Should I buy a Hybrid car?

I've been thinking lately about hybrid cars. There are several of them already on the market, and more and more coming each year. With the price of gas over $3.00 a gallon, the allure is easy to see. However, it is easy to fall into the trap of "I'll save so much money on gas!" without realizing the other costs associated with buying a new car (sales taxes, registration, more loan interest, and higher yearly depreciation).

So, as I do with most things, I wanted to put this to the spreadsheet test. My current car is a 2000 BMW 323i, worth about $8k.

I will compare this to the 2008 Nissan Altima Hybrid and the 2008 Honda Civic Hybrid -- two hybrids I have considered. Both which qualify for $2k and $1k, respectively, for federal tax credits.

First, let's calculate what our gas savings would be with two new hybrids vs. my BMW.


Since I only drive about 10,000 miles per year, my savings would only be in the $700/year range (depending on the hybrid car).

Next, we need to figure out several calculations to answer the following questions:

Does the hybrid have a federal tax credit?
What is the expected depreciation?
What is the expected maintenance?
What registration and taxes are involved in buying the new hybrid?
What is the cost of the loan?
Are there any incentives from the hybrid manufacturer?

I have plugged the answers to these questions into the pasted spreadsheet.
As you can see from my calculations, keeping the BMW or going for the hybrid produce roughly the same 3 year projected cost.





So as you can see, based on my calculations and assumptions for unpredictable costs (maintenance, depreciation, etc), the Altima should have roughly the same total 3 year cost of around $10,200-$10,400. The Civic Hybrid however, will have a slightly higher 3-year cost at a little over $11,000. All of these, however, are in the same ballpark and within a margin of error on my estimates.

Conclusion: In my particular situation, both of these Hybrids will have roughly the same cost over the next 3 years as my current car.
The upside would be driving a new car and feeling a little better about my carbon output.
The downside is, with all due respect, that neither a Civic nor an Altima compare to the handling or the fun of a Beemer. So for now, the BMW is staying put.

You can try this spreadsheet for yourself below:

5 reasons Gift Cards make a lousy gift

Every Christmas, it seems that gift cards become more and more popular. People give them, people receive them, and the stores market them like crazy.

Here are five reasons why I CAN'T STAND them:

1. They have less value than actual money.
I know some will argue that a $20 gift card is worth $20, I say it is worth much less. The reason is because a $20 dollar bill, has no terms and conditions. I can spend it anywhere, anytime. I can save it and use it later. I don't have to spend it all in one place. I can't do any of those things with a gift card.

2. The fees.
Some gift card companies have the audacity to charge fees! Inactivity fees, activation fees, and even a fee for checking the balance! That's outrageous.

3. Balances go unused.
It's pretty common that when I receive a gift card, I have a hard time finding something within that store that I actually want. I don't want to get ripped off, just because it is a gift card, so I'm not just going to waste it on random things. So what happens is that a fraction of the original never goes used. Apparently I'm not the only one.
Freakonomics authors Dubner and Levitt report in the NY Times that 10% of the gift card balances never get used. That's $8 billion dollars that goes unused every year!

4. I may not want something at whatever store it is that you think I should want something.
While I don't want to be unappreciative, it happens quite often that I get a gift card for a store or restaurant that I have no interest in going to. The good news is that ebay and gift card trading sites like CardAvenue have made it easier to get rid of these and trade for something you'd rather have.

5. Giving me a gift card may actually COST me money.
Again, I hate to be unappreciative, but giving me a $20 gift card to a restaurant is basically the same as handing me a bill. There aren't many places where a couple can dine for $20, so unquestionably, I'll have to add to the gift card balance with my own funds.

Getting rid of cable/satellite

I admit it....I like TV. I like it a lot. I use it to relax late at night, to start my mornings with a cup of coffee and the news, and to stay current on the latest hit shows like The Office. But it kills me to pay over $50 a month for this privilege.

This week, I've been thinking about how I could reduce my expenditure on TV programming, while still having enough channels to scratch my TV itch. One caveat: I won't even consider a solution that doesn't include a DVR.

