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Dad’s Foolproof Car-Buying Tips (and Other Secrets of Life)

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Some Dads teach you how to tie your shoe, ride your bike, even how to parallel park. My Dad gave me the crash course on how to get anything I want in life, starting the day I bought my first car.

I’ve mentioned before that my Dad’s “foolproof” car-buying secrets helped me buy my first car at a $3,000 price drop. Those financial tips have helped open a few other  doors, including getting my dream job and landing the right relationship.

This Dad-patented method isn’t just about negotiating a sticker price. It’s really about the approach and attitude you have when achieving your goals. Dad always drilled that getting what I want in life isn’t magic; it’s more strategy than serendipity.

There is a formula for getting what you want in life. My Dad knew it well, and now, you will too.

 

1) Stick to a clear purpose.

“What do you need a car for?”
“Well… getting groceries, to get to work, and… to visit you of course, Dad!”

Dad’s question came up often as I researched cars. I was on the fence about whether I should buy a new or used car, so Dad asked me again. When I remarked that the Mini Cooper has superior handling as clearly demonstrated in The Italian Job, Dad asked. While contemplating whether to get Dyno Blue Pearl or Alabaster Silver Metallic, Dad still asked. It was his understated way of reminding me why I needed a car in the first place: errands and commuting. In the end, practicality won over flashy and I selected a 2007 used Honda Civic.

Having a clear purpose helps simplify hard or complicated decisions. It’s a philosophy I’ve fallen back on again and again. At the crossroads of every major relationship, I’ve played my Dad’s card. “What is this relationship really for?” My answer: to make me happy. That reminder always made the next move painfully clear. When faced with a decision, like a major career move or handling a personal conflict, go back to your singular purpose and stick to achieving that. Other priorities and details will fall into place.

2) Know your opportunities and timing.

 “Let’s wait until the end of the month to look for your car.”
“But Dad, that’s 3 weeks from now.”
“…. Let’s wait until the end of the month.”

Luck, schmuck; Dad knew that a great deal doesn’t just happen. Many dealerships slash prices at the end of the month to meet their sales goals, so if you’re looking to cut a deal, they’re most flexible around this time. Also, knowing the price at other dealers and even private sellers helps establish a competitive baseline for you to negotiate price. Dad’s formula for getting a great deal is 10% good timing and 90% strategy. Strategy is all about knowing where opportunities are and seizing them.

Dad’s approach to car-buying also helped me find my perfect job. With a think-outside-the-box strategy, I started looking in the financial industry for a creative job because financial services need writers too, right? I landed this dream job at Credit Karma because I looked for the right opportunities in unlikely places. The out-of-the-box opportunities are often the worthwhile ones, so be open-minded yet aim strategically.

3) Seek out the right person.

“Dad, where are you going? The front door is this way.”
“The back door leads to where the dealership’s offices are.”
“But that’s not where the cars are Dad…”

Dad never stepped foot on the sales lot with the shiny cars and giant inflatable gorillas. He sought out the dealership’s other entrance and went straight to the offices of the Internet Sales Manager or General Sales Manager’s office. These managers knew the inventory and they could make the final decision when we negotiated price. My Dad doesn’t waste time, so getting face-to-face with the decision-makers is how he cut through the sales pitch and worked directly with people who had authority to stamp the deal.

Doors can open more easily if you approach the right person with the keys. Submitting your resume straight to the hiring manager, asking for the store manager to get issues resolved, or in my experience, contacting the right editor to get something published, proves to be more successful efforts to getting what you want. So who is the “right person”? Whoever has the power to make what you want happen; just find that back door.

4) Know when to walk away.

“Dad, I really want this car.”
“What’s your price?”
“I want to pay under $15,300.But he won’t budge on the price.”
“Well you don’t really need this car today, do you?”

My Dad spent a whole decade working to get promoted and transferred to the United States, so even though patience isn’t a virtue I inherited from him, he did teach me not to go for the easy wins and to shoot for the long-term payoffs. On occasion, that means knowing when to walk away. Two weeks later, I sealed a great deal to buy the car I wanted under $15,000and in Alabaster Silver Metallic.

Dad’s most important lesson was that, sometimes, you don’t get what you want. But that doesn’t mean giving up. If means knowing there are other alternatives and choices, and to come back to it when it’s the right time, place, and budget. Maybe that means saving up more money to buy the home of your dreams or waiting till next year to take your once-in-a-lifetime vacation.

 

Of course, not all of Dad’s advice applied neatly to the grand scheme of life. For example, he told me in grade school that I could learn a thing or two from watching more football. Most recently, he advised me to be more like my Mom in the way I cook, and less like her in the way I drive.

