Archive for category Personal Finance
My Car Dilemma
Posted by Sonny in Personal Finance on June 18th, 2009
My boss is looking to get a new 2009 Mercedes Benz and, besides being insanely jealous, it got me thinking about my car. I have a car that I have owned since 1999 and, according to the Kelley Blue Book value, is worth about $1500. I had a problem with my ignition last month and it cost me about $350 to fix; that’s 23% of the total value of my car! The auto-repair place “recommended” about $2000 in additional repairs to get the car in tip-top shape. I don’t even need to go through to the numbers to know the repairs will cost more than my car is actually worth, which brings me to my dilemma: Should I buy a new car or keep my current car until it goes kaput?
First of all, I need to evaluate my financial condition currently. Things don’t look so hot in this category. The end of 2008 took a toll on my investments, even though I fared much better overall than the S&P 500. (I think I’ll post my returns on another post.) My net worth also took a hit due to my investment losses and from paying tuition for school. I started my MBA program in 2008 and, as luck would have it, right as this financial crash happened, I brilliantly decided to go back to school. My portfolio goes down and the school takes the rest of my money!
Another thing weighing on my mind is saving for a house. A lot of these future decisions rest on graduating with my MBA. At this point, I am not sure where I am going to live since it depends on where, and if, I take a new job. I would love to leave and make more money elsewhere but in this economy the new maxim is “any job is a good job”. Hopefully this will change very quickly but I’m realistic and expect a bad job market for a while. Although getting a house is definitely on my list of goals in the next couple of years, it wouldn’t be practical to buy a house here only to move six months later. Finally, my finances are being stretched to the point that I’m considering a student loan. Consumerism Commentary had a good post a few days ago about the new lower rates on student loans starting in July which was a vote in my mind to take out a student loan. I hate debt and getting into debt for the first time in a while would be an unhappy day for me to say the least!
Back to the car dilemma: I am looking to get a 2005 Honda accord. I saw the kbb.com value to be about $8,000. I could buy the car outright with my savings but that would completely wipe me out. I could consider financing the car but as I mentioned, I don’t really want to go into debt. Another option is just getting a new car considering there are a lot of 0% offers on new cars right now but I would still be paying more than I want to for a car right now. I might be able to qualify because I have good credit but I don’t think I really want to due to the high price tags of new cars (although it would be nice).
After weighing all of my options, I’m leaning more towards keeping my car and just shelling out the $2000 to keep it in good shape. My car got me through high school and college and although it has its issues, I’d be a little sad to see it go. There are a lot other factors up in the air right now like where I’ll be living in a year and whether or not I’ll stay at my current company. I think it just doesn’t make sense to buy a car right now, unless I have to. I’m just keeping my fingers crossed that my car will hold out until everything settles and then I can reevaluate buying a new car.
photo: Plutor
Eating at Home Progress Report: Two Weeks Later
Posted by Sonny in Personal Finance on June 11th, 2009
Two weeks ago I made the painful decision to stop eating out. After months of spending at least $400 a month on fast food and restaurant meals, I realized I couldn’t afford to keep doing it. I decided to go cold turkey and eat exclusively at home. At first, my only goal was to save money but I’ve been pleasantly surprised with a few other benefits. Likewise, there have also been a few drawbacks that I didn’t consider when I made the decision initially. Both positive and negative considered, I’m feeling pretty good about my progress. I must confess my girlfriend and I ate out over the weekend. We were at the mall and got a slice of pizza. We spent about $10 and it was a actually a fun change of pace, so I don’t feel too bad for it.
One benefit of eating at home is that I feel healthier. My clothes fit a little better and I just don’t feel so weighed down and tired anymore. Now I opt for a piece of fruit instead of fries. That’s not to say I’m becoming a health freak but I am eating healthier now. Another benefit has been learning to enjoy going out and doing other things with my girlfriend. This weekend we had a great time just hanging out at the mall. The most important benefit has been the money I’ve saved eating at home. I’ve estimated I was spending $5 per person (my girlfriend and me), per day on eating out. After 11 days of eating at home, I’ve saved about $100.
A few drawbacks: meal planning, more money for groceries, cooking, and cleaning. Now that my girlfriend and I eat at home, we plan our meals out to save money and time. Personally, I find menu-planning a little boring but it only takes us about an hour to decide what were having for the week. It definitely makes grocery shopping easier. Even though I’m spending more on groceries now, it is still cheaper than eating out. When it comes to the cooking, I used to prefer the convenience of modern technology (i.e. the microwave or toaster oven) to breaking out the old pots and pans. Luckily, my girlfriend enjoys cooking so we developed a system we both appreciate: she cooks, I do the dishes. On occasion I’ll help with the chopping or slicing of something but usually there are other things I would rather be doing. Again, not something I would say is a positive but I don’t completely hate it either like I expected I would.
Overall, eating at home has improved my life, and bank account, in more ways than expected. I’m confident that it was a great decision and am looking forward to the new adventures it brings.
Ever heard of the Ing Direct Café?
Posted by Sonny in Personal Finance on June 9th, 2009
Move over Starbucks, the financial-savvy place to have a cup of coffee is the Ing Direct Café. If you think I’m joking I am not. I am an Ing Direct member and I never have heard about the cafes but it is true. Apparently in 2001, Ing Direct started cafes in 6 cities (LA, NY, Philly, Chicago, St. Paul, and Wilmington). In fact, there is even one that opened in 2008 in Honolulu, Hawaii. The purpose of the cafe is to have a physical place to go to bank and talk about how to “Save you money” (how the website puts it). They really did a great job to not make it feel like a normal bank. You can get a latte, surf the internet, and even listen to financial seminar. The prices of the drinks are more affordable than Starbucks as well but the coffee quality does not suffer with the lower price. The locations seem fun, warm and inviting. I checked around some reviews online and most are extremely complementary. My local bank has a really bad cup of coffee and I try to avoid going inside whenever possible but if I had an Ing Direct Café, I would probably switch from Starbucks to Ing Direct Cafe. Also to try to get the word out, they have a coupon for a free cup of coffee for your first visit. If you have one in your city, please check it out and let me know what you think!
