Dealer Installed Options and Adminstrative Fees - the latest gag.

New 2013 Nissan Frontier SV $26,750**

 

**Disclaimer: Prices plus tax, tag, dealer installed options and fees including $55 private tag agency fee and $599.00 pre-delivery service fee

 

 

Buying a brand-new car is never a good idea.   Things like "Internet Pricing" and pricing services like Kelly Blue Book (KBB), Edmunds, and TrueCar, would seem at first to level the playing field for the consumer.   People like to think they can outwit a dealer this way, but dealers are constantly coming up with new "gags" to pad and obscure the price of a car.

 

The latest "gag" the Auto dealers are using to hide the cost of a car, is to add on "Dealer Installed Options" to confuse you about pricing and to pad the price of the car.

 

For example, the car shown above is advertised for $26,750.  This sounds pretty cheap, until you realize that you can use any online price service, such as TRUECAR to drive down the price considerably - to about $23,147, which of course is a lot better.

 

So you call the dealer and he says, "Come on down!" and you think, reasonably, that the price of the vehicle is $23,147.  This includes the list price minus any incentives, rebates, markdowns, etc., plus the cost of shipping.

 

Of course, there are the normal "hidden costs" of buying a car, such as sales tax, and titling fees, which come to $1700 in my State.   So $23,147 is now $24,847.   OK, still a cheap car under $25,000.

 

But the dealer adds in a "$599 administrative fee" - some call it "document prep" or "vehicle preparation" - basically profit to cover their overhead of washing the car for the nice photos and to pay for secretarial help.   Some websites suggest you should not pay this fee, or at least negotiate it down:

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And as you might guess, "Friendly Al" at the dealer didn't mention this $599 fee, which appears in fine print on the Internet Ad, until he is asked point-blank about it.    Salesmen can't lie, outright.  But they can lie by omission.   And if you don't ask, they won't tell you about the $599 fee or what is considered a "Dealer Installed Option".

 

Of course, if you do something stupid like trade-in your old car, they will just adjust the price of that accordingly, or pad the financing price.  The simpler you can keep any financial transaction, the easier it is to figure out the real price involved.

 

But what about dealer installed options?   The local Nissan dealer adds their "Safety Package" for a whopping $1685.   What is in this package?

 

Well they tint the windows.  This sounds expensive until you realize that on this model, the rear windows are already tinted, and that a tint job in Florida is less than $100 - maybe $50 if done in bulk.

 

They add a few options - the step rails shown above ($184) and wheel locks ($44) and rubber floor mats ($115).   The car comes with standard floor mats, for free.  They also add a pinstripe, which is maybe $50 and that's being generous.

 

So this comes to about $500.  How do they pad the price of the car by over $1000?

 

Well they add "One year free roadside assistance" - which is essentially worthless, particularly if you already have AAA.   And they throw in "free oil changes for a year" which means two oil changes with Dino oil - a $39.95 value each, at Jiffy Lube.

 

So where does the rest go?   Well, no doubt they add in "labor" to "install" the side rails and other items and pad out the price accordingly.

 

The point is, you don't know in advance, unless you ASK, what "options" are installed on the car, even if you have an "Internet Pricing Deal!"   And not surprisingly, they get really vague on the phone about what these options are.   If you can even get them to say, they usually just give you the flat fee for "the safety package" (how this makes the car safer is anyone's guess).

 

And you had better be astute, as they will try to tell you than some things that were installed at the factory were "Dealer Installed Options".    Floor mats, bedliners, trailer hitch, and cargo extender, for example, are all factory options on this truck, but that doesn't stop the dealer from trying to add one or more to the list of "Dealer Installed Options".

 

So you take your stupid Internet Pricing Certificate (such as from TrueCar) to the dealer and they snicker at you, because most of that "discount" has been wiped out by "Dealer Installed Accessories".  You think you are being clever and smart by clipping coupons, but once again, "the man" has beat you to the punch.

 

And at that point, the vaunted ease of "No haggle Internet Pricing" is shot.   Because you will spend hours - as many as four or five, trying to argue down these penny-ante items which collectively, add up to over $1000 to the sticker price of the car.  (The dealer will argue that since they have already been added to the car, they cannot be removed - except for an additional fee.)

 

And a lot of people do this - spending hours at a dealer, being worn down, until they finally throw in the towel and say "to heck with it, I just want to get out of here!"

 

So you see what has happened here.   The dealers have found a neat end-run on the "no haggle" pricing.   They quote you a price on the Internet, and when you get in the door, they show you another price quote, with "dealer installed options" added on.  Dealer installed options that are often gimcracks and garbage and not worth much - but are wildly overpriced.

How do you avoid this?    Well, buying used is one way.   You can't lose at their game, if you refuse to play the game.  The same truck shown above, in a different color, with 10,000 miles on the odometer, is for sale an hour away for $21,400 from a private owner.  In fact, two such trucks could be easily found on Autotrader.  Yes, that is a savings of about $5000 when all is said and done.  And the private owner has added the side rails and a tonneau cover ($500 value) as well.

 

A used car seller isn't going to play this bait-and-switch game with you, telling one price on the phone, and then jacking the price when you arrive.

 

It also illustrates how much a car depreciates in the first year of ownership.   Here, a $26,000 truck drops $5000 in value - about 20% in just 10,000 miles.   Those first 10,000 miles cost 50 cents a mile to drive!

