Cash for Clunkers..The real math

Here is what a friend had to say about "Cash for Clunkers". Ignore all the gas savings and just look at how the car buyer got taken to the cleaners.

If you traded in a clunker worth $3500, you get $4500 off for an apparent "savings" of $1000. However, you have to pay taxes on the $4500 come April 15th (something that no auto dealer would tell you). If you are in the 30% tax bracket, you will pay $1350 on that $4500. So, rather than save $1000, you actually pay an extra $350 to the feds.

In addition, you traded in a car that was most likely paid for. Now you have 4 or 5 years of payments on a car that you did not need, that was costing you less to run than the payments that you will now be making. But wait, it gets even better: they also got ripped off by the dealer.

For example, every dealer in LA was selling the Ford Focus with all the goodies including A/C, auto transmission, power windows, etc for $12,500 the month before the "cash for clunkers" program started. When "cash for clunkers" came along, they stopped discounting them and instead sold them at the list price of $15,500.

So, you paid $3000 more than you would have the month before. (Honda, Toyota, and Kia played the same list price game that Ford and Chevy did). So lets do the final tally here: You traded in a car worth: $3500 You got a discount of: $4500 Net so far +$1000 But you have to pay: $1350 in taxes on the $4500 Net so far: -$350 And you paid: $3000 more than the car was selling for the month before Net -$3350 We could also add in the additional taxes (sales tax, state tax, etc.) on the extra $3000 that you paid for the car, along with the 5 years of interest on the car loan but lets just stop here.

Who actually made out on the deal? The feds collected taxes on the car along with taxes on the $4500 they "gave" the buyer. The car dealers made an extra $3000 or more on every car they sold along with the kickbacks from the manufacturers and the loan companies. The manufacturers got to dump lots of cars they could not give away the month before. And the poor consumer got saddled with even more debt that many cannot afford.

Congress convinced Joe consumer that he was getting $4500 in "free" money from the "government" when in fact Joe was giving away his $3500 car and paying an additional $3350 for the privilege.

When we look at all the numbers it looks as only a few reaped the benefits from the Cash for Clunkers program. We never really get anything for free!

Later...
Scott
http://www.fdipays.com/

Whats new?

Time has been flying by and I can definitely tell from my blog entries! My Twitter posts are always current with my uncontrollable raves and rants... It hard keeping my views to myself and watching the politicians spend our taxpayer monies gives me a lot to rant about. Without freedom and capitalism we wouldn't have business, so don't take it personal if I rant about big government. We need business to make money!

As for FDI we are here and growing!!!

In a earlier post we mentioned about FDI International launching, it here and open for business in 62 countries.. This is a exciting time with the global slowdown, people are looking for opportunity and FDI has something for everyone. So if you re looking for additional income or looking for personal and financial services check us out. In today's current financial turmoil FDI's Credit Trax, Equity Trax along with LifeLoc and Teledoc are services that will save you money, help eliminate debt and protect your good name.

Summer and Fall is always a busy time so updates are few...That's where the FUN come in.... some of that fun is shared on Twitter and some is just to much to share....

Until next time...
Scott

Riding doesn't have to cost you a fortune!

Over the years motorcycle shop rates have been inching up, $80 per hour and up are very common. Everyone has the ability to learn so why not you!

Buying that new or used motorcycle is always fun but as you put on those miles it also needs proper maintenance. People mention paying $1oo or more to get a basic oil change. Dealers need to make money so they can provide us with their services, but it never hurts to learn the basics if you want to save.

Where do we start?

Start by purchasing a factory repair manual, then find a Mentor that is willing to show you the basics of maintaining your motorcycle. Most people with years of experience will guide you in the right direction plus we always enjoy sharing our knowledge.

Doing the simple fluid changes and minor adjustments can save you a pile of cash without jeopardizing the integrity of your motorcycle. Save all your receipts and don't forget to document the mileage. Learning the basics will allow you to be more safety conscious adding more satisfaction to your experience!

These steps will bring you years of enjoyable riding along with new friendships.


Ride safe,
Scott
www.fdipays.com