Above all, Dad always reminded me, “You’re always learning.” Whether it’s buying a car or tackling your bucket list, that’s the most valuable trick to getting what you want.

 

Justine Rivero is the Credit Advisor and resident Credit Rockstar for Credit Karma, the pro-consumer credit advocate that helps more than 2.6 million consumers realize the everyday cost savings of having great credit health.

 

3 Words to Small Business Success: Easy, Fun and Popular

What’s the attitude you show up to in your business each day?

Are you having fun?

Does it lift your spirit to connect with those you need to connect with to be successful in your business?

 

In my blog Community Service, Leadership and Small Businesses, I told the story of how my best friend Tina Reynolds, long-time small business owner of Uptown Studios, uses her love of community service to drive the marketing for her business. I met Tina 15 years ago, when she was doing volunteer work for a local HIV/AIDS service organization, and through the years I cannot begin to recall how many organizations, actions and activities she has led or been part of. Her dedication and stamina for community service are unparalleled, and as a result she frequently receives awards, honors and nominations.

 

At this week’s California Small Business Day, she was honored by California’s Senate President pro Tem Darrell Steinberg as the Capital Region’s Small Business of the Year. Senator Steinberg made an excellent choice. From the vantage point of a best friend I’ve watched Tina’s business grow, and then sputter, and then grow again. I’ve watched her maneuver through the economic challenges of the past few years, always with a positive attitude. 

 

So how exactly do you get to be a Small Business of the Year? What makes Tina and her business stand out as a role model for entrepreneurs? To use Uptown Studios’ tagline, be Easy, Fun and Popular.

 

Easy

In my Forbes Profile I write about blocks I've Been Around: putting $10 of gas in my car because that's all I had.This was years ago, so I’m going to out Tina: she was the one I passed that $10 back and forth with. Sometimes I needed it; sometimes she did. Entrepreneurship isn’t always glamorous. But Tina, no matter how challenging a client project or how tough a business issue she faces, always has a can-do attitude and exudes to her staff and her clients that it’s easy. “Let’s just jump in and get it done.” And to persevere as an entrepreneur while enjoying a personal life, having an “It’s Easy” attitude is vital.

Getting a Mortage After a Short Sale or Foreclosure

Just a couple of years ago, Lisa and Laura (names changed for privacy) were caught in a housing nightmare. They had moved back to Sarasota, Florida from Nashville, Tennessee at the height of the housing market boom, and rented an apartment just long enough to decide they wanted to own their own home again.

They found a home in a community they really liked. It was a fixer upper that needed a lot of work, and the sales price was $365,000, but they jumped at it. “At that time there were lines of people waiting to buy, and there were bidding wars,” Lisa explains.

Within a couple of years, though, their home’s value had dropped by more than half. They had also put about $30,000 into repairs using a separate second mortgage, but the punch list just kept getting longer. “We were looking at (the decline in value) plus the fact that we needed a new roof; pool resurfacing and a new pool cage; plus a new kitchen, bathrooms, air conditioning and more,” says Lisa.

At that point they decided to cut their losses, and they got lucky. Their lenders allowed them to sell their home for $180,000 in a short sale. The mortgages totalled $435,000, so the banks took a total loss of $255,000. The remaining debt was forgiven. “We didn’t owe anything when it was done,” explains Laura.

After that harrowing experience, you might think they would never want to buy again. Once burned, twice shy, perhaps? But Lisa and Laura realized what a lot of experts are saying: it can be a great time to buy a home if you qualify. Mortgage rates are low, and home prices are within reach in many areas of the country.

But buying after foreclosure or short sale isn’t as common as one might think. Since the housing downturn, Sarasota-based real estate professional John Scherden has found himself working with many buyers and sellers involved in the short sale process. Buyers who were in bidding wars when prices were twice what they are today are often skittish now. “They don’t realize that when rates go up, they may not have the opportunity they have right now,” he says. John finds that buyers often focus on the monthly payment and waiting to purchase after mortgage rates have gone up will substantially increase their monthly payments and the overall cost of the property.

Deciding to jump in again, the couple’s main questions for me were, “How long do we have to wait after the short sale to buy?” and “What do we need to do to clean up our credit to qualify for a mortgage?” (For the record, I don’t offer credit repair services. I agreed to help Lisa and Laura in order to write about their experience for this article. If you have questions about your credit, I recommend you visit Credit.com where I and other experts answer questions for free.)

Reviewing their credit reports, we found several issues that needed to be addressed:

• Lisa’s credit reports show several older collection accounts from bills they didn’t receive when they moved back to Florida.