 

The other advantage of buying used, is that when you sell the used vehicle, you lose a lot less in depreciation.   Let's say two people buy these trucks, and one pays $26,000 at a dealer and the other pays $21,000 secondhand.  Each keep their cars about 5 years and put 75,000 miles on them.   At that point they are used cars, one with 75,000 miles on it, and the other with 85,000 miles on it - the difference in resale is negligable.  They are both worth about $12,000 at that point.

 

The new car buyer takes a hit of $14,000 in depreciation or 18 cents a mile.  The used car buyer pays only about $9000 or about 12 cents a mile - a 50% decrease in cost-per-mile.   Of course both buyers do far better than the fellow who bought the truck new and sold it in the first year - he got hammered with the most depreciation.   That's why a late model used vehicle is the best bargain - it has taken the biggest hit in terms of depreciation.

FOOTNOTE:   Deceptions like this are perfectly legal, since the "disclaimer" mentions that other items may increase the price.   Dealers also do very despicable things that are also legal.  For example, they sell a car on credit to a buyer and slap temp tags on it.   Two days later they inform the buyer than the interest rate on the loan is higher than expected.   The buyer cannot "take the car back" as it is no longer new.  Or, if used, the dealer will claim the "trade-in" was sold at auction already.  This is perfectly legal, and one reason you should NEVER take possession of a car, until it is paid for.

The point is, car dealers have 1000 sleazy and yet legal tricks to fool you into spending far more money than you intended, on a new car.   The only way to win at this game is to not play.

 

 

ObamaCare is Here!

 

Obamacare is here.  Is this a good thing?   Maybe on a personal level.

NOTE:  While I am no longer posting to my blog, I had to write up my experiences with the Affordable Health Care act, as it is quite interesting how this plays out.
 
I went on the affordable health care act website today to sign up for Obamacare - or at least see what the premiums are like.   It is fascinating.


First, the site is pretty badly done.  It asks the same questions again and again (middle name and Social Security number, e-mail address, and phone number, all entered twice - on separate pages) plus has a paranoid level of security with regard to user names and password structures, and security questions (two sets in different parts of the site).

In addition, there are so many questions to be answered that have nothing to do with health insurance - like ethnicity and demographic data.

And then it bombs out.   The final "signature" page bombs, and then I get an e-mail message saying "I have a message waiting for me!"  So I click on the link to sign in, and that signs me OUT on the bombed page.   Badly done.

The "message" says I am eligible for a $627 tax CREDIT every month (!!!!) based on my sucky 2012 income (2013 will be slightly better, so my credit may go down).   The message is in a pdf format that is not recognized by my old version of Adobe Acrobat, but a new version of Adobe reader will display it.

HERE IS A PROBLEM RIGHT HERE:   While my tax credit is based on my 2012 income, if my income goes up next year, I may lose part of that tax credit, and thus have a nasty surprise on my tax bill on April 15th.  As a self-employed person, it is hard to predict my income from year to year, which may vary from over $100,000 to as little as $25,000.    This makes planning, based on the tax credit, nearly impossible.    The only "safe" was to deal with this is to chose a plan that costs less than the tax credit, or be prepared to put aside money for April 15th.

A warning message comes up that I have to "review my application for unresolved issues" but when I click on the link, it says "Page not found".    Clearly the HTML isn't ready for prime time, but then again, it has been up for only 15 days now.

Regardless of this warning message, the site allows me to proceed further in selecting a plan.

What is troubling is that this massive tax credit, while appreciated, is something that government will have to pay for.   At the present time, Mark and I are on a $10,000-deductible Blue Cross plan, which costs us $240 a month, combined.    We get a deduction for this on our taxes, which might reduce the cost to $210 a month or so.   This is still a cost to us.

What is interesting is that I have a letter from Blue Cross on my desk, offering to extend my existing plan for another year, for a $298 premium.   This would "grandfather" in my high-deductible plan, but clearly compared to the tax credit plans, it is not a very good option.

With a $627 tax credit (each) we can "afford" a Cadilliac plan now - with more coverage - and pay nothing for it.  This is great for us, personally, but it means that combined, the government will get about $15,000 less in taxes out of us in 2014 - which is about what we pay in taxes every year.   In other words, our tax bill is being shifted from Uncle Sam to Blue Cross.

All very well and fine, but what is Uncle Sam going to use to pay his bills?

That is an interesting question.

There are several levels of plans out there, Bronze, Silver, Gold, Platinum, and all in my State (Georgia) are from Blue Cross (my present insurer) or Humana:

 BCBS Healthcare Plan of Georgia, Inc. BCBSHP Bronze DirectAccess w/HSA - caar
        Monthly premium  $0/mo.  was $524.73
        Deductible $6,300 group total
        Out–of–pocket maximum $6,300
        Copayments / Coinsurance
            No Charge After Deductible Primary doctor
            No Charge After Deductible Specialist doctor
            No Charge After Deductible Generic drugs

 BCBS Healthcare Plan of Georgia, Inc. BCBSHP Bronze DirectAccess w/HSA - cabp
        Monthly premium $0/mo. was $547.62
        Deductible  $4,000 group total
        Out–of–pocket maximum $6,350
        Copayments / Coinsurance
            20% Coinsurance after deductible Primary doctor
            20% Coinsurance after deductible Specialist doctor
            20% Coinsurance after deductible Generic drugs

