Category Archives: Smart Shopping

Financing a car vs. paying cash for an older vehicle

Let’s say you have $5,000 available to purchase a car, and you need it right now. You can technically afford to add a monthly payment to your finances, but of course that will take away from the amount you’re able to save each month.

You need to decide whether you want to use that $5,000 as a down payment for a financed car or use it to pay cash for an older car with a lot of miles on it.

Let’s look at some of the pros and cons of each:

Paying cash for an older car

Pros

  • No monthly car payment
  • More money to put toward savings
  • Lower insurance rates
  • Lower taxes

Cons

  • Higher maintenance fees
  • Unreliable
  • It’s a gamble. You may drive it for years with no problems, or the engine could die and leave you without a vehicle a few months later.
  • Depending on the age and type of vehicle, gas consumption is likely to be higher than a newer car.

Financing a used car

Pros

  • Certified cars come with warranties that promise reliability.
  • Less likely to have problems soon

Cons

  • Still a gamble. You don’t know how the previous owner cared for the car, so you could end up with a car payment and high repair costs.
  • Higher financing interest rates than brand new vehicles

Financing a new car

Pros

  • Guaranteed reliability through warranties.
  • If you’re the only owner, you can care for it diligently and drive it for 10+ years.
  • Possible tax incentives on cars with better gas mileage.
  • Lowest possible interest rates for financing.

Cons

  • High monthly payment.
  • High taxes.
  • High insurance rates.

I don’t really have an answer. To me, it’s a toss-up, and used cars are a gamble. You might save a lot of money, but you’ll end up funneling it back into the car for repairs. We haven’t decided what we’ll do for our next car, but we’re leaning toward financing a certified used car.

Here’s why:  I drove a lot of old beaters in high school and college. My dad is a relatively good mechanic, so this wasn’t a problem in high school. When I broke down, he’d pick me up, and get my car running again. But in college, I ended up stranded a lot with no choice but to tow my car to a garage and charge the repairs on a credit card. Ouch.

When we moved to North Carolina, Tony and I made the decision that we’d rather share one new, reliable car than have two unreliable beaters. So that’s what we did. And I don’t regret it. We bought a reasonable economy car, but it was brand new. Yes, there’s a payment every month, but I’d rather pay a car payment every month than wonder when I’ll be stranded again by a breakdown.

Many personal finance bloggers will say, “Yes, you’re likely to pay for repairs on a used car, but it still won’t add up to the amount you’ll lose in depreciation and interest on a financed car.” That’s true. But honestly? It’s not about the money for me. There was absolutely nothing I hated more than breaking down at a stoplight or being stranded in the cold after working late. I’d rather pay 100 car payments than deal with that again.

What about you?

Photo by smcgee

In which we admit defeat in the classic struggle between man and expensive razor

About a year and a half ago, Tony and I were fed up with spending ridiculous amounts of money on his razors. He has quite a beard, and when he’s shaving every day he can go through razors pretty quickly.

We were pumped when we found what seemed to be a fantastic frugal alternative: the safety razor. He even wrote a post about it. It’s an ancient-looking steel razor that holds regular straight razor blades. These razor blades cost about 50 cents each — a much lower price than the razors he was buying at the time for $4 a pop. They’re also environmentally friendly. The steel razor blades are completely recyclable, and create much less waste than fancy plastic-encased replacement razors with moisture strips.

Shortly after he began using them, Tony’s sensitive skin became irritated. At first, he assumed it was just part of the transition. He was sure he’d get used to it.

We started buying him manly lotions in an attempt to heal his irritated skin. He was determined to make the frugal razors work. But everything we tried failed, and he was uncomfortable with the patches of red skin on his face and self conscious about them.

I told him he didn’t have to worry about the money. If he wanted to go back to his old razors, it was absolutely fine with me. But he’s stubborn, and he felt unnecessarily guilty about spending $15 a month on replacement razor blades.

When the weather turned colder, his face dried out even more. He finally agreed to buy some of his old razors, use them, and see if it helped. It did. Though he’s grown a beard for the colder months, he cleaned up his face with the replacement razor once and his irritated skin already looks improved.

Frugality is one big experiment. Whether you’re buying generics or trying to use less dishwasher detergent, the point is to live comfortably while spending the least money possible. But there comes a point when you have to accept that the experiment has failed. There comes a point when frugality makes you so uncomfortable that you have to admit defeat and drop a few extra dollars to be comfortable.

