Posts Tagged ‘debt’

Cash for Clunkers

One of our goals here at Equity Cycling is for our clients to become smarter about money. We teach you the facts about how much of your life bankers are sucking out of you through interest – and how to stop it!

What we don’t do it tell you what not to spend money on. Until now.

This morning an email from Dr. Kevin Hogan triggered a pet peeve, because he described it so eloquently. He wrote about a behavior that has irritated me for years – more in family than in friends, probably because our friends are a lot more like us! 🙂 He said it so well, I’m going to let him tell you…

A good friend is next to broke and bought a brand new car in the Cash for Clunker thing. I nearly fell over. 30 K on loan. In five years, it will be worth 15 K and she will literally work to pay for that non-Clunker…to get back and forth to work!

The lack of logic in faulty decision-making has always been disconcerting to me.

It’s always pretty easy to tell where a person is financially. If they are living to pay for transportation…. then their efforts at saving $200 a month for retirement is little more than a joke.

If someone is spending $600 per month for transportation, they should at least be spending 50% more than that on their business or investments (or both).

As Dr. Hogan said, that shiny new thing begins its precipitous descent toward clunkerdom as soon as you drive it off the lot. If you bought it as a basic necessity, take good care of it and don’t buy another new car, truck or means of transport until you are debt free and financially free! In other words, until you can truly afford ‘toys.’

In January of 2000, we bought a 1999 Acura with 4000 miles on it. It has a few scratches on it now, and the brake light stays on on cold mornings even when the brake is released. We’ve put 132,000 more miles on it. Admittedly, we haven’t “driven it hard and put it away wet.” It still looks pretty nice when freshly washed.

During this same time period, we sold a 20-year old Toyota for $800, bought two used Jeeps (the second to replace the first), and a year ago traded the latter Jeep straight across for a 2003 Toyota Tundra – useful in collecting enough free, or nearly so, firewood to warm us through this coldest winter in history.

We’re a two car family, but other than the used Acura have not had a car payment in 11 years. On the other hand, I have a brother-in-law who always buys new, has three vehicles for his two-driver family, and doesn’t let his 15 year old ride his bicycle to school (they drive him). And he owes us $50! He never has money for anything…except almost everything he and his wife and son want. (I could write a whole book about how he manages finances and if you did just the opposite, you would grow rich!)

Take on as little debt as possible for things that do not in and of themselves earn you income (like rental properties, for example). And let us show you a way to cut your current interest load in half without reducing your current lifestyle. Get on the webinar to see how it can happen for you: http://equitycycling.com.

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