How to survive a midlife crisis on a budget

I’m closing in on 47 years of age and to date I have not had the midlife crisis I’m entitled to. I think that may have just changed.

My midlife crisis was brought about by a transportation dilemma. My oldest daughter turned 16 this year and we had not adequately saved to buy her a car. That means she is driving my vehicle a lot these days. When she has my vehicle and my wife is out with her’s, I am left stranded at home. We live in a community that is pretty much self-contained in the foothills of South Mountain in Phoenix. Since I work from home most of the time, I don’t need a car on a daily basis. However, when I need to run an errand or meet up with the guys at church or just get out of the house for a while, sometimes I need a set of wheels.

1979 Honda CT 90 trail bike — The cure for my midlife crisis: A 1979 Honda CT90 trail bike.

For the last year or so, I have been watching Craigslist for an opportunity to buy a scooter at a good price. It wasn’t until recently, that I stumbled upon an ad for a Honda CT 90. The 90 in the bike’s model means it is a 90 cc engine. Not much power by modern street bike standards, but it is plenty to get me from my home to the points I tend to travel. I’ve done some research on the bike and discovered that they stopped making them in 1979 – the model year I bought. Nevertheless, there is no lack of popularity with the bikes.

It turns out there are cliques of people who buy and collect and ride these bikes just like there are for Harley Davidson motorcycles. People buy these post the bikes for all sorts of reasons, such as nostalgia, convenience, economics and so forth. For me, the appeal is budget. The truth is I’ve never desired to ride or own a Harley Davidson. But once I discovered the CT90 and did a little research, I was hooked.

Thanks to Craigslist, I was able to find one of these trail bikes of the 1979 vintage for only $1,600. Here’s the beauty: it has only 1,400 miles on it and is in near mint condition. It’s almost as if somebody locked it away in a time capsule and preserved it for me to have today. With no clutch and only four speeds, it’s very easy to ride and gets about 80 miles per gallon of gas. The perfect cure for my midlife crisis.

How I got a new car motor for the price of an oil change

Recently I took my wife’s Jeep Wrangler into the shop for a routine oil change. It was a couple thousand miles overdue and much as I despise the practice, I knew it had to be done. The engine had over 225,000 miles on it and we’ve been starting to come to grips with the fact that we should start putting a contingency plan in place for the day when the inevitable happens.

2001 Jeep Wrangler — My wife’s Jeep Sunshine

When I went to pick it up, everything seemed fine. I was in a hurry to pick up my daughter from school, so I jumped in his driver’s seat and took off down the road. A couple miles later it began to sputter and lose power. Beneath the sound of the air conditioner and stereo I had not heard that the car stopped running. Once I noticed it lost power, I shut everything off and realized that engine was no longer running. So I put the car in neutral and tried the ignition switch. No dice. It was not going to start.

I coasted onto the shoulder and face the reality that something major was wrong. Long story short, I had it towed back to the the shop where I placed the burden of proof on the shop manager to convince me they put oil in the engine. He couldn’t do it.

“Don’t worry,” he told me. “We will make it right.”

For me there was only one way he could make it right, so I asked him to elaborate. “We’re going to have to put a new engine it. At no cost to you.”

It took about a week, but they made it right. The shop found the identical engine from another Jeep with only 70,000 miles on it. For the price of an oil change, the Jeep that my wife fondly named Sunshine was transformed from a tired old hen to a lively spring chicken.

How to get the best deals of the year on Ebay

If you are a bargain shopper, your ship is about to come in. Four of the best bargain hunting days of the year on Ebay are just around the corner: December 24, 25, 31 and January 1.

Here’s why: Ebay is an auction site. There is only one thing that makes prices go up with an auction. People. If you are shopping on Ebay when hardly anyone else in the country is, you can pretty much have your way with prices. What are people doing on the aforementioned dates? Answer: Not shopping on Ebay.

