Infographic: The Insanely High Cost of Higher Education

Posted May 23rd, 2012 in Economics by Jeremy Waller

Upon graduation, the average student has over $25,000 in student loan debt. Though, it’s not unusual to graduate with many times that amount.

If you are not strategic about where you attend college, what you major in and how you pay for it, you could find yourself out tens or even hundreds of thousands of dollars. And all of that time and money may set you up for a career that doesn’t pay much more than a fast food chain.

The Price of Higher Education

Top Personal Finance Posts Of The Week – Facebook IPO Post Mortem Analysis Edition

Posted May 20th, 2012 in Blog Carnival by Jeremy Waller

So…Facebook’s IPO was on Friday…and it was one of the least exciting IPOs I’ve ever seen.

The hype leading up to it was off the charts. This was supposed to be one of the biggest IPOs in years. It opened pretty stinkin’ close to my prediction. And then slowly dropped back to the IPO price – $38.

I expected a big pop, but the fact that there really wasn’t much of one shows that the investment bankers did their job and priced the IPO well. A big pop would mean that they underpriced the stock and FB wouldn’t have received as much money as it should have.

Now, I betcha we see a big drop when the market opens tomorrow. I still think the stock is way overpriced.

Top Posts of the Week

Kurt Fischer @ Money Counselor writes Jobless Youth Take Action – Slammed by the terrible trio of an anemic job market, lower starting pay, and record student debt, young people are organizing to seize the day. Through initiatives like Campaign for Young America and Fix Young America, 20-somethings resolve to find or create jobs for themselves, move out of their parents’ basements, and resurrect America as the land of opportunity.

Lena Gott @ Taxes and Stuff writes President Obama’s 2011 Tax Return – You can learn a LOT about someone by looking at their tax return. Wanna know how much Barack Obama made in 2011 from his job as President and from book royalties? Wanna know what kinds of tax deductions he takes and how he allocates his charitable contributions? Read on to learn these and other highlights from Obama’s 2011 income tax return. You’ll even be able to pull up several years’ worth of presidential tax returns to see them for yourself!

TRL @ The Retired Landlord writes Important Traits of a Successful Landlord – Find out what it takes to be a successful landlord. Do you have these important traits to make a profit in real estate investing?

Sustainable PF @ Sustainable Personal Finance writes Green Tip #242: Sharing Toys – Share toys, keep your baby stimulated but save money.

Jeremy @ Modest Money writes Keeping Up With The Joneses In The Digital Age – As the internet has evolved and we truly enter the digital age as a society, the biggest enemy of our personal finances has been quietly growing stronger and stronger. No it’s not inflation. It’s not government taxes. It’s something much less obvious. It’s those pesky Joneses!

Earth and Money @ Earth and Money writes Planning a Green Frugal Wedding – Guests – At most weddings, there is a fixed cost associated with every guest that attends – food, dishes, venue, all these things are related to the number of guests that you have. So that begs the question – do you really want to invite your dad’s cousin’s nephew’s boyfriend who winds up getting drunk at the open bar?

Dave @ Financial Conflict Coach writes How To Map Your Financial Relationships – A Financial Relationship Map helps you create a current snapshot of where your money goes, where it comes from and how strong or weak these financial relationships are. It’s not about numbers- it’s about relationships.

Brent Pittman @ On Target Coaching writes S.H.I.E.L.D. Your Finances from Total Destruction – Protect your finances like Nick Fury and the Avengers are protecting the earth from total destruction by using the S.H.I.E.L.D. method.

Kraig @ Young, Cheap Living writes How to Achieve Balance and Do What You Care About – How well do your values and what you care about line up with what you actually spend your time and money on? My definition of life balance here is based on if you’re doing what’s important to you, or other things which are throwing your balance off.

Jeff Rose @ Life Insurance by Jeff writes Guaranteed Acceptance Life Insurance – How Does it Work? – For those who cannot get approved for a basic term life policy, guaranteed acceptance life insurance is the solution to their problem.

