Sunday, December 09, 2007


"Relationship between two individuals should be like fish and water. Not like the relationship between fish and fisherman."

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Sunday, December 02, 2007

Warranty Direct - extended warranty

Extended warranty for automobiles seems to be next only to used cars business in terms of negative publicity. You can search on the web and you will so many people complaining and cursing extended warranty companies which did not pay legitimate claims by using some fine print or made it so difficult that the customer could not wait them to resolve the issue and went ahead and paid for the repairs and some flimsy companies even went belly up.

I had not really thought about extended warranty. However, soon after my previous car - 2002 Honda Accord V6- was out of warranty, my repair shop recommended that lower ball joints be replaced. I am not sure if it was really required or was simply ripped off. Since it was related to safety, I went ahead and had it replaced. Cost of the repair was around $500. That's when it really started sinking into me that even reliable Japanese cars can lead to costly repairs. What if transmission were to fail or engine or something other than routine parts such as brakes, bulbs, tires etc. It is one thing to plan for known wear and tear and totally a different thing to suddenly be hit with an expensive repair bill which can go up to a few thousand dollars in case engine or transmission rebuild.

In 2006, I researched for extended warranties. There are literally thousands of companies selling variety of auto warranties. It seems to me many are simply fronts to the same business entity based on their advertising pitch. Most of the extended warranties are exclusionary type. Unlike bumper to bumper warranty you get on a brand new car, these extended warranties specify in finest detail and finest print, what is covered and what is not covered. It looks like they want to sell you something so complicated that when time comes, they can give you a run from pillar to post with all that legal jargon. What do you do at that time? Fight with them or pay for the repairs and get moving.

After some research, Warranty Direct (www. stood out for several reasons. First they had many types of extended warranty plans. Each one clearly explained so that you can make a reasonable decision on what plan to buy. Easy quote process. Excellent web site. Variety of payment options and plans in case if it is important. One of the plans which covered most of the items was closest to bumper to bumper warranty. Exclusions were routine stuff like brakes, bulbs only. All other parts and repairs fully covered. No fine print and legal jumbo mumbo. Even the price was very reasonable. Like $1275 for 100, 000 miles or 8 years whichever came first. Seemed like less than dollar a day for 4 years coverage. Also impressive was the requirement for them to examine your car before they decided whether it made sense to sell the warranty. Fair enough. If you are serious about selling extended warranty and honest, you want to make sure the car you are going to cover is a fair deal for you and the customer. They waive this examination if you buy the extended warranty when your car is still in the factory warranty. Since my car was out of warranty for close to an year, I had to have this exam and they charge you extra for this. Like $90. They will send an expert mechanic who can come to wherever your car is, does a through check up, takes it for a ride (you can go with him) and then files a report. You will get a copy of the report. If your vehicle passes, you pay the quoted fee and your vehicle is covered under extended warranty.

Luckily there was no occasion for me to make any claims against my extended warranty. My car was in an accident recently and was totaled. Due to this, I remembered another positive point from Warranty Direct. They let you cancel extended warranty anytime and refund you pro-rata. Good feature. I was not sure how it was going to be to get my money back. I went to their web site, called the customer service line. Their rep gave me a fax number to fax my request for cancellation and refund. I did that and waited for a week or so. Then called them again and was told it would take up to 4 weeks. In less than 2 weeks, I see today they have promptly credited the refund to my credit card. No hassles. Refund seems reasonable. I was midway through the 4 year period and I got little more than half the money back. May be because I had not put much miles anyway. Not sure what formula they use. I am happy to get more than half as I go by time and not necessarily how close I was to 100,000 miles.

I can not really say what would have been the experience if I had to claim warranty services if something were to go wrong and I had to have it repaired. You can search Internet and you will find experiences of other car owners. I can certainly recommend them from the point of smooth business transaction and professionalism. Also, not many companies seem to offer the comprehensive plans they offer. Extended warranty comes with basic road side assistance, trip break coverage etc. Prices are reasonable. Seems like a ethical company in the industry which is marred by some many scandals and bogus companies. You can also transfer the warranty to the new owner for a small transaction fee. This should make it very attractive to prospective buyers if you want to sell your car.