Gift Cards: The Best Way To Give?
Posted by Sonny in Personal Finance on June 7th, 2009
Whenever a wedding or birthday rolls around, I always have trouble deciding what gift to get. Naturally, the idea always comes back to writing a person a check because it’s so easy for me to do and the gift receiver can use the money on whatever they want or need without restriction. Win-Win situation in my mind! However, somehow or another I get talked into buying people a gift card as it doesn’t seem as tacky as writing a check or giving cash. In all honesty, I think the receiver and giver would both be better off if real money (cash or checks) were exchanged!
On the other end of the spectrum, I received a $100 gift card during Christmas for Macy’s from a friend. While I am grateful for the card, there are a few drawbacks for me. First, I never shop for clothes and on top of that, if I do, Macy’s is not where I go. Macy’s, at least to me, is overpriced and normally packed with people so it’s not fun to go to. Now I have this gift card to Macy’s and I am not looking forward to going there to use it. As a giver or receiver, gift cards have some major negative aspects for practical (or pessimistic, as my gf likes to say) people like me. I have outlined a few of those aspects below.
Five Drawbacks of Gift Cards:
1. Fees – Think you are getting the stated amount of your gift card? Guess again! On a visa gift card, a $2.95 admin fee is applied for each month after the 13th month until it expires. There is a $5 fee if the card is lost and needs to be replaced and a $15 fee to replace an expired gift card. Or lets looks at an AMC movie gift card; you are charged a $2 fee for every month after the 18th month if you don’t use it. I know one thing, cash doesn’t expire!
2. Forced to shop at a certain store – If you were lucky enough to get a gift card to a place you like, congrats! If not, you’ll be forced to spend some time in your not-so-favorite store. Even if you get a Visa gift card, some places don’t take Visa so you can’t use your card there. I don’t like shopping at Macy’s but now I am forced to go there because I have a gift card! I know there are sites like CardAvenue.com or even eBay where you can sell gift cards but don’t expect to get paid face value for the card. Right now on eBay I see a $250 Macy’s card on sale for $235. If you do the math that’s a 6% hit for getting rid of the card.
3. Spending too much – If I found a $100 bill on the floor, I would happily put it in my wallet then deposit it in my savings account. I wouldn’t go out of my way to go spend all my newly acquired $100. However, with gift cards, they don’t exactly feel like cash. Let’s say you have $100 gift card. You spend hours in your not-so-favorite store, searching for something, anything that catches your eye. Finally you find something but it cost $129.99. Even though your gift card will pay for most of it, you still have to spend $30 out of your own pocket.
4. Only use online – A new trend in gift cards are eGift Cards. This is where you go to a site for example, like Walmart.com, and buy someone a gift card online, specifically an e-gift card. Through the magic of the internet, the gift card is sent through email to the recipient in only a few hours. This is way better than actually going to the store. There is one catch however; some eGift Cards can only be used online. For example Walmart.com says eGift Cards “Cannot be used at Wal-Mart stores or at SAM’S Club stores” but they can be used at walmart.com or samsclub.com. Therefore, it’s incredibly important to make sure you know where you can actually use these e-cards.
5. Are gift cards more personal than cash? Whenever I want to write a check for someone’s birthday, I am told gift cards are better. Here’s the problem, are they really more personal than cash? Basically if it’s the thought that counts then both gift cards and cash/checks aren’t thoughtful enough. Go for an actual gift whenever an occasion rolls around. If the person likes it, great! If they don’t, hopefully you included a gift-receipt so they can return it for something they really want.
I know there are a lot of positive things about gift cards: convenience, freedom of choice, some can even be personalized, but I still think there are better ways to give and receive gifts. If you have to get a present, go for something real and leave the gift cards alone!
Foreign Owners of an American Team
Posted by Sonny in Personal Finance on May 29th, 2009
Earlier this month, in my post Buy American? What Does that Mean?, I wrote about the impact of globalization on the economy and our everyday life. It appears globalization has now changed the American sports landscape. On May 24th 2009, the Cleveland Cavaliers, one of the four remaining teams in the NBA playoffs, sold a 15% stake in the team to a group of Chinese investors. The deal must be approved by the NBA’s board of governors but this would be the first major American team to be owned by foreign investors, even if it’s only a minority share. Foreign players on US teams has become ordinary and foreign ownership overseas is more common in football clubs(soccer for us Americans). In the English Premier League alone Derby County is owned by a US based group, Aston Villa is owned by the Cleveland Brown’s owner, Chelsea is owned by a Russian Billionaire, and Fulham is owned by the Egyptian owner of Harrods department store.
Mark Cuban owner of the NBA’s Dallas Mavericks, actually predicted this would happen in his blog post, When Will Foreign Ownership of US Sports Teams Start? on Feb 29, 2008. A little over a year later he has his answer. The irony of the whole thing is that one of the hardest hit parts of the Rust Belt is Cleveland, OH. Globalization has caused many manufacturing jobs to go overseas; no doubt bitterness for foreign companies and the US companies that moved operations elsewhere, must be high. In April, Ohio’s unemployment rate was 10.2%, one of the highest rates in over 25 years. One place the city of Cleveland could find solace was in the Cavs who looked poised to win the team’s first ever NBA championship. Now a championship might be bittersweet.
The only thing for sure is globalization is here to stay and will continue to change the way all business is being done.