Sean @ One Smart Dollar writes How is My Credit Limit Determined? – Understanding how your credit line is determined can be a great way to start understanding your finances.

Aaron @ Aaron writes How to be extraordinary – Have you ever stopped and wonder how people like Mozart, Shakespeare, DaVinci and even Jordan became such an influence in our everyday lives? How is it that they became so creative and talented that it seems almost impossible for anyone to try to be like them?

JB @ My University Money writes Are Banks Really In It For You? – Learn from my mistakes and never assume the banks are in it for you. They aren’t, in fact they make a killing off you so don’t make it easy on them whenever they try to push a product on you.

Young @ Young And Thrifty writes RRSP vs RESP Accounts – There are obviously numerous aspects of each person’s financial situation that will come into play when looking at whether a RRSP or an RESP contribution is right for them.

Khaleef Crumbley @ Faithful With A Few writes 4 Reasons Why I Will Not File For Bankruptcy – To file for bankruptcy is not an easy decision. Even though it has become more common, here are 4 reasons why I will never do it!

Kim @ Money and Risk writes How to Get a Hot New IPO and Why You Did Not Get One – Ever wonder how you can get shares of a hot IPO – initial stock offering? Here’s the scoop.

Lance @ Money Life & More writes How I Paid for My Hobby – Hobbies are a lot of fun, but there is one thing that prohibits many from taking part in their favorite hobby as much as they would like to. Cost. Hobbies, while fun, can be expensive. In this post I describe how I paid for my hobby.

Echo @ Boomer & Echo writes How Young Adults Can Still Thrive Financially – It’s hard to see the silver lining for today’s youth, but luckily there are still plenty of opportunities for young adults to thrive financially.

SB @ One Cent at a Time writes How to shop at Garage Sales – A Guide to Garage Sale Shopping – A shoppers guide to garage sales. What to buy, what not to buy and tips for a successful treasure hunt at a garage sale is included in this post.

Oh Noes! The Facebook IPO!

Posted May 18th, 2012 in Investing by Jeremy Waller

Today is the big day. The day that Facebook goes public and makes Mark Zukerberg the 29th richest person in the world.

It’s unreal how much hype is surrounding this IPO. I don’t know if it’s because it’s one of the biggest IPOs in history or if its simply because it’s Facebook.

I’m sure there’s no shortage of people that will be doing everything they can to grab a piece of the action as soon as the opening bell rings.

I think those people are fools.

Facebook is incredibly overpriced at $38 – the price it is set to start trading. (Though there’s no way you could actually buy it at that price today. FB it going to pop like you wouldn’t believe today.)

At $38, Facebook will trade at 65 times projected earnings for 2012. 65x is nuts!

Google is currently trading at 15x projected earnings for 2012 and Apple is currently trading at 13x.

Oh, but I’m buying Facebook on future earnings. I’m getting in at the bottom!

Oh you are?

Are we looking at the same data here?

Well, we probably are – you just don’t care.

Let’s be realistic here folks. Everyone buying Facebook today is doing so on pure speculation.

The fundamentals simply do not support the pricing of the IPO.

But, people simply don’t care.

They look at Google’s IPO in 2004 with was priced at $85, immediately rose above $100 and continued to climb to $400 in less than 1 year.

There’s a very significant difference in the IPOs though. Google was priced cheaper compared to earnings and Google had more than double the revenue growth in the quarter before its IPO than FB has.

Even if Facebook can achieve 50% earnings growth year-over-year, $38 will still be 40x earnings.

Ding! Ding! Ding!

There goes the opening bell.

Grab you bucket of popcorn and get ready to see an opening pop like you’ve never seen before!


Top Personal Finance Posts Of The Week – Big Fat J.P. Morgan Losses Edition

Posted May 13th, 2012 in Blog Carnival by Jeremy Waller

Last week JP Morgan Chase announced it was sitting on at least $2.3 billion in paper losses stemming from trading naked credit default swaps. These high risk derivatives are analogous to buying insurance on a house you don’t own – doesn’t make a whole lot of sense.

