Member Present: Brian and Bickford.
One of our members got hit with another set of car issues, so a discussion about when to buy a new car came up. One of the first ideas brought up was that you could compare the amount that you are spending in repairs to a car payment. If you were spending more than a car payment would cost, then the thought was that the new car is the way to go. An example was brought up about an older car with 200k miles on it that had recently had 1500 dollars in work and was going to need another 3500. That car ended up going away. A counterargument was made that you'll never actually get to the point of sustained work that would equal a car payment. The new-to-the-owner car that replaced the junker was $200 per month for four years in loan. We'll ignore the increase in insurance for the moment. This is at minimum $2400 per year that would be spent in repairs to equalize. You'll never end up making the payment amount with repairs. The counter-arguers opinion was that the car should only be swapped out when its reliability is impacting your ability to use the car on a regular basis. An apropos internet saying: YMMV.
The second topic of the day was a new company offer for financial advisers to help employees with their retirement plans. The fee structure amounted to 0.5% annually. With the limited offerings of a corporate 401k structure, there isn't much that this third party company will be able to offer in terms of help at first glance. In terms of the fee, this will be another drag on the account. It is hard to say whether it would actually be of benefit. This will need to get revisited, but the offer ends on August 17th, so we better hurry.
Fee structures got us talking about hedge funds and that they have a fairly scammy business model if we understand it correctly. The fund says it will only collect fees if the fund performs at some level. If it does, the company makes money and if not, then the company doesn't really lose out since they don't have to cover losses. They can just close up shop and start a new fund with the same people. These folks could have several firms going at once and can just push people towards the one that happened to luckily do well last go around with their high-risk investments. A standard mutual fund firm needs to keep clients around, so has more incentive to take less risk. At the time of writing, which is several hours after the conclusion of the meeting, I'm sure that I know what I'm writing anymore. It made much more sense when we were talking.
Anyway, the topic moved on to coming up with a down payment for a home. The 20% number can be a large chunk-o-change in the wrong area of the country. A few members of the group said that they lucked out when it came to down payment time, but it can be tough out there. If you can save $1k per month for 50 month, it can be possible. Seems like a tough thing to do with any sort of haste. Just keep socking away money a little bit at a time. Potentially you could also find financing through alternative means such as family members. If the housing market has dropped so much where you live that houses go for $60k in total, then the equation just got a bit easier. There are a number of factors that go into the idea of purchasing a home that will have to wait for another meeting. A way to save some extra cash is to get a "couch programmable" thermostat. They seem pretty swank. Bickford is getting away with $70 summer power bills, which is impressive.
Profit!
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