The good news is, there are a million other ways we can save money. We won’t even notice that $15 a month if we cut corners in other places. We tried to find a frugal way, but the alternative just wasn’t worth the money it saved. If $15 a month means that Tony is a little more comfortable in his own skin, then it’s money well spent.

Photo by photonoob

Our $100 Christmas — or how to stretch your budget by buying used

Christmas is over, and now that I’m looking at the stack of books, movies, and records that Tony and I bought for each other, I’m amazed at just how far our Christmas budget went.

We set a budget of $50 each before we knew just how generous our friends and family would be to us. To be honest, if we had known we’d end up spending $200 on a new TV and getting a Playstation 3 and Beatles Rock Band, we probably wouldn’t have bought each other gifts at all. But we love shopping for each other and making the most of a $50 budget is a fun challenge for us. Here’s what we were able to get:

From Tony:

  • A French phrase book for our trip to Europe
  • Bill Bryson’s “Dictionary of Troublesome Words”
  • The Pixar movie “Up.”
  • Bob Dylan “Desire” on vinyl

From me:

  • Tony had a list of books that he plans to teach either next semester or in the future, so I just filled his wish list. He got four books.
  • The Beatles “Abbey Road” on vinyl.

We had a $25 Amazon gift card from cashing in our rewards points from the debit card for our old bank account, so we also got three non-fiction books by David Foster Wallace that we both wanted: “Consider the Lobster,”  “A Supposedly Fun Thing I’ll Never Do Again,” and “Brief Interviews with Hideous Men.”

Looking at everything that we got, it’s hard to believe we only spent $100. But that’s the most fun part about gift giving for each other — we set a budget, and then do our best to get the most out of our money. We so rarely buy things like books and DVDs these days, so Christmas is a fun time to splurge and figure out what the other one wants.

We bought most of the books and vinyl used on Amazon. There are a ton of books available for $1-$2. You have to pay $3 in shipping, but that still keeps the cost of the book below $5. That’s a great deal considering most new books are at least $10, and all but one of the books we got are as good as new.

There was one gift that was not in our budget. Tony got me a Chi flat iron. I straighten my naturally curly hair almost every day, and I’ve been talking about wanting one of those things for five years. Tony surprised me by going a little over budget to finally get it for me. It’ll make my life easier, and since I’ve wanted it for so long he thought it was about time. I suppose I won’t hold it against him that he made the purchase without discussing it with me. :)

On Christmas Day we ate dinner at a hibachi restaurant and saw a movie using the cash we received from our grandparents. It was a lovely day, and it didn’t cost us a thing.

I hope Santa was good to all of you this Christmas. And I hope he was frugal, too!

Good things come to those who wait

For the past several months, there have been a handful of things that Tony and I wanted, but didn’t need. I’m sure you have your own list of fun things that you can’t justify spending the money on, but you want anyway.

For us it was a new TV, a Playstation 3, and the Beatles Rock Band game. There have been a few times when we’ve gotten our hands on some extra money and considered splurging for one of them. But I could never do it. All together, the three of them would have cost us almost $1,000. Something so frivolous just wasn’t worth that kind of money to us.

This week we learned the importance of waiting for things like this. Thanks to the incredible generosity of the people in our lives, we received all three of them for $200. Here’s what happened.

My future brother-in-law who is currently serving in Iraq found out that we wanted a Playstation 3. He’s a big video gamer, but ever since he got an XBox, he wasn’t using his Playstation. Because he’s incredibly generous, he sent us the Playstation 3 and told us to consider it a Christmas gift. I told him we’d pay him for it, but he refused. Thanks, Joey!

When I told my parents that we received the Playstation 3, they knew how much we wanted Beatles Rock Band. They also knew we’d never spend the money on it. So they sent it to us as a Christmas gift. We were thrilled.

Finally, a good friend of mine back home in Indiana  offered us his used 42-inch plasma TV for $200. We’ve been in the market for a new TV, but the lowest price we could find on a 32-inch was $400. We just couldn’t justify spending that as long as our old TV was still working. But I couldn’t pass up this deal, so I used some of my holiday bonus to buy it from him. (Thanks Chris!)

The moral of the story? Well, first of all, we have the most fantastic friends and family. But secondly, when there’s something you want but you don’t need, just wait. Eventually you’ll find the deal you’ve been waiting for.

