Drive Free Cars for life!

While taking part in Dave Ramsey's "Financial Peace University", we heard a great example of how you could turn traditional thinking around, and make your money work for you.

They started the lesson out by talking about how the average new car payment for 1/3 of car buyers is $475 with a loan term of 6 years (for a $26,000 car with 9.6% interest). Most people will just assume that they will always have a car payment, and that having a car loan and payment is just a part of life. It's something that you can never get away from!


According to Dave Ramsey, if you turn that thinking around, within that first six years you can get to the point where you'll never have a car payment again!

How it works

Let's say the car you're driving now is worth $1500, and instead of paying a dealer $475/month for a new car like most people do, you save that money for 10 months. At the end of 10 months you'll have $4750, along with another $1500 from the sale of your old car. With that money you can buy a new car worth $6250.

If you keep going along those lines for another 10 months, you'll have another $4750. At the same time you'll probably be able to sell your new $6250 car for just about what you paid for it. That means you'll have $11,000 to spend on another new car, just 20 months after you started with a $1500 car!

Let's say you decide to keep that new $11,000 car for the full six years it would have taken to pay off a new car with a loan. Continue paying yourself that $475 payment every month for the remaining 52 months, and put it into a good mutual fund. If you receive an average return of 12%, then you'll be sitting on over $32,000 dollars after the 6 years is up.

You're home free - free cars for life!

If you go now and buy a nice used car for $12,000, you'll still have 20 grand sitting in your "car replacement fund". If that fund continues gaining 12%, even if you never add more money to the fund, you'll be able to buy $14,000-18,000 cars every 5 years from now on! The interest you're gaining in that account will pay for your new cars for the rest of your life!

How do I retire rich?

Here's the fun part. Once you've established your car replacement fund, from then on you'll be ok to take that $475 you would have used to pay for your new car loan, and invest it in a mutual fund. If you gain 12% interest, here's how the numbers work out if you invest that amount for 10, 20, 30 and even 40 years:

• 10 years - $100,000
• 20 years - $470,000
• 30 years - $1,600,000
• 40 years - $5,588,385

So there you go, Dave Ramsey's plan to drive free cars and retire rich. While it does depend upon you earning a good amount of interest through your mutual fund, as well as some other assumptions about car values, it doesn't sound impossible to me. I know we would never pay $475/month for a car, but at the same time this example really brings home the idea that the returns of compounding interest are something we all need to strive towards gaining.

Let me know what you think about this plan in the comments!

Over at www.rather-be-shopping.com they're running a contest to give away a cordless drill to some lucky soul who has told about their "smartest, dumbest, hardest, or frugalist (is that even a word?) Home Improvement Project or Repair Job that you have undertaken".

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The Project

My "frugalist" and "dumbest" home improvement project took place last summer.

We had just moved into our new house the previous fall, and it was late spring, early summer 2007. We decided that we'd like to spend a little more time outside, enjoying the weather while it lasted (here in Minnesota, you have to take advantage of the nice days while they're still here).

We decided to build a nice patio in our backyard so that we could sit outside and eat dinner, entertain or have a nice little campfire for those warm summer nights.

Then we looked into how much it was going to cost. For materials and labor it was going to cost us in excess of 1600-1700 dollars. Ouch! I decided that I would undertake this project on my own. By doing all the labor ourselves we would end up saving almost $1000 dollars on the patio because labor accounted for over half of the cost! Can you say frugal homeowner 101? I took a free class at our local Patio Town to make sure I understood how to build a patio. It was a bit more complicated than I anticipated. I thought it would just be me placing a bunch of bricks down on the ground next to each other. Boy was I wrong. You have to dig a deep pit, place aggregate rock, tamp it down, add sand, screed the sand, and the place bricks one by one. Its a job most people can do, but time consuming.

The Execution

We bought all of the materials that we would need to complete the job, and had them delivered on the Friday that we would begin work. As you can see in the picture our backyard was completely grassed over when we started. We would need to begin by digging an 8" pit by the house where we would be installing the patio.

Moving dirt is a lot harder than it looks. We spent the rest of the day Friday just digging out our 8" pit and moving the dirt to a construction site across the alley. End of day one.

On the beginning of day two we tamped down all the dirt in our big hole manually with a hand tamper. Most people are smart and get a mechanical tamper that does all the work for them. I went the frugal route and got the hand tamper figuring I could save the $30 rental charge. I would regret this later on because just about every muscle in my body was sore.

