BP Exec by Mike Mitchell

This is an interesting question, for a number of reasons.  I won’t go into too much detail here on BP (BP); you should make your own decisions…but consider this:

Yes.
- Stock is already at 50% of it’s highest value for the year.
- Might get bought by another company which will immediately make the value more.
- Over the long term, oil is only going to increase in value.
- Crowd seems to think its a good buy: you see a bounce after every big drop, thats from others scooping it up.

No.
- They haven’t even made a dent in the leak.
- Company is literally hemorrhaging billions of dollars.
- Lawsuits against BP.
- Obama’s oil fund is going to be expensive.
- Rebuilding their image is going to be expensive.

What do you think?

The following are provisions in the bill followed by my comments to the Senate in BOLD:

The legislation creates a one-year program that allows the Secretary of Transportation to authorize the issuance of an electronic voucher to offset the purchase price or lease price for a new fuel efficient automobile when the consumer surrenders their current gas guzzler.

Wow! This bill sounds too good to be true, it will help stimulate our dragging automotive industry by giving consumers an incentive to purchase a new fuel efficient cars all while being environmentally friendly.  Your constituents will love you for this! Senators, please continue reading past the first provision of the bill, the devil is in the details…

Participating car dealers cannot resell the trade-in vehicle and must also surrender the title to the U.S. Government and transfer the car to an entity for disposal/shredding.

Really? Participating dealers have to sign over the vehicle to the U.S. Government who then in turn will crush the car into tiny pieces?  I realize a lot of these cars being traded in are probably not worth a lot, but tell that to the person who waits for the bus everyday because he/she lost their job and couldn’t afford their car payments anymore.  Why don’t you just crush these perfectly good vehicles in front of the hard working, now jobless, automotive workers in Detroit who made them?

Supply and demand is a concept that lets the market put a price on things based off the amount of consumers shopping and the quantity of products available.  It’s just a guess, but when you completely eliminate an affordable class of used cars, the supply is down.  Combine the now shrinking supply of affordable used cars with an economy set to recover in the coming years and you will likely have successfully raised the price of what used to be reasonable priced vehicles.

In order for a consumer to actually receive the credit, he/she has to purchase a NEW vehicle or lease one.

The bill is called a consumer assistance bill—what part of consumer assistance is encouraging people to take on debt all for a coupon off the purchase price of a vehicle?  The last thing many households need right now is another note to pay off.  The additional costs in buying a vehicle nearly equal the lousy credit.  For example, taxes, fees, title, plates, and higher insurance are all expenses a new vehicle owner is strapped with.  And I won’t even start on the economic downsides of leasing a vehicle.  What was the main lesson learned from the mortgage crisis?  Just because you can get the loan, doesn’t mean you can afford it.  Just because the Government gives incentives to buy something doesn’t make it the “right time to buy.”  Senators, you can’t fix the economy by encouraging people to take on debt, that’s what caused the problem.

A Consumer can get a $3,500 voucher for a new vehicle if the combined highway/city fuel economy of the new vehicle is at least 4 miles per gallon higher than the trade-in vehicle.
Wow, we are going to save the earth 4 miles per gallon at a time.

What are you thinking?  4 miles per gallon is nothing and is likely accomplished by simply not turning on your air conditioner while you drive.  Why don’t you just write up a bill that gives consumers a $3,500 tax credit to make sure their tires all have the correct air pressure?

A Consumer can get a $4,500 voucher for a new vehicle if the combined highway/city fuel economy of the new vehicle is at least 10 miles per gallon higher than the trade-in vehicle.

Senators, let me remind you that the car dealerships have to crush the trade-in vehicle, meaning the consumer does not actually receive any money from the dealer for their vehicle like they traditionally would.  Instead they are limited only to the amount this bill would give them.  The last time I checked, a vehicle that gets about 10 miles per gallon better than their trade-in is expensive—that’s why nobody is buying the new cars and that’s why the auto industry is hurting.

In order to receive the credit towards a new car, the consumer would have to purchase a “passenger automobile,” which is defined as a vehicle with a combined fuel economy value of at least 22 miles per gallon.

OK, the environmentally friendly part of this bill is getting a bit humorous.  Not only do consumers only have to improve their vehicle’s miles per gallon by about 4 to receive a significant credit, but they only have to purchase a new vehicle that gets 22 miles per gallon.  22 miles per gallon is horrible!  Who lobbied for this provision?  Let me guess, the auto industry?

