There is still time to save on your 2016 taxes!

Save money on 2016 taxes!

There is Still time to Save on Your 2016 Taxes!

So its 2017 and its been so warm here in New Jersey that the spring flowers have started to come out in my yard. You should have received your W2 form from your employer and you might have your tax return finished or at least you’re thinking about how you’re going to get your tax preparation completed. March Madness is beginning and the Grapefruit League is in full swing down in Florida. So does that mean its game-over for tax savings in 2016? Absolutely not! There are still moves you can make in the beginning of 2017 to lower your 2016 taxes.

Contribute to your traditional IRA

Traditional IRA contributions are subtracted from your income when calculating Adjusted Gross Income (AGI) and taxable income. So IRAs are powerful tools to lower your taxable income. You can still make a tax deductible $5,500 contribution with a $1,000 catch-up if you are over age 50. If you are covered by a retirement plan at work, income has to be below $61,000 (single) or $98,000 (joint) to make the full contribution and the tax deduction phases out completely when your income is above $71,000 (single) or $118,000 (joint). If you are not covered by a plan at work, then there is no income limit. If one spouse is covered by a plan but not the other, then the phaseouts for the other spouse are $184,000-$194,000. So the good news is that even non-working spouses can make a retirement plan contribution based on the working spouse’s income. And did you know that alimony counts as employment income for IRA contribution purposes? If you are divorced and your only income is alimony, you can still make a tax-deductible contribution.

The deadline for traditional IRA contributions for tax year 2016 is April 18, 2017.

Start and/or Contribute to your SEP IRA

If you’re self-employed, then you can actually still defer much more from your 2016 taxes. How much? The maximum amount of self-employment income that can be considered for SEP IRA contributions in 2016 is $265,000. You can actually contribute approximately 20% of your income into a SEP, so that means if you have $265,000 of income you can contribute $53,000 and defer that amount from 2016 taxes. You can open a SEP IRA and make this contribution up to the extended due date for your business’ tax return. If you file a Schedule C on your 1040, that date is October 16, 2017.

There are some complications however. If you have employees, you need to make the same SEP contributions to all your employees who are over 21, made over $600, and worked for you in 3 out of the last 5 years. Still, this is a great tax shelter for any solo or family business owner.

If you have a larger business, then you might want to look into 401(k), profit sharing, or cash balance defined benefit plans. These plans allow you to shelter much more money from taxes and allow employees to defer more as well. You can’t use them for 2016 taxes anymore, but its a perfect time to set up for 2017.

Contribute to your HSA

You can still contribute to your 2016 Healthcare Savings Account (HSA) if you had a high deductible health plan (HDHP) in 2016 and didn’t already contribute the maximum. If you make your HSA contribution via payroll deduction, all is not lost. You can simply write a check for your 2016 HSA contribution and mail it in to your HSA provider. Call them up first to get the right form and address. For 2016, the maximum contribution for individual plans is $3350 and the maximum for a family plan is $6750. If you are 55 or older you can make an additional $1000 catch-up contribution. You have to reduce your contributions by the amount your employer put into your HSA during 2016. Also, these limits are based on your having the HDHP for the entire year. If you had the HDHP for less than a year, your contribution limit is prorated.

The deadline is April 18, 2017 for tax year 2016.

I would be happy to help you with contributing or setting up a traditional IRA, ROTH IRA, SEP IRA, or any other type of retirement plan. If you have any questions at all, contact me at Cereus Financial Advisors:

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Keeping Financial Documents

Keeping Financial Documents

Drowning in a Sea of Paper

Its that time of year. You are getting all those tax forms in the mail: W2, 1099, 1098, 1095, etc. You probably get bank statements, brokerage statements, and bills. Once your taxes are done, you will get copies of your returns to keep. When do you throw it all out? Can you ever throw it out?  What financial documents do you need to keep? My dad died in 2013 and not only did I find every bill, bank statement, and tax return from the past 50 years, I also found bank statements from my grandparents. My parents had just packed each year in a supermarket back and thrown it into a large closet. Is there a better way? There sure is!

