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July 2018

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How to buy the Perfect Car

Have a look at the parking lot of one of those suburban mega-restaurant-outdoor malls on a Friday night. You know, the ones with the Moxies, Milestones, Keg, Jack Astors and…well you get the idea. The asphalt is adorned with beautiful cars. Shiny, late model Bimmers, Acuras and Lexus SUVs. Who is driving all of them? How is it that they are all driving the perfect car? And how come they can afford them and we can’t?

The simple answer is that they aren’t affording them. The average car loan is now 69 months. That is insane. It has been steadily rising. People then leave car loans early to get a nicer car and carry their negative equity over to another new car loan. Interest on the interest. Logic out the window. The marketing machine and our peers have convinced us all what we need and to not worry about paying for it. It is, in fact, time to worry. So what is the perfect car and how do we find it?

The Acura vs Honda experiment

I recently moved from an Acura MDX to a Honda CRV. I was curious what would happen if I made the switch. It was fascinating. Nothing happened. Same friends. Same fun road trips. My kids still speak to me. Solid safe driving. It doesn’t accelerate as quickly, but that doesn’t really change the outcome of my grocery trips or business meetings. It likely saves about $4,000 a year vs the more luxurious MDX. My favourite new features? Runs on regular gas, cheaper insurance, half the fuel cost, lower servicing costs. And it has every kind of feature and drives great. I lost some prestige and the ability to carry an extra couple of people for when I need to do that twice a year. I’ll ship them in an Uber for an extra $50 a year. They’ll be fine. As a financial speaker and writer, I am likely better off with less prestige.

So what is the perfect car and how do you find it?

Start with the question of whether you need a car or not. Can you locate closer to your work? Carpool? Walk? Bike? Can you Uber around the rest of the time? Cars are a massive expense and doing without one and using the savings for debt repayment or increased investment is a powerful way to get ahead.

If you can’t avoid one, aim for the simplest, most reliable one you can find. The black Toyota Corolla in the picture is a great example. My son bought it as a 4 year old used car when he graduated. Lived frugally and paid the whole thing off in a few months. Runs like a dream. As a software engineer, could he have handled the payments on a Bimmer? Sure. But why? The CaRolls Royce (as he calls it) has manual winder windows, hub caps and a pretty spartan interior. Would father and son trips be more fun in a nicer car? I doubt it. What would have been the Bimmer payments are in his TFSA, compounding nicely. In one simple move, he gets a safe reliable ride and starts a path to financial freedom. And he is sure that his dates are interested in him, not his Corolla.

Where do you find the reliable ones? Easy. Subscribe to Consumer Reports Online. $25 a year. One of the great bargains. Look up the cars you are interested in and check the reliability score. Couldn’t be simpler. My CRV was their second best pick for small SUVs. I will admit that I liked the look of it better than their top pick.

How much can you afford for a car?

How much can you afford? I like the concepts on the interest.com site. Check out their post on how much car you can afford. They talk about a 20/4/10 rule, meaning to put down at least 20%, pay it off in less than 4 years and not pay more than 10% of your gross compensation for car payments and insurance. Good advice.

On affordability, don’t push your budget upward because your budget can handle the extra payment dollars. Think about your finances in terms of your net worth over time. In other words: What is the car decision that will optimize your wealth over the long term? Learn more about that here.

Once you get the car, take the time to do the scheduled maintenance. The newer cars tell you when they need help. Heed the call. It will save you in the long run.

So what is the perfect car?

The perfect car is one that gets you there safely and optimizes your wealth over the long term by being cheap to operate, reliable and have reasonable servicing costs. And even with Bluetooth connectivity, GPS mapping with traffic and route optimization, heated steering wheels, adjustable lumbar support and sculpted alloy rims, there is still one car feature that turns a good car a perfect car. The lack of a monthly payment.

What are your tips for finding and driving the perfect car? Let me know in the comments.

 

 

 

Serendipity – 6 Tips to Shine it Your Way

It happened again. This time, I was out for a drink with my daughter’s boyfriend’s dad. (How many of us can say that!) Great guy. He brought it up first. He is transitioning from the bicycle industry to real estate. “It’s like serendipity”, he said, “I just keep meeting the right people at the right time who are there to help me.” I smiled and nodded, “Go on”. He offered story after story. He has tapped into the power and is in awe of the possibilities.

