Tag Archives: BMW

Financial Independence, Saving

Become your own bank

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“If you would be wealthy, think of saving as well as getting.” —Benjamin Franklin

Growing up one of my favorite toys was my piggybank.

I used to put all the spare change and money I found or received into it.

It was my ice cream truck money.

I just loved having my own.

It was such as source of pride, freedom, and independence because I was allowed to spend my money on the things I wanted.

That is how I want everyone to feel.

A sense of ownership and accountability over oneself and your actions.

In order to do this, you have to go back to saving the old-fashioned way, like putting money inside that old piggybank.

Here’s how.

A HOUSE IS NOT A PIGGYBANK

First, you need to stay away from borrowing. And if you truly must borrow, make sure to only get what is absolutely necessary. Every dollar you borrow just keeps you in debt.

Case in point, if you do a cash out refinance on your home, that can reset your mortgage debt-free clock and cause you to owe more interest over the life of the loan.

No one wants that.

You need to keep your hands off of large piles of cash. This includes the equity in your home, your 401(k), and easy access savings accounts.

It’s like losing weight. You have to keep your hands out of the cookie jar. In this instance, it’s the money jar. If you keep taking out of it, you will never reach your goals.

Forget taking out huge auto loans and personal loans. You do not need to drive a BMW to the airport on the way to Jamaica. That is the road to broke, if you cannot afford it.

I would rather you drive a Honda to the Grand Canyon, if this will keep you out of debt.

HOW TO START SAVING YOUR COINS

The most important step is to decide to save. If you want to save more, you have to earn more, slash expenses, or both.

Set a goal.

I started out with a goal of $50 per month and worked my way up to saving $13,000 a year by increasing yearly savings goals.

You have to write it down. Otherwise, it is a wish and not a goal. A goal requires action. It starts with writing it down. A written plan is 80% more likely to succeed.

I started saving my change. I would put it into a jar or bag.

I would save up anywhere from $25 to $100 dollars in change and then deposit this into the bank.

When you see the money add up and feel how heavy that coin jar or bag is, it gives you incentive to keep going. After, mastering the coin game, I moved on to bigger gains.

TURN SAVING COINS INTO SAVING DOLLARS

Then I started turning my attention onto dollars.

I started with manually transferring $50 per month into my savings account.

From there, I set up an automatic deposit of $25 every two weeks.

However, I was also getting tired of having to pay ATM fees. So, I found a way around this.

I would have to either go to the bank and take out a large enough amount of money to get me through the week, go to free ATM’s, spend less, or go to stores and do cash back.

For instance, grocery stores will allow you to do a debit card cash back of anywhere from $100-$300 depending on what store you go to.

Other places, like the convenience store, may allow you to get between $20-$80 cash back with a purchase.

I slowly worked my way up to saving more.

Every year, I would re-evaluate what my saving goals were, I would write it down, and figure out a way to make it happen.

If you zero sum budget, then you know when something gets paid off or you eliminate any type of expense that money gets freed up and must go somewhere or it disappears. Like all good dogs, it goes into heaven, I call it dollars heaven.

I started saving my money first from income I earned, and then spending what was left over.

I would decide to save $300 per month and figure out how much more to bring in to increase my cash flow or what I could cut in my budget to lower my expenses and then save that money.

It went down like this:

Year 1: Save $600.

Year 2: Save $1,800.

Year 3: Save $2,500.

Year 4: Save $3,600.

Year 5: Save $10,000.

Year 6: Save $13,333.

WHERE TO PLACE YOUR MONEY

Since, I knew I did not want to depend on having to go to the bank or grocery store every week, I decided to place money into a cash box.

I would put no more than a few hundred bucks in it.

I was placing my savings into several savings accounts such as regular savings and money market savings.

In addition, I would label my savings accounts to ear mark that money for things I wanted to pay for such as a vacation, car, home down payment, or college.

I then started looking into Certificates of Deposit (CDs) and High Yield Savings Accounts (HYSA).

Earn Money with High Yield Savings Accounts

With the high yield accounts, you can start to earn money on your money, that you can spend any way you want.

HOW TO BE YOUR OWN BANKER

Now that you have a cash cushion and cash box, you need banks less and less.

You should get to the point of not needing to borrow for much of anything.

You can keep 1s, 5s, 10s, 20s, 50s, and 100s in your cash box. Enough money to make your own change.

The savings account allows you to earn interest on your money and use this to save up enough to pay for hotel stays, rental cars, and vacations.

You can also earn through peer-to-peer lending because you now have enough dough to start lending to others like a bank does. And earn interest too!

ROLLING IN THE DOUGH

At this point, you should be able to start saving at least 10% to 25% of your income, after you eliminate debt and put your money to work for you.