Initially credit default swaps (CDS) were introduced as a way to hedge against defaults on debt – bonds in particular. However, the practice of trading naked CDS (credit default swaps in which you do not have an interest in the underlying debt) became more and more popular.

JPMorgan Chase, one of the biggest financial institutions in the world, is now facing scrutiny for the huge losses it has amassed from trading these high-risk derivatives.

Top Posts of the Week

Roger the Amateur Financier @ The Amateur Financier writes Book Review – The Art of Non-Conformity – A review of the book The Art of Non-Conformity, which takes a look at ways to live your life that aren’t in line with the normal approach most people take.

MMD @ MyMoneyDesign writes What Did You Learn From Working as a Teenager? – Was your job as a teenager a complete waste of time, or did you learn some incredibly valuable life lessons that prepared you later on in life to be a better working professional? I present to you 17 lessons I learned from my early days of employment that I still carry with me today.

Maria @ The Money Principle writes Politics and economy in the Eurozone part 1 – The people have spoken in France and Greece. They do not like this austerity business one little bit. Can you blame them? After all it was not the people who caused the problem so why should they suffer while the banks get off scot-free?

TRL @ The Retired Landlord writes Different Places to Save a Down Payment – Find out the many different accounts or investment places that you can use to save a down payment for a rental property.

Teacher Man @ Young And Thrifty writes Choosing the Latest Investing Fad – Don’t you love the guys/gals that get their investment advice from the water cooler? You know the guys and gals that are constantly hopping on the bandwagon of whatever terrible investment advice that their co-workers heard on the radio on the way in this morning?

Echo @ Boomer & Echo writes Pitfalls Of Chasing The Highest Dividend Yield – Choosing a dividend stock involves a lot more than simply looking for the highest dividend yield. Here are some of the pitfalls to avoid:

Harry Campbell @ Your Personal Finance Pro writes Traveling on a Budget: A Review of My Vacation to Maui – I never realized the value of a vacation until I started working full time. You could even say I took my travels to Thailand, Hungary & Turkey for granted. My trips during college were an awesome experience that I would recommend to anyone at any age. But for working professionals, who get anywhere from 2-4 weeks off a year, vacation time becomes a precious commodity. I get two weeks a year but I think I would be a lot happier with four

Sean @ One Smart Dollar writes 8 High Paying Jobs Without a College Degree Needed – Not everyone has the means or want to go to college. Luckily for them there are still plenty of jobs that you can make over $100,000 while not having a college degree

Earth and Money @ Earth and Money writes How NOT to Make a Financial Decision – When it comes to making financial decisions, it is imperative that you have a clear and focused mind. Given how hard we work for our money, a poorly made financial decision can come back to haunt us many times over.

SB @ One Cent at a Time writes Top Risks for Investing in Oil and Natural Gas – Every investment opportunity has its share of risks. This article talks about the risks of investing in oil and natural gas sector, geared towards beginner investors.

Lance @ Money Life & More writes Rental Property – The Financial Side – There are many numbers that are important when making a decision on buying a rental property. The first one that we calculated was how much we would offer for the townhouse. It was listed at $73,500 which may not seem like a lot but would probably be about 5,000 under market value IF it was in great shape and ready to rent out. It wasn’t, so we definitely would not be offering anywhere near that amount.

J.P. @ Novel Investor writes Remember Your Investment Horizon – Fears in Europe, slowing economy, unemployment concerns, and a few hundred other data sets all contribute to the daily swings of the market. When the markets start acting crazy, remembering your investment horizon will bring everything back into perspective.

Other Carnivals And Mentions This Week

Top Personal Finance Posts Of The Week – The Grueling 26.2 Edition

Posted April 30th, 2012 in Blog Carnival by Jeremy Waller

One of my goals this year was to run a marathon. That goal is officially accomplished!

This weekend I ran my first marathon. I can definitely say it was one of the most difficult things I have ever done.

