Recently, Hyundai has begun airing car ads for their “Dollars and Sense” campaign, in which they’re offering a “cash back” promotion on new purchased Hyundais. To get across the idea that buying a brand new Hyundai is a financially sound decision, the commercials feature various personal finance and investment writers offering suggestions on how to use that “cash back” in a financially sound way. Here’s my favorite of the series, featuring an almost-creepy appearance by Larry Winget, the author of You’re Broke Because You Want To Be (which I reviewed and reasonably liked a while back):

Other ads in the series feature Ray Lucia (author of Buckets of Money) and Adam Smith (author of The Money Game).

Let’s look at the ads a bit more carefully.

Is this a good deal?
First of all, never, ever make your car buying decisions based on an ad for a new car. If you’re going to invest your money in buying a car, focus on late model used ones and use Consumer Reports and other car journals to research and find the most reliable and fuel-efficient car for your needs - and do the same if you must buy new for some reason. A late model used car with high reliability numbers and good gas mileage is the single best deal out there for car buyers.

Car commercials, for the most part, try to sell you on things that largely don’t matter - small sales up front (like 5% off), exterior appearance, and so on. Don’t base your automotive purchases on them - instead, go do some real research.

Is their advice any good?
Winget, Smith, and Lucia do provide good advice in the commercials. It does make sense to put your money in a highly diversified index fund or to pay off high-interest credit card debt - both are indeed good moves.

The problem with the commercial isn’t the use of the money - it’s the source of the money. They’re talking about using money that’s coming to you in the form of a rebate on an item that’s overpriced to begin with. You’ll lose more in depreciation of the value of the car the minute you drive it off the lot than you’ll gain back in the rebate from the sale.

In other words, their advice is great if we’re talking about $3,000 free and clear, but that cash is tied up in the value of the car you just bought - and you’ll lose more than that the second you drive it off the lot. A better option is to buy a cheaper car and then use the $3,000 you actually did save to pay off credit card debts and such.

Are these writers “selling out”?
The advice actually coming out of their mouths is good advice - the problem is in the context of all of it. By appearing in the ad, they do appear to be implicitly approving of the purchase (which isn’t a good financial choice for most people).

Given my condemnation of the ads, you’d likely expect me to say that these writers are “selling out,” or betraying the trust that their readers have placed in them. For the most part, I don’t feel that way, because if one of those writers had said no to the advertisement, Hyundai would have simply found another writer. By saying yes, they at least get their paycheck and a bit more attention to their books and public persona.

So, obviously, in the context of a car commercial, these guys are more interested in selling themselves to you than in providing an overall positive financial image. But by doing this ad, Larry Winget might just have been able to get a few more people to read You’re Broke Because You Want To Be, which does contain some excellent “tough love” style advice. If that book helps one of those new readers turn their life around, that’s overall a good thing, is it not?

Would I appear in such an ad if the opportunity presented itself? Honestly, I think it would depend on the car. For instance, if I were asked to appear in an ad for a car I would ordinarily recommend - one with good gas mileage, high safety ratings, and high reliability, I’d probably be fine with it because the people interested in such a car likely have some financial sense anyway. Alternately, I wouldn’t appear in an ad for a Hummer - but then the average Hummer buyer isn’t exactly going to be swayed by a guy writing a site called The Simple Dollar.

As a final note, since this post mentions Hyundai, I have to include one of my favorite comedy clips of all time - Stephen Colbert’s “I’m Singin’ in Korean” music video.

We woke up this morning to the peculiar tinny sound of freezing rain on the windows and sides of our house. The windows on the east side of our house are glazed with ice, so all of us climbed back into bed for a while before getting up to have a very lazy breakfast.

Days like this are often incredibly lazy, filled with idle thoughts and idle activities, and today is no different. My mind is filled with an assortment of thoughts that could possibly be fleshed out into posts, but instead I decided to just write a paragraph or two about each one.

Since this is my first Christmas in financial security, how do I avoid the desire to go overboard? I’m basically just limiting any extra spending to just my parents and my wife this year, and even then, it’s because I have some very specific gifts in mind for them that have some personal connections as well. For my son and daughter, I am giving them something special for Christmas, but they won’t see it for a long time - an extra contribution to their 529 accounts.

Here’s that hot chocolate powder mix recipe that you’ve clamored for. I get a large bowl and put five cups of dry milk, a quarter cup of powdered sugar, and a third of a cup of powdered dairy creamer. I then get a pound of dark chocolate (a couple bars of Hershey’s Dark will suffice), then grate it into a powder using a box grater (you might want to use a blender or something). I pour in the chocolate powder, mix it all up until it’s consistent, and put it in a jar. It takes about fifteen minutes or so.