After tamping down the soil we had to put down aggregate rock/gravel to make a solid base for our brick patio. The aggregate came in large 50 pound bags. We dumped the bags into our pit, making a nice even base for our patio. Again, this took longer than expected, and by the end of the day we realized that we didn't have enough rock for our hole, we had dug it an inch or two too deep. We ran back to the home improvement store and bought another $200 worth of materials. My frugal job just became less frugal.

While we were loading all of our extra materials I felt something in my shoulder twinge and experienced a shooting pain. Although I didn't realize it at the time, it turns out I had torn something in my rotator cuff. I continued working through the pain.

After we returned to the job site, we put in the rest of the rock and finished tamping it down. End of day two.

On day three we began placing bricks. First, we poured sand over a small portion of rock aggregate, and screeded it (smoothed it out) using a straight piece of lumber. We carefully placed our bricks in the pattern that we had chosen, and by the end of the day, we had a new patio! After having some steps built for a couple hundred bucks a week or two later, we were done with our project! Total cost? Just over $1000 for a patio and stairs that normally would have cost over $2000.

Conclusion

So this was my most frugal home improvement project ever, but it was also my dumbest project ever. The reason it was the dumbest was because I pushed myself too hard to get the job finished in one weekend, and tore my rotator cuff. I ended up having to rehabilitate it for the next 6-7 months. Not fun!

So what's your "smartest, dumbest, hardest, or frugalist Home Improvement Project or Repair Job that you have undertaken"?

Check out more stories by going to http://www.rather-be-shopping.com:

Win a Drill Contest

The IRS estimates 1.3 million taxpayers who neglected to file a 2004 return are eligible for refunds, but that they had better act soon. The deadline for claiming a refund for that tax year is April 15 this year, and you must file a return to get a refund.

There is no penalty for filing a late return if you have a refund coming to you, the IRS said.

You'd think that taxpayers who face big tax bills are the ones who don't file returns, but that's not always the case. For instance, workers whose incomes fall below the filing threshold may decide to not file, said Michelle Lamishaw, an IRS spokeswoman.

"Maybe (the refund) didn't seem like a lot of money to them, or it seemed like too much bother to file, or they didn't have the right paperwork. Sometimes they may anticipate they wouldn't get a refund, so why bother, but sometimes they're wrong about that," Lamishaw said.

"There are a lot of reasons why people don't file, but it can add up to serious money for some people," she said.

The article goes on to note that it is especially important for people to file a return this year for 2007 taxes as they won't be eligible for the tax rebate stimulus package unless they do. So get crackin!


LINKS:
MSN Money: IRS has $1.2 billion in unclaimed tax refunds
IRS Has $1.2 Billion for People Who Have Not Filed a 2004 Tax Return

One great way that I've found to save money is to buy things that I would normally buy at a Bricks and Mortar store, at an online store. You can often find ways to make it cheaper to buy online using one of my favorite things - Coupon Codes!

There are a ton of coupon code sites out there, and some of them are better than others. Here are a few of my favorites:

A few days ago I posted about how I can do without a gym membership, and how my wife and I are cancelling our memberships to Lifetime Fitness this year. In this post I'm going to talk about a bit more in depth about why I think working out in your own home gym, or in the great outdoors is a much better option.

1. Getting a gym membership feels like buying a used car: Complicated signup forms, pushy salespeople, long term contracts, complicated cancellation. I'm getting a headache just thinking about it! A while back we were looking for a new gym membership, and decided to check out our local club, which belonged to a national chain. To make a long story short the salesman was very pushy, wouldn't take no for an answer, and we ended up walking out it a huff because he was so rude. Not only that but unfortunately we had given him our contact information at the beginning and he started calling us a couple times a week. Talk about a hard sell! He finally stopped calling us after I picked up the phone one night and told him to stop calling.
   
   
2. Gym memberships are expensive: When you're signing up for a membership make sure you know about ALL the costs up front. Usually there will be a monthly membership fee, an initiation fee and an administrative fee. Some clubs will even require you to pay for 2 or 3 months up front when you sign up. So you could be talking about 4-500 dollars you have to pay when you first sign up at the club. What a rip-off! Not only that but we've heard a lot of horror stories about gym fees being taken from people's accounts even after they've cancelled. Be very careful about this, and make sure you read all the fine print on your contract!
   
