Tax Refund Time!

[disneysteve]

Originally Posted by timetosave

SmartBuy is a purchase transaction that is like a lease because monthly payments can be lower than with traditional financing. That’s because the monthly payments are based on the portion of the vehicle you expect to use during the SmartBuy term plus a finance charge. However, with SmartBuy you own your vehicle.

At the end of your contract you have several options, including keeping your vehicle by making a final balloon payment or simply returning your vehicle and paying a disposal fee (if applicable).

SmartBuy is available in a limited number of states. Ask your GM dealership/retailer about availability.

This comes from carbuyingtips.com

GM's "Smart Buy" Program

It's really a dumb lease! Salespeople know the word "lease" reminds us of bad memories and scams in the mid 90's so the brilliant marketers at GM have relabeled it, disguising leases with the name "Smart Buy". It's sort of a purchase, and sort of a lease. Salespeople tell you that YOU own the car, your monthly payments are less and you can buy the car in the end for a balloon payment. I'm sorry folks, that's a lease with a purchase option at the end. They don't tell you the balloon payment may be more than fair market value because they artificially inflate the residual value to make your monthly payments less. Balloon payments are risky, what if you don't have the cash at the end? Even GM's website places a veil over the lease telling us that that Smart Buy "enables you to own your vehicle and lower your monthly payments. The low payment is possible because each month you pay for the portion of the vehicle you expect to use." Leasing is fine if that's what you want, but our visitors have been tricked into thinking they are "buying". If you don't buy the car at the end, you pay a $250 disposition fee. Why don't they just call it a lease?
I don't recommend balloon payments! No one is ready for them when they come due.

[timetosave]

Disneysteve- yep, I know that already...I'm planning for it.

thanks

[Ima saver]

Do they tell you how much you have to pay off in the balloon payment, the total that is due? I would want to have some idea of that before signing. (not that I would ever lease a car)

[disneysteve]

Originally Posted by timetosave

Disneysteve- yep, I know that already...I'm planning for it.

I realize you understand the program. I was posting more for general info purposes. I think a lot of us, myself included, didn't understand what the Smart Buy program was. GM clearly has used deceptive wording - Buy - to hide the fact that it is actually a lease. Pretty sleazy marketing actually. They trick customers into thinking they are buying the car when they really aren't. Even the GMAC website says, "with SmartBuy, you own the vehicle" which isn't true at all. I'm actually a bit surprised they are allowed to get away with making false claims like that. Very interesting.

[timetosave]

Actually up until now I always thought it was a lease. When I was in the showroom Lorren (sales ex) kept trying to explain that it was not a lease, I kept pressing him about it because I could not understand the difference...oh well, the fact of the matter is that I have it and have to deal with it...make the best out of the situation.

[kv968]

Originally Posted by disneysteve

I realize you understand the program. I was posting more for general info purposes. I think a lot of us, myself included, didn't understand what the Smart Buy program was. GM clearly has used deceptive wording - Buy - to hide the fact that it is actually a lease. Pretty sleazy marketing actually. They trick customers into thinking they are buying the car when they really aren't. Even the GMAC website says, "with SmartBuy, you own the vehicle" which isn't true at all. I'm actually a bit surprised they are allowed to get away with making false claims like that. Very interesting.

I agree, this is pretty deceptive advertising. I think they can get away with saying you "own" the car because at the end of the "lease" (or whatever you'd like to call it), one of the options is you can "sell" the car back to them. Whereas with a lease you can't "sell" it because you don't "own" it, you just turn it in. That's the only thing I can see that's different than a lease. Again, all just fancy, deceptive wording.

[timetosave]

I just realized that I have not actually decided what to do with the 4191 left after the 2400 is put into my miniEF.

I had decided to put the remainder on the car but that has been proven to be a bad idea. So should I just put it all into the emergency fund? Or start funding my other goals (dd's riding/skiing; christmas fund; college)

thanks for all suggestions

[disneysteve]

Originally Posted by timetosave

I just realized that I have not actually decided what to do with the 4191 left after the 2400 is put into my miniEF.

I had decided to put the remainder on the car but that has been proven to be a bad idea. So should I just put it all into the emergency fund? Or start funding my other goals (dd's riding/skiing; christmas fund; college)

I've lost track. Will that $4,191 be needed to make the balloon payment on the car (assuming you still plan to purchase the vehicle at the end of the lease)? If so, just put it in your MMA so that you earn interest on the money between now and when you need to make that payment.

If that money is not needed for the car payment, I'd keep it in the EF.

