Consolidation Loans Jump Starting Things ?

I have had a few folks talk to me about whether they should be looking at consolidation loans to try to get their debt problems under control, and as a rule, I don’t like the idea, but for some folks the concept may work. Consolidation loans usually consist of adding higher interest rate debts (i.e. credit card debt, etc.,) onto your mortgage or some low(er) paying credit structure that you now use.

This financial tool can be useful in that you end up having a lower interest rate on your debts, however, there is a very large danger with consolidation loans, which I will discuss after this helpful car tip.

I found a very interesting diagram on Pinterest that I now offer for your reading pleasure:

How to Jump Start your car (in the correct order)

As I mentioned a consolidation loan may jump-start your financial life in that you have a lower payment level for your overall debt, however, just like jump starting a car there are dangers. Some of the dangers of jump starting your car are:

  1. If you connect the wires backwards (pos on donor to neg on dead), you will fry your electrical systems (at the least),  your on board computer and you may cause the batteries to explode.
  2. If in step (4)  you connect to the negative pole on the dead car (as many people do), the battery may explode as well (one reason for that is you cause a spark over a battery that may be leaking fumes).
  3. This isn’t a danger, but if you simply jump-start your battery and don’t figure out why your battery went flat it could mean something more severe with your car.

Point number (3) on my list is important because it is similar for consolidation loans, which is why are you using a consolidation loan? If you are jumping your car, there is something wrong somewhere, similarly if you are using a consolidation loan, something is wrong financially in your life.

What do I mean by something wrong in your financial life? It is possible that if you don’t change your lifestyle you will end up needing another consolidation loan (sooner than you think) and that can start a death spiral of debt that will not end well.You must find the root cause as to why you needed the consolidation loan, and deal with that part of your life, or you are doomed to have to “consolidate” again later.

Just like jumper cables, the consolidation loan can be a useful financial tool, but you must use it very carefully, you don’t want your finances blowing up (like your car battery) or end up frying your financial life.

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When To Let it Go

A while ago I had to decide about my car, about whether it was worth repairing it, or whether it was time to retire the old girl and look at another used car. For my needs I have made a conscious decision not to buy a new car, I use it as a means of transportation (to get to work and such), so having a “fancy new” car is really not needed. I have already asked, when do we push them off a cliff (my CAR remember), but let’s revisit this decision a bit further.

In my case there are different parts to this decision:

Hank's Car ?

No Not This Old Beater Easy to Decide When I Gave This one Away

  • Is the car on it’s “last legs”? I don’t think so, seems to be running fine for what I need it, I wouldn’t drive it across Canada, but it might make it.
  • Do I need a replacement car? Not really, that is the hard part of the decision. In the next little while I will have to decide (or will have decided for me), whether I want to go back to taking the bus to work, in which case I may not need a 2nd car.
  • Can I afford the repairs? I can “afford” it, however it will mean some sacrifice on our part (yet again).
  • Can this repair wait? Unfortunately when your car sounds like a Sherman Tank and it makes rattling noises that make a Diamondback green with envy, so that did not play into this decision.

What other interesting decision points might be needed for this conundrum?

 

 

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They are Watching You (Drive)

A while ago, I read about how GPS makers were selling your driving data, without really telling you. It’s quite simple, each time you “update” your maps, your usage data gets downloaded (you most likely ticked a box saying that was OK, when you first installed the software). That’s easily remedied, find the “don’t send my data” box and tick that, and you are all good.

My guess is that the data on the GPS can actually show when you are speeding, and show where you visit, so the data has some value to a few folks, but I thought no more of this (as I had remedied the issue for my GPS).

Now my automobile insurance company is offering me a magical device that if I install in my car, could lower my insurance rates dramatically, and it leaves me scratching my head. Don’t we put electronic monitoring devices on pedophiles and dangerous criminals, why do I want that on my car?

I suspect my complete distrust of this technology is part of my general Luddite attitudes towards anything that might be used as a “watching the C8j live” device (yes I know my cell phone is already doing that).

Let’s take as an example Hank and see how things might change for him with this new monitoring device:

  • Hank has a relatively spotless driving record, no speeding tickets in the past 5 years, and he gets a good driver discount thanks to his clear driving record.
  • Hank’s wife is also an excellent driver, and while his son costs a bloody fortune to insure, Hank Jr. has a clear record as well.
Hank's Car ?