3. You don't have to deal with fitness club meat market: Some clubs are worse than others, but almost always you'll have a bunch of these people - you've seen them. The preening body builders, inappropriate ladies with their barely there outfits. The guys and girls with the spray on tans who can't stop looking at themselves in the mirror. This isn't the type of atmosphere I enjoy working out it.
   
4. No built in "I don't feel like going to the gym" excuse when you workout at home: I know I've done this more times than I could count. You get off work, you've had a long day and you just decide that you're not going to drive out of your way on the way home to go to the gym. It's just too far, and you're too tired. Maybe tomorrow night you'll make it. One night off turns into 5, and then you end up only going to the gym one night of the week. I've found that when I work out at home I'm much more likely to do it because I'm already at the "gym". I just change into workout clothes and walk into the next room to workout. Easy.
   
5. Working out at home is cheaper: Once you've made the initial investment of a set of weights and some type of aerobic equipment, it wont' cost you anything to workout at home. Granted it can be expensive to buy that fitness equipment up front, but you can find some very nice used equipment on sites like Craigslist.com or ebay.com. Also in many cities there are stores for second hand fitness equipment like 2nd Wind Excercise Equipment, but I've found tht they often tend to be a bit overpriced. You may have better luck with them than I have.
   
6. Working out at home allows you to do a wider range of workouts: This one may be more personal, but I've found that working out at home I'm more apt to do a wider range of workouts including workout videos, cross training, different weights routines, biking, running, etc etc. I've found when I go to the gym I tend to do the same thing every time I go. Because I'm changing it up so often at home, I tend not to get as bored as quickly, and I'm more likely to workout because of it.
   

So there are some of the reasons why I think working out at home is a great idea. If those reasons aren't enough for you, or you decide you need that motivation of going to the gym and working out with others, at least remember to go the money saving route when you sign up for a gym membership. Keep these things in mind:

1. Check and see if you can get reimbursed by insurance: Many health insurance companies will reimburse you for part of the cost of a gym membership if you go to the gym at least 10-12 times a month. When we were members of a local fitness center we received $40 off our couple's membership a month through our health insurance provider. Make sure you ask about this up front when buying your membership.
   
2. Check out local city and park district community centers: Our local city rec center offers a great workout facility and track for about $25 a month. The facilities are nice, and it is hardly ever busy. Local YMCA and YWCA centers also offer a cheaper alternative.
   
3. Shop around for the best price: In our local area we have a large number of gym choices, and the prices will vary widely from place to place. You can end up paying anywhere from $25 to $75 for a membership. Look for the best deals when signing up so you don't have to pay initiation fees and other miscellaneous fees. Use a site like Fatwallet.com to find the best deal on a gym membership.
4. Make sure you use the membership you're paying for: If you do end up joining a gym, make sure you use the membership you're paying for. If you find you don't get to the gym very often, consider cancelling your membership. Beware of early cancellation fees, however, because many gyms will have this written into their contracts, and many won't allow you to cancel at all until the term ends, you die, or you move to a city far away where they don't have any locations within 50 miles.

Be sure to check out the links below for further tips, tricks and other fitness information.

LINKS:
Get Rich Slowly - Ads I Hate: East Side Athletic Club
Tips on working out at home - http://crossfit.com/
Workout Motivation and Tracking - Traineo.com
Body for Life Program - Great program for weight loss

"Make a joyful noise unto the LORD, all ye lands.
Serve the LORD with gladness: come before his presence with singing" Psalm 100

I love listening to music, playing music and singing. I just love music. So you're probably not surprised to find out that I have an Ipod and that I listen to it pretty much on a daily basis.

What you might be surprised to know is that I didn't have to pay a dime to get my Ipod! A year or so back we were in the midst of moving to a new house, and in the process we were getting rid of a ton of old things that we had stored away. One thing that I had decided on getting rid of was my old CD collection. I had a couple hundred CDs that were just sitting in a box in the closet. I looked into selling the CDs at a local used CD store, but they were only going to pay me pennies on the dollar for all of them.

Then I found feedyourplayer.com. What feedyourplayer.com will do is take your old CDs in trade for a new Ipod (they have all the new ones including the nano and the iphone). They'll even take your CDs in trade for a new XBOX 360, Playstation 3, or a Wii if they have them in stock. If you don't have enough CDs or DVDs to do the trade, you can pay the difference in cash.