• Laura’s credit reports show a $5000+ charge off from a corporate card her previous employer had not paid.

• Lisa’s credit report showed the short sale, just over two years ago. She had obtained the mortgage on their previous home alone so it was not listed on Laura’s credit reports. It was just over two years old.

With regard to the collection accounts, I explained to both of them that paying a collection account generally doesn’t help boost your credit scores. However, mortgage lenders may sometimes require you to pay them off before the loan closes. I also explained that they may be able to settle those collection accounts for less than the full amount owed, and still bring the balance listed on their credit reports down to zero, but I wanted them to talk with a loan officer first. Credit strategies can be different when you are trying to get a mortgage loan, and I didn’t want them to do anything to jeopardize that.  

Laura’s collection account from a previously held company card opened another can of worms that I researched and wrote about for Credit.com. [Read: Important Warning If You Have A Corporate Credit Card.]

To answer their question about how soon they can get a loan after a short sale, I turned to Joe Kelly at ArcLoan.com, who in turn asked one of his loan officers, Carrie Chienyuen, to review their credit reports and financial situation, and explain their options.

Carrie shared the latest Fannie Mae guidelines with us. After a deed-in-lieu of foreclosure, preforeclosure sale, or short sale, there is a mandatory waiting period of two years for a loan with an 80% maximum LTV (loan-to-value ratio), or four years for a loan with a 90% LTV. If the borrower can document extenuating circumstances, the waiting period for a loan with a 90% LTV drops to two years.

Since the couple had the money for a down payment, they could get back in the game if they were ready. Carrie also explained that another option: Laura could try to qualify for the loan on her own. They could still hold title to the home jointly, even if Lisa wasn’t a co-borrower.  

Carrie also described FHA guidelines, which are even more generous. The couple could get an FHA loan with a down payment of only 3.5%. The APR at the time of the quote was a jaw-dropper, at less than 5%. (Keep in mind rates can change daily, and depend on individual circumstances.) FHA requires a three-year wait after a short sale or foreclosure, however.

Carrie warned that if they were to get a conventional loan, they would probably have to pay off the collection accounts first. But with an FHA loan, it likely wouldn’t be required. In the meantime, Laura is trying to work with the card issuer to resolve the corporate card account, by far the largest collection account listed.

Not surprisingly, the two were thrilled at the prospect of getting a do over. They will decide shortly whether they want to make the plunge back into homeownership. But more importantly, they feel like they are starting to gain a sense of control again.

“I know there are a ton of people out there like us, and I know I feel so lost with everything that’s happening with the economy,” said Laura.

If you’re thinking of buying a home after going through a foreclosure, short sale, or other credit problems, I recommend you:

1.       Get your credit reports from AnnualCreditReport.com or a credit monitoring service and review them carefully. Make note of anything you don’t understand. If you are hoping to get a mortgage soon, don’t dispute or close accounts until you have talked with a loan officer.  

2.       Understand your credit scores. You can get an idea of where you stand using a tool like Credit.com’s free Credit Report Card or by purchasing at least one of your FICO scores. FICO scores are the most commonly used scores in the mortgage loan evaluation process. Listen to my podcast, Credit Score Fact or Fiction, with former FICO executive Tom Quinn.

3.      Get prequalified by a loan officer to review your credit and your financial situation to see if you qualify. Listen to my podcast with ArcLoan.com’s Joe Kelly where he explains how to get a mortgage after credit problems.

I am not trying to imply that getting a mortgage after foreclosure or bankruptcy is going to be a walk in the park. I am sure plenty of loan officers will read this and start recounting of all the hassles they’ve gone through with their clients. Lenders are much more careful than in the past, and you must be able to document your ability to pay the loan. Your credit must be on the mend as well. But still, if you’re in the same boat as Lisa and Laura, it can be encouraging to know that it may be possible to put your past behind you – possibly sooner than you think.

Gerri Detweiler

Personal Finance Expert: Credit.com

Co-author of Reduce Debt, Reduce Stress: Real Life Solutions for Solving Your Credit Crisis and Debt Collection Answers: How to Use Debt Collection Laws to Protect Your Rights.

Disclosure: Credit.com and ArcLoan.com are both currently sponsors of my radio show, Talk Credit Radio.

 

 

Financial Recovery: developing a healthy relationship with money

The Book by Karen McCall


So many books are full of financial advice, yet when we read them and then struggle implementing all their advice, we just feel worse. But not with Karen’s McCall’s book.  The difference is that she writes about our actual relationship with money. She talks about the emotions of money. She goes into our history with money. Here is an expert who has spent decades in the trenches with real people (I was a client of Karen’s years ago) and understands why people really do what they do with money and how they can change.