Here's what I have now:
Dish Network "America's Top 100" with Locals
HD enabled w/ DVR
Total monthly cost: $55.

After exploring several options, here is what I have decided to go with:

• Samsung SIR-T150 (HD tuner/receiver) - bought for $35 (including shipping) on ebay

• Silver Surfer HD Antenna - Included as part of the ebay deal, but these can be found for about $10 on amazon.

• DVR subscription - $6.95/month. ReplayTV 5040. (The normal monthly rate is $12.95, but I get a discount since I also still have an [inactive] Panasonic showstopper 2020 on my account qualifying me for the multiple unit discount.)

This solution will allow me to receive 6 channels in HD (for watching live) or to record them in Standard Definition (via my DVR).

My Total Savings: $48/month

If you are not a gadget geek like me, and don't have a couple of DVRs sitting in the closet, I saw plenty of Tivo Series 2 machines on Ebay/Craiglist in the $50 range. Those will require a $12.95/month service charge.

Had I started from scratch, it would have been:
$35 ebay for tuner and antenna.
$50 ebay/craigslist for Tivo
$12.95 monthly for Tivo

Curious as to whether you could receive HD channels over the air? Check out your address at antennaweb.org and find out.

Using a credit card for purchases less than $1

It seems that I'm always given weird looks by store clerks and friends when I pay for an inexpensive item (something less than a dollar or so) with a credit card. I understand, of course, that the store owner may have to pay a flat fee + % on the transaction, but I doubt the clerk knows or cares about that.
To me, using a card on these types of small transactions makes perfect sense from the consumers' perspective. Here are some advantages:

1. I don't have to get back a handful of coins.
2. It slightly reduces the purchase price (via cash back bonuses).
3. I don't have to go to the ATM constantly. ($100 in cash can last me months!)
4. Keeping all of my daily purchases on the same card can help answer the question, "Where did all of my money go?"

That being said, this only makes sense if you are paying off your "daily spending" card at the end of every month. If you aren't doing that, you're probably better off paying cash.

6 ways to save $3900 per year on your family's groceries

When Benjamin Franklin said "A penny saved is a penny earned" he was right. But that's because good ol' Ben lived before the 16th amendment to the constitution was passed in 1913 -- the amendment that gave our federal government the power of Income Taxes. So these days, if you are in a 30% tax bracket, a penny saved is worth about 1.43 pennies earned. So if you or I can save $1000 a year, it is the equivalent of earning an extra $1428!

Which brings me to my point. Coupons.
To be specific, let's talk about grocery coupons. I realize some consider them to be archaic in our internet-connect world, but they are a powerful tool for reducing your expenditures (effectively increasing your income).

Consider this. In a typical month, I purchase about $150-$200 worth of groceries for just myself, a single individual. These are groceries I have to buy regardless of whether I have coupons or not. However, by just clipping the coupons from my Sunday paper I can easily save $75 or so from that bill. That's $900 a year in savings, and I'm just a single person. And to my point earlier about income taxes, saving $900 is equivalent to earning nearly $1300.

For a family, the savings are magnified even further. If a typical family of 4 is buying $150/week ($7800/year) of groceries, a savvy couponer could cut that in half. Saving $3900 a year! Remember, in a 30% tax bracket, that's like earning an extra $5570!

Think I'm exaggerating? I'm not. Here are tips to help you take a bite out of your grocery bill.

