One sticking point for me. You say that buying used "produces no new demand for automobiles" but you could definitely argue that a robust used car market supports the prices of used cars and, therefore, some folks, use the "great trade in-value" as justification for their purchase.
Overall, good and solid points. I will agree with other responders though that buy new and hold works out better (at least in MY situation.)
Your clunker is smarter for YOU than buying a NEW hybrid car. That is your argument. Many of your points are invalid for persons buying a new car anyway. Ever consider a used hybrid?
I love your site! I know what you mean, but the phrase, "low standard of living" has negative connotations. When did living w/in ones means, living simply, or being poor, become crime-like. Ho hum. I just don't want to fill my life with junk and I care about people and our lovely planet. I had the opportunity to travel to New Zealand, and stayed in hostels. The transportation and accommodations there were terrific!! Unlike any I've seen in the US. I meant a lot of people from Asian and European countries, and what I noticed, and it stuck with me, was how free they were. They didn't seem to worry about money like the US, and they didn't have to worry about healthcare, and they seemed liberated/free. When my mom was losing her battle w/cancer (She had her own HInsurance problem when my father's company dropped retirees and told them a month later. Try getting affordable supplemental insurance w/pre-existing conditions.), she made pre-arrangements. When she passed and we went to the funeral home, they were trying to sell us all kinds of things for thousands of dollars. We kept saying no. They didn't understand, it wasn't that we couldn't pay, it was, we didn't WANT it. HInsurance is a joke. I quit my job (when to contracting) to help and be with my mom/hospice. When I left, I spoke w/contractors and they said pay out of pocket. I had terrible experiences w/Cobra, catastrophic, and other HInsurance. It was stange being drilled by a salesperson about personal health issues and they weren't happy when there weren't any they could write about. It was a real game to them. My HInsurance is exercise, eating "right", hopefully keeping my environment safe, and prayers. I just didn't want to participate in what I saw was a losing, corrupt business. A friend, who only had HS diploma, actually had a job approving claims, overriding doctors. I wanted to downsize my home from 1600 sq ft to something smaller because I wanted to - less upkeep, insurance, property taxes. I didn't need much and didn't want much - quality vs quantity. The real estate agents turned their heads, and some subdivisions actually had size limits, large was okay, but not small. It takes great strength of character in our society - we are inundated with pressures to consume and misinformation - to simply live and live simply.
yes! you dit it, congrtas my friend, and as well I heard Coke is used in hospitals to clean their toilet stains! once my toilet got clogged and pour a whole 2 litter botle of coke to disolve everything it worked!
1. If an immigrant with a 7th education and very little English speaking skills can save a high percentage of their income, then the average American with a high school diploma can leave below their means, purchase items they actually have cash for, live modestly, etc. Saving money is about rituals and mindset; if you need to ask "how to save" then you need to start from the beginning and examine how you live your, personal finance, life.
2. By "rich" I mean a fulfilling life; in my view, being "rich" is not about a large home, flashy cars, and expensive clothing, rather about family, eating well, financial security, etc. I wouldn't take the word "rich" literally...
5. Real estate today, historically speaking, is still a good value (especially multi family homes that the owner is living in). If you live in a two family home and are able to put down a good down payment then the rent can help off set property taxes and mortgage - I still think the opportunity exists and isn't as "hard" these days as you suggest.
6. A class? Maybe some time spent reading a book or trial and error, but it doesn't take a degree to learn how to cook, make a simple house repair, shine your shoes, plant a garden, change your own oil, etc.
8. Where you a philosophy major? Not sure what you mean by "who needs definitions?" My point here is to treat a job with respect and do it well, but to not let it define you or make up who you are? Make sense?
9. You are correct, but you do you wake up everyday thinking you're going to die and live life like you only have one day to live? It's silly not to think big picture and strategic about your life.