There is authorized to be appropriated to the Secretary of Transportation $4,000,000,000 to carry out this Act.

Senators, you cannot fool the voters, this is clearly a $4 billion bailout package for the auto industry, which is basically now owned by the voters and ultimately will be returned to the industry, who will profit.

H.R. 2751, the “Consumer Assistance to Recycle and Save Act” should ultimately be renamed to something that more accurately defines its contents, like the “Consumer Disservice to Waste and Overspend Act.”

My wife and I have been in the market for another vehicle for some time now and after browsing the internet for close to 6 months, we finally found a car that is reliable, affordable, and attractive enough to please my wife.  The winner was a 2003 Dodge Neon SE with 54,000 miles for $3,500.00 (pictured above and below). I think this is a car that will last us for many years to come and most importantly, requires only one payment.  There are even better deals out there to be had and now may be the time to search one out for yourself.

Places to Find Bargain Vehicles.
I primarily searched three sources to find our vehicle: 1) www.craigslist.org; 2) www.ebaymotors.com; and 3)Washington Post’s Classifieds.  Because I have learned over the past couple of years how to do most vehicle repairs, I have a slightly higher comfort zone when it comes to owning a used car.  However, what is there to be nervous about really?  With the proper preliminary steps, purchasing a used car from a private-party is safe, affordable, and satisfying.  I’m always shocked by the number of people who absolutely refuse to buy a car unless it’s from a dealer.  The reality is, in most situations, is that a dealer is going to overcharge you for you’re a new or used vehicle, and undercut you on a trade in.  I don’t even enjoy walking into dealerships.  You are immediately met by a salesperson who is likely looking out for themselves rather than the customer.  If you decide not to purchase a car then you usually recieve future periodic phone calls of extreme cant miss deals.  Generally, I think if a product has to be sold and rammed down your throat, it’s probably not a good product–good prodcuts sell themselves.

Use the Economy to Your Automotive Advantage.
A reality of our current economic situation is that used cars have seen a decline in price.  If you think about it, it makes a lot of sense.  Even those people who can probably afford to spend money like they did 2-3 years ago are saving, mostly because they are nervous about job losses and investment losses.  Just like selling a house right now can be difficult because buyers are sparse, trying to get rid of a used car to somebody of whom will take only cash can prove just as complicated.  Those fortunate with cash are hesitant to unload on a used car and those that need a car, but don’t have the cash, are finding a loan hard to come by. What all of this really means is there is a saturated market of used cards, both on the lot and in the papers.  For us, this meant the perfect time to buy.

Steps to Take to Avoid Buying a Lemon. Test driving the vehicle is a must; even those that lack the confidence to even open the hood can detect major problems just by the feel and drivability of the vehicle.  Finding out the cars history is also another great way to avoid buying a lemon.  For a few dollars you can get a snapshot of the vehicles life using www.carfax.com.  It’s usually a good idea to avoid buying vehicles that have obtained major front end damage and flood damage.  It’s also important to check with your local DMV to understand all of the steps you need to take, including all the proper forms both the buyer and the seller need to sign, in order to properly register the vehicle.  Making sure the proper forms are filed can help prevent purchasing a vehicle that doesn’t have a clear title or that has been stolen.

Still not convinced a used car is the way to go?

My Top Ten Reasons to Buy a Used Vehicle.
1)    A new car will instantly be worth less than the amount you owe the second you drive off the lot.
2)    A new car will come with higher taxes and fees.
3)    A new car will come with higher monthly insurance payments.
4)    Properly maintained cars can easily last 15 years.
5)    New cars can breakdown too.
6)    It’s much cheaper to put money into a savings account and save for emergency maintenance costs than making a monthly car payment for years on a new vehicle.
7)    Used cars that are paid in full have the option of only carrying liability insurance.
8)    By avoiding buying a new car every 5 or so years, you can expedite your retirement by an estimated 5 years or more.
9)    Services like AAA can take the fear out of driving an older vehicle and will still be cheaper than a new one. However, over a lifetime, paying for a few towings will be cheaper than a constant monthly fee.
10)   Oddly, the longer you keep amd use a vehicle, the more you become attached to it and understand its limits.