It was totally worth doing, but I’m not sure if I’ll ever do one again…I’m going to be sore for a month. (If you look closely at the picture above, you can see the ice on my knees in the background)

Top Posts of the Week

Joe Morgan @ Simple Debt-Free Finance writes 3 Ways To Negotiate a Credit Card Debt Settlement Yourself. – If you’re one of the millions of credit card holders who has found themselves buried in credit card debt with a balance you can’t hope to pay down, then you may be wondering if you can Negotiate Your Credit Card settlement yourself. Well, it is possible to do, but it’s not easy. Here’s how.

Timothy @ Wealth Artisan writes Budgeting Tools To Reach Your Goals – Are you looking for tools to help you budget? We have a list of the best budgeting tools including free budgeting tools to help you reach your savings goals.

Dr. Dean @ The Millionaire Nurse Blog writes 100 Words On How To Become “Well To Do!” – Want to be financially successful? Check out this short mantra, and repeat it daily.

Sustainable PF @ Sustainable Personal Finance writes Green Tip #240 – Rain Barrel – The 240th Green Tip: Use a Rain Barrel to collect rain water and reduce your water usage costs.

harry campbell @ Your Personal Finance Pro writes Getting Away From Internet Job Searches: Networking Tips for Young Professionals – With unemployment at 8.2% as of March 2012, many Americans find themselves relying on the same unsuccessful job hunting tactics. Recent graduates are stuck looking for work in an extremely saturated job market where supply is high and demand is low. So what makes one candidate stand out from another? When I entered the workforce in the summer of 2009, I applied online for every job I could find and unfortunately didn’t hear back from any of them. But I also went to every career fair I coul

TRL @ The Retired Landlord writes Why I am Investing in Real Estate – Investing in real estate is not a easy commitment, but doesn’t mean it isn’t worth it. Find out why I am investing in real estate.

Dave @ Financial Conflict Coach writes What’s The BEST Financial Advice I Can Give? – When someone asks for financial advice, is that really what they’re asking for? In my experience, they’re really asking for something else- options

Debt Guru @ Debt Free Blog writes Is the Cash Method Helpful? – Is an all cash method of budgeting the best way to control your spending? Find out if the envelope method is right for you.

Sean @ One Smart Dollar writes What are the Best Days to Buy Specific Items – Did you know that you can save money just buy making purchases on a specific day of the week or month?

MMD @ MyMoneyDesign writes Before Retirement, Eliminate Your Biggest Expense – Have you ever considered the benefits of paying off your mortgage early as a way to save BIG during retirement and reduce the amount of income you’ll need? If you’ve got a lot of time between then and now, even better! Let’s crunch some numbers and see how much extra it would take to eliminate your mortgage payments altogether.

Earth and Money @ Earth and Money writes Comparison of Foreign ATM Fees Charged by Canadian Banks – A comparison of the foreign ATM fees charged by all the big five Canadian banks, and a few alternative options as well. With a little insight and planning, you can go abroad and spend your money the right way – enjoying your trip!

Maria @ The Money Principle writes Regulate the people, not the banks! – Read why it is not the institution that the government need to go after, but those few selfish individuals in the company!

Princess P @ Portfolio Princess writes Smart, Savvy, And On A Budget – Sometimes sticking to a budget is no easy task, but there are ways to make saving money easy by following these simple budgeting tips.

Busy Exec @ The “Busy Executive” Money Blog writes The Importance of Rebalancing your Portfolio – Regular rebalancing means that you are in fact buying low and selling high. If left un-adjusted, a portfolio will either become too risky, or too conservative.

PPlan @ Provident Plan writes Top 5 Mortgage Mistakes – Learn about the top five mortgage mistakes that you can make when buying a new house or condo.

Jeremy @ Modest Money writes Thank You For Irresponsible Credit Card Usage – There are many personal finance blogs that tell you to cut up your credit cards or exercise greater willpower with credit cards. While that may be good advice depending on your situation, I want to personally thank the countless people who are irresponsible with their credit card usage.