And don’t worry: we’ll be sure to pay this incredible generosity forward. :)

Photo by grandeabobora

The importance of slowing down

canon-xsI have always been pretty decisive. Usually it works in my favor. I trust my instincts, and when I have to make a decision, I can usually pretty quickly make up my mind. This week, this decisiveness led to a pretty crummy mistake.

When I bought my digital camera, I wasn’t sure how into photography I would get. But it turns out I love it. I’ve had a lot of fun with my camera, and I love that we have photographic memoirs or our lives now.

We recently made the decision to add a camcorder to our tools. We really want to be able to shoot videos when we’re in Europe, and we definitely will want one when we have a baby. I’ve been looking at pocket HD camcorders in the $200 range (like this one that I really like and have been considering purchasing).

This morning, I started looking at the newer model of my camera, which shoots HD video. I realized that if I could sell my camera body without the lenses for $400, I would be able to upgrade to the newer model with HD video capabilities and higher quality still shots for only about $200. I was so excited, that I acted impulsively (which is pretty out of character for me).

I listed my camera in the Amazon marketplace, and I was surprised that it sold within minutes. But by the time I got to the post office on my lunch hour to ship it out, I was starting to have doubts. Was I really ready to drop $200 on another camera? How would I take pictures of Christmas in the meantime? Was this the right decision?

It turns out, my hesitation was an indication that I should slow down. After I’d already shipped it, I received an email from my buyer. He realized that the description said I was selling the camera body only without the lens. He didn’t want to buy it anymore. But it was too late.

He’ll be able to send it back, but I’m out the $20 I paid to ship it to him and I probably won’t have my camera back by Christmas. And now I’m having second thoughts about whether I want to sell it and upgrade yet at all. This is something that could have waited until the spring since I don’t even need the HD camcorder until May.

And now my beloved camera is somewhere between here and Minnesota instead of being safe in my camera bag.

Sigh.

I learned a valuable lesson about slowing down. When I get an idea, I tend to get tunnel vision. Sometimes I act too quickly. I need to learn to take a step back, think through the situation, and make sure I have all my bases covered. Luckily this time it only cost me $20 (hopefully). But I really hate when I lose money because of a stupid decision, don’t you?

Creating a holiday care package for a soldier

care packageThis year, Tony’s sister’s fiance is spending the holidays in Iraq. We really wanted to send him some things to make his holiday a little brighter, so we put together a care package.

This was my first care package for a soldier, so I put a lot of thought into what to send.

Here are some of the things I learned while putting it together.

Make it personal

There are tons of places online with great care package ideas, but it’s best to keep your soldier in mind when creating yours. Everyone is different, and the care package you send should include personal touches to let him know you’re thinking about him.

For instance, my future brother-in-law doesn’t care too much for sweets, and the microwave in his room recently bit the dust. So he specifically requested food and snacks that don’t need to be cooked to be enjoyed. His care package includes lots of his favorite snack foods like chips, fruit snacks, and trail mix.

Check with other friends and family to avoid overlap.

It’s likely that other people in your soldier’s life are putting together care packages for him, too. Check with them to make sure he’s getting a wide variety of treats and gifts.

Include a touch of home

Is there a certain baked good he misses? Or a local treat he can’t get overseas? Pack something special that will give him a little piece of home for the holidays.

Add some cheer

It may not feel too much like Christmas in Iraq, but he might be craving a taste of the holidays. Send some hot chocolate, festive candy, and maybe a Christmas movie to keep his spirits up.

Don’t forget the necessities

Treats are your top priority in a holiday care package, but it might be nice to send some necessities, too. Soap, shampoo, toothpaste and other toiletries are a nice addition to a box of treats.

Do you have any care package ideas to share?

Photo by nathansnostalgia

Last minute holiday gifts that won’t bust your budget

Christmas giftsWe’re coming into crunch time now, and if you’re anything like me, there are probably still a few people on your list for whom you need to buy gifts. I always find myself adding people at the last minute, which can be a real problem for my gift budget.

Here are some easy, frugal gift ideas for gifts for the last few people on your list.

Baked goods

Who doesn’t love to get cookies at Christmas time? It’s likely you’ll be doing some holiday baking anyway, so pick up some decorative plastic wrap and give away a dozen cookies wrapped with a bow.