In a selfish way, I think there is a glimmer of good that has come from our automotive industries economic problems.  With the Governments involvement, there is at least pressure on the industry to change its ways and produce vehicles that get decent gas mileage, and by decent, I expect higher miles per gallon (mpg) than a Toyota Prius.  There is no reason that in 2009 we are paying top dollar for vehicles called hybrids that only compete in mpg with my 1995 Dodge Neon.  We have made advances in so many different fields, but have lost years of productivity in the automotive world.  Check out the following automotive experiment from Tata Motors in Indiana, which could change the way American car companies do business–hopefully.

The car is called Nano produced from a Company called Tata; it’s a four door/four passenger vehicle that is supposed to go on sale in India sometime this summer.  Amazingly, the car will sell for about 100,000 rupees, which translates to about $2,000 U.S. dollars.  Can you believe that?  $2,000 for a brand new car, granted, it’s not going to have all the bells and whistles of what we have become accustomed to, but if you’re like me, you don’t care about these accessories.  It’s been said many times, but a car is to get you from point A to point B, it’s not an object that proves you make more money than your neighbor.  No matter how fast it is, it won’t change the speed limit and not matter how fancy it is, you still store it in the same place as you do your garbage—the garage.

The general concept behind the Nano is that you only get the barebones necessary to get you around.  The Nano has the ability to be less polluting than scooters and should be capable of getting 50 miles per gallon with a two-cylinder 33 horsepower diesel engine.  The vehicle is offered so cheap, in part, because its missing main features that we are more than used to like power steering and a trunk that actually opens (the Nano’s trunk is assessable by folding down the seats).  Interestingly, the Nano will have the engine in the rear, which helps provide more interior room in an already tiny vehicle.  Also, the vehicle will be a rear wheel drive, which means if you live in a snowy area, you’ll likely have major problems.  Of course, a manual transmission would be standard, which already disqualifies 90% of the U.S. from owning one.  The acceleration isn’t all that bad either; it should go from 0-43 MPH in 14 seconds (ok, that is pretty bad).

Who knows how long it will take to get an affordable car like the Nano into the United States.  I realize to get this vehicle up to the U.S. safety standards etc., it will likely cost more than the version going on sale this summer in India, but if one goes on sale soon here, the manufactures probably couldn’t keep up with the demand.  This could ultimately produce an unintended side effect however, if vehicles do come on the market this cheaply, traffic could end up being a bigger problem than it already is.  Whatever happens, I hope the U.S. starts using its brainpower and produces vehicles that in reality, we should already be driving.

As a side note, I wanted to point out this nifty graphic of what exactly ou get with a barrel of oil.  you always hear from people, “Oh you should buy oil,” but what ticker is that?  Simply energy commodities?  OPEC?  *shiver*

According to a report from the Energy Information Administration, there is an extra 1.5 million barrels laying around that we didn’t really account for.  On top of this excellent news, it might take a lot of wind out of the sales regarding that whole Russia vs Ukraine issue.  And going back to OPEC, they have agreed to cut production to start increasing prices so better start to fill up!  (JK, not a good idea.)

Oil prices have climbed 43% since reaching a five-year low of $33.87 a barrel on December 19, 2008.  $

• Make sure your tires are all inflated to all different PSI’s.

• Accelerate and break with intensity, careful and slow driving only consumes little amounts of fuel.

• As the temperate drops, be sure to idle your car for at least 15 minutes before driving.  There is nothing worse than a cold car and a full tank of gas.

• If possible, avoid driving 55 MPH or slower.  Anything under 55 MPH will only allow you to get less credit card rewards at fill up.

• Open all of your windows and be sure the air conditioner is always on.  If your car isn’t working hard then your not even trying.

• Increase your speed when approaching hills to ensure forceful breaking.

• Rather than turning your car off at long red lights, put your car into neutral and rev the engine like your going to race the person besides you.

• Be sure to take the longest route possible everywhere you go, after all, why pay thousands of dollars for a car you are only trying to get out of?

• The more weight in your car the better, so eat up.

• Only put the highest-grade fuel in your vehicle, and be sure to laugh at those around you being cheap.

• Program your GPS to avoid highways and interstates and to only use busy one lane roads.

• Race your friends and family members at top speed with reckless abandon through parking lots and alley ways.