 BCBS Healthcare Plan of Georgia, Inc. BCBSHP Bronze DirectAccess - cabr
        Monthly premium  $0/mo. was $541.23
        Deductible  $4,300 group total
        Out–of–pocket maximum $6,350
        Copayments / Coinsurance
            $35/20% Coinsurance after deductible Primary doctor
            20% Coinsurance after deductible Specialist doctor
            20% Coinsurance after deductible Generic drugs

 BCBS Healthcare Plan of Georgia, Inc. BCBSHP Bronze DirectAccess - caae
        Monthly premium  $0/mo. was $570.28
        Deductible  $5,550 group total
        Out–of–pocket maximum $6,350
        Copayments / Coinsurance
            $45/25% Coinsurance after deductible Primary doctor
            25% Coinsurance after deductible Specialist doctor
            $20 Generic drugs

 BCBS Healthcare Plan of Georgia, Inc. BCBSHP Bronze DirectAccess w/Child Dental - cdae
        Monthly premium $0/mo. was $619.41
        Deductible $5,550 group total
        Out–of–pocket maximum $6,350
        Copayments / Coinsurance
            $45/25% Coinsurance after deductible Primary doctor
            25% Coinsurance after deductible Specialist doctor
            $20 Generic drugs
        Dental: Child

 BCBS Healthcare Plan of Georgia, Inc. BCBSHP Bronze DirectAccess - caaw
        Monthly premium $0/mo. was $575.81
        Deductible $5,750 group total
        Out–of–pocket maximum $6,350
        Copayments / Coinsurance
            $40/20% Coinsurance after deductible Primary doctor
            20% Coinsurance after deductible Specialist doctor
            $20 Generic drugs

 BCBS Healthcare Plan of Georgia, Inc. BCBSHP Silver DirectAccess w/HSA - cbbg
        Monthly premium $22.56/mo.  was $649.56
        Deductible  $500group total
        Out–of–pocket maximum $500
        Copayments / Coinsurance
            No Charge After Deductible Primary doctor
            No Charge After Deductible Specialist doctor
            No Charge After Deductible Generic drugs

BCBS Healthcare Plan of Georgia, Inc. BCBSHP Silver DirectAccess - cbds        Monthly premium $51.28/mo. was $678.28
        Deductible $200   group total
        Out–of–pocket maximum  $600
        Copayments / Coinsurance
            $10/10% Coinsurance after deductible Primary doctor
            10% Coinsurance after deductible Specialist doctor
            $10 Generic drugs

BCBS Healthcare Plan of Georgia, Inc. Blue Cross and Blue Shield Healthcare Plan of Georgia Silver DirectAccess, a Multi-State Plan        Monthly premium $70.17/mo. was $697.17
        Deductible $200    group total
        Out–of–pocket maximum  $650
        Copayments / Coinsurance
            $5/20% Coinsurance after deductible Primary doctor
            20% Coinsurance after deductible Specialist doctor
            $10 Generic drugs

BCBS Healthcare Plan of Georgia, Inc. BCBSHP Silver DirectAccess - cbiq        Monthly premium $70.17/mo. was $697.17
        Deductible $200    group total
        Out–of–pocket maximum $650
        Copayments / Coinsurance
            $5/20% Coinsurance after deductible Primary doctor
            20% Coinsurance after deductible Specialist doctor
            $10 Generic drugs

BCBS Healthcare Plan of Georgia, Inc. BCBSHP Silver DirectAccess - cbaa        Monthly premium  $77.96/mo. was $704.96
        Deductible $150   group total
        Out–of–pocket maximum  $650
        Copayments / Coinsurance
            $10 Primary doctor
            No Charge After Deductible Specialist doctor
            $10 Generic drugs

BCBS Healthcare Plan of Georgia, Inc. BCBSHP Gold DirectAccess - ccab        Monthly premium  $206.52/mo. was $833.52
        Deductible  $750   group total
        Out–of–pocket maximum $6,000
        Copayments / Coinsurance
            $30 Primary doctor
            No Charge After Deductible Specialist doctor
            $15 Generic drugs

BCBS Healthcare Plan of Georgia, Inc. Blue Cross and Blue Shield Healthcare Plan of Georgia Gold DirectAccess, a Multi-State Plan        Monthly premium  $255.63/mo. was $882.63
        Deductible  $750 group total
        Out–of–pocket maximum  $6,000
        Copayments / Coinsurance
            $30 Primary doctor
            No Charge After Deductible Specialist doctor
            $15 Generic drugs
        Dental: Child

BCBS Healthcare Plan of Georgia, Inc. BCBSHP Gold DirectAccess w/Child Dental - cdcp        Monthly premium $255.63/mo.  was $882.63
        Deductible $750   group total
        Out–of–pocket maximum $6,000
        Copayments / Coinsurance
            $30 Primary doctor
            No Charge After Deductible Specialist doctor
            $15 Generic drugs
        Dental: Child

Humana Employers Health Plan of Georgia, Inc. Humana National Preferred Bronze 6300/6300 Plan        Monthly premium $327.39/mo.
        Deductible $6,300 group total
        Out–of–pocket maximum $6,300
        Copayments / Coinsurance
            No Charge After Deductible Primary doctor
            No Charge After Deductible Specialist doctor
            No Charge After Deductible Generic drugs

