Beating Broke

Personal Finance from the Broke Perspective

5 Strategies to Buy a Used Car without Being Scammed

By 1 Comment

Besides your home, one of the biggest expenses you will face is purchasing a car.  Unlike a home, cars do not appreciate.  They are a depreciating asset that lasts for a finite period.  Choosing the correct type of car within the price range you can afford can have long lasting consequences on your finances over the years.

John (name changed) is a 21 year old college student.  He was in the market for a new-to-him car, but he knew he didn’t want a car loan.

He found the perfect deal on Craigslist.  The car was listed for $9,000, but John knew that it had a Kelley Blue Book value of $12,000.  John met the owner, went for a test drive, and paid $9,000 in cash.  John was proud of his deal—until he went to transfer the title and learned the great deal he had just bought was a stolen vehicle.

Now, John, the smart student who didn’t want to go in debt for a vehicle, is out $9,000.

Everyone knows that dealer prices for used cars are usually at Blue Book value or higher, but the up side is that if you buy from a dealer, you don’t have to worry that the vehicle is stolen.

But what should you do if you want to find a good deal and don’t want to rely on a dealership?

Used Car Scammed
Original Photo via John Lloyd on Flickr

The investigator on John’s case recommended taking these precautions:

Try to buy used vehicles from family or friends.  The best thing you can do is buy a used car from family or friends who are upgrading their vehicles.  You know that the vehicle isn’t stolen, and you also have a good idea how well the vehicle was maintained.

Be wary of a good deal that is significantly below Blue Book value.  If a seller wants to sell a car for much less than it’s worth, be suspicious.  In this case, you should think of the old adage, if something seems too good to be true, it probably is.

Don’t trust a seller who only has his cell phone number as his means of contact.  If the seller won’t give you any personal details or ways to contact him besides his cell phone, he may have something to hide.

Run a CARFAX check.  Running a CARFAX is a good idea no matter where you’re buying the vehicle.  A CARFAX will tell you how many owners have had the car, whether it’s been in an accident, how it was maintained, among other information.

Run a VIN check.  Using the free service VINCheck, you can see whether or not the vehicle you’re considering buying has been stolen.  Had John done this, he would have been tipped off immediately that something was not right with the vehicle he wanted to buy.  As it turns out, his vehicle had been shipped down to Mexico where the VIN was altered.  The vehicle was then brought back to the U.S.  When John went to register the title, he discovered that the VIN he had did not exist.

Buying a car from a private party can be worthwhile and save you money if you take the proper steps.  If you don’t, you could find that the bargain you purchased was actually a very expensive lesson.

Have you ever had trouble buying a vehicle from a private party or know someone who had trouble doing so?

 

What’s Your Financial Weakness?

By 12 Comments

We all have a financial weakness.  That one area where we struggle to do the right thing.  We might even struggle with deciding what the right thing is.  If we remain unaware of our financial weakness, it can wreak havoc throughout our financial life, as my weakness did mine.

However, knowing your financial weakness, your financial Achilles’ Heel, so to speak, can help you become a better manager of your finances.

My Financial Achilles’ Heel

Me?  I like to squirrel things away for the proverbial rainy day, but when the rainy day comes, I don’t like to dip into my stash.

My husband and I have an emergency fund.  True, it’s smaller than we’d like, but we do have one in place.  Considering 28% of Americans don’t have any emergency fund (CNN Money), we’re glad to have our small one.

Financial WeaknessThere are other ways I squirrel away things.  We buy produce in season at lower cost by doing creative things like renting an apple tree.   Then we store it away for the cold winter months.  (It makes me feel a bit like a pioneer.  A pampered pioneer, but a pioneer, nonetheless.)  Right now we have a deep freezer in our basement that is filled with plums, grapes, blueberries, strawberries, and applesauce.  If we didn’t have money for groceries, we have enough fruit to easily last us for two to three months.

Having an emergency fund as well as a stocked pantry doesn’t sound like a problem, right?

Right.  I’m being financially responsible and preparing for a time when money will be tight.

Here’s the problem.

I don’t like to dig into my stash.

If I have a financially lean month and I’m faced with a large expense like a car repair, I don’t do what would be logical–dip into my emergency fund.  Instead, my first inclination is to put the repair on my credit card and leave the emergency fund intact.

If I have a month where I don’t have as much grocery money, I’m more likely to put groceries on my credit card than make a significant dent in our food stash.

My behavior makes.no.sense.  No sense.

And yet it took me years to figure out that I do this and to realize that I have to fight the natural inclination to go in debt rather than dip into my reserves.  Part of why my family struggled with credit card debt is because of this irrational behavior.  Now the credit card debt is paid off, and I have a chance to start anew, well aware of my weakness.

What’s Your Financial Weakness

So, what’s your financial weakness?  What completely irrational behavior do you exhibit?  Are you even aware of what it may be?

Honestly, finding the chink in your armor, so to speak, may take years.  I think it took me nearly 15 years to figure out mine, and I made a lot of financial mistakes during that time.  I’m not sure why I exhibit this behavior except that perhaps growing up, I always saw my parents struggle with money.  They never had money to create an emergency fund.  Credit cards were their emergency fund, and they had to use them frequently.

I’m guessing for most of us, the experience is the same.  Financial behaviors we saw in childhood and learned as normal become the basis for some of our adult decision making.

What is your financial Achilles’ Heel?

All Is Not Lost

By 13 Comments

I can’t tell you the number of times that, in our seemingly never-ending struggle with debt, that I’ve seriously contemplated just giving up.  Just throwing in the towel and saying f-it.  You know it’s bad when you catch yourself fantasizing about it.  About how much easier your life would be without the struggle.  Just declaring bankruptcy, taking the hit on your credit score, and moving on with your life.

Even now, after having written about personal finance for over five years, I still find myself in that place occasionally.  We let our budgeting lapse, and inevitably our spending gets out of whack again.  Something happens, and the emergency fund just doesn’t seem to cover it all.  Or, worse, doesn’t seem to replenish itself as quickly as it should.

someecards.com - I can't believe I work this hard to be this poor.I can try and lay the blame somewhere.  That always helps, right?  If it isn’t my fault, then I can’t be blamed for it.  I can’t be the one that everyone points to as the failure.  I can deflect that attention to someone or something else.  That helps.  Until it doesn’t.

Every single time, it’s really me that deserves the blame.  It wasn’t the boss that refused to give me a raise.  It wasn’t the heater in the car that needed to be fixed.  And it certainly wasn’t the kids that needed to eat.  It was me.  Every.  Single. Time.

I failed to negotiate the raise.  I failed to have enough saved up to make that repair.  I failed to budget properly to make sure that we wouldn’t have to cut corners at the grocery store.  Me.  I did that.

I could just give up.  I could miss having to work harder to be paid appropriately.  I could miss having to pay attention to my budget to save money for car repairs, or to pay for groceries.  I could do that.  Giving up would be so easy.

Until it isn’t.