Beating Broke

Let me begin by saying that I don’t see any real value in buying a car new.  You’d be better off waiting a year or two and buying the same model after the initial devaluation happens.  If you insist, however, and you have to choose between a cash back rebate and 0% financing, here’s how it breaks down.

I’m taking liberties here and using a few assumptions.  The first, and most important, assumption is that you’ll use the cash back rebate as an addition to your down payment.  I’m also assuming a 5 year loan because that’s pretty standard for a new car loan.  I’m assuming that you’re going to use the cash back rebate as an addition to your down payment, because you’d be an idiot not to.  No really.  Why would you buy a $20,000-$50,000 car that will lose at least 10% of it’s value the second you sign the dotted line and then also take the $2500 (Or however much) in cash?  Also, if you do take it in cash, will you drop me a line?  I’ve got some ocean front property in Oklahoma to sell you.

Assumptions aside, the deciding factor here is the interest rate.  The lower the interest rate if you take the cash back, the better that side looks.  Somewhere around 5.8% they are about even over the life of the loan.  Of course, if you make extra payments that will change things as well.  If you can get a rate of 4% or so, the difference is pretty good and you should use the cash back and run with it.  At something like 8%, however, you’d be pretty silly to not take the 0% financing.

In the end, there are several variables that need to be taken into account such as trade in and sales tax.  And this is far from a scientific study I did here.  What I would suggest is using a loan amortization calculator and punching in the numbers.  For this little experiment, I used a calculator built for just such a calculation at interest.com.

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LifeLock will pay $12,000,000 in a settlement with the FTC and 35 states.  The states and the FTC claim that LifeLock’s Identity theft and data security claims were not true.

In one of the largest FTC-state coordinated settlements on record, LifeLock and its principals will be barred from making deceptive claims and required to take more stringent measures to safeguard the personal information they collect from customers.

“While LifeLock promised consumers complete protection against all types of identity theft, in truth, the protection it actually provided left enough holes that you could drive a truck through it,” said FTC Chairman Jon Leibowitz.

“This agreement effectively prevents LifeLock from misrepresenting that its services offer absolute prevention against identity theft because there is unfortunately no foolproof way to avoid ID theft,” Illinois Attorney General Lisa Madigan said. “Consumers can take definitive steps to minimize the chances of having their personal information stolen, and this settlement will help them make more informed decisions about whether to enroll in ID theft protection services.”

Since 2006, LifeLock’s ads have claimed that it could prevent identity theft for consumers willing to sign up for its $10-a-month service.

There’s a laundry list of other things that they were fined for that includes data security holes and just overall misrepresentation.

It’s been widely reported that most of the stuff that LifeLock does is easily done by yourself without having to pay the $10/month membership fee.  It’s no surprise that they got hit with this, really.

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Isn’t that a funny title.  Even I had to double take to make sure that it wasn’t typed wrong.  But, yes, unautomate it is.  And the man with the plan is Adam Baker.  You likely know him from ManVsDebt.  Maybe not, but if not, you should.  And he’s got a plan to help you unautomate your finances.  From reading his blog, it certainly seems to have worked for him and after reading the review copy of the ebook, it might just work for a few of you out there too.

The concept is pretty simple.  Automating your finances can go to far.  It can cause you to “set it and forget it”. And that can lead to expenses getting out of control.  Which is where Baker’s Unautomate Your Finances comes in.  The eBook is 83 pages of wonderful advice for minimizing your financial footprint and living a life of controlled finances.  He’s got a pretty impressive list of bonuses that you can get when you buy the eBook too!  There’s two awesome interviews.  A video one with Leo Babauta, who writes a ton on minimalist living.  And there’s an audio interview with J.D. Roth of GetRichSlowly.com (And author of Your Money: The Missing Manual).  He’s also throwing in the templates that he’s created for the program’s minimalist budgeting system.  One in .pdf for printing and one in excel for use on a computer.  And finally, he’s giving you all the updates you can handle.

And he’s only charging you $17 for the whole shebang.  I know he’s planning on upping the price to $27 eventually (I don’t know when) so I wouldn’t wait too awful long if your interested.  This program could be a great thing for those of you who are feeling out of control of your finances and want a more simple way of getting them back under control.