I have seen it non-stop since I left the land of the quarterly earnings. I am living a constant Field of Dreams moment. My car dealer friend introduced me to another self-published author and speaker who agreed to share his secrets over a coffee. I couldn’t type fast enough into my iPhone. He laid out his whole business model for me and has followed up with emails to keep me on point. No charge, no consulting fee, no catch. Just doing it for the goodness of paying it forward. But it’s not just him. Old friends are reappearing. Colleagues offer introductions that pave the way for new possibilities. Sometimes it is me, sending drops of serendipity their way. And finding oceans of it washing back in return.

Where is all of this serendipity coming from?

And the serendipity breeds more serendipity. The speaking engagement leads to a newspaper column. The blog post leads to a speaking engagement with the clients of a financial advisor, which then leads to an employee financial wellness session at a different firm.

Was it always there and I missed it? Are we rising toward peak serendipity? Just yesterday, at a client meeting we talked about what we could do together on social media. One idea flowed into the next. Some would help my business, some would help theirs. Didn’t matter. There was a “pull” feel to it. No pushing, no demanding, no measurement. Just people helping people and the results flowing in. In fact, it seems to happen the most, the further I get from the command and control corporate world. Speaking with entrepreneurs, they look at me like I’m from Saturn. Of course that is how things get done. They have known about it all along.

How to open the serendipity tap?

So how can we all grow some more serendipity in our lives? I am no serendipity expert, but let me share what I have seen so far:

  1. Do Good – Choose a vocation that is about helping others. Define a great quest. It feels good and draws in others to help.
  2. Be Open – Accept the invitation even if it’s not clear why you should go. It could be a dinner in Toledo or a coffee in Portland that opens up completely new possibilities for you.
  3. Seek to Help – Meet new people with a mindset of how you can help them in their journey. Seek to understand, then to be understood.
  4. Look for the Synergies – Is there an elegant meeting of needs somewhere that can accelerate what you both are doing? What unique properties do you each have that can help the other?
  5. Loosen the Strings – in the corporate world, it is often about bolting down timelines and deliverables. Let them flow for a while and see what happens.
  6. Connect Others – we are all just a connection or two away from meeting those who can help our plans soar. Keep bringing your contacts together and those synergies will flow among them. And back at you.

Do you find Serendipity is rising? Or are we becoming more attune to it? Share your thoughts!

Photo credit Louis K on Unsplash

Is There a Better Way to Buy Clothes?

In the epoch prior to Netflix there were 2 ways to get a men’s suit. Once was off the rack, a fantasy-based method that assumes that your dimensions are aligned with a mythical standard. With mid-sized shoulders, mid size arms and mid sized paunch all was good. For the rest of us, these are more commonly known as “ill fitting suits”.  The second approach is to go made-to-measure, hand fitted over several appointments with pricing mentioned only if requested and then in hushed tones accompanied by sage nodding. Is there a better way to buy clothes?

Actually, let me back up. Prior to Netflix there was more call for suits in general. We festooned ourselves in them, complete with big shoes, fancy belts and power ties. Work fashion has morphed to jeans and polos or even cargo shorts and rock T shirts with concert listing dates on the back. So who cares about suits? Who knows, you might have a wedding, a fancy dinner out or a kid’s graduation to attend. Or maybe you just want a shirt or dress pants that fit properly. And if you are looking for savings on casual clothes look here.

I may have found a clothing gnome

Some guys love the trip to the mall to fuss over the fabrics and the styling details and enjoy getting up close and personal with a measuring tape. I don’t know any of those guys, but I’m just saying. The rest of us hope for a clothing gnome who magically restocks our closet with suits, shirts and pants that fit, look good and take no shopping time.

In a perfect world you would get measured once, pick fabrics from a web site, order new suits, shirts and pants from your iPhone while watching the Patriots. Click on your saved credit card and, Presto, your clothes show up at your door. No parking,  mall trips or  hassles. No embarrassing encounters with measuring tapes. Well OK, but just once.

The last mouse click sent a digital Gord to China

There is such a place and it is called Indochino. Brilliant. I put them to the test when replacing my ancient tuxedo – pleated pants, circa 1980’s NFL shoulder padding and inexplicably, a mustard stain on the lapel – don’t ask, it had to go. I booked my appointment via their online calendar. Boom. They greet me at the door by name and set to work. Lots of prodding with tape measures and everything carefully noted in the computer system. I wouldn’t have thought that there were that many things you could measure. Tape extended, move here, mouse click, keyboard. Repeat. About 30 minutes worth. Years of careful rum drinking and Breaking Bad binge watching were boiled down to a set of numbers. Then some try ons of sample jackets and pants. More measuring and clicking. Finally done. Time still left on my parking meter app. The last mouse click sent a digital Gord to China to get cut and sewn into exactly the tuxedo I spec’d. $699 plus taxes. I could get 3 for the price of a made to measure tux from a high end retailer.

