Seven tips for buying a used car



Each month, financial expert Shay Olivarria answers personal finance questions from readers. This month she addresses how to not break the bank in the holiday gift giving season

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As tax time rolls around, many people have started to talk about buying a car. With the economy being the way it is, many of those people are considering buying a used car. There are some good deals to be had when buying a used car, but there are also some horror stories about deals gone wrong. Here are seven tips to help you choose the right car and make the right deal on your next used car purchase.

See what’s available on Craigslist.org and AutoTrader.com
Everywhere you look people are offering cars for sale. From cars parked on the street to a plethora of websites that allow sellers to post their cars. A couple of great websites to search for a used car are Craigslist.org and AutoTrader.com. Both sites list used cars from private sellers and dealers. Both sites are searchable by price and type of car. As you’re looking at cars don’t forget to check:

Is the car currently registered? You want a car that is.
Does the car have a salvage title? If it does, it means that the car has been in some kind of accident. You want a car that does not have a salvage title.
How many miles does it have? The average is about 12,000 miles per year. Knowing how many miles the car has versus how many is should have will tell you a lot about the car.
Does the seller have maintenance records? A car is a machine. The better the car has been taken care of the less worry you’ll have about potential problems.
Does it have everything that you are looking for? Power windows/locks? An alarm? A CD player? Seat warmers? Drink holders?

Once you see a few cars that you like you’ll need to find out if the car is really worth what the seller wants to sell the car for. You are the one buying the car. You have a choice in what you want to buy. You have every right to get the most value for your dollar.

Check the Kbb.com value
To find out if the price the seller is asking for the car is reasonable, you’ll need to visit the Kelly Blue Book site at Kbb.com. Input the car’s year, make, model, miles, and body type to have the website estimate what the car’s value. If what the seller wants and what KBB says it’s worth are in the same range: hooray! If not, you’ll need to decide if you’re willing to try to haggle with the seller or if you want to move on to another car.

Print out everything
Once you find a car that you want to see, print all the paperwork relating to the car. That means you need to print out the original listing (people will ask for more once you are on site), the KBB information, and any other information that you have found relating to the car. Have everything in front of you before you call.

Start calling
Give the seller a ring. Make sure to ask any questions that you have before you make a plan to see the car. Also, listen to the person to whom you are speaking. Do they sound like someone you want to do business with? What does your gut tell you? You don’t want to put yourself in a situation where you might get involved in a bad deal or put yourself in physical danger. If anything about the person makes you uncomfortable, move on to the next car on your list.

Take a look-see
Show up on time and take a thorough look at the car. Definitely drive it on the street as well as the freeway. There is really no way to know how safe a car is without a mechanic taking a look at it, but there are some things to check for before you pay a mechanic. Check for:

How much tread is on the tires? Make sure there are no bald spots and definitely no metal pieces showing.
Is there an oil leak? Leave the car running and check the engine and on the ground under the engine. If you see drips of dark fluid or puddles of dark fluid then there may be a problem.
Are there any other leaks? Check for green fluid (coolant), red fluid (steering fluid), or any other strange fluids.
Does the car need an alignment? When you are driving, notice if the steering wheel is tugging in any direction. It shouldn’t be.
Does the starter work? When you start the car, is it difficult to turn the starter? It shouldn’t be.
How is the electrical system? Do the dashboard lights come on? The overhead light? The lights for the radio and A/C?
Are the lights functioning? Take a look at the headlights, turning signals, and brake lights. Make sure they all function appropriately.
Does everything else work? Turn on the radio, air, heat, and anything else you concerned about. Are they functioning correctly?

If you are okay with everything up to this point, it’s time to have a professional mechanic take a look at the car. This is where things can get rocky.

Get an AAA check-up
Having the car checked out by a professional mechanic should be non-negotiable. The worse thing that could happen is you end up buying a lemon because you didn’t want to spend the $90 to have a professional look at it. The American Automobile Club offers a great service for members looking for a used car. Any AAA-approved auto center will perform a once-over and provide you with a written report for only $90. Most mechanics have similar products. Ask at your favorite mechanic’s shop.

