They got me!

Even experts will occasionally make a mistake, or do something that is contrary to their teachings. Sometimes this transgression leads to the downfall of the expert, and others it is just a footnote that is humorous. We’ll get to that one a little later.

First, an update on my friend with the car problem. LAST WEEK I told you about a friend who made several mistakes in the purchase of a vehicle.  I talked to my friend again over the weekend, and he was able to unwind the deal.  Essentially, he came out ahead.  He was able to use the car for a couple of weeks for free.  Now he has his money back and the seller has his car back.  My friend learned a few lessons with this transaction, and has stated that he will be smarter in the future.  Score one for the good guys!

Secondly, I consider myself to be a fairly shrewd consumer.  I rarely fall for gimmicks or shiny distractions.  Last week was one of those times where I fell for the gimmick.

I bought a CD on Amazon of a comedian that my wife and I enjoy.  His music is pretty explicit, but for adults I think he is pretty funny.  When I was placing my order, I got to the checkout and they said if I ordered something like $6.00 more, I could get free shipping.  Who can resist free shipping, right?  So I ordered a DVD of a web series that I really enjoyed.  I got my free shipping, and two items that I really wanted.  Then I saw that the shipping would have been about $3.00 give or take.  Arrgh!  The got me!

Now let’s look rationally at what happened:  I bought two items that I probably would have bought anyways.  I saved about three dollars.  Is it a little frustrating that I fell for the trap?  Sure, but there are bigger deals in the world.  I personally don’t think falling for this is anything more than a humorous footnote to a long history of doing the “right” thing.

What’s the lesson here?  From time to time, you will make financial mistakes.  Just like every dieter cheats occasionally, and just like people who are trying to kick any habit, you will slip up.  You have the choice of letting a one-off define your future, or of laughing it off and realizing that you probably shouldn’t fall for that one again.  Too often, young people come to me and throw their hands in the air in frustration because they made a mistake and feel that they can’t overcome the mistake.  This is rarely true.  Mistakes will happen.  Worry when you keep making the same mistake after recognizing that a mistake has been made.  Don’t worry about isolated incidents, or even a pattern that you have successfully broken.  Life is too short.

Driving into debt, or the price of learning?

So I have a young friend who would have done well to have been reading F4Y for a while. His situation isn’t as unique as it should be, but it is illustrative of things not to do.

• He bought a car from a co-worker
• He paid cash
• He doesn’t have title for the vehicle.

All of this is bad enough, but wait, there’s more.  Let me back up a little bit.  My friend doesn’t know how to drive yet.  He has been practicing with his girlfriend, but he doesn’t feel comfortable on the road, so he doesn’t have a license.  Buying a car should have been very low on his list of priorities.

A co-worker bought a car earlier this year from Craig’s List.  The car is a 1993 something with only 60,000 miles.  The co-worker got at least one ticket for not having registration tags on the car.  The co-worker hasn’t got a smog check (a requirement for registration and transfer of title), and is waiting for a “light certificate”, which I believe to be a brake and light inspection (which is required for registering salvaged, junked, or “totaled” cars.

My friend paid cash for the car, and got the actual vehicle.  My friend did not get the registration, title, or anything else showing proof of ownership.  They didn’t even fill out a bill of sale.

So my friend was asking me about this issue the day after he parted with his hard earned money.  First, I told him that he might wind up okay in the deal, but I saw several red flags.

1. No bill of sale.
   1. Without a bill of sale, there is no legal recording of the deal.  The seller could say that the car was stolen and get his car back, regardless of any money paid.
2. Car was paid for in cash.
   1. Especially in the absence of a bill of sale, there is no way to track cash.  If my friend had written a check, even something as simple as a memo line saying “for purchase of car” would have given a little more security.
   2. An unscrupulous seller could say he never received any consideration for the deal, and my friend would be out of luck.
3. The car itself worried me.
   1. A fifteen year old car with that few miles doesn’t seem realistic.  Unless the car was driven by an older person who didn’t use it often, the number is too small.
      1. If the car was driven by an older person, chances are that they wouldn’t sell the car via Craig’s List.  Most older people are (rightly) skeptical of that particular site, even more so in light of recent news items about it, such as rapists and murders using the site to commit crimes.
   2. The light certificate issue bothered me because I’ve done car loans and counseled young people when buying cars for years, and I had never heard of it.  My wife has a lot of experience in the area as well, and has likewise never heard of it.  When the two smartest people I know when it comes to finance don’t know about something, I start worrying.
      1. Upon further research, I found a brake and light inspection that is a requirement for salvaged, junked, or “totaled” cars.  These cars are notoriously difficult to maintain, since they frequently have more issues than the current owner is aware of, making what seems like a good deal a good deal more expensive.
   3. No registration of the vehicle.
      1. Registration on a 16 year old car is pretty cheap.  The ticket for not having a registration on a 16 year old car is way more expensive.  The only reason not to register such a car is because it is too difficult or expensive to do so.  Having a salvaged car without a title from a sale on Craig’s List would make it very difficult to register.
      2. Not getting a smog check on a 16 year old car tells me that the car probably wouldn’t pass a test.  If it doesn’t pass, it can’t be registered.

Each of these red flags are simple to address individually.  After the deal was done however, there is little that can be done to fix the problems.  Below is a brief list of things to look for.  This is by no means exhaustive, but doing these simple things will help avoid you getting taken for a ride in a bad car deal.

