Getting A Good Deal Buying A New Car - Part 3 of 3

In Part 1 of this series, I revealed that my wife and I decided to get a new car and decided to engage in a competitive bidding process with several local dealers.  In Part 2 of this series, I described how the bidding process worked out in practice.  In this final Part, I'll tell you about something that blew my mind about the purchasing process, as well as some last-minute pressure from dealers and some bottom line thoughts!

One Way To Get A Good Deal Buying A New Car - Part 2 of 3

In Part 1 of this series, I revealed that my wife and I decided to get a new car and that I had sent a request for a quote to nine local dealers using Yahoo Auto - and asked a salesman who worked with us for a quote.  I told everyone that it would be a competitve bidding proceed - and it was!  Here's how it turned out!

One Way To Get A Good Deal Buying A New Car - Part 1 of 3

A few years ago, after 10+ years in practice, I finally bought my first new car.  Previously, I had only driven used cars in order to save money, but this new car was primarily for my wife and she was more concerned with a potential breakdown then I typically am.  She was especially interested in a Honda that was known for reliability.  I agreed to buy the new car, but I wanted to get the best deal that I could in the shortest amount of time - remember! every hour spent on the car purchase is an hour less billing/another hour longer you will have to work.  Also, I didn't feel too badly about buying this model new because this model of Honda typically holds its value well - as I checked on Kelley Blue Book.  I'll relate my experience below as one way a busy lawyer can try to get a good price with a minimal investment of time.

Investment Advisors - Should You Have One?

A reader recently sent me the following question:

I've just discovered your blog and have enjoyed reading through your prior posts.  I'm curious about your thoughts on when to use an investment advisor/portfolio manager and when to go it alone.

That's a good question.  Let's take a look at the types of investment advisors and their potential services below:

Buying Vs. Renting - Followup

In our recent four-part series (Part 1, Part 2, Part 3, Part 4) we discussed calculating the total cost of buying vs. renting in order to determine which was the better financial decision.

I have had several great comments and suggestions both on the site and via e-mail.  These comments focused on 1) clarifying the tax deductibility of real estate taxes and mortgage interest, 2) including rental increases, and 3) identifying the ultimate online calculator for the buying vs. renting comparison.  We will discuss these further below:

Appreciation and the Total Cost of Buying vs. Renting - Part 4 of 4

This is Part 4 of our 4-part series in toward establishing a methodology for determining whether renting or owning is more financially advantageous.  Part 1 can be found here.  Part 2 can be found here.  Part 3 can be found here.  In Part 4, we will be discussing Appreciation and Transaction Costs and working though some specific examples of calculating the cost of renting vs. owning.  Part 4 starts below:

Equity and Financing Costs - Buying vs. Renting - Part 3 of 4

This is Part 3 of our 4-part series in toward establishing a methodology for determining whether renting or owning is more financially advantageous.  Part 1 can be found here.  Part 2 can be found here.  In Part 3, we will be discussing the Equity and Financing costs associated with owning a house.  Part 3 starts below:

Ownership Costs - Buying vs. Renting - Part 2 of 4

This is Part 2 of our 4-part series in toward establishing a methodology for determining whether renting or owning is more financially advantageous.  Part 1 can be found here.  In Part 2, we will be discussing the Ownership costs associated with owning a house.  Part 2 starts below:

The Varied Housing Market - Buying vs. Renting - Part 1 of 4

In a recent comment, an associate posed the following quandry:

I think many associates erroneously think that renting a place to live is always throwing money away, while buying a house is always good, not understanding that they're investing (or "investing") on borrowed money in an asset that may not appreciate it at all.

This is a question that I get asked a lot.  Although at first it seems like a simple question, there are actually several issues wrapped up in the comparison of renting vs. buying.  We will unpack and examine these issues and develop a formula for making a direct financial comparison in this 4-part series (it is just too big for one post).  In Part 1, I will review that the housing market varies widely geographically and that any determination of ownership vs. renting really relies on your local factors.  Part 1 starts below:

Efficient Charitable Donations Can Earn You $300K For Retirement

In this recent post about the book Debt Is Slavery, we touched on the author's proclaimation that possessions are really a prison - that just about everything that you own costs money, time, and peace of mind.  However, the Giant Marketing Machine (GMM) as the author calls it, is out to convince us that we need more and more "stuff" - and that only through "stuff" can we achieve happiness.  The author advocated "putting stuff back into circulation" by selling it or donating it and taking the write-off on your taxes.  This aspect may also be particularly relevant right now as people being preparing their taxes.

However, I have noticed that people, especially some lawyers, just don't want to let things go or donate them because they feel like they are not getting a good "deal" on the exchange.  For example, they don't think that recouping 33% (or 28% or 35%) of the fair market value by donating the item is a "fair price" or that is does not match the emotional value that they assign to the item. 

Although the decision to donate or sell an item seems like a straightforward transaction, there are actually some financial aspects that might not be immediately apparent, but can be valuable to consider. These aspects could actually have a financial impact worth several multiples of the fair market value.  More on this below.

"Closed" Mutual Fund vs. "Closed End" Mutual Fund

One thing that I see a lot is that there are certain investment products that are marketed (and are consequently well-known) and that there are other investment products that are not marketed, or are marketed much less (and consequently are not very well-known at all.)  Unfortunately, in many situations the less-marketed investment product may actually be the better choice for some investors.  First, a note - this is not investment advice, just educational advice.

In this regard, I have had at least 3 lawyers in the past month confuse a "Closed Mutual Fund" with a "Closed-End Mutual Fund."  That's unfortunate because closed-end mutual funds can often provide an investor with substantially better returns - as we will discuss more below.

