Wednesday, April 29, 2015

Car Buying Experience Has Not Improved


So I finally decided to get a commuter car so I can get back and forth to my consulting job.  We wanted something not too expensive, with some utility to haul things, and some style.  The Kia Soul was the car we selected, so I did my usual research on what to buy and what to pay.

The "Plus" version is the middle of the line and has what I need, and I get a price forecast from Edmunds website which is about $2K under list.  I also try "Truecar" which is something new.  The two Kia Truecar dealers give me quotes on the Soul + at even lower prices, about $2.7K below list.  I call the dealers up and verify what is included in the quotes, but the problem is they are quite far from our home.

So I do an online chat with the local dealer and ask if he can meet the Truecar price and of course they say yes.  Off we go to the dealer where we meet Joe, the super smiling salesman, who says he will get a Soul for us to test drive from their storage lot.  25 minutes later, Smiley Joe is not back and we find out that the car had a dead battery.  Another salesman gets us another Soul which we test drive and we like it.  Joe returns and tries to get us a coffee, but the machine is broken, we settle for water.

Price negotiation commences.  Smiley Joe presents a price, which seems to be competitive with the low Truecar price, but it turns out that there are added charges (dealer docs yadda yadda) and the price is now too high by about $2K.  Sales Manager Ernie turns up and explains the pricing.  I say I don't need an explanation, I need them to match the price.  Ernie then badmouths Truecar.  I call the other dealer on my mobile and find out that Ernie is totally wrong.  Once Ernie is confronted, he says that he will work on a new price.  He goes away, and comes back with a better price, but not what I want.  Off goes Ernie again and he comes back with a new price on a piece of paper that he says "is smoking hot!"  It is the price we wanted ($2.7K under list) and he says that he might be able to get it approved if we agree to buy the car and he makes us sign his bit of paper.  5 minutes later Ernie triumphantly returns with a scribbled OK on his paper and he announces that the owner has agreed to the deal.  I piss off Ernie by joking that the scribbled OK looks like his handwriting and he was probably just killing time outside.  He decides to torment me by again explaining why this is such a great deal and it is below their invoice, but we know that Kia provides lots of incentives to the dealer so the invoice is not the true cost of the car.

Then we go through the usual paperwork process where they use 4 foot long carbon copy 4 part forms (I am not kidding) to close the sales process.  The 4 foot sheets of paper are why dot matrix printers are not obsolete yet.

Then Smiley Joe has young Chris "deliver" the car and he forgets to give us the manuals and second key...  Honestly, we could have done this all on the Internet, did a test drive, and then brought the car home without all this hassle.

Saturday, April 18, 2015

A Luxury Cruise on Financial Advice


In the USA, up until now, your financial advisor had no fiduciary duty to protect your interest under laws or regulations.  This means that his/her advice did not have to be in your best interest, it could be in their interest.  For example, an advisor with Company X could advise you to roll over your 401K into Company X mutual funds, because the advisor would earn a 10% commission and might win the all-expenses-paid Cruise to Monaco sales competition.  This seems silly, and it is.  Why would you take financial advice from someone who does not have to give you good advice?

You adviser could have a fiduciary duty to your best interests because they signed an agreement with you that obligates them to do this, but they are not required by law.  Some good companies do have this incorporated in their agreements, but many do not.

Luckily, the US Government has proposed to change regulations to make financial advisers have a fiduciary duty to protect your best interest, not theirs.  But watch out, it is still a proposal and could be negated by industry lobbying.  You need to ask your advisor whether the agreement that you signed with them has a fiduciary duty clause, and you need to read it and understand it.  Otherwise, you may not get good returns, but maybe get a nice postcard from Monaco.

Photo Credit: Flickr

Thursday, April 9, 2015

We Need One More Horseman for a US Tax Apocalypse



The US Income Tax System seems to be heading for trouble and only needs one more horseman for a Four-Horse apocalyptic mess.

Horseman Number 1: The tax code is extremely complicated, with rules upon rules upon rules and forms and guides and ...  The tax code is over 70,000 pages long, and this means that you could only explain it with a guide of well over 150,000 pages.  The website is huge and you are continuously using search and wading through documents to find what you need.  Form 1116 is estimated to take 20 hours to fill out, and it performs the simple task of making sure you get credit for foreign taxes paid so you don't get taxed twice.

Horseman Number 2: The IRS is run as a US government agency and has extremely unwieldy processes that hamper the workers.  It also seems to have a pretty aggressive approach to taxpayer when there is a problem, which makes it unpopular.  The recent scandal over non-profit tea party group approvals demonstrates their methodology.

Horseman Number 3: Congress is run by the Republicans and they don't like taxes and they don't like the issue with the approval of non-profit tea party groups.  Therefore, they cut the funding to the agency so they cannot provide adequate customer service or adequate checking of tax returns for errors and fraud.  The IRS receives 10% less funding than it did 5 years ago while the tax code has increased in complexity, which makes no sense.  Lines at the IRS offices are out the door and 60% of phone calls are unanswered.

So the loser in all this is the honest taxpayer, who gets little help preparing their taxes and feels like a chump paying their taxes while others cheat.  The solution is obvious: simplify the code, thereby reducing the cost of the IRS and the cost of preparing taxes, and making it easier to catch cheats.  However, with the US government in gridlock, the Maple Leafs will win the Stanley Cup long before this happens.

Photo credit: Flickr

Tuesday, April 7, 2015

Working With The Government Makes You Want to Retire, Again


Good and bad news.  The consulting opportunity with the government came through and I started work.

Working 9 to 5 again has its good and bad points, but the government aspect tips it towards the bad.

On the good side, you learn new things and meet new people.  The money is good and there are lots of tax advantages to being self-employed.  I was also able to help at least one colleague get a similar assignment so that is good too.

However, being forced to get up, commute, work 8 hours, and follow government procedure is not  much fun.  I will spare you all the details but suffice to say, the US public's disdain for government carries over into working conditions and procedures for the government agencies.  The building that I work in was inaugurated by Richard Nixon and is in original condition, complete with 40 years of wear and tear.