Personal Extended Warranties

Extended warranty policies are offered by every car salesman with every sale of a new or used car. In some cases these are very good investments and offer you excellent protection on your car, at other times they have turned out to be not worth the paper they are written on.

As with anything else you need to do your homework before agreeing to purchase an extended warranty. Look at the mileage and time that the policy is good for and compare it to how long you keep a car and how many miles you drive. Remember that the clock starts running as soon as you purchase it. Check out the company that issues the policy with the BBB and see how many complaints they have lodged against them.

Now I am not a financial advisor nor do I claim to be, but over the years I have noticed a trend that can make funding your own warranty policy a real possibility. Using the latest national driving averages, a common sense maintenance plan and keeping the car for ten years you can set aside the money to cover all the maintenance needs and the repairs that come up.

For the first three years the car is covered under the factory warranty or until it has 36,000 miles on it. The national average is 15,000 miles a year so the mileage will be meet near the end of the 28th month. Up to that point anything outside of normal maintenance will be covered by the factory, so repair expenses are limited to oil changes and tire rotations basically.  After that follow a plan that will do the following items:

1. Change the fluids every 2 years or 30,000 miles.
2. Rotate the tires every 6,000 miles.
3. Change the belts and hoses every 4 years or 60,000 miles.
4. Change the oil every 3,000 miles.
5. Tune-up the engine 2 times
6. Change the timing belt if it has one twice
7. Change the brakes 3 times at a 50,000 mile average.
8. Replace the struts and shocks once.
9. Replace the tires 3 times.
10. Align the front end once a year.

Now seeing as how this is a mechanical device there will be other things that will need to be replaced during 150,000 miles of operation, but this will cover the main things that we see.

Now how are you going to pay for it? This is really a very simple program all you have to do is put $50.00 a month into a savings account while the car is financed and then switch to putting the car payment into the account when it is paid off.  Here is an example of how this can work.

• $50.00 per month times 12 months equals $600.00 a year
• $600.00 a year times 5 years equals $3000.00

Now at an average car payment of $400.00 a month times and additional 5 years to bring you to the 10 year mark will be another $24,000.00 set aside. As you can see you will have put away $27,000.00 over the course of ten years. The repairs and maintenance cost over this 10 year period will run about

15,000.00 if you do not have a major engine or transmission failure. Now at the end of these ten years not only is the now old car well maintained and worth more money on resale; you also have $12,000.00 to help with the purchase of a new vehicle.

Jim Miller

What does this have to do with Health Care?

Beginning in January 2012 (only a little over a year away) a very serious, time consuming and expensive provision of the health care bill will take effect. It has nothing to do with health care, doctors or medicine. It is a change in the requirements for filing 1099 forms.

Currently we have to issue a 1099 to any non-corporate entity from whom we purchase services over $600 per year. This could be contract labor, professional services or consultants. Under the new rules we would have to send a 1099 to everyone we pay more than $600 during the year.
The Health Care Act section 9006 b 1&2 expands the requirements for submitting a 1099 to include goods in addition to service and corporations.

This means that anyone your company pays more than $600 during the year will have to be sent a 1099. If you spend more than $600 during the year at Sams, they will get a 1099. If your light bill is more than $600 a year you will have to send them a 1099. Regardless of what the service, product or goods, if you spend more than $600 they must get a 1099.

You will be required to get all of the information for the company or individual you spend $600 or more with, including correct name, address and tax identification, and then send both them and the IRS a copy of the 1099 at the end of the year. When the business reports income for taxes the IRS will match what they report against all of the 1099’s submitted with that tax ID.

Of course your business will be receiving 1099’s as well. Every business customer you have will be required to send a 1099 to your business if they have spent more than $600 with you during that year. Insurance companies, warranty companies, fleets that you service and even the one man or woman entrepreneur doing consulting from home, or selling Mary Kay will have to send you a 1099. You will be responsible to file those with the IRS when you file taxes.

Last year our company issued less than twenty 1099 forms. We estimate that under the new rule we will issue well in excess of 200. It is estimated that there will be more than one BILLION new 1099 forms issued under the revised rules.

There is no good way to calculate the cost of the hours that a business will spend complying with this ruling, but consider this; mailing one billion forms at 44 cents each will cost American businesses $440,000,000! Yes, that’s Four Hundred and Twenty Million Dollars!

We have a year to petition our representatives to repeal this costly and time consuming regulation.
Call or write your Congressman and Senator and urge them to consider the impact of this ill conceived rule.

Know Before You Tow

You have to be careful about towing companies that show up at an accident site. We have seen towing fees of 7 and 8 hundred for a pretty simple tow.

If possible have the car towed by the shop you plan to use to repair it. If the car is not blocking traffic and on private property the officer will allow you to call your own shop for a tow in most cases. Second choice, negotiate with one of the drivers on site to tow your car to your shop of choice. They are going to want to take it to their shop because most wrecker companies get a commission on the cars they tow in plus the fee. If you can agree to a fee, probably 150 to 200 go for it. If it is during business hours the shop will pay the tow truck. If it is after hours you will have to pay and get the money back from the insurance. Finally if you cannot do any of these things than ask the officer to assign your car for a non-consent tow. The tow truck will take your car to their storage lot and your repair shop can pick it up from there. The insurance will pay the fees. On a non-consent tow the city sets the rates that can be charged. If you sign that tow ticket the driver is not restricted on fees.

Also be VERY careful what you sign, if you do. Some drivers have a repair authorization included with the tow ticket and you give their shop permission to repair your car if you sign it.