Archive for September 2008

Book Review: The Five Dysfunctions Of A Team

I have recently finished reading The Five Dysfunctions Of A Team written by Patrick Lencioni.

A GREAT book.  If you are a leader, this book will cause you to think through your team in a new way and could quite possibly take your team to a new level of performance.

Here are some key points I took from this book:

  • Everything we do should be about making the company succeed
  • No matter how good an individual team member is, everyone loses if the team loses
  • Fear of Conflict = Artificial harmony
  • Boring Meetings = Unnecessary Meetings
  • It is important for a leadership team to keep walls between their teams torn down.  Teams naturally tend to move toward isolation and a "Those guys over there are terrible, but we have got our act together" mentality.

Well written.  I read this book in five to ten minute sections, and I found that it was very effective for me to read it this way.  It allowed me to process what I read and then come back to it later having thought it through. 

SERIES: Sell Car With Negative Equity – Part 5

Welcome to the latest series – "Sell Car With Negative Equity"

The fact that most cars drop in value by sixty percent in the first four years causes an enormous part of the American population to struggle with huge car payments and an inability to rid themselves of the car without acquiring yet another new car and rolling in the negative equity to the new loan.

It is my hope through this series, that you will be equipped to sell a car that has negative equity.

Part 1 – Recognize How Much A Car Really Costs

Part 2 – Determine Your Car's Negative Equity

Part 3 – Sell The Car With Negative Equity – Option A – Pay Off The Balance

Part 4 – Sell The Car With Negative Equity – Option B – Transfer The Negative Equity Balance

Part 5 – Benefits Of Selling A Car With Negative Equity

Lower Debt!

This is obvious, but it is a wonderful benefit of eliminating the car with negative equity.  In the example used in this series, debt has been reduced by $18,000 in Option A or $12,000 in Option B.  Either one is fantastic!

Money Freed Up Every Month!

This is also obvious, but the monthly payment will be eliminated or vastly reduced.  This allows one to have more margin in their monthly finances to give, save, or invest (three of my favorite parts of money!).

Not so obvious is the reduction in other fringe expenses.  Car insurance will go down.  Car property taxes will go down.  Gasoline consumption will go down.  Car repair costs will go down.  These can total up to hundreds of dollars in savings each month! 

Margin

When all of the money leaves as soon as it is earned and one is living paycheck-to-paycheck with zero margin for life to happen, it creates serious stress.  By eliminating debt and its related payments, one gains tons of financial freedom and drops loads of stress.

Final Note:  I know that this stuff is HARD, but I am convinced that financial freedom is worth all of the effort that it takes.  When Jenn and I embarked on our debt freedom march, it seemed like it would take forever.  Fourteen months later, we were debt free.  That was in February 2004.  We have never looked back.  No car, TV, boat, lawn mower, or Llama has looked good enough for payments.  Frankly, a new house does not even look good enough for house payments.  We have worked way too hard to achieve financial freedom to fall back into the debt trap.  It has been SO WORTH IT!  You can read more of my family's story HERE.

SERIES: Sell Car With Negative Equity – Part 4

Welcome to the latest series – "Sell Car With Negative Equity"

The fact that most cars drop in value by sixty percent in the first four years causes an enormous part of the American population to struggle with huge car payments and an inability to rid themselves of the car without acquiring yet another new car and rolling in the negative equity to the new loan.

It is my hope through this series, that you will be equipped to sell a car that has negative equity.

Part 1 – Recognize How Much A Car Really Costs

Part 2 – Determine Your Car's Negative Equity

Part 3 – Sell The Car With Negative Equity – Option A – Pay Off The Balance

Part 4 – Sell The Car With Negative Equity – Option B – Transfer The Negative Equity Balance

In this series, we are assuming that we have a car with an actual value of $12,000 but the loan balance is $18,000.  This means that the car has negative equity of $6,000.

This is quite the lovely situation, but it is possible to make the car leave.

Obtain A Signature Loan From The Bank or Credit Union

One usually must have decent credit to obtain a signature loan.  Obtain a $6,000 loan from the bank.  Next, find a purchaser who is willing to pay $12,000 for the vehicle.  Use the signature loan money to pay off the negative equity portion so that the title is clear.  With this one transaction, the debt has been reduced by 66% – from $18,000 to $6,000!