Marla and spouse: I sanitize my bottles by soaking them in bleach water (2 TBL per 5 gallons), rinsing thoroughly using a bottle washer which fits on the sink faucet and squirts hot water into each bottle, then putting the rinsed and drained bottles into the oven. I slowly raise the oven temp to 300 degrees and leave it there for 1/2 hour. I turn the oven off and let the bottles cool naturally. I sanitize the day before I plan to bottle, so the bottles will be cool to touch. If you plan to reuse your bottles, always rinse them after you (or the neighbors) drink the beer, to ger rid of any lingering film of beer or yeast. Your enthusiasm is delightful, and I'm glad your first batch of beer turned out well. Keep us posted....By the way, I almost always sneak a taste of my homebrew before it conditions a full ten days in bottles. Just can't stop myself. Helene Jackson, McNeal AZ
Yes, definitely contrasting new vs. used -- but that is the crux of the article. New supports new demand, rather than pulling from existing auto inventory. Your other factor counterpoints all make for a compelling discussion around a topic that gets too little. Thanks.
Given the current situation, I think the BofA plan seems fair.
1) A 40-year amortization allows BofA to reduce the interest rate less and continue to make money on the interest
2) Tacking the unamortized balance on the end lets BofA recover some of the value of the money, even though they make no interest
BUT, here is a problem for BofA. If BofA only offers this for their delinquent clients, then current clients will be forced to become delinquent to get a better deal.
We believe in holding onto a car until it dies and can't be brought back. I'm glad to see that this is at least somewhat environmentally wise. Also, I'm frankly not that impressed with the gas mileage of hybrids compared to some of the most fuel-efficient normal cars and the fact that the battery is likely to die after an unknown number of short years is also a red flag. We had to buy another car this year here in France (lost our old one to an accident). We found a used one with decent gas mileage. Perhaps we'll be able to hold onto it until someone creates a hybrid worth our money. . .better yet, until we can buy one used.
Obvious observation - you're contrasting new versus used. If the contrast is new versus new - than high efficiency (aka hybrid) wins, right? Second, I dont think this is "opportunity cost" - maybe its "risk" - not sure: when I buy a new car - it's new, I am buying it from a dealer, and its under warranty. We've had two Hondas. They have been really reliable and what probs they had have been resolved. Used cars - I dont know how to buy them. Each car is like playing roulette - you dont know how it was treated and abused. You dont know what condition it is in except for a superficial guess. Most used car shops are - well they dont have great reputations lets just say. So okay, I could buy a used car but (a) I would need to invest a lot to become smarter about cars or (b) I accept much higher risk that the car will be junk and opportunity costs for living at the repair shop. As for factor 4 - you are guessing. In Virginia that is not true. Factor 5 - again, reliability. If you look at Consumer Reports tracking reliability over time, your statement isnt true - when cars are young, they are much more reliable than when they are old. Say it a different way, you will have more repairs when the car is older. Factor 6 - who cares about the Jonesses. Factor 7 - probably the people reading this blog - that's invalid. If I want to pimp my ride, I am going to do that for a used or a new car. So this is invalid. So if I take your valid points - depreciation, fees, insurance, and my points about reliability and buying a car I know is going to work - I think you end up with a different strategy: BUY AND HOLD. I think people on average own cars for 3 or 4 years?? We own cars for 10. We drive our cars into the ground. A big factor is reliability (read Honda). Buy a good car, take car of it, and own it for a long time ---- oh yeah, and Andrea is right ---- how you drive make a huge difference!
I immigrated from Thailand to the U.S. when I was 4-years-old. Unfortunately my family adopted the American ways of materialism and credit cards. My mother had a lot of credit card debt but managed to pay it down for the most part (from $20,000 on 6 cards to about $2,000 on 2 cards in the past 7 years). I lived a spend thrift life through most of college. I'm in my early 20s and learning about personal finance and saving for the future. Good thing I'm able to get a financial awareness intervention now rather than 10 years down the road. Thanks for sharing your story with us Vince!
I have a hybrid, and I agree with all of these statements. I think you're as well off buying a cheap, fuel-efficient vehicle than spending a bunch of money on a hybrid car. While I find that my car is cheaper to fuel, the biggest savings in fuel efficiency come from the WAY that I drive. A couple of times during the past week, I had to accelarate more rapidly than normal in order to avoid being run off the road when merging onto the freeway, and the difference in my fuel efficieny (two accelerations! two!) was really drastic.