You can read a bit more on the program and the eBook by visiting: Unautomate Your Finances

Disclaimer: I’m an affiliate of both Amazon and Unautomate Your Finances.  If you click through and end up buying either the books I’ve linked or the eBook from Baker, I will get a portion of that sale.  That didn’t sway my review, I really do believe all those things I said up there.  Affiliate links like those are how I pay to keep this site operating, so I appreciate when you do click through.  Thanks.

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Unfortunately, I try to keep this blog safe for work; which means that I can’t use the words and terms that I would like to in reference to Innovis.  In short, Innovis Health is one of the worst medical facilities that I’ve ever had to deal with.  And that’s not an exaggeration.  Innovis Stinks.

And here’s why.  Actually, the laundry list of reasons is a bit too long for me to go into detail, but let me discuss the most recent issue that is prompting this post.

I owe them money.  All told, it’s around $1300 that I owe them.  Not a big deal, and manageable.  Unless your Innovis.  Beginning in November of last year, I’ve had a budgeted agreement with them to pay them $45 a month.  I set it up on my bill pay to make sure that I won’t miss a payment and all is well and good, right?  Wrong.

Today, I got a phone call from their business department (read bill department) requesting a call back.  I called back and got a rep.  What she explained to me is that the policy of Innovis is to get at least 10% of the outstanding bill as a payment.  Fine, I told her, but I can’t pay that.  We only have so much money in the month and $45 is what we can afford to send to them.  I was then informed that unless they get the 10%, there is no way for them to guarantee that my bill will not get reviewed for collections.  What?!?

In a nutshell, they would rather sell my account to a collection agency and get 50% (or whatever an agency pays for debt) of the money they are owed instead of carrying the bill and receive all of it $45 at a time?  What kind of hair brained idea is that?  By being a good consumer and paying my bill on time and consistently, they are going to irreparably damage my credit report?  Some reward for doing the right thing.

I have half a mind to ask them to send it to collections now so I can begin negotiations with the collection agency to reduce the bill.  Unfortunately, I don’t know if that would affect my families ability to receive medical care there.  Not a big deal for me, I switched to a different medical facility a while ago, but Innovis has the only Pediatrician in town.

Innovis is the worst health facility I’ve ever dealt with.

And thanks for reading my rant.  I know I feel better.

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I missed the first carnival by a day or two, but if you want to check it out, you can see it over at Deliver Away Debt.

However, I didn’t miss the newest one and my post on reactive personal finance is included.  If you’d like to check it out (and you should) it can be found over at The Life of an Insurance Salesman.

As a side note, it looks like I’ve jumped about 500k in my Alexa ranking since sometime last week.  That’s pretty impressive if you ask me.  And I’d be remiss if I didn’t credit almost all of it to my fellow Yakezie folks.  Thanks Yakezie!

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Here’s a weekend wrap-up of some links that you should check out.  And since I’ve just joined the Yakezie group, all of the links are also from Yakezie group members!

• The 5 Books that changed my Money life, from Foreigner Finance
• Maternity Coverage and Health Insurance Choices, from Stay at Home Mom CFO
• One Car Family this Week, from CoupleMoney
• Rainwater Collection Ideas, from Little House in the Valley
• Can you be Content while in Debt, from Deliver away Debt
• We are Credit Card Debt Free, from Ultimate Money Blog
• Should you Keep “Emergency Cash” at Home?, from 20sMoney
• How I got $8 Glasses, from Canadian Finance Blog
• Why the Gym is a Waste of Money, from Fiscal Geek
• 5 Ways People Waste Money, from Eliminate the Muda
• Smiles are Free, from Budgets are Sexy
• Treat Your Job as if you Won the Lottery, from Financial Samurai

Some great reads there.  You should check them out.

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Just what is reactive personal finance?  It’s the management of your personal finance in reaction to events or situations as opposed to the management of personal finance in anticipation of events or situations.

The best example of this is a budget.  A budget is built and held to in anticipation of events in your financial life.  You know that things like your electric bill and water bill are going to be coming and roughly how much they  will be.  That allows you to budget for them and set aside money to pay for them with.  A budget is a great tool in avoiding reactive personal finance.

Why do we need to avoid reactive personal finance?  Because reactive personal finance is disruptive.  You are managing and spending your money in reaction to the events that are happening.  Doing so can cause you to quickly lose control of your finances and find yourself in a downward spiral of poor management choices and, eventually, it can lead to you being broke.

