Cash For Clunkers bill passes, what does it mean for you?

Jennifer McClelland | RSS | Fri, Jun 19 2009 | 0 Comments

On Thursday, the Senate passed a “Cash for Clunkers” bill that would give car buyers an incentive to take in their cars and get a new or used car. So, what exactly is this “Cash for Clunkers” bill and how will it affect you?

Well, if your car gets less than 18 miles per gallon, when you go to trade in your car, the government will send the dealership a voucher for $3,500 if the car you get has at least gas mileage of 22 mpg or higher, it becomes $4,500 if it’s 28 mpg or higher. If you own a pickup truck, sport utility vehicle, or minivan that gets 18 miles per gallon or less, you would receive a voucher for $3,500 if the vehicle you purchase gets at least 2 miles per gallon higher than you current vehicle and $4,500 if the vehicle you purchase gets 5 miles per gallon more.

If you have any emotional attachment to your current car, this may not be the deal for you. When you take your car in, it will not go to a loving home or sent out to “live on a farm.” The bill is to ensure that these cars are taken off the roads, so your car will go to scrap and either shredded or crushed.

Obviously, if your trade in value is higher than $3,500 or $4,500 it wouldn’t make much sense for you to participate in this bill anyway simply because the dealership will not give you the trade in value for your car if they have to send it off to be scrapped.

GM and Chrysler have both lobbied for this bill to be passed and while it is another thing that the government has thrown $1 billion at, it is good in the long run for not only the car manufacturers, but also the environment. The only problem is that all the SUVs that were purchased at the height of the “craze” have a higher trade in value than the $4,500 currently offered. If you purchased a Tahoe in 2004, I’m sure that your trade in value is more than $4,500, so that car hasn’t been taken off the road.

I think that this bill is a step in the right direction, but in my opinion, I think that people who drive environmentally UNfriendly cars should be taxed to make up for what the government has spent on this bill.

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Tags: sport utility vehicle, miles per gallon, voucher

Stop trying to play the blame game and get the job done GM

Jennifer McClelland | RSS | Tue, Jun 02 2009 | 2 Comments

There’s no need to point fingers at GM for the bankruptcy it had to file. Now is the time for the company to try to come back from the brink of extinction rather than try to figure out whom or why.

Several news articles today are about which cars doomed General Motors or “Who’s to blame for GM’s Bankruptcy?” In the articles, everything from management to the Pontiac Aztec are mentioned as reasons for the fall of the once mighty auto maker. In a previous post, I blamed the auto company’s poor quality and lack of fuel efficient cars as the reason in recent years. However, it has taken years and a multitude of events to transpire for this to happen to GM.

Now is the time for GM to get their act together.

Today GM took the first step by announcing that someone is willing to buy the Hummer brand. While it was good while it lasted (or not), Hummer would have been completely done away with without a buyer. However, now that there is a buyer, GM will be able to recover some of the costs that it lost in acquiring Hummer. There was little known about the potential buyer of the brand other than that they are looking to aggressively finance the Hummer brand and its future product programs.

The government will be taking a huge risk by taking GM by the hand and basically leading it through chapter 11 proceedings. GM hopes to have everything in order to come out of bankruptcy in just a short 60 – 90 days.

The road back to profitability for GM will be bumpy and isn’t traveled often, most companies that file for bankruptcy never come out and are forced to liquidate rather than prosper.

Chrysler has shown that it is possible for a large company to come out of bankruptcy quickly, as long as it is helped along by the government anyway. Chrysler is planning on selling the majority of its assets to Fiat, an Italian car maker. The move would help the company along and it would make a move out of bankruptcy fairly quickly.

In the attempt to restructure, nine GM plants will close completely and three will idle while GM ponders its future plans.

David Cole, the chairman of Center for Automotive Research in Ann Arbor, Michicgan, said, “We are at the threshold of a dramatic increase in profitability for the industry, and we are increasing household formation in this country by one million a year, so demand is growing.”

At least there is a bit of optimism in the face of all the pessimism surrounding GM and its bankruptcy filing.

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Tags: italian car, chapter 11, gm plants

Economic Prosperity for College Grads

Michael Bowler | RSS | Fri, May 29 2009 | 1 Comment

You just spent the last four years preparing for the rest of your life. As the Rodney Atkins song says, you “majored in beer and girls”.  (If you did, you are part of 5.4 million college bingers. Be not ashamed.) You spent five long minutes every week writing answers on every part of your body that you can pull out of your clothes to look at during the exam. Okay, maybe some of that is exaggerated. I really do hope you did the best you could throughout those four years of college and did your best to prepare yourself for the next 45 years of your life (or more, these days).

One thing they probably did not teach you is money management. You will have a mortgage, car payment, marriage (likely complete with two or three curtain climbers), food, etc. The list goes on. Money does not buy happiness, but if you hang on to a little of it and manage it wisely, you will be a much happier and successful person. The first step is learning how to manage that dollar no matter how big a hole it is burning in your pocket.

The first thing you need to learn is that we do not have control. We can stock all the money away that we want, invest as much as we can, but the truth is that the government and the free market have total control. All we can do is try to steer clear of the obstacles the economy throws in our way. Try to plan ahead and give yourself a financial cushion.  Very much like the commercials played here in Maryland for Baltimore’s St. Joseph’s Hospital concerning their heart department‘s heart attack risk assessment program. It begins with a man they introduce by name. They mention all the things he does right– he jogs every day, eats right, smoke free and alcohol free, but in three days he will have a massive heart attack. You could do everything right but then have a financial attack. Just learn to do the absolute best you can with every dollar you earn.

Work hard at all the right things. Be proactive. Be ambitious. Raise your hand for new challenges. Experience new things. Beef up that résumé. Do something you like that is still financially rewarding. Network properly in your industry. Most importantly, look for good benefits. Example: many employers reward their employees with stock portfolios (401k) which will likely grow. Live your life toward one central financial and occupational goal and live up to it.

Decide what “rich” means to you. There is another country music song that says that you do not have to make a million dollars if you are putting food on the table and providing for your family. If you only make $60,000 per year but it pays for that townhouse you bought in Hanover, PA, pays the bills, buys the bread, and allows you a little money left over to stock away and you are okay with that, you have succeeded. Just remember to live under your means and put those extra few bucks away every month.

Understand the fiscally responsible way to live. Pay off credit cards on time, more than the monthly payment; total balance if you can. Banks should be paying you interest, not the other way around. If you are paying interest, you are wasting money. Treat your credit score like a baby. One mistake could kill that poor child. One mistake in your credit could be the difference in that loan you want. Learn how to manage your money properly. Get down to the dime if possible in your budget. As mentioned in a previous article, there are easy ways to budget. Some people swear by the envelope method. Understand the cost-benefit analysis of your investments. Take good care of your health. Remember that a million dollars is more than enough for retirement. The investment companies want you to invest a million with them but in reality, $350,000 is plenty if you are fiscally responsible. Last but not least, be giving and grateful. This all leads not only to happiness but financial security.

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Tags: automobiles, money management, retirement