lights almost never came on anyway. So I tried one of the switches and the window came down. With the car still off. Hmm. I drove home, parked in the driveway, and the same thing happened. Obviously a short, and one that could eventually drain the battery. I performed a little key dance with the ignition and got the lights to go out, but discovered the problem persisted the next day. To temporarily rectify the situation, I removed the power window fuse from the fuse panel. Obviously not something I could ignore for long.
The Intrepid had seen its share of issues over the 12 years I owned it. Too many to count. I think I began thinking about replacing it in earnest in May of last year, when the brakes completely failed (while I was driving back from Iowa City) and I shelled out nearly a grand to have them replaced. I was mere months away from paying off my student loans and wanted to keep focused on that, so I told myself the next financial goal after the loans were settled would be to buy a new car. Thankfully, the Intrepid hadn’t needed much maintenance since last summer, so most of my discretionary income has been set aside for its replacement.
So back to last month… the day after I discovered the latest in a too-long line of mechanical failures, I made a call on a car I had seen in the Veridian swap sheet. Met with the owner, talked a bit, took the car for a test drive, was very impressed, haggled over the price and came to terms. I had secured a new car. Spent the next day (Monday) updating my insurance policy for full coverage and securing an auto loan through Veridian, which I didn’t really need as I could have just cut a check from my savings account, but I figured an extra loan that could be paid off in short order would serve as good fertilizer for my A credit score.
I am now the proud owner of a 2007 Buick LaCrosse CXL. Let me tell you, this is one fine car. Nearly immaculate condition. One previous owner, an elderly man who passed away last month (his daughter & son in law were the ones selling it). Stored in a garage, never driven out of state, only 55K miles (very low for a 6-year-old car!), serviced & maintained ahead of schedule, clean leather seats, sun roof, telescoping steering column, 10 preset radio w/ optional XM satellite service, optional OnStar service, heated front seats (VERY nice this time of the year), remote lock, remote start, remote trunk unlock, a display counsel that tells me far more than I can remember, such as the outside temperature, each tire’s psi reading, battery voltage, two trip odometers, current fuel economy, oil life capacity (I guess an indicator of when the oil should be changed?), six-way driver seat adjustments, some manner of anti-theft system that I don’t fully understand, and about a thousand other things I’m still learning about it.
For the first couple weeks I alternated between driving the LaCrosse to work and back and driving the Intrepid to move recyclable items and Viet’s bike to his apartment. Then I left the Intrepid parked in the lot across from the Mandalay for a couple weeks. It was only costing me 56¢ per day to insure it but I just wanted to be done with it. And I didn’t have it in me to list it and deal with people coming to look at it and haggling over a selling price. So on advice from Denny I called Waterloo Auto Parts and they quoted me $300 if I could drive it there myself.
So a week from last Friday: Dad met me at my place to follow behind in his truck & give me a lift back after the sale. I remember getting inside the Intrepid and noticing, after having driven a properly functioning car for a couple weeks, how badly the Intrepid’s driver seat sagged! I turned the ignition and it made a really horrible clanky noise, followed by a whiff of black smoke from the tailpipe. Hmm. I let the engine rattle for a minute before feeding it some gas and shifting into reverse. Okay Intrepid, I thought to myself, just one more ride. Just get me there and you can rest in peace. I drove it gingerly to its final destination.
Made it to Waterloo Auto Parts without incident, although at a couple points I became seriously worried the brakes weren’t working (just my luck they would try to fail me!). I parked in front of the main office, took off the license plates, removed my registration paperwork & insurance card from above the passenger side sun visor, and went inside. The fellow I talked to on the phone greeted me and asked for the title and the keys. Odd how he didn’t walk outside to inspect the car… and given there were no windows in the front of the office, it was even odder how he just assumed there was a car outside at all! But whatever, he was a trustworthy fellow. Made a Xerox of the title and after a couple minutes in his office I had a check for $300, which I immediately cashed at the bank 10 minutes later. So long, Intrepid. It’s been swell.
I’m still getting used to owning a nice vehicle. I don’t put anything on the seats, aside from the large box of Kleenex that came with it when I bought it (a leftover from the previous owners). Most things go in the stretchy net thing in the trunk, or on the floor inside. I’ve taken it through a car wash once (Viet came with, his first time in a car wash!) — we went to the recently-opened Happy Hippo Car Wash on University for its $10 touch-free, tri-colored soap magic. I only put top tier gasoline in the tank, 87 octane or higher, which means no more fill-ups at the Hy-Vee station (and no business for Kwik Star as they have ethanol in their 92 stock). Conoco is a mile away and offers 93 octane ethanol-free, so I’ve been going there.
Sunday we drove down to Cedar Rapids to see “All is Lost” at the Wehrenberg (very good movie). Driving out of town to catch a film wasn’t something I’ve been able to do with the Intrepid over the past few years. Driving out of state (aside from a couple quick jaunts to the Twin Cities over the past few years) wasn’t even a consideration. But now that I have the LaCrosse, I can fill up the tank and light out for any direction I choose without a concern for performance. I’ve regained a sense of true mobility, and I’m already giddy for a road trip next year.