What I love the most about her book are all the stories. She shares her own very personal story of struggling with spending and debt. (She shares some of her painful money secrets that people in her life would have been shocked by at the time, if they had known.) And she shares the stories of countless clients she’s helped guide over the years. Suddenly, you feel like you are not alone if you struggle with credit card debt or sometimes you spend too much, or you simply never seem to earn enough.

Here are Karen’s own words, from chapter one:

I’m not implying that money is the most important thing in life, and certainly it’s not more important than the people we hold dear. Interestingly, though, the healthier your relationship with money, the less likely it is that money will distract you from the things you value most. But money, and our relationship with it, is an undeniable force. Ignoring it doesn’t change that. In fact, when we choose to be ostrich like in our relationship with our finances, hiding our heads in the sand, money exerts an even greater, and usually more negative, influence on us. Money colors so many areas of our lives—health, education, lifestyle, career, family, self-image, political influence, and so on. Doesn’t it make sense to have as healthy a relationship with it as possible?

Karen also writes about being caught in the “money life drain” and how she has seen so many people simply try to work harder, only to not have it help their financial problems. She is very direct about addressing feelings of shame and deprivation and how this fuels our financial behavior. And yes, she shows you how to get out of debt and stay out of debt. She also covers how to track and plan your spending- topics that may be unpopular, as I well know from my years of working with people. But she makes a very convincing case how the new financial behaviors she advocates can truly change your life. By the time the reader gets to the last chapter called “Imagining Sterling Money Behaviors”, you just want to BE that person, and you really feel like it’s possible.

To order Karen’s book go here: Financial Recovery

Weight Loss or Money Management: It Takes the Same Formula

In January, I wrote a post about deciding to lose weight through Weight Watchers ($39.95 per month) instead of spending thousands of dollars to replace my suits. In five months, I have lost 20 pounds for approximately $200 and am now a Weight Watchers Lifetime Member (which means I can go to meetings for free as long as I continue to maintain my goal weight). What I learned is that the same discipline and mental process it takes to lose weight and get healthy applies directly to money management.

It is easy to say, “I want to lose weight or spend less money.” It’s another thing to inherently commit to that goal and stick with it every day. Losing weight or getting out of debt is also just the first step. If you want to remain at a healthy weight or be on top of your finances for the rest of your life, that requires a complete mental overhaul and daily practice, awareness, planning, commitment, and belief.

Weight Loss Money Lessons:

Recognize when you are ready to make a change: whether it comes in the form of a “few whispers” (as Oprah puts it), a pit in your stomach, or a dramatic “wake up” call, try to “hear” when your mind and body are telling you that something in your life is not working and needs to be fixed. (For example, if you can’t sleep at night because you are thinking about how much money you owe, that is a sign that you need to stop spending and start paying off your debts.)

Get support from a friend or group: share your goal with a family member or friend you can trust, or join an organized group of like-minded individuals who share your financial goals and vision. To get started: check out the America Saves program or join an online goal-setting community such as 43 Things.

Set a weekly financial goal: and regularly start saving money. Whether it’s $20, $50, or $100 a week - pick a realistic amount of money that you can save each week and stick to it! Having a visual tracker that shows you how much you are saving each week is extremely helpful and rewarding. Use automatic deduction to help you save regularly, and visit Mint.com and 360 Degrees of Financial Literacy for additional tools and tips.

E-mail prompts and resources to help you stay motivated: sometimes, just a little money news or tip in your e-mail Inbox reminds you to keep focus and stay on course. Sign up for weekly newsletters from financial experts like Jean Chatzky, Michelle Singletary, and Jonathan Pond. Or, sign up for this bi-monthly Financial Literacy Updates to see what’s happening in your area.

Everything in moderation: going “cold turkey” is not necessarily always the best solution. You work hard to earn your money, and you have a right to occasionally treat yourself to something that makes you happy. In my seminars, I suggest that people use the 30/30/30/10 Spending Plan to help stretch their money. For example, if you have $100: 1) spend $30 on something you want today (e.g., book, cup of latte, movie, etc.); 2) save $30 for a short-term goal in 3-6 months (e.g., jeans, shoes, purse, etc.); 3) save $30 for a long-term goal that you want to achieve in one, five, or 10 years and beyond (e.g., laptop, vacation, education, car, home, retirement, etc.); and 4) consider giving $10 to a charity or organization that you love.

 

Missed Opportunities

The thing about a missed opportunity is that you typically only figure out that it was missed in hindsight, and many times, there is no going back. The following are a few examples of what can happen from a job seeker’s perspective and from a sales perspective when assumptions are made and not investigated. I’ve co-mingled examples of both because the aspects of an employment opportunity are very much the same as with sales opportunities.

