THE Cambridge Connection - Episode 35

I knew you were going to say it. It’s actually, I think, if you asked me, just from the many conversations we have with people over the years, six months is really the safe amount you should have, which is basically covering everything in your budget. 9% of the people I speak to live paycheck to paycheck. So to have to save six months worth of living expenses, it almost, it does seem impossible. And why are we in front of that?

Because we’re saying, the signs are showing that we’re going into a recession, right? Right. So it’s going to be even harder to do that as costs go up for goods, energy, et cetera. So now is the time to start tightening the buckle. Yep.

Figuring out where you’re going to cut back. I’m going to channel grandma here. If I can get $5 a week saved somehow out of my budget, it’s a start. It is a start. Got to start somewhere.

Budget percentages and expense categories

That’s right. OK. Number two, decrease your expenses. Mm-hmm. Well, this is where we talk with people counseling as far as how to decrease expenses.

And journalizing and tracking, to me, is one of the biggest ways to notice where you’re spending your money and how to decrease your spending. A lot of transactions are done via credit card or debit card. Obviously, you want to keep track of where the money is going. And a lot of people, we’ve seen this over time, when they don’t have a budget, they think they know where it’s going, they think they know the dollar amounts, but they don’t. So let me quickly bring up some percentages on what to set for a budget.

All right. Let’s get our pencils out. So housing, 25% to 35%. Becoming extremely difficult, it seems, because many people, the housing market’s been crazy. People are overbidding in insane amounts to acquire a new home.

So if you’re thinking about buying a home in a low-inventory situation with a recession, you want to be thinking the lower amount of that, 25% of your income for housing. Insurance, including health, medical, auto, and life, 10% to 20%. Food, this is a big one, 10% to 15%, and this is where people should be looking right away, because groceries have gone up. The spending that they thought they may have been doing on a percentage basis off the income probably is higher, and it needs to be looked at. I agree.

I talk about my experiences at the grocery store all the time, and I want to cry, to be honest with you. Recently, especially recently, I used to love cooking with lobster and shrimp and all that good stuff. Man, that’s through the roof. 99 a pound, which, almost like the price of bologna. Yeah.

Right, wow. But now- Cold cuts have just gone insane. I mean, it’s crazy. Yeah. 99 a pound- Understood.

on anything. That’s where you make smart cuts now, right? Don’t wait, because you’ve got to start saving some of that money that might be going- Exactly. out the window on higher costs. Exactly.

Guest introduction and transportation budgeting

So, this is The Cambridge Connection. Your host, Gordon Oliver. We’re in the middle of talking about budget percentages in dealing with the recession that is here, and even potentially worse on the way. We have special guest, Dominic Finocchiero, the finance manager of Lia Toyota in Northampton. We’re going to talk about transportation today, but the percentage there is 10% to 15% for transportation.

Utilities, 5% to 10%. Savings, 10% to 15%. What’s your take on that? If you have 10% to 15% to save, obviously, we’ve just discussed the six months’ worth of savings for emergency, 10% of your income to save if you can do it. Are we talking 401ks as well, or this is just your personal savings?

It is savings. Yeah. So, it could be investment. It could be just basic savings, because we know there’s no return in savings in a savings account. So, however you allocate that, you want to speak to a financial advisor and try to come up with a plan, but that’s the general amount, 10% to 15% for savings.

Fun and recreation is 5% to 10%. Zero. Yeah. So, if you ever go bowling or any of the recreation, what are the go-karts, I mean, you spend just an insane amount of money on one event. And that’s not their fault.

Obviously, the businesses are dealing with the same thing the consumer is dealing with, right? Exactly. The restaurant industry with the food costs, it’s just so expensive as far as entertainment. With the food costs, the restaurants have to increase their prices. They don’t have a choice.

They’re not going to survive without that. So, obviously, it’s going to fall on the consumer. There goes your entertainment. We talked about clothing, clothing at 5%. For our listeners, if you have yourself or your family members or friends that are struggling, look yourself in the mirror.

And if you’re saying you don’t have the money, you have to go back to your budget and look. And if you can honestly say there’s not a single dime that I’m wasting on anything, then you have to be as tight as possible. But there are areas usually in the budget defined to try to start saving and build that six months of savings. So, let me round out the other three in the top five here. Invest in your career.

Invest long-term, which we talked about savings and investing. And of course, increase your income when you can. You see a lot of people with two and three jobs trying to make ends meet and just survive. So, if you can increase your income, if there’s ways with time that you have in your schedule to do so, maybe a part-time job is fitting to try to increase that income. It helps.

It’ll definitely help. All right. We’re going to take a quick break. We’ll be right back. This is The Cambridge Connection.

