Wonder Why You’re Broke? Look in the Driveway

Rockhead126's_1951_Mercury_CustomIf you’re struggling to make ends meet, your problem may not be too many lattes or dinners out. It may be sitting in your driveway.

Your monthly car payment is the tip of the iceberg.

Counting gas, registration and taxes, depreciation, tires, insurance and finance charges, Americans spend $8,700 a year on average — $725 a month — for the privilege of owning a typical midsize sedan, according to AAA, and more than $10,600 a year for an SUV. If you’re struggling with bad credit, the increased cost of financing and insurance will push those numbers even higher.

In my latest for NerdWallet, how to determine if you have too much car in your driveway.

Tuesday’s need-to-know money news

Today’s top story: The pros and cons of e-gift cards. Also in the news: Why you’re likely to pay more for auto insurance in 2016, why couples should tackle estate planning now, and a guide to holiday tipping.

Are E-Gift Cards Safe? Here’s What to Know
Making holiday shopping easier.

Here’s Why Your Auto Insurance Will Likely Cost More Next Year
Get ready for higher rates.

5 Ways Couples Can Tackle Estate Planning Now
Don’t put it off.

How Big a Tip to Give for the Holidays
Who should get what.

Friday’s need-to-know money news

8.6.13.CheckupToday’s top story: It’s time for your midyear financial checkup! Also in the news: Credit card vows for newlyweds, how your credit score could affect your auto insurance rates, and the surprising affects of credit card debt.

A Guide to Your Mid-Year Financial Checkup
How’s your year going so far?

6 Credit Card Vows Every Newlywed Couple Should Make
Saying “I Do” to a budget.

Study: Credit scores impact auto insurance
A low score could mean higher premiums.

5 Weird Ways Credit Card Debt Can Hurt You
Where you’d least expect it.

Tuesday’s need-to-know money news

My first carHow to speed up your mortgage closing, saving more money with a maxed out 401(K), and preparing for your teenager’s time behind the wheel.

Four Steps to a Speedier Mortgage Closing
Speeding up the last, agonizing step before home ownership.
How Rising Interest Rates Affect Retirement
Rising interest rates could leave you altering your retirement plans.
Maxed Out on Your 401(K)? How to Save More
Maxing out your 401(K) doesn’t mean you should stop saving.
The Impact of Adding a Teenager to Your Auto Policy
Prepare to open your wallet when Junior’s ready to get behind the wheel.

How to Budget as a Live-In Couple
Creating a budget can make a stressful time much easier.

Friday’s need-to-know money news

House With Tree DamageThe inconvenient costs of convenience checks, the effects of the sequester on the unemployed, how to save money by purchasing an energy efficient home, how to save your financial sanity when your kids move back home and why hurricane season means it’s time to check your auto insurance coverage.

The True Costs of Credit Card Convenience Checks

The checks sent by your credit card company under the guise of convenience could lead to some very inconvenient fees.

Why the Unemployed Are Seeing Smaller Checks

The effects of sequestration mean 11% to 22% cuts for unemployment checks.

Bill Would Sweeten Loans for Energy-Efficient Homes

Purchasing an energy-efficient home could land you a larger mortgage and a lower interest rate under a Senate bill introduced with broad real estate industry support.

How to Set Money Ground Rules For A Boomerang Kid

With over 13% of parents having a grown child living at home, it’s important to set financial ground rules in order to keep the peace.

Hurricane season: Make sure your car is covered

Hurricanes damage hundreds of thousands of cars, but insurer rules prevent last-minute buying of coverage. Now is the time to review your policy.

 

Are you paying too much for car insurance?

Shopping for auto insurance is still a pain in the butt.

I’d hoped it would be better by now. I’d hoped that the Internet would make the whole process more transparent. But you still have to check several Web sites and pick up the phone to call a few agents to get a truly comprehensive picture of what various insurers are charging. Some of the big companies don’t participate with online comparison services (which is why you have to visit their sites and, often, talk to an agent to get a quote).

Why would you go through the hassle? Because the differences in premiums can be huge–not just hundreds of dollars a year, but thousands.

