personal

Earlier, on one of my recent car-whining post about my old Nissan, a reader (Chris) left this comment:

Don’t tow it to a junkyard – donate it. There are lots of charities that’ll want it, even if it’s not running. They’ll come tow it away and initiate all of the paperwork on your behalf. A “junker” will be auctioned to a junker lot, and you will receive a tax receipt for the proceeds. It likely won’t be much, but it’d be more than simply towing it to a junk yard (many of which will charge you for the tow).

At that time, I liked the idea of donating it to charity and did research on the subject. Here are a few (of many) sources you can approach to have your car donated:

Junk-Yard.org

• Car condition: It’s ok if the car is totalled and/or not working, but it should have all the major components - for example, cars without engine will not be towed.
• Towing costs: Free
• Tax Deductible Donation: Yes
• Service availability: Nationwide
• Phone number: 1-888-511-5865

Teddy Bear Cops

• Car condition: You need to get in touch with them through this form and make sure they are ready to pick up your car.
• Towing costs: Free
• Tax Deductible Donation: Yes
• Service availability: Does not pick up in Mississippi, Florida and Iowa.
• Phone number: Not listed

Kars 4 Kids

• Car condition: Working or not working. However, there is a small clause on the website that says “exceptions include older cars whose value would not offset the cost of towing”. So call them up and see if they would be interested in your car.
• Towing costs: Free
• Tax Deductible Donation: Yes
• Service availability: Nationwide
• Phone number: 1-877-527-7454

Then there are others that tow your car for free but do not give you any compensation for the value of the car. Here is an example.

Junk My Car

• Car condition: It’s ok if the car is totalled and/or not working. They will accept it even if it’s missing some major components.
• Towing costs: Free
• Tax Deductible Donation: No
• Service availability: Nationwide
• Phone number: 1-877-586-5692

You MUST provide all these guys with a valid ownership title for your car - otherwise they won’t pick it up. So if you are thinking about making money by having your neighbor’s junker towed away, it’s not going to work.

Anyways, after going through all the information, I thought over donating my car, but didn’t have the patience to wait till the next tax season to get the benefits (nor the patience to wait until someone decided whether my car is worth towing or not). So, I called up a few junk yards in our area to see what they can do and one of them (which operates along the lines of this organization) offered $650 (to be paid on-the-spot) for my car … plus free towing! The sound of the quick $650 made me give up (sadly) any noble thoughts of donating the car to charity.

The deal was pretty sweet because I was not *expecting* anything for the car and just wanted someone to tow it away for free. The amount they paid me was in spite of the fact that the Nissan had a salvage-rebuilt title, had really *bad* paint on it, had suffered some damage on the trunk lid and rear bumper, and was hardly working (the engine cranked to life, but it wouldn’t run for more than 2 minutes at a stretch; the only other things that worked were the headlights and the brakes). I had earlier estimated the market price of the car between $1800 to $2000 - but I had appraised it as a clean vehicle (with a clean title) at that time. With the kind of repairs it was needing, and with it’s salvage title, I think $650 was a fair price to get for it.

I am not sure what will happen to that car after this, but from what I was told, it will be dismantled and the individual components will be sold to interested parties - people who rebuild salvaged vehicles. I just hope they don’t *repair* that car and sell it to some unsuspecting poor guy (without disclosing the vehicle history).

So, if you want to get rid of the junk car, and are more interested in the monetary aspect than the charity aspect, I suggest you spend a few minutes on the phone and the internet and locate a few junk yards in your area. If they won’t buy your car, at least they will lead you to people who might be interested. Btw, you can try this option even if your car is in working condition; you could probably get more money this way than what you will get if you trade it in for a newer car.

After about 8 dealers and numerous salespeople, we finally got what we wanted - at the price we wanted.

It was a very rich learning experience in the field of used-car buying; and hopefully I will summarize a few key points next week.

Our final choice (war trophy) was a lease-returned 2005 Toyota Corolla CE with about 21K miles - still has a fraction of the original warranty on it. I won’t disclose the actual drive-out price, but people who read this blog are smart enough to fish that out from online sources.

In our little psychological battles with car salesmen, we defeated about 10 salespeople (and a few managers) before finally making a truce with a down-to-earth guy (in terms of the prices).

The summary of the proceedings (divided over two days) was as follows:

Day 1: Dealers were taking us for a ride - this was our learning phase.

