My most recent used car purchase

Step 1: Figure out what you want
Start by making a list of everything you need and want in a car. This is an initial wish list, so you can include anything and everything. Appropriate items for your list might be: make and model, color, size, safety features, reliability ratings, gas mileage, air conditioning, stereo system, etc…

Step 2: Prioritize your wish list
Go through your list and order it by priority, putting the one thing you absolutely cannot live without at the top, the second most important item should be number two and so on until every item on your list is assigned a value. This will help you zero in on the right car for your needs.

Step 3: Make a list of cars that meet your needs
When I organized my wish list, my top priorities were: safety, reliability, and fuel efficiency. I also needed a car that comfortably seated a family of four, had air conditioning, and was not beige (my husband hates beige). There were other nice-to-haves on my list, but I focused on the top five when I started my research. I consulted Consumer Reports to get a reliable assessment of different makes and models of used cars. Consumer Reports ranks cars according to safety, reliability, size, fuel efficiency, and price range, so I was able to quickly come up with a list of cars that met my needs.

Step 4: Figure out what you can afford
Look at your savings account and figure out how much money you can afford to spend IN CASH for your new used car. Whether it’s $500, $5,000, or $15,000, write that number at the top of your prioritized list and commit to getting a car for that price. Do not take out a loan to buy more car than you can afford. This is a difficult goal to stick to, especially when you start seeing the pretty cars you can get with just a few hundred, or thousand, dollars more. You’ll be tempted to take out a loan, but try to stay committed to a cash deal so that you aren’t saddled with monthly car payments. if you don’t have enough cash, and your current car is still drivable, consider saving up for a few more months.

Step 5: Zero in on the car that meets your needs and fits your budget
Go to Kelly Blue Book or Edmunds and look up each car on your list. These free online resources are industry-standard. They will tell you exactly what you should expect to pay for a used car. The main factors that determine the price of a used car are: make, model, year, mileage, and condition. When I did my search, I started with the make/model, chose “good” condition, and then looked for the “year” and mileage that I could afford.

Step 6: Start shopping
Search classified ad sites like Craigslist, local newspapers and other sources for the make, model, and year you are looking for. Remember, buyer beware. Keep the following in mind when buying a used car directly from a seller:

Step 7: Close the deal
Once you’ve identified the car you want, you’ll need to do the following to ensure it’s a good purchase:

When it comes to something as important to you and your family as your mode of transportation, you don’t want to take any chances. When preparing to buy a used car, do your homework. This way, you’re getting a reliable used car at a price you can afford.

“The new mantra is, ‘do I really need this?’”
- Lynda Resnick, Owner, POM Wonderful, FIJI Water and Teleflora

“What we’ve experienced is customers marching down the demand curve toward much more value-oriented purchases.”
- Gary Loveman, Chairman, CEO and President, Harrah’s Entertainment Inc.

“It started after 9/11 with the whole staycation trend. People are doing things as families. They are still consuming, but they are consuming differently. Crock pots, food savers, anything that has a value proposition where people see the return for themselves.”
- Martin Franklin, Chairman and CEO, Jarden Corp.

“My bottom line is that the American consumer is toast.”
- Steven Roach, Chairman, Morgan Stanley Asia

These are my favorite quotes from a Milken Institute panel discussion on the mindset of the frugal consumer. This discussion took place over a year ago, but not much has changed. One of the most interesting aspects of the discussion was the speculation around whether our value-oriented frugal behavior will last if the economy improves. The panelists don’t think it will. What do you think?

My efforts to wean my family off the earn-and-spend treadmill hit an ideological snag a few weeks ago when my seven-year-old son became obsessed with Monopoly. We were in the bookstore with a Christmas gift card to spend when the game was spotted. He’d never played it, never even seen it, but the attraction was instant and he begged me to buy it. I rationalized that it would help him improve his math skills, and I figured he would tire of it quickly and we could put it in the closet with the rest of the board games, so I wasn’t prepared for what happened. He won the first game and his inner tycoon, last seen in August when he obsessed over how to drive more business to his lemonade stand, completely took over. On the weekends, if he couldn’t talk us into playing with him, he played by himself for hours, memorizing rent amounts, building custom hotels out of legos, and learning multiplication so that he could calculate fees for utilities.

