Just like a store that sells products and keeps them on the shelves with an inventory, car dealers are no different.  Basically, all of the cars you see on their lot is their inventory.  And just like other retailers they buy the cars from Honda, GM, Toyota or whomever and then sell them at a profit.   So, how can a dealer possibly make a profit on a car they just sold for “factory invoice” meaning the price the auto manufacturer charged the dealer for the car?  Well, here’s how.  Dealer incentives.  When General Motors notices one of their latest models is not selling very well, they give the dealers “incentives” (i.e., cash rebates to the dealer directly) to start unloading these vehicles.  GM may charge a dealer $19,000 for a new Chevy Malibu.  Let’s say in a slow economy that dealer is having a hard time selling those Malibus for much higher than $19,000.  What does GM do?  They may send the dealer $3,000 per Malibu sold just to jump start their numbers of that model.  Dealer paid $19,000, sold it for $0 profit but received $3k back from GM and the consumer thinks he got the car at “dealer invoice” price.  Everyone here is a winner, right?  Wrong.  GM, as usual, is the financial loser here.  By giving back that $3,000 to the dealer they may have actually lost money on that car.  So now you can see why General Motors has been in such a financial quagmire for so long.  

In addition to the car company incenting the dealer to sell those cars, the dealer and/or the car company often give cash back, 0% financing or other perks to the consumer directly.  Why is this?  It’s because they will always have a continual need to sell model-year cars.  Do you really think GM gives cash incentives to dealers to sell used cars?  Of course not!  The car companies are always under tremendous pressure to hit certain sales figures per year.  Why do you think the Ford Taurus and Honda Accord battled so long for the title of “best selling car in America”?  That whole thing was a sham as well because Ford included fleet sales to car rental companies in their sales figures and Honda doesn’t even sell many to rental companies.  

So the next time you or a friend think you just got a steal by getting a car at dealer invoice, think again.

Other popular coupons on eBay:

• Home Depot coupons here
• Lowe’s coupons here
• Baby diaper coupons here
• Pet food coupons here
• Coca Cola coupons here
• Pepsi coupons here
• Starbucks coffee coupons here

You get the drift. Now go save some money.

1. He’d have a feeling or “sixth sense” as to when an item would be moved to the clearance shelf.
2. He would not necessarily act right when it moved to clearance, for it may go lower in price.
3. Once the price was low enough he’d check eBay to see how much identical items were fetching.
4. Once he knew it was almost a “sure thing” he’d buy some of the items and sell them on eBay for a 100% to 200% profit (these were heavily discounted when he bought them)
5. If the items sold well on eBay he’d investigate to see if other area Home Depot stores had many of them in stock and buy those. For the most part, all Home Depot stores have the same items in clearance (assuming the stores are in the same climate).
6. He’d call me to get in on the action if the profits were really good. I remember once driving to three different stores to find those lucrative electric heaters to re-sell. I bought and sold two for 100% profit each.
7. If for some reason the item did not sell on eBay he would take advantage of Home Depot’s (and Lowe’s) little-known secret that you can pretty much return anything without a receipt even years later for a store credit. Or with a receipt within 30 days for a full refund.

The reason his system was completely legal was because all of the items were for sale to the general public at all times. There weren’t any before-store-opening secret sales or hidden paper lists of what would make it to the clearance shelf. My friend Rich was merely a keen observer of patterns, policies and profits that passed through that store day in and day out. I can’t thank him enough for sending a little of that knowledge (and profit) my way.

1. Called my bank and asked them for a lower rate on my car loan. I did not have to threaten them or be mean in any way. I merely told them I thought a lower rate was possible since rates had declined recently. It’s mentioned in detail on how I did it and how my brother and father did it as well right here (last paragraph on the page).
2. Called my cable company and said “I’m jumping ship and going to satellite dish. What can you do to keep my business?” Wham! $20/month off my bill for three months. That was pretty cool. $60 with 5 minutes of work. I’m still contemplating the switch to satellite.
3. My wife and I found a cordless phone at Target we liked the other day but noticed the last remaining one had an open box and was clearly a return. We have no problem buying a returned item as long as it’s in near-perfect condition. When we were about 10 feet from the checkout we lucked out and the manager of the store walked by. “Could you discount this since it’s an open box?” Wham! 20% off on the spot. Saved us twenty bucks. Luckily we did not cave in and send that money right back to the store for our five-year-old’s life desire for the moment.
4. For one summer season I paid someone to mow our lawn. Three of us were all using the same landscaper. Finally one of us had the brilliant idea to ask him for a discount since we were giving him a convenient set of customers all within 100 feet of each other. He discounted each of our bills 30% per month. All we had to do was ask.
5. I have a business checking account at a local bank (only because the Greatest Bank Ever does not offer business checking). Apparently I did not pay close attention to that business account recently and some checks bounced. Now, since my personal bank account has been at the Greatest Bank Ever for 12 years now I was pretty uneducated about current insufficient funds fees (or “bounced check fees” as they are called). After seeing multiple charges for $33 per bounced checks I about had a myocardial infarction. I then drove to speak with the branch manager. I calmly and politely explained to her that I had been banking there for over a year and was pleased with the employees and customer service. I then just asked “is there anything you can do about these $33 fees for insufficient funds?” She immediately replied “sure, we can get rid of those.” Wow, enough said. Perhaps the bank treats “business” customers on a different playing field than “consumer” accounts, but the end result made me pleased, needless to say.
6. Technically this one was from my brother, but the concepts are still the same. My brother had been planning to buy a new washer and dryer for his apartment and his roommate wanted to buy a new big TV and stereo system. They agreed to go to Best Buy together and see what kind of a deal they could get knowing they were going to be spending upwards of $2500. After they had tallied the total cost of all the items they politely just asked the salesman on the floor for a discount of $500 off the total price. Remarkably, he gave it to them.