Online bill pay is an amazing time saver. I can’t imagine having to write this many checks each month. It’s much easier to just type in the dollar amount owed, hit submit, and have my bank take care of it electronically. I use ING for this, and their interface for it is just stellar.

I need to melt ice and I don’t have any special salt. So what? I’ll just get a couple gallons of water really hot, mix in a cup of table salt, and gently pour it down my driveway. The ice melts away quite well with this mixture (not as well as salt specifically for ice melting, but not bad), and it flows, which means I can basically start pouring it at the edge of my garage. If I need more, I go make more, but it’s best to give the mix some time to work between pouring (let the salt work on the ice).

I sometimes get so fired up about paying off debt that I almost make foolish choices. When I got down to just a little bit left on my last student loan, I really wanted to take a big chunk out of my emergency fund to get rid of it. Had I done that, though, Murphy’s Law dictates that something disastrous would happen. Of course, just to reinforce that idea, my truck had some serious problems shortly after that, delivering a $1,500 repair bill to me. Thankfully, I hadn’t touched the emergency fund, so it was no problem.

I’m having more fun mastering video games than buying another new one. My pace at buying games for my Wii has been far, far slower than with previous game consoles. What I’ve found, though, is that I’m actually having more fun with fewer games. I’m spending a lot more time with each one, mastering it and digging into the nooks and crannies. In fact, I probably won’t buy a new Wii game for a year and I won’t get bored, as I have a handful of games yet to master. There’s no need to blow a lot of cash on a lot of games - just buy one that you will really enjoy and invest the time in to master.

We’re going to put up and decorate our Christmas tree today. Our favorite decoration is actually a long string with popcorn on it, and about every ten or fifteen kernels we put a dried cherry on it. The best part is that after Christmas we can just drop it all in the composter (save the string). Our only other decorations are lights and a few sentimental ornaments. Very simple, classy, and not very expensive.

We’re iced in, don’t have much to do, and we probably won’t turn on a television all day today. The only exception might be if we choose to play a video game - otherwise, I bet it doesn’t even turn on. Meanwhile, I’ll probably finish Cannery Row, we’re going to have a homemade chicken marinara dish for supper, I’m going to make some bread, and I’m also going to make a homemade Memory game for my son and teach him to play it. I’m really beginning to believe that life is better without television.

My wife and I have reduced our television viewing to roughly four hours a week: two hourly dramas and maybe two more hours combined throughout the week. I believe that it won’t be too long before we turn the television off for good. Why? It’s too expensive. Here are ten reasons why.

Cable / satellite bills Our cable bill used to cost us roughly $60 a month. That adds up to $720 a year spent just to get more programming. Three years worth of that and we’re looking at a very nice vacation. Five or six years of that, put into a savings account, potentially replaces a car.

Electricity We had two televisions, and they would each be on an average of four hours a day. Given a cost of $0.10 per kilowatt hour, and the fact that the smaller television used about 100 watts and the larger one used about 160 watts, that meant we were using a bit over a kilowatt hour each day. There’s another $40 a year that vanished.

Guilt Television programs often create a glamorous image of a life that is far outside the financial capabilities of most people watching. When viewers watch such programs then reflect on their lives, it creates a set of negative feelings. For me, the most prevalent feeling was guilt - I can’t give my family this stuff, I would think. Thus, my sense of self-worth would go down. This would put me in a mindset to be more susceptible to the ….

Commercials Those wonderful short little programs that are designed to sell you stuff, period. Even better: they often work in concert with the programs to create a sense of guilt - and they offer a psychological way out. One commercial isn’t powerful, but when you’re inundated with them… very powerful.

Less time for other opportunities If the television is on for four hours a day, that’s four hours where I could be doing something more constructive with my time, like starting a successful blog (*ahem*) or starting a business or working on a novel or getting household chores done and so forth.

Stress When we spend a lot of time watching television, we put off other things that we should be doing, like paying bills, playing with the kids, and so on. After a while, these things build up and we begin to feel stress in our lives that wouldn’t be there if we didn’t spend so much time watching television. Over time, elevated stress leads to health issues.

Poorer dining habits Instead of spending time preparing a healthy, inexpensive meal from scratch, we would hurry up and eat an more expensive prepackaged meal (or takeout) so that we could catch certain television programs. These costs added up, not only on our wallets, but also around our waists.

