Tips for Saving for Your New Car

Hands holdinga jar of moneyIdeas for affording that hot ride you have always wanted
It’s a common situation: your current car is on its last leg and you have your heart set on a new model that will last longer, look better and have more features. Unfortunately, your bank account isn’t on your side and is limiting your options. Instead of disregarding your financial limitations, find ways to overcome them by saving money and shopping wisely so you can eventually afford that dream vehicle.

Determining your financial goal
Before you establish a plan of action, it is vital to fully evaluate your current financial situation and what your goal is; a clear understanding will help you effectively plan how to reach your goal.

Once you identify which vehicle you want, you can estimate how much a down payment would cost. Ronald Montoya of Edmunds suggests that 20% of the total cost of the vehicle should be your down payment (resulting in a lower monthly cost), but that if you cannot comfortably afford that amount, a 10% down payment with GAP insurance mitigates risk while keeping money in your pocket.

Jamie Page Deaton of U.S. News & World Report emphasizes the importance of considering the ongoing price of monthly vehicle costs, such as repayments, insurance and maintenance. Depending on your cost of living and pre-existing debt, these expenses should not exceed 15-36% of your monthly take-home pay. Ensure you have a secure income to afford these monthly costs after you drive the car off the dealership lot.

Saving money on daily expenses
Now that you’ve established a target amount of money to save for both the down payment and monthly fees, you can analyze your current spending habits and find ways to trim your daily expenditures and divert the difference into a savings fund.

Trent Hamm of The Simple Dollar outlines dozens of methods for cutting expenses. For instance, consider using public transportation or carpooling to work. Cancel your unnecessary memberships, subscriptions or paid services. Buy bulk, generic, non-perishable items from the grocery store and make your own meals instead of eating out. Other ideas include shopping at thrift stores, selling unused items, consolidating your loans, lowering home thermostats, unplugging electronics and pausing your travel plans.

Getting the best deal on the car
Saving money isn’t just about having enough cash in your bank account; it’s equally imperative to ensure you’re getting a deal on the vehicle you are purchasing. There are methods for knocking some numbers off the sticker price to ensure you are paying the lowest possible amount rather than simply handing over your hard-earned money at the first price presented.

Kerry Hannon of Forbes offers nearly a dozen ways women can save on a new car; all of the methods can be used by men, too. Time your purchase so that you can take advantage of a seasonal sale, a reduced price on last year’s model or a rebate program. Do your research and have a clear idea of what the car’s value is and what competing dealerships in the neighborhood are offering for the same model. Don’t be afraid to negotiate; hold firm on the target price and don’t get drawn into add-ons or upgrades.

Another way to get a better deal on your car is by improving your credit score and thus receiving a better deal on financing. Investigate all your financing options and find the best loan offer that is best for you, whether that’s through your bank, a local credit union or the dealership.

With a solid plan and frugal spending habits, you will eventually be able to afford that new car without putting your finances at risk.

Used with Permission. Published by IMN Bank Adviser Includes copyrighted material of IMakeNews, Inc. and its suppliers.

Advertisements

Common Auto Financing Terms

Defining the essential vehicle finance jargon you should know
Calculator with car keys on top of keypadPurchasing a vehicle from a dealership, be it a brand new or moderately used model, is rarely as simple as you would hope. What should be a basic transaction can quickly become a complicated discussion rife with uncommon phrases you wouldn’t hear elsewhere.

In preparation for the next time you intend to shake hands and sign on the dotted line to purchase a car, familiarize yourself with the following information.

Understanding pricing
Even before you step foot on a car lot and introduce yourself to a sales representative, it is crucial that you understand how each vehicle is given a price. If you’re researching vehicle prices, you will likely come across these terms.

The manufacturer’s suggested retail price of a vehicle (MSRP), also known as list price, is the manufacturer’s recommended price at which to sell a brand new vehicle. It’s not required that a dealer adhere to this amount, but according to the experts at Bankrate.com, it is required by law to be posted on the vehicle window’s Monroney sticker, along with the destination (freight/shipping) charge.

This differs from the invoice price, which is the amount the manufacturer initially charges the dealership to obtain and, in turn, sell the car to a buyer. The invoice price can be lowered by rebates, incentives, holdbacks and other ways to ensure the dealer makes a profit.

According to the DMV.org’s guide to understanding car financing, incentives and rebates can also be offered to retail customers looking to purchase the vehicle. The dealer may launch a short-term program to offer financial enticement to buyers in order to sell certain models. Manufacturers can also temporarily reduce the price of a model in a rebate program to make the cost accessible to more buyers.

