PocketCoinage

Back in March of 2008, I made the decision to buy a brand new car.  There was nothing wrong with my old car at the time, but I somehow talked myself into wanting this new item.  I made the justification that I wanted to buy a house eventually (I needed the credit history) and that my sister would start driving in September.  Clearly, I needed to get this new car (not really). My 2000 Saturn SL2 had 105,000 miles on it and ran great.

My mind was already made up on what I wanted.  During my trip out to Nashville earlier that year, I rented a 2008 Mitsubishi Galant.  I immediately fell in love with it and had to own one.  It was roomy, economical, and had enough power to get onto the highway without difficulty.  So I went over two auto dealers to see what kind of selection they had.

I had a few ideas in mind when going to the auto dealer:

• Look for last year’s model
  • They usually have specials on left over inventory for the previous year
  • In my case 2009 models were already out, so I was looking for a 2008
• Haggle for the best price
  • Usually with last year’s model, they are willing to sell it for equal to or less than invoice (what they paid for it)
  • Shop around multiple dealers for the same model and year with similar features
• Don’t let them play on my emotions
  • A good sales person knows how to work with people’s emotions
  • If you get fixed on a particular quality, they will try reel you in using that!
• Be willing to sacrifice some features
  • I would have liked a sunroof, but it didn’t make or break the deal
• Shop educated
  • I went online and did my homework about the vehicle
  • This showed them that I had an understanding of the car to limit them pulling any tricks

I went to the first dealer and found a car that I liked.  It had all the features I wanted and they were willing to sell it $1,000 under invoice.  Fair enough, I told the salesman that I would go home and sleep on it.  It was very difficult to walk away from that dealer; they followed me out to the car!  The next day, I went over to another dealer and found a car with very similar features as the other one.  It was missing a few things such as fog lights and traction control, but this wasn’t a deal breaker to me.

Talking with the salesman at the second dealer, they did not offer the same pricing initially.  So I mentioned that the dealer up the road offered me $1,000 under invoice for a similar model.  The salesman talked with his manager and came back with $1,150 under invoice.  Between this offer and the color of the car, I was sold.

Now came the big moment of running credit and financing.  Since this was my first “big” loan, Mitsubishi Motors did not want to offer me a credit line for their current offer of 0% financing.  The dealer was able to find another bank and they offered me 6.69% APR for 5 years; so I went for it.

While paying back this loan, I ran into some interesting situations. The first one was making a principal payment. There were two ways for me to make it:

1. Send it to a different address at the bank.
2. Include it with my normal monthly check and explicitly specify “use remainder as principal payment”.

There were times where “use remainder as principal payment” was checked on the payment stub and they proceeded to apply the remainder of the balance towards next month’s payment (and the month after that)!  I immediately called them to correct the problem.

I also considered paying the auto loan online.  However, there was also no way for me to make a principal payment through their website.  Plus they charged you a “courtsey” fee of $10 to make the payment if you did not have a checking account with them!  Absolute highway robbery.

In the end I wasted $894.83 in interest, but I sacrificed and managed to pay off the loan in less than two years!

What experiences have you had with car dealers and auto loans?

This is the second in a series of weekly posts titled “How I Did It”.  Throughout this series I will be describing my methods of personal finance, frugality, and what it took to get where I am today.

Education can and will open up new doors in this adventure of life.  I found it helped me grow to where I am today.

While in high school (vocational school), I specialized in Commercial Art – Advertising and Design.  I really enjoyed photography, product and web design.  However, I also found another passion while there: technology.  This came almost as naturally as graphic design, but was less competitive.

Because of my high grade point average (GPA) during high school, I could have gone to a two year community college followed by a four year state college at no cost.  However, I opted to attend a one year technical school instead.  This was not the most frugal choice, however, there were many reasons for it:

• It was the most direct route to a career in technology.
• To enjoy learning what I wanted to learn.
• To meet others with similar passions.
• The ability to hold job(s) while attending class full-time

Education Tip: Technical schools usually get right to the meat allowing you to learn and experience the career head-on and reap rewards sooner.  You can always pursue your degree afterward.

Attending a technical school to specialize was, in my opinion, the quickest way to kick start a high-paying career (and it showed).  Even though class was full time, I was still able to work a part-time job at a local electronics store while being a technology consultant.  During slow periods at work, I would bring a book to study and create flashcards.

Even though I was in a technical school, college credits still accumulated for me.  At the time, they offered 6 months of online (core) classes after graduating to complete my Associates Degree.  The technical school approach allowed me to obtain a full-time career in technology while working towards my degree.

Job Tip: While in school full-time, see if you can find a job that’s flexible to accommodate school and studying.  If you ask your current employer to adjust your schedule, they may work with you.

I obtained my first full-time technology job at a VoIP start-up after technical school.  The best part about this job was that they had me on 2nd shift.  This allowed me to focus on my school before going to work.  However, a few months later, I obtained a technology job at a local hospital working four, 10 hour shifts over the weekend.  This allowed me to have three days off during the week to focus on my studies.  The job could be slow at times, so I was able to squeeze in some extra studying.  While I was there, I obtained various technology certifications and continued my education online for a Bachelor’s Degree in Technology Management.

While working full-time in my career, I was able to pay for most of my schooling without the burden of high-interest private student loans.  Why pay money in interest unless you have to?  Sure, I still took out the government loans at $5,500 per year as these low-interest loans helped ease the large monthly payments.  At one point in time I was making payments of $1,000 per month to the school.  I’m not going to lie, it was a lot of money!  It bummed me out to see more than 60% of my check go over to school.  However, it was for the better as it helped me focus on things that were important to me.  I paid pure principle and accrued no interest.  For me, this was the beginning of budgeting.

All-in-all, I walked away with numerous technical certifications, two degrees, and roughly $18,000 in student loan debt — not too bad!  As of today, that debt is down to $16,400 and accrued roughly $1,900 in interest this year alone.  This debt needs to go; That could have been $1,900 more in my pocket!  The worst part is, I am unable to claim this interest on my taxes.  Since my auto is paid off, I’m looking to redirect some of the funds to go towards paying down school.

Looking back, I wouldn’t change much.  The only thing I would have done is increase the amount I was paying on my student loans.

Job Tip: See if your current job pays for education.  My current employer pays $4,000 a year to further educate myself.

Tax Tip: Consult your tax advisor to see if you are eligible for education credits.

Because I was humble, hungry, and had the drive to go forward with my education, I applied for a position within the hospital and moved up!  If it was not for my education and drive, I truly believe I would not be where I am today.

How did you obtain your education?  Have any tips?