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THE FRUGAL LIFE NEWS
Published Weekly by Randal Watkins
https://www.thefrugallife.com
July 22, 2002
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CONTENTS OF THIS ISSUE:
A NOTE FOM RANDAL
Thanks For Your Cooperation
FINANCES
Why Not Lease A Car?
GARDENING
Plant Swapping For A “Free” Garden
SIMPLICITY
FRUGAL TIPS
SHARING WHAT YOU KNOW
ANSWERS TO PREVIOUS QUESTIONS
LEGAL DISCLAIMER
SUBSCRIPTION INFO
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A NOTE FROM RANDAL
Hello Everyone,
Thanks for sending in all the answers in the format I asked for. This is proving to be a great time saver.
I have noticed the ezine is getting longer and longer. If you are like me, I am sure you have more than just this ezine to read. :-)
Therefore, I am starting to post many of the answers on the website. Also, make sure you check the existing web pages on topics of interest regularly. I am often making new entries to those pages.
We often receive many of the same responses on several of the questions. Due to space and time considerations, I am only able to post the contributor’s name with the most complete response. Although, I am very grateful to each of you for your contributions.
Hope you stay safe and comfortable this summer. Thanks for your readership and sharing all of your neat ideas. Remember if you know others that can benefit please forward this email to them. We would greatly appreciate it!
Until next week!
Randal Watkins
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FOCUS ON FINANCES
WHY NOT LEASE A CAR? – by Gary Foreman
Is it better financially to buy or lease an automobile since it’s a depreciating asset? Thank you kindly. Mark
Like most people, Mark is probably attracted to the lower monthly payments of an auto lease. But, even with the lower payments it’s usually better to buy. There are a couple of reasons that’s true. You don’t build up equity in a leased auto. You’ll also be prone to trade cars more often and you give up flexibility if you need to get rid of the car quickly.
Mark’s question points to the main reason why leasing isn’t the best deal. A car is a depreciating asset. And a car depreciates more quickly when it’s newer. A $15,000 car will lose approximately 25% of it’s value in the first year. From year two through year six the car will lose between 6 and 9% each year with the bigger losses in the earlier years.
Once you lease an auto you’re much more likely to drive a new car every few years. And the first miles are the most expensive that you can put on a car. Your cost of ownership drops dramatically if you keep a car 6 or 7 years.
For instance, if you drive 12,000 miles per year, the depreciation alone during the first year on a $15,000 car will cost you 31 cents per mile. By the time you get to the sixth year those miles only cost 7 cents each. Clearly those first couple of years are very expensive ones.
Let’s take a look at a fairly typical dealer ad. It offers a popular new model for $13,998 with 1.9% financing or a four year lease with $1,000 down and monthly payments of $249.
If Mark takes the lease deal he’ll pay a total of $12,952 over the 48 month period including his $1,000 down payment. So he’s pretty much paid for the entire car. But, when the lease ends he won’t own the car. He’ll be required to turn it in. And, if he’s put on more mileage than the lease allows or the car shows any unusual signs of wear, Mark will face extra charges.
Suppose he chooses to buy the car instead. He’ll spend $13,508 over a 48 month period. That assumes a $1,000 down payment and the 1.9% financing. His monthly payment would be $281. Not much more than the lease.
Let’s further suppose that Mark’s credit isn’t good enough to qualify for the 1.9% financing. We’ll assume that he pays today’s average rate of 8.4%. That would bump his monthly payment to $319. That’s $70 more each month than the lease, but he’ll be building equity in the car.
The big advantage to buying comes at the end of the 4 years. He’ll own the car outright. It will be worth approximately half of it’s original $13,998 purchase price. So he’ll end up with an asset of about $7,000 that he can continue to drive.
If he had leased there would be few choices. He could buy his old car from the leasing company. That would mean adding a couple more years of payments. He could be paying 6 or 7 years on the same $14,000 car! Or he could turn the car in and go find something else. Probably another lease. And he’d join the ranks of those who will always be driving new, but expensive cars.
Maybe Mark is concerned with the reliability of a four year old car. Most cars can give more than four years of dependable service. But let’s buy an extended warrantee that would cover the car until it’s six years old for an additional $850. So instead of signing a new lease at $250 per month, he’s spending about $35 a month for the extended warrantee. In the fifth and six year he’ll have saved $5,100 on lease fees plus he’ll have his old car to use as a down payment for a newer car.