So, now you know how I did it and what you can do too.

I went from saving $50 to over $13,000 per year! See how here 

How Millennial Money inspired me to start saving $13,333.06 a year

I started doing 5% of my income to now saving over 41% of my gross income!

It took years to get to this point.

Once I made the decision to save, I wrote it down, and created a plan.

It took over 5 years to get here!

So, take my advice, do not rush to try and do so much and then do nothing.

Take small steps toward bigger ones. That is the key to building wealth. The kind of wealth that lasts takes time to build. There are no shortcuts. Only patience, discipline, consistency, and time.

Automobiles, Financial Freedom

Outrageous Loan Terms for Porsche that even the Rich can’t Justify

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Want to finance an exotic car? No sweat. It will only cost you $157,944.33.

That amount is based on a Porsche that costs $144,750 with loan terms of 144 months, with a 3.3% interest rate, and $14,475 down payment.

Yes, you read that right. Financing for 144 months is the equivalent of 12 years! Just ridiculous.

Especially, considering that a car depreciates in value the minute you take it off the lot.

For example, a $100k BMW 6 Series after five years will likely only be worth $40,000 in resale value. Therefore, over that time period you have paid over $70k. You would still owe approximately the same amount as the current resale value and it would be worth even less in a few more years.

What made me look into this was listening to talk on a radio show I heard about being able to finance a $100k Porsche over 8 years. I was like that can’t be real. Oh, but it is. The people on the radio said that people were doing it and taking out these loans. I was like that’s insane. You can buy houses in different countries all over the world or in certain parts of the United States for that.

If you are so set on having an exotic vehicle, then I think the best course of action is paying cash in the form of a cashier’s check. If you have to finance a $100k car, then that sounds like a red flag that you can’t afford it. Instead of spending $100k on a car, why not invest it? Over a period of 12 years with a 7% ROI you could have $272,641 in your 401(k). Even without investing another dime, you could be a millionaire in about 20 years. Is that car worth a million dollars? I don’t think so.

Who are these people that want to finance a $100k car? The only one I have ever seen was on a Canadian television show called Til Debt Do Us Part hosted by finance writer Gail Vaz-Oxlade. In one episode, a married couple had accumulated a significant amount of debt, but what made this episode stand out was the fact that the wife wanted a very fancy car and was thinking of financing over $100k to get it. Mind you, the couple had kids and debt, so where was this money coming from?

Here is a sample of how the show went on to explain to viewers how people are spending and where the money comes from: credit. If you want to order Gail Vaz-Oxlade or other financial books, then look to the side or go to the top of my blog page and click the Amazon banner link.

Who are these companies that are likely to finance these amounts? BMW Financial, Audi Financial, Porsche Financial, and the like. See the screen shot.

And not only do these companies allow you to finance, but expect a down payment on cars with six-figure price tags.

I have had my car for more than a decade. Actually, it has been 15 years. My car has been very reliable. Once I paid it off I decided I did not want another car note.  That was almost 10 years ago. Here is a snapshot below of my last payment. It may become my screensaver.

I have been able to do so much without having that payment hanging over my head. I decided to start paying off my credit card debt, invest more, get Lasik, join a gym, and get another degree. Basically, I invested in myself. I do not regret not purchasing a new car for one second.

Here is my take on it. Why stretch yourself financially, for a car you desire? Ask yourself if you would still be willing to do that, if the most popular car in the world among the money elite was a Honda? Financially savvy folks know that a fancy set of wheels is pricey in more ways than one.

I was told that a rapper was discussing online about owning a Bugatti or some other luxury vehicle that has three radiators. If one goes down, it costs $90k to replace. Gulp! That’s a hard pill or repair bill to swallow.

I heard an NBA player say that he knew people that would buy Bentley’s, but then would stop driving them because they were not meant for everyday driving. The wear and tear was ridiculous.  Owners were shelling out tens of thousands of dollars on maintenance. Don’t believe me. I read an article by Forbes about unreliable luxury cars.  Apparently, I am not the only one who has noticed that every luxury car that glitters isn’t gold, but merely sold to those willing to fork over their hard earned cash.

That means you basically are driving a house on wheels for the amount you paid. Then after all that, still have to worry about thousands of dollars in repairs. And since this isn’t your run of the mill car, you have to go to specific repair shops. Usually, this means repeated trips to the dealership. Who has time for that?

Luxury cars seem not only to come with a high price tag, but also lots of headaches. I say this: if you can afford the monthly payments, maintenance, and can hire a mechanic or chauffeur to repair or take your car in for service at a moment’s notice, then you can get the car. If not, you’re better off sticking to something you can take to Jiffy Lube.