That’s because insurers are all different. They have different policies and ideas about what poses a risk and how much of that risk they want to take. If they don’t want teen drivers, for example, they will make it extremely painfully expensive to add one. Other insurers will just make it painfully expensive.

Insurers also adjust their pricing to add or shed customers. If they want to get bigger in a certain market, they’ll chop their prices to attract more drivers. If they decide they’ve gone overboard, they will jack their premiums above their competitors to slow new applications. If you’re a long-time customer who doesn’t know any better, you could find yourself paying a lot more for the same basic coverage than you’d pay with one of those competitors.

If you want some incentive to start getting quotes, check out CarInsurance.com’s Rate Comparison Chart and then read Des Toups’ accompanying post, “The most and least expensive cities for car insurance.” The average premiums cited conceal a lot of variation, Des noted.

For example, the average rate from six major insurance carriers for ZIP code 48101 in Dearborn, Mich., was $2,522 — but that included rates as low as $1,776 and as high as $4,374.

Des ran the numbers for a ZIP Code closer to me–90025, or West Los Angeles. There the average was $1,915, but the range was from $1,106 to $3,136.

Price isn’t the only thing to consider, of course. How fast and how well the company handles claims matters a lot, too. Your state insurance commissioner may have complaint data that will help you figure out which companies to avoid, like this one at California’s Department of Insurance. The number to pay attention to is the “justified complaint ratio” which divides legitimate complaints by the number of policies the insurer has in the state. Just as there are big difference in price, there are also big differences in complaints.

In any case, you shouldn’t assume you’re getting the best deal. Every year or two, check around to make sure.

20 best cars for teens

My good buddy Des Toups has a nice piece at CarInsurance.com about the best cars for teens. He started with the 65 cars that made the Insurance Institute for Highway Safety’s 2008 Top Safety Picks list, then whittled them down to those with likely price tags of $15,000 or less, average or better reliability, and gas mileage of 20 mpg or higher. He also has some good suggestions for how to keep somewhat of a lid on insurance costs–although make no mistake: you are going to feel it deep in the wallet when you insure a teen driver.

The #1 car? An Audi. For the rest of the list, click here.

Save money. Don’t multi-task.

The barista had to ask three times for her order before the woman finally responded. She’d been so busy nattering away to her friend in line that she didn’t notice she was now at the front.

And the fun wasn’t over. When it was time to pay, the woman pulled out her wallet and dug fruitlessly inside, opening the same compartments over and over, all the while keeping up the nonstop chatter.

As the seconds ticked passed and the line grew, what started out as vaguely annoying became absolutely absurd. The barista looked at me, the next person in line, and widened her eyes in exasperation.

I shrugged. I was just grateful I’d encountered this person in a coffee shop rather than on the road, where she probably thinks she can drive while talking on the phone just fine.

Obviously, she can’t. None of us can. Multi-tasking is a myth, and only works when both the things you’re trying to do are brain-dead simple–like folding laundry and watching TV. Anything more complicated, and you’re likely to do one or both things far worse than if you’d concentrated on a single task.

But multi-tasking isn’t just stupid. It can be expensive. Consider:

  • Talking on a cell phone while driving is as dangerous as driving drunk. You’re four times as likely to be in an accident.
  • Texting while driving raises your chances of an accident by 20 times.
  • Not only are you risking injury and death–and the injury and death of others–but you’re just begging for a nice juicy lawsuit. As Nolo Press puts it, “plaintiffs have argued (and some courts have agreed) that a driver was legally at fault for the accident (“negligent,” in legalese) because the driver used a cell phone immediately before or during the collision.”
  • If a plaintiff’s attorney can successfully argue that a phone call is distracting, think how much easier his or her case will be if you were texting–which any idiot knows you shouldn’t do in a car.
  • Even if everybody walks away without stunning medical bills, you can bet your life your auto insurance rates will skyrocket.

It’s not that hard to turn off the phone and put it away when you drive. You’ll drive better, and you could save yourself a fortune.