Is Jeep really offering help at the gas pump?

Saw a commercial today for a Jeep SUV that they are evidently trying to push any way that they can. With gas prices these days, I’ve been reading that SUVs are not selling (at over $4 per gallon and a tank that can hold 21 gallons, who can afford it with the 4X4 Grand Cherokee only getting about 18 mpg city and 23 mpg highway for the 3.0L automatic.. the V6 gets about 15 city and 19 highway). So it totally makes sense that an advertising incentive involving gas savings may appeal to folks. However, the commercial for their Let’s Refuel America program says that for 3 years they will give you gas at $2.99 per gallon up to 12,000 miles per year. So at 16 mpg, that makes about 750 gallons that you can purchase at $2.99 each for a total purchase of $2242 and you can fill up about 35 times. If you were purchasing gas at today’s prices of let’s say $4.07 per gallon, you would have been spending $3052. That’s a difference of $810, which means that your bonus for buying a Jeep Grand Cherokee is $810 for year one. I think it is important to note that in order to be able to do the program, you have to have a Mastercard or Visa credit card (no debit cards). Your gas purchases get billed to that credit card. At $2.99 per gallon, it means that your credit card will get charged about $62.79 to fill up the tank when you are on empty. And at 16 mpg for city driving, for those of us who commute back and forth to work, the number of times you’ll be heading back to the pump will depend on your total distance, traffic, etc. For me, it is about 20 miles each way, or 200 miles each week just for going back and forth to work. That means 12.5 gallons used per week. If I only used the Jeep for commuting, I would have to refill almost every 9 commuting days. If my calculations are correct, at 750 gallons and 12.5 gallons per week, I’d be able to get the $2.99 gas for about 60 weeks (and of course, there are only 52 weeks in a year). Unfortunately, any unused “time” does not roll over into the next year, so you will have to use it all up in order to get all of the savings due you.

I tried to find out how many miles per year that the average American drives, and I’m sure a more updated statistic exists than the 11,900 that I found for the year 2000, but I haven’t found it. I have read that the rising gas prices have caused Americans to drive 11 billion less miles in March 2008 than they did in March 2007. You can read it at

http://tomwarnereport.com/twr/twr_v5n21.html

How many miles do you drive per year?

It appears that IF you pay off your credit card each month and don’t rack up finance charges, and IF you drive your car around 12,000 miles per year, then the $810 may seem like a good deal for you. I personally like the thought of getting closer to 30 mpg and paying less money on the car in the process. Sure, I won’t be able to climb up into my driver’s seat or sit up high and look down at the traffic, but I will be able to go further and spend less money.

**Note: One benefit of only getting about 16 mpg is that with the cost of gas these days, it has curbed driving among Americans, which according to the website I referenced above, has caused the greenhouse gas emissions to be greatly reduced. Hooray for Jeep!

A million people in foreclosure... along with Ed McMahon and Evander Holyfield

They released an astonishing figure a few days ago. There were apparently about 1 million Americans who were in some stage of foreclosure in the month of May 2008. As mind-boggling as that statistic is, what has seemed to catch more of the media’s attention are the names of two of those borrowers: Ed McMahon (Johnny Carson’s previous sidekick on The Tonight Show) and Evander Holyfield (former heavyweight boxing champion). So now that we see that it can indeed happen to anyone, let’s take a look at what happened.

According to Jet magazine (June 23, 2008), his 54,000 sq ft estate/home in suburban Atlanta with 17 bathrooms, three kitchens and a bowling alley is worth $10 million. Now I don’t pretend to know what year he purchased the house, how much money he put down on the purchase, or how much he still owed on the house, but what I do see from the article is that in his 1997 fight with Tyson, he supposedly made $34 million. This is in addition to the other millions that he made during his more than 20 years of boxing. Am I looking at this too simplisticly? I mean, you buy a $10 million home, and you make $34 million income in a fight. Okay, okay, you pay your agent, pay your trainers, pay your accountant, pay your staff, you know… your cost of doing business. But surely he had money left over after the bills were paid, didn’t he? Out of $34 million, didn’t he have at least $15 million left over from that fight? More importantly, didn’t anyone tell him that he needed to pay himself first? If someone had told him to do that, he’d likely have some money to fend off the current foreclosure.

That brings us to Ed McMahon. He was recently on CNN’s Larry King Live trying to answer questions on what has happened. A portion of the transcript can be found here:
http://www.cnn.com/2008/SHOWBIZ/TV/06/06/lkl.mcmahon/index.html
Mr. King basically asked them how they got $644,000 in arrears if they are millionaires. Mr. McMahon talked about the mistakes that he made: “taking care” of his friends and family, ”spending more than you make”, and not being prepared financially for a medical setback.

Lessons from these two celebrities? There are many contained in these two examples that all of us can use to help us to avoid some of their current woes. For those who may be in danger of slipping into a financial crisis, do what neither celebrity did… ask for and get help at the first sign of trouble.