When I was 10 years old, I got a handed down a white dresser. On it, I had small tv and all my stuffed animals. Now 30 years later, my 6 year old daughter has it. It was sanded down & painted black with pink flowers.My daughter keeps her tv with and computer on it. The dresser is still in great shape.
I wish they stil made furniture like they used to.
Did you take into account that most Americans lived an agrarian lifestyle also?
Food costing a third of one's income seems high.
My parents both grew up on farms in rural Kentucky in the 1950s. This was before rural electrification got everyone here "on the grid". Before that, there *was no grid*.
You can maintain a decent lifestyle and not go hungry if you have no electricity, and car manufacturers were still designing cars that the average person could afford to pay cash for, without taking on a HELOC. Remember, cars in the 1950s didn't put you into debt for 15 years.
Also, living on the farm, you grew most of your own food. My dad remembers with laughter that some school food program was put into place in his rural, small town school, to provide free lunches for all the students from poor rural families. The thought was that they were probably going hungry, since the average income was so low in their county. The irony is they had plenty to eat, because their families were farmers!
Of course, winters were ice cold, and after dark you had only the light of kerosene lanterns to read by. If you're a farm boy you won't stay up late after dark anyway, since you have to get up before dawn to milk the cows. Going to bed on a cold January night was a pain, 'though. Granny would prepare hot coals in a cast iron "bed warmer" thingy that you would stick under your blankets to keep your feet warm. No electricity = no heat and no electric blankets.
Cooking was done on a wood stove, which also kept the room warm enough for most family activities until bedtime. The woodlot on the farm supplied their fuel, so they didn't have to buy wood. There was no indoor plumbing - people had well water, and outhouses. My grandfather sprinkled lime I think around the outhouse. I'm not sure what else he had to do to keep the outhouses clean. I suspect it wasn't good for the well water, and maybe there were occasional cholera outbreaks?
Basically, you could probably live okay on minimum wage if you were living Amish-style on a family farm that was mortgage free and had been in your family for generations, and didn't need a car daily, so you could just hitch a ride with someone else into town once a week to run errands. My parents rode a school bus to go to school, no helicopter soccer moms driving them to soccer practice or piano lessons either. My mom took piano lessons from a neighbor who lived on the same street.
City living in the 1950s is another story, but one I know less about, personally, since I come from an agrarian state and live a suburban type of lifestyle in a small city of under 250K people.
3. Family, see 7. "trust", but some people do not have family.
4. True!
5. Doing these things today, earns much less than it did even 5 years ago. There are more people "trying" these things, and more hands out digging into those peoples pockets. For example, taxes, insurance, available locations.
6. These are all great, but most Americans cannot do one of those things, they would need a class.
Great article. I am also Italian American and have found so much more pleasure in life living this way. Unfortunately it is often misunderstood or looked at askance that I don't join the rat race but take pleasure in the simple things in life .... I've wrote and self published a small book about how to bring that Italian lifestyle to your house in America. It's on Lulu and called La Bella Figura by Kristi Belle
Very good article. I think one of the absolute best ways to save money is to do things yourself. If you are a handy person, you can really save yourself some money.
Even easy stuff, like oil changes, you can save yourself $10 to $15 easy each time. It will add up after time.
Also, I think if you can come to terms with what I would call a simplier life, it would be good. Downsize your house, drive later model cars, etc. You can save money not only on payments (or lack of payments) but also on taxes.
Who cares if Americans travel or not. It’s no one’s business.
Good guest post!
One sticking point for me. You say that buying used "produces no new demand for automobiles" but you could definitely argue that a robust used car market supports the prices of used cars and, therefore, some folks, use the "great trade in-value" as justification for their purchase.
Overall, good and solid points. I will agree with other responders though that buy new and hold works out better (at least in MY situation.)
