The American Dollar
OUR FAMILY. OUR MONEY. ONE PERSONAL FINANCE BLOG.
One industrious American family's focus on a financial goal of freedom. Through worldly personal finance education, here is our story.
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Our Story: Both my wife and I are 27 years old and have gone through financial hell and back. Now we are on track to financial freedom, however we are not financial advisors or professionals, just everyday people. Share our journey from a negative networth and email us if you have questions or comments! :)



RECENT POSTS

Tuesday, June 19, 2007

Networth Update: $209,849 (+.0001%) lol

Barely breaking even with our recent SUV purchase , we were fortunate to have some modest gains in our retirement. The market must be moving because the numbers are always jumping in the positive direction. However we did take $3500 for the truck. The savings has been stagnant obviously since it is now my 4th month of not working. I finally will go back this Friday! Not that I'm going to miss our beautiful infant, but I'm going to leave that to the stay at home mom :) She's just excited to finally be out of a job she dislikes. First thing when I get the paychecks this month is make sure we replenish the Emergency fund and savings. Then we can work on retirement, finally.

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Monday, June 18, 2007

The Trade-in at the Dealership: Our Story



After much deliberation in the details, we decided to pull the trigger and purchase the SUV. I'll get to the story which takes us into the dealership craziness, but first wanted to touch base on how we even came to this major purchase. We don't take ANY purchases over $100 lightly. There is a time that we stop and think, 'ok do we really need this' and start listing pros/cons and obviously the more money the purchase is, the more we will actually go though the numbers working out what is the best deal. The thought process has been going on for a while now. Finally we have found what we were looking for while I was searching through online classifieds, I came across our next "new" used vehicle.


Finding the Right Car: While looking online researching thousands upon thousands of cars/trucks, I found our local car dealership was liquidating all their used inventory. I'm thinking to myself, 'yeah...but they are always liquidating', but decided to browse anyway seeing as it was a change from ebay.com or cars.com or our local classifieds. I came across a 2003 Toyota Highlander V6 with the same miles as our Toyota Corolla. They were asking $12,700 for it in the advertisement, which was still way below wholesale value on KBB. Since we were looking for an SUV due to our increase in family, I ran the numbers and spoke it over with my wife. Since our Corolla has no power and is just a CE (base model), I valued it on Kelly Blue Book for $9,700. I thought that the 'upgrade' in car would run us about $3,000. This sounded reasonable enough; that is until we got to the dealership...


The Test Drive: The weather that day was quite cloudy with a drizzle here and there. My wife and I dropped the baby off at my sister's house for a couple hours while we went just a few miles up the street to the dealership. We arrived at the lot to find the used vehicles off to the side in another vacant lot and we spot the truck. I pull up to the front where there is only one other car in about 10 vacant spaces, so a salesperson immediately notices. I can barely open the door to the Corolla when a middle aged fellow with an accent greets us with a grin. "Looking for something in particular" he says. "Yeah, there's a Highlander in your used lot.", I said as I pointed towards the fenced-in dirt square to the left. "Ok, I'll be right back with the keys", he acknowledged darting towards the glass doors of the showroom. I looked at my wife, surprised he didn't hit me with a new car line, like, 'we have some great new cars too'. He swiftly came back and said they are going to clean it up first and shouldnt take but 5 minutes. I looked at my watch as if trying to be impatient. Honestly, I would have driven it as it was. The truck is now prepped and pulling up in front of us all shiny with the metallic paint gleaming from the wash. I gave him my driver's license and insurance card as he handed me the keys and put on the dealer tag on the rear. As I got in, I noticed they didn't pay attention to too much detail on the inside though. My wife pointed out smudges on the dashboard and a couple peppermints and discarded wrappers in cupholders. Off we went down a side street and then jumped right on the highway to test the acceleration and if I heard anything out of the ordinary at 75mph. I made sure the radio was off trying desperately to find the slightest imperfection and call the deal off. Nothing. We drove for about 5 miles and got off at the nearest exit. I pulled into an empty parking lot of a hotel chain and parked far from the door. Time to do the walk around again with the same fault-finding mindset. I was surprised at how much my wife was looking into the particulars so meticulously as well. We must have spent 20 minutes or more in the drizzle going from top to bottom. I was more concerned with the key components: engine, transmission, tires, belts, A/C and heat, etc. Everything checked out nicely, so we headed back to the dealership. I told my wife that it was a good car, but we both knew we should be able to walk away at any moment that the deal falls through. We agreed as we pulled up and were greeted by the our salesman.