So here's how it worked. I downloaded an excel spreadsheet from their website that I had to fill out detailing all of the SKU numbers and titles of the CDs I wanted to send in. I also had some DVDs that I didn't want anymore, and they take those as well.

After filling in the spreadsheet, I emailed it in and they notified me within a couple of days which CDs and DVDs they wanted me to send in. I then boxed up the items and sent them in to feedyourplayer.com. This is the only part that actually cost me anything, and it DID cost me about $20 to send in the heavy box.

A couple of weeks later after my CDs and DVDs were processed I got my brand new 30gb Ipod Video in the mail.

So here is how the trades work out at the time of my writing this:

• 1 GB Shuffle - 40 CDs or 30 DVDs
• 4GB Nano - 75 CDs or 50 DVDs
• 8GB Nano - 100 CDs or 75 DVDs
• 8GB Touch - 150 CDs or 100 DVDs
• 16GB Touch - 200 CDs or 135 DVDs
• 80GB Classic - 125 CDs or 85 DVDs
• 160GB Classic - 175 CDs or 120 DVDs
• XBOX 360 - 175 CDs or 120 DVDs
• Playstation 3 - 250 CDs or 170 DVDs

Check out their trade calculator here to see how many CDs or DVDs you need to submit to get your item, or how much cash you'll need to pay if you don't have enough.

LINKS:
http://www.feedyourplayer.com/

One thing that I used to hate was going to the movie rental place to rent a movie. Not only was it a hassle to drive there and walk through the store trying to find a movie for a half hour - it was expensive! To rent two new release movies could cost upwards of $10 or more depending on where you went.

One option that a lot of people have been using in the last few years is renting movies through netflix.com. I've used netflix and in general i think its a great idea. But what if you don't think spending $15 a month is going to be worth it because you don't watch that many movies?

CHEAP MOVIES

My wife and I have found a great option for renting movies, and it doesn't cost us a thing! That's right - its free!


Mcdonald's restaurants in our area installed big movie rental vending machines from a company calledRedbox.com. The machines carry new release movies and it costs a paltry $1 per night to rent a movie. So right off the bat, as long as you return the movie the next day, its a great deal. You can even rent movies right from your computer at home, and the machine will hold the movie for you.


FREE MOVIES

To make the deal even better we've discovered that the machines will accept coupon codes for free movie rentals, and since Mcdonald's is giving these coupon codes out all the time, it seems like we haven't paid a dime to rent a movie in the last year.

To make things even easier we discovered a website called Insideredbox.com that allows users to send in their coupon codes for free movie rentals, and they are cached in a database that other users can access. Just do a search for coupons in your area that have been used recently, and you can get a code for a free rental. You can use each code once with each credit/debit card. Coupon codes can't be used to rent movies on their website, only in person at the machine.

Right now if you sign up with Redbox to receive SMS alerts, they'll send you a coupon code for a free movie rental every Monday. I've used this, and it works great, 1 free movie every week. Sign up here.

Redbox locations in our area are exclusively at Mcdonald's restaurants, but they may also be at some grocery stores and other locations. Search your zip code on their website for a location near you.

LINKS:
Insideredbox.com
Redbox.com
A Similar deal at Wisebread.com
This article is included in the Carnival of Personal Finance. Check it out here

Have you bought a diamond in the last ten years - be it a wedding ring, earring, or nose stud? You may be able to get back a percentage of the purchase price!

If you bought a piece of diamond jewelry -- or jewelry with a diamond in it -- between Jan. 1, 1994, and March 31, 2006, you may be eligible for a refund as part of a recent settlement of a class-action lawsuit alleging that De Beers, the big South African diamond company, had cornered the market for diamonds for decades, keeping prices artificially high.

In settling, De Beers is shelling out $295 million to put the trouble behind it -- $135 million of which is earmarked for consumers rather than wholesalers.

During that time period I bought diamond jewelry for my wife twice. Her wedding ring, and a 5 year anniversary gift. I've already submitted my claim for a refund. To submit your claim go to the website at https://diamondsclassaction.com/ and enter your details.

On a side note:

If you paid less than $96 for jewelry with diamonds only, or $166 for a piece that includes stones other than diamonds, your refund wouldn't reach the $10 minimum payout, so don't bother. And the refund covers only the diamond, not the other elements in your jewelry, such as the gold, the setting or the labor.

LINK:
MSNMoney.com

Think you might have some unclaimed cash out there from a long lost relative? Check it out now on missingmoney.com.



MissingMoney.com via Lifehacker