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Tools for Creating the Life YOU Want!

Math that Really Matters
by Marc Eisenson

Say you want to buy a brand new $18,000 car, and you've done battle to "win" a 10% price reduction, which would bring it down to $16,200. You decide it pays to pocket a $1,000 rebate from the manufacturer. So that $18,000 buggy would cost you $15,200. Right?

Wrong! Let's assume you finance 90% ($13,680) at 7.5% for 3 years. That'll add $1,639 in interest to the $15,200, for a total cost of $16,839. Right?

Wrong! Even if you disregard your new car's sales tax, registration, and insurance (which will add up to way more than pocket change) there's still income tax to factor in. If you're in the 28% tax bracket, you'd need to gross over $23,000 to pay for this horseless carriage. That's over 50% higher than the $15,200 rock bottom price you negotiated, and the equivalent of almost 9 months of hard labor for someone earning $30,000 a year.

And that's without adding in the cost of state and local taxes, to say nothing of Social Security. Do you really want to spend the better part of a year working, not for food, clothing, or shelter, but just to pay for the privilege of parking that car in your driveway?

Get ready for the final insult: Your shiny new car will lose about 20% of its market value the minute you drive it off the lot.

Is a new car worth more than a year of your life? The decision's yours. Us? We'd rather buy the cream puff you're about to trade in.

The Pocket Change Investor
The Secrets to Getting Ahead -- Even If You Have a Pile of Credit Card Bills, Hefty Mortgage Payments,
Loans Out on a Clunker or Two, & a Bad Case of the "I'm Tired of Living Payday to Payday" Blues.

As of Issue #35 (Fall, 2003), The Pocket Change Investor, our quarterly newsletter on how to save money, get out of debt, and live better on less, will be available online, only -- for free! To get future issues right into your inbox, send your email address to us at newsletter@goodadvicepress.com, putting the word "subscribe" on the subject line.

The Pocket Change Windfall: Each of our 34 back issues offers painless ways to get out of debt and save on the many expenses that confront us all -- taxes, credit card bills, mortgages, insurance, food, you name it. You can get all 34 for just $29.95 -- that's less than $1 each. To order, you can use our secure server, call 845-657-8245, or write to us at:

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"You'll also find useful dollar-stretching tips from the editors of America's top three penny-pinching newsletters. ... Start trimming the fat from your family budget with these tips from the 'editors-in-cheap' of The Pocket Change Investor."
-- Susan Ungaro, Editor
Family Circle Magazine

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Reprinted from The Pocket Change Investor, Issue #14
© 1996, Marc Eisenson & Nancy Castleman
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