For this and other posts, as well as info on the book series 26 Things to Teach Your Parents, go to www.26thingstoteach.com

A "miseducated" movie star...

I read today that actor Wesley Snipes recieved a 3-year jail sentence in relation to his legal tax troubles. I’m not going to argue whether or not I think he deserved to get that sentence or not. That was for the judge to decide. I thought that the most interesting part of the story was contained in the statement that Mr. Snipes read where he called himself “well-intentioned, but miseducated” in matters of finance.

I believe Mr. Snipes to be in the majority on this one. How many of us have made errors in judgement as it relates to financial matters?

……… Sorry for the delay in continuing my thoughts, I was too busy raising my hand, so I couldn’t type…

Where Mr. Snipes and I differ, however, is in the fact that he presumably has access to advisors and counsel that little-ole me doesn’t. For someone who earned millions of dollars over the past few years, to have not sought to use a fraction of that money to seek the wise counsel of some sort of financial advisor or accountant, is just silly to me. Granted, I am not wise about the stress, strain, hardships or responsibility that one faces when earning that level of money. But what I do know is that the instant I am making enough money that my taxes need no longer be handled by TurboTax’s software program because I am needing necessary creative deductions to help protect my wealth, is the instant that I will be finding a trustworthy tax accountant. What’s my alternative? Plead ignorance to the financial ways of the world, continue to live life with my head in the sand, get caught, and get sent to jail for 3 years where I can’t practice the livelihood that provided me the money in the first place? That’s one way to not give any money to Uncle Sam… don’t earn any to have to pay taxes on!

For these and other posts, as well as the books in the 26 Things to teach Your Parents series, visit http://www.26thingstoteach.com/

Thinking of tomorrow, Today...

Yet another article in the paper about the misuse of one of the government credit card programs by an employee. I was getting ready to type in that I don’t understand why it is that an employee would just abuse the government credit card by purchasing frivolous things that clearly don’t have anything to do with their job or responsibility. But is it really that different than one’s personal credit card? You whip out your credit card and make impulsive purchases that you clearly don’t really need, and can’t afford to pay for at the end of the billing month. Most people don’t think about the financial repercussions of their purchase until their bill comes in the mail. Even then, they don’t really have to think about it all that hard, because they have the option of making the minimum payment, which is much more affordable. They can just make that payment, file the bill away as being “paid”, charge up more items, and then start the whole cycle over again when the bill comes in the mail. It’s a great game of avoidance mixed with hide and seek. I don’t think those government employees thought that they’d get caught. I think they thought that their credit card bill was one of thousands, and they figured that they’d worry about it when the bill came at the end of the month.

Too bad credit card companies don’t send you daily statements by text-message or email that would remind you of where you stand today. If more people thought of their tomorrows… today… how different would their worlds be?

For these and other blog posts, as well as info on the 26 Things to Teach Your Parents book series, visit www.26thingstoteach.com

You're going to do what?

So, I have a friend who told me the other day that she has decided that she is going to do whatever it takes to move into a million dollar home within the next year and a half. She lives in the DC area, and so that’s not hard to have happen. So far, so good… if that’s her goal and wish, then fine. What I wasn’t prepared for though was her plan for reaching that goal. See, she bought a house a few years ago and rehabbed it.. a magnificent rehab I must say. But now that she has decided that she needs a bigger house with a bigger yard, she is planning on dumping that house. I know that this story is not a unique one, and as a real estate agent, I certainly hear this type of story all the time. The problem for me is HOW she’s going to dump that house. You see, in this market, there are tons of sellers who are dumping their houses by slashing the sales prices (largely because they can because of all of the equity that they can afford to walk away from in order to have the sale go through). This presents a problem for people like my friend, because those types of sellers who live near her house have now caused the appraised value of her house to decrease. And that means that she is now in a situation where she owes more on her house than her house is worth… she is “upside down”. But she’s not going to let that stand in her way of getting her dream house. Her solution? To short-sale the house in order to be released from that mortgage obligation, and then be free (theoretically) to buy the million-dollar home that she really wants. She asked my opinion, and I told her that I couldn’t believe that she was going to risk possibly damaging her credit with the short-sale in order to buy a house that was even more expensive. She said that she spoke to a representative at her current mortgage company, who assured her that since they have so many short-sales to deal with already, they were not going to go after her for the difference, and that she’d “be fine”.

So, for those who don’t really know what short-sales are, here ya go: Say you owe $500,000 on your house, but the house is now only worth $450,000, and a buyer offers you $440,000 for your house. Take $500,000 and subtract $440,000, and that difference of $60,000 is what the mortgage company is left holding, unless they can get the money from you.

So, nevermind my friend and her plans. What I want to know is, if there are mortgage companies out there telling people that they’re not going to go after you for that $60,000, and therefore you won’t have to pay it… then who is going to pay? Will it be future potential borrowers who will have to jump through hoops and pay in increased fees and rates? Or will it also be me, the day I decide to get a new mortgage?