Books for Lawyers: Debt Is Slavery

Over the last 20 years, I have read easily more than 100 books on personal finance and investing.  Some of the books were eye-opening studies like that in the Millionaire Next Door that we discussed in this earlier post.  Many of the books included some tidbits of wisdom, but may not have given practical, dollars and sense advice - like Rich Dad, Poor Dad as we discussed here.  Frankly, it's been a lot of work and effort over several years to mine these books for their wisdom.

Consequently, I could not help but be a little irritated when "Debt Is Slavery" came out - Why?  It's just too darn good!  In its short 102 pages the book clearly and concisely sets forth about 80% of the basic personal finance advice that I had to learn the hard way. 

I highly recommend "Debt Is Slavery" and I have given the book to several of my younger relatives. Let's take a more detailed look at it below.

Going Solo: 4 Things To Keep In Mind

In this earlier post, we discussed Solo Practice University (SPU) and whether taking some of their classes might be helpful for a newly-minted JD looking to go solo.  Since the article was posted, we have had a number of solos commenting and I have reached out to a few attorneys that I know who are in solo practice.  I have attempted to distill their wisdom into four broad categories that I describe after the jump.  I hope that this will be of interest to those considering solo practice!

Books and Lawyers - Rich Dad, Poor Dad

In this earlier post, I discussed the bestselling book "The Millionaire Next Door" and what it might be able to teach lawyers.  "The Millionaire Next Door" was one of the first personal finance books that really helped me improve and shape my financial thinking.  Robert Kiyosaki's "Rich Dad, Poor Dad" (RDPD) was another.  As I will discuss further below, this post should in no way be construed as a blanket recommendation for all of Kiyosaki's products, but RDPD does have a few valuable lessons for lawyers.

Three Social Security Benefits That Senior Counsel Could Be Using

Here are some relatively unknown (but potentially nice) benefits that Senior Counsel (65-66 years old) can use.  Why should you care if you are younger than 65?  Well, maybe if you bring it to the attention of someone over 65 and they use it to put money in their pocket, maybe they will be grateful.  Maybe you can get a dinner or a referral out of it - at least some good will!  After all, you could be putting several thousand dollars in the pocket of a senior counsel.

As described more thoroughly in this article, senior counsel over full retirment age (65-66) can take advantage of a few unusual strategies to put money in their pocket right now from Social Security.  I actually brought this to the attention of a couple of senior counsel and they are taking advantage of it right now.  We will discuss some of the specific suggestions below.

Considering Inflation On "Equal" Investments

In response to my recent post entitled 5 Reasons Why Extra Cash Should Go To Retirement ASAP, one insightful commenter had this to say:

I think that to be fair, you need to take inflation into account when you assume rates of return and amounts of investment.  In terms of real dollars, saving $2000 at age 25 is very different from saving $2000 at age 50.

And 8% in real returns strikes me as pretty unrealistic.

These are certainly legitimate comments!  Let's take a look at the impact of inflation and what return we might expect.

5 Reasons Why Extra Cash Should Go To Retirement ASAP

In a recent post, an associate posed the following question:

 -- My fellow associates have a vague idea that they 'should' be saving for retirement, but don't understand why waiting just five years is so detrimental. I've tried explaining the power of compounding to a few, but to little avail.

First, let me acknowledge that it is really tough to get a good legal job these days -  and even if you go get a good legal job, you often have a crushing amount of debt and your expenses may not leave you with much (if any) free cash for investing.  However, for the sake of this post, we will assume that by some rare good fortune, an associate has gotten a good job and has a little extra money above the associate's subsistence needs.  Consequently, the associate is faced with the choice of whether to buy toys now (which gives pleasure today) or save/invest the extra for the rather nebulous goal of "retirement."  However, retirement seems so far away that it is difficult to even conceive of it.  Also, the associate thinks that they will be making more money later, so it will be even easier to save for retirement later - so why deny themselves today?  Besides, they deserve it! 

I can't control the choices that the associate will make, but I want to be sure that the associate fully understands the consequences of their action (or inaction) - and how investing for retirement right away will actually turn out to be the cheapest, easiest, and least painful way to have enough for retirement.

Lawyers And "The Millionaire Next Door"

The bestselling book The Millionaire Next Door was a real eye-opener for me.  The book is based on a series of surveys set up by the authors who both work in academia and serve as advisors and consultants to businesses that are trying to market products to the rich.  The book provides a lot of great information about the millionaires in America, including generally how they got there, who they are, and how they live. 

The book also mentions lawyers and provides some analysis of how lawyers can become millionaires and why more laywers aren't millionaires.  We will discuss the advice provided by the book as well as some points that the book may have missed after the jump.

Financial Choices As An Associate Determine Your Future

I'll never forget a conversation that I had as a young associate with another associate a few years more senior than me - who I will call Senior Associate or "SA" for short.  I had been working at the firm (a large law firm with top compensation in the city) for a few months and had come to realize that even though my salary seemed high, after taxes, social security, health insurace, student loan payments, and car payment, there did not seem to be much left over.  At the time, I did not yet have a lot of insight into personal finance, so I came up with the idea of trying to figure out what more senior associates were doing so that I could potentially copy that.

Costs To Consider When Buying A Condo

This posting is NOT going to be about 1) the decision whether or not to buy or 2) about finding the area that is most desirable.  Instead, I am going to assume that the potential buyer has already arrived at generally what they want and is now trying to decide among several potential purchases by comparing the costs associated with the ownership of the properties.  One would think that it would be simple to compare these costs, but I see people (even smart young attorneys) screw this up all the time.  I attribute this to their inexperience and the fact that the real estate deal is complicated and their eyes are on the wrong ball.  I'll explain further below.