Your clunker is smarter for YOU than buying a NEW hybrid car. That is your argument. Many of your points are invalid for persons buying a new car anyway. Ever consider a used hybrid?
i dont get it,,,, son
I love your site! I know what you mean, but the phrase, "low standard of living" has negative connotations. When did living w/in ones means, living simply, or being poor, become crime-like. Ho hum. I just don't want to fill my life with junk and I care about people and our lovely planet. I had the opportunity to travel to New Zealand, and stayed in hostels. The transportation and accommodations there were terrific!! Unlike any I've seen in the US. I meant a lot of people from Asian and European countries, and what I noticed, and it stuck with me, was how free they were. They didn't seem to worry about money like the US, and they didn't have to worry about healthcare, and they seemed liberated/free. When my mom was losing her battle w/cancer (She had her own HInsurance problem when my father's company dropped retirees and told them a month later. Try getting affordable supplemental insurance w/pre-existing conditions.), she made pre-arrangements. When she passed and we went to the funeral home, they were trying to sell us all kinds of things for thousands of dollars. We kept saying no. They didn't understand, it wasn't that we couldn't pay, it was, we didn't WANT it. HInsurance is a joke. I quit my job (when to contracting) to help and be with my mom/hospice. When I left, I spoke w/contractors and they said pay out of pocket. I had terrible experiences w/Cobra, catastrophic, and other HInsurance. It was stange being drilled by a salesperson about personal health issues and they weren't happy when there weren't any they could write about. It was a real game to them. My HInsurance is exercise, eating "right", hopefully keeping my environment safe, and prayers. I just didn't want to participate in what I saw was a losing, corrupt business. A friend, who only had HS diploma, actually had a job approving claims, overriding doctors. I wanted to downsize my home from 1600 sq ft to something smaller because I wanted to - less upkeep, insurance, property taxes. I didn't need much and didn't want much - quality vs quantity. The real estate agents turned their heads, and some subdivisions actually had size limits, large was okay, but not small. It takes great strength of character in our society - we are inundated with pressures to consume and misinformation - to simply live and live simply.
yes! you dit it, congrtas my friend, and as well I heard Coke is used in hospitals to clean their toilet stains! once my toilet got clogged and pour a whole 2 litter botle of coke to disolve everything it worked!
Hi JustMike,
Just a few replies to your comment:
1. If an immigrant with a 7th education and very little English speaking skills can save a high percentage of their income, then the average American with a high school diploma can leave below their means, purchase items they actually have cash for, live modestly, etc. Saving money is about rituals and mindset; if you need to ask "how to save" then you need to start from the beginning and examine how you live your, personal finance, life.
2. By "rich" I mean a fulfilling life; in my view, being "rich" is not about a large home, flashy cars, and expensive clothing, rather about family, eating well, financial security, etc. I wouldn't take the word "rich" literally...
5. Real estate today, historically speaking, is still a good value (especially multi family homes that the owner is living in). If you live in a two family home and are able to put down a good down payment then the rent can help off set property taxes and mortgage - I still think the opportunity exists and isn't as "hard" these days as you suggest.
6. A class? Maybe some time spent reading a book or trial and error, but it doesn't take a degree to learn how to cook, make a simple house repair, shine your shoes, plant a garden, change your own oil, etc.
8. Where you a philosophy major? Not sure what you mean by "who needs definitions?" My point here is to treat a job with respect and do it well, but to not let it define you or make up who you are? Make sense?
9. You are correct, but you do you wake up everyday thinking you're going to die and live life like you only have one day to live? It's silly not to think big picture and strategic about your life.
Marla and spouse: I sanitize my bottles by soaking them in bleach water (2 TBL per 5 gallons), rinsing thoroughly using a bottle washer which fits on the sink faucet and squirts hot water into each bottle, then putting the rinsed and drained bottles into the oven. I slowly raise the oven temp to 300 degrees and leave it there for 1/2 hour. I turn the oven off and let the bottles cool naturally. I sanitize the day before I plan to bottle, so the bottles will be cool to touch. If you plan to reuse your bottles, always rinse them after you (or the neighbors) drink the beer, to ger rid of any lingering film of beer or yeast. Your enthusiasm is delightful, and I'm glad your first batch of beer turned out well. Keep us posted....By the way, I almost always sneak a taste of my homebrew before it conditions a full ten days in bottles. Just can't stop myself. Helene Jackson, McNeal AZ
Yes, definitely contrasting new vs. used -- but that is the crux of the article. New supports new demand, rather than pulling from existing auto inventory. Your other factor counterpoints all make for a compelling discussion around a topic that gets too little. Thanks.