As mentioned at the start of this article, you needn’t be a high-pressure, manipulative customer to get these kinds of deals. Use some common sense, a little research and then just ask.

Top 10 Reasons Why You Should Join USAA

1. I’ve been a member since 1993 and my parents have been members for a couple decades beyond that. When you call them for service on your accounts or policies their computer screen must have a big fat window on it that says “Mr. Hutter has been a member for over 14 years!” because they treat you like royalty. Most banks couldn’t care less even if you opened the account with your friend Rockefeller or Carnegie at the turn of the 20th century.
2. During years that their premiums collected exceeded their claims paid out, they send you a refund check. Yes, you read that correctly. Does your financial institution EVER EVER EVER send you money back saying, in essence, “we charged you more than we needed to last year. Here’s the difference.” Plus, the check comes around the holidays which is very convenient. I don’t have statistics but I bet I have received refund checks four of the past five years including 2005, the year of Katrina and Rita.
3. You can deposit checks from the comfort of your own home with USAA’s revolutionary Deposit@Home program. Basically, you need a scanner, a computer and an Internet connection. Scan the check, upload it to USAA and within 60 seconds the money is in your account. Pretty incredible for a bank, huh?
4. If Step 3 is too complicated for you, just mail your checks to them, free of charge, in the USAA-supplied postage-paid envelopes. Again, never leave the house to deposit checks. I recently opened a business checking account with a local bank (only because USAA does not offer business checking) and I asked the branch manager if her bank allowed me to mail the checks for deposit. She replied “sure, just send me an envelope addressed to me and I will deposit it for you.” Wow, thanks. Ever heard of USAA?
5. I can withdraw money from any ATM with no fees. Yes, again you read that correctly. They credit you 10 withdrawals from any ATM up to $2 per withdrawal. I have to laugh (and do) when I see my friends drive out of their way to use their bank’s ATM to save the $2. And spend that money in wasted gas driving out of their way.
6. Their consumer auto loans can’t be beaten. Great rates and top-notch customer service. Oh yeah, two years in a row and counting by J.D. Power and Associates for #1 highest in overall customer satisfaction among loan service providers. Source is here.
7. USAA received basically the highest aware a business can get from J.D. Power and Associates for overall customer service. Source is here.
8. USAA just recently received #1 customer service champs here from BusinessWeek. A new survey BusinessWeek just started and USAA gets #1 first try.
9. A plethora of praise from members (and even a laid-off USAA employee!) can be found here. Excerpt: “I am a former employee laid off a few years ago, and have to say here that all of the tough decisions made during that time were right on the money!!- There was so much duplication across the enterprise … that it would have been irresponsible to the members to not tighten up the ship.” If a polar opposite phrase exists for the words disgruntled ex-employee then that guy is it!
10. I willingly tell the phrase “don’t put all of your eggs in one basket” to go jump in a creek when it comes to USAA. I have researched the competitors and I have five bank accounts with them (two for the household and a savings account for each child), two life insurance policies, homeowner’s insurance, auto insurance, a personal floater policy for my wife’s wedding ring, and a partridge in a pear tree.

If you are active-duty military or have parents that are USAA members I cannot urge you strongly enough to join this stellar organization.