For anyone investing in a 401(k), please take an hour to watch this video. It’s a real eye-opener. I’m happy to report my portfolio is already composed of low-fee funds, and I contribute 12% of each paycheck into my account. While that’s higher than most people I know, I feel I should raise it a bit more. Anyway, watch and learn —
I waited and waited and waited for my student loan servicer to send me something in writing confirming my student loans had been paid off — which I did on Black Friday — and I finally received it, kinda, as an electronic message in my account on their website. So I logged on, hopefully for the last time, downloaded each statement (there were nine, as I had nine separate loans) as a PDF and saved them to my hard drive. I’m considering that “something in writing”, so I can now publicly declare my student loans are paid off and I am debt free.
It’s an odd feeling, not having to make any obligatory payments to anyone anymore, aside from rent and all. So far I’m doing good curbing any impulse shopping desires. Years of living frugally has trained me to cringe anytime I have to spend money, especially if it’s on something unessential. I’m still going to treat myself to a few nice things, a few electronics for the apartment and maybe fund some traveling this spring. Otherwise my paychecks are going straight into savings and earmarked for a new car, which I’d like to procure by the end of this year.
Tonight ends my 10-day* vacation from work. Ten short, cold days mostly spent indoors with Viet, constantly running to Hy-Vee to buy food, seeing various friends for seemingly short bursts of time (1-2 hours tops) and watching a variety of movies (including the 2010 restoration of “Metropolis”, “Santa Sangre” and “The Last Laugh”) and episodes of “30 Rock” and “Merlin”. I caught up on my sleep, ate far too much junk food and didn’t get nearly as much done as I had hoped… so in other words, another typical holiday vacation.
NYE was spent at Cory’s parents’ house with him, Cara, Viet and Swestka. We sat at the living room table and played Farkle, Last Word, Up and Down the River, Sequence and Rummikub, with episodes of “Pawn Stars” playing in the background. We took a quick break at midnight to catch the ball drop and down some cheap champagne.
So here is 2013. I achieved last year’s major goal of paying off my student loans (on Black Friday; I didn’t want to write about it until I received written confirmation from the loan servicer but it appears they didn’t mail it until Dec 23, so may as well break the news now). This year’s major resolution/goal is to either save up for a new car or relocate to a city where I could get buy without one. Once that decision is out of the way, I can *finally* focus on traveling! Otherwise, same as last year — for the immediate future (Jan/Feb) I’m just going to keep my head down, work my ass off, keep up at the gym, whittle away at my winter to-do list and try to spend as little money as possible. Stay tuned…..
[*excepting a six-hour workday on Xmas Eve.]
[Prepare for a rant…] I’ve seen an online petition on Facebook and other sites arguing in favor of forgiving the nation’s student loan debt, which is currently around a trillion dollars (making it higher than all outstanding credit card debt). My gut reaction is that this is a horrible idea.
Granted, I am one of those college graduates with outstanding student loans, and I could definitely find better uses for my income instead of handing it over to the federal government. But you know what? That’s the deal I made way back in the summer of 1999, before I began my first semester of college: I would receive a quality education in exchange for paying tuition plus interest when I graduated. I knew the burden I was taking upon myself and I agreed to it. I signed on the dotted line. And I’ve been dutifully paying it back over the past eight years, and am very close to paying it off (I seem to be perpetually three months away, but trust me, at this point I could cut a check from my savings account and wipe the loans out, if I didn’t care about my rainy-day fund).
I live within my means. I have a credit card (through Veridian) but only use it to pay for groceries and gas and other monthly expenses, and I pay off the balance every week, before interest can accumulate. Aside from the student loans and an auto loan for $1000 I took out in 2001 (and which was paid off in 2 months), I don’t borrow money. If I want something, I save my money until I can afford it. Thankfully, ever since adopting a lifestyle philosophy centered around simplicity and minimalism, it’s rare when I feel the need to buy something anyway. If I do, I obey the “one in, one out” rule I set for myself, so my apartment doesn’t become cluttered with junk I don’t really need in my life. Luckily, my monthly loan payments are less than 10% of my discretionary income.
All this is to say I have been faithful in paying back my student loans rather than being the dutiful consumer American capitalism wants me to be. I am going to feel very good when I finally pay off my loans because I will have done so all on my own, without the assistance of anyone. I took on this obligation and I am determined to see it through. It’s my moral responsibility to repay this obligation, as it should be for every college graduate.
I think that’s what chaps my hide about this signon.org petition to waive student loan debt. With very few exceptions, college students knew the terms of the loans they were taking out. These loans are totally voluntary!! Now they have a degree, which they get to keep for life, but they want out of their end of the deal. Their main argument centers around the supposed stimulus such a waiver would have on the economy:
Forgiving the student loan debt of all Americans will have an immediate stimulative effect on our economy. With the stroke of the President’s pen, millions of Americans would suddenly have hundreds, or in some cases, thousands of extra dollars in their pockets each and every month with which to spend on ailing sectors of the economy. As consumer spending increases, businesses will begin to hire, jobs will be created and a new era of innovation, entrepreneurship and prosperity will be ushered in for all.
