This Week in Your Wallet: September 18, 2012
I suppose the title to this week’s newsletter should be, “Drive YOUR car,” but after reading two recent articles about car loans and buying a new car, I couldn’t get the Beatles’ song out of my head.
I don’t know if you know this about me, but I’m a car person. I not only like driving, I like shopping for (and simply looking at) cars both new and old. And, as those of you who follow me on Twitter might know, I recently fulfilled a lifelong dream of buying a Volkswagen Beetle convertible. (Isn’t it cute?!) I bought it used, and I will be sharing my story in an upcoming segment on my TV show — but more on that in a bit.
It is perhaps because of all of this that two recent articles on cars caught my attention. The first one, from MarketWatch.com, noted that there has been a rise in popularity for the seven-year car loan. In the past, these longer-term loans cost one or two percentage points more in interest than their shorter-term counterparts, but now, manufacturers have started offering lower rates — as low as 0% to 2%. That sounds great on paper, but is a seven-year car loan actually worth it for consumers?
As with any type of debt, a longer-term loan means lower monthly payments, but it also means paying more in interest over the life of the loan. You also need to think about how long you’ll have the car. If you’re the type of person who gets antsy after six years with the same vehicle, a longer-term car loan may not be worth it for you.
The second car article that caught my attention was this one from the Wall Street Journal. It talks about how not only has the average price of a brand new car gone up (from $29,882 in 2011 to $30,369 in2012), but often does not include hundreds of dollars in fees and add-ons that “aren’t mentioned by the dealer until after the buyer has the impression the negotiating is over.” The article goes on to suggest that buyers always ask for an “out-the-door” price of a car. This will show you what you’re really going to be paying, and it will also help compare prices across the board.
As I mentioned earlier, I think that buying used is a great option if you want a new car but aren’t picky about how “new” it is. I did it successfully, and if I can do it, anyone can do it. I’ll be sharing all my buying-used tips in my upcoming TV show, Money Matters with Jean Chatzky (formerly Cash Call with Jean Chatzky), in addition to answering all of your car-related questions. So, I want to know what YOU want to know. What questions do you have about car loans, car insurance or refinancing? Email me at jean@jeanchatzky.com — I want to make sure that the episode answers all the car questions you may have.
And now, here are the other headlines for the week:
Managing an Inconsistent Income
In his latest column in the New York Times, financial advisor Carl Richards addresses a problem that many people are having these days: managing a variable income stream. Whether it’s because the only job you could find was a freelance gig or the small business you run has high seasons followed by dry seasons, managing money that comes in ebbs and flows can be difficult. However, Richards provides some great tips. Among them: if you have a big year, don’t think of that as the new normal (i.e, don’t spend as if you’ll always make that much); set a spending threshold and save the rest; work with a CPA so you’re not shocked when your tax bill comes in.
What Not to Buy in September
Sometimes, I’ll use this space to tell you when it’s a good time to buy something. Mattresses in the summer, electronics after the winter holidays, etc. However, sometimes it’s just easier to have a blacklist — a list of things to just flat out avoid. Courtesy of Time’s Moneyland blog, here’s one for September. Among the things you should stay away from this month: 2013 cars (dealers are desperate to get rid of 2012’s stock), TVs, diamonds and, of course, fall fashions.
Are We Talking Too Much Money-Talk?
This past weekend, the New York Times ran a rather interesting op-ed. In it, the author lamented two things: the fact that everywhere you turn, there’s an article about what’s happening on Wall Street, and the fact that our “insatiable, competition-fueled appetite for stuff we don’t need shackles us to ‘continuous, objectless wealth-creation.’” After reading the whole op-ed, I felt compelled to comment, because I wholeheartedly disagree with the first half of his argument. Yes, we as a culture talk a lot about money, but it’s important to have these discussions. We need to know what’s going on with the global economy and the national economy — including on Wall Street — because it enables us to ask better questions where our own money is concerned. After all, we live in an age where we’re more responsible for our own retirement than ever. Having access to more, better information is key.
Have a great week!
Jean
