Mar 092017
 

A Car Buying Formula 

Someone once said that an old car is like virginity. Once you’ve had it for over 25 years it’s kind of hard to get rid of because nobody else wants it either. 😄 But I’m not here to give relationship advice. This is a personal finance blog after all. So in today’s post we’ll discuss one of the most common questions people face; how much is appropriate to spend on a car? For most people I would recommend the following formula.

0.01s(5h+2i) = Price to pay for a vehicle

= Monthly household spending (before accounting for the potential vehicle.)
h
 = Number of expected hours the car will spend on the road per person per month.
i = Monthly cost of the auto insurance.

For example, I live pretty close to work so I only spend about 20 hours on the road each month. My car insurance costs $100/month, and my monthly household spending is roughly $2,500. When these numbers are plugged into the formula we see that I should spend about $7,500 if I were looking to buy a car today.

0.01 x $2500 x (5 x 20 hrs + 2 x $100) = $7,500

Let’s look at another example. Susan and Bob are looking to buy a vehicle. It will be used primarily for Susan to drive to work, but will also be used for shopping / recreational activities for both of them. They estimate the car will be on the road for 50 hours per month. They will be in the car together for 10% of that time. Their monthly spending is $3,200. Insurance for the car is expected to cost $150/month for the type of vehicle they are looking for. Using these numbers we discover they should budget in the range of $18,400 for a car.

0.01 x $3200 x (5 x 55 hrs + 2 x $150) = $18,400

Even though the car spends 50 hours on the road, we are using 55 hours in the formula. This is because two people are expected to use the car simultaneously 10% of the time so during those times the hourly rate of utility is doubled.

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Apr 012015
 

The market for new high-end vehicles is growing quickly. Last year in Canada more than 1 in 10 car buyers went luxury. I don’t like to feel left out so I’ve decided it was time I upgraded to a newer, faster car. #YOLO! 😀 Since this is a finance blog I’m going to share my experience buying a $100K+ car.

Being an environmentally conscious millennial I’ve decided to buy a TESLA! I know it’s not cheap, but Watt good is money if we don’t spend it, right? 😉 The Tesla Model S is rated as the safest car in America, and Consumer Reports has named it their best car for 2 years in a row. Ohm my goodness! With accolades like that how can I not buy one? 😎

So in early February I visited the Tesla showroom here in Vancouver (929 Robson St.) They had a white Model S on display. Here are some pictures I took.

15-04-tesla-model-s-showroom

The biggest decision when buying a Model S is choosing the right battery capacity. After consulting with a product specialist, Sandy, I’ve chosen the larger 85 kWh battery configuration, which has 380 hp and can accelerate from 0 to 60 mph (100 km/h) in just 5.6 seconds. Its top speed is 225 km/h (140 mph,) and it can travel about 400 km (250 miles) on a fully charged battery, which is a pretty good range for an all electric vehicle. 🙂

Purchasing a Tesla Model S

The total cost for my white 85 kWh Model S came to about $105,000 including tax. I was also charged $1,000 for delivery and $180 for prep. There’s a $5,000 government rebate in B.C. for electric vehicles. As someone who clearly lives a frugal lifestyle I always try to capitalize on these incentives because it’s basically free money from the government! 😀

The buying process was pretty straight forward. After my test drive, I sat down with a sales rep who helped me customize the options. Then I made a deposit of $2,500 with my credit card. Tesla said delivery usually takes place about 2 months after an order is put through because they have to source all the parts and custom build the customer’s car.

About 9 weeks later I received notice that my Model S has finally arrived in Vancouver! So earlier this week on Monday I excitedly went down to the Tesla service centre to pick up my brand new car!

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Jan 142015
 

The basic concept of debt is simple. It’s when someone borrows money from another person. But once we start looking at different forms of debt such as sovereign debt, treasury bonds, mortgage-backed securities, demand loans, etc, it can start to sound like a different language to many of us. 😕

Even the money in your wallet right now is just another form of debt. It may not be your debt but if you trace back that money to its initial point of creation you’d discover who’s debt it belongs to. 😉

Year of the Debt

It has come to my attention that there is a lot of misinformation and confusion about the topic of debt on the internet. That’s why I’m making the proclamation that 2015 will be the year of the debt. I dedicate this year to write more about debt and its impact on our lives. I have even created a new section on the blog that’s all about debt.

15-01-year-of-the-debt

Most consumers are told that being in debt will hold them back from spending, investing, and living the life they want. But this is not entirely true.

Canadians now have more debt than ever before yet our average household net worth continues to reach record highs. So debt and wealth doesn’t have to be contradictory. In fact, often times debt can increase our financial well-being.Alberta has the highest household debt of any province, but they also have the highest household incomes. 🙂

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Dec 282011
 

Hope everyone had a good Christmas. I went to the local consumer electronics store (Futureshop) on boxing day and it was packed. I feel bad for the minority who are facing financial difficulties now, but one look at our shopping malls, restaurants, road congestion and it’s hard to find any signs that our economy is slowing down…

There are so many cars on the streets this holiday season. We have a law in this part of Canada that issues a $167 ticket to anyone talking or texting on their phones while driving. But hands free blue tooth is okay because you’re not looking at your phone.  According to the police, 48% of fatal car accidents last year involved distracted drivers. So this is really a moral issue, which will save hundreds of lives each year.
.

I think this law is a great idea for any State/Province or municipality looking to make some extra money. Imagine how much more in taxes we would all have to pay if the government didn’t have other ways of raising money like using these traffic ticket fines. On a per person bases, BC already issues more than twice at many of these tickets as Ontario. Other provinces should follow us. I’m all for issuing fines if it means saving lives and money.  I’m surprised at how many drivers I see today still holding phones to their ears. If people must use phones while driving, they can buy a cheap head set for talking, or use Siri, if they have her, to send text messages. Driving at 60 km/hr (37 miles/hr) a driver who takes their eyes off the road for just 3 seconds drives the width of a football field, “so even a brief glance at a text message or dialing a cell phone can cause serious injury or death.” ~Solicitor General R. Coleman.

75% of drivers polled in this province, believe that talking or texting on a mobile phone behind the wheel is as dangerous as drunk driving. And most of them support this cellphone/driving law. Some even want the fine to be higher. What’s interesting is 53% said they witnessed others breaking this law “several times a day.” But only 16% admitted to breaking the law themselves in the last year. Hmm, I wonder…