I’m your host, Gordon Oliver. Spring is here, and it’s a great time to clean up your debts with a debt management plan from Cambridge Credit Counseling. Reduce your credit card interest rates and lower your monthly payments. Call Cambridge Credit Counseling today. 1-800-CAMBRIDGE.

Auto industry supply chain challenges

Welcome back, everyone. This is The Cambridge Connection. I’m your host, Gordon Oliver, here with my co-pilot, Tina Marie, and we’re talking about inflation and recession and budgeting, and, you know, one of the key pieces of our lives are transportation. So, we have a special guest today. Dominic Finocchiero of Liatoyota in Northampton, here to discuss all things cars and transportation.

Dominic, welcome to the show. Hey, thanks for having me. Welcome, Dominic. I’m all fired up talking about finances. All right, so before we get into transportation, cars, et cetera, why don’t you tell our listeners a little about you and a little bit about your experience?

Sure. So I have been in the auto industry for going on 15 years. And I’ve kind of been in all parts of it. I’ve been a general manager. I’ve been a finance manager.

I’ve been a sales manager, salesperson. I’ve been kind of everything in the auto industry. All of the above, huh? Yeah, all of them. So I’ve been in every part of the dealerships.

I’ve been basically helping people get cars for the last 15 years. So I’ve seen all kinds of customers that we deal with from people who have great credit and people who pay cash for cars, which is amazing, and people who have bad credit. And yeah, so I’ve seen it all. I’ve helped a bunch of people. And yeah, it’s a great industry to be in, to be able to deliver that to the people.

You know what I mean? I can only imagine how difficult things are right now, though, as far as supply, demand, and the cost. Ooh, yeah. Yeah, so right now, so the auto industry has changed in the last three years since the pandemic. So it’s changed a lot.

So the days of people walking through rows of cars on a dealership lot and being able to pick whatever vehicle they want, the color, the options, and all this other stuff, those days are over. And they are probably over for good, you think? They’re probably over forever, yeah. So we used to have on our lot about 200 to 250 cars just sitting there collecting pollen during the summer. And now we have for sale on our lot in a Toyota store that does a lot of cars.

We probably have roughly about 10 cars that you could walk on the lot and buy. All right, so for some, obviously, we are post-pandemic. Obviously, the pandemic had some input on what has gone on in the auto industry. I’m sure it was changing already because with big tech and just technology in general, things were changing anyway. But what in the last couple of years have you seen in the industry that’s been challenging?

So the biggest thing, obviously, has been with the pandemic, the supply chain, right? So with our factories, and we get a lot of our vehicles in the Toyota brand, anyway, from overseas. So shipping the vehicles to us, the factories that have been affected because of COVID, shutting down the factory for two weeks. And you’re talking about shutting down a factory that produces 3,000 cars a day. Shutting it down for two weeks is going to affect the entire country.

So the entire country’s supply chain was essentially shut down, as well as with the chip shortage that they had. So there was this gigantic chip shortage. These microchips they need for the vehicles, they gave up. So they said, when the pandemic hit, they said, we’re not going to need these because we’re not going to produce a lot of vehicles. We’re not going to sell a lot of vehicles.

The demand is going to go away. So they gave them up to other industries. And what ended up happening was for March, April, May, when that pandemic first hit, the demand did go down. But what ended up, they weren’t expecting, was August, September, October of that same year, it shot through the roof. I mean, the demand came roaring back.

And we had some cars on the ground. And what ended up happening was we sold through. And the demand is still there. It has never gone away from those first few months after the pandemic. So now we sold our inventory that we had on the ground that was available, and they couldn’t replenish, right?

So it just kind of snowballs when you think about all of the other places that need vehicles, like all your rental car companies, right? So Enterprise, Hertz, and all these other places that always replenish their inventory. Have you tried to rent a car in the last year? I haven’t, no. It’s ridiculous.

Because they cannot replace their inventory. So they have a huge rental car shortage. So it’s a circle, right? So the factories can’t supply the rental car companies. The rental car companies can’t fill their inventory and get rid of the stuff that they want to get rid of, which they sell back to us.

And we sell as used cars, right? So now there’s not only a new car shortage, but there’s a used car shortage. Because the people that are either getting the cars from these rental companies or people that are leasing cars currently and would come in and give their car back as a used car for us and lease a new car, they’re not. Because there’s no inventory for them to buy. This is a global issue.

This is every brand. It’s every car company. It’s mom and pop shops. It’s big dealers. It’s everybody all over the country.

All right, we’re going to talk about a couple of things that consumers would want to hear about if they’re in the process with all of these changes. But is there any shining light now that you have been in the business for the last couple of years with the change? Is there anything that is from cons? Are there any pros that you see with it? There’s been more, I think, cons for the consumer.

