Tag Archives: new vehicle

Happy New Year – For New Vehicles

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Yes, it really is the new year in the world of car manufacturers. They haven’t  built 2016s for months and, by now, over half of the 2017 have been delivered to dealers.

If you’re in the market for a new vehicle, you have to figure out if it’s deal or no deal in buying a 2016 between now and winter. If you keep your vehicles for a very long time, there may be deals to be had. If you trade more frequently, you could be shooting yourself in the foot – financially speaking.

Here are a few things you have to know:

A new vehicle is defined as one that has not been registered. If you’re buying a 2016, after you take possession, it is actually a one year old model the next day.

Dealers will focus most of their ads, energies, and bonuses on selling off the 2016 models from now until winter.

Dealers cannot return vehicles to the factory. They’re stuck with them to either sell them to customers, to another dealer, or trade with another dealer.

Because of that, in September, almost all manufacturers send dealers a check for around five percent of the invoice value for every 2016 in stock. That money is used to help with advertising, or to allow the dealer to sell it at a great deal and still make a profit.

That means, as late September comes, the deals will get better. But the selection will also get more limited. A deal is not “employee pricing,” or “factory clear out.” Those are advertising slogans. So you’ll need to do some homework.

Here’s why that matters so much: If you’re keeping your vehicle for 10 years, get a great deal on a 2016. Yes, it’ll be 11 years old when you sell it, but that’s pretty irrelevant at that point. If you buy a 2016 and want to (or need to) sell it next July, you essentially have a three year old vehicle: You purchased a 2016, the 2017s have gone a full year, and the 2018s will be out next July. That means you will take a massive loss in attempting to sell it, trying to trade it, or if you need to get it paid from an insurance claim. Yes, it’ll be really low mileage. Yes, you’ve only driven it for less than a year, but the calendar doesn’t lie. Be careful with your purchase decision, and don’t lie to yourself as to how long you’ll keep it!

And before you go car shopping, you HAVE to read the Money Tools (or in the US: Start Fighting Back!) book chapter: Choosing some shiny metal over debt freedom.

One more heads up as it may apply here, but certainly on every financial decision you make: Don’t base your decision on the advice of those who don’t have to deal with the outcome!

Seven Things the Middle Class Can’t Afford Anymore

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This was an article originally published in USA Today last week. Two are medical and dental that don’t apply very much here in Canada, but how many of these are accurate, or apply to you and me in the middle class?

Vacations: Most middle-class families just can’t afford an expensive vacation without sacrificing something else. A Statista survey found that 54% of people had to sacrifice another big purchase to be able to afford a vacation. We’re not talking about a camping trip here, but anything that involves an airline flight is expensive. Add meals and hotels and you’re over $3,000 to $4,000 pretty quickly.

A new vehicle: With an average price over $32,000 it’s just not something most people can afford – either because there’s no chance they have that kind of money saved, or because they couldn’t afford the payments no matter how long the term is stretched.

To pay off debts: Debt loads are rising way faster than incomes. So every  month, finances get worse and not better. Living pretty close to spending every dime of income on bills, necessities, and minimum payments makes it really difficult to make a dent in their debts. That makes it more critical not to get into debt in the first place. Because,  once you’re in, you’re trapped for decades. How do families get into debt in the first place? Vehicles they can’t afford, houses with little down payment and high monthly payments and that subconscious refusal to acknowledge they can’t afford something.

Emergency savings: We’ve talked about this before. Basic emergency savings are one week of net pay. Then pay off your debts smallest to largest and step three is to have a three-month emergency fund in place. But almost 50% of people couldn’t miss one week of pay. Why? See number one two and three.

Retirement savings: When you’re barely able to keep your head above water today, it leaves nothing to save for tomorrow. That’s just the reality of what’s coming in versus going out. That’s why you need to pay yourself first. If it comes off your pay or out of your chequing account every month you can’t spend what you don’t have. It’s pretty much the only way to save for retirement. In a recent study, 17% of Canadians plan to use the proceeds of their house sale to fund retirement….but don’t they need to live somewhere? After all, you can’t eat your house! That’s a terrible strategy, right up there with winning the lottery to fund retirement.