Over the last month, I’ve spent many evenings and weekends in marathon Monopoly games and it’s given me some food for thought. The game lays bare the mechanisms (and the huge downside) of capitalism itself. You win by bankrupting your fellow players. It starts with a land grab, and ends with strategic investments designed to drive your competitors out of business. You have to be ruthless to win. No feeling sorry for the player who is glumly selling his house, mortgaging his property, and handing over his very last dollar. The winner is the one who literally takes all.

Interestingly, the earliest ancestor of Monopoly was a game called “The Landlord’s Game” designed by Elizabeth J. Phillips, a Quaker woman who wanted to illustrate how unfair economic conditions made a few people rich at the expense of everyone else. Elizabeth’s game was revised and self-published by Charles Darrow, who later sold it to Parker Brothers. Ironically, Lizzie Phillips’ game-style critique of the property tax system evolved into a celebration of capitalism that is so brazen it is still banned in North Korea and Cuba.

So what am I going to do about my kid’s Monopoly fixation? For now, I’m going to let it play out. There have been improvements in his math skills, and the game is establishing a good baseline to help him understand the sub-prime mortgage crisis, and other Great Recession issues that he wouldn’t have been able to approach without the hands-on experience Monopoly is giving him. I’m trying to sneak in lessons on how runaway greed destroys people, but to really internalize this, he might need an anti-monopoly game that shows him a different way to win. Hmmm, I have some ideas about that. Maybe I’ll get out the magic markers and design a new version of the game, reinventing Monopoly for the anti-consumer. Stay tuned.

Today, a friend reminded me of this funny Saturday Night Live skit in which Chris Parnell, Amy Poehler and Steve Martin demonstrate the most fundamental frugal tenet.

Brent Kessel

I thought it would be appropriate for a site dedicated to frugal living to hear a few words from someone who spends his days and nights advising people on their money–and helping them to use it better.

Financial planner Brent Kessel is the C.E.O. of Abacus Portfolios and President and co-founder of Abacus Wealth Partners. I met him at the Yoga Journal conference in New York in May, where he was presenting at the 2-day “business of yoga” workshop.

Kessel, a long-time yoga practitioner, has been able to combine his wealth of financial experience (pun intended) with the mental discipline and spiritual insight of his yoga practice to come up with some pretty fascinating theories on our relationships to money. And, some helpful techniques for taming the financial beasts within.

In his talk–and in his book It’s Not About the Money: A Financial Game Plan for Staying Safe, Sane, and Calm in Any Economy–he outlined 8 major money archetypes as he sees them: the Guardian (worry/prudence), the Saver (hoarding/abundance), the Innocent (avoidance/hope), the Pleasure Seeker (hedonism/enjoyment), the Caregiver (enabling/empathy), the Idealist (distrust/vision), the Star (pretentiousness/leadership), and the Empire Builder (greed/innovation).

I was so fascinated that I took another workshop with him a few weeks after the conference. I found out (no surprise for a Frugaltopian) that I’m a Guardian and a Saver—also, to my surprise, an Idealist and a Pleasure Seeker.

Brent was gracious enough to agree to an interview with Frugaltopia. So, I’m happy to pass some of the super interesting insights outlined in his book “It’s Not About the Money” (Buy it! You won’t be sorry!) on to you, dear readers.

Interview with Brent Kessel

Frugaltopia: Do many people avoid looking frankly at their financial situation? If yes, do you know why?