Electronic Filing for financial documents

The best way to keep all this stuff is on your computer. You don’t need the paper and everything will be easier to find and take up a lot less space if its on your computer. A lot of statements are available online now, so you don’t even need a scanner for them, but there will still be some things you will need to scan. Luckily, doing this is easy and I will explain how.

Get a Scanner

The printer you have already might scan, but if you don’t have one, I recommend buying a multifunction printer/scanner which has a duplexer in the feeder. The feeder will feed pages, so you can scan multiple pages without putting each one into the scanner individually. The duplexer in the feeder will actually flip the pages so you can easily scan double-sided pages with no intervention into one document.

Or use your Smartphone

Maybe you don’t get very much paper you have to scan or you are on the road a lot. You can use the camera on your phone or tablet instead of a scanner and there are several apps which do a great job. I recommend Scanbot Pro or Scanner Pro. Scanbot Pro is free, but you will need the $5.99 OCR package as an in-app purchase. Scanner Pro is $3.99. With either app, way under $10 gets you a very usable scanner with your smartphone. It won’t be as fast or easy as a scanner, but it works.

Filing Cabinet

Create an electronic filing cabinet. You can think of it just like a physical filing cabinet, except you have folders instead of files. Use a system which is logical and will allow you to find things. I use a top level of folders by year and then within each year, I have a folder for bank accounts, another one for investments, another one for taxes, etc. You can go as deep in hierarchy as necessary to keep yourself organized. Then just put your files in their appropriate folders.

--File Cabinet
      --Investment Statements
      --Bank Statements
         --Charity Thank You
         --W2 and 1099 Forms
         --Tax Returns

File Format

When you scan, you will have a choice of file format for your financial documents. Always use PDF files. PDF stands for Portable Document Format and this format of file is easily readable on any device including your phone. It supports multiple pages within one document and even allows you to add a password to the file. Stay away from formats such as jpg or tif because the file size will be larger and you can’t get multiple pages per file. Also stay away from any proprietary file formats. By the way, when you get your statements online, they are always in PDF format.

Helpful Software

You don’t actually need any additional software other than free PDF reader software. Adobe Acrobat Reader works as a good PDF reader, just download it from their website. Chances are you already have it. But a PDF editor program can be helpful. A PDF editor can usually allow you to print to PDF (although there is a free program called PDF creator that does this too). It also allows you to combine PDF files, export them to a word processor or spreadsheet, delete pages, add a password, and more. Adobe, which originated the PDF format, sells Adobe Acrobat for a yearly service fee. I’m sure its great software, but Nuance Power PDF and PDF Architect both do the job for much less. There may be others you can find by searching.

Another software program I use is Presto! PageManager. This software gives you a visual view of your folders with thumbnail images of your documents. It allows some limited manipulation of your files in either PDF or JPG format. It comes with a printer driver so you can create PDF documents by printing other files, webpages, or emails. It also works with your scanner to create searchable PDF files by using Optical Character Recognition (OCR). This allows you to search your PDF files. Besides Presto! PageManager, Nuance PaperPort has similar features. This software is optional, but I find it invaluable in working with my electronic file cabinet.

Cyber Security

You always need to think about cyber security if you keep your important financial documents in electronic format. The hackers are just waiting to steal your information and if they can get it from your computer of smartphone, they will. So here are a few tips to keep your information safe:

