Personal Finance

In our last post, we had a look at some of the headlines that hit you in the face when you have a look at a car ad  and some of the fine print that usually turns up at the bottom of the page. Most of these headlines relate to car finance and the various conditions of the loan, but a few don’t.Here’s another selection, again taken more or less at random from the automotive section of an old newspaper with identifying information about makes, models and dealers removed to protect the innocent and the guilty.

• Brand new [Make & Model] from $XXXXXX. Notice that little from.This means that the price could be more than this. In fact, it probably will be more than this if you want anything more than the basic bog-standard variant of this new car.
• Get $XXX worth of accessories free.Sounds like an attractive deal, but the chances are that these accessories will include rather basic things like soft cloths for cleaning the windscreen, a keyring with the brand name (or the name of the dealer) and a few other little bits and pieces like coffee cups, cleaning products, mats and possibly seat covers if you’re lucky. A nice deal, but don’t let this sway you away from a lower price from another dealer  these little dinky giveaways probably aren’t worth it.
• Now only… Like all ads of this type, there’s a chance that the full price isn’t really the full price and you’re being offered a discount just to make you think that you’re saving money.Shop around and look at what other dealers offer for similar vehicles and you’ll get an idea about whether you are actually getting a discount or not.
• The new [make and model]  new look and new features. This means that the manufacturers have upgraded the vehicle in question. The fine print usually clarifies what the changes are. It’s up to you as to whether you like the new features or whether you want to stick with the older type that has just been superseded  which might be a good idea if you’re on a tight budget and the new features are things like bigger wheels or a different shape for the headlights. But new models usually have a few more tweaks than that!
• This month only! or its close cousin This week only! This is a very common advertising technique, making you think that you’ll miss out on the deal of a lifetime if you don’t sign on the dotted line now. It is a gimmick, and there will be another get it now before it’s too late deal in the yard next week or next month. Never feel rushed or pressured into making a decision about a vehicle  it’s your money (OK, you’ve borrowed most of it but you will have to pay it back) and your car.
• No deposit.This means you don’t need a deposit to get the car but you will probably be stung with higher interest charges or higher weekly/monthly repayments. Shop around for loans in this case (or get us to do it for you) to find something easier to manage unless you’re in urgent need of a set of wheels (see above).

Christmas is a-coming, and it’s one of those things that you have to factor in when you’re working with a budget… and you should be working with a budget if you are considering taking out a loan for a car, bike or boat (yes, even if you are buying said car, boat or bike as a Christmas present!).

Often, when people first calculate a budget to see what sort of weekly payments can be managed for your loan repayment, they can overlook events like Christmas and birthdays, which do require a little extra expenditure. And then that time of year comes around and the pressure can start coming on. It can be tempting to overspend and possibly max out your credit cards in order to have the perfect Christmas.

However, if you cut through the hype and are smart, then you can avoid blowing your budget over this time of year and facing the choice between defaulting on a loan repayment  with all the nasty hassle that comes with this  or eating baked beans for a fortnight. (If it gets to that level, choose the baked beans. They’re good for you as well as being ultra-cheap, and it’s easier to repair the social damage caused by blowing off than the credit damage caused by blowing your credit).

First of all, remember that Christmas doesn’t have to be perfect as defined by advertisers and movies. You don’t need a huge turkey or ham for Christmas dinner, plus all the heavy food of a Northern Hemisphere Christmas. In Australia, we’re lucky enough to be able to have Christmas in the veggie growing season, so make the most of cheap seasonal veggies or even home grown veggies and built your Christmas dinner around that, with the meat being a sideshow.

And presents don’t have to be the biggest, best, flashest and most fashionable. It’s a clich, but it really is the thought that counts. Try home-made treats and gifts if you’re good with your hands (sweets, jam, biscuits, cake, photo frames, etc…) or vouchers offering your services (washing cars, mowing lawns, babysitting, weeding, cleaning) that can be redeemed throughout the year. Or set a maximum limit and see what you can find for under a certain price  it’s amazing what you can find if you use your imagination.

Other tips to help you fit Christmas into your budget are:

• Join a Christmas hamper scheme or voucher scheme through your local supermarket  this does trim down the food budget.
• Buy presents bit by bit through the year rather than in one big hit. This spreads the cost out, allowing you to fit present shopping around your repayments. October and November can be good times to start. (Oops  bit late for that one now!)
• Buy presents for families as a group rather than individuals. This is especially good if you have masses of relatives.
• Make your own Christmas cards  after all, you can get enough pictures of Christmas-related stuff on the catalogues that pour through the letterbox to provide plenty of collage material.
• Make a pact with the members of your family that the presents will be bought in the New Year/Boxing Day sales when all the excess stock in shops gets sold off cheap. Don’t go mad, though  again, set a maximum limit and stick to it. Use cash and leave the credit card at home if you’re likely to give into temptation.