Setting the Stage: "How was it?" he smiled. "It was ok." I said stepping towards the glass doors he was holding open for my wife and I. We walked to a smaller room with a desk, a couple pictures of his family, a computer, and two chairs. At that moment, I felt claustrophobic. He got out a pen from his pocket and asked "So, what kind of loan do you have on the Corolla?" Since we had the title with us, I explained we had paid it in full a year ago. "Do you know what the value of it is?" he said. "About $9,800 in the Kelly Blue Book" I said. He turned to me with a disgusted face like anyone would EVER pay that much for our little Corolla. "Nah, it doesnt have power features or anything... let me find how much we will take for it." He stumbled out of the room, while my wife and I faced his drab wall with the picture of his wife and two children. I leaned in towards my wife acknowledging that she was doing a good job. She gets really nervous in these high pressure sales situations. After about 5 minutes, he came back with the used sales manager. I could sense the adrenaline going on in my body.


The Deal: A heavy set guy in his late 40s walked in and introduced himself, shook our hands and took a seat at the salesman's desk. He had on glasses with transition lenses, however they seemed to stay dim the entire time, which made it difficult to see his eyes. This guy had a sales demeanor about him; just the way he carried himself. My wife would tell me later that he represented the classic car salesman. "My buddy here tells me you like our Toyota out there?", pointing to his collegue standing behind him. "Its a great truck... power everything. Lets take a look at what you're trading in today." He went towards a sheet of paper our prior salesman handed to him. "Hmmm... well your Corolla is a base model with no power, we'll probably do $5,000." He took out a sheet of printer paper and a black marker from the desk. He started writing the numbers. (I already calculated it in my head) "So if we take your trade for $5,000 and the price on the Highlander is $12,700", as he checks the inventory sheet again, "will make the difference $7,700 plus there's a dealer fee of $800 for tax, title, and vehicle registration for a total of $8,500 that we can get you approved for today."


Im thinking to myself, ok they really think we are two kids from the street looking to just bend over. I went into my 'are you kidding' mode. "Absolutely not" I said firmly. "First off, we're not financing, we pay cash. Secondly, the Corolla is in immaculate shape with all the service records." I had to catch my breath for a second. "Kelly blue book says I can get it for around $10. I saw our SAME car at your sister dealership selling for $12. $4 is ridiculous." The manager glanced over at the salesman and sighed. He sat back in the chair and said "Ok. I can probably convince my manager to buy yours for $7,000 but thats the best you're looking at. With everything that'll be $6,500." He underlined the new total with the marker.


"Would you be kind enough to give us a minute?" I stated. Let me talk this over with my wife. "Certainly, take all the time you need" as they both stepped out. "This is getting interesting", I gleamed at her. My wife was a nervous wreck at this point. "$7,000? Are they kidding us? Lets just sell the Corolla privately and we can go somewhere else." I rattled in frustration. I was looking to close the gap in the price difference and that was the only thing on my mind. A few minutes past by to the point I thought they had forgot about us. I looked out the glass and opened the door. Our original salesman saw me and headed back to the room.


Round Two: "Are we ready to draw up the papers?", he proprosed. "Not yet. We're looking at these numbers and know you guys can come up with something better." He looked me straight in the eye, "You are not going to find anyone that is going to pay anymore for that Corolla. Honestly. Even though we are a dealership, we won't make any money off your car." Ok, now I was being treated like a kid with no options. "I think you can do better", I said. He sat up in his chair and stared down at the numbers. Then the manager stepped back in with a smile on his face and a sheet hot off the printer in his hand. "Ok you two, I checked the blue book online again and spoke to MY boss. He said, we can give you $9,000 for your car, plus what we're selling is already at wholesale value, making it a $4,500 total fees included." He handed me a sheet of typed up numbers with the deal all stamped out on paper showing a $4,500 difference. I know that alone the taxes/title fees of $800 was going to kill me. I sat back in the chair. Of course my target price was $3,000 or less from the get go but the fees were going to bump that up regardless. I sighed and looked at my wife; I knew she thought that $4500 total was a great deal. I covered my mouth with my hand. Long silence. "How about 3-5... for everything?" I said.