Brent Pittman @ On Target Coaching writes Planting an Urban Garden: Frugal or a Hobby? – This year with a bit of our tax money, we’ll going to invest in a small urban garden. Our premise is that it will save us a lot of money on basic vegetables and herbs that we buy almost weekly. Are we being frugal or just fooling ourselves into another hobby?

Teacher Man @ My University Money writes How To Use Your Liberal Arts Degree To Get a Government Job – I have been someone negative about the job prospects out there for people like me with a liberal arts degree before. While it is still not what I recommend for most people coming out of high school, it can be a valuable tool in your career tool belt if leveraged correctly.

Echo @ Boomer & Echo writes Pros And Cons Of Waiting To Buy A Home – Should you buy a home now and take advantage of ultra-low interest rates, or should you wait until housing prices come down from their record levels? Here’s the pros and cons of waiting to buy a home:

SB @ One Cent at a Time writes How to Start with Managing Personal Finance – Most critical and hardest barrier to managing personal finance is getting started. A guide to help you get going with the first few baby steps towards better management of your personal finance.

SB @ Finance Product Reviews writes Everbank Review – A Bank Which Pledges Yeild – Not often we come across banks who has rate pledges, EverBank announces at its home site that the rates for its account holders would remain in top territory. Read moe in this review.

Other Carnivals And Mentions This Week

Have a great week – I’m off to ice my knees!

How to Wreck Your Car, Buy a New Car, Refinance Your Mortgage and Pay off A Credit Card at The Same Time

Posted April 26th, 2012 in Goals and Reflections by Jeremy Waller

What a crazy month it has been. I feel like I’ve gone through a financial blender.

As I mentioned a few weeks ago, my beloved Jeep was totaled. I was rear-ended by someone going 60 mph. My car didn’t stand a chance.

State Farm estimated it would cost $10,132.95 to repair. But, the Jeep was only worth about $6k. Needless to say, my Jeep wouldn’t be getting fixed.

Much to my suprise, the claim process was fairly painless. It only took a couple of phone calls over the course of a week to get everything settled.

Once it was settled, I went by my local agent’s office and picked up my check for $5,834.58. (There’s still another $500 out there that I will get if they are able to recover anything from the other driver’s insurance company.)

With that taken care of, it was time to shop for a new car.

Buying A New Car

I have a love hate relationship with car shopping. On one hand, I hate the process of searching for a car. This was especially true in this case as we were searching for a mini-van so that we would have room for baby #3.

On the other hand, I love the mental game you get to play with the car salesman. I love setting up my plan, strategically throwing out specific comments to place myself in a better position when it comes time to talk money. I enjoy the mental tension in the negotiation process. Who knows, maybe I’m a little masochistic.

Anyways – we endend up finding a car. One that I surprisingly like a lot – a 2006 Kia Sedonna.

It seems strange to say that I really like our mini van. I think it’s one of those things you really can’t comprehend until you have kids.

I also love the fantastic deal we were able to get on it. The Kelly Blue Book value was $11,615. We got it for $8,500.

I have to admit though that I broke my rules when we bought the car.

My rules are to pay cash for a car. If for some reason you can’t pay cash, then finance it for no longer than 36 months. The resulting payment should be less than 10% of your takehome pay.

We could have paid cash for the car, but we didn’t. We could have easily financed it for 36 months and the payment would have been well below 10% of our takehome pay, but we didn’t.

We ended up financing it for 54 months.

Let me explain why.

Paying Off The Credit Card

One of my goals for this year was to pay off our credit card. At the beginning of this year, the balance was $13,595.

Year to date, we have paid off $4,828 of that balance. That leaves an outstanding balance of $8,767 – only slightly more than the cost of the new car.

My options were to pay cash for the car and leave this balance outstanding on the credit card – at an interest rate of 9.01%. Or, I could pay off the credit card and finance the car at a rate of 4.25%.

Seems like a no-brainer to me.