Freakonomics points out a few reasons why this argument doesn’t hold water:
If we are going to give money away, why on earth would we give it to college grads? This is the one group who we know typically have high incomes, and who have enjoyed income growth over the past four decades. The group who has been hurt over the past few decades is high school dropouts. … If you want stimulus, you get more bang-for-your-buck if you give extra dollars to folks who are most likely to spend each dollar. Imagine what would happen if you forgave $50,000 in debt. How much of that would get spent in the next month or year? Probably just a couple of grand (if that). Much of it would go into the bank. But give $1,000 to each of 50 poor people, and nearly all of it will get spent, yielding a larger stimulus. … Why give money to college grads rather than the 15% of the population in poverty?
College graduates have demonstrated they have the skills and knowledge needed to succeed in life. The last thing they need is a bailout. I’m sorry if the economy isn’t providing enough job opportunities, but bailing them out won’t change that. And from a moral standpoint, those living at or below the poverty line need government assistance more than college graduates (though I’d still prefer to provide assistance programs rather than a simple handout).
Of course, all this says nothing about how profitable student loans are to the federal government:
According to the scrupulously nonpartisan Congressional Budget Office, $37 billion will flow IN to Treasury from student loans made this fiscal year … Treasury can borrow money at 0.5% or less, and lends it to students at 3.4%. Administrative costs are well below 1%. Prepayment risk is minimal; repayment stretches over many, many years, and the yield spread just keeps on coming. Interest rate risk is also minimal, given that Treasury can issue debt in a range of maturities.
This video does a good job of recapping some of the arguments against student loan bailouts mentioned and linked to above:
As bad as student loan debt may be, it’s nowhere near the moronic level held by our federal government, currently at $15.7 trillion.
Only one time in our nation’s history have we ever been debt-free. That was during the tenure of Andrew Jackson’s presidency:
In Jackson’s mind, debt was “a moral failing,” Brands says. “And the idea you could somehow acquire stuff through debt almost seemed like black magic.”
So Jackson decided to pay off the debt.
To do that, he took advantage of a huge real-estate bubble that was raging in the Western U.S. The federal government owned a lot of Western land — and Jackson started selling it off.
He was also ruthless on the budget. He blocked every spending bill he could.
When Jackson took office [in 1829], the national debt was about $58 million. Six years later, it was all gone. Paid off. And the government was actually running a surplus, taking in more money than it was spending.
An unreleased government report written in 2000 predicted we could have potentially paid off all national debt by 2012. But it’s unlikely America will ever be debt-free again, for the simple fact that much of our economy (as well as the global financial system as a whole) now depends on the issuance of Treasury bills:
Banks buy hundreds of billions of dollars’ worth, because they’re a safe place to park money. Mortgage rates are tied to the interest rate on U.S. treasury bonds. The Federal Reserve — our central bank — buys and sells Treasury bonds all the time, in an effort to keep the economy on track.
I never would have guessed having no debt (for the country) could be a bad thing. But I still would prefer to have “just a little” debt to the amount we have now.
Hey, did you all know you can request a free copy of your credit report once every year? Of course you did. How many actually do this? Probably not many. Well, it’s worth it, even if you’re like me and you have very few items on your report (though all are in good standing with an A-quality credit score*).
I made my annual request today at Annualcreditreport.com (not to be confused with the not-free services of FreeCreditReport.com). I obtained PDF copies from Equifax and Experian, and had to phone-order a copy from TransUnion as their website was “experiencing technical difficulties” at the time of my request. What sucks is that not only am I limited to one report request per year, but the fact that their site was down at the time of my request counts as the request. Jerks. Whatever, I’ll wait for the snail mail copy.
But I did find a strange though perhaps innocuous discrepancy in the Equifax and Experian reports. One shows my student loans still open and the other shows them transferred/closed, which is technically accurate as they were transferred to a new servicer last year, but that begs the question of why isn’t the new servicer showing up on the report? Or, conversely, why does the first report not show the transfer at all? Hmm. I filed a dispute and will await their “research”.
So, message of the day: review your credit reports once a year.
*It is worth pointing out that the free credit reports do not provide a credit score.
I’ve been very good this year about devoting discretionary income towards my outstanding student loan balance. The entirety of my federal and state tax refunds as well as the year-end bonus I received at work were all sent off to fill the government coffers. I’m still on track to pay off the loans this year, but my original deadline has been pushed back a few months. I think I was overly optimistic when I did my budgeting last year. Two flat tires (one patched, another replaced) and a faulty oil sensor on the Intrepid were unwelcomed expenses earlier this year.
My resolve, however, remains intact. It may mean (yet again) putting off travel plans for the year, but I feel that’s a worthy sacrifice for being debt-free. But once the loans are behind me, I’ll try to finance a mini vacation somewhere. Nothing too exotic… I’ll probably stay stateside.
The remainder of the year will be spent saving up for a new car. The Intrepid has had a good long run but it is developing rust holes around the rear wheel wells (I like to refer to them as my car’s “liver spots”) and repairs are unfortunately becoming more common and more costly. I would like to get it over the 200K threshold and then put it down mercifully.