If you want better extended warranty, it makes sense to buy the extended warranty from the manufacturer of your car. If you buy it from the dealer when you buy the car, chances are you will pay a steep mark up. But, there are several other dealers who have taken extended warranty seriously and sell the same factory extended warranty at much competitive price. For example, you can buy Toyota or Honda factory extended warranty from say Bernardi Warranty (also a dealer in MA). I have not yet purchased for my new Toyota Camry. But, prices seem very reasonable, extended warranty plans are good (from most comprehensive to very basic) and you can get repairs done by any factory dealer or other mechanic.

All said and done, I prefer "best warranty is one which you will never have to claim". It is more of peace of mind than anything else. Who wants to have the hassles of a broken car. Give me a car which runs well for a long time with least maintenance. Luckily for us, most of the cars these days are like that. May they get even better.

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Beware of M2Mags Rebate

You may come across an offer to subscribe to free magazines or get a $10 rebate when you shop online. You may want to consider, getting the mags instead of $10 rebate. When it comes cash rebate, this company M2Mags sucks big time. I have tried contacting them so many times after duly completing all the paperwork and they have never sent any rebate. Once I got an e-mail from someone who said she would look into it and then from there it seems to have gone into a black hole. In the past when I came across such magazine rebates (from some other company), I went for magazines and been getting the magazines without any problem. No wonder cash and kind are not the same.


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Results v/s Consequences

"Results are what we expect. Consequences are what we get."

Nice quote to differentiate between results and consequences.

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Saturday, December 01, 2007

Year is almost over

So, today is the first day of the last month of the year. You know, it always feels like year is ending at the end of August. Two long months July and August are over and year end is almost there.

Year end is always a good time prepare your end of the year report. Much like companies file their 10-K or whatever they file at the end of their financial year. We can look not only at your financial life but also other aspects of life and take a stock of the situation.

Financial - if you invest in individual stocks, how's your performance? Performance can be compared against benchmark such as S&P 500 index. As it has been verified historically, many active investors fail to match market performance over long time. So, if you are not faring at least as well as market, it may be time to shift back those hard earned money to passive modes of investing such as index funds, indexed ETFs are whatever and save of transaction costs. Most of the online stock brokers such as Scottrade make it easy to calculate your performance. Also, time to think about dumping all those money losing stocks and take the write offs on the tax return.

It is also time to re-balance your portfolio. Rule of thumb is to maintain a healthy ratio of funds invested in stocks and bonds. Rule is to subtract your age from 120. Maintain in stocks what equals (120  minus your age)diversified stocks and rest in a bonds. If you are 35, it means 85% in stocks and 15% in bonds. This gives a fairly aggressive portfolio which should appreciate at the rate of around 10% year over year over the long term. In last 5 years, this portfolio has delivered around 15%. Much better than any active trading can consistently perform.

You have to be careful how you re-balance in your non-retirement portfolio. Reason is when you try to balance in an active portfolio, you effectively sell appreciated assets and buy less appreciated assets. So, you will have to pay additional capital gains. One way to avoid is to leave the appreciated assets as such and defer any further investments in that area. Continue to buy bonds if bonds are in less ratio than ideal and stocks if they are in less of a ratio till that point optimum ratio is reached. That way ratio comes to required state in a few months. Then again you can start buying the mix of stocks and bonds in the ratio you desire. This works well if you invest on regular basis. It is best invest on monthly basis. Gives ample opportunities to re-balance all through the year based on your desired optimum mix.

Or you can choose on of those life cycle mutual funds which adjust your stocks-bond ratio based on your set retirement age. You can choose a lifecycle fund with retirement set to some year in the future. They automatically adjust such ratio based on the objective of the fund which takes less risk as the target year approaches.

Also, it is the time to organize all the paperwork. Look into aspects such as insurance, medical records, setting up appointments for medical check ups, wills, checking out if you have nominated appropriate beneficiaries etc.

Good luck and get ready to welcome new year with new hope. Things are going to get better. We can at least hope so!!!


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