Besides the ownership issue, a lease could set Mark up for a nasty surprise. Sure, he expects to drive the car for four years. But everything doesn’t always go according to plan. A lost job or sick child could make that car payment too big to handle. If he should need to get out of the deal early, it’s harder to terminate a lease. Most carry a hefty penalty if you want to turn the car in early.
Some leases can be sold, but Mark would still be hurt financially. Selling any car in the first year or two is costly. Owning the car does give him more chances to get a better price.
OK, one final argument. What happens if Mark can only afford the $249 per month. Maybe $319 is too much for his budget. The correct answer for Mark still isn’t to lease. It’s to find a car that he can buy that fits within his budget. It might be smaller. Maybe used. But at the end of four years he’ll own a car instead of walking away from the dealership empty handed.
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Gary is a former Certified Financial Planner who currently edits The Dollar Stretcher website
Another helpful article that discusses natural ways to treat your pet, home, and yard can be found here.
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SHARING WHAT YOU KNOW
Q. Is there an easy remedy to removing a water stain on a small lazy susan without ruining the painted design? Patty
Q. I like to keep a feeder in my back yard but it seems the birds are getting a little picky with the seed I put out. They push so much out onto the ground I have a patch of “who knows what” growing! I think it’s mostly weeds but it is starting to look like a mound. How do you prevent this from happening? Thanks so much! – Kathy
Q. Hi. does anyone know what to use when dying a polyester fabric? Rit dye says not to use on polyester on their package and i’m not familiar with any other products.
I have this great pair of polyester stretchy super comfy pants that would serve me quite nicely throughout my entire pregnancy (I hate to spend a lot on maternity clothes when i only will wear them a few months) but the only problem is that these pants are a remnant of my college days and I have since outgrown snakeskin print. (don’t ask) if I could just dye them a basic black they would be perfect. any ideas are greatly appreciated.
thanks. – Carmen
Please post your questions/answers to our new bulletin board. You can find directions here.
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ANSWERS TO PREVIOUS QUESTIONS
Q. Is there any natural way to get rid of ants other than the commercial sprays and powders? I ‘have been seeing lots of little black ants around my sink and counter area. Thanks for the help. – Ana
Find some wonderful answers at https://www.thefrugallife.com/thefrugallife/ants.html href=”/ants.html”>
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Q. I really enjoy your newsletter and have a question for your readers.
I would like to know if anyone has any advice or knows any good resources for budgeting on a fluctuating income. My husband is self-employed in the construction business, I am a stay-at-home mom with 5 kids. His income can fluctuate from $500-$4000 a month. This amount also includes the money we use for business expenses such as tools, gas, materials etc. We always manage to just barely get by, of course many times we are late on bills, etc. Then when we make more money we are having to play catch-up and it is very hard to get ahead. I would appreciate any advice from your wonderful readers.
Check out the detail answers at
https://www.thefrugallife.com/budgetfluctuate.html
href=”https://www.thefrugallife.com/budgetfluctuate.html”>
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Q. I have a problem with mice in the spring and again in the fall. I am told it is because I live close to a river. Anyone know how to keep the nasty things out of my house for good? I am freaking out!
Check out some very innovative answers at https://www.thefrugallife.com/thefrugallife/mice.html
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Q. Our son will be attending a University in Montreal, Quebec this fall (we live in Vermont). We are looking for cell phone service that covers both areas at a reasonable price. Does anyone have any suggestions? Thank you, Julie
a. Another suggestion would be that if you have 7-Eleven convenience stores in your area, you can purchase a verizon phone card for 1,000 minutes, and the price is only $20. – Jillana
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LEGAL DISCLAIMER
Information in The Frugal Life News (TFL) has been derived from sources believed accurate and reliable. In no event shall *The Frugal Life,* Randal Watkins, or the TFL staff be liable for any damages whatsoever resulting from any action arising in connection with the use of information herein.
TFL does not knowingly accept ads from advertisers deemed detrimental to TFL’s readers, however, publication of an ad in TFL does not constitute an endorsement for such product or service.
There is no remuneration for suggestions, tips, or ideas submitted by readers. All suggestions, tips, and ideas, submitted for publication in The Frugal Life, become the property of The Frugal Life, notwithstanding similar rights of the reader submitting such suggestions, tips, or ideas. TFL publishes readers’ names with their suggestions, tips, and ideas unless a reader requests otherwise at the time of the submission.