Day 2: We set the pace of the negotiation and the price - here we were implementing what we learned on the previous day.

We could have reduced the price a little bit more, but we realized that at the price we agreed, all parties involved were looking comfortable. I guess that’s when you know that the deal is reasonable.

The deal wasn’t a *bargain* for us, but it was very *reasonable*.

I have so much to write on this subject; I am thinking of devoting a few days next week to discuss it.

Since our Nissan broke down on a freeway a few days ago, we have been trying to zero in on some good deals on used Honda or Toyota vehicles. We located a few feasible deals far away from our town and decided to rent a car for a couple of days in order to pursue them (that is - visit some dealerships, test drive, haggle, try to aggravate an irritating salesperson, etc.).

Renting was not our first option; we first borrowed a *very* old car from a good friend - who forgot to mention that the registration sticker had expired. We didn’t notice it either - until a cop pulled us over - for exactly that reason! That effectively ended the productive phase of the old car and forced us into looking for rentals.

Now, let me whine about how Enterprise conducts it’s car renting (rather the lack of it) business. Since the last couple of days we have twice tried to rent an economy car from Enterprise. Each time, I booked the car online and scheduled the pick-up at about 11:00 am on the following day. This is what happened on both occasions when it was about time to pick up the car:

Me (called to ask for a ride): We need a ride to your location to pick up our rental car. Would you please arrange for someone to pick us up?

Desk Clerk (after checking up our confirmation number): Sir, we don’t have any economy cars available at the moment. In fact, I am not sure if we will have any available for the rest of the day.

Me: Forget economy, is there any other car we can get today?

Desk Clerk: No sir, we don’t have any cars available.

Me: Is it possible to get one later in the day.. say about 3:00 pm? It doesn’t have to be an economy car.

Desk Clerk: I am not sure.

We called at least FIVE other Enterprise locations and got a similar story.

What is the matter with these guys? Why does a car renting company doesn’t have a single car to rent at ANY of it’s locations at ANY time of the day? If they don’t have cars available (or have a backlog), why the heck don’t they say that on their website - or at least give a courtesy call to inform about the lack of availability?

Is this *normal* for Enterprise or am I just going through a bad car phase here?

On a related note, I will have some interesting stories (rants) about car dealers. From the experience so far, let me just say that ALL car dealers work on the same profound assumption - most people are born suckers.

It hasn’t been long since the last moaning and whining about my car troubles, but here I go again.

Events that occurred yesterday (as described by the title) have effectively hammered the last nail in the coffin.

I am getting rid of that car for sure.

It’s almost criminal to sell it to anyone (as of yesterday only the headlights and brakes work) - so I am just going to have it towed to a junkyard. Will call up a couple of shops to see if they are interested in salvaging some useful parts in it - but apart from that, it’s ready to be trashed.

We just received our annual health insurance enrollment papers through our employer. As expected, the premiums have increased again this year.

It is extremely fortunate that our university pays a major chunk of the premium for employed graduate students (teaching and research assistants) who enrolled before 2005 - without the university contribution, it would have been a disaster.

Looking at the regular health insurance premium numbers that our HR department provides us, sometimes I think they are way inflated. For part-time employees (like graduate students), below is the “total cost” of the insurance options mentioned in the brochure (not including life, dental, vision, and long-term disability). After the employer’s contribution, the out-of-pocket premium payments per month are mentioned in brackets alongside. These values are for “employee-only” plans.

• Option 1: $437 ($251 out-of-pocket)
• Option 2: $368 ($181)
• HMO 1: $395 ($208)
• HMO 2: $487 ($300)
• HMO 3: $405 ($219)
• Really sucky plan “specially created for students“: $196 ($9)

The cheapest option for students is the $9 plan, but like I mentioned - that one really sucks. High deductibles, pathetic service, and really painful billing and reimbursement procedures are among the highlights of that *cheap* plan.

Anyways, the point is, look at the original cost that they are billing - health insurance that costs $487 per month (HMO 2)? That’s $5,844 per year for a single person!

If you are a super-determined graduate student employed by the university - studying and supporting your family with your part-time income - all I have to say is: may god have mercy on your soul! Here are the monthly out-of-pocket premium costs for employee+family coverages:

• Option 1: $646
• Option 2: $494
• HMO 1: $712
• HMO 2: $906
• HMO 3: $506
• Really sucky plan “specially created for students“: $854

Look at the above data in light of the fact that there are numerous graduate students on campus who are paid less than $1,000 per month.