Transfer The Negative Equity Balance To A 0% Credit Card

I really do not like credit cards, but I really do not like huge car payments and car loans either!  If one has the option to roll the negative equity to a credit card at 0%, it will allow the car to be sold and all of the subsequent payments on the remaining $6,000 will go directly to principal!  I have also seen several credit cards that offer 2.99% for the life of a balance transfer.

Option B does not entirely eliminate the debt or the payment, but it will substantially reduce it!  It will certainly help one's journey to financial freedom obtain serious traction.

In the final part of this series, I will be sharing some side benefits to eliminating a car with negative equity.

Read the entire "Sell Car With Negative Equity" series HERE.

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SERIES: Sell Car With Negative Equity – Part 3

Welcome to the latest series – "Sell Car With Negative Equity"

The fact that most cars drop in value by sixty percent in the first four years causes an enormous part of the American population to struggle with huge car payments and an inability to rid themselves of the car without acquiring yet another new car and rolling in the negative equity to the new loan.

It is my hope through this series, that you will be equipped to sell a car that has negative equity.

Part 1 – Recognize How Much A Car Really Costs

Part 2 – Determine Your Car's Negative Equity

Part 3 – Sell The Car With Negative Equity – Option A – Pay Off The Balance

Let's assume that a car has an actual value of $12,000 but the loan balance is $18,000.  This means that the car has negative equity of $6,000.

This is quite the lovely situation, but it is possible to make the car leave.

Use Savings

If one wants to sell the car, then the negative equity must be covered in order to provide a clear title to the purchaser.  The fastest way to clear out the negative equity is to find a purchaser who is willing to pay $12,000 for the car and use $6,000 from savings to clear up the negative equity.  This is by far the fastest and easiest way to clear up the negative equity situation – IF you have $6,000 in savings!

Earn the Difference

If one does not have the money to cover the negative equity, then another way to accomplish the exact same thing is to earn additional income.  Work overtime or acquire a second job to earn enough to cover the negative equity.

This is definitely not a fun answer, but I do not like negative equity situations either.  The tough part about this option is the fact that it takes additional time and it is possible that the negative equity will increase because the car will continue to go down in value.

Sell Something Else

If one has an item that they no longer need, want, or use that has value, it can be sold to cover some of the negative equity.

I prefer Option A the most because it eliminates the entire debt and frees up the entire car payment to use for additional debt pay-off, savings, giving, and investing.

In the next part of this series, we will continue to discuss ways to sell the car even with negative equity.

Read the entire "Sell Car With Negative Equity" series HERE.

Receive each post automatically in your E-MAIL by clicking HERE.

SERIES: Sell Car With Negative Equity – Part 2

Welcome to the latest series – "Sell Car With Negative Equity"

The fact that most cars drop in value by sixty percent in the first four years causes an enormous part of the American population to struggle with huge car payments and an inability to rid themselves of the car without acquiring yet another new car and rolling in the negative equity to the new loan.

It is my hope through this series, that you will be equipped to sell a car that has negative equity.

Part 1 – Recognize How Much A Car Really Costs

Part 2 – Determine Your Car's Negative Equity

Equity is determined by the following equation:

Vehicle Actual Value – Vehicle Loan Balance = Equity

If the Equity number is negative, then that means that the vehicle has negative equity.

As you prepare to sell your car, it is very important to know the actual value of the car and the actual amount owed.

I emphasize the word ACTUAL because most people tend to overestimate their car's value and underestimate what they still owe.

How does one determine how much their car is actually worth?  Obtain a quote from Kelley Blue Book and Edmunds.  You will need to know the year and make of your vehicle including your engine type and mileage.  These two sites will provide you a general idea of what used cars like yours are selling for in your area.  Recognize that these are average selling prices.  That means that cars are selling above and below that number, but this is the price that one can expect to sell the vehicle.

Now that you know the actual value of the vehicle, it is time to determine exactly what is owed.  Contact your lender and obtain the actual pay-off balance of the car loan.

Now, use the equity calculation to determine your vehicle's equity.  If it is negative, then you have a car that is known as "upside down".  It has negative equity.  You owe more than it is worth.

In the next part of this series, we will discuss ways to sell the car even with negative equity.

Read the entire "Sell Car With Negative Equity" series HERE.

Receive each post automatically in your E-MAIL by clicking HERE.