[lucasrd]

I need to modify my withholding...I have to pay in about 6K.....Last year I had to pay in 7K....that gets old fast....

[Ima saver]

Wow, that would get old!!

[jIM_Ohio]

outside of making quarterly minimum payments... a 7k 0% interest/12 month loan is not that bad of a deal.

[Homebody]

Hi Time to Save,

I do not disagree with wanting to pay for DD's college. In fact we did pay for our OD and are paying for YD even though she is now married, (after financial aid kicks in).

I'm sure it was very painful for you to deal with your parents helping your brothers and not you and your sister. My in-law's did something similar in that they bought their 3 sons cars when they turned 16 (DH included), but had no interest in buying for the daughters, nor even helping them to get their licenses. I remember feeling what an injustice to my boyfriend's sisters (DH now for going on 29 years).

In looking back, I did something similar in that I did not have enough socks growing up and tended to go overboard with my three girls and clothes. At one point my then 4 and 6 year old older girls had over 30 pairs of sock each, many with tags still on. At that point I realized I had a problem!!Unfortunately just identifying I had a problem did not stop me from spending way too much money over the years on clothes for them, while completely neglecting my own needs.

So the challenge is to provide for your daughter's education without neglecting your own financial security.

One thing to consider is that your YD may do someething totally unexpected and up and get married as my own YD did at not quite 19. Instead of attending a junior college (because of grades), playing soccer with an eye towards a division I school (hopefully with scholarship), she is now attending a small junior college in North Carolina where her husband is stationed working on prerequisites for nursing school.

In other words, even though DD is now doing well with grades and working hard, it is not assured this will continue over the next 6 years and have the same goals. Not to say you should not prepare for that, just sometimes kids don't follow our plan (and their own plan).

Having written that book, I will say I think buying a rental is a very bad idea. Pay down debt, try to have no payments other than living expenses and pay for YD's college as she goes or like someone else said you can take out loans iin your name and her name, helping her with that as your finances permit. Personally concentrating on savings and paying off debt and reducing your living expenses, in my humble opinion is the way to go. That method has less possible negative outcomes.

Good luck!

[Joan.of.the.Arch]

Here is another to say that trying to buy a rental building is a bad idea. Besides everything that has already been pointed out about it, I wonder how you would pay for it beyond the less than $30,000 you would end up with after cashing out your retirement fund. There is no one that is going to finance that for you with your current debts. Trying to buy a rental and keep it in business sounds like a step backward rather than a step forward.

Also, please do not let your daughter think that any one university is the be-all-end-all of universities. She needs to be willing to consider others. What can a 12 year old possibly know about universities in order to have chosen Cornell already? It is highly unlikely she even knows what Cornell's strongest departments are, much less what she would want to study when she is an adult. She needs to be ready to spend her tuition money wisely, in a way that will gain her the education she wants.

I noticed on one of your other threads that you work in the Finance & Marketing department of a college. Do you know whether one of your benefits is that dependants can attend free or at a reduced rate? If so, you might want to keep before her the idea that your school is a possibility, too. I had to do that myself. My husband teaches at one school, yet my son ultimately chose another. But he will make use of the benefit by taking some of his elective courses at his dad's school

And with this year's coming tax refund, please apply it to debts that are accruing interest rather than to get ahead in payments on a contracted schedule that does not have interest (which I think you are saying is the case with your car.) If your paycheck is still being garnished, it might be good to apply it to that debt, as you had earlier thought you might do.

[Ima saver]

I have mentioned several times that my dh and I decided to buy small houses and rent it out. Lucky for me, I have a husband that can fix everything, carpentry, plumbing, electrical, etc. If not, we would have been even worse off. He had to make repairs constantly. In the end, we sold all the houses at a loss, a big loss. I would never consider a rental without a handyman husband.

[Joan.of.the.Arch]

Hope no one minds my bringing this post back up.

Timetosave, today it ocurred to me that our worlds have another parallel--besides the fact that we both have kids who want a college education and both our kids have parents who work at a college and therefor might get free or reduced tuition. Guess what! I am looking at our current contributions to retirement savings because I am investigating the possibility of buying a very inexpensive house next to a college campus! It is my son who came up with this idea. He is signing a contract to rent, but is aware that the owner wishes to sell. He started working on some of the math before he contacted me to bring up the idea. (That college education is already paying off. Math is his minor. )

But what are some differences between our situations?