  1. Always be safe when reading emails or messages. This means never clicking on a link in an email which opens a webpage and enter information on the webpage (such as username and password). Always assume that the email you get from your bank, broker, cousin Harry, or anyone else could have come from a hacker. Use your normal way to get to your bank’s website or use Google or Bing to search for the link. Never click on an email link. The most common way hackers get into your information is via social engineering. Social engineering just means they trick you into revealing your information via email, instant message, or calling you on the phone.
  2. Keep your computer physically secure. If you store your important documents on your home computer, then it should be a desktop computer at home in your locked house. It should have a password on it. If you are using a laptop or other device which travels outside your home, then think about what happens if it gets stolen. I recommend using encryption on your hard drive so if the laptop or mobile device is stolen, the thief will not be able to get into it. Microsoft has Bitlocker built into their professional operating systems, but you have to enable it. VeraCrypt is a free program that works on Windows or Apple OS X. For mobile devices, Apple IOS has built-in encryption (Yea!). Android devices are really the wild west. In fact Android is so insecure, I cannot recommend using the devices for any data storage, email, or messaging.
  3. Back up your data securely. Have you read about ransomware? It’s when a hacker gets into your computer and encrypts all your files, doesn’t let you access them and asks for a ransom to unlock access to your own files. If this ever happens to you, just tell the hacker to get lost if you back up your data regularly. You can use Google Drive manually or there are streaming backup services such as iDrive or Carbonite which do a great job. You can just set it and forget it and all your files get backed up. You can even use Google Drive as a remote drive on your computer and just store all your files on it all the time. Just make sure you back your Google Drive up somehow (maybe just to another folder on Google Drive). icloud and Microsoft’s OneDrive have similar feature.
  4. Use good passwords. Don’t use Password1 or abcdefg as a password. Do use complex randomized passwords. Here is a great website to create them: . Write them down on a piece of paper or use a password manager such as LastPass to remember them. Try to remember the most important ones, but use the password manager for the rest. Make sure you use a different password for every service or login.
  5. Make sure you securely wipe data from your hard drive when you get rid of your computer. Use a program like Eraser or Darik’s Boot and Nuke to securely overwrite your hard drive before recycling your computer. You can also remove the drive from the computer and physically destroy it (a sledgehammer works great, but wear goggles!).

What to Keep

So, now you have a method for keeping your documents. What do you actually keep? I recommend keeping the following:

  • All Bank Statements
  • All Brokerage Statements
  • Your Insurance Policies and renewals
  • Your Credit Card Statements (so you can keep track of what you bought when and for warranties)
  • Your paystubs (Yes, you should keep them, but especially keep the last one of the year)
  • Most current utility bill (No reason to keep them all unless you might need them for taxes)
  • Records of auto service and repairs
  • Records of home improvements
  • Receipts and thank you letters from charity donations
  • W2, 1099, 1098, and all other tax-related forms
  • Copies of your tax returns
  • Medical Explanation of Benefits from your insurance
  • Medical bills or receipts

This is probably not a complete list, but you get the idea. Even though your bank or other financial institution keeps your statements online for you, I don’t trust that you will always have access to these documents when you need it. So I always download them to my own computer and I suggest you do the same. If you still write any actual physical checks, I recommend downloading images of the cancelled checks. Very handy in the case of a dispute or if you have the need to prove you paid for something. The banks all destroy these images within a few months.

How Long to Keep Documents

Keep your tax-related records for 7 years. The IRS has 6 years to audit you if it thinks you under-reported 25% or more of your income. You should keep bank statements and credit-card statements as long as you have the items you purchased on the statements. Certainly for at least 7 years. I recommend keeping paystubs, or at least the last paystub of the year until you retire. I had the case where I applied for a job and the company hired a background-check company to verify all my previous employment. I had worked for a company 15 years before which had gone bankrupt so they couldn’t verify my employment. This could have been a deal-breaker, but luckily I had my old paystubs to show them which they accepted as proof of employment.

Keep car-related documents for as long as you own the car. Keep insurance documents while you have that insurance policy, but I discard old auto policies after about 3 years. If you get into an accident, keep a copy of your policy for the year you were in the accident forever. Keep your medical bills and insurance EOBs for 5 years both for tax purposes as well as billing issues with your medical providers. Keep home improvement records for 7 years longer than you own the home (for tax purposes).

Keep vital documents like birth certificates, marriage certificates, divorce decrees, and wills in a fireproof safe or safety deposit box at your bank. Keep life insurance information there too. It is often useful to have copies of these documents at home. These copies can be electronic too!

How to Discard Documents

After reading this article and taking action, you will probably have a lot of paper you want to throw out. WAIT! Don’t throw these important documents in your garbage because its a security risk. Instead you need to shred or burn the documents. I own a shredder at home and another one at work, but if you don’t have access to a shredder and don’t want to buy one, there are other choices. Many towns and counties have shredding services available. These services might be on a specific day once or twice a year. Save up your documents and bring them to the shredding event. If you have a wood fireplace or fire pit, just burn your documents with your wood. Old bank statements make great fire starting material! Just make sure you dispose of your outdated documents in a way that makes them unreadable.