The costs have risen significantly because of the reduced supply. So, you know, cars and things that were previously you could come in and you can negotiate and you could say to a car dealership, you know, well, I want a $2,000 or $3,000 discount. That doesn’t happen anymore. Supply and demand, right? Right, so the supply is not there.

If you’re not going to buy that car, they have three or four other people that want to buy it, right? So the negotiation part is kind of gone. The positive side is if you have a specific car in mind that you want to buy and, you know, the dealerships and the factories and everybody else have gotten much better at, you know, you want a Cherry Red Prius Prime with a certain package and, you know, they’ve gotten really good at kind of honing in on that order. You can order the car. You may have to wait four to six months to get it, but it’s going to be the exact car that you want.

So the first thing, again, that I’m hearing on the budgeting side, right? You don’t want to be in a position where you’re desperate. So number one, if you have a vehicle that’s mechanically struggling, you should really start making plans because let’s say you’re trying to ride a vehicle until it cannot operate anymore and then you have to rush to go get a car. Well, either you’re going to probably get something that you don’t necessarily want because you’re in desperation or you better have a good enough plan to be able to wait for what it is that you’re trying to purchase. Correct.

So if you can plan, obviously planning is part of what I was going to touch base on as well, but planning ahead, obviously. So you can’t walk in, again, you either have to be extremely flexible on what you want and not be very specific on color, trim, even model. So some people come in, they want a RAV4 hybrid, they walk out with a Venza hybrid, you know what I mean? So you kind of have to be flexible like that or be willing to wait for a certain amount of time. Or the third option is, you know, you keep your vehicle that you have and you just continue to add miles to it.

And that’s where, in our industry anyway, people have been kind of opting into some kind of an extended vehicle plan for their car. So that’s a big, big thing that we kind of work with Toyota, it’s called an OEM provider, but we get people all the time that come in and say, you know, I got this call and everybody gets the phone calls, right? How many times have you gotten a phone call that said, hey, your extended warranty on your vehicle is open, you have to blah, blah, blah. Sure. Right, so there are people that are now getting pulled into that and they’re charging them ridiculous amounts of money for these third party warranties that are supposed to cover their vehicle.

And some of them are paying $100, $150 a month for infinity amount of months, because again, you don’t have a choice, you have to do something with your vehicle. And my suggestion there would be, if you can, go to a factory dealer, get something from the manufacturer. So for a Toyota, go to a Toyota dealer, get an OEM coverage for your vehicle if you have to keep it. That would be definitely a good piece of advice, because again, you’re not gonna end up paying as much as you would for a third party and they’re gonna cover you a lot better than a third party warranty would. All right, so what we’re gonna do is we’re gonna take a quick break and then when we come back, I wanna talk about electric vehicles versus gas powered vehicles, because obviously there’s a lot of promoting going on in the electric side.

And I wanna get some clarity on that from your perspective in the industry. And then we’ll talk about some tips, tricks, and processes for people to. plan on when they’re buying a car. But to take a quick break, this is Gordon Oliver with The Cambridge Connection. We’ll be right back.

Station promo and small talk

Well, Tina Marie, here we are, already in our mid-30s. Have you checked your license lately? You’re a far cry from being in your mid-30s. No, no, not me, our show, The Cambridge Connection. We’re already more than halfway through our first year of great guests and need-to-know topics.

Oh, I thought you were talking about your age. Well, that would take a lot longer than we have in this message. But what only takes a moment to share is that if you miss any of our shows on Saturdays on WHMP, don’t worry. com, click on Podcasts, and all of our shows are listed there. Plus, listeners can find us on all the podcast sites where they listen to their favorite podcast.

Well, when I get home, I’m going to listen to my favorite episode. And what’s that? You know, the one with me in it. Ha! Welcome back, everyone.

Electric versus gas vehicles

This is The Cambridge Connection. I’m your fired-up host, Gordon Oliver, with my co-pilot, Tina Marie, and fired-up Dominic Finocchiero, finance manager from Liatoyota in Northampton. Tell us more. All right, so before we get into a couple things, I want to tell you, for my decision, perfect example. I have a 2017 Pathfinder, and the amount of money they want to give me for the Pathfinder right now is extraordinary because I was actually following that because I aggressively worked on paying the car down.

And my grandmother gave me a tip, and that was, when you pay off your car loan, my first car loan, when you pay it off, open a bank account, keep making that payment into that bank account, and then when it comes time for maintenance for the car, you have a fund. When it comes time to buy a new car, you have a down payment for the car. And that’s the direction that I’m taking. I’m probably gonna ride this one into the ground. I love grandma’s tips, by the way.

Me too. I love grandma’s tips. Should have a new segment. Me too. I think that’s a very distinct possibility.

Grandma’s tips segment. Grandma’s tips for financial wellness. Okay, so in the vehicle realm, obviously in politics, there’s a lot of different conversation about climate control, energy independence, energy wealth, if you will. So you’ve got options now to either buy a car that’s fueled by gas or a vehicle that’s fueled by electric. Can you kind of break down?