Understanding financing
Once you negotiate and agree upon a fair price for the vehicle, the process moves to financing the purchase. Since most people don’t pay the entire bill up front, the transaction will be financed, distributing the cost across multiple years to be paid back with interest in monthly installments.

The Federal Trade Commission’s Consumer Information guide explains that the annual percentage rate (APR) measures how much the loan will cost the buyer and expresses it as a negotiable percentage. The APR includes not only the basic interest rate but also other fees involved with making a loan. The APR can be affected by many factors, from your credit history to local competition among dealerships. If you have poor credit history, based on an inconsistency of bill payment and financial dependability, you may be deemed a non-prime lender and receive a higher rate.

Interest rates can either be fixed, remaining the same throughout the entire repayment term, or are variable and fluctuate based on the current index.

Once you pay the initial down payment on the vehicle, the remaining balance will be financed and will consist of the principal, the amount of the vehicle cost still owed, the interest charges and any other fees.

Understanding your future
Ideally, you will continue to make monthly payments until you repay your auto loan on time. If you happen to pay it off early, Bankrate.com experts warn that you might be charged a prepayment penalty by the dealer, so inquire beforehand.

If, down the road, you believe you could get a better deal on the loan than you currently have, you can refinance the loan, either with the current lender at a new rate or with a different lender. Refinancing allows your loan to be reevaluated and potentially adjusted to a better rate.

According to DMV.org, there are two things you don’t want to have happen to your new car: be upside-down or have it repossessed. If you are upside down or underwater on a loan, the vehicle has negative equity and you owe more on it than it is worth. If you fail to make your payments on the vehicle, your lender might repossess your car, taking the vehicle from you without warning or court involvement.

Hopefully by understanding how the auto financing process works and what these common phrases mean, you can avoid any penalties or pitfalls and purchase your next car without issue.

Used with Permission. Published by IMN Bank Adviser Includes copyrighted material of IMakeNews, Inc. and its suppliers.

Cool Ways to Save Extra Money

A little creativity and thought can save you a lot of money
Couple Saving MoneyThere are many ways to save a little extra money each month, some of which have added benefits beyond financial ones. Have a little fun and get some great additional perks with these five out-of-the-ordinary ways to save extra money.

Forgo cable
With the popularity of Hulu, Netflix and other streaming services, cable isn’t considered a necessity anymore. These streaming services even produce their own shows that you can’t watch anywhere else. Plus, their fees are just a fraction of the average monthly cable bill—services like Apple TV only cost a flat fee up front for the device.

Another way to get media on the cheap is to dust off that old library card. Many local libraries are part of a network from which you can rent a vast selection of DVDs, TV series boxed sets, CDs and books. Even better, it’s absolutely free—as long as you return everything on time.

Socialize cheaply
Instead of going to the movies on date night or heading out for drinks with your pals, look for free activities happening in your area.

“Many cities offer a host of free activities, especially in the summer months. Use social media tools and the web to find listings for community activities and make your date night a little cheaper,” wrote money blogger Nicole Graham on LifeHack.org. “This will also push you to do something new or different, which will broaden your horizons and help you meet new people.”

You can also host your own social events. Save on menu items, tax, tips and parking by hosting a potluck supper. Or organize a clothing swap—it can be a fun, intimate event; and you can all get some free new outfits out of the deal.

Eat at home
Maybe your apartment is too small to host a potluck, but you can still plan your meals ahead and cook at home for yourself in order to pocket some cash.

“Taking a few hours every weekend to grocery shop and meal plan for the week will definitely save you money, as dining out is the No. 1 expense for most households,” said Brittney Castro of CNBC. “By eating at home, you save money that would otherwise be spent on tax and tip—and you usually save calories, too.”

If you do eat out—maybe it’s a special occasion or a reward—at least try to order take-out rather than dining in or getting food delivered. You won’t have to pay the double-fee of tipping the driver AND paying the delivery charge.

Get crafty
Take to Pinterest, beauty blogs and more to find cheap, easy-to-make and oftentimes eco-friendly cleaning or beauty supplies. These online resources can also give you cool ideas for repurposing items around the house or crafting in general, so finding a new hobby out of the deal is yet another advantage.

Charge yourself for bad habits
Quitting vices, such as smoking, can save you a ton of money. But the actual process of kicking the habit can save you some money as well. On LifeHack.org, Graham recommends labeling a jar with your designated bad habit and placing a certain denomination of money in the jar every time you find yourself partaking in said bad habit.

