Piece of Crap Jeep

So I thought with the sky rocketing diesel prices I would go "practical" and trade my diesel truck in for something more economical but still practical for what I need in my climate (ie, 4x4, towing cabability, room for a bike, etc); so I started looking at Jeeps. I've heard mostly good things about them; never owned one, but found that Jeep made a nice Grand Cherokee Limited edition with the items I was accustomed to.

I drove to the dealer (Salem Auto Sales, in Salem, Oregon) and drove the car, they looked over my truck (of course wanted to give me practically nothing for it) and we put a deal together. There was a small "tick" noise coming from the engine so I asked my sales associate about that sound and if it got any louder when the engine was completely cold. He assured me that it did not and that was the noise it came in with, and that he himself owned several Jeeps that make that noise-- "it was just a Chrysler thing'.

I did some quick and dirty research and found quite a few owners of Jeeps posting about the same noise online in Jeep forums, and from what I read it was just an annoyance more than a problem.

Long story short, I had the Jeep for 3 weeks and put two tanks of gas through it and the head gasket blew! Salem Auto Sales wanted nothing to do with me at that point and said "too bad, you bought an as-is vehicle"... Well, that of course didn't sit well with me. I let them know that they went to quite the degree to represent this car in a very particular condition, and cars just dont develop head gasket problems over night. I had a feeling that they knew about it and Alex, the sales associate, just looked the other way. Ya live, ya learn I guess.

So $1,749 later from a shop, the head gasket is fixed. Now it has an ATF leak somewhere, so I get to be hassled yet again by taking it back and having them ID the source and fix it. What a mess. And on top of all this I'm trying to put everything I've got into working towards an advancement opportunity at work---when it rains, it pours.

So anywho, here's the deal. If i had a spare $1700 laying around in cash, I'd think about using it to pay for this repair. But the question would be do I want to do that? Would YOU want to do that. Well somethings you might ask yourself is, "How much is my "nest egg" earning? Do I have to pay a stock commission to get it? A Certificate of Deposit penalty? Do I want to let go of $1,700 of my HARD-EARNED-CASH?" Or you might have an option to borrow it from yourself. You would think about how much it would cost you to borrow the money from your Visa credit card (remember it'll be at that lovely Cash Advance APR--not the standard purchase APR (unless the shop takes Visa, which is probable); or do you have a Line of Credit, unsecured or, home equity? Or do you have the value in your car that you could refinance the car and roll that new debt ONTO the asset itself (in my case, onto this Jeep)?

Rates are so low right now that a good way to go about it is to see if your bank or credit union will do a refinance with cash out (the cash out to pay off your credit card or replenish your nest egg) in order to get a better rate (secured is usually always lower rate than unsecured). And what makes it simple for bookkeeping wise: if you want to unload this POS and just get rid of it because now you've got more debt associated with it than you wanted, you simply sell the car, get one check to pay off one loan and VOILA! You're done.

But it's all up to you. Where will you save the pennies so the next time your car blows up you'll have the dollars to spend? :)

Cheers!!

Oh, by the way: I have a 2004 Jeep Grand Cherokee for sale, Limited Edition, very clean, runs great! :P

Financial Spring Cleaning

Just had a thought as it's come up with some of my customers lately: Free Credi Report.

I have had several customers apply for credit in the past couple of weeks, and when I pull credit, there are Collections showing (Collections mean someone still owes someone money, which is not good....to say the least). Most of the time my customers aren't even aware there is any issue with their credit.

So that brings up a good habit to get into: 'spring cleaning' of your credit.

Once every twelve months you can obtain a free of charge credit report; simply go to www.annualcreditreport.com. This really is a must so you know where your credit stands and to identify any incorrect reporting--banks/creditors are not immune from errors. So make sure you check out your report on an annual basis, so you can leverage credit as a financial too and get the best/lowest rates available to you!! Save the pennies!!! ;-)
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Cost of Overdraft--Post 2010

We are living in a bit of a different environment since our "great recession" and the way banks and credit unions are required to post transactions that would cause your account to "overdraft", or overdraw.

You can still have a savings account or a line of credit "linked" to your checking account to transfer money from in the event your run your debit card or write a check and there are not enough funds in your checking. The kicker is, now some banks and credit unions are charging a "overdraft transfer" fee. From what I've seen, this fee is lower than the big NSF fee you would otherwise be charged to allow the item to go through your account (the $30-39 one), but you're still being charged just to have automatic access to your money. From what I've seen at the banks, the fee is around $15.00 per transfer...... Let me say that again, PER TRANSFER!!! That's crazy!

Some of the credit unions I've reviewed the fee is about $3.00 per transfer... that's a little more understandable. Because what we usually don't hear about is the 'behind the scenes' work this legislation has created. However, this is just one of many reasons why you should heavily consider banking at your local credit union versus a bank. Banks are for profit, credit unions are not.

It use to be, if you have an account set up for ODP (Overdraft Protection), such as your savings or line of credit (ie, your credit card), when your checking account needed money to cover a debit, it would transfer it and most of the time it was free to do so from your savings, and possibly, from your line of credit.