A better way to buy clothes

About a week and a half later, a big box waited at my door. Inside was something that looked a bit like a tuxedo that had done a red eye flight from China. After a bit of closet time it came back to life. I would too, under those conditions. I slipped it on the jacket and wow, did it fit. Nothing bunching or stressing. Brilliant. On to the pants. Hmm a bit tight in the seat and waistband. Bad measuring? Excess rum? Who knows. I called my Indochino friends and they suggested I take it to a local seamstress. Then they ask me to take a picture of the receipt, send it to them and they will credit my account. And, they adjusted digital Gord so the next suit is perfect. OK, now this is service! Check them out at Indochino.com.

So have I bought more clothes from them? Not yet, but I know that Digital Gord is ready whenever I am. I will be back.

So how does this help my female friends? Ladies contribute! Is there a better way to buy clothes for women? Let me know!

Photo credit: Ruthson-Zimmerman on Unsplash

How to Get Free University Funding

Many families struggle with the high cost of sending their offspring to College or University. Including books, tuition, housing and, of course, beer and concert tickets, the tab can run to $25,000 or more a year. How great would it be to get free university funding?

Lots of options for free university funding:

  • Take full advantage of the RESP program in Canada or the 529 plan in the US. Currently in Canada, the government provides up to $7,500 per child in matching grants. Strangely, only about 1/2 of students are on campus funded by an RESP and event then, they are only taking advantage of about 1/3 of the value of the program. When your government offers free university funding…grab it!
  • Look at government student grant and loan programs. These can be effective for lower income families since they usually include a means test. However, in some locales, a means test is not used when the student enters her 5th year of a higher education program, meaning that students in longer programs or in second degrees may be eligible for free university funding.
  • Be sure to set things up right with your student. I recommend paying some or all of the fixed education costs like books, tuition, rent and food and letting the student save for incidentals. In that way there are no budget overruns and their is no calling home in October with frantic calls for more funds. More details on this in Cashflow Cookbook.

Finally, it is worthwhile looking at scholarships for students. Navigating the process is tricky, so we are lucky to have some help on this from the President of mycampusgps.ca, Janet MacDonald, here to help with this. Janet, over to you!

Scholarships – there may be one waiting for you

There are many reasons why students don’t apply for scholarships.  Some believe tired old myths like “You must be a top student to win scholarships.” Or “It’s too competitive, I’ll never win.” Or maybe it’s the parents who believe the myth that you must demonstrate financial need for most scholarships.

While there is a kernel of truth in some of these myths (e.g. top students do win scholarships, but not all scholarships are won by top students), many more students qualify for scholarships than they think.  In fact, only about 1/3 of scholarships require high grades and financial need.  Many scholarships have about a 70% minimum grade requirement, and some don’t have any grade requirement at all.

Actually, you do have time to write a scholarship application

Another barrier to scholarships is the time it takes to complete the applications.  But let’s look at the potential return on investment of a scholarship, even a relatively small one at $1,000.  If your student puts in 3 hours of work on a $1,000 scholarship, they saved the equivalent of working about 90 hours in a part-time minimum wage job. If we look at it another way, they just made over $300/hour.  There are 720 hours in a month.  If your student has something better to do with just 3 of those hours than to potentially win $1,000, please let me know what it is so I can share it with others! (Love this, very Cashflow Cookbook-like thinking – Ed)

But, qualifications and time barriers aside, sometimes the obstacle is the student simply not knowing how to fill out the applications.  Some scholarships require references, and students sometimes don’t know who to ask.   Many applications require an essay, which some students find intimidating.  They often struggle to decide what experiences they should include on the essay, and how to communicate their accomplishments without sounding arrogant.

Finally, a course to help you win scholarships

How to Write Winning Scholarship Applications is a step-by-step online course that takes high school students (and their parents), through the scholarship writing process.  It provides professional instruction on how best to complete scholarship applications — right in your own home, or any place you have an internet connection.

When students sign up they have access to video training modules and downloads of templates and other course materials they can use to support their learning.

With the information in the program, students are able to write their best scholarship application, and then re-use the material again and again to apply for more scholarships, thereby increasing their chances of winning.

This program is aimed mainly at Grade 12 students in Canada.  Parents can also follow along to discover some of the best ways to support their child through this busy and important time of their lives.

Thanks to Janet for her ideas on scholarships.

Do you have some interesting ways to get free university funding? Let us know in the comments.

Photo credit Antenna on Unsplash.com