Well, we would not be looking to make a profit on the house, should we buy it. We are merely hoping to actually spend less in the end by doing this. Son would occupy the house and do upkeep. He'd be there everyday to tend to things, rather than us having to find it in a mess everytime the last round of renters leaves. He would be the landlord, renting a room to other students--he already has two who are going to sublet from him under the current landlord. We do not want rental property in a town where we don't live after our son's college years, so we could resell when he is finished there. We would not plan on a profit; if it happens, great; if not, at least we figure we will not have lost anything and in fact will have come out ahead by keeping the would-be rent money in the family.

We are, of course, looking into financing. No question that we could get bank financing for a second home of eight times the value of this little house! We have good income, excellent credit, little debt, and live below our means, currently saving 28% of income. So one of the things we are looking at is slowing our retirement contributrions. But we are not considering cashing out the retirement accounts! That would be a big loss. (And did you know, timetosave, that some retirement savings accounts are protected in a bankruptcy? You seem to have lived very close to the edge, so I thought you would want to know that your retirement money might not be given to creditors should you find yourself in bankruptcy.)

Though I think my family with three adults is far more able to afford this college town second property than your family could, I am not yet convinced that it is a wise thing to do. I have to weigh many options and factor in some uncertainties. A chief concern is how the slowdown in retirement contributions would change our bottomline 20 years from now, and how soon we could re-up the contribution. It is an idea to think through very thoroughly and to make sure everything is really covered, that even in the worst case scenarios we can handle the our obligations.

Again, hang in there with your commitment to pay your debts and to find increased income if necessary. In your position I would have so much anxiety, so I really feel for you. Stay on the frugal wagon and you can eventually come out ahead.

[jIM_Ohio]

Originally Posted by Joan.of.the.Arch

Hope no one minds my bringing this post back up.

Timetosave, today it ocurred to me that our worlds have another parallel--besides the fact that we both have kids who want a college education and both our kids have parents who work at a college and therefor might get free or reduced tuition. Guess what! I am looking at our current contributions to retirement savings because I am investigating the possibility of buying a very inexpensive house next to a college campus! It is my son who came up with this idea. He is signing a contract to rent, but is aware that the owner wishes to sell. He started working on some of the math before he contacted me to bring up the idea. (That college education is already paying off. Math is his minor. )

But what are some differences between our situations?

Well, we would not be looking to make a profit on the house, should we buy it. We are merely hoping to actually spend less in the end by doing this. Son would occupy the house and do upkeep. He'd be there everyday to tend to things, rather than us having to find it in a mess everytime the last round of renters leaves. He would be the landlord, renting a room to other students--he already has two who are going to sublet from him under the current landlord. We do not want rental property in a town where we don't live after our son's college years, so we could resell when he is finished there. We would not plan on a profit; if it happens, great; if not, at least we figure we will not have lost anything and in fact will have come out ahead by keeping the would-be rent money in the family.

We are, of course, looking into financing. No question that we could get bank financing for a second home of eight times the value of this little house! We have good income, excellent credit, little debt, and live below our means, currently saving 28% of income. So one of the things we are looking at is slowing our retirement contributrions. But we are not considering cashing out the retirement accounts! That would be a big loss. (And did you know, timetosave, that some retirement savings accounts are protected in a bankruptcy? You seem to have lived very close to the edge, so I thought you would want to know that your retirement money might not be given to creditors should you find yourself in bankruptcy.)

Though I think my family with three adults is far more able to afford this college town second property than your family could, I am not yet convinced that it is a wise thing to do. I have to weigh many options and factor in some uncertainties. A chief concern is how the slowdown in retirement contributions would change our bottomline 20 years from now, and how soon we could re-up the contribution. It is an idea to think through very thoroughly and to make sure everything is really covered, that even in the worst case scenarios we can handle the our obligations.

Again, hang in there with your commitment to pay your debts and to find increased income if necessary. In your position I would have so much anxiety, so I really feel for you. Stay on the frugal wagon and you can eventually come out ahead.

I have often thought of the "college rental goldmine". I don't think over 4 years it would work out... but if you crunch numbers, please do share.

I see several advantages of this:

1) tenants are plentiful
2) tenants have "low demands". Not worried about school buses for kids or other factors in "quality of living".
3) old friges make for good kegerators
4) tenants often will not be in house for 1-2 months, which can allow for maintainance to unit.
5) leases could be renewed for 3 year periods (sophomore-senior years).
6) buy cheap used furniture and you can increase rent to "furnished" unit prices.

[creditcardfree]

College students are rough on rental property. Maintenance could be high. I still think that OP should get debt under control before buying rental property...but maybe that could happen by the time her daugher gets to college.