• NEVER mix old gas, with new.  Run your tank dry while at the pump so that old and new fuel doesn’t touch.

• If you can, put it in 4-wheel drive.  Always.  Get a bumper sticker that says I Traction.

• Leave it running while shopping.  That way its ready to go when you need to get out of the mall because your credit card has melted from over use.

• Everyone knows the best radio is when you are in rush hour.  Listen to news and find out where the best gridlocks are and jam!

• Oil changes?  Come on, its just oil, what could be the harm in leaving it alone?

• Carpooling is for sissies.  Race your coworkers to work, but sit in the parking lot and laugh when they all get out.

• Drive down your driveway to your mailbox to get your mail.  Keep a log of how fast you can do this.

1. Search for Coupons. Most major car rental companies have a variety of free online coupons floating around on the interent.  You simply enter in the code at checkout and usually recieve a free upgrade or a discounted rental.  Check the following sites: Rent a Car Coupons, DealInfo.com, and travelcouponsonline.com.
2. Make Reservations Online. Making your reservations online allows you to search multiple sites to ensure you are getting the best possible rate available.  Not to mention, online reservations also allows for online coupons.
3. Opt-Out of Insurance. Generally, depending on your own automobile insurance, you do not need to pay extra money to insure your car rental.  Make sure you are covered before renting.
4. Rent for a Week. A lot of times, renting a car for a week or five days, will be cheaper than renting for only four days.  Many of the coupons above will also allow for cheaper rentals during the work week.  Play with your dates before reserving a car to see if picking up the car or dropping it off earlier or later saves you money.
5. Combine your Rental. When your booking a hotel or flight, search for a package that includes a car rental.  This could potentially save you money on both the flight and car rental.
6. Rent the Smallest Car. Remember that your renting the car to simply get around, save money by renting the smallest car.  Not only will this save you on your rental, but will get you the best gas mileage too.
7. Avoid Airport Rentals. If possible, avoid renting a car directly at the airport.  Airports generally charge an expensive fee for simply being convenient.
8. Let Somebody Over 25 Rent. Apparently, when your turn 25 you magically become a better driver.  Well, that’s what car rental companies figure by significantly increasing your rental if you are under 25.  If possible, let somebody over 25 rent the car.

The main “drive” of the site is to continue to provide savvy drivers with tips and financial options that have saved them thousands of dollars on gasoline.  The cards they offer are looking at as they can potentially provide 3-5% off every gas purchase that you might not get elsewhere.  (I would also have to recommend that the introductory time periods are kept in mind as well.  Some are for 6 months and others are for a year.  With any credit card, its extremely important to maintain diligence in keeping balances low and not accruing revolving debt.)

Lets take a look at their resources:

• Gas Usage & Trip Calculator – Estimate your gas consumption in the coming year.  This does a pretty good job of factoring miles driven as well as the exact make of your car.  Let us know if you find a calculator that is more accurate.
• MapQuest Local Gas Prices – Allow yourself to cruise past this before going out when you know you need to get gas.  Through MapQuest you are able to nail down to the station at an intersection where the absolute cheapest gas is, within reasonable driving distances of course.

Their over all tips include, of course, a wide selection of every credit card on the market related to saving or even making money on gas.  Not only in general, but for business and students as well.  Keep in mind, especially students, that these cards should not be abused and cautious must be taken before you get swept up into all the perks some cards may offer.  Not only because the market is in one of the scariest and steepest descents since the Great Depression, or at least 9/11, but also because the whole reason a credit card company exists is to make money.  They are not interested in even money either, they are after interest.  With proper management the rewards most of these offers can equate or even surpass interest charges, but only when handled delicately.

Let us first define what we are talking about: location can mean a few different things to many different people. Some would say, it is the type of neighborhood you are potentially going to live in that matters, which is very true. On a grander scale, location also means how far away from work you are, which could either extend or contract your commute time, ergo your travel cost. I live near Washington DC, where there is an almost scientific inverse ratio relating the distance from DC and the cost of the average home. Naturally, the further we get from the nations capitol, the more affordable the homes are and the longer the commute.

Let’s first address the mass transit aspect. Its great for me and it doesn’t really matter where I go, the commute time will be insignificantly different. My girlfriend on the other hand, only has the option to drive and this is where the complications start to arise. We need to figure out if its cost effective to buy a home further out and tack more time onto our commute versus getting to and from work faster and paying for a smaller, but yet more expensive home.