My top tips to save big on Ebay this holiday season:

Set up an Ebay and Paypal account in advance. Many sellers only take payments by PayPal these days. Trust me, it’s super safe and convenient.
Know what you want to buy and what you are willing to pay. Don’t let your ego cost you money. If somebody happens to outbid you, don’t sweat it. Just move on to another seller or the next item on your list.
Narrow your sights on things that are easy and inexpensive to ship or mail. If you pay $1 dollar for an item you could buy locally for $10 and it costs you $20 for shipping, you haven’t really saved anything.
Place your max bid on the items you desire just minutes before the auction closes. If there are no other bidders, you won’t have to pay your max price, but it helps you automatically outbid other bargain hunters.

This concept only works if you are trying to win auctions that are closing on the dates I highlighted above. Don’t bid on items that will be closing on days after the dates listed above. Set your top price low and be okay with spending not a penny more, even if it means losing the item to someone else who read this post.

I discovered this tactic as a seller over 12 years ago when I inadvertently listed an item for auction that closed on a holiday. I didn’t get near the money that I was asking for the item but I learned a lesson that has paid me back greatly over the years. Few sellers put much thought into when the auction will close. Usually, they are just happen to get the item listed.

If you follow these tips and score big, please come back and leave a comment.

The best way to save on airfare you’ve never heard about

I can’t believe the travel geeks aren’t making a bigger to do about this. I stumbled on to the best travel deal I’ve seen in over a decade without even trying.

I needed to book a business trip to Charlotte next week. In the past I have paid around $700 or $800 to fly there. This time around my fare was only $243 for a round-trip ticket. The plus or minus one day fares were comparable to what I’m used to paying.

It didn’t occur to me until I printed my itinerary that I had booked a departing flight on September 11, with a return flight on September 13 – a Friday.

I’m not superstitious but apparently a lot of travelers are. Seems like these two travel dates are being avoided like the plague by many of my fellow Americans.

You want to save big on aifare in the future? Consider flying on September 11 or Friday the 13th.

A lesson on how to stand behind your work

Does a guarantee really mean anything in this day and age? Think about it: When something goes wrong with an item you buy at a retail store, who bears the burden of proof? The consumer.

What do you hear when something goes wrong with something you purchase? Prove to me you bought it here when you say you did. Prove to me you didn’t break it through misuse.

With services, it can be even more tricky, unless you have it all in writing. And then you have the burden of keeping the paperwork filed someplace where you can retrieve it.

Recently I found someone who has put an end to all that nonsense. We’re in the market to have our exterior block wall covered with a stucco. I’m a bit of a bargain shopper so I called Dwight after seeing his handwritten sign on a neighborhood street corner.

As I worked my way through a litany questions in the backyard, I got around to asking if his work comes with a warranty.

“Yes!” was his response. “As long as I’m alive my work is warrantied. So for about another 25 to 30 years or so. After that, you’re on your own.”

I can’t ask for much more than that now can I?

Read this before you spend another dime on road hazard insurance

I wonder how many people are paying for road hazard insurance unnecessarily. I used to pay the annual fee to a big-name motor club for the promise to help me or my wife out if we had a flat tire, dead battery or needed a tow.

My decision to discontinue the coverage was easy the first time I called for help after being told that it would be over an hour before someone would come to change my flat tire on I-25 in Denver. Ordinarily I would change the tire myself, which is what I ended up doing.

Check with your current auto insurance company before paying someone else for roadside assistance protection.

I enrolled in the plan with my wife in mind, but they covered both of us for the same price so I thought I would try it out. On the day I called for help, my motivation was driven by the fact that my blowout occurred in rush hour traffic in the midst of one of Denver’s famous summer afternoon monsoon gully washers. We discontinued the coverage the next time they sent me a payment due notice.

It wasn’t until recently that I realized I had been wasting my money with the policy anyway. It turns out the full-coverage policy we’ve had with State Farm all these years comes with roadside assistance. I found out about it only recently while scanning my semi-annual premium notice into the computer. I looked into it a little deeper and found that it’s basically the same service I had been paying about $100 a year for once upon a time.