1. Develop a budget. Yes, I know for some of you that’s a four-letter word but at a bare minimum you need to at least know where the majority of your money is going. In Larry’s Burkett’s Complete Financial Guide for Young Couples: A Lifetime Approach to Spending, Saving and Investing he mentions that 10% of us are rich enough to not need a budget, 10% of us actually have a budget and that 80% of us do not. Can you answer these questions within 5% accuracy?
   • How much cash do you withdraw per month from ATMs and where does it go?
   • How much do spending eating out per month? Could you save money when you eat out?
   • Do you balance your bank account monthly? If not, convince me that there aren’t merchants who mistakenly overcharged you for a good or service.
   • How much do you spend on your car and car service per month? For most people this is the second-biggest expense next to paying a mortgage or rent.
2. Decide which items in your spending are a want versus a need. All of us have the same basic needs of shelter, food and clothing. Other obvious needs include insurance (health, auto, etc.), basic utilities such as electricity and water as well as various household convenience items like a microwave and dishwasher. However, what about that Netflix service at $20/month? Or playing golf twice a week in the summer? Or maybe taking a cruise every year? At your previous income level these items could be purchased without much of an impact to the household budget. Now that your income is reduced do you need to play golf so often? Could you take up a cheaper or nearly free form of exercise like jogging, tennis or basketball? If Netflix costs you $240/year could you get similar movies from the library for free? Most libraries now will let you reserve DVDs online through their website. Once you’ve weeded out all the extraneous wants I would estimate many people can save 10 – 30% on their spending. Keep in mind that these may not be permanent spending cuts. They might be only temporary cuts for a couple months or years depending on your situation.
3. Can you lower your grocery bill? You don’t need to take it to the extreme like this couple, but you could start buying some generic brand name items. You can see some major savings buying generic items as detailed here.
4. Are you “car poor”? Noted personal finance expert Dave Ramsey recommends that your car’s value should not be more than 50% of your household income. Let’s suppose your annual household income is $70,000. You drive a $20,000 minivan and your husband has a $25,000 truck. The total value of these automobiles is $45,000 which is 64% of your household annual income. This is a problem. Unless you and the family are living in one of those vehicles this is too much money tied up in the world’s worst depreciating asset. If you can get over the whole car-as-a-status symbol thing, you’ll save tons of money on car spending.
5. Call your bank and see which loans or credit cards they will lower for you. First of all, banks absolutely will not offer this to you out of the clear, blue sky. You need to light a fire under their seat and threaten to leave the loan with a competing lower rate. Or just ask them to lower it like my brother, Dad and I all did here. You will be amazed at how responsive the bank customer service representative is when she realizes that her employer may lose your business.
6. Pay cash. It is amazing how much you appreciate your purchases when you need to save up for them. The reason credit card companies (and casinos) are billion-dollar enterprises is because they have successfully removed the emotion from spending. Anyone can sign the credit card receipt for pay for a $45 dinner out with the family and think nothing of it. But when actual green cash is involved coming out of your wallet bill by bill somehow you are more aware of this spending. And it’s more painful for you, thus reducing your spending.

Hopefully your major pay cut will be temporarily short term or it was a pay cut chosen by you on your terms. If not, I hope the tips above can provide you some ammunition in battling a reduced household budget.

• put it towards Christmas presents?
• pay off previous debt or loans?
• finance that home improvement?
• put it into savings or investments?
• apply it to your mortgage principle?

I’d like to discuss what the possible financial benefits would be if you put that bonus money towards the principle owed on your mortgage. First some assumptions: your mortgage is $150,000 over thirty years with a 6% interest rate. Excluding real estate taxes the princple and interest payment would be $899 per month over those thirty years. Below are the possible scenarios.

Sending just one extra payment to your lender (in our example it’s $899) in December on the first year of your mortgage slices five months of payments on the mortgage. In other words, that $899 turns into five months of mortgage payments over thirty years. Put another way, you are basically turning a one-time investment of $899 at 6% over thirty years into $5169 which is between five and six months of mortgage payments.

Now let’s suppose you were discplined enough to send that $899 in December each year to your lender. It computes to $899 sent to your lender each December until the mortgage is paid off. In this case it translates to paying off the mortgage exactly five years, three months early. So, twenty-four payments of $899 (in years one through twenty-four) shave off sixty-three months of the mortage (five years, three months = sixty-three months). Wow, you turned twenty-four payments into sixty-three payments just by using time on your side.

Next let’s get a little crazy. What if you made double payments on that thirty-year loan? You’d pay off the home in a little over nine years. Of course, the average consumer would have a tough time paying double-payments on any mortgage but it’s certainly possible with a lot of discipline.

All of the above examples confirm one of Albert Einstein’s greatest quotes: “the most powerful force in the universe is compound interest.” Whether you use that compound interest with one extra payment, one extra payment per year or an extra payment every month it gathers enormous momentum over time.

In my case, I am currently in year four of a thirty-year mortgage. When I called my mortgage lender recently and asked what effect an extra payment would have on the pay-off date of my mortage the customer service person replied that it would shave four months off the end of my mortage. Thus, the title of this article….I would get four times my money back from making one extra payment.

Let’s summarize the major points of this article:

1. As with all investments, time is your best ally. The more you have of it the more power it produces.
2. In some cases one extra mortgage payment made early enough in the life of the mortgage can shave four to five months off the mortgage.
3. One extra payment made per year can shave over sixty months off the mortgage.
4. Double payments on a thirty year mortgage can shave nearly twenty-one years off of a thirty-year mortgage.

Finally, one important note is that you may find better uses for that extra cash rather than putting it into your mortgage. Invested in a good mutual fund the money could grow twice as fast as put towards your mortage. Just another financial nugget to digest.