Brent Kessel: Almost everybody avoids looking at some part of their situation. I call it their Money Mask. This is the part of us that hopes the world will see us a bit differently than we know ourselves to be. Most want to appear to have more income and assets than they do, primarily because in our culture, that’s synonymous with approval, success, praise. They are like a drug fix that allows us to avoid emptiness, restlessness, or sadness. However, because they’re ego-driven, they’re completely impermanent. So the only lasting solution becomes an addiction to more and more.

Frugaltopia: How did you come up with the idea of the 8 archetypes that best describe most people’s money issues?

Brent Kessel: Mostly just by observing the patterns that people get stuck in year after year, even if they sell a business or get a big inheritance. And these patterns are almost entirely based on past conditioning. It seemed an easy way to give us a common language for identifying our weaknesses and strengths, and to cultivate more balance.

Frugaltopia: Is there one archetype that seems to do better financially than others? Why is that, in your opinion?

Brent Kessel: It really depends how you define better. If it’s defined as increasing your net worth or financial security, it’s likely the Saver, or sometimes the Guardian. If it’s defined as voluntary simplicity, it’s probably the Idealist. If it’s using money to ease the most suffering in the world, then it’s the Caretaker.

"It's Not About the Money"

Frugaltopia: Frugaltopians–the 4 of us who run Frugaltopia–are most likely Savers or Guardians, according to your system. (I’m both!) Are there any downfalls to being frugal?

Brent Kessel: The biggest downfall is when we believe that we can obtain ultimate security from our frugality or savings. They are impermanent too. It’s imperative that we stay in touch with our mortality, with the preciousness of life and how quickly security can vanish. This elicits compassion, which is the best antidote to the extreme Guardian (who’s overly anxious about money and safety) and to the Saver (who never gives money away for fear that they might need it one day.)

Frugaltopia: If there’s one piece of financial advice you could give to everyone, no matter what their archetype, what would it be?

Brent Kessel: Look beneath the surface. Your financial life is not dictated by interest rates, investment returns, or budgets. 99% of it is dictated by the unconscious beliefs you have about money. Use my book, or the Cure for Money Madness to uncover the parts you’re not yet aware of.

Thank you, Brent! Learn more about Brent and his work at his web site www.brentkessel.com.

Aidan's Independence Day Decorations

As Matt Taibbi’s article points out, the problems in our banking system aren’t anything new. In fact, the system has been corrupt since…the beginning. Andrew Jackson said this about it: “If the people only understood the rank injustice of our Money and Banking system, there would be a revolution before morning.”

Now consider the origins of our July 4th holiday. One of the biggest problems the colonists had with the King was that he taxed them excessively and didn’t give them any say in how that tax money was spent. In 1773 they dressed up in disguises and dumped over-taxed imported goods (tea) into Boston harbor. That touched off the Revolutionary War which ended in the birth of our nation. Of course, the war was about more than just money, but my point is that Boston Tea Party was to the Revolutionary War what Rosa Parks was to the Civil Rights movement. Someone finally did what everyone else had been afraid to do, and that ignited the courage and resolve of the less bold.

So this 4th of July I’m looking for, hoping for, a hero who confronts the economic tyranny we are under. But I don’t see any heros on the horizon. The new government hasn’t done anything to hold banks accountable for their monumental swindle mistake. The previous administration did even less. Maybe we need a grass roots movement? But short of pulling our money out of the banks and stuffing it in our mattresses, what can we do? I’ve been writing this blog thinking that the little things would be enough. That if we could learn to consume less, then our greed would atrophy and our culture would shift its focus. But when I think about the enormity of the problem and the powerlessness of “ordinary people” like me, I get overwhelmed and discouraged.

The Declaration of Independence

I know this sounds boring and kind of depressing, but that’s what I’m thinking about on this July 4th – economic freedom – how do we get it? I’ll take heart by reminding myself that against the odds the founders of our country declared their independence from tyranny, won that independence, and started a new kind of nation.

We need a new declaration of economic independence. Anyone have ideas?