In our special case, since both me and my wife are working for the university, we just have to worry about employee-only coverages. Also, since we joined the university before Fall 2005, there are some additional perks in terms of university contribution - something that new students (who joined after 2005) do not get. Overall, for our choice of coverages, the deal for each of us comes to about $75 per month - this includes dental and vision insurance, accidental death and dismemberment, basic life insurance, and long-term disability.

So, to sum up, we spend about $150 per month on health insurance as a family without kids.

Considering the situation of the students (or other part time employees) who joined after 2005, I have to say that we are very lucky to have what we have. For the kind of coverage that we currently enjoy, the new employees will have to shell out $500+ for a family without kids. That’s ouch.

Yesterday, after the fireworks, we made a quick stop at a grocery store to pick up some cooking oil. It was sort of an unscheduled stop (a *scheduled* oil purchase usually gets done through SAM’s club) and since we didn’t have anything else on our shopping list, I just walked to the oil aisle and picked up a bottle of our regular cooking oil - canola oil (also known as rapeseed oil). As I was walking towards the checkout counter, tossing the bottle from hand to hand, I ran into a couple we are well acquainted with.

A casual conversation ensued and gradually drifted to the bottle of oil in my hand. Here is a summary of what followed next.

Me: Yeah.. just dropped by to pick up this.. canola oil.

[The husband and wife looked at each other and then both gave me a look that sort of screamed to me "man, you are really cheap".]

The Wife: You use canola oil !? We use only extra virgin olive oil for regular cooking [now with the "we are richer than you are" look].

Me: Oh.. why?

The Husband: Extra virgin olive oil is the best oil you can buy, also it is much healthier. It’s expensive, but we are OK with that.

Me: Really? .. I will think about it next time, thanks for the information.

From their tones and facial expressions, it sounded like they were trying to tell me: “We are rich - rich people use olive oil; you are poor - poor people use canola oil“.

Later, me and my wife discussed (bitched) about how they (the couple) consistently displayed a showy attitude towards other things in life (flashy car, clothes, electronics, etc). It was interesting (but not surprising) to see that olive oil has now been added to their boasting list. By the way, this must be the first time someone tried to impress me with olive oil - like it was a status symbol.

A look at the typical price of extra virgin olive oil sort of makes it clear why some mindless people might consider it as a status symbol (price source):

Olive oil is typically five times more expensive than canola oil. People who subscribe to the “expensive always means good” ideology (and don’t know any better) easily fall for olive oil.

Also, the “much healthier” reason that the husband gave me is a complete hogwash. Much healthier than what? canola oil? I don’t think so. Here is the typical nutritional data that goes with these two oils.

[unsaturated fat is *healthier* than saturated fat]

Based on the nutritional data, canola oil seems to be slightly healthier than olive oil - in fact, it is probably the healthiest oil out there. There are numerous claims in favor of olive oil, but generally they are either unsubstantiated or are a result of some kind of an anti-canola propaganda (apparently there is a major oil-war between pro-canola and pro-olive oil folks). People should exercise caution in following such claims.

I am not saying extra virgin olive oil is bad, it has its own charms - you can eat it without cooking and it has a distinct flavor (unlike canola oil). So, if you want to argue in favor of extra virgin olive oil, do it with a valid reason (taste or recipe specific use). But, please don’t waste your money by mindlessly switching to olive oil for regular cooking just because your other rich friends do so… and please don’t try to impress people with that “I use only extra virgin olive oil” attitude (unless you are an Italian a Spaniard).

If you are among those people who have the olive oil attitude, here is some interesting reading for you.

• Truth about olive oil
• Olive oil-rich diets results in higher concentrations of LDL cholesterol (LDL cholesterol is the bad one)
  

And, if you think the cheaper canola oil is a health risk, then there is something for you too.

Outrageous (and generally unsubstantiated) anti-canola claims:

• Canola Oil: Deadly for Human Body
• Canola Oil: Danger
• Beware of Canola Oil - this one is hilarious.
  

Sources that counter anti-canola claims:

• Canola Oil Warnings are False
• The Horror of Canola Oil
• Canola Oil - is it harmful to your health?