Humana Employers Health Plan of Georgia, Inc. Humana National Preferred Silver 4250/6250 Plan        Monthly premium $386.68/mo.
        Deductible $500   group total
        Out–of–pocket maximum $750
        Copayments / Coinsurance
            $35 Primary doctor
            $60 Specialist doctor
            $17 Generic drugs

Humana Employers Health Plan of Georgia, Inc. Humana National Preferred Gold 2500/3500 Plan        Monthly premium $443.62/mo.
        Deductible $2,500 group total
        Out–of–pocket maximum $3,500
        Copayments / Coinsurance
            $25 Primary doctor
            $35 Specialist doctor
            $8 Generic drugs

Humana Employers Health Plan of Georgia, Inc. Humana National Preferred Platinum 1000/1500 Plan       Monthly premium $499.97/mo.
        Deductible $1,000 group total
        Out–of–pocket maximum $1,500
        Copayments / Coinsurance
            $25 Primary doctor
            $35 Specialist doctor
            $8 Generic drugs

Whew!  That is a lot of data to digest!   If I sign up for a "Bronze" or some "Silver" plans, it appears my health insurance costs will go from $240 a month to ZERO, and the coverage increased (deductible decreased to $6500 or less) and Uncle Sugar will pick up the tab.

That's pretty sweet, considering my net worth is over a million bucks - I get some of that tasty gub-ment chee for a change!

But what do these plans entail?  It is hard to parse this out.   When I click on "Provider directory" I get:

Access Denied

You don't have permission to access "http://www.healthcare.gov/marketplace/auth/GA/en_US/www.bcbsga.com" on this server. Reference #18.f8050f17.1381842281.23969eec 

 Which is not helpful.   My present plan, even with a $10,000 deductible, does provide $40 co-pays at the doctor's office and a $15 prescription plan (the latter I never use, as many pharmacy plans are cheaper for generic and older drugs).

The site also logs you out after 30 minutes, so you'd better read fast!

We scotch the "gold" plans right off, as the premiums are ridiculous.    People with severe health problems probably will go for these plans - if they have high drug costs and lots of treatments to make.  But $500 a month?   That's $6,000 a year and a big chunk of my disposable income.   Not even a starter!

Similarly, the link to "SUMMARY OF BENEFITS" goes to a dead link generating the following message:

"Your Summary of Benefits and Coverage (SBC) is not available at this time, please check back soon."

So..... I have to sign up for a plan without really knowing what the plan is all about.

Geez, this isn't really very well thought out.  The premium costs of each plan are far higher than my old $10,000-deductible plan was for TWO people.   So we are talking about a4X increase in premiums!    And I think the premiums went UP because Uncle Sugar is paying the tab - to the tune of $7000 a year.

I was very hopeful that Obamacare would solve some of our health care crises problems.    So far, it ain't looking very good to me.

One problem is, of course, how the GOP is fucking this up totally.  Suppose I sign up for this new plan, at $500 a month and then the GOP decides to kill Obamacare?   I can't go back to my old plan, and now I may be stuck with a high-cost plan - and no tax deduction.   Our overall premiums would be over $1000 a month, versus $240 before.   I am not sure how this is "cutting" the cost of health care or health insurance.

But stay tuned.    Obviously this whole thing is in Beta stage....

UPDATE:  I am holding off on signing up for now. I have a $240 a month plan now (my share being about $120). If I sign up for a $570 a month plan, and the GOP decides to scotch the tax credit, I'd be screwed royally!

UPDATE:  10/16/2013  I called Blue Cross.  They have offered to extend my "non-conforming" plan for another year for $298.   It is a $10,000 deductible plan.

Blue cross has its own Beta website, Changemycoverage.com (they admitted it is not quite ready for prime time) where you can "sign up" for Obamacare - well, actually change from a non-conforming to a conforming plan.  A conforming plan for two people would run $1037.31 a month (!!!) for two people.

They also indicated that you might be able to shop for Blue Cross plans that are offered in other States (!!).

Here is the conundrum:

1.  If I keep my non-conforming plan,  I pay $298 a month, but get no tax credit (maybe a deduction, but no credit).  I am still "insured" and do not have to pay the fine. 

2.  It is unclear whether the non-conforming plan will be offered in 2014 - I may have to switch over to Obamacare eventually.

3.  Right now, we could switch to a conforming plan, and the tax credit WOULD PAY FOR ALL OF IT (Wheee!  Free Ponies!!!) but the government would be out about $12,000 to $15,000 in tax money from us (basically all we pay in taxes).

4.  If our income goes UP, we may lose this credit, in whole or part, and then be "stuck" with a $1000-a-month plan.

5.  If Republicans manage to cut the tax credit, we may lose our subsidy and be "stuck" with a $1000-a-month plan - and wished we kept our old $298 plan!

So, what should I do?  Renew the existing plan as a back-up, AND sign up for "Obamacare" and see how that works out?

Or just jump off the cliff, sign up for Obamacare, and hope the GOP doesn't kill off the tax subsidy, so our rates don't skyrocket.

The best answer the folks at Blue Cross had was, "Wait and See" - which I suspect a lot of people are doing!