So what is the difference? Further out, its about $100k – $150k cheaper, and 30-45 minutes (each way) more in commuting time. The homes have more land and are quieter and safer. But how much time would a person be missing out on? It would be safe to say about 2 hours a day. But the amount of money saved that could go either into the stock market, a Roth IRA, a money market, the house itself (to pay it off faster), the car (again, to pay it off faster; its losing value!) and just savings in general. It would be the epitome of living below our means. And it would be a wicked commute. What do you think? $

Slim down coverage on old cars. Once your vehicle is worth less than 10 times waht you pay each year to insure it, toss the comprehensive coverage plan you had and go as low as possible.  Check Kelley Blue Book to find your vehicles value.

Increase your deductible. Car insurance exists to protect you from insane costs that could arise in an emergency.  Raise your deductible from $200 to $1000 (and stash away that $1000!) and you could save about 40% on your premiums.

Get discounts. There are all kinds of savings here, from having a good driving record, having good grades (if you are a student), even using the same insurer for your home.  (Go to Insurance Information Institute for more answers to your questions.)  The trick to getting almost 25% off your premium is to call them, they won’t call you.  Why would they?  They make more money by not calling you but once that info is out there they want to keep you.

Pit them against eachother.  This one has the most work involved but if they want to keep you then they will match what you find.  And if not, you have a better place to go.  Heres the rundown:

• Go to naic.org to find your state insurance commission website and then download a car insurance buying guide.
• Call them for quotes after finding the closest situation to you.
• If that doesn’t work, get the top five quotes at insweb.com (State Farm not included)

Watch for hassle. Be sure this new quote in hand is not a sham by making sure that the ratio of complaints vs policies written.  Your states insurance commission websute will have this.

In other news…

We have added two new members to the Money Life Network!  Emily of Remodeling This Life and Kacie of Sense To Save.

Remodeling The Life is a site that focuses on her and her family’s ongoing adventure of remodeling their house.  As a major DIY fan, this is intruiging to me.  Take a look at her site and be sure to subscribe!

Kacie is another one of our favorites and authors the well known site, Sense To Save.  I am a huge fan of her writing and have been reading her for a while now.  She knows what she is talking about and we recommend her site as well as her feed.

]]> http://milkyourmoney.com/2008/06/29/how-to-reduce-your-car-insurance-payment/feed/ 3 http://milkyourmoney.com/2008/06/26/the-art-of-hypermiling/ http://milkyourmoney.com/2008/06/26/the-art-of-hypermiling/#comments Fri, 27 Jun 2008 01:54:28 +0000 Ben http://milkyourmoney.com/?p=307 One of The Washington Post’s most esteemed writers, and coincidentally, one of our favorites, has written a nice piece on hypermiling.  Before we go any further, lets first define what hypermiling is…

Essentially what it entails is altering your driving behavior to get better gas mileage.  Sounds simple right?  Well there is a lot more to it if you put in the effort.  Nancy found a great deal of information on the topic and ended up getting first hand experience in the best methods for getting the most mileage out of a vehicle.  Its an interesting article and can really open your eyes to how to get the most out of your vehicle.  Check it out here!

Hypermilers do such things as drive slowly, brake as little as possible and limit their use of the air conditioner to save fuel.” - Nancy Trejos

Some sites that she found that had other great information about hypermiling:

Ecomodder.com
A nice community that rates different vehicles based on their MPG.  Also, there are fair amount of DIY things you can do to as well.

HyperMilingForum.com
A pretty robust list of tips to look at as well as a nice section of videos.  Again, an active community with current forums.

CleanMPG.com
Has the best lsit of the latest news on advances in hypermiling.  If you are really curious about the ins-and-outs, their forums have a ton of content.

This post is meant to contribute to the MoneyLifeNetwork’s Summer Saving Series.  Have you entered to win the $100?  The deadline is 11:59 am Monday June 30th!!

But how do you go about learning the ins and outs of your car?  I would recommend everyone buy a service manual (different from your manual that comes with your car).  I use a manual from Haynes Repair Manuals, which cost about $20.  This comprehensive guide ranges from doing the very basic fixes to more advanced procedures that are specific to your vehicle.  Just today, I cracked open my manual to learn how to drain the transmission fluid and replace the filter.  The cost to me was $30 in materials, compared to the $100 + it would have cost else ware.