As if watching exclusive media content, hanging with friends, helping the planet or bettering yourself could get any better—with these tips, you can save money while you’re at it!

Used with Permission. Published by IMN Bank Adviser Includes copyrighted material of IMakeNews, Inc. and its suppliers.

Saving on College Moving Expenses

Tips to save money on your move to college
Young man carrying tote with personal items, his mom and dad are in the background packing their SUVThe transition from high school student to college student is momentous emotionally, mentally and often geographically. Heading off to college typically includes relocating, and whether that relocation is across the city, state or country, it requires planning, energy and money to move your belongings from your old life to your new life.

To start your college experience on a frugal foot, consider the following tips to help you save as much as you can on your college move.

Take stock of your belongings
A move is the perfect time to take stock of your possessions and really weed out what should be kept, thrown out or donated. By going through what you already have, you’ll have a clearer picture of what you need to buy.

MoneyCrashers.com writer Lainie Petersen suggests hosting a garage sale, which is a great way to drum up funds, purge your inventory and avoid packing items you don’t really want or need.

Pack with a minimalist mindset
Moving is an emotional experience, which is why it makes sense that your instinct is to take as much as you can that reminds you of home, but for the sake of efficiency, effort and reducing expenses, fight that instinct.

“One of the basic rules of moving is that the more stuff you have, the more it costs to move. Save money by packing smart. Consider your living situation and plan your belongings accordingly. If you’re living in a furnished apartment or dorm room, you probably don’t need to bring your old desk or beanbag chair,” advise the experts at DealSpotr.com.

Research what you truly need to bring by seeking advice from older students and the housing department at your college and coordinating packing responsibilities with your roommate.

Source free packing materials
Round up as many free cardboard boxes and packing materials as possible—and the sooner the better, according to Petersen. She recommends reaching out to neighbors and friends for any packing supplies they can spare while the experts at DealSpotr.com suggest asking a manager at big box stores like Wal-Mart for boxes, which are set to hit the trash or recycle bin that you can claim.

Call in the professionals
Even after you have purged and stuck to a strict packing list of essentials, you might realize you have more items than can easily and safely fit into your vehicle. If making multiple trips is not possible, you will need to seek professional help and rent a truck. Renting a truck or trailer may seem like an extraordinary expense, but you can save some money by sharing the cost of the truck or trailer rental with your roommate or friend, according to the DealSpotr.com experts. If you plan to rent a truck, they recommend shopping around early to find the best deals.

Purchase big items upon arrival
Upon arrival, you might realize the bookshelf you hauled doesn’t work in your new space. To avoid mishaps with bulky stuff, the DealSpotr.com experts recommend purchasing bigger items, like furniture or appliances, once you get to your new address.

With these tips, you’ll be able to save money and reduce anxiety on your college move.

Used with Permission. Published by IMN Bank Adviser Includes copyrighted material of IMakeNews, Inc. and its suppliers.

Should You Save Your Credit Card Information Online?

How to protect your information when shopping on the internet
Woman using a tablet to make an online purchase using a credit card
It seems all too common these days to hear about major breaches at retailers that leave consumers’ credit card numbers and personal information vulnerable to identity thieves. In perilous times, it feels tenuous enough using a credit card to complete purchases in-store, let alone online. If you shop online frequently, the question of whether it is safe to store credit card information online for the purposes of faster and easier check outs is a valid one that can be approached a number of ways.

Assume the worst
In an April 2014 article on NerdWallet entitled “Should I Save My Credit Card Payment Information on Retail Websites?”, website contributor Lindsay Konsko states the obvious in a blunt fashion: “[Y]ou must understand that anything you put on the internet should be considered completely unsafe and available to the public. No matter how much a website boasts about its security, it may still be vulnerable.”

You can save your credit card information with retailers if you shop there frequently enough that it might warrant it, but you should only do so fully understanding the level of risk involved. Some retail outlets like Amazon.com provide two-step authentication to protect your information and help you spot when someone might be attempting to access your account, but even then, it is not entirely protected from the possibility of data breaches.

Consider the alternatives
CNET Senior Editor Lexy Savvides recommends protecting yourself from the possibility of having your credit card information stolen from an online retailer by considering instead the option of shopping online with a prepaid card. According to Savvides, prepaid credit cards are advantageous in that they can help curb impulse shopping and can easily be reloaded (for a small fee), but arguably the biggest advantage that they provide online shoppers is that “even if the card’s details are compromised somewhere along the chain, there is a limit to the amount of money that can be taken.”