1. Purchase a Sunday paper and clip coupons for items you already need to buy. Don't fall into the trap of buying stuff you don't need and won't use just because it is inexpensive.
2. Go to stores that double or triple coupons. It's a great feeling to turn a $.75 coupon into a $2.25 coupon just by walking into the door. Stores typically post their coupon policies at the customer service desk, but don't be afraid to ask.
3. Match your coupons with weekly store sales. If an item is on sale for 50% off, matching that sale with a coupon will often make the product nearly free! See below for sites to help you find these deals.
4. Don't be too brand loyal. If you have a coupon for a different brand of Ketchup which makes it 1/3 of the price of your normal brand, give it a try.
5. If you find a good coupon, get extras! There are plenty of ways to do this. The easiest way is to use a service like "thecouponclippers.com" which allows you to order as many specific coupons as you like. Also, if you find lots of valuable coupons in a certain week's paper, you can always go buy another paper. Definitely worth your $1.50.
6. Print grocery coupons for free online. There are lots of online coupon sites that allow you to print grocery coupons. However, almost all of them pull from the two major sites:
www.coupons.com and www.smartsource.com
You can also find some good coupons for Pillsbury products on www.pillsbury.com

Websites to help you along the way:

hotcouponworld.com - Find a forum specific to your local grocery chains and share weekly deals with other users.

couponmom.com - Check the "Grocery Deals by State" section for a list of the best weekly grocery deals from your local stores.

thecouponclippers.com - Coupon clipping service that will mail you any coupons you need for a moderate fee.

OR join a yahoo group of like minded savers:

http://finance.groups.yahoo.com/group/smartspending/

No time for another degree? Free online Berkeley and Stanford classes

Every now and then, I'll find something online that I've seen before, but forgotten all about. That happened this week when I rediscovered the massive webcast directory offered free from the good folks at University of California Berkeley. This directory offers all of us the opportunity to take a class from one of the top-rated schools in the country from the comfort of where ever your internet connection finds you, without paying a dime.

There is a similar offering from Stanford (though only audio from Stanford, no video that I can find) available for free download from iTunes.

While there don't seem to be many related to finances or business, I'm spending an hour right now watching an "Intro to Astronomy" lecture (one of my all-time favorite college courses).

Hundreds of webcasts and podcasts from Berkeley available here.

Free podcasts from Stanford via iTunes.

Audio and Video classes from MIT.

How to calculate: Municipal bonds vs. Federal bonds

Municipal Bonds (or Muni Bonds as they are often called) are bonds issued by a city or county to finance the local budget, usually denoted for specific projects like new schools. Muni bonds are extremely low risk for the investor, since cities can always raise taxes to raise money. (However, there was a famous defaulting of muni bonds in California in 1994.)

The great thing about municipal bonds is that if you purchase them from the state in which you live and pay taxes, they are state tax free most of the time . (Be sure to check the individual bond you are buying.)

Like other bonds, your profit on a bond is determined by two pieces: the stated coupon rate (the interest rate they pay you), and the price you paid for the bond relative to the par value (usually $100). This is usually calculated for you and stated as the Yield to Maturity, or YTM.

Should you buy Muni bonds or Federal bonds? Here's how to figure it out:

First you need to know your federal and state tax brackets. Pull your tax return from last year (you should keep those somewhere safe and organized) and find your taxable income. Then consult the "tax schedule" for the Federal and State taxes. (I've linked the federal schedule. You'll have to google a term like "North Carolina tax schedule 2007" to find for your specific state.)

For example, if you live in NC and had $50,000 of taxable income in 2006, that puts you in the 25% federal bracket. That also puts you in the 7% NC state tax bracket. That's a total tax bracket of 32%. To compare the return on a federal govt. bond to the return on a muni bond, simply plug in the following formula.

Muni rate / (1- tax bracket)

So if you have a choice between a muni bond paying 3.5% and a federal govt. bond paying 5.4%, which should you choose?

The Muni bond is equal to a taxable bond paying .035/(1-.32) = .035/.68 = 5.14%

Therefore the federal bond is better for you.

However, if you were in the 40% total tax bracket:

The Muni bond is equal to a taxable bond paying .035/(1-.40) = .035/.6 = 5.83%

Since 5.83% is better than the 5.4% you could get from a federal bond, the muni would be better for your situation.

NOTE: This assumes you are thinking of holding federal or muni bonds in a taxable account. If you are considering purchasing bonds for a non-taxable account such as a Roth IRA, you should not consider munis, because interest payments on all types of bonds are tax free.