Use your tax refund to improve your finances

How will you spend your tax refund? Flat-screen TV? IPod? Clothes? A better idea for your money might be to spend it on your second biggest investment, your car. After all, it is hard to earn an income without a reliable car.

Terry Mulcahy, vice president of investments for R.W. Baird in Mequon, WI says, "We advise our clients that if they want a 10-percent increase on their investments every year they need to cut down on their expenses. A new automobile is for most people their second biggest investment next to a home, so a great way to save money and increase financial assets is to hang onto their current vehicle rather than buy a new one every few years. Budgeting for and doing preventative maintenance on your car is one of the best ways to cut your costs and keep your car."

Here is a balanced approach to repairing and maintaining all of your vehicles, while remaining within your budget. Bring both of your vehicles to a trusted repair facility. Tell them you would like to have both vehicles inspected and a prioritized estimate of repairs and preventive maintenance services prepared. This could be done in two trips; you need not try to have both vehicles inspected at the same time. Ask that the priorities be compared across both vehicles. You can then choose and control how much you spend and get the best total value from it. By having both of your vehicles inspected, you can begin the repair process knowing that you are staying within your tax refund or budget. This is a far better alternative to learning about necessary repairs after you have bought the flat-screen TV.

Another consideration might be to sell your newer car that currently has a loan against it, and buy a used car for cash. This is what financial radio personality and author Dave Ramsey suggests. I have just finished reading Dave Ramsey’s book “The Total Money Makeover”. Coincidently I have recently come across several people who are passionately following his advice.

I would caution you to be very careful when selecting a used car. Go into the process expecting to seriously consider several successive cars. You don’t want to immediately face a repair bill equivalent to the cost of the car.

The first step would be to go to the repair facility you have established a relationship with. Discuss your vehicle needs with them and then ask which vehicles are more reliable in that category of car or truck. Most vehicles have characteristic weaknesses that a repair shop can predict for you. No one can guarantee that you won’t have additional problems, but this improves your odds.

I would recommend having any used car you are considering inspected by a qualified technician before making an offer on it. You can get an estimate for the cost of any immediately apparent repairs and discuss these with the seller when agreeing on a price. We frequently see cars that we advise people to just walk away from. This is why you want to begin the process expecting to walk away from a vehicle. If you get your heart set on the first car you see, you may be buying someone else’s problem.

Brian Klaubert owns Christian Brothers Automotive – Hamilton Mill, on Braselton Hwy in Dacula. They are “Best of Gwinnett” winners in both the Gwinnett Daily Post and Gwinnett Magazine.