Poor health / obesity Television is almost always a sedentary activity. Over time, it begins to show. Television is the big reason for the “obesity epidemic,” because Americans simply don’t get the natural exercise from doing non-sedentary activities that they once got. The health costs from this can be tremendous.

Less communication When the television is on for hours each day, it’s much more difficult to have real conversations with the people in your life. Over time, less communication means weaker relationships with the people you love, and this means that quite often you have to “supplement” the relationship with additional spending.

Less sex For a married couple, not only is it good exercise (and thus healthy), it’s free and it can help heal a lot of costly relationship issues. With heavy television usage, particularly in the bedroom, couples can fall asleep watching television instead of in each other’s arms. I know it’s true from experience.

Ten Things To Replace Television With

If you take a one week challenge to turn off the television, several things will happen, chief among them boredom and a sense of having a ton of “empty” time. Here are ten things to do to fill that time.

Start an exercise plan. If you didn’t watch Mad Money every night at six o’clock, you might be able to spend that hour walking around the block, doing leg lifts, or doing an aerobic workout. Most exercise routines cost nothing, though it can be more fun if you do something like a DDR exercise regimen (something I’d love to write about, but I can’t really conceive of how it fits on The Simple Dollar).

Prepare meals. Learn how to cook at home. Prepare some interesting meals. Get a good cookbook and dig in.

Read a book you’ve always wanted to read. Something like Anna Karenina or The Rise of Theodore Roosevelt (both were the “book I always wanted to read” for me at various times). Read something to educate your mind and your spirit.

Start a second business. I keep this blog running on less time than I used to spend watching television each night and it is earning some money. I also started a computer consulting business, where I fix people’s computers locally. This has opened up two solid revenue streams for me that, added together, approximate what I made from my job before. This has made me feel much less stressed about work - I do my job, but it no longer has the paralyzing “Oh my God what if they downsize?” fear that it used to have.

Be social. Have healthy, focused conversations with your immediate family. Patch up bruised relationships and friendships. Go out to community events and meet people. Find a group connected to the things you’re interested in and get involved (like a book club).

Take an evening class. Most universities offer degree programs towards a master’s degree (or higher) in the evenings. See what’s available and get into such a program. It will fill your evenings with food for thought and put you on a much stronger career path.

Learn a new skill or a new hobby. When my great grandfather died, my great grandmother spent her evenings learning how to paint, something she’d always wanted to learn how to do. She had a ton of natural skill, and as she learned the craft, it began to show. It was something that her married life and television watching had never left time for before.

Take on a major project. Do something huge that you’ve always wanted to do. I’ve done things like made a homemade bullwhip, learned how to speak Mandarin, and so on, just in my newfound spare time.

Get things done. When I finally turned off the television and looked around, I saw literally hundreds of little things that needed to be done that I simply hadn’t done. So I started getting them done; I literally spent three days making a giant checklist of every task that would take longer than five minutes, then I just started going through them. I felt so productive while doing this that it was a huge endorphin rush just by itself.

Take care of whatever bothers you. For me, it was taking a little bit of time each day to meditate and get in touch with my spiritual side, and it made a huge difference in my life.

In short, by cutting out television, you can not only directly save money, but live a much more rich and fulfilling life.

Many, many people were driven to distraction by my recent offhanded claim that Netflix didn’t really work for us in the context of a plan to keep up with our various favorite television programs. In that post, I basically stated that our best plan for keeping up with programs we like and skipping out on ones we don’t like is buying and selling television series on eBay, a season at a time.

An aside: before I get started on why Netflix isn’t cost effective for us, among the suggestions for a “better” solution was a TiVo with a lifetime enrollment. Unfortunately, this plan isn’t available for new customers. Plus, you’ve got upfront costs and you’re limited on channel availability to what you subscribe to.

So why isn’t Netflix cost-effective? First of all, I need to draw a clear picture of our television viewing habits. My wife and I watch roughly an hour of television per day. We have very specific series that we enjoy watching, but we don’t really like watching the same show over and over again. In fact, we like being able to space out the episodes of a series about a week apart so we don’t get sick of it. In short, we love the depth of continuing dramas, but we don’t want to be bombarded with many, many nights of consecutive episodes.  Remember, one of our goals is to replace cable television in our lives as a cost-saving mechanism.
In short, we want to be able to enjoy long non-repetitive and sequential runs of our favorite shows, but not consecutively; we want to watch them spread out over several nights. Let me give you an example: we currently have six DVD series at home. Every night, we watch one episode of one, then the following night, we watch an episode of another one, and so on in a round-robin fashion. This enables us to be able to stretch these six box sets into about four months of television viewing.