To get the car checked-out you’ll have to get the current owner’s approval. Some owners may become upset when they hear that you want to have a mechanic check it out. They will tell you that the car is sound, that there is no reason for a mechanic, that you don’t trust them. Of course you don’t trust them, you don’t even know them! If they won’t let you have it checked out, do not buy the car. Obviously, they know something about the car that they don’t want you to know.

If you are able to get a mechanic to look at the car and the report comes back clear, then you are on your way to making a deal.

Sign the paperwork
If everything is up to snuff, you’ll need to sign some documents to make the sale official. All the forms can be found online. You’ll need:
• California Certificate of Title or Application for Duplicate Title (REG 227)
• Signature(s) of seller(s) and lienholder, if any
• Signature(s) of buyer(s)
• Transfer fee

You may also need:
• Smog certification
• Use tax and/or various other fees
• Additional documentation
If you have any questions about the paperwork required, you should call the DMV at 1-800-777-0133 to speak to an operator between the hours of 8 a.m. and 5 p.m. Monday – Friday, Pacific Time.
Buying a used car can be an undertaking, but there’s no greater feeling than driving your new car knowing that you don’t have a car payment. Happy car hunting!

About Shay Olivarria
Shay Olivarria is a financial education speaker and the author of three books on personal finance. She has written articles for Bankrate.com, FoxBusiness.com and The Credit Union Times, among others. To find out more about her work, visit her at www.BiggerThanYourBlock.com

The best low-cost gifts this holiday season



Each month, financial expert Shay Olivarria answers personal finance questions from readers. This month she addresses how to not break the bank in the holiday gift giving season

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Reader: I love my family. I usually spend a lot for presents during the holiday season, but I don’t think I can do it this year. I don’t want my friends and family to think that I care about them any less, but I can’t get any more into debt. Are there any cheap deals this year?

Yep! The holiday season is upon us and according to the National Retail Federation, Americans are expected to spend $704 million on holiday gifts. That amount of holiday spending is considered “average,” but many of us are concerned about how the future of our income, not to mention our savings, and many people are making the decision not to spend a penny this holiday. Let’s take a look at some of the best holiday gifts available that will be good for your loved ones and your pocketbook.

Time Doing Nothing
The best gift this year is definitely Time Doing Nothing with loved ones. Think back over your life. Haven’t some of the happiest memories been sitting around the house with your friends and family laughing about things that only your group finds funny. Don’t be quick to dismiss this gift out of hand. This may be the hottest gift of the season.

Playing Together
Another hot item this year is Playing Together. It doesn’t matter if it’s playing a card game or playing a physical game — friendly competition is all the rage this season. We all like to tell the story of the time we finally beat our father-in-law at dominoes or the one about all the cousins having a footrace in the street. Playing Together will bring memories of this holiday season for years to come.

Encouraging Each Other
This one is sure to be the one everyone is talking about. One of the best gifts is the gift of Encouraging Each Other. The seeds of confidence this gift provides will last long after the wrapping paper has been picked up and the tree is out on the curb. Haven’t we all benefited from this gift from time to time? It doesn’t matter if it’s a huge bag of “You’re great at ________” or a small box of, “’I really appreciate you ________.” Make an effort this holiday season to give this gift to everyone you meet.

Group Photos
The last gift on your list should definitely be Group Photos. Nothing puts people in a better mood than seeing themselves with their loved ones. Take photos during the season and after January 1, send an email with the photos attached and a cheery note.

I know you expected me to talk about the latest gadget or coolest toy, but these are gifts that will your loved ones will enjoy and they won’t cost you an arm and a leg. The spirit of Christmas is about appreciating each other and sharing that feeling.

May you truly enjoy your Christmas this year.

Do you have a question you’d like Shay to answer? Email Shay at [email protected]

About Shay Olivarria
Shay Olivarria is a financial education speaker and the author of three books on personal finance. She has written articles for Bankrate.com, FoxBusiness.com and The Credit Union Times, among others. To find out more about her work, visit her at www.BiggerThanYourBlock.com

Why use a credit union?