Final Decision: "Let's check with my boss." I got up out of my chair, went out the glass door and walked with him to the front of the showroom. There stood a guy, early 30s with a very nice suit on. He shook my hand and glanced over at the used car manager, "What can I do for you today?"... "Mr. ------- wants to deal at 3-5.", the manager said. I looked right at his boss nodding my head. "Ok lets do it.", he said, "Because I know this guy will be back and recognizes that we won't make much off his trade and we are actually losing money here." (I laughed a little inside there). I shook his hand and thanked him as I walked back to the room.


The whole process took us approximately 3 hours from the time we pulled up to the time we drove off. The paperwork seemed like it was the most lengthy. They drew up paperwork showing we had gotten $10,000 for our trade and after all fees it was $3500 even. I look back on it now thinking I probably could have gotten the deal at $3000 or even $2500 if I was a little more patient and a slight bit more aggressive. Well we live and learn... and what a great learning experience we went though. Now we have a car that we can get our baby in and out of with ease and with more room! Yeah!

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Friday, June 15, 2007

My friend wants to hurt me for paying!


Today after having a fun filled day with the baby, my beautiful wife was nice enough to watch our daughter and let me go to dinner with one of my good childhood buddies, whom I haven't seen in months. We left at about 4pm to a nice local chinese restaurant. The conversations are always light, jovial and reminders of yester year, some good and some bad.
Anyway, the check comes to the table and of course the sweet old lady puts both of our orders on the same check (obviously since neither of us said anything being engaged in high school reunion information> by the way, IM NEVER GOING, I hated high school why would I ever think about going back there it made my youth a living hell; see what I mean by being engaged in the conversation?) . Ok, so she brings the check and my good friend picks it up and says I'll get it this time. First off, whenever we eat, we ALWAYS pay our own way. Needless to say, Im shocked at first because he NEVER offers to pay and his situation is he is in grad school making $15K per year before taxes (AHHH!!). So my first instinct was Absolutely not, lets just pay our own. Then my voice took over my thoughts and said, "No, I'll get it this time". Then it became a back and forth battle of who paid for what last and "he never gets to pay" and I have a baby so I need the money... blah blah. So needless to say I went up to the counter and paid and he was pissed. Oh well... he can be such a whiner sometimes, but then I got to thinking...why shouldnt we just agree to pay for ourselves EVERY time? I know he was just offering to be courteous but it just will lead to a big deal about nothing. Since we have been friends for so long, I know he will get over it. I just didnt want to have to feel like mr. money taking HIM out.
Side note: OUR BABY IS 4 MONTHS TODAY! wow she has grown!~ :)

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Thursday, June 14, 2007

Taking a vacation from it ALL... is a good thing!


We have taken a little vacation these past couple weeks; since I obviously haven't had the chance to really get down and blog like I do. However I am still enjoying my time being home with our newborn daughter. This will be my fourth and FINAL month of absolutely no work or having to worry about the daily grind; which I still miss in a wierd way. I truly believe it is still a blessing that we have such an opportunity for one of us to stay at home full time. Now a days, she giggles and laughs like crazy and everyday I learn just a little quirk or two more than I didn't yesterday which makes it all worth it :)


Financially speaking, like we have been doing for the past several months, we are living on just my wife's paycheck. This month is a bit different because not only do we have ZERO of my paycheck coming in, but we are relying on sticking to the budget like never before (ie. no room for error time). So far midway though the month, the funds are looking a bit high and dry. We have depleted over 80% of our cash in the budget during our last week's big Sam's Club and Target run. These were major but they will carry us definately through mid next month. That only leaves us with 2 grocery shopping days left, this Sunday and next Sunday. Since I will actually be in the driver's seat at work this upcoming Friday, the 22nd, I should be getting a paycheck on the first of July. Also after my wife spoke with her work, she will be getting her FINAL monthly salary in July. That's great because then we will live off her paycheck for one more month and all that I make in July will go towards our 2008 annual expenses, currently at $4500.

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Emergency Fund
40%
$25,000
2007 Roth Contributions
$8,000 Total




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