Control your speaking volume at the coffee shop
While in a local coffee shop waiting to meet a friend recently, a group of people nearby was engaged in a conversation. Now I don’t make it a habit to eavesdrop, but they were so loud you couldn’t help overhearing them. And they clearly weren’t overly concerned that virtually everyone inside was within earshot.
I was especially interested because their conversation was financial in nature. Frankly, it took all my willpower to sit still and keep my mouth shut.
Their conversation reminded me that too many people are simply not paying attention to financial details the way I believe they should. In other words, when it comes to financial matters, it’s important that you pay attention to more than just the large print.
One animated gentleman complained that taxes must have been increased in 2010 because his refund was going to be much smaller this year than last year. I obviously didn’t know his personal tax information, but my guess is that he totally forgot what happened to payroll withholdings earlier in 2010.
They were adjusted lower in an attempt to get dollars into consumers’ hands sooner, with the hopes that additional dollars in the pocketbook would help jumpstart the economy.
Other than that and the Roth IRA conversion option, the income tax code had no real significant changes last year. I have a feeling a lot of people will be surprised when their tax refund this year is smaller than in years past. More than likely, the reason is they took more money home every pay period.
Automobile leasing was the other financial topic discussed. I was alarmed at the lack of understanding about how it works. Everyone wants our auto industry to thrive, but I think you need to understand all terms and responsibilities, whether you buy or lease.
Because leasing is generally more complex than buying and because it’s estimated that nearly 20 percent of new autos driven off the lot this year will be leases, it’s especially important to understand leasing terms.
The good news is that financing is beginning to loosen up. But that doesn’t mean you should run out and get it just because you can.
In the coffee shop, the patrons were describing leases as purchases that ended on a predetermined date. In reality, leasing is simply renting a car for a specified period of time, with certain limitations.
For example, a vehicle may be advertised as $199 for 36 months. But as anyone who has ever leased a car knows, there are penalties for things like damage and excess mileage.
In the past, many lease prices were based on 12,000 miles per year. These days, many of them are based on 10,500 miles per year.
So, what does it matter? Well, typically, there’s a 15 cents per mile charge for excess mileage.
If you drove 12,000 miles a year for 3 years, there would be 4,500 excess miles. At 15 cents per mile, you’d be charged an extra $675 at the end of the lease. That’s why understanding all the terms and conditions is so critical.
So in the future, control your speaking volume at the coffee shop or any public place. And make a commitment to be smart about your finances. That means carefully scrutinize all the fine print and details.
Fax your questions to Ken Morris at 248-952-1848 or e-mail to ken [dot] morris [at] investfinancial [dot] com. Ken is a registered representative of INVEST Financial, member FINRA, SIPC and is Vice-President of the Society for Lifetime Planning in Troy.
- Return to Paging Mode
By on 08/03/2011