For these and other blog posts, as well as info on the 26 Things to Teach Your Parents book series, visit www.26thingstoteach.com

3rd graders plot attack against teacher?

At first I thought it was an April Fool’s joke. How could it be that 3rd graders in Georgia actually plotted to attack their elementary school teacher? When I clicked on the link for the story, the first thing that I noticed was the photo of the bag of items that they were planning on using. Duct tape, handcuffs, a broken steak knife, a paperweight, and other items. And listen to this: apparently they were organized enough to have assigned tasks to one another to help facilitate their goal. One of them was to cover the windows (so no one could witness it?), and another had cleanup detail afterwards. How were the industrious 3rd graders (I can’t believe I just typed that in…) going to do whatever it was that they were thinking of doing? By apparently knocking her unconscious with the paperweight, handcuffing her, taping her up and then stabbing her with the steak knife. What did the teacher do to deserve her intended fate? She “scolded one of them for standing on a chair”. I would love to know what is going on in the world of that 9 year old girl who brought the steak knife to school, and the 10 year old girl who brought in the paperweight. You see, even 3rd graders are watching, listening and comprehending much more than what adults give them credit for. Do we really think they can’t handle financial education?

When is enough ENOUGH?

Another trusted official seemingly walked down an unsavory path and is now paying the price today for their actions. Today, the HUD Secretary Jackson resigned because of his alleged participation in a scandal that involved money. I don’t pretend to know all of the details of the situation, or what is true and what is not. This story is not unlike many of the other stories that have surfaced in recent years with the same theme. It’s a story of people not being satisfied with what they have, and instead of working within the constraints of the law and moral ethics, make the decision to bypass those things in an attempt to gain or profit (at times, at someone else’s expense). A list containing the names of those people is too long to write down here. What I’d be more interested in learning about is where that whole mentality comes from, and why some folks think that it’s okay to circumvent the laws that the rest of us rely on to guide our behavior?

What message are we sending to our young people by participating in such activities? It’s the same thing as trying to tell your child not to smoke as you yourself are taking a puff of a cigarette. Is it really effective to in a sense tell your child “do as I say, not as I do”? According to Mr. Jackson’s biography on the HUD website, he and his wife have two grown daughters. It is my hope that the next generation of potential leaders that are the offspring of these fallen leaders will not do as they have seen done.

It's Just a Game, Right?

Okay, so I saw an advertisement on television for a Monopoly game by Parker Brothers (an imprint of Hasbro). Let me just say from the start that it’s not a game that will I ever play, nor would I want my son to play it. Let me tell you why.

It’s the Electronic Banking edition apparently. Feel free to go to their website at and see it for http://www.hasbro.com/games/kid-games/monopoly/default.cfm?page=Products/Detail&product_id=19783 yourself. You can click on the game and get a virtual sample of what it will be like to play the game. Now I absolutely love Monopoly, and always have since I first played as a child. It is a game that I have played with my son many times. I would just never buy the electronic banking version. Apparently, each player starts the game with a debit card that is loaded with $15 million! Yes, I wrote 15 million, there is no error. There are so many things that I think are wrong with the messages that the game is putting out, that I don’t know if I can list them all here. How realistic is it to start with $15 million dollars? And who in their right mind would want it to be loaded and spend freely on a debit card? Is that all of the money that you have, or do you have a savings or investment account somewhere? OK, let me move on from the issue of the money… the tokens that you select from at the start. Your choices are a plasma tv, a box of Altoids, a space shuttle, a Segway, a purse with a dog in it (would my little girl be getting encouraged to be Paris Hilton for the duration of the game?), and thank goodness for those of us that were happy being the shoe or thimble in the old version… there is a baseball cap in this version.

Moving right along with the actual game: I can take my plasma tv, roll the dice and move down the lane… landing on Gateway Arch, St. Louis which will cost me $1 million dollars should I choose to buy it. OK, no problem, because I’ve got 14 more where that came from, and I’m feeling lucky. My opponent moves, and then it’s my turn again. A roll of the dice lands me on Community Chest where I am told that I am the runner-up on a reality tv show (and have therefore won $100,000). On my next turn, I land on Disney World Orlando, and have to pay rent of $200,000. 200K for what? Would that be for my resort timeshare there, and if so, how long does that get me? As the adult, I would assume it’s the rent for the entire place, but I’m not sure my child would know. A roll of the dice brings me to a Chance space, where I am ordered to donate $150,000 for disaster relief. Not bad I suppose since I have $14 million left… I suppose the message of being philanthropic is not lost here. I have a problem with cards that say “Win big at the casinos in Atlantic city… win $1 M”. I have no idea how much it will cost to get out of jail, can only image how much money could sit in “free parking” waiting to be won, and hate to guess how much those blue properties at the end of the board will cost that were always expensive (you know, Park Place and Boardwalk). What I do know is that each time the player passes “go”, they collect a whopping $2 million for successfully dodging all of the financial whoppers that are on the player’s path.

The game is said to be for ages 8 and up. Hmmm. It’s just a game though, right?