Some examples of events that can cause you to become reactive.  Medical emergencies, blown tires, unexpected social events, and even bills that are larger than they normally are.  Any thing that is unexpected can cause you to spend in a reactive manner.  And when you have events like that, it can often lead to larger problems, like overspending on luxury items to make you feel better.

How do you avoid reactive personal finance?  No plan is foolproof, so it’s not really completely possible.  However, you can make the odds of it happening be cut drastically.  How?  An emergency fund and a bit of willpower.  The emergency fund will give you the available spending power to cover any emergencies that would normally make you spend in a reactive manner.  Instead of trying to react and borrow from somewhere else to pay for the emergency, you can just pay from the emergency fund and not need to react any further.  The willpower comes in where the spending opportunity isn’t an emergency.  You have to have the willpower to avoid last minute and spontaneous spending that could drain your funds and cause you to become reactive when you no longer have the money to pay bills or buy necessities.

The best laid plans often go askew.  But, building an emergency fund and strengthening your resolve can go miles towards avoiding reactive finance and potential disaster.

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I’m making this post in part to share with you, but also to make a reminder for myself of the things that I need to look into.  One of the mistakes that I and many other people make is not shopping around enough.  While you may have found the best deal when you bought something, if you are still paying for it, you might not be getting the best deal still.

The most obvious place where this could be true is with insurance.  I’ve been with my insurance company for about 10 years.  When I first purchased the insurance, I did a fair amount of shopping around and comparing and bought the insurance that was the best fit.  Since then, many things have changed.  I got married.  We’ve had two children.  We bought a house.  We both turned 25 several years ago.  All of these things could easily cause some drastic changes that really warrant a new comparison.  But, we never did that.  It’s time we did.  Over the next few weeks, I’ll be doing a bit of shopping around for better insurance rates and coverages.  In particular, our home owners insurance seems much higher than it should be.

The other thing that I really need to look into (and should have a while ago) is the mortgage on our house.  We managed to buy our house when rates were good.  We’ve since added a second mortgage that is about 25% of the original mortage’s size.  The rate on that is not as favorable.  (9% ish)  So, I need to look into whether refinancing the whole thing and rolling the two together might help us out with a lower overall rate and maybe even a lower payment.

That’s just the two things that came up recently.  I’m sure there are plenty of other things that need to be checked regularly that I and others do not.  What are the things that you check regularly to save money?

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I’m always looking for better ways to promote my blog and to find inspiration for better, more plentiful blog posts.  I may have found both!  It’s called the Yakezie Alexa Challenge.  It’s the brain-child of The financial Samurai.  Essentially, it breaks down to a cooperative of personal finance bloggers.  A great idea really.

Here’s the details over at FS’s website. The Yakezie Alexa Challenge

Pretty cool.

ADDED: Here’s some links that are helpful

A list of links to all the participating blogs at fiscalgeek : Yakezie participants

A regularly updated spreadsheet broken down by goal alexa rankings at Sweating the Big Stuff: Alexa ranking challenge spreadsheet

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They weren’t exactly forgotten, but unpaid all the same.

Our habit for doing our budget and paying bills consists of throwing everything in a pile and then sorting through the file when we sit down to enter all the data for our budget into the spreadsheet.  One of the first things we do is go through and find the unpaid bills and pay them.  When we sat down to do budget last night, we found our mistake.  One of the bills was sitting at the bottom of the pile.  Not a big deal, until you consider that we hadn’t been doing very well on regular budget checks and the due date for the bill had come and gone already.  Ouch.  To make matters worse, it was a credit card, so we’ll see what kind of late fees and default rates we end up with next month.

Lesson learned.  From now on, we’ll be paying bills as they come in instead of letting them wait until we do our budget work.  The other thing that I’ve been contemplating is to set most everything up on automatic payment systems.  I’ve been super hesitant to do this before because part of our financial history is a history of not having the money to pay our bills.  So, my fear has always been that if they come out automatically, the money won’ t be there, or the money won’t be there later on to pay for something more important.  Now that we’ve taken on budgeting and a much higher control over our money, that really isn’t a valid fear anymore and we could probably set up some automatic payments.

How do you all do it?  Pay as they come in?  Automatic deductions?  Or do you pay them at a set day or event?

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