It seems like my car might never see better days again. The check engine light went ON for the third time this year and my wretched mechanic was more than happy to see me (like a doctor is *happy* to see a patient - think $$). Here is the latest repair estimate:

In December 2006, I spent about $333 in repairs because the car was dying on me; later, in March 2007, I spent $268.93 for a brake job (original repair estimate was $687) and now this repair estimate for $612. Due to the nature of the current repairs, I don’t think there is an option to instruct the shop to “leave out the non-critical items” - although, I am wary of the oxygen sensor replacement - I have heard that most shops directly jump to oxygen sensor replacement (without a good reason) for any observable problems in RPM and fuel efficiency. So, I will get a second opinion (which will not be free) from another local shop before I approve any repairs.

This repair-monkey gets on my back after every few months and I am getting tired of it. Apart from the constant drain on my wallet, it’s a mental torture to be worried about car repairs every now and then.

Whenever the car starts giving trouble (which usually results in some massive repair estimate), I start contemplating about dumping this piece of junk and getting a newer, more reliable car. However, each time, I end up convincing myself in this way - “let’s see what happens after making this set of repairs, probably it will run a long time without giving any problems“. This must have happened at least 6~7 times in the last couple of years. After each repair, the car runs well for a few months, and then the story repeats itself.

[As an aside, it's like contemplating on selling a rapidly falling stock - one part of your brain says 'get rid of the stock before you incur more losses' and the other part says 'don't worry, wait on it and things will be back to normal'].

I know that even with all the repairs, it is cheaper (in terms of payments per month) to maintain the current car; however, I am beginning to wonder if the money saved is worth the lack-of-peace-of-mind. Plus, the current market value of the car is around $1800 ~ $2000, and it’s becoming difficult to convince myself to spend about $600+ for a given set of repairs, for that kind of a car.

On the lines of buying a newer car, I have started to ask myself whether it is better to lose money on repairs, or to lose it on depreciation? How is an old unreliable car, that costs $1200 to maintain every year (that’s my average expenditure on repairs for the last couple of years), better than a newer more reliable car that loses $1200 a year in depreciation?

Used car enthusiasts, any words of wisdom or experience to share?

Recently, The Mint Blog published an interview with me in which they asked for a picture of my wallet.

Here is that wretched piece of leather.

Now, I am not a neatness freak by any measure, but the stuff that I pulled out of my wallet before taking the picture almost made me recoil in horror - people probably experience that kind of feeling when they *suddenly* realize that they are deep in debt.

I have intended to clean it up many times in the past few years, but those intentions never materialized. It must have started with just a single receipt (or perhaps a business card) which I did not dispose off in a timely manner - and since then, receipt by receipt, it has grown into this huge nonsensical mass of paper. Why did things come to this point? I think it’s just because of one single, transcendental, cliched reason - procrastination. It’s the result of not getting things done on time.

This brings me to a couple of interesting analogies:

• Some people gain weight everyday by a fraction of a pound - if they procrastinate and don’t exercise (or do anything about it) at the right time, they *suddenly* find themselves overweight or obese after a few years.

• Some people pile up their debt everyday by a few dollars - if they procrastinate and don’t pay it off regularly, they are bound to *suddenly* find themselves overwhelmed by a huge debt after a few years.

Makes me wonder if procrastination might be at the root of most misery. In the past I have written about the positive side of procrastination, but I guess that works only in moderation [ironically, the title of the post was "Procrastination is Good for Your Wallet" - my wallet will tend to disagree with that]. Too much procrastination, with things that really matter, is definitely going to cause problems.

Fortunately for me, it was just the wallet; but I can appreciate how this can easily happen to people in other, more crucial aspects of life.

Anyways, going back to the topic of the interview, here are some of my responses:

Current Financial Strategy:

Save-Save-Save. I try to keep my financial life simple. Generally, most financial transactions are a “returns vs. headache” deals for me and at times, I tend to minimize headache rather than maximize returns. I used to budget our finances to the penny, but of late, I have realized that such micromanagement tends to harm productivity (at least in my case) so I don’t do that any more.

Of course, I spend less than I earn. But that’s not a strategy, it’s a way of life.

Now, some people will disagree with the headache part because I use credit cards 99% of the time (notice that there is not a hint of cash anywhere in that wallet picture above; that’s how it is most of the year) - but for me that’s what is more peaceful than having to keep track of cash.

