In no particular order, here’s a few interesting things I heard and read recently that I wanted to share:
5 ways to get best car loan deal, especially as interest rates rise (USA Today, by Susan Tompor)
I remember being 23 years old and negotiating my first car purchase: I didn’t really know what I was doing, but I do recall wanting a manageable payment. That’s all I really cared about – and I think most people are the same way. I’ve come a long way since then and recognize there are many other moving parts to consider, as this recent USA Today article suggests. As interest rates are climbing higher (so are car prices!), it’s more important than ever to understand the mechanics of car loan pricing. One thing I encourage people is that before heading to the dealership, evaluate what kinds of loan terms you can get from local banks, credit unions, or online vendors. That way, you have options and know what those options are before getting “the pitch” from the dealership. Also ask the dealership’s finance people for the figures to take home and evaluate – which they are often reluctant to share. FYI if they provide the figures on a lease, the “money rate” is how they compute (or disguise) their version of interest rate. Don’t be afraid to walk out without a deal, in fact, I encourage it! Have them sharpen the pencil a little more until you get them to quote better deals. I usually don’t go back until they tell me via phone if they were able to come up with something better. If it’s still not to your liking, tell them you want to see if another dealership has better pricing…that always makes them a little nervous! Although they may sell the same cars – they still compete against each other and could offer different discounts. There’s a lot more to the art of this car negotiating so do your homework! These are some of the things I learned – good luck out there.
4 Reasons Not to Save in a Roth IRA (The Motley Fool, by Maurie Backman)
If you know me, I love the Roth IRA. I believe it’s one of the great investment vehicles available, and I am often having the conversation with investors about finding a way to fund a Roth IRA. That said, I know it’s not for every one or every situation, and I am straight-forward with people when it’s not the best solution. Which leads me to this Motley Fool piece as it gives a few most common examples when a Roth might NOT make sense. For some high wage earners, Roth IRAs are not even available as an option. But even if it’s possible, you might not want to do it if tax rates in the future are uncertain, you need a tax break in the current year, or you don’t have family to pass your wealth to. I would also add that a Roth might be NOT advisable if 1) you are spending more than you are making (i.e. can’t afford to save – uh oh), 2) have other debt that prioritizes paying down before saving in a Roth, or 3) you plan on dying early (like… before age 60, because paying tax in early years may not fully pay off until later in retirement). But with tax brackets lower across the board in the near term, a Roth IRA is more attractive than it was a year ago. Feel free to talk through your situation with me!
The 1 Percent Rule: Why a Few People Get Most of the Rewards (Medium.com, by James Clear)
Most of us heard of the Pareto Principal (aka the 80/20 rule) which was coined from Vilfredo Pareto in the 1800’s. If it sounds familiar but you need a refresher, it’s basically the thought that 80% of results comes from 20% of the causes. Some examples could be that 80% of the wealth in this country is caused by 20% of the people, or 20% of a company’s customers account for 80% of the revenues. Keep in mind, it could be 80/20 or a variation such as 90/10 or 70/30, but the principal holds true for many events around the globe. I personally see this effect on a routine and daily basis. For example, I know exactly where I stand with my bank when I am on hold for 15 minutes trying to reach customer service (even though they tell me I am “preferred customer”, haha!). This rule has gained attention from me as well as others around the world, and the article cites many great examples of how this holds true. From the 80/20 rule, scientists then developed the “accumulative advantage” law, which says that someone only needs a slight advantage over a rival (say 1%) to eventually dominate long term. In other words, very small differences in performance which are repeated over time can lead to disproportionate rewards…i.e. the gap widens over time. I loved learning this notion of the 1% rule, how I don’t need to be twice as good as my competition to win twice as much…but if I am consistently slightly better each time, it will add up in in the long run. Good reading for those looking for competitive advantage, and who want to differentiate themselves from the rest.
Enjoy the light reading!