Each month, financial expert Shay Olivarria answers personal finance questions from readers. This month she addresses the benefits of credit unions.

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Reader: I heard all this stuff on the news about banks and credit unions and the Occupy Wall Street movement trying to get people to move to a credit union. Why would we want to leave banks?

Saturday, November 5th was National Bank Transfer Day. The goal was to try and get as many people as possible to leave traditional banks and open accounts at local credit unions. Banks spend millions of dollars every year trying to convince potential customers that banks are the way to go, but credit unions have some significant benefits.

Not-for-Profit

The one difference that sets it apart from other banking institutions is that credit unions are not-for-profit. That means they exist to help their members, not to make money. With that being the driving force, everything they do is handled differently thank for-profit banks.

You’re an owner

When you open an account at a credit union (you can find one at www.CreditUnion.coop) you become a member-owner of that credit union. That means that you can vote on things and your voice can be heard. Each credit union has different requirements for membership, but LA Financial Credit Union is open to “people who live, work, worship, volunteer or attend school in, Los Angeles County, California.” It’s nice to know that you have a say in what’s going on at your financial institution.

Great loan rates

Credit unions offer the same financial products as traditional banks, except for one major difference: they have better loan rates. The credit union uses the deposits of members to loan to other members. Since the bottom line isn’t to make money, but to serve the members, the loan rates (think mortgages, auto loans, credit cards, business loans, etc.) tend to be lower than traditional banks. Go online to compare rates.

Better customer service

Every year thousands of customers take a survey to share how they feel about their financial services institutions. Consistently, credit union members give higher satisfaction ratings than traditional bank customers. At credit unions you’re more than just a number, you’re a member-owner.

The most ATMS across the nation

This is a little-known fact, but credit unions have more ATMs across the country than banks. The coop network gives credit union members access to 28,000 surcharge-fee ATMs including the ATMs at 7-Elevens. Visit www.CreditUnion.coop to locate ATMs by street address or zip code. Most credit unions also have mobile phone apps to help you locate ATMs.

Your goal should be to work with a financial institution that provides the products and services you need at a fair rate while making you feel comfortable. Your financial life is your responsibility to handle. Choose from all the available options, not just the one with the most commercials on TV.

Do you have a question you’d like Shay to answer? Email Shay at [email protected]

About Shay:
Shay Olivarria is a financial education speaker and the author of three books on personal finance. She has written articles for Bankrate.com, FoxBusiness.com and The Credit Union Times, among others. To find out more about her work, visit her at www.BiggerThanYourBlock.com.

Why you should invest in a 401K



Each month, financial expert Shay Olivarria answers personal finance questions from readers. This month she addresses 401 K contributions.

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Reader: I just got a new job and HR gave me all this paperwork about my 401k. I’m not sure what “matching” is and I’m not sure if I want to give them my money. What should I do?

Congratulations on the new job. I’m thrilled to hear that your company respects its employees enough to offer a 401k retirement plan with matching contributions.

Let’s start from the beginning. Years ago, workers received pensions from their employers. For many retirees the pension, combined with Social Security payments, was enough to cover household expenses. For those with the foresight to save for retirement, the trifecta of savings, pension, and Social Security was enough to provide for many retirees to live pretty well in retirement.

Pensions are now a thing of the past. To make up for that, companies have started offering retirement vehicles that encourage individuals to invest to cover their retirement needs.

Most public companies offer a type of retirement plan called a 401k. The ones that really value their employees also offer “matching” contributions. That means that while you are encouraged to invest as much as possible towards retirement, your company will “match” the dollars that you contribute up to a certain point.

For example, if you contribute up to 6% of your income to your retirement account, then the company will match that 6%. It’s like a buy-one-get-one-free sale. If you earn $30,000 per year and contribute $1,800 per year (6% of your income) to your retirement fund, then your company will contribute another $1,800 to your retirement fund. If you contribute nothing then your company contributes nothing.

Keep in mind that matching contribution amounts differ from company to company, for those that actually offer the benefit.