Best Financial Tip:

Keep an open mind towards financial ideas. Don’t bias against (or in favor of) a certain idea without thoroughly analyzing it. Always take financial advice with a grain of salt…whether it comes from the guy next door or the latest financial guru.

Head over to The Mint Blog to read the rest of it.

Meanwhile, do feel free to share what’s in your wallet.

Last week, I posted a list of 25 things that “we do to save money” and I have been thinking on it ever since. Some introspective questions resulted from the thinking, like: were all of those things done *actively* to save money? or were there other motivations behind the actions - and saving money just happened to be a passive outcome? if money was not a constraint, would we still be doing some of those things?

There are no generic yes/no answers to these questions, but as I was attempting to answer them, I realized that a lot of our actions that save us money (or appear to do so) are (or were) situation specific - probably, saving money was not the main motivation behind all of them.

So, if it’s not always about the money, then what else could motivate you to do something frugal?

To answer that, here are six motivational factors off the top of my head. I will try to explain these through examples to make it easier to understand.

1. Time: I walk to school/work and I count that as a frugal activity that saves me money. However, I have pointed it out earlier that it simply takes more time (and more hassles) to reach school if I drive - and that is probably the main reason why I walk to school. The fact that it saves me money on parking permits is only a secondary motivation. It doesn’t matter if I had a billion dollars (or if someone gave me a free parking permit) - I would still walk to school/work if driving is not saving me significant amount of time.
2. Energy: We cook regularly, but we don’t cook everyday - mostly, on alternate days. Not cooking everyday is frugal in many ways: there is less washing of cooking vessels, less utilization of electricity (or gas) for cooking, less wastage of food, fewer grocery trips, etc. So yeah, it saves some money - but are we really not cooking everyday to save money? I don’t think so; we just don’t have the energy to cook (and clean things up after cooking) everyday. Here, lack of energy is the frugal motivation.
3. Attitudes: There are some things we do “just for the heck of it”. One such example is my worn out pair of jeans in the list of 25 things that attracted a lot of public (and private) attention. Yes, it saves me money because I wear some of my clothes till they wear out (to the point where they get holes in them) - but that’s not the main motivation. Stronger motivation is provided by the fact that I hate shopping for clothes, and that my “attitude” just doesn’t let me get rid of that torn pair of jeans. Even if someone gifts gives me several new jeans, I would be still wearing the torn one for another year.

   

   My favorite (and dilapidated) jeans

4. Preferences: Another frugal example, in which saving money is probably a secondary factor, is our homemade lunch routine. Of course, not eating out for lunch saves money, but even if I had a ton of money, I don’t think I would prefer eating at McDonald’s, Taco Bell, or Subway (the three fast food joints closest to my workplace) - I hate those places (for various reasons). The main motivational factor here is probably the hatred for fast food and preference for home-cooked meals.
5. Lack of Resources: During my early days as a graduate student (when I was single and sharing apartment with roommates), only one of us had a car (and it wasn’t me). That sort of restricted the frequency of my grocery trips, out of town socializing trips, movie theater trips, etc. It wasn’t like I was going only twice a month for groceries to “save money” - it happened because I didn’t have a damn car (and I didn’t like asking someone for frequent favors). Agreed, it was a frugal thing to do, but it was very situation specific. It’s very likely that I would have had a different lifestyle (probably with less “money saving” habits) if I had a car at that time. A resource crunch also encourages the “make-do” attitude - which is probably one of the most fundamental reasons behind a lot of frugal habits.
6. Habits: Here, I will quote my own words from the list of 25 things post:
   

   I am also in the habit of extracting the last drop of shampoo from almost-empty shampoo bottles by filling some water in them - doesn’t save diddly-squat of money, but it’s a fun thing to do.

   It’s pretty clear right there - it’s a habit. I would probably continue doing it even after I become a millionaire. I am sure it will save a few bucks over several years, but that’s not the main reason why I keep doing it. It’s just for the heck of it.

So, in summary, there are things that are done specifically for saving money (buying a used car, renting a small apartment, etc.), but there are a lot of frugal things that we probably do due to other motivational factors - and save money in the process. The six factors listed above are only some of them and depending on your situation, they may or may not be influencing your frugal behavior.

What are the motivations behind your frugal actions? is money-saving your only driving factor?