Be proactive
The reality, as unfortunate as it may be, is that there can be no guarantee of the complete safety of your credit card information. Having said that, it is within your power to determine how much risk you face. Savvides notes that you should only enter credit card information when checking out online if the website has an https connection and “a padlock or another digital security certificate to ensure that you are only entering your details on a site that encrypts the transaction end-to-end.”

Savvides also recommends being attentive when it comes to monitoring transactions. Konsko notes that most credit card companies offer fraud protection and low or zero liability for fraudulent charges, but it is not always guaranteed that a credit card company will notify you when a charge goes through even if it is unusual. As such, frequent or even daily monitoring of your balances and transactions can be key to shutting down identity thieves before they have an opportunity to do any major damage.

Savvides notes that credit card companies like MasterCard and Visa offer secondary levels of security to protect your credit card information by requiring a private code or password before completing a purchase. Before deciding whether you feel comfortable storing your credit card information with a retailer online, make sure that your credit provider will protect you in the event of having that information compromised. When it comes to credit, it is always better to be safe than sorry.

Used with Permission. Published by IMN Bank Adviser Includes copyrighted material of IMakeNews, Inc. and its suppliers.

Food Shopping: The Blindspot in our Spending Plan

Woman pushing a shopping cart down a supermarket isleYour relationship with food is probably pretty complex. In addition to sustenance, you may use food for comfort, gathering with others, distraction or pleasure. When you really commit to tracking your food expenses as part of putting together a spending and savings plan, you realize food can be a complicated part of your financial life too. While meals are of course a necessity, take a look at your food-buying habits. Odds are that there’s room to save.

Eliminating “extra” expenses like dining out or buying pricey steaks is a good place to start. But also keep in mind that a successful food-purchasing plan isn’t just about cutting things out. It’s also about understanding your habits.

Going out to lunch at work
You may grab “a quick bite” at work because it’s easy. But it might actually take you less time at home to put together the same meal. Then you get to spend more of your lunch period at work relaxing, going for a walk or reading a book. Or you could just spend the time thinking about the hundreds of dollars you will save this year by brown-bagging.

Convenience store or check-out aisle buys
If you actually look at the prices, you realize that the mark-ups on the quick-grab items near store cash registers are incredibly high. But that’s just the thing. Stores realize you don’t stop to examine and consider prices in those situations. If you find yourself reaching for a pack of gum or some candy as you are about to check out, instead, make a commitment to stock up ahead of time and keep these items in your car or your purse or your desk. By buying them online or at a bulk retailer, you could pocket a bunch of extra dough.

Fast food
The fast burger or taco for $0.99 sounds like the perfect recipe for our modern sensibilities; we want food in a hurry and we don’t want to pay a lot. While the speed of delivery may be enticing, the end price may not be all that great. Consider: how many times have you gone to a fast food restaurant and ordered just one thing? The advertised item may be under a dollar, but when you add on a drink and fries or another side order, the costs add up.

Shopping when you are hungry
It’s silly to think that you are always going to shop on a full stomach. So instead of feeling like you need to plan all your grocery shopping excursions in tandem with meals, just be aware of why you are putting each item into your cart. Are you reaching for that plastic canister of candy rope because it’s a part of your spending plan or because your blood sugar is a little low?

“High end” grocery stores
You may like to go to the more expensive grocery in your area because they have a few specialty items that you can’t find at other stores. That is certainly understandable. But make sure those items aren’t available for a lower price at your regular grocery first. They may be tucked away in a place you hadn’t thought to look. Also, even though you might go to the more expensive grocery store for a few specialty items, doesn’t mean you have to pay a higher price on the regular items; try to just purchase the specialty items there.

Buying prepared items
Any financial coach worth their salt will tell you that cooking your own meals instead of buying prepared meals saves you mounds of cash. But also think about the fruits and vegetables you buy. Fruit medleys or even individual chopped fruit packages can cost much, much more than just buying the fruit in its whole form. Same goes for salad mixes. Is it really worth the extra money to have someone cut up your fruit or mix up some greens for you?

Failing to plan
If you are one of those people who wander around the grocery store until they find some things that look yummy, you are probably paying more than the list makers of the world. In a perfect world you would plan out your meals for a couple weeks and create a shopping list based on that. But at the very least, try to formulate a list of necessities. Allow yourself one impulse buy if that helps you stick to the plan. Remember that “if you fail to plan, you plan to fail”.