It’s to your advantage to contribute as much as possible to your retirement account. There really is no down side to investing as much as you can, as often as you can. You’ll be safeguarding your retirement as well as getting free money from your employer.

Do you have a question you’d like Shay to answer? Email Shay at [email protected]

About Shay:
Shay Olivarria is a financial education speaker and the author of three books on personal finance. She has written articles for Bankrate.com, FoxBusiness.com and The Credit Union Times, among others. To find out more about her work, visit her at www.BiggerThanYourBlock.com.

Strategy to pay off credit card debt



Each month, financial expert Shay Olivarria answers personal finance questions from readers. This month she addresses paying off credit card debt.

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Reader: I’m expecting a lump sum of money. I would like to pay down my credit card debt with the money. I have several credit cards with balances ranging from $50 to $3,000. What is the best way to do this? I would like to reduce the number of payments I make each month in addition to reducing the amount of money I owe.

First of all, congratulations on coming into a tidy sum. I’m glad you’re being proactive in paying down your debt with your windfall. To know what to do, you have to know what you’re working with.

Make a list of all your debt. There should be a column for the name of the company, the amount of debt, the interest rate, and any notes about the debt. You can find a great debt worksheet in my book Money Matters: The Get It Done in 1 Minute Workbook. After you have filled in all the columns relating to the debt, you’ll have to decide which strategy you’d like to use to pay down the debt.

Choose a strategy. There are two basic ways that most people decide which debt to pay off first:

Pay by interest rate – Once you have all your debt listed on the chart take a look and see which interest rate is the highest and write a number one near it. Find the second and write a number two. Continue numerically ordering them until you have them all in order from highest interest rate to lowest interest rate. You’re going to continue paying the minimum balance on all your accounts; however you’re going to start paying a little extra on the account with the highest interest rate to help pay it off faster. Once the highest interest rate is paid off you’re going to apply all the money that you would have paid (minimum balance plus the extra bit) towards the debt with the second highest interest rate while continuing to pay the minimum on all the other accounts. Once that one is paid off you’ll move on to the third account. People like this method because it helps to cut down on the overall amount of interest you’ll pay back over the lifetime of the loan and it creates a snowball effect that helps get debt paid off quickly.

Pay by debt amount – Once you have all your debt listed on the chart, take a look and see which is the smallest amount. Write a number one near it. Find the second lowest amount and write a number two near it. Continue until each debt is in numerical order from lowest amount to highest amount. You’re going to continue paying the minimum balance on all your accounts. However, you’re going to start paying a little bit extra on the account with the lowest amount of debt. Once the smallest amount is paid off you’re going to apply the payments you would have made (minimum balance plus the extra bit) to the debt with the next highest amount. Continue this strategy until all debts are paid off. People like this strategy because it feels like you’re accomplishing the goal of paying off debts more quickly and it creates a snowball effect that helps debt get paid off quickly.

Since you mentioned that you would also like to reduce the number of payments required each month I’m going to suggest that you use the second payment strategy and pay off debt by amount owed. Once you have everything listed, use as much of your windfall as you can to pay off the smaller outstanding debts. With those smaller debts gone you’ll be able to focus your payments on the remaining debt and your credit score might increase due to your debt ratio being lowered.

Want your personal finance question answered? Ask it! Email your questions to [email protected] I look forward to working together to build the knowledge, and net worth, of South LA residents.

About Shay:
Shay Olivarria is a financial education speaker and the author of three books on personal finance. She has written articles for Bankrate.com, FoxBusiness.com and The Credit Union Times, among others. Visit her at www.BiggerThanYourBlock.com.

Financial changes you need to know about for 2011



imageBy Shay Olivarria

Welcome to 2011. There are some great changes taking place on the financial landscape. I’m going to give you the skinny on some that you might not be aware of.

College students will not longer be able to get credit cards
Due to the Credit Card Accountability, Responsibility, and Disclosure Act or CARD Act for short, people under 21 years old will no longer be able to get credit cards unless they can prove that they have enough income to pay back the debt or they get a co-signer. The biggest group that this will affect is college students. This will help stop young people from racking up debt that they don’t understand and can’t pay off.