So, let’s see what that costs, assuming we buy the series new. I’m going to assume a ballpark average of the season sets at $35 new. We’ve seen many on sale recently for $20, so this seems about right. We would be spending roughly $50 on DVDs per month if we bought them new. Obviously, this has some great advantages: we can watch whenever we like without worrying about having them at home or not.

Now, what if we bought them used on eBay and kept them? If you do some eBay searching, you’ll discover the cost for a season of a series drops by about 40% if you buy used on eBay only from reputable folks. This means that a season costs about $20 on average. Given our viewing habits, we would be spending about $30 a month on DVDs if we bought the seasons used and kept them. This is much better than new, obviously, and has almost all the same advantages.

Let’s keep going. What if we re-sold the watched series on eBay? By doing this, we reduce the cost of having a season to merely the cost of packaging and shipping: perhaps $5 per DVD set. With this program, we would be spending $7.50 a month on DVDs. We still maintain most of the advantages of owning the sets - watching what we want at our own pace - except that we don’t keep them long term. We’re also not factoring in the idea that many people love to give DVD season sets as gifts in our family, and we would be able to include these in our program and drop the cost even more. With that caveat, our cost per month would be about $5.

Now, Netflix does have some advantages over this; the biggest one, obviously, is the film catalog. However, they have one monster disadvantage that really can’t be overcome: you can only have a small number at home at once. We like to have our DVD series in rotating order so we don’t get sick of them. In order to use the Netflix “service,” we would have to change our viewing habits and compress the series quite a bit.

Let’s say we signed up for the 3 DVDs at a time plan for $17.99 a month. We get three discs worth of our favorite series in the mail and start watching them. Each disc has four episodes on it, so on the tenth, eleventh, and twelfth days, we drop discs in the mail. We then hope that we have new discs back on the thirteenth, fourteenth, and fifteenth days, which isn’t a guarantee. An even bigger problem: we’re compressing the series down quite a bit; we’re watching an episode every three days of the same series, which pushes hard against our thresholds, even if we really enjoy a series.

The conclusion? Netflix doesn’t offer a plan that matches our needs - or our acceptable cost levels. The only plans that come close don’t fit our viewing requirements very well and are much more expensive.

Netflix is a great service for many viewing patterns, but it is not a be-all-end-all service, especially with the pocketbook in mind. What Netflix really sells is convenience - and for us, it’s not convenient. Using our plan, over a year we can save about $200 versus using Netflix and be much happier with our programming.

Each month for years, my wife and I have dutifully paid a cable television bill that amounted to about $50 (on average). We used to watch quite a bit of television in the evenings, interspersed with reading and writing. When our son was born, however, our television viewing dropped considerably, to the point where we only watch a very small number of shows consistently. For me, the television shows I’m interested in are mostly science fiction dramas (Lost and Doctor Who, though I’m interested in giving Battlestar Galactica a good shake) and a few network sitcoms. There are a few other programs we might be willing to watch, but honestly, we have other things to do with our time than schedule them around television programs.

We discussed purchasing a TiVo to record our programs, but we didn’t want to add another monthly expense to our budget for the opportunity to record programs that we barely have time to watch in the first place. I think TiVo is a wonderful tool, but it simply doesn’t fit well into our lifestyle.

Thus, we are finally coming around to what seems like the best solution for our situation: television programs on DVD. At first glance, this seems like it would be a major expense: a season of a television series on DVD costs about as much as a month of cable, right? Well… not entirely.

Here’s our plan for keeping up with our favorite programs without commercial interruption without spending much money at all - and also enabling us to cancel that pricey monthly television bill.

First, we make a big list of the television programs we would like to watch starting from the first season. We limited this list to series we both enjoy or enjoyed in the past. Here’s a sampling of my list, for giggles: Picket Fences, Northern Exposure, The Sopranos, Arrested Development, Battlestar Galactica, and the reintroduced Doctor Who. Most of these happen to overlap with my wife’s list, too.

We choose about five programs that we want to watch sooner rather than later, and then cross-check them for DVD availability. Unfortunately for us, our mutually “most wanted” series (Picket Fences) isn’t out on DVD yet, so we’re looking at a collection of other series.