If we ever get locked out of our car, or have a dead battery, or need a tow, we’re covered. You have to call a special toll-free number to take advantage of it but no biggy; we just keyed the number into our cell phones.

Takeaway: Check with your current auto insurance provider to see if they offer roadside assistance. If so, don’t even think about paying another “motor club” for the same service.

Have you heard about the free travel services on Craigslist?

We’re on a tight budget these days but determined to do something fun out of town with the kiddos for Spring Break. Since we’re new to Phoenix and only a six hour drive from the LA/Hollywood area, my wife and I decided we could work a thrifty road trip into the budget.

Beautiful pic of Santa Monica pier by Dan Adamato — Beautiful pic of Santa Monica pier by Dana Damato (www.danadamato.com).

So we put some dates on the calendar and began to plan. The trouble with searching the web for things to do is that most of the search results include options that cost money. I knew if I could talk to some locals I could find some cheap or free ways to entertain our tween-aged daughters.

Since we don’t know anyone who lives in LA, I posted this plea for help in the “Frugal” message board on Craigslist/LA:

Looking for help from locals. We’re hoping to find a studio tour or filming of some sort to experience that is free or cheap. Any tips?

The crowd came through in a big way. Here are the responses I received in just the first 48 hours:

Craigslist has an event calendar for every city, click on a day in calendar at left side. http://losangeles.craigslist.org/
Google free tv tickets Los Angeles. We saw the Jimmy Kimmel show and Jeopardy. The Science Museum in Exposition Park is free. Natural History Museum is cheap. Ride the Blue Line to Long Beach. Take the Red Line to Union Station, walk to Olvera Street and Chinatown. Red Line also to Hollywood Blvd. Gold Line to Pasadena.
Call the Burbank studios to get tickets to Leno.
Universal has a theme park tour, but I think it costs.
Google free tv tickets Los Angeles. We saw the Jimmy Kimmel show and Jeopardy.
The Science Museum in Exposition Park is free.
Natural History Museum is cheap.
Universal city walk – it’s a few miles north of downtown LA (on the subway too) its free to walk around the stores and browse. the biggest cost is parking. but its about $80 a person to enter Universal City theme park next to it.
Drive to Santa Monica beach. You have to see the ocean plus the Santa Monica pier is a boardwalk classic the main cost is finding parking at the end of the 10 freeway.
Walk around Hollywood & Vine. See the stars in the sidewalk with Grummans theater handprints, and Kodak theater walk into souvenir stores see all the hucksters on the sidewalks, some impersonating stars.
Drive up to Griffith Observatory. That’s where they film lots of movies you’ll have a good view of downtown L.A. and the Hollywood sign nice science museum there too; parts are free.

Thanks, Craigslisters. This oughtta keep us busy!

Check out the incredible deal I found at Ross

I know if I didn’t show you the receipt you would never believe the incredible deal I found at Ross today. (Hint: it was almost 5 oz.)

What Powerball can teach us about annuities

by @PaulFiarkoski

Dream with me for a minute. Imagine that you woke up this morning and realized that the quick pick numbers on the Powerball ticket you bought at the convenient store the other day matched all six balls in last night’s drawing.

Lump sum or annuity?
Among the many important decisions you’ll have to make is weather you want a lump sum or series of payments over twenty years. If you were to choose the series of payments, you’re opting for what we call in the financial planning world an annuity.

Now you know what an annuity is in it’s simplest form. Unfortunately, the insurance industry has added so many bells and whistles to annuity products that they’re far from simple.

When I used to teach my financial consultant trainees about annuities, I always found it helped them understand the concept better if we put them into categories. Most annuity products can be categorized as either a fixed annuity or variable annuity and again as immediate or deferred.