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Tax Changes Coming in 2017 and Beyond

Tax Changes

Tax Changes Coming in 2017 and Beyond

By David J. Haas CFP®
December 21, 2016

We are in the midst of an administration changeover in Washington with the Republicans taking over the White House and maintaining control of both houses of Congress. Both President-elect Trump as well as congressional leaders have made promises regarding tax changes. Mr. Trump has promised tax-cuts to corporations and the middle class as well as tax reform. Congressional leaders have promised revenue-neutral tax reform and want to find a solution to the corporate tax problem as well.

How Did We Get Into This Mess Anyway?

I think most Americans agree that our tax code is extremely complicated. The convoluted nature of the tax code is because government expects it to do a lot of different things at the same time. At it’s simplest, the income tax is supposed to raise money for the Federal Government to operate. To do that, income tax could be as simple as: send in 25% of your income every year. The problem with this is that the US also believes in a progressive tax system. Let’s say Justin, who makes $400,000, will send $100,000 to Uncle Sam and then keep and live off $300,000. No problem, since $300,000 is still a lot of money and Justin will still be living large. But Mike only makes $40,000 per year. It’s much tougher to live on $40,000 per year and if he has to send in 25% of that, or $10,000 to Uncle Sam, he will only end up with $30,000 per year to live on. We usually think that if you work for a living, being poor is not your fault. So it’s not really fair that for Justin, the government is taking money he probably wouldn’t spend anyway, but for Mike, that 25% is taking food off his table. The solution is tax brackets that make Justin pay a larger percentage of his income than Mike. So maybe Justin has to pay 35% and Mike only pays 10%.

The government is also trying to help certain Americans and promote certain behaviors because its good for society. That’s how we get deductions for retirement plan contributions. It’s good for America overall if people save for their own retirement and we don’t have stories about seniors eating dog food and living in shelters. Similarly, we want people to donate to charity, get the healthcare they need, and buy their own house. So we provide deductions for all those things. And some people live in states with high taxes and maybe that’s not fair, so we provide a deduction for state taxes.

On top of all this, there is a fear that people are gaming the system and not paying their fair share. So they came up with the Alternative Minimum Tax to make sure you can’t have too many deductions and pay little or no tax. On top of all that, President Obama implemented Obamacare using the tax system to both pay for it, enforce it, and provide subsidies for people who can’t afford their premiums.

More and more complexity.

Competing Tax Reform Plans

Both the Republican Congress and President-Elect Trump have promoted tax reform, but their plans have differed. While Mr. Trump wants a tax cut to stimulate the economy, the Congress has some very conservative Republicans  who want a balanced budget. Both Mr. Trump and the GOP Congress want to cut corporate taxes to make the US more competitive and stop corporations from fleeing overseas. Frankly, this makes a significant permanent personal income tax cut fairly unlikely. The Administration is probably constrained from cutting spending too much. They won’t want to cut the defense budget and cuts to social programs like Social Security and Medicare will be very unpopular with retirees and pre-retirees (who tend to vote). The spending that’s left when you take out the debt-service is really a drop-in-the-bucket when it comes to the overall budget. Still, expect long lines at border crossings and more cuts in National Parks. It just won’t make much overall difference to the budget.

Proposals for new tax brackets

Mr. Trump’s current proposal is to have only three tax brackets: 12%, 25%, and 33%. This is identical to the House GOP Proposal, but its still not totally clear where the brackets would start. Mr. Trump’s plan calls for the 12% bracket to end at $75,000 for Married Filing Jointly, with the 25% bracket going up to $225,000 and the 33% bracket above that figure. Although there is currently 7 brackets, from 10% to 39.6%, the breakpoints for the current 25% and 33% brackets are very similar. This is primarily a tax cut for taxpayers currently in the 35% and 39.6% brackets.