We start watching eBay for auctions of the first seasons of these shows - and buy when we see a good deal. We also keep an eye out in stores for new seasons that seem to be heavily discounted as well; I recently found each season of Arrested Development new in the store for about $15 each, for example.

We add some of the other series to our Amazon wishlists and see if we get them as birthday gifts. Television series on DVD make for a great gift for people: they’re easily acquirable and provide a lot of entertainment to the recipient. We add these to our wishlists on Amazon so that people can easily give us these as gifts if they so choose.

When we finish a season of a series, we put it up on eBay and use the proceeds to buy more seasons. This is the key part: we can usually sell the seasons on eBay and make back roughly the price of what we paid for them (and sometimes beat it, if we found a good deal earlier). Thus, our cost for a “new” season is roughly the cost of listing an auction, a padded envelope, and postage. This is an incredible deal for us; even if we watch an episode a day on average, we can usually stretch a season of a series out over most of a month.

We are strongly considering using this process for all of our “television” watching and abandoning cable programming altogether. This scheme is inexpensive and lets us watch our favorite shows without commercial interruption. We lose the option of having the latest episodes, of course, but we gain freedom from a monthly bill for $50.

You almost can’t avoid that face, can you? He’s on three times a day on CNBC hosting Mad Money, plus his book Jim Cramer’s Real Money, featuring his smiling face on the cover, is almost ubiquitous if you go anywhere near the personal finance section of a bookstore. If you’re concerned about your money and seek advice on it, chances are you’ve seen his face plenty of times in the last couple of years.

I make no claims whatsoever about the strength of his stock picks; one should always research their stock picks and not simply blindly follow the advice of others. Nor do I have any comments about his temper issues (besides the fact that they kind of scare me when he starts going crazy on television); those are for him to work out.

What intrigues me about Jim Cramer is the cult of personality that has grown up around him. There are dozens of sites out there that focus on little else but either lauding or criticising this man, whereas there is significantly less attention focused on other stock pickers. Obviously, the difference is Cramer’s persona, that of a caffeine-fueled raging maniac shouting out stock tips and investment advice while storming around on the set hitting sound effect buttons.

What about this persona appeals to people? I am particularly curious about this since Cramer’s topic is personal finance, an issue that usually ties itself to calmness and careful study, not ranging around like a bull in a china closet screaming at viewers. From a non-investor standpoint (take my nephew, for example), Jim Cramer comes off as some sort of lunatic; Mad Money is the only investment show he’ll pay any attention to because of Cramer’s antics.

I guess that alone reveals the truth of the matter: the real appeal is not in the investment advice, but in the entertainment factor. Most listeners and followers of Jim Cramer are not actually tuning in for investment advice. Instead, they’re tuning in to watch his antics. Maybe they’ll remember a ticker symbol or two to look up later, but mostly Jim Cramer is there to entertain. This explains the “cult of personality” around him; he’s like a stock broker version of Britney Spears.

As for me? I’ll take the hour that Cramer is on the air and use it to do my own financial research and writing, perhaps while being entertained by listening to a record by The Shins. As for his book, it’s actually on my reading list, but as for being a member of the “Jim Cramer Army,” count me out.

Several months ago, my family was invited by the Nielsen Ratings to be a “Nielsen Family,” in other words, we were given a few dollars to spend a week filling out a booklet detailing every television program that we watched in a given week and who watched it.

Given that we generally only watch a small number of programs (and we diligently watch them… Lost, anyone?), we were quite happy to give a small ratings boost to our favorite programs (sadly, a bit too late to help the recently cancelled Arrested Development, but I digress). We diligently filled out the booklet and at the end of the week, we were about to send the booklet out when I spent a bit of time leafing through it.

I noticed that almost every program we watched during the week aired on a broadcast network, with only two exceptions (if you must know, they were Battlestar Galactica and The Wire). That meant that we were paying about $50 a month to watch two television programs that, if we waited a bit, we could watch on DVD rentals (or perhaps receive a season as a gift).

We sent the guide in, but my wife and I (just to be sure) kept a viewing log for the next two weeks and, sure enough, excepting a few minor news events, we only watched Battlestar Galactica and The Wire on cable. Given that this was costing us $50 a month, we elected to cancel our cable and replace it with a small antenna that enables us to receive the broadcast networks quite well (ABC, CBS, NBC, Fox, PBS, and a faint CW).

This plan can save you money, too. Spend a couple weeks logging what you watch. Then, evaluate that data: are there any packages you’re paying for that you’re not watching? If there are, cancel them and put the cash towards more important things instead.