Magazine subscriptions

Amazon has some amazing deals right now for 1-year magazine subscriptions. Many of them are even available for $10 or less. Choose something you know they’ll be interested in, and it shows that you’ve put thought into the gift. They won’t get the first issue until after the holidays are over, but there’s plenty of time to print up a card that says, “I got you a gift subscription!” They’ll know it’s on the way, and it’s no hassle for you.

Wine

Supermarkets usually offer great discounts on good wines right now, because they know people are entertaining. Pick up a nice bottle for under $15, stick a bow on it, and you’ve got a great gift for the wine connoisseur in your life.

Calendars

I love to get a fun desk calendar for work or a wall calendar for my home office at the holidays. Find one with practical tips or a theme they’ll like, and they’ll think of you every day of the year.

A night out

When I was a teenager, I always gave my parents a “date night” for Christmas with two movie tickets and a gift certificate for their favorite restaurant. People who are strapped for time love this because it gives them an excuse to work time into their busy schedules for themselves. If your budget is too tight for a restaurant meal, consider a gift card for a coffee shop instead or a “movie night” gift basket with a movie rental, popcorn, and snacks.

If it’s a close friend or family member with kids, be sure to offer your babysitting services, too, so they can take advantage of your gift without having to worry about finding a sitter.

Share your last minute gift ideas by leaving a comment! We can use all the help we can get this time of year. :)

Photo by obd-design

An unconventional engagement ring

Engagement ringThe diamond engagement ring is one of those traditions that many frugal people shun. After all, diamonds are expensive, mining practices are often unethical, and who says you even need one?

In the interest of full disclosure, I will admit that I have a traditional diamond engagement ring. I love my engagement ring. It is the fanciest piece of jewelry I’ve ever owned (and probably will ever own), and I wouldn’t give it up for the world. But honestly, it’s important to me because he gave it to me. It could have been anything, and I would cherish it the same way.

My best friend and her soon-to-be official fiance are trying to plan a wedding and start their lives together in this awful economy. Like a lot of people, they’re making decisions to help them save instead of spending more. So when they decided to make their engagement official, they chose an unconventional route for the engagement ring.

My best friend’s fiance’s parents are divorced, but his mom kept her diamond engagement ring. She offered to give it to him so he could propose. They’re having the stone reset in a white gold band that my best friend picked out to make it her own. The cost for this beautiful half-carat diamond ring? Just $350 instead of the usual $1,000+ most people pay.

Because the ring came from his parents, it has sentimental value, and now it will be worn proudly instead of hidden away in a jewelry box. I absolutely love this idea.

Another option for frugal fiances is the non-diamond engagement ring. My sister’s husband gave her a beautiful sapphire ring that cost a fraction of the price of a diamond.

Whatever you choose to symbolize your commitment to your fiance, remember that the important thing is the commitment — not the jewelry.

Photo by wumpiewoo

For inexpensive organic meat, the freezer is your friend

meatEver since Tony and I vowed to stick with organic meat, we’ve had to be creative to keep expensive organics from driving up our grocery costs. Not only did we swear off cheap chicken, we recently nixed ground beef from our diets thanks to this terrifying New York Times story about flaws in the inspection process.

We get around using ground beef by substituting it for organic ground chicken when we can. Occasionally we still use beef in recipes, but we buy cuts of sirloin or chuck and ground them ourselves in the food processor. Using single cuts of beef reduces the risk of contamination by e. coli and other dangerous bacteria. But I digress.

Shopping for organic meats can get pretty expensive, but one of the ways we keep costs down is by watching out for expiration date specials. Even on sale, the organic chicken we prefer never goes below $3 a pound. We check the grocery store every week for packages with sell-by dates coming soon. Usually these packages are marked off by a dollar or two. When we get them home, we either cook them right away or put them in the freezer. Freezing the meat increases its shelf life by months, and buying on the sell-by date reduces the cost considerably.

For example, on Sunday we found four packages of organic ground chicken with a sell-by date that day. They were marked off $2 each. They were also on sale for buy one, get one free. All together, we bought four packages for $1 a pound. That’s much less than we typically paid for regular ground chicken.

By stock piling, we ensure that we can stay ahead of the curve and only buy when the price goes down low enough. This has allowed us to buy exclusively organic meat without increasing our grocery budget.

Photo by judybaxter