Changes to Capital Gains Taxes and Qualified Dividends

The House GOP plan makes a significant simplification for Capital Gains taxpayers. Individuals would simply exclude 50% of their investment income; capital gains, qualified dividends, and interest income. The balance would be taxed at ordinary rates. So the effective rates in the 3 brackets would be 6%, 12.5%, and 16.5%.

President-Elect Trump’s plan would continue the current capital gains rates of 0%, 15%, and 20% corresponding to the proposed 3 ordinary rates (12%, 25%, and 33%). So you would pay 15% on long-term capital gains if your ordinary income was taxed at 25%.

Since repealing Obamacare is a given, the 3.8% Medicare surtax on net investment income would be repealed with both plans. This will probably make Medicare insolvent almost immediately, so it’s not clear how this revenue will be replaced.

Deductions and Personal Exemptions

The House GOP plan keeps the mortgage and charitable deductions and adds in some deductions for college and retirement savings. All other deductions will be eliminated including medical. The standard deduction and personal exemption get combined and be raised slightly from the current ones.

President-Elect Trump’s proposal will keep all current deductions, but phase out deductions more aggressively for taxpayers with higher incomes. He would also combine the standard deduction and personal exemption and raise them.

Alternative Minimum Tax

Under both proposals, the hated AMT would be done away with. Since both proposals lower the ability to use deductions for wealthier taxpayers, the current AMT wouldn’t work anyway.

New Deductions and Credits

President Trump has proposed a new above-the-line deduction for child care expenses which phases out at income levels above $500,000 for married couples. The deduction would be capped at the average cost of child care in the taxpayer’s state. For lower-income families and individuals the deduction becomes a refundable credit. Elder Care expenses for a dependent parent living in a taxpayer’s home would also be deductible up to $5,000 per year.

President-Elect Trump has proposed a new Dependent Care Savings Account similar to Health Care Savings Accounts to pay for dependent care as well.

The House GOP have been talking about enhancing the current Health Care Savings Accounts as part of their replacement of Obamacare.

Will Tax Reform Happen and When?

The GOP controls both the White House and Congress, so you would think tax reform will be no problem. Unfortunately, the GOP is not a very unified party and the new President might not have the same goals as the members of Congress. Once the current honeymoon period is over and the serious work begins, these different factions are going to have to compromise to get anything done. I think we will get some tax reform as well as some tax cuts, but I think the reform will not go nearly as far as some think and the tax cuts will be combined with removal of tax breaks to make the cuts revenue-neutral. Not what was promised, but something.

Tax reform is complicated and while I think the new government will want to give some taste of tax cuts or reform in 2017, I think it will be too hard to implement most of it and make it apply to 2017. Instead look for some token change in 2017 and the majority of the change implemented in 2018.

What would I do?

Well, no one actually asked me. But I’ll tell you anyway. I believe in a progressive tax system, but I hate the idea of brackets and phase-outs. They make people hire individuals like myself to make suggestions on how to lower income to get it into a certain bracket or under a certain phaseout. Let’s get rid of all that and create a continuously progressive tax system where your bracket changes in very small increments as you make more money. Most people do their taxes on a computer anyway and instead of having the IRS issue forms, make them provide a tax website that will do the calculations for you. It will be easy, stop people from having to do complex tax planning, and put a lot of tax planners and tax preparers out of business.

The other thing I would make sure to do is stop linking healthcare with the tax system. Whatever subsidies or premiums are going to be part of the Obamacare replacement, don’t make them part of the tax system. Figure out a different way to implement it.

Lucky thing I’m not in charge!

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Buying That New Car

Enjoying a New Car

Buying That New Car

By David J. Haas CFP®

A few years ago when my son was in college, I gave him my old car to drive. This was a nice Honda Accord which I had bought new in 2005 and was about 8 years old when I gave it to my son. His college as 3 1/2 hours from home and my daughter was in another college 3 1/2 hours in a different direction, so it was really self-defense for both kids to have cars. Now, 4 years later, my son has a job and an apartment and uses this same old car to commute. The car is still reliable, but does need a little maintenance and my son is thinking about buying a new car. My son relies on his car and he has a good job with benefits and little other responsibility, so there is nothing wrong with him getting a new car. I want to help him, and he’s asking my advice! So I thought I would share my advice with everyone! Except for buying a house, buying a car is one of the priciest purchases you can make, so its definitely a subject that requires some financial advice.