UPDATE:  October 17, 2013

If we assume that 1/3 of the country (100 million people) gets a subsidy averaging $5,000 a year, we are talking about 500 billion dollars in lost revenue to the Treasury.  This is a lot of money!    And that number could be much higher.  Since the median household income is about $51,000 at the present time, it may be that more than half the country gets some sort of subsidy.  This could add a trillion dollars to our budget, easily.  Ouch.  Now I see what the GOP is getting at.

How much of a subsidy do you get?  It is hard to play with the numbers as the healthcare.gov website does not have a "change my lifestyle" section just yet.   When plugging in my 2012 income, it says I get a subsidy of $627 a month.  But I may make as much as 50% more than that this year.

This site:  http://kff.org/interactive/subsidy-calculator/

Has a subsidy calculator.  Kaiser Permanente seems to have done the best job of preparing for this.

So, for example, if I make $16,674 a year (my adjusted gross in 2012) my subsidy

Household income in 2014:  145% of poverty level

Unsubsidized annual health insurance premium in 2014:  $5,172

Maximum % of income you have to pay for the non-tobacco premium, if eligible for a subsidy: 3.71%

Amount you pay for the premium: $619 per year

(which equals 3.71% of your household income and covers 12% of the overall premium)

You could receive a government tax credit subsidy of up to: $4,552 (which covers 88% of the overall premium)

This is on the Kaiser site, and it is interesting that it shows a lower subsidy that the government site - but still a substantial subsidy!

Now, 2012  was  a nadir of income for me.  2013 will be much higher.  In fact, I will probably have an adjusted income of about $30,000 (apiece), if I apply singly:

Household income in 2014: 261% of poverty level

Unsubsidized annual health insurance premium in 2014: $5,172

Maximum % of income you have to pay for the non-tobacco premium, if eligible for a subsidy: 8.37%

Amount you pay for the premium: $2,512 per year

(which equals 8.37% of your household income and covers 49% of the overall premium)

You could receive a government tax credit subsidy of up to: $2,660

(which covers 51% of the overall premium)

Ouch.  Even with a modest middle-class income (median income in this county is about $51,000, and combined, we would make about $60,000 in 2013) my subsidy would then drop in half.  My premium would then be about $200 a month (as compared to $298 a month for both of us, in a renewed existing plan) even with the subsidy.  As my income rises, the subsidy evaporates, and the cost of insurance would jump to $500 - APIECE....

Note that the subsidy is based on INDIVIDUAL income, not on joint income.  If we assume a "household income" of $60,000 and TWO people in the plan, we get the following numbers:

Household income in 2014: 387% of poverty level

Unsubsidized annual health insurance premium in 2014: $9,317

Maximum % of income you have to pay for the non-tobacco premium, if eligible for a subsidy:

9.5%

Amount you pay for the premium: $5,700 per year

(which equals 9.5% of your household income and covers 61% of the overall premium)

You could receive a government tax credit subsidy of up to: $3,617

(which covers 39% of the overall premium)

This is interesting.  The new premium under Obamacare comes to $475 a month (this is line with the Humana and BCBS Bronze plans, which run from $499 to $550 a month for the cheapest plans).  This would be my out-of-pocket cost, with the subsidy (tax credit) included.

Compare this to BCBS's renewal offer of my existing plan at $298 a month, and it is clear which is cheaper.  The Obamacare plan might have a lower deductible ($6300) but does not have the co-pays and drug plan I have now.  Hmmmmm....

THUS MY CONCLUSION FOR THE TIME BEING IS THIS:   Since I will only receive a partial subsidy for these new premiums, and the Obamacare premiums in terms of cash-out-of-pocket will be higher than my existing plan, I will renew my BCBS plan for the time being.

This, tied with the uncertainty regarding the subsidy (and my income) makes the existing plan more attractive.   If I dump my $10,000 deductible plan and go with Obamacare, and lose my subsidy through legislation or increased income, the cost of insurance would be about three to four times what I am paying now.

Subsidy or not, for many Americans, a high-deductible existing plan may have lower monthly costs than even the cheapest Bronze Obamacare plan.

This is not working out the way I thought it would!

Last Post

When you set out to do what you wanted to do, it is time to stop.

I have enjoyed writing this blog over the last four years.  But like all good things, it has to come to an end.  I have been writing this blog since November 2008 - almost 2000 posts at this point.  It is time to call it a day.  Why?  A number of reasons.

1.  I did what I set out to do, and I'm done.

2.  The bog has become a bit of a time-bandit for me.

3.  The postings are becoming repetitive and redundant.

4.  I am not sure my message is getting across - or could get across - due to human nature.

This last reason is most troubling.  The transformation I have gone through in the last five years has not been some sudden revelation on my part, but rather, I think, a transformative change that occurs in most people as they reach a certain stage and age in life.  It does not occur in everybody, or at the same age, of course.  Many folks never end up "getting it" and go to their graves as angry and destitute middle-class people.

But I think when you reach a certain age, and face retirement and death in the face, you realize that life isn't what you thought it was at age 20, or even age 40.   And for many people, this becomes a "mid-life crises" where they get a divorce and spend even more money.   But for others, it is a time for taking stock and realizing that the party doesn't go on forever, and what's more, that in a very short time, the earning years will end - and that is a good thing.   I don't want to work forever.  Or if I do, I want it to be a personal choice not something forced upon me.