Given the current situation, I think the BofA plan seems fair.
1) A 40-year amortization allows BofA to reduce the interest rate less and continue to make money on the interest
2) Tacking the unamortized balance on the end lets BofA recover some of the value of the money, even though they make no interest
BUT, here is a problem for BofA. If BofA only offers this for their delinquent clients, then current clients will be forced to become delinquent to get a better deal.
We believe in holding onto a car until it dies and can't be brought back. I'm glad to see that this is at least somewhat environmentally wise. Also, I'm frankly not that impressed with the gas mileage of hybrids compared to some of the most fuel-efficient normal cars and the fact that the battery is likely to die after an unknown number of short years is also a red flag. We had to buy another car this year here in France (lost our old one to an accident). We found a used one with decent gas mileage. Perhaps we'll be able to hold onto it until someone creates a hybrid worth our money. . .better yet, until we can buy one used.
The fact that my husband is under-employed and we have a baby on the way.
Nicely done.
excellent post!
soaking kitty litter boxes with a mixture of water and vinegar helps keep down the kitty pee odor
Obvious observation - you're contrasting new versus used. If the contrast is new versus new - than high efficiency (aka hybrid) wins, right? Second, I dont think this is "opportunity cost" - maybe its "risk" - not sure: when I buy a new car - it's new, I am buying it from a dealer, and its under warranty. We've had two Hondas. They have been really reliable and what probs they had have been resolved. Used cars - I dont know how to buy them. Each car is like playing roulette - you dont know how it was treated and abused. You dont know what condition it is in except for a superficial guess. Most used car shops are - well they dont have great reputations lets just say. So okay, I could buy a used car but (a) I would need to invest a lot to become smarter about cars or (b) I accept much higher risk that the car will be junk and opportunity costs for living at the repair shop. As for factor 4 - you are guessing. In Virginia that is not true. Factor 5 - again, reliability. If you look at Consumer Reports tracking reliability over time, your statement isnt true - when cars are young, they are much more reliable than when they are old. Say it a different way, you will have more repairs when the car is older. Factor 6 - who cares about the Jonesses. Factor 7 - probably the people reading this blog - that's invalid. If I want to pimp my ride, I am going to do that for a used or a new car. So this is invalid. So if I take your valid points - depreciation, fees, insurance, and my points about reliability and buying a car I know is going to work - I think you end up with a different strategy: BUY AND HOLD. I think people on average own cars for 3 or 4 years?? We own cars for 10. We drive our cars into the ground. A big factor is reliability (read Honda). Buy a good car, take car of it, and own it for a long time ---- oh yeah, and Andrea is right ---- how you drive make a huge difference!
agreed.
my 20 yr old civic cost $3000, gets 37 mpg, and does great at smog check every time.
(but plain old driving less is certainly the most effective way to save on gas.)
I immigrated from Thailand to the U.S. when I was 4-years-old. Unfortunately my family adopted the American ways of materialism and credit cards. My mother had a lot of credit card debt but managed to pay it down for the most part (from $20,000 on 6 cards to about $2,000 on 2 cards in the past 7 years). I lived a spend thrift life through most of college. I'm in my early 20s and learning about personal finance and saving for the future. Good thing I'm able to get a financial awareness intervention now rather than 10 years down the road. Thanks for sharing your story with us Vince!
I have a hybrid, and I agree with all of these statements. I think you're as well off buying a cheap, fuel-efficient vehicle than spending a bunch of money on a hybrid car. While I find that my car is cheaper to fuel, the biggest savings in fuel efficiency come from the WAY that I drive. A couple of times during the past week, I had to accelarate more rapidly than normal in order to avoid being run off the road when merging onto the freeway, and the difference in my fuel efficieny (two accelerations! two!) was really drastic.
