Saving $46,728 by Bucking America's New Car Norm

My friend recently sold her 1992 Volvo that she’s owned since 1996.

I’ve had countless conversations with people trying to balance their financial life, and when the conversation turns to their transportation expenses, excuses pop up faster than a Ferrari. The most common excuse: “I don’t want to deal with the high maintenance cost of a used car.” I sketch out the math for them, I explain that if they set aside half of their current car payment for maintenance, all but the most serious of problems would be paid for, and I tell them how much I’ve saved by my car choices. Still, it’s a rare instance I convince someone that they can reach their goals by ratcheting back their transportation costs.

It’s under this context that when my friend, also a financial professional and frugal by nature, told me she kept a maintenance cost spreadsheet on her 1992 Volvo that I got excited. I knew that someday I was going to have a treasure trove of data to share with clients and readers. Well, this year is the year. In her spreadsheet calculations, after 22 years of ownership, the math no longer penciled out on getting the Volvo fixed. She’s moved on to a Prius.

I set about researching the historical average expenditures by U.S. households on transportation and calculating how much she saved by bucking the American norm of getting a new (or new to you) car every 6-7 years. The grand total she saved over the 22 years she owned her Volvo? $46,728.

She’s likely saved a lot more, perhaps $10,000 to $15,000, on insurance costs and registration. Most people, when considering the cost of buying a new car, only look at the monthly payment. They don’t take into consideration all the other factors that they’ll be paying for: interest, higher insurance, higher registration, warranties, and for those leasing, the “turn-in fee.” The largest “expense,” though, is depreciation. A new car loses 20% of its value in the first year, and 15% each of the next nine years.

American’s love their cars. I get that. Personally, I don’t care about cars, so it’s easy for me to choose to spend less on transportation so that I can meet other goals. And if you’re meeting all of your financials goals, then how much you spend on a car doesn’t really matter. But if you’re struggling, living paycheck to paycheck, not funding your retirement, or having constant financial emergencies, perhaps it’s time for you to take the Volvo approach.  

If you'd like to learn more about spending money, and saving money, Stacey's book is available on Amazon and at thefinancegym.com, and videos available at You Tube.

Managing Your Money with These 5 Numbers - Part 3

Welcome to The Finance Gym Action Plan for a Better Life with Money video series. If you’re ready to not just know better but to do better with your money, you’ve come to the right place.

Today we’re going to be talking about the big picture again. In our last video we talked about the big picture but we wrote about it in sentences. Today we’re going to get those pencils out and put some numbers down. But for those of you that are number-phobic, I promise today we’re just going to do five simple numbers.

If you’re following along in the book, turn to chapter 1, page 11 and for those of you that haven’t gotten the book yet, just get a piece of paper and a pencil out and write these five rows down. You just start with “earning” and then we’re going to subtract “spending” and then the third row is going to be “difference”. The fourth row will be “debt” and the fifth row is “savings”.

What I want all of you to do is to think about your last year, either your last 12 months or the last calendar year, whichever is easiest and I want you to estimate. We’re not looking for exact here. What did you earn in the last year? That’s earning everywhere, in your businesses, in your job, in your investments.

Then I want you to write down what you spent in the last year and then of course the difference. Whatever that difference is, whether it’s positive or negative, I want you to divvy that up. Did you increase your savings with anything that was left over or if you had a negative amount, did you grow your debt? Was there some mix happening with both? So some of you, you’re like writing those numbers down right now. You guys are great. You’re all good. Some others of you are like, “How in the world would I know those numbers?”

So for some of you, you might need to pause this video and when you do that, I want you to set a timer for 15 minutes and spend no more than 15 minutes going and gathering that information to write those five numbers down.

Now again, estimate it. If 15 minutes ends and you still don’t have those numbers, then just do it to like the nearest 50,000. All of us can do it to the nearest 50,000. Well, most of us. But those people aren’t watching this video. Just do as close as you can and take a look at those numbers.

So here’s the thing. How much time did it take you to pull those four numbers and do that simple little calculation down? How much energy did it take and how comfortable are you with your final answers?

There’s a trick to this exercise. When I have an introductory meeting with potential financial coaching clients, they always want to know what information they can pull together to bring to that first meeting and I always tell them I would really rather you didn’t prepare and then I asked the questions that I just asked you and how readily someone can answer those questions tells me a lot about where they need to begin on their path to making their money life better.

So if this was a challenging exercise for you and you wanted to pull your hair out, you might not like my answer. My answer is you’re going to have to watch that next video on recordkeeping and you’re going to have to make a little bit of commitment to change your recordkeeping format.

I promise you I’m going to make it as painless and easy as you can possibly do. But you’re probably going to have to do something a little different and if you’re one of those people where those numbers just roll off of your head or they were at your fingertips, whatever recordkeeping you’re doing, even if it’s simply just recordkeeping in your head, you’re good enough. You don’t need to do anymore unless you really want to because you already know what your numbers are. You have your answers.

So thanks for walking through the first time of delving in, writing numbers down. I swear we’re not going to do this every time and as always, I don’t want you to do this alone. If you would like support, please join our community by signing up on our list at www.TheFinanceGym.com or head on over to Facebook and join our Finance Gym Action Group or head on over to Facebook and join our Finance Gym Action Group, "Team Do Better". Have a great day.

#Debtfree2014

I have long believed that the reason so many of us feel stuck financially is because we don’t talk about money. I write about it all the time. I think the single most important thing you can do to change your financial position is to find someone to have a constructive conversation about it with.

So imagine my surprise this month when I (for the third time) was making a concerted effort to engage in Twitter (I feel so old) and found people on Twitter talking about their money. I knew there were people like me, financial experts, using Twitter as a platform for their business. But I wasn't expecting everyday people telling their friends about how they've paid off another credit card, made their final car payment or sharing the actual amount of debt they've paid off.

One particularly courageous soul (@famdebtjourney) links to her blog where she’s declared 2014 the year to put it all out there and share her family’s story about their journey to get out of debt. Beginning with a blog in January, My Family's Debt Journey itemized their debt:

• Credit Card Debt:           $27,102

• Auto Debt:                     $16,173

• Mortgage:                     $133,968

Can you imagine posting everywhere your truth? That’s laying the gauntlet down! Making that kind of public declaration will no debt propel them, and hopefully provide inspiration when the going gets rough. Just like a diet, becoming debt free is a journey with peaks and valleys for sure.

Who would you be willing to share your numbers with? Do you think it would propel your financial health?

-Stacey Powell


Finance Gym offers personal finance coaching in professionally facilitated peer-advisory groups. 

Reach your financial goals. Get motivated. Get support. Get results. Are you ready?

Just Do It ~ Nike: Step 1

The secret to financial well being and health is: be in consistent action. Or as Nike so powerfully declares: Just Do It!

©beugdesign-fotolio.com

That’s the key that separates the successful from the unsuccessful in improving financial health. Those that spend consistent time every month working on their finances build their financial muscle and create a financially healthier life. Those that consistently put a little bit of money away every month, even just a few dollars, create a financially healthier life. Those that learn a little something new, consistently, create a financially healthier life. There is no better, faster, more effective approach to financial health than simply being in action.

One frequent mistake I see, and I’ve made it myself, is that we only take action when money is tight, when something’s wrong.  It’s kind of like only going to the gym when you’re overweight and out of shape. You’re spending time just trying to get back to some baseline of health. You never get the opportunity to fine tune your health and strength.