If you try to tell a 20-something that spending all their income on pot, beer, cars, cell phones, and other bling is just a stupid waste of money and net worth, you are shouting to deaf ears.   Kids want toys, and being "adults" for the first time in their lives, they want to drink deep from the well of life - even if it means borrowing from their future self to do it.   They set themselves up for misery later in life and there ain't much that can be done about it.

And when that misery kicks in, at age 30 to 40 - when it seems that they never will get out of debt, and no matter how hard they work, they never seem to get ahead - they will blame others rather than look inward at their own malfeasance.  It is Wall Street's fault!  It is the Big Corporations!  Nothing you can say will convince them that their credit card debt was a result of their own life choices - chasing after frequent flyer miles instead of low interest rates.  And their four years of Party U. that was paid for by student loans?  Has to be someone else's fault - along with that onerous "funny money" mortgage they signed.  Right?

It is simple human nature.  It isn't about to change.  A very few people might "get it" - but not many.  I know I didn't, until about age 50.   I thought, like most Americans, that chasing after "things" was the point in life, and that having nice stuff meant you were wealthy.  I was wrong.

A reader e-mailed me when I announced I was ending the blog and said, "Congratulations for not falling into the blog trap!" which I thought was an interesting comment.   A blog can be a trap - a time bandit that sucks up all your energy and starts to lose focus.   And after a while, it just peters out - as so many do that I have seen - and people forget about them or abandon them.  Better to leave intentionally than to just give up.  Better to leave on a high note, as Seinfeld would say.

And who knows?  Maybe I can organize and revise these better postings into a more coherent narrative and put them into e-Book on Amazon or something.  It would be a better use of my time.  I did not "monetize" this blog as the sorts of side-bar ads that would appear would be for the worst sort of odious deals that I rail against.  And that is one thing I am proud of.  This blog, for better or worse, is not just some Search Engine Optimized "content" designed to generate click-through revenue - like so much of the crap on the Internet today.  And I may revisit some of these postings and "polish them up" a bit, correct typos and misspellings, dead links, and whatnot.

Writing this blog has improved my writing skills and typing ability, both of which were no slouches to begin with.  While I could do about 60-80 wpm before, I am hitting 100 wpm on occasion, and fully "touch-typing" today, not looking at the keyboard at all.   It is helpful for my career, which involves a lot of writing.

But what about the journey, and what have I accomplished?   When I started this blog, I was in debt.  I had been in debt a lot, having well over a million dollars in mortgage debt at one time.  But that was for investment properties, most of which I sold before the market crash (my office building sold in 2008, after the crash, but I still realized a $400,00 capital gain from that, which is rally what precipitated the crises that started me down this road).

I realized that I made a lot of money in life - millions in fact.  Most people do, even at a $50,000 a year job, you will make over a million dollars by the time you retire.  But where did it all go?  Here I was, 48 years old, having made a ton of money and still in debt.  I had a mortgage on my home, another on my vacation home, and thanks to a capital gains fiasco, I had a $40,000 credit card bill to pay off.

At the same time, I owned two boats, five cars, a jeep, an RV, an antique tractor, and a host of other "things" all of which were very nice things, and were "paid for" but were in fact costing me money.  The taxes alone on my two homes were costing me $10,000 a year.  I was spending another $5000 a year on homeowner's insurance.  I was paying $500 a month on life insurance policies.  I was still making the final payments on my student loans!  And I was paying for two internet connections, landlines, cell phones - all sorts of stuff.

And foolishly, I did not rent out my vacation home to help cover some of these costs.

That is where the money all went.   It went to lots of little expenses, lots of little purchases, and a lot to interest payments on credit cards and mortgages.

And then of course, the market crashed.  My income dropped as the economy collapsed.  While I had a good amount in savings, I saw much of this cut in half by the recession.  And while I could "keep all the balls in the air" with a high income, as my income declined, it became readily apparent that I was burning through savings to pay expenses.

Something had to be done - and should have been done a long time ago.   I realized that while I could "afford" fancy cars and vacation homes and boats, having all of them at once was just too much.  And it was too much work, as well.  Mowing five acres of lawn took hours every week.  And changing the oil on five cars?  Winterizing two homes and two boats?  Forgetaboutit!  I realized that I was a slave to possessions - they owned me, I didn't own them.

It is possible, in this country, to live the life of what in the past would have been a rich man, on a middle-class salary today.  But maintaining all that sort of stuff is where it all breaks down.  Really rich folks can afford to hire people to paint their mansions and maintain their fancy cars.  When we have to pay someone to do these things, that is where we run out of money.

I started by cutting expenses - to the bone.  I cut my homeowner's insurance costs in half, merely by shopping around and going to higher deductibles and lower coverage.  I cut my life insurance down to zero by converting policies to paid-up status (and they now pay me every year instead).  I shopped our cell plan, our landline, our internet services.  I looked at every area of spending - our food, our clothing, our utility bills.  And I realized that there was no one area of "waste" in my life, but rather a lot of spending a little too much here and a little too much there, that added up to a lot of money over time.  You stop watching the little things and they become large things in short order.

Just saving $10 a day, for example, adds up to $3650 a year, which if invested, would be a couple hundred thousand in retirement.  And for most folks, this "sacrifice" might mean little more than packing your own lunch or not buying a Starbucks.  And yet many middle class people say they can't afford to save!

