Windshields

If you are one of the unlucky people to have had your windshield broken, you know how unpleasant that can be because it is usually not the driver's fault. Because, it is likely not be your fault, you shouldn't have to pay for the replacement.

In fact, did you know that if your windshield is cracked or damaged by a rock falling from a truck, you can call up the truck company if you can get the name off the side or the back of the vehicle and some identifying information like the license plate. You can tell the company what happened, and often, the company will pay for the replacement of the windshield for you.

Also, if you woke up with a broken windshield or something hit you on the roadway, you may contact your state's Department of Transportation and explain the situation. The DoT should have a budget for this. I recently called the DoT for this issue and although, they had no specific person I could talk to, I spoke to the person who makes the budget and he asked that I submit all information to him directly for review.

Also, in many states such as Florida, if you have comprehensive insurance, they will cover the windshield replacement for any purpose.

Don't Skimp on Things that Matter

I'm looking for a new used car and yesterday I needed to run a CarFax report, however, CarFax no longer has an unlimited option. Therefore, I decided it would be best to run another report for $3.75 from CheckThatVin. However, that report only let me know that the title was issued 4 times and the title is clean. CarFax usually gives service information, the amount of owners, accident details, etc.

Therefore, I ran another report for $6.99 because it was supposed to be comparable to CarFax, however, that had similar information. I did find out that the car was never in a collision, but I knew I could get more information.

I wanted to see the service records and ended up going with CarFax nonetheless. Therefore, the first two checks were a waste of time and money since I ended up with the company I knew was good in the first place. I wanted to know as much as I could before I spent a large amount of cash on a used car.

Moral of the story: don't skimp on the things that matter like used cars.

Installment Loan Utilization Ratio and Credit Limit

Some people see a utilization ratio of their installment loans when they check their credit report. If you see a utilization ratio of your student loans or of your auto loans, for example, do not be surprised that it's close to 100% or over 100%. For many student loans, expect to see amount owed greater than the credit limit listed as well, making it seem that you have gone over your allowed limit.

Do not worry. Student loans and auto loans are installment loans and, therefore, even though a report might show the same type of features that it does for credit card, it is not counted the same. The credit scoring agencies are able to tell the difference between revolving accounts (credit cards) and installment loans and know that if you just took out a loan of $10,000 for your car, then your utilization will be 100% on the first payment as the balance and credit limit will both be $10,000. If you have student loans with capitalized interest, it will say that your credit limit is i.e. $10,000, yet the balance is $14,000 because you have so far run up a total of $4,000 in interest costs.

Credit scoring agencies know and understand the difference and the only utilization ratio and credit limit that you need to worry about is that of your revolving accounts.

Car Accidents and Insurance

If you are in an at fault car accident, you always want to make sure that the person you hit can get a couple of quotes from shops before you call up your insurance or make a police report. In Florida, you can make a delayed police report, which means that up to 5 days after the accident, you can make a police report at the station and you can use this police report for an insurance claim. This should be true in other states as well.

If you have the person get quotes and you can pay for the damage out of pocket, then you will not receive points on your license and your insurance will not increase. Another reason to get quotes is that it might be cheaper to replace the bumper out of pocket, than to replace it through insurance if you have a high deductible. Let's say, your deductible is $1,000 and the bumper you hit can be fixed/replaced for $500, then there is no point to involve insurance and receive points on your driver license as $500 is clearly less than the $1000 from your deductible.

Excel Templates

I just discovered a great way to have your own financial calculators that you can modify. For example, recently I have been struggling with the fact that I am paying off capitalized interest on my private student loan, which means that the whole payment is currently tax deductible. I had two options: pay off an extra $300/month on that loan or save that $300/month in a savings account.

Mathematically, it turns out that I should save $300/month in a savings account for the first 2 years and then pay off my student loan with those savings in the third year after I have paid off my capitalized interest. There is no way to run an amortization schedule where you can change the payment amount after 24 months and add a lump sump payment in the beginning of the third year. However, that and more can be done with Excel Templates.

I also like the fact that in an Excel template, you can save the worksheet and return to it when you feel like it. If you were to use the BankRate amortization schedule, for example, then you would have to reenter your data each time you wanted to change up your payment.

Excel templates offer amortization of payments, monthly and yearly budgets, expense trackers, net worth analyzers, gas and mileage logs, etc. New templates are added by users, so new ones can sprout up any time. Modify any of the templates to meet your specific needs.

Suze Orman Expense Sheet - Budget and Emergency Fund Planner

Another great budgeting tool is on the Suze Orman's website, Suze Orman's Expense Sheet. You enter your emergency fund amount and break down how much you spend each month by category. Then, Suze lets you know what your essential expenses are and based on that how large your 8 months emergency fund should be.

If a budgeting category is off from the national average, the cell will highlight yellow and by hovering over the cell, you can see what the national average is. If you are spending less, that's great. However, if you are spending more than the national average on a category, you should reconsider that expense even if you have an above average income.

At the end of the process that takes 2 minutes, Suze will tell you to beef up your emergency fund if you do not have 8 months of essential expenses. If your emergency fund fits the bill, she'll say that you should aggressively pay down any debt.

NetWorth IQ

There are several ways to track your net worth. The most convenient for me, has thus far been Mint.com because it does everything automatically. However, another way to track your net worth is through NetWorth IQ. Here are it's advantages and disadvantages.