Fixed or variable
A fixed annuity means that it accrues interest at a minimum guaranteed rate. The interest paid is generated by underlying investments in bonds or other securities that pay interest and the eventual return of principal. Since annuities are also insurance products, fixed annuities are typically guaranteed to pay a minimum rate plus additional earnings (or dividends) on top of the guaranteed amount.

On the other hand, a variable annuity offers no guaranteed rate. Instead, the return generated by a variable annuity depends on the performance of underlying investments – usually publicly traded stocks and other non-interest bearing securities. Variable annuities can even lose principal in the event of a drop in the stock market.

Immediate or deferred
Most annuities can also be classified as either immediate or deferred, a reference to when the payments (to you) begin. As the name implies, an immediate annuity will begin payments right away. That could be in a month, a quarter or even a year from the contract date, depending on when you request your first payment. Deferred annuities often don’t begin to pay out for several years. During that time, you can typically increase the size of the annuity principal by contributing more premiums to it.

To summarize, you could have a fixed annuity that’s immediate or deferred. Likewise, a variable annuity can be either immediate or deferred.

The connection to Powerball
Okay, so how does this lesson about annuities tie in with Powerball? Remember, if you ever win the Powerball lottery one of the most important decisions you’ll have to make is whether you want to receive your winnings as a lump sum or annuity – a series of payments.

You don’t need me to tell you that your chances of getting hit by lightning in this life are better than matching all six Powerball numbers. However, anyone can purchase an annuity contract. If you have a sizable lump sum from insurance proceeds, the sale of property or a business or what have you, you can convert that money into a series of payments with an immediate annuity. In many cases you can even roll all, or a portion of, your retirement account into an annuity. (Be sure to educate yourself on potential tax consequences if you consider this move.)

Suppose you don’t have a large sum of money. You can purchase a deferred annuity with a smaller sum of money and add to it over the years to build up your own annuity “jackpot.”

The impact of political party on personal tax rates

by @PaulFiarkoski

The Washington Post headline for January 1, 2012 read “Senate overwhelmingly passes ‘fiscal cliff’ deal.” This after President Obama cut short his Christmas vacation with the family in Hawaii to fly back to Washington negotiate a deal with Speaker Boehner.

Tax time image 1040 — Image credit: Fox2now.com – St. Louis, MO

With all the talk recently about the fiscal cliff and how President Obama’s plan would surely send the U.S. into a double-dip recession (the first dip having occurred 2008-09), I got to wondering about how my own tax situation had been impacted by the decisions of Washington in recent years.

It’s hard to know what the truth is with all the sound bites we hear in the news, so I did what made the most sense to me and looked back at the tax returns I have filed jointly with my wife for the past several years.

Our effective tax rates for 2004 through 2011

Year     Rate       Pres         Senate control
2004   6.68%    Bush       Republicans
2005   5.43%    Bush       Republicans
2006   9.37%    Bush       Republicans
2007   8.02%    Bush       Republicans
2008   6.46%    Bush       Democrats
2009   6.46%   Obama       Democrats
2010   7.46%   Obama       Democrats
2011   8.45%   Obama       Democrats

I was a little surprised by what I found. Our highest effective tax rate (9.37%) was in 2006. I did a little more digging found that the Republican Party not only occupied the Whitehouse (George W. Bush) but also controlled the Senate at that time.

During this time period our gross income increased by 16%. Neither my wife nor I changed employers or moved. Our dependent (children) count remained constant too.

The takeaway for me is that Republicans aren’t as true to their claims of being the tax reduction party as they would like the American public to believe. During the Bush presidency, our effective tax rate rose nearly 3% from 2004 to 2006 before it began to drop in 2008 in response to all of the stimuli designed to head off a recession. (Note: we went into a recession anyway.)

During the Obama years, our tax rate increased from Bush’s last year in office; however, as of our 2011 tax return we’re still not back to the peak rate of 9.37% tax rate we were paying in 2006 under Bush and a Republican controlled Senate.

Don’t take my word for it. Look up your own tax returns and see what the impact has been for you.