Banks are no longer able to automatically enroll customers in over-draft protection
When you signed up for a checking account a few years ago you were automatically enrolled in the bank’s overdraft protection program. It sounds helpful, but many customers found out that banks were arranging transactions, making sure the largest transactions go through first, to make sure that they could rack up overdraft fees when several smaller purchases went through and the account was already overdrawn. New banking regulations make sure that banks can no longer automatically enroll customers in overdraft checking.

You can still enroll in overdraft protection if you want it, but you have to make the effort. With overdraft fees averaging $35 per item in 2010, customers will have to choose to keep a better eye on their finances or pay to the use the service, but from now on it will be your choice.

Full retirement age is now 67 years old
According to the Social Security Administration, “Full retirement age (also called “normal retirement age”) had been 65 for many years. However, beginning with people born in 1938 or later, that age gradually increases until it reaches 67 for people born after 1959.” That means that the average American will have to work two years longer than they may have thought before they can access Social Security benefits. Check here to find out what your full retirement age is.

Free checking is over
Now that there are more restrictions on how banks can earn fees, the time of free checking is over. Many banks such as Bank of America, Wells Fargo, and Chase are charging, on average, $15 per month account maintenance fees. You may still be able to get free checking if you agree to a minimum amount of debit card transactions, direct deposit, and minimum balance requirements. If you’re not sure if you can fulfill these requirements, a great option is to open a checking and savings account at a credit union.

Credit unions are exactly the same as banks, but when you are a part of a credit union you own part of the financial institution. This enables the credit union to offer lower loan rates and better customer service. You can join a credit union if you live in a particular county, work at a job that has a credit union, or worship at a religious center that has a credit union. Find a credit union by clicking here.

401k contributions may become mandatory
Due the current financial crisis, the government is considering making employee contributions to 401ks mandatory. That means that from the first day on a new job, employees would be enrolled in an automatic plan to invest at least three percent of your earnings in employer-sponsored retirement plan. Those plans would, more than likely, be target date mutual funds, increase contributions one percentage point each year until your contribution was 15 percent on your pre-tax income, be vested (that means you could take the money you contribute and the money your employer contributed from day one) from the first day you open the account, and you wouldn’t be able to take the money out until you reached retirement age.

Like most things in life, everything has good and bad aspects. It’s important to know what’s going on so you can choose how you incorporate these changes into your life.

Shay Olivarria is a professional speaker and the author of 10 Things College Students Need to Know About Money. Join her on Facebook.

Keeping Your Spending Plan Merry During the Holidays



Originally published in Prominence Magazine.

Nothing can blow that spirit of goodwill like taking a look at your credit card statements after the holidays. Here are a few tips to keep you merry this holiday season.

imageDecide who’s in
Think about your usual holiday spending pattern and decide who you would like to consider in your holiday gift giving. You get to choose how you spend your money. Don’t let anyone force your hand.

Open up a holiday account
I would guess that you have an amount you’d like to spend when you think about holiday shopping. Instead of waiting until October/November to start planning your budget, why not open a “holiday account” at your local credit union or bank? Add a specific amount every month and you’ll find that when the holidays arrive, you’ll be sitting pretty without going into debt. It may be too late this year, but it’s never too early to plan for Christmas 2011.

Shop online
There are many good discounts to be had online. Shop early and check prices often. Sign up for online notifications from manufacturers and/or businesses that have a tendency to offer good sales. A great place to find deals is www.SlickDeals.Net; check the forums.

Shop clearance
Check out the clearance page from the manufacturer you want to purchase from. Also, stop by the page for refurbished items if you’re purchasing electronics. Almost every business from designer clothes to cars has to get rid of older stock. Savings of 50% are common.

Follow these tips and you’ll be thrilled to watch your loved ones open their gifts knowing that you won’t regret any of your purchases.

imageShay Olivarria is a financial educator, speaker, and the author of Money Matters: The Get It Done in 1 Minute Workbook and 10 Things College Students Need to Know About Money. Visit her at www.BiggerThanYourBlock.com.