I grew up frugal—or, as friends put it, “cheap”; my family had the whole reduce-reuse-recycle thing down, or at least the reduce and reuse part (municipal recycling didn’t exist yet where I lived). We grew vegetables, drew on the backs of papers my dad brought home from work, and wore sweaters indoors all winter. And we kept things, even if we didn’t need them anymore, because they were “perfectly good.”

I’m glad for some of the things my parents kept and handed down to my family, like wooden trucks and kid-sized rocking chairs—but these days I’m amazed at how suddenly all the perfectly good things can stop being useful and start being clutter. The lavender and hot-pink bicycle with training wheels was great when my daughter was four, but she’ll never ride it again. The local consignment shop where I used to unload baby items lost its lease years ago. There’s the dump, of course, but how could I stand to throw out all these perfectly good things?

So how to connect my unwanted but still eminently usable stuff with people who would snap it up? I signed up for Freecycle. Local online groups exist all over the country for the sole purpose of connecting one person’s trash with another person who sees it as treasure. Once you join your local Freecycling group, it’s a simple matter to post messages (“Offer: little girl’s bicycle”) and tell respondents where to pick items up. The recipient gets something for nothing; I get rid of things without having to throw them away. And even more satisfying than the extra space in my basement is knowing that somebody else’s little girl is learning to ride that perfectly good bike.

Freecyclers join to get free stuff, too, and sometimes I’m surprised by what’s on offer—just this week, in addition to the ubiquitous baby clothes and (surprisingly) televisions, I saw a pasta machine, a sailboat motor, and a 50-year-old metronome kit still in its unopened box. I try to resist; after all, I’m in it for the joy of unburdening. But every now and then I’ll see an item that makes my frugal heart skip a beat. Tomato seedlings! Extra paint! All the zucchini you can pick! And hey, couldn’t I find some use for that bag of switchplates? After all, they’re still perfectly good.

Money may not grow on trees, but does come on the roll.

The whole point was that the nice people at the bank were there to help you save money. I think that’s why ATM fees infuriate me. And what really gets my blood boiling are the “double” withdrawal fees – not only does the stranger bank (the one who is not your own) charge you a fee to take money out of their ATM, but then you get charged by your own bank too! It means that if you want to take out $100, you’ll end up spending between $2 and $4 per withdrawal. In other words, you’re paying 2 to 4% of your own money TO USE YOUR OWN MONEY! And if you’re keeping track of the math, that’s a whole lot more than the little interest they’re paying you to hold onto your money.

My solution for avoiding these fees when I am not near one of my bank’s ATMs is to go to the closest grocery store – D’Agostino’s, Food Emporium, Gristede’s, or any other place that provides cash back – and buy something. No fees are charged when you take advantage of the “cash back” option. (But don’t confuse cash advance with cash back; cash advances will cost you an extremely high fee of 15 to 19% on the amount advanced!) Buying something may not seem like the most frugal choice, but I‘ve made the rule that in such cases I buy necessities only – like toilet paper or toothpaste – so that the purchase is something I need to buy, or will need to buy in the near future. Toilet paper is my favorite since it only costs $1 to $1.50 – definitely less than the ATM charges. And I have to admit that sometimes I do categorize M&Ms as a necessity.

Another way to save at ATMs is to save the environment. According to Elizabeth Rogers, author of The Green Book: The Everyday Guide to Saving the Planet One Simple Step at a Time, receipts from 8 billion ATM transactions every year create one of the biggest sources of litter on the planet. Rogers says, “If everyone left their receipts in the machine, it would save a roll of paper more than 2 million feet long – enough to circle the equator 15 times.” While it’s true that sometimes we need the receipts to manage our accounts, taxes, etc., you may also take a moment to remember one of the golden rules your parents taught you: If you’re just going to throw it out anyway, it’s best not to take it at all.

Every little bit helps, so please be green when you’re getting your green!