The advantage of doing a little auto maintenance yourself goes beyond saving a few dollars.  It helps build knowledge of how your vehicle operates, which has multiple upsides, like standing your ground with an unscrupulous mechanic.  Also, putting a little sweat into your vehicle only makes you appreciate it more.  For me, this means driving it more conservatively and making sure I do the schedule maintenance. Give it a shot, regardless of you current car knowledge, I know you can do it – I’m proof! $

I have an uncle who has a large hand in writing policy for the EPA and last winter I asked him if it would not be until gas was at $10 before people pitched a big enough fit to stop buying gas like we are now. He said it would be closer to $6. At the time I thought that was too low, but now I have changed my tune. With all due respect, I do not write policy for the EPA so who am I to disagree anyway? Another issue he sighted was that until we are all driving vehicles that get 100 mpg at a minimum, there would not be a significant change for any sort of economic OR environmental benefit…but then again we sort of talked about that yesterday.

To be honest, I know that gas is not really the most expensive fluid on the planet and I would be totally ok with it being as it is for a number of years, if only it would just stay. A big part of our anger comes from the fact every time we blink the price goes up. For almost no reason. Its not so much the actual price that gets me, its the rate at which it increases. A dollar increase over a few years is not too bad but a few months? How does Big Oil sleep at night? Yea I know…probably very comfortably…with pillows stuffed with cash.

One of the more immediate repercussions of this new “Gas Crunch,” (did I just make that term up?), is the airlines: starting June 15, American Airlines has announced that they are going to start charging $15 for each checked bag. This is not the only thing they are doing to stay alive either. There are widespread layoffs, flight cancellations, and even experiments with flight times to see if by flying slower they can save a few dollars. You know how driving 55 mph in your car is the most fuel efficient way to go? They are now doing it with planes. Who knew that we were all speeding up there?

So how does Milk Your Money try to help? By finding you the best places to find a cheaper ticket of course! Every time we find a site that aggregates an airlines “web discount” we are going to post it. The latest one is Mobissimo. We do not get any sort of referral or award for providing these, just trying to help out. Keep in mind that we don’t check every possible ticket or location, just that the possibility exists for you to dig a little deeper and milk your money a little more. Be sure to take the check out as far as you feel comfortable and that the prices your are looking at is for the correct number of travelers. Its worth a look. Once we get a few more, we will compile them and have a listing. You should probably subscribe so you don’t miss anything..

(Courtesy of the interwebz’ tubez)

Depreciation
Just like many homes have temporarily depreciated in our current market, vehicles will lose value with time. For the most part, cars depreciate the most, the moment they are driven off the lot. Once a car goes from new to used, it drops in value so much so, that at times the car is not worth what your loan is asking for. Because of this, trading in a relatively new car for a hybrid in order to save on gas is a mistake. Why? Well, because when you trade in your vehicle, you will swallow the deprecation that naturally comes with a car that is 2-3 years old. In many instances, this deprecation figure can be around $2,000-$8000 or more – roughly 2,000 gallons of gas.

Interest
Of course, with every car loan comes interest. Let’s say that you trade in your current car, which you have owned for about three years, for a new hybrid. You most likely are starting to see the end of your car payments, assuming it’s around a 5-year loan. By borrowing for a new car, you are essentially extending the life of your loan for an additional 5 years. As each month passes, you are paying more and more to the bank, all to save on gas. If you currently own your car and enjoy no payments, borrowing for a new one to save on gas is hardly logically, mostly because the interest on a new loan will cancel out any gas savings.

Taxes and Title Fees
For me, not buying a new car means not having to visit the DMV for new tags/plates etc., this alone might prevent me from buying a new car, anyone who has waited in line for hours knows what I mean. The costs associated with these fees can be spendy. Let’s say you are charged a tax totaling 5 percent of your new car’s value, for example if your car is worth $20,000, taxes could cost you about $1,200. Also, your state my charge for a new plates or tags.

Before you decide to purchase a new hybrid, make sure you do the math and include all the costs that come with new vehicles. I didn’t mention upkeep, but hybrids – especially with their batteries – may cost more to maintain. $