Choosing the Right Car

Choosing the right car is very subjective. There’s practical needs, emotional needs, and aesthetic needs. Some people only care about a car as transportation. As long as the car gets you where you need to go, nothing else matters. For some, a car needs to be comfortable. For others a car needs to project the buyer’s personality or be beautiful to look at. For still others, the car is the manifestation of sophisticated technology and needs to go fast and look like it’s going fast! I happen to think a car is transportation, but I also want to be comfortable while I’m being transported. My son wants the car to fit his transportation needs, but also wants the car to be fun to drive. When my wife bought her last car, her only criteria was that the car had a place to put her purse not on the passenger seat or too far away. So how do you choose?

Make a List

You won’t be happy if you get a car which looks great and goes fast, but can’t fit your family or transport your dog or bottoms out on your driveway. So make a list of the most important transportation criteria and use this as a guide during your search.


There is a lot of good information out there about cars, both new and used. I happen to think Consumer Reports is one of the best sources out there for car information. They have a lot of technical information on the cars and they drive every one. They collect information from their readers on reliability issues and even have a buying service to help you get a good price. Since they accept no advertising, their advice is unbiased, but you do have to take it with a grain of salt. Remember, their criteria are not necessarily your criteria. Reliability data is based on past experience and your car may or may not be as reliable as previous model years of the same car. Still, its a great place to get information.

Here’s a list of good places for car research:

What Car Can I Afford?

The first part of this question has to do with how much available cash you have. Financially, the best way to buy cars is to buy the car new with cash and keep it for a long time, preferably 10 years or more. This has a lot of advantages because you can get the best price on the new car, you don’t pay any interest and have full flexibility as to whether you want to keep the car or sell it. A car is a depreciating asset and it’s value does not depreciate in a straight line. New cars depreciate the most right when you drive them off the lot and they become used. They depreciate rapidly in the first couple of years of ownership and then depreciation slows. So keeping your car a long time means the rapid depreciation when the car is newer won’t matter to you. You’re in it for the long haul.

So how much car you can afford is obvious if you are paying cash, but a little less obvious if you borrow or lease your car because you don’t have $35,000 lying around. Then you have to work with a monthly payment and rule number 1 is don’t get into any deal over 5 years (or 60 months). If you do, you are likely to be underwater (where you actually owe more than the car is worth) for at least part of the deal. Sure your payments will be lower, but you are locked in for way too long. Make a realistic budget and include the car payments (remember car insurance and maintenance). You can compare your results with certain ratios. Try to keep your debt to income ratio (consumer credit payments including car payments divided by after-tax income) less than 15%. You should also be continuing to save 10% or more of your income. If your car payments cause your savings to go away, then you’re buying too much car.

If you find that you can’t buy the new car you want, then look into a used car. For as little as $2,000 you can probably get a used car that will take you from point A to point B and if you spend more you can actually get a nice car. Just remember that any used car will need some maintenance, so put that in the budget. If you buy a used car from a dealer, you might be able to get a 1 month to 6 month warranty, but you will definitely pay more than buying from a private party. Always get a Carfax report on any used car you buy. Most dealers will give that to you for free, just ask. For a private party purchase  you will need to buy it (unless the previous owner gives it to you). The Carfax report will give you information on a car’s collision and repair history as well as when and where it was bought and when it changed hands.

Leasing vs. a Loan

When you buy a car with a loan, you are actually buying a car and will generally own more and more of it until you make that last payment when you finally own all of it. When you lease a car, you are actually renting it for a period of time. At the end of the lease, you may be allowed to buy the car at a preset price. Which is better depends a little on how long you plan to keep the car. If you really like a new car every 2 years and don’t mind not owning your car, then leasing can be a great way to go. You will always have the latest and greatest, but you will never be done with that payment. On the other hand, if you keep your car for 10 years and take a 48 month loan (which you can sometimes get for 0%), then you have 4 years of payments, followed by 6 years with no payments. With both the lease and a loan, you are responsible for any repairs or maintenance not covered by warranty. In the case of the lease, there is usually a preset number of miles you are allotted (often 12,000/yr) and if you drive more than that, you will be charged at the end of the lease.

