Thursday, January 1, 2009

How to "REALLY" get a car FREE ?

I always share that below picture can help me answer ALL kinds of financial planning questions.  Let's try it now ...

First of all let me emphasize that I may not have free lunch here.  So if you are expecting magic here please wait a bit longer until I graduate from my magic classes :)

Legally there are 2 ways you can get a car for FREE 
1) by adopting the green shaded area called "Earn $2 with $1" and
2) by applying some 'tricks' in the "Income" area
The easiest way to get your first car FREE is ... by NOT buying it "now".  You may say this is a no brainer or even a bit pissed with this suggestion but its the reality in Personal Finance Planning ;
DO NOT buy the things you cann't afford
Time with compounding interest is your friend
For example, an averagely usable used car would cost one to five thousands dollars, so lets say you are budgeting $3,200 for this purpose and all you have is $100 to start with.  According to Rule of 72, if you save $100 with 12% interest, you will reach your target 30 years later.  So if you save your $100 at age 10, you can buy your first car for "free" when you are 40 years old.

Some of you may get even more pissed by now, "What kind of lifestyle is that ?"  

Well, above is assuming you do "nothing" or purely a "passive" growth.  If your expectation is you don't want to pay with Money but DO NOT MIND spending some effort, then keeps reading on ....

Playing with the same number game, these are the interests you will need and number of years to achieve your target.

18% : 20 years
24% : 15 years
36% : 10 years
72% : 5 years

Now this is the turning point ... 90% of the respond up to now is, " There are NO WAYS we can get 72% return !! "  

Fewer would complain slightly differently, " The only way to get that return is by doing business myself ".

I know asking you to start a business to earn enough money to buy your first car would even be more lame for this topic.  But this still brings out another reality in Financial Planning ;
When you cann't address your finance needs "passively"
you will need to solve it "actively
"passive" means Earn $2 with $1 and Buy $100 with $1
"active" means doing something with your income

You may get away with NOT paying with money, but you would most probably still need to PAY with some effort or at least PAY with a Darn Good Idea !

Here comes a few ...

Ask For Minimum Wages
The next time you are offered a job, do not ask for salary raise.  Indeed ask for minimum wage and a FREE car.  In some case, the company car you received is still taxable but usually the total taxable is still lower than if you have a high salary.  There are a few ways how the company can do this although not common.  The general principal is that your lower salary helps you pay less tax and company purchase vehicles reduce business taxes.  At the end, you may receive more than your raised salary while your company is paying less.

Your effort :  You will need to calculate all the figures correctly and build a strong case to propose to your employer why it is beneficial for them to do it.  This requires you to really understand your local tax policy, your targeted purchased car resale value and depreciation rate, industry total compensation plan.  Lastly you probably need to have good presentation and convincing skill.

This is already a standard procedures for top positions in big companies with very expensive cars.  Smaller companies do not see the point of doing this with everyone because the saving is not that big.  However, if you do all the calculation for them, there is no reason why they don't want to save an extra penny.

Don't Buy One, Buy More !
Find an investor, buy 10 cars and rent them out.  You link all these people up but let your friends manage the business.  You keep a very small share or no share at all with the agreement that you can use one of the cars 5 out of 7 days or when the car is not in rent.  5 years later, you may keep the car for good.

Your effort : You will need real business skill to come up with the business plan and proper contract to get this going.

This used to be a very successful model in Langkawi and Labuan when they have a lot of tourists back in those days.

Be A Market Expert

Pick a used car model you are interested in.  Start compiling your own market price statistic by calling each seller.  Record the lowest selling price you get from each seller.  Eventually you should have the actual selling price of this car model in your local area.  Keep looking until you find one that is 20-30% cheaper than your compiled price.  Buy that car with 90-100% loan.  While driving the car, put up an adv with 5% more than the selling price but stated "negotiable".

Your effort : You will need to be a marketing guru to understand how above has used the technique of "leverage".  If done correctly, the cycle keeps going and you will have a free car.  But if done incorrectly, you may end up in debt trouble.  You will also really need to know the car and its price very well.

There are 2 ways in leveraging.  You may buy the car 20-30% cheaper than 'normal' or you can sell the car 20-40% higher than 'normal' by value adding.  This depends on how well you know cars, its supply and demand.  This technique is still actively practised everyday but not with the purpose of driving a FREE car.  The car sales men are adopting these strategies to earn big money.


Hmmm ...

I just realize this post has gone too long, I can go on and on ... so if you are still not happy with above suggestions, do leave comments why so and I would try to come back to this topic in future ...

13 comments:

KCLau said...

Looks like there are many ways to get a free car.
I like your sharing!! Keep it up.

Michael Tsen said...

thanks KC, one of the good aspect during crisis time is that if one complains start with a 'how', it would most probably end up with some innovative answer rather than just some coffee shop cursing sections, not that I don't like it which I just came back from an hour ago, hee hee hee ...

TheCurious said...

Hi Michael,

Your statement of " "passive" means Earn $2 with $1 and Buy $100 with $1" caught my eyes!

Can you provide realistic examples on what activities can we do to earn $2 with any single $1 that we have? And how to shop for an item of $100 by paying just $1, apart from the insurance "value"?

Michael Tsen said...

it may take a while before I write for these 2 so I would just answer you here that its Investment (Mutual Fund) and Insurance in short.

The key to 2for1 is the 'time' taken for your investment to double its value. Which goes back to Rule of 72. For example, a $1 FD of 3% will double to $2 in 24 years. As you may see, the main trick to win this game is to have the shortest time to dbl the money, which the solution is a custom made own portfolio. Varies tricks will be shared in future posts on this.

The key to 100for1 is a simple bargain with the insurer with a few tokens that you may not realize you have ...

as for the 'realistic examples' you refer to, I do have some of them but like this post itself, it will fall under the 'Income' part where there is no limit and our imagination can run wild ...

marxy said...

The word "FREE" is much simpler and straight-forward for me: Anything that I can only acquire by "exchanging" with something that I already owned, it's "NOT FREE" then.

It takes quite an effort to justify that something is truly FREE; but it takes little to prove it is NOT. :-( .

Michael Tsen said...

yeap, most of human mind is tuned to the 'NOT', thats why only a handful who are practical can get what they want, be it free or not.

marxy said...

By identifying (most) things are NOT free, one would get more committed in looking for more practical and realistic ways (instead of constructing fantasy with the numbers) to achieve what he wants, and feel more contended with the achievements.

Michael Tsen said...

I guess that is one good life philosophy too ...

except my Math teacher used to say, "There is NO free thing in this world !" ... "Its PROVEN in all the numbers (math formula)"

TheCurious said...

So, takalah "free" --lorr --horr ? Hehe ...

Michael Tsen said...

pretty free to me :) may not be for others ...

TheCurious said...

arr? That means you have just forget what your Math teacher said? Muahahaha ...

al_husni said...

hi mike,
good info..sure triggers my imaginations...

Michael Tsen said...

thkx, imagination is good ... :)

if you start doing some projects with regards this, do give me a buzz ... I may have something on too ...