Now to throw a monkey wrench into all of this, I received an interesting phone call the same day that I picked up our insurance check.

The Art Of Loan Poaching

Quicken Loans, who did our last refinance two years ago, called me up and offered to do a no-fee refinance and drop our rate from 5.00% to 4.25%.

That seems a bit strange. Why would they do a no-fee refinance and drop our rate. My red flags were going up.

I started to ask some questions. Namely, why on earth would they refinance my mortgage at a lower rate without getting any fees out of it.

They were doing it because they wanted to poach my loan from Bank of America.

Two years ago when we closed our last refinance Quicken immediately sold our note to Bank of America. They got their origination fee and were done with it.

Now, they are servicing 100% of the loans they originate. They’ll originate loans at a loss as they breakeven after servicing the facility in house for 12 months.

Well, I’m more than happy to let them poach my account if it saves me money. I also can’t say that I’ll miss Bank of America.

The only problem with this is I need to hang on to the cash I have in the bank until everything has closed. I have to bring some money to closing to fund our new escrow account as they can’t rollover the old escrow account from BOA.

The underwriters also like to see some cash in the bank as they are going through the approval process.

Once the dust settles though, we’ll have a new car, we will be completely free of credit card debt and our mortgage will be 3/4 point lower.

I would call that a pretty productive month.

Top Personal Finance Posts Of The Week – Wal-Mart Bribery Scandal Edition

Posted April 22nd, 2012 in Blog Carnival by Jeremy Waller

Wal-Mart, one of the largest companies in the world, has just found itself in the middle of a massive bribery scandal.

Allegedly, bribes totaling more than $24 million were paid to Mexican officials to speed up the permitting process to open new stores. This was allegedly hidden from the corporate office via good old fashioned accounting fraud.

Supposedly, then CEO of the Mexican subsidiary, Eduardo Castro-Wright, personally signed off on the bribes. Castro-Wright is currently the vice chairman of the parent company.

Business Insider has a good overview of the allegations.

With all of the PR problems that Wal-Mart has been dealing with, this is the last thing the company needs. I’m interested to see how this effects the stock price when the markets open tomorrow morning.

Top Posts of the Week

Kraig @ Young, Cheap Living writes 10 Personal Finance Tips for Young Adults – As he gets another year closer to turning 30, Kraig examines what he’s learned about personal finance in his twenties and shares 10 tips on personal finance that he’s learned so far.

Princess P @ Portfolio Princess writes Why Females are Better Investors – Women are better investors because they take a calculated approach to risk and investing in the stock market. Low volatility portfolios come with patience.

MMD @ MyMoneyDesign writes What Would You Do With An Extra $1,000? – Having just received $1,000 from my previous escrow balance, should I totally blow it or do something responsible? Let’s explore the options and see all the things you could do with an extra $1,000.

Sean @ One Smart Dollar writes Gym Memberships – Using Money To Motivate You – All of us need ways to motivate ourselves to get things done. One of the biggest motivators is money. Thank you for your consideration.

Earth and Money @ Earth and Money writes What Do You Need in Your Cage? – While listening to a podcast about zoos, I was touched by a fascinating concept that can be related back to society, lifestyle, money and happiness. You see, at some level, we are all just animals in a cage.

SB @ One Cent at a Time writes Basics of Insurance: Why we Need Insurance? – What is insurance? Insurance is all about playing defense, where as an investment is an offense. You protect yourself and your asset by having insurance and investments take care of future needs.

Brent Pittman @ On Target Coaching writes What Do You Teach Your Kids About Money? – What do you teach your children about money? A recent survey by T. Rowe Price revealed the state of the union regarding financial literacy and what we teach our children about personal finances.

Jeremy @ Modest Money writes Establishing Spending Priorities – Depending on your financial situation, you may need to make some sacrifices. At the same time, you don’t want to let your budgeting prevent you from enjoying the things you love. To stay happy you need to establish spending priorities and spend a bit where it makes you happy.