And credit cards!  I got rid of the high-interest-rate ones and rolled them over into low-rate cards and then paid them off.  It was difficult, and it took years to bring the balance down.  How I allowed myself to get into that debacle, still eludes me.  What was I thinking, signing a loan document at 14.5%?

I tried early on to save my lifestyle - which proved to be pointless.  While I was able to cut costs, the expense of owning so much "stuff" was still considerable.  Cars need repairs over time.  Antique Tractors strip a camshaft gear.  And while I always wanted to rebuild a flathead Ford, it is better to do such things at a time and place of your own choosing, rather than to be forced to do it as the lawn gets higher and higher.

But pride goeth before the fall.  And we see this all the time in the recent meltdown - people wanting to hang on to upside-down mini-mansions and luxury cars, rather than be perceived as "giving up" by their neighbors.  We see this all the time here on Retirement Island - people getting reverse mortgages so they can "hang onto their homes" even if they really would rather downsize to something simpler and easier to maintain as they get older.   The reason?  They don't want to be embarrassed in front of people they don't even know or care about and be perceived as "poor".

Myself, after owning eight homes over the years, realize that a house is just that - a house.  And since none of the houses I owned were Frank Lloyd Wright homes, they were not worthwhile making into showplace estates.  You can make the perfect lawn - as my neighbors have done - but who really cares that you have made a bland and inoffensive tract home look tidy?  No one.  And yet that will be the epitaph of many an older man - "He had a really nice lawn."

We were growing tired of maintaining two homes, too.  It was a lot of work.  And frankly, while it is fun to go on vacation, it is not necessarily fun to go on vacation every year to the same place, and spend half your time on home maintenance.  Houses, like cars, don't like to "sit" unoccupied, and vacation homes have special troubles of their own, just from sitting.

So we bit the bullet and sold it - at a loss, of course, the first time in our lives we lost money on Real Estate.   We sold the boats, we sold the cars, we sold the tractor, the Jeep.   It wasn't sad to see it all go.  It was liberating.   And most people will never have the experience of going into the bank and depositing a check for a half-million dollars - to a befuddled bank-teller in training who had to call the manager.

And paying off the mortgage and that remaining credit card debt?  Priceless.  It was like, well, ecstatic.  Like 100 orgasms in a row, that first acid trip, or whatever.  The idea that you had no debt whatsoever was as liberating as, well, liberation.   I was, for the first time since I was 21, no longer a slave to debt.

But it hasn't ended there.  I realized that while knocking $30,000 a year out of my budget was good, there were still a lot of expenses in my life - homeowners insurance, car insurance, utilities, property taxes, and the like.  It still costs $1000 a month just to live in a house "free and clear" here.  And maybe, someday down the road, we will sell this place and move to something smaller and easier to care for - so we can do things rather than own things.  When building our pottery studio, we realized that you can build a nice house for not a lot of money - and not need a lot of room to live in.   A simple Park Model home, for example, might be all we need.  Who knows?

As 2012 winds down, the world is more uncertain than ever, but appears to be headed for recovery.  What will happen is anyone's guess.   But today, we are prepared for the worst far better than we were in the past.  We have no mortgage to go upside-down on, and we don't have to worry about making X number of dollars a year to get by, as our personal life expenses are down to nil.   If we make more than that, we can spend the money on doing things rather than owning things and we look forward to that a lot.  For example, renting a 40' yacht in June of this year, in France for a week.  It will cost less that the storage and insurance costs on our 28' boat for one year.   And I don't have to change the oil or grease the outdrive, either!

And the most wonderful thing of all is that I could retire right now, if I had to, as I have enough money to retire.  How did I do that?  Simply by lowering my lifestyle costs.   If I can live on $50,000 a year, as opposed to $150,000 a year, the money I have in the bank can go a long, long way.  More than three times as far, in fact.

I suppose some of the old habits may creep back, over time.   Perhaps.  It is inevitable.  As we make more money, we tend to spend more - Boyle's law at work.   But I doubt I will be going back to a barbershop and spending $20 on a haircut - for the rest of my life - as we now have these hair clippers.   And I doubt I will ever set foot in a Starbucks again - now that we are drinking tea (and coffee today just gives me horrific cramps).   And while we may visit the Harris Teeter for their Indian Food Section, we still shop at Wal-Mart for their inexpensive crackers, cheese, and other staples.

The battle is never over, and the marketplace is a battlefield.  You have to fight the merchants and purveyors all the time.  And moreover you have to fight yourself - your own urges to "have it all now" and want the latest shiny, shiny, instead of having less "junk", saving more, and having real wealth.

So, dear reader, if you got something out of this blog, I am happy.  But as I noted when I started it, I wrote this blog for my own purposes - to turn my own life around.   Writing about something tends to reinforce ideas, and the more you pound these ideas into your own head the more you program your brain with positive normative cues.

If I can leave you with one thought, that would be it.  Stop watching television, the media, and the advertisements that all pound poor normative cues into your head.  You don't need to be "up to date on the news!" other than the weather.   And obsessing about politics is a bad idea.   Concentrate on your own life and what you want out of it.    Unplug from society's expectations.  Stop worrying about what other people think of you, and worry more about what you think of yourself.

Be happy.  It isn't hard to do in this country, and sadly, so few do it.