1. Know who you are dealing with

One of the easiest mistakes made by people is to rely on a title to reflect value or power, (or lack thereof) without fully investigating that assumption. An opportunity to speak with the real decision maker can be missed because the title of the person you communicating with doesn’t reflect a position of power, but may actually be a huge influence in the decision making process.

A background in sales taught me to be respectful of gatekeepers, and to never underestimate the power they hold when it comes to recommending a vendor or cutting off all access to the final decision maker. A caller can be stopped because the person on the receiving end either didn’t perceive value, or were simply put off by a sales approach. To succeed, I was also prompted to dig a little deeper to learn about a company’s needs beyond what was visible on the surface. In a similar vein, I watch as job seekers ruin their chances for getting in the door with a company because they were disrespectful of the lower level employees they had contact with. Either way, the scenario typically begins with an assumption and may end without gaining traction unless the assumption is thoroughly researched.

2. Know what you are dealing with

It is also possible to mistakenly overlook an employment opportunity because the title of the position you learn about sounds too junior. I have seen job seekers miss out on prime opportunities to get their foot in the door with a company that could lead to a great future. They thumbed their noses at lower level roles because they felt the roles were “beneath” them. Before you ask: “Won’t the company perceive a candidate with a recognizably higher current/former title as being overqualified?” I’ll respond by answering “not necessarily.”

Sometimes the “fit” with the organization is so highly regarded by an employer they will follow up with a candidate based on a referral, even when they are not an exact match with a posted position. They may even adjust the role to fit the candidate’s full qualifications after meeting and discussing their needs.

Researching the culture and hiring practices of an organization through current/past employees prior to applying can give a candidate a leg up. Many companies can and will create a new role, at a different compensation level, based on a referral, the candidate’s willingness to break in at the lower role, and their enthusiasm about the organization. If the candidate is called in for an interview, you can bet the company was interested in what they saw on paper. What comes next depends on how well the candidate leverages the company’s interest and parlays the opportunity to speak to them.

Interviewing for a lesser position can lead to a referral for an impending higher level role a candidate was unaware of. Or, another outcome can be that a new position opens up in the same department because someone else moves on within a brief time of the new employee coming on board. Mind you, an immediate or quick promotion can’t be assumed or counted on, but if the candidate shows the willingness to contribute in any way the company needs them to in the beginning, you can bet they will be regarded highly when that next opportunity opens up.

Similarly, a salesperson that researches the needs and buying practices of an organization before calling on them, and subsequently impresses the person influencing the decision maker, can help identify an expanded need for products/services beyond what had originally been anticipated.

3. Know what is needed

After an interview, when a candidate reports “they thought I was over qualified,” I immediately wonder what was said to lessen the company’s interest. Certainly something caused them to change their minds about considering the candidate after their initial interest was piqued with the receipt of the resume. During an interview, prematurely speaking beyond the position can lead an employer to believe the candidate is not interested in the role at hand at all, and that can be a turn off. Boasting about experiences that are beyond the needs of the role is not productive, and may cause the employer to immediately lose interest. The fear is that the candidate will bail when a more interesting position pops up, or will get bored or become too impatient to wait for the
right opportunity within the company. It is the candidate’s responsibility to convince the employer they really have a strong interest in the organization, not just a great job.

To do that, it is critical to satisfy the organization’s immediate need first. Once this need is clearly satisfied, then it is possible for the candidate to address questions about growth by inquiring about their business plans and future challenges. This is very different from asking straightforward questions about “growth opportunities” from an employment perspective. By understanding their current status and needs now, it is possible to segue into how you can help down the road. Show a clear understanding of the need for the current role right now, and then connect it to how it naturally relates to their future needs.

Not dealing with or resolving the immediate need is like trying to sell a fleet of cars when only one car is needed. At this point, regardless of the fact that more will be needed later, the sales opportunity will be gone with the wind if a salesperson hasn’t met and confirmed a company’s immediate need first. Talking too much about the wrong points or being too “self-assured” can also lead to a very misdirected sales effort.

4. Go in prepared to have a productive conversation

The key take away from this blog is not to make assumptions. Get your facts straight about what the company really needs, where they are headed and what level of influence your contact has before you make a decision to pursue or discard a lead, or engage in a conversation.

Researching a company in advance to thoroughly understand its culture, needs and reasons for making buying decisions, whether it is for team members, products or services, will ultimately lead to a much more productive outcome.

If you have learned enough about an organization prior to applying for a position or presenting a product that changed your approach and ultimately led to a different opportunity than anticipated, please share your experience.