Echo @ Boomer & Echo writes 10 Fees That Are Worth The Money – Some fees just can’t be avoided, but that doesn’t mean every fee is designed to rip you off. You can feel good about paying fees when they provide enough benefit to justify the cost. Here are 10 fees that are worth the money:

Control your Cash writes The Multimillionaires Who Need Your Money – Why are we subsidizing Major League Baseball owners?

Jason P. @ One Money Design writes Money Saving Ideas for Spring in the Home, Landscaping and Kitchen – Ideas for saving money sometimes comes too late. Let’s make sure that’s not the case this spring! Here are some tips from the biggest spring-cleaning project I’ve had in a while!

Other Carnivals And Mentions This Week

Reader Question: Spend Money to Repair a Gas Guzzling SUV or Sell And Get a More Fuel Efficient Car?

Posted April 19th, 2012 in Cars by Jeremy Waller

This week I received an e-mail from one of the PF Whiz readers:

We are at a cross road dilemma to purchase or repair. Our gas hog Acura 2005 MDX, with 107,000 miles needs new a timing belt & other minor repairs. The cost estimate is $2800. This car only takes premium unleaded. Cost at the pumps is a major factor in California.

My question is, would it be wise to purchase a more gas efficient vehicle such as a Honda or Chevy which gets at least 30 mpg? Currently we are getting 15mpg in the city, 19 mpg on the highway.

Anxiously awaiting your advise.

Thank you,

Mary Lou

Hi Mary Lou –

I’m sorry to hear about your repair bill. I think I would faint if my mechanic told me that my car needed $2,800 in repairs. Have you talked to any other mechanics to see if you can get the repairs done for less? $2,800 sounds high for a timing belt and other minor repairs.

Is the car still drive-able without doing the repairs? If so, do you think you would be able to sell it without doing the repairs? Even if you had to discount the car $2,000 under market value because of the mechanical issue, you would still come out ahead by not doing the repairs. If you can’t find a buyer, then you’ll likely have to foot the bill for the repair and then you can sell the car.

Regarding the gas issue, it really depends on how much you drive. Assuming you’re average, about 15,000 per year, then you’re using around 80 gallons of gas per month. At $4.30/gallon (for premium) you’re spending $344 per month on gas. With a more fuel efficient car, say 30 mpg on average, you would use 40 gallons of gas per month. At $4.00/gallon (for regular unleaded)  you would spend $160 per month on gas. That saves you $184/month. That’s $2,208 per year. That’s not an insignificant amount.

If I were in your shoes, I think I would sell the car. First, I would get bids from a few other mechanics to see if I could get the repairs done for less. Then I would try to sell the car at a discount (disclosing the mechanical issue) – but don’t discount it more that what it would cost to do the repairs.

If you can’t sell it, then pay for the repairs out of pocket and then sell it. Market value for that car should be $11,000 – $12,000. Take the proceeds from the sale and pay cash for a more fuel efficient car.

My general rule of thumb on used cars is 4 years old with fewer than 60,000 miles. That gets you past the bulk of the depreciation, but there is still a lot of life left in the car.

Hope that helps.

What would you do if you were in this situation?

Top Personal Finance Posts Of The Week – Spring Cleaning Edition

Posted April 15th, 2012 in Blog Carnival by Jeremy Waller

It may be time to clean out the gutters.


Spring has sprung! That means nice warm weather….and yard work. Bleh.

Every year I think about how nice it would be to pay someone to do my lawn. And then my financial side reminds me how much that would cost over the course of the summer.

I guess I know what I’ll be doing every weekend again this year.

Top Posts of the Week

Ben @ The Financial Reader posted Do You Know What Payday Loans Charge? – “Payday loan rates are usually quoted for the term of the loan, making the rates seem lower than they actually are. Readers will be surprised just how costly payday loans are when the rates are annualized.”