Disadvantages:

1. You must manually enter all your data
2. All other people's data is manually entered as well and might not be accurate for comparison
3. You must enter your data every month to see the progress

Advantages:

1. You can track your net worth with a graph
2. You can see the percentage change in each category
3. You can make your net worth public so other people can comment on your progress
4. Making your net worth public might motivate you to get that number up
5. You do not need to give out personal login information
6. You can compare your net worth to others your age, or in your occupation, for example
7. You can also compare each category such as student loan debt, credit card debt, or retirement assets to others in your demographic groups

AAA

Depending on where you live, AAA can be a great investment. In CA, AAA costs $48 a year. If someone in your household has AAA, then adding you on would only cost $25. However, in FL it's $66 for the first person and $30 for the second. The benefits differ by area as well. For example, the CA one also offers free Credit Monitoring, but the FL one has a vehicle theft reward of $1,000. However, the main benefits are the same. You can have 3-4 free tows/unlocking services a year and you have access to the AAA discounts.

AAA discounts are given at a lot of places such as Denny's (FL, GA, TN), Amtrak, Courtyard by Marriot, Barnes&Nobles.com, FTD, the Walmart Pharmacy, Target.com, Payless, and many more. You can download the AAA discounts app and see what locations near you accept AAA discounts. If you use the card right, then it can save you more money than you are spending on the membership and you have the protection of the tow service.

Other benefits include appreciation days. For example, last year in Miami AAA offered free admission to the Seaquarium. Regular admission price is $30-$40. Also, in most states you do not need to go to the DMV/BMV to register your car or turn in a smog check. That can be done at the AAA offices. The local offices can also provide you with maps, personalized travel 'trip-tiks,' and discounts on such things as movie tickets.

It's something to look into.

Cut Your Bills - Insurance

Insurance is something unavoidable, if you own a car that is. However, many people overpay simply because they stick with the insurance agency that gave them their first quote or they never compared rates. A great company for comparing rates is Insurance.com. This site allows you to fill in the forms once and get quotes from several companies.

However, it does not hurt to get quotes from other companies that you do not see on the Insurance.com list, or even those that show up, just to make sure.

Upromise.com will offer $5 if you request a quote from Liberty Mutual, even if you do not sign up for their insurance.

Make sure to compare insurance rates every time your insurance expires as you might be able to get a better deal elsewhere. Also, make sure to pay your premium in full for the 6 months. Usually, it will lead to great savings.

Money in your 20's

Money management skills should be learned as early as possible and the 20's is a great place to start. Here are 10 financial projects you should take on in your 20's:

1. Learn to live on less than you make. Many people who find their first job, go all out with a new wardrobe, a new car, decorations for the new apartment, etc. Control your spending and only spend what you can afford with the money you have. See the Cash Flow blog post to see how you can see your cash flow with ease.
2. Start saving. Use the budget worksheet to see where you are overspending if you are unable to spend 15% of your take home pay. If you have large student loan payments, try to cut down in all areas to free up some space for savings, even if it's $5/month.
3. If your company offers a 401(k) match, start putting in the minimum amount you have to put in to get the full match.
4. Build an emergency fund in a high interest savings account.
5. Maintain a good credit score. Make sure you are never late. Automating your bills is an easy way to make sure of this.
6. Pay down on your student loan or any other debt with any extra funds that you have. If you receive a gift, a tax refund, or a bonus, try to apply it directly to your debt. See the Debt Pay Off Methods to see how you want to tackle your debt. See how even $5 per month extra will make a difference in your debt by using the Bankrate Amortization Calculator.
7. Save for retirement. Starting early is one of the best things you can do. Use a retirement calculator to see how much you should save. Start small if you can't contribute the full amount you are advised and increase your contributions yearly.
8. Designate separate savings accounts for various goals. Retirement should be saved in a 401(k) and an IRA. You should also have separate savings accounts for an emergency fund, grad school, vacation, car, down payment, etc. You can save in each account simultaneously or take it one step at a time and once your emergency fund is full, save for a vacation, once you have enough in that account, you can save for grad school and a car, etc.
9. Get health insurance. One accident can ruin all of your plans. 
10. Earn more money. Ask for a raise at the annual review or find a job that will pay you 15%-20% more and present the offer to the current employer. Be ready to leave for the new job if the offer isn't matched.

Kelley Blue Book

Just like you need to know the value of your house to calculate your net worth (See Blogpost Zillow), you need to know the value of your car.

To estimate the value of your car, you can go to Kelley Blue Book (KBB) and enter your car's information. KBB is also useful if you would like to sell your car. Once you are ready to sell, enter your car's information and use the private party value as the basis of your listing. The buyer will probably want to bargain with you and bring the value of the car down, but at least you have a place to start.

Value of Your Car

Many people spend crazy amounts on their car payments. Usually those car payment are for 3-5 years. So, if you drove an old car for the first 3-5 years of your life and paid car payments to yourself, at the end of the 3-5 years, you should be able to pay for your car outright. While you drive your new car you have no payments, therefore, once again you can make payments to yourself and at the end of another 3-5 years you can buy another car outright, if you want. You have to be disciplined and treat those car payments to your separate savings account as a bill. Paying interest on the car payments to a loan company is like paying someone to make sure you put that money away. Do you really need to spend 5%, 10%, 20% of the value of your car on having someone look over your shoulder?

Also many people buy cars that they are unable to afford. A car's value together with all other motorized things in the house (i.e. boat, plane, motorcycle, ATV) should never total more than half of your salary. If it does, you have poured too much money into something that you cannot afford, especially if you are making payment on it. Therefore, if you just started working and are making $30K, and have signed a car loan for a brand new $25K car, you have overspend by $10K.

And, since new cars loose much of their value within the first few years, it is always a smart idea to buy a used car, even if it's just a couple years old.