What a Rotten Year! Or...Maybe Not!

Oh what a horrible year we've had!  Everything is going so badly. 

No, wait, that's not quite right, is it?

On the Internet, you see people trolling and grooming and posting messages about how awful things are.  This is nothing new, we've seen it in real life since time began.  During every economic recovery I have lived through, there were legions of people willing to tell you how awful things were and why everything was so rotten.   These are called depressed people and you shouldn't listen to them.

During the 1950's, we had a huge post-war recovery and our nation was prosperous.  But to listen to some folks, it was an awful time, what with nuclear annihilation, the cold war, and youth gangs and all.  The fabulous fifties, according to some, were a dark and dreary time!

And during the 1960's, the economy boomed again.  But if you listen to some folks, their only impression of the 1960's was race riots, assassinations, and the Chicago 7.  Yea, bad things happen - they always do, you know.  But a lot of great things happen as well.   People seem to forget the latter.

The 1970's?  Well, they did kind of suck.   Nixon resigned in disgrace, we made a hasty exit from Vietnam, stag-flation and oil embargos paralyzed the country, and Jimmy Carter was President.  But you know what?  We still drove off to work every day - in our crappy 70's cars - and people still had a lot of fun.  I know I did.  I spend most of my time water-skiing and smoking pot.  There are worse ways to sit out a decade.

In the 1980's, the economy slowly recovered - but the naysayers would have you think that "Reaganomics" killed off all economic activity of that decade.  The opposite was really the truth.  Gas prices eased and salaries shot up.   Things were looking up and people were doing well.

The 1990's, of course, were the Clinton years.  And you may think he was a failed President for getting a blowjob in the oval office, the economy prospered and frankly, I made a ton of money during that decade.

the 2000's were marked by our war on Terror - but it is a war we have largely won.   While we may never wipe out all these terrorist groups (any jackass with a stick of dynamite and two friends can start another one), I think we proved that the "threat" of Al Quaeda can be kept tamped down.   And the economy roared again - and then tanked (as it did in 1959, 1973, 1980, 1992 and in 2001 - perhaps ends-of-decades are a good time to dump stocks!).   But by 2010, it was starting to recover.

And today?  Well, the recession has been officially "over" for over two years now.  The definition of "recession" is when an economy shrinks, not expands.  And we are expanding - nice and slowly, thank you, which personally is the way I think it should be.   The slower the expansion, the longer the recovery will last.  Rapid expansion is usually followed by rapid and more severe decline.

Unemployment is down, housing starts are up, existing home sales are up, home prices are up, foreclosures are starting to ebb, unemployment is down.   And it will get better, too, once we stop extending "unenjoyment" indefinitely and people realize that they aren't getting that overpaid job back, ever again - and take a job they are actually entitled to.

And the stock market?  Way up over this time last year.   In fact, I made more on my investments this year than I did in ordinary income from work.  My investment portfolio went up 13% since December of last year, which is not a bad annual rate of return.  Will this continue at this rate?  Well, we have already seen a drop of a couple of percentage points due to Boehner's boners.  But like July 2011, we will bounce back from this, eventually.

My life insurance went up a nice 5.7% which today is considered a good rate of return.   And while my income reached a nadir in the summer of 2012 (partly because I took a two-month vacation), my income is ticking up for 2013, and looks to be pretty good for the new year.

And my debt load is pitiful.  I am carrying a small balance on my business credit card ($2000) for some filing fees owed to me by a client, but that is about it.  No mortgage, no car loan, no staggering monthly payments to make.   Even if the shit hits the fan, I'm set - or at least better off that I was four years ago.

In other words, not only are things not all that bad, they are pretty freaking good, compared to say, 2008.

But no one wants to admit to that.  Why is this?   The political types want to say everything is rotten, so they can blame political opponents.   This is how you gain power and leverage in a political debate.  And both parties do it, although the GOP, being the party out of power, does it more lately.

And people like to feel sorry for themselves - wallow in self-pity.   It feels good to feel bad, sometimes, and we all like to indulge ourselves, from time to time.  But some folks take this too far, and it blows up into a full-blown mental depression, and nothing you can say will make them think otherwise.

In fact, good news is bad news to such idiots.  You tell them that the stock market is up, and they say, "Well, wait for the double-dip recession!  I read about it on a website!"   Or you say that housing sales are up, and they argue, "Well, that is only because the banks are holding back on foreclosures!"   For every piece of good news, they have some long-winded and improbable theory as to why it is actually bad news.

And the way economies work - the way human nature works - things will get better and then get worse.   This isn't the last recession you will see in your lifetime or the life of mankind.   So the naysayers can always say, "I told you so!" even if they have to wait a decade or more for their negative dreams to come true.

But more to the point, life is what it is, regardless of your credit score or the level of the Dow, or who is in the White House.   A beautiful day in the park doesn't have a score or level or credit, and never goes into recession or recovery.   You have to look at life like a customer sometimes, and appreciate it when it is beautiful and not worry so much about nonsense like jet ski payments and new apps for your cell phone.

2013 will be a good year - regardless of the debt ceiling, the fiscal cliff, the stock market, or unemployment rates.   Whether you enjoy life or not has a lot less to do with money than you think.

But even if you measure your life in terms of dollars and cents, 2013 seems poised to be a pretty good year, no matter how you slice it.