Laura Edgar @ NerdWallet posted Western Union WU Pay: Better Option, Not Perfect – “WU Pay may come to serve as a viable financial product for the unbanked. Much like prepaid debit cards, the program provides an alternative means of conducting online transactions. ”

Jason P. @ One Money Design posted Gas Reward Cards and a Few Other Ways to Cut the Cost of Gas – “Gas prices are on the rise so consider these tips to cut the cost of gas and use the money for more important financial goals.”

Super Saver @ My Wealth Builder posted Earn Large, Live Small – “Here’s my simple strategy to building wealth: maximize and grow earnings; live at least 20% below those earnings. Building wealth is all about earning large and living small. To me, many people make the mistake of doing the opposite: earning small and living large.”

Your Life For Less posted Buy Current Technology, Not State of the Art – “How to save money on technology by analyzing your needs and buying a product that fits those needs”

Dr. Dean @ The Millionaire Nurse posted Save on Gas: At The Expense Of Our Marriage? – “A Mars and Venus twist on the “improving your gas mileage” article.”

Joe Morgan @ Simple Debt Free Finance posted 3 Ways To Negotiate Credit Card Debt Yourself. – “If you’re one of the millions of credit card holders who has found themselves buried in credit card debt with a balance you can’t hope to pay down, then you may be wondering how to negotiate your credit card debt away. Here are 3 possible debt payment solutions to offer to your credit card company when you make the call.”

Other Carnivals And Mentions This Week

5 Reasons to Keep Your Credit Report Up To Date

Posted April 13th, 2012 in Economics by Jeremy Waller

Many people think that their credit reports reflect only up-to-date, accurate information, but unfortunately many people would be wrong. About 79 percent of reports contain some type of error, with 25 percent containing errors serious enough that lenders will deny you new lines of credit. Here are five reasons you should make sure that your credit report is up-to-date.

1. Inaccuracies

With over three-quarters of credit reports containing some kind of error, you need to make sure that you check your credit report every six months for any inaccuracies. Make sure all of the personal data on your report is accurate, including your name, address and social security number.

Double check to make sure that each account listed on your credit history is really yours. Make sure that every current account in good standing is included in your credit history and that each account is only listed one time. Nearly one-quarter of credit reports list the same loan or mortgage twice.

Read your credit history carefully, making sure that each credit limit is correct and every date an account was opened is accurate. Your credit utilization ratio and the length of your credit history are both important factors in determining your credit score.

2. Identity Theft

Identity theft is another reason you must check your credit report regularly. This crime involves a thief using your personal data to open up new credit accounts and accumulate all kinds of debt under your name. Most people don’t realize their identities have been stolen until collection agencies track them down for non-payment.

Regularly check the statements for your bank accounts as well. Once someone has your personal data, the identity thief can quickly drain your checking or savings account.

3. Unauthorized Charges

Sometimes credit account numbers or the actual credit cards themselves are stolen, making it easy for the thief to make all kinds of unauthorized charges on your accounts. Although you might be protected from actually having to pay off those unauthorized charges, all of the activity can have a negative effect on your credit history.

Make sure your credit history is up-to-date and you’ll catch any unauthorized charges and have them corrected before too much damage is done.

4. Tracking Your Payments

One of the most important factors for potential lenders is that you have a history of making timely payments. Bear in mind that even though you send in your check on time, a delivery delay can cause you to become delinquent.

Monitor your credit report and if you spot any payment errors, call your lender and explain the situation. They should adjust your information so your payment is listed as being on time.

5. Inquiries

Yet another reason you should keep your credit report up-to-date is to find out who has been making inquiries on your report. Potential lenders and potential employers both check out credit histories.

If you’ve been shopping around for new lines of credit or applying for jobs, all of those inquires add up, which creditors typically see as a big red flag. Make sure that every inquiry is one that you authorized.

In summary, you need to keep your credit report up-to-date for several very good reasons. A high percentage of credit reports contain errors, which you’ll want to correct. Reading your report will help you keep track of inquiries, payments and unauthorized charges.

Also check the financial statements for all of your basic bank accounts to make sure your identity hasn’t been stolen.

When was the last time you checked your credit report?