Hank’s Car ?

Hank sees this wonderful tracking device, and decides that he’d like to have lower Car Insurance rates, so he installs it on his car.  What might this wonderful device tell his insurance company about Hank’s car ?

  • Someone likes to drive 120 km/hr on the 400 series highways (as do we all from what I can tell)
  • Someone also enjoys driving 102 km/hr on highway 7 .
  • The car seems to accelerate very quickly from stops, and tends to stop suddenly at stop signs and places where there are traffic lights.
  • One night the car drove down Hunt Club Road doing 110 km/hr for a long period.

What do you think an Insurance company might do with this information?

  1. Since no charges have been laid or tickets written, the monitoring device must be faulty.
  2. Someone is driving Hank’s car in a high risk fashion, and the insurance rates for this car should reflect this risk.

If you ask my opinion I would say (2) is the more likely answer.

Has anyone got one of these “Wonder devices” for their car, and have their rates gone down?

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Paid For Car is Free and Clear, Right?

I realize most folks already know this one, but I have had a few odd questions about this topic, so let’s get back to some basics about owning a car.

Your car payment (be it a loan payment or {cough} lease payment) is nowhere near the only cost when owning a car, but it is the most obvious and the easiest to see in terms of your personal finances.  While your $400 a month payment seems like a lot of money, remember what else you are paying for:

Someone thought driving with no tires was a good idea the previous night, not such a good idea the next morning.

Tires are a big cost, but you can’t go anywhere without them.

  • Gas, another simple one to remember, you are most likely forking out between $50 and $150 a month depending on whether you drive a Hybrid or an SUV
  • Insurance on your car, that’s at least $100 a month depending on your age and driving habits.
  • Wear and Tear on your car is the tricky one to figure out, how much are you paying in maintenance to keep the car on the road? What does that entail?
    • Tires really only last for four years and at $500 for a set of 4, you are paying about $10 a month for tires. Add more money if you need to buy Snow Tires too (maybe double it)
    • Brakes last 2-ish years
    • Oil Changes every 4-6 months
    • Etc., etc., etc.,

If the place you work has a travel allowance for when you use your car to travel for work, how much do they pay you? That is very close to what you are paying per kilometre for your car, which is sphincter tightening when you figure that one out.

Agreed, this seems ludicrously simple, however, why do people not think of this stuff?

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Tire Storage the Business

So in the fall I wrote a slightly off colour piece Do You Store Your Tires, where I bragged about my wife’s rack (the tire storage rack that I include in this post, because I am very proud of it), but after retrieving my tires from my mechanic I learned something more interesting about the ever growing business of “storing our stuff” (to quote the Late George Carlin from Brain Droppings).

A very Nice Rack

A very Nice Rack

Someone at my mechanic’s shop pointed out that they stored over 1600 sets of tires this past winter, and I thought, “WOW! That is a lot of stuff!”.

That is more than 6400 tires stored somewhere (actually it was being stored in a set of storage containers (a big (but not huge) place to keep your stuff) beside his property.  I guess if you have the space, storing your customers tires is a service that is in high demand, but I was just floored by how many tires that was.

Will I be storing my tires next winter? I am hoping I don’t because I plan on putting a shed on my property where I can store that kind of stuff (tires, lawnmower, snow blower, bikes, etc.,), because I have a lot of stuff . Is it cheaper for me to store my own stuff, or to pay someone to keep my stuff somewhere else (where I might have to call to go look at my stuff)? I don’t know, but I don’t feel safe leaving my stuff somewhere else, I like having my stuff close by, to make sure no one is fooling with my stuff.

Every time I turn around when I am driving in a rural area there is yet another “store your crap here” business popping up, so storing your stuff must be a growing business. Where I live in Ottawa storage is a booming business where folks store their stuff, their RV’s (which are places with wheels to store stuff, which then need to be stored when you aren’t using them), and other stuff.

At the end of it all, Mr. Carlin had it right when he said, “A house is just a place to keep your stuff while you go out and get more stuff.”, do you store your stuff, or do you not have enough stuff to worry about it?

Some crazy folks get rid of their stuff, but what if they needed it later? I like my stuff, but I am not sure I like paying to store it, maybe I just need a bigger house to put my stuff in?

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