1. Never pay for something that large in cash.
2. Never make a deal without getting it in writing.
3. Before any money changes hands, run a CARFAX report.  You have to pay like, $40 bucks to check on the car, but that is going to be money well spent.
4. Avoid salvaged or gray market vehicles unless there is no other choice.  You won’t save that much money in the short run, and you will spend a lot more in the long run.
5. Make sure the car is currently registered, and can be registered again.
6. Take the car to a mechanic to look for any problems that might cost you a lot of money to fix.
7. Avoid disreputable sales such as Craig’s List, several smaller dealerships, or anybody that offers a deal too good to be true.  Such deals are too good to be true in most cases.
8. If you are not confident that you know all the in’s and out’s of buying and selling a car, find an older adult that you trust to help you.  There is no shame in learning from older people.  Even though I am running out of people older than me as I get older, I learn something every day from them.

I’ll keep you posted on whether or not my friend makes out okay with his new purchase.  I’m hopeful, but I’m also a little glad that he (hopefully) has learned a lesson relatively cheaply compared to what it could be later on.

Get to know your blogger!

From time to time, I get direct emails from readers who don’t, for whatever reason, post comments on the blog.  Generally, I try to answer these in future posts or with a direct response.  I haven’t done a whole lot of “mailbag” posts, but I thought it might be a good idea to do just that so readers can get a better idea of who I am.

Dear Will:

You seem to be a right wing repuglican (sic), but sometimes you sound like a more progressive person.  You can’t be both so which is it?

KV-

KV-

That’s a really good question, but it is also really hard to answer fully, honestly, and accurately.  Ordinarily, I wouldn’t respond with my political beliefs, but one cannot separate politics from economy, especially in the circumstances in which we find ourselves today.  Between the two major parties, I more closely identify with those on the right than on the left.  However, there is much about all parties that bothers me, so I make it a point to vote and live my life on my own terms, and not on those of any party.  For example, I really couldn’t care less about gay marriage, abortion, or other social issues.  Most, like these, do not impact my life in any way.  I am vehemently opposed to the drift towards a populist, socialist state that I see our country in.  I believe that hand-outs do not solve problems, but instead create more down the line.  I don’t care about gay marriage because I am not gay, and already married.  I think Perez Hilton is a ginormous douche bag for his treatment of Carrie Prejean, but she should have known that being a public figure comes at a price.   As far as the actual parties go, those are just names.  Republican, Democrat, Green, American Independent, or whatever are closer together in practice than many people believe.

Dear Will:

You seem to watch a lot of TV.  What do you like to watch?

JM-

JM-

Guilty as charged.  My wife and I like to spend some veg time in front of the TV after a hard day work.  We both watch

Big Bang Theory

How I met your Mother

Two and a Half Men

Rules of Engagement

House

Bones

Reaper

Supernatural

Smallville

Dollhouse

Buffy the Vampire Slayer

Angel

Law and Order: SVU

Psych

Robin Hood

Graham Norton show

Top Gear

Gordon Ramsay’s Kitchen Nightmares

The Office

Arrested Development

Justice League

Batman:  The Brave and the Bold

Family Guy

American Dad

I’m sure there are others we have watched over the years.  Some of these shows are no longer on TV, and that’s a shame.  They are good shows.  Sometimes, I find something on one of these that fits in well with what I’m talking about, and you will find a post that talks about it.

Dear Wil:

What are your credentials?  What do you stand for?  What makes you different than anybody else out there?

KJ-

KJ-

Another good set of questions.  Although I get from your questions that you are skeptical (which is a good thing to be in all cases), I’m glad to take the opportunity to respond to these individually.

What are my credentials?

I am a recently credentialed teacher of Social Science (including economics, government, and history) in the state of California.  Prior to that, I spent the better part of 15 years working in financial services industries, primarily working with the public including youth.  I’ve dedicated my adult life and career to helping young people avoid the mistakes that the previous generations have made.

What do I stand for?

I stand for the best anybody can do for themselves.  For some, that includes being wealthy or rich.  For others, it includes service, but for all it includes being happy.  In order to help youth achieve this goal, I strongly support education and self-sufficiency.  I’ve talked about my QUALITIES OF SUCCESS many times, and these encapsulate everything I’m behind.  I think individuality and individual expression are things to be celebrated and cherished, not destroyed or silenced.

What makes me different than anybody else out there?

In a word, nothing.  The strategies I teach are not new.  In fact, they are very old.  They work.  The only difference between me and anybody else with the same knowledge is that I have the ability and desire to share the information, where others may not.

Will:

What do you have against unions?  Don’t you realize the good that organized labor has done for Americans over the decades?

JS-

Historically speaking, unions served a very important purpose.  There were, during various periods of this country’s history, serious abuses committed on the worker.  Unions helped to right those wrongs.  Like many other good things that are allowed to survive past their usefulness, unions have largely abandoned the idea of righting wrongs, and have become in many cases hostile entities to business.  I personally also believe that unions stifle individuality and creativity, chamioning status quo and “good enough”; allowing people to keep jobs they should leave simply by virtue of sitting still and hanging on long enough to go up the food chain.

As a teacher, I am implicitly required to join several unions in order to do my job, which I will do because it is a requirement of the job.  If and when unions return to protecting the individual from actual work place abuses, my membership will become more active, but as long as they push an agenda that I disagree with, they get the dues required and nothing more.

Finally, a note about my name.  I generally spell my name with one “L”.  Some have even called me “Wil with one L”.  I don’t get bent out of shape for people throwing in the extra letter, but I thought it important to inform you as to which is correct.  If you have any questions about Finance For Youth, personal finance, me, or anything else, drop me an email at:  wil@finance4youth.com.  I’d like to thank those who have sent messages, even if they disagree with me.  One of the great things about America is that you don’t have to agree with somebody else.