Most of the time when you use a line of credit, such as a credit card, as ODP, the money used for that purpose is taken off the line in the form of a Cash Advance. Depending on the type of card your institution offers, the rate is usually higher than your standard purchase rate, and most of the time at banks, they charge you a "cash advance fee", generally 5-10% of the advance amount, or a minimum like $10.00, PLUS the higher APR on that balance you needed to cover that purchase or debit from your checking.

"So what's your point?", you're asking. First point, is to make sure you know how your bank operates when it comes to overdraft protection. Did your Wells Fargo bank tell you they'd charge you $15.00 a pop just to transfer your OWN money from one account to another automatically? Do you think that's appropriate, or a little over kill?

Also, when the cash gets tight and you need to get some bills paid, be smart about how you do it. First, wherever you hold your checking account, they most likely offer a credit card too. Make sure it has a respectable Cash Advance rate, and $0.00 CAV (cash advance) transfer fee. Why? Well, you're going to get a double whammy on fees if there is a ODP Fee, PLUS a CAV fee. So you gotta break it down, so you can see what makes most financial sense to get you through the tight times.

Let's do a quick example. You have 3 bills that come out of your checking at the end of the month on the 30th, but you don't get paid until the 5th of the following month. So you have a small dilemma. How do you pay those three automatic debiting bills? You could let your account overdraw and get a NSF fee PER item (let's say it's $35/item), that would be $105.00 in NSF fees, not counting a daily 'negative account balance' fee that might be applicable.

We're going to assume that your overdraft protection savings account is empty. So that option is out the window. Everyone should have even a small line of credit for this type of thing. So your next option is to look at how much you need to cover (let's say, $300) and how much it would cost to advance that from your line of credit to cover it.

If you have a credit card at the institution (like you should), and the cash advance APR is 15%, and there is a 5% CAV fee, we should look at how much it would cost to come at this proactively, and transfer the money into the checking before the bills actually hit.

The first thing you have to think about it is, how much in an additional fee (CAV fee) will it cost me? In this case, we need $300, and 5% of that is $15.00. That's our first fee. The next fee is, the cost in interest. This is where we get to do some math! :)

We don't want to plan on keeping the balance on the credit card--ever. We're just using it as a TOOL (which you'll hear me say over and over again), and paying it off once our payday arrives. So the first thing we have to do is take the Annual Percentage Rate (APR), and convert it into its equivalent Daily Interest Rate, so we can apply that to the balance and figure out how much interest we'll be paying.

Since our card has a 15% APR, we need to take that and divide it by 365 to get the 0.09589% daily rate. Multiply that to the balance, .09589% x $300 = .009589 x 300 = $2.88 per day in interest. So now we can figure out what costs we have to deal with to compare to the option of letting the bills come out and get NSF fees.

We know we'll have 5 days before we get paid, therefore, $2.88 x 5 = $14.40; we know the bank will charge us $15 to perform the cash advance, so we have a total amount in fees of $29.40.

So, in my book, if that's your only option, it's better than paying $105 to pay these things you must pay.

Some might be thinking that's a lot of work just to figure out I'm only paying the equivalent of one NSF fee versus three of them. But, it's developing the habit of this bit of research because what if you needed $900 to cover your bills for 3 days? Now it might not be so cut and dry since your CAV fee alone will be $45.00. Make sense? I think so.

The other thing to keep in mind is if your institution does implement a ODP transfer fee, and you know you've got bills coming out soon that will need some of your back-up money, why not be proactive and make the transfer before the system does so you can keep those fees in your account?

Managing money is not everyone's favorite thing, I get that. However, if you let the bank babysit you, you will pay them to do so. With the amount of technology out there that allows you to view your accounts online, on your smart phone, via text message, etc., stay on top of it and save those pennies, so you can spend the dollars... on your terms! :)

Overdraft Fees

I thought this was an interesting article... One of the top things we have to strategically maneuver is those times when our cash is a little short... Take a look at this article, I want to share some ideas on how to use the tools available to us to steer clear from padding the big banks' pockets!!

http://lifeinc.today.com/_news/2011/05/02/6570994-bank-overdraft-fees-your-5000-apr-loan

Kicking things off

Hey everyone,

As the first post to the blog I'd like to thank you for taking the time to stop by my humble blog. :)

What I hope to accomplish is to share some things that I've learned surrounding personal finance decisions and I hope this information will serve as tips, or even a "guide" (using that term loosely) to help those wanting to make their finances go farther. Hence, Pinch the Pennies. I truly believe, and am a living example, that no matter how much you make, you can live very well off by making your money work for you, and using credit wisely, as a tool. Sure I can't jet-set all over the world whenever I want, so there is still a very real meaning to "living within your means". However, making wise decisions can go a very long way!

A little about me, I completed my Bachelor's of Science in Business Management from Portland State University's School of Business Administration, directly after high school. Since 2005 I have been working in the banking industry in hopes of helping every day folks with the item that can be a plague or a blessing: Money. We definitely all have to deal with it. As some say, it is what makes the world go 'round. I've held several different positions within banks and credit unions, both in the branch as well as "back office" in operations.

So, please stay tuned for regular discussions on differing topics that surround our daily financial lives. If you have any questions or items you'd like me to cover I'd love an email with your request and I'll be sure to discuss it as soon as possible!