Meat-centric meals
If you plan your dining experience with meat as the centerpiece, you are not alone. It’s a common tactic. But it doesn’t have to be an all-the-time way of looking at meal construction. By sometimes substituting in tofu, beans or legumes as your protein source, you can save significantly at checkout time.

Brand name insistence
There are certain consumer items for which you can make an argument that brand name goods are a better choice. But that isn’t generally the case with food. Lima beans are lima beans, whether the name on the can is the one you heard on TV or it is completely new to you.

Making money-smart choices about your food purchases doesn’t have to mean denying yourself the things you love. Instead, think of using these tips to get all the food you like, while giving yourself extra money to spend on things you enjoy.

Used with Permission. Published by BALANCE Includes copyrighted material of BALANCE.

When to Use Credit (and When to Avoid It)

person holding credit card and using a laptopIf used carefully, credit can be a helpful financial tool. For example, using credit to purchase a home now, rather than trying to save up the whole purchase price, makes financial sense. The home provides a place to live that will perhaps increase in value and the mortgage interest offers a tax deduction. Credit may also help you deal promptly with costly emergencies.

Many consumers turn to credit when faced with unexpected home or auto repairs, as well as medical emergencies. And credit offers convenience, enabling you to rent a car or hotel room or buy airline tickets over the phone or online. In many situations, credit offers peace of mind; there is no need to carry large amounts of cash when shopping or traveling.

Despite all the advantages and conveniences credit can provide, there are some pitfalls associated with credit use. Credit can be expensive. Interest rates (often ranging from 14% to 22%), finance charges, annual fees, and penalties can dramatically increase the cost of any purchase made on credit. Then, there is a tendency to overspend on credit. It is much easier to spend more than you can afford when all you have to do is pull out the plastic. Over-extension gets thousands of consumers into financial trouble every year.

It is possible to have the best of both worlds, though. Designing a realistic spending and savings plan so you are aware of how much credit you can afford, as well as comparing the cost of credit and shopping around for the best deals, will help you avoid credit trouble.

Here are a few more tips:
Keep your charge receipts in an envelope with a running total on the outside. If the total exceeds an amount you consider appropriate, you know it’s time to curtail your spending.
Save monthly for expenses such as auto maintenance, holiday gifts, and the kids’ school clothes. That way you don’t need to use credit to cover these expenses, or, if you do charge them, you can pay the balance in full when the bill arrives.
Monitor interest rates. Choose lower-rate financing options whenever possible.
Limit the number of open credit card accounts you have. You don’t need more than one or two credit cards, and it’s much easier to keep track of your total outstanding debt with just a couple of accounts.

How Much Debt Is OK?
As a rule, no more than 15% of your net (take home) income should be committed to consumer debt payments each month. Another way to determine how much debt is appropriate for you to carry is to first complete a family budget. The amount remaining after you deduct your monthly savings and living expenses from your net income is the most you should have going to debt repayment. If you’re sending more than that to your creditors each month, you may want to consider credit coaching to help you reduce your debt load.

Shopping for Credit
When shopping for a credit card, you should first decide how you plan to use it so you can compare the features that are important for you. It is important to understand the difference between a charge card and a credit card. The balance on a charge card must be paid in full every month. Paying only a portion of the bill will cause your account to be delinquent. A credit card allows you to carry a balance for as long as you want, provided you make at least the minimum monthly payment due.

If you will pay your credit card bill off every month, a low annual fee is important. If you usually carry a balance, look for the lowest interest rate. Shop for a grace period, the amount of time after your purchase during which finance charges are not assessed. Some banks and finance companies give you up to 30 “free” days, but it has to be at least 21 days. However, interest starts accruing immediately on cash advances; there is no grace period and the interest rate is higher than that applied to regular purchases.

Depending on your payment and credit use habits, you may also be affected by late and, possibly, over-limit fees.

If you have no credit or a bad credit history, you may be able to obtain a secured credit card. A secured card works just like a regular credit card except that you must leave a deposit—usually between $250 and $500—with the issuing bank as collateral. If you default on your payments, the bank takes the money owed out of your deposit.

The interest rate and annual fee on a secured card are often a bit higher than on a regular card. But a secured card can offer you the convenience of a regular credit card and the opportunity to improve your credit record. When comparing cards, try to find one that does not charge an application or processing fee and confirm with the issuing bank that they will report your payment performance to at least one of the three major credit reporting bureaus, Experian, Trans Union, and Equifax. Make the most of this chance to build an unblemished credit report!

Used with Permission. Published by BALANCE Includes copyrighted material of IMakeNews, Inc. and its suppliers.