When I was 10 years old, I got a handed down a white dresser. On it, I had small tv and all my stuffed animals. Now 30 years later, my 6 year old daughter has it. It was sanded down & painted black with pink flowers.My daughter keeps her tv with and computer on it. The dresser is still in great shape.
I wish they stil made furniture like they used to.
Did you take into account that most Americans lived an agrarian lifestyle also?
Food costing a third of one's income seems high.
My parents both grew up on farms in rural Kentucky in the 1950s. This was before rural electrification got everyone here "on the grid". Before that, there *was no grid*.
You can maintain a decent lifestyle and not go hungry if you have no electricity, and car manufacturers were still designing cars that the average person could afford to pay cash for, without taking on a HELOC. Remember, cars in the 1950s didn't put you into debt for 15 years.
Also, living on the farm, you grew most of your own food. My dad remembers with laughter that some school food program was put into place in his rural, small town school, to provide free lunches for all the students from poor rural families. The thought was that they were probably going hungry, since the average income was so low in their county. The irony is they had plenty to eat, because their families were farmers!
Of course, winters were ice cold, and after dark you had only the light of kerosene lanterns to read by. If you're a farm boy you won't stay up late after dark anyway, since you have to get up before dawn to milk the cows. Going to bed on a cold January night was a pain, 'though. Granny would prepare hot coals in a cast iron "bed warmer" thingy that you would stick under your blankets to keep your feet warm. No electricity = no heat and no electric blankets.
Cooking was done on a wood stove, which also kept the room warm enough for most family activities until bedtime. The woodlot on the farm supplied their fuel, so they didn't have to buy wood. There was no indoor plumbing - people had well water, and outhouses. My grandfather sprinkled lime I think around the outhouse. I'm not sure what else he had to do to keep the outhouses clean. I suspect it wasn't good for the well water, and maybe there were occasional cholera outbreaks?
Basically, you could probably live okay on minimum wage if you were living Amish-style on a family farm that was mortgage free and had been in your family for generations, and didn't need a car daily, so you could just hitch a ride with someone else into town once a week to run errands. My parents rode a school bus to go to school, no helicopter soccer moms driving them to soccer practice or piano lessons either. My mom took piano lessons from a neighbor who lived on the same street.
City living in the 1950s is another story, but one I know less about, personally, since I come from an agrarian state and live a suburban type of lifestyle in a small city of under 250K people.
Backlash in 3, 2, 1...
1. How?
2. Why the need to feel rich in the first place?
3. Family, see 7. "trust", but some people do not have family.
4. True!
5. Doing these things today, earns much less than it did even 5 years ago. There are more people "trying" these things, and more hands out digging into those peoples pockets. For example, taxes, insurance, available locations.
6. These are all great, but most Americans cannot do one of those things, they would need a class.
7. See 3.
8. Who needs definitions?
9. Not one of us is guranteed tomorrow.
10. True, see 8.
Great article. I am also Italian American and have found so much more pleasure in life living this way. Unfortunately it is often misunderstood or looked at askance that I don't join the rat race but take pleasure in the simple things in life .... I've wrote and self published a small book about how to bring that Italian lifestyle to your house in America. It's on Lulu and called La Bella Figura by Kristi Belle
(http://www.lulu.com/product/paperback/la-bella-figura/10660465)
It's about less is more and quality over quantity, something many people don't just get.
All my Italian American relatives have bought it, but I have inlaws who are American who won't even look at it ....
Very good article. I think one of the absolute best ways to save money is to do things yourself. If you are a handy person, you can really save yourself some money.
Even easy stuff, like oil changes, you can save yourself $10 to $15 easy each time. It will add up after time.
Also, I think if you can come to terms with what I would call a simplier life, it would be good. Downsize your house, drive later model cars, etc. You can save money not only on payments (or lack of payments) but also on taxes.
Again, great article.