Consumer reports has a very nice discussion on buying vs. leasing here: Consumer Reports: Buying vs. Leasing basics.

Getting the Best Deal

You’ve decided on a car and you’ve decided on how you’re going to pay for it. So how do you get the best deal? Do you lie awake at night because of your fear of car dealers? Well, just follow these tips and don’t worry.

Always Separate Price from All Other Factors

This tip works best when you are paying cash outright or are taking a loan. The car dealer will want to give you a price, based on how you’re paying and other factors like your trade-in. Resist this. Ask for a price assuming you are paying cash and not trading in your car. You can always tell them you’ve changed your mind and now want a loan and/or you want a price for your trade-in afterwards. The reason you want to do this is to get a simple single price for the car that you can compare using TrueCar or some other service which will tell you what’s a good price.

Arrange Financing Before Going Into The Dealership

The dealer might have great financing deals, but sometimes those great deals mean you actually pay more for the car. So shop around for a loan before going into the dealership and then see if the dealer can beat it after you’ve negotiated the price of your car. There are some online loan search engines and try calling some local banks to find the best rates. Also, check some of the websites listed above such as and to see if they list any dealer loan or lease programs.

Use and to Get Email Price Quotes

Once you’re ready to buy use and to get email price quotes from local dealers. These price quotes often come from a special internet department from within the dealer. They know that you know what a good price is for your car, so they generally are going to give you their best quote. Ignore the dealers which won’t give you a straight quote. Sometimes, they just email you back with some vague promises. Go with the dealers that give you a hard quote for what YOU want.

Shop on the Last Day of the Month

Dealers need to move a certain number of cars in a month to get incentives from the car manufacturers. Salespeople are measured on a monthly basis. So if you buy your car on the last weekend or better yet the last day of the month, you’re more likely to get a good deal. They want you to buy a car and if you’re ready to buy and all they have to do is give you a good price, they’ll do it. They want to move that extra car this month. Better yet, try the last day of the quarter. It’s like magic!

Make Sure the Dealer Can Get Your Car

If you find what you want on the dealer lot, that’s the best way to make a good deal. But dealers only get a certain number of cars each month and the chances it’s in your color with your selection of features is pretty low. So dealers trade cars with other dealers to get the car you want. But they are eager to take your deposit and sometimes they don’t actually know where they’re going to get YOUR car. So always know where the car is and if the salesman doesn’t have a good answer, don’t make the deposit and walk away.

Put Your Deposit on a Credit Card

This tip is related to the issue of making sure the dealer has your car. Deposits on new cars are refundable if the dealer can’t get the car you want, but it’s a pain to get your money back. Being able to threaten the dealership with a chargeback on your credit card is a good way to make them refund your deposit if they can’t get the car you want for you.


The dealer will try to sell you all kinds of extras. Many of these extras have little or no value although some are worthwhile. Unless you know that your particular model is very prone to mechanical problems, I would avoid the extended warranty. Most new cars are amazingly reliable. Many extended warranties are actually very poor and don’t cover things that you think they should. Dealers like to sell them because they make lots of money on them. They make lots of money on them because they are generally a poor deal. Also a poor deal are undercarriage coatings or rustproofing, fabric protection, and paint protection.

VIN etching is more complicated. It’s generally a good thing, but keep in mind that the dealer is going to charge a lot for this: $200-$300 You can buy a do-it-yourself kit for $30. On the other hand, its pretty convenient to have the dealer do it for you.

Financial Planning

Remember that a new car needs to fit into your financial plan. I am always happy to work with my clients to make sure they don’t get overextended when the buy a car. For more information on services from Cereus Financial Advisors as well as lots of informative information on other financial planning topics, go to If you have any comments or questions, feel free to email me at







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