CARS

Beginning with new car purchases on July 1, 2009 a new stimulus program began. It is designed to encourage people to purchase a new, more fuel-efficient car. While the rule will not be final until July 24th, consumers may want to consider how, or if, they will benefit from the program. The program ceases on November 1, 2009 or when the program’s money is depleted.

What is it? If you trade-in a less fuel efficient car, as defined by the government, and purchase or lease a qualified, more efficient new car, the program provides a voucher, ranging from $3,500 to $4,500, to use toward the purchase or lease.

Fact Bullets:

• The purchase just occur between July 1, 2009 and November 1, 2009. If you lease, the lease must be for a minimum of five years.


• Your “trade-in” car must be less than 25 years old at the trade-in date.


• The car must be in drivable condition, being continuously owned, registered, and insured by you for a full year prior to the time of new car purchase.


• Generally, the “trade-in” vehicle must get less than 18 miles to the gallon. This is “combined” mileage. For more information on this see https://webmail.um.umsystem.edu/exchweb/bin/redir.asp?URL=http://www.cars.gov .


• The new vehicle must have a purchase price of less than $45,000 and have a combined fuel economy of, at least, 22 miles per gallon. If the new vehicle is only 2 MPG more efficient than your clunker, you are eligible for a $3,500 voucher, while the new vehicle must be 10 MGP more efficient for the full $4,500.


• Vouchers are paid directly to the dealer and, essentially, replace the trade-in value of your car. The dealer must destroy your car, selling it for scrap. (This part of the ruling has car collectors crying.)


• Considering the fact that the car must be destroyed and that the greatest voucher is for $4,500, it is clear that if your car is worth more than the voucher, you would be better off not participating in the program. On the other hand, if you have a 1999 Ford Eddie Bauer Explorer with a V-8 engine, you could benefit. This car has a $2,400 trade-in value and, when I looked up that price on Edmunds.com, there was an adjacent advertisement for the Government’s “Cash for Clunkers” program proudly displayed.

You should make your car buying decision on many more factors than a new government program. Yet, when one exists, that can potentially help you in your trek toward financial success, you should consider the opportunity. Frankly, that 1999 For Explorer is my youngest son’s “hand-me-down” car and, if I were in the mood to spoil him, the program clearly provides an incentive. On the other hand, I’m a big fan of purchasing slightly used cars, as opposed to a new car and I would want to add that to my decision matrix.

For more information see the National Highway Traffic Safety Administration’s website: Car Allowance Rebate System (CARS) .

Personal Note: I will be on a 12 day trek with my youngest son at Philmont Scout ranch, over the next two Fridays. I plan to write a couple of “Tips” to be sent to you on “delayed delivery”, however, if my email box gets to cluttered in my absence, the delayed mailing ceases to work. So, if you don’t hear from me, think about how much fun I’ll be having carrying a 50 pound backpack up and down the New Mexican mountains with bad knees and arthritic feet. Actually, I wouldn’t miss the chance to do this with my boy for all the financial success in the world.

- Robert O. Weagley, Ph.D., CFP(r)
Chair, Personal Financial Planning
University of Missouri
Columbia, MO 65211

Fathers Know Best

This weekend we celebrate the birth of our great nation. Given that, I thought a good financial tip would be for us to read a few quotes, focused on money, from our founding fathers. While these are more than 200 years old, some will cause you to pause and ponder about the implications their opinions have to today’s world. While many are “out-of-date”, I am resisting the temptation to provide my own interpretation, for we are celebrating Independence Day. You are free to interpret them as you wish to aid you in helping our country maintain her financial success. - rw

"I believe that banking institutions are more dangerous to our liberties than standing armies. Already they have raised up a money aristocracy that has set the government at defiance." --Thomas Jefferson, at the Constitutional Convention (1787)

"All the perplexities, confusion and distress in America arise not from defects in the Constitution or Confederation, not from a want of honor or virtue so much as from downright ignorance of the nature of coin, credit and circulation." --John Adams, at the Constitutional Convention (1787)

"The Central Bank is an institution of the most deadly hostility existing against the principles and form of our Constitution. I am an enemy to all banks, discounting bills or notes for anything but coin. If the American people allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all their property until their children will wake up homeless on the continent their fathers conquered." --Thomas Jefferson

"We are in danger of being overwhelmed with irredeemable paper, mere paper, representing not gold nor silver; no sir, representing nothing but broken promises, bad faith, bankrupt corporations, cheated creditors and a ruined people." --Daniel Webster

“A penny saved is a penny earned.” – Benjamin Franklin

“Savings is a virtue, especially in ancestors.” – Benjamin Franklin

“The use of money is all the advantage there is in having it.” – Benjamin Franklin

“A house is not a home unless it contains food and fire for the mind as well as the body.” – Benjamin Franklin

“Beware of little expenses. A small leak will sink a great ship.” – Benjamin Franklin

“Buy what thou has no need of and thou shall sell thy necessities.” – Benjamin Franklin

“Gain may be temporary and uncertain; but ever while you live, expense is constant and certain: and it is easier to build two chimneys than to keep one in fuel.” – Benjamin Franklin

"A disordered currency is one of the greatest political evils. It undermines the virtues necessary for the support of the social system, and encourages propensities destructive to its happiness, wars against industry, frugality and economy, and it fosters evil spirits of extravagance and speculation. Of all the contrivances for cheating the laboring classes of mankind, none has been more effectual than that which deludes them with paper money." --Daniel Webster, Congressional Record March 4, 1846

"We have no government armed with power capable of contending with human passions unbridled by morality and religion. Avarice, ambition, revenge, or gallantry, would break the strongest cords of our Constitution as a whale goes through a net. Our Constitution was made only for a moral and religious people. It is wholly inadequate to the government of any other." John Adams; The Works of John Adams, 1851

"If ye love wealth greater than liberty, the tranquility of servitude greater than the animating contest for freedom, go home from us in peace. We seek not your counsel, nor your arms. Crouch down and lick the hand that feeds you; and may posterity forget that ye were our countrymen." - Samuel Adams

"I will not go into an argument to prove that Congress has no power to appropriate this money as an act of charity. Every member on this floor knows it. We have the right, as individuals, to give away as much of our own money as we please in charity; but as members of Congress we have no right to appropriate a dollar of the public money." -- Colonel David Crockett

- Robert O. Weagley, Ph.D., CFP(r)
Chair, Personal Financial Planning
University of Missouri
Columbia, MO 65211