Or both. Or both, right, or both, absolutely. Can you break that down for our listeners? Sure, so electric versus gas, it’s a hot button these days. And I think Toyota is, as a brand, they’re really good at kind of gauging the industry, and they do a lot of research.

They don’t do anything quickly. They’re not gonna release an electric vehicle without knowing exactly what the market is gonna do and exactly which way it’s gonna go. So they don’t have an electric vehicle. I don’t know if you knew that. Toyota does not have a fully electric vehicle, yet anyway.

So they do have plug-in hybrids, which is, they’re great cars, obviously. But the electric versus gas, as far as the, if you’re looking to be environmentally friendly, electric is great, for the most part, as far as not burning a fossil fuel to propel the car. Is it also better for mileage? Are electric vehicles better? So the mileage is getting better, right?

So on a full charge versus a full tank of gas, electric cars are pushing now into the 350, 400 miles per charge range, which is similar to a full tank of gas on a gas vehicle. So the charge is getting better. The battery life, or the overall lifespan of the car is improving. So it used to be about 10 years, right? So those things are all improving.

The amount of charging stations are increasing. And then you step back and you just look at a company like Toyota. Well, why haven’t they gone to a fully electric car? And I think there are a lot of reasons. I think that the electric cars, they don’t have, so you can keep a Toyota, and you could probably drive your Toyota, like we were talking to your producer there.

She’s got an 09. It’s pushing a 13, 14, 15-year-old vehicle that she still can probably drive. She said she wants to hit a half a million miles. That’s a reality in a lot of cases. So people keep their cars for a really long period of time if you have a gas vehicle, right?

So the electric vehicle has a finite lifespan. So that battery is not gonna last you 20 years, and they know that. It’s gonna last 10 to 15, right? And then that battery is really not gonna be efficient anymore, and you’re gonna have to get a new car, and that car is not gonna go to somebody else who’s gonna use it as a used car. It’s gonna go somewhere to just kind of get crushed, part out, whatever.

You’d have to replace the whole vehicle, not just the battery? Well, you can replace the battery packs, but again, essentially, that’s the vehicle, right? So the battery pack is expensive, and they’re getting, again, that’s changing as well. So they’re being upgraded to where you can replace battery cells as time goes on, on some of the newer cars, right? Is it a big cost to put a charging station in your home?

It is. So obviously, you have to get the whole electrician, the whole nine yards, so it can be a couple thousand dollars to get a stage two charger. But you can use every plug-in hybrid right now. They have just a 110, where you can plug it right into your garage outlet. You don’t have to get an upgrade, right?

And they take about eight hours to charge, but if you have the upgraded charger, it’s gonna be two to three hours. So basically, you get home, when you go to bed, you’re plugging it in? Plug it in, leave it overnight, and it’ll charge it up, yeah. And so yeah, so the big thing is, in my eyes, if you’re looking at the overall carbon footprint on an electric vehicle, it’s gonna be not as much of a carbon savings. When you talk about the production of the rare earth elements to be able to make the battery cells, when you talk about the fact that most people are gonna plug their hybrid or plug-in hybrids or plug-in electric vehicles into the electric grid, unless you have solar panels, right?

So solar panels, electric car is gonna be the ideal. If you don’t have solar panels, you’re now charging off an electric grid that’s roughly in the neighborhood of 20% off of renewable energy, and the rest is fossil fuels. So you’re really charging your car off of that anyway. And then the lifespan of the car. So now you’re using all these rare earth elements, they’re taking a ton of production to get them out of the ground to make these battery cells, and now you have this car for 10 or 15 years that you don’t even have to replace the entire battery or the car.

So Dena Marie, so when is the last time that you bought a $50,000 car? I never bought a $50,000 car. Right, so the average full electric or plug-in hybrid electric car, so it’s about $45,000 to $50,000. So the answer of just buy an electric car and you’re gonna save the planet, you know, drop $50,000 on a vehicle, not everybody can do that. That’s gonna last 10 to 15 years.

Car buying process and closing remarks

At this point, yeah, approximately. All right, so this is great information, Dom. So we’re running out of time. Let’s talk about the process. Yes.

What tips can you give on the buying process and what tips on the maintenance process can you give? So buying process, obviously know what you want, right? Know what’s a need versus a want. Approximately what kind of mileage you’re gonna be putting on the vehicle. Obviously, when you’re thinking about buying the car, what you wanna do for money down.

A lot of people like to try to pay cash for a car. Everybody says, oh, I paid cash, and they wear it like this badge of honor, right? Just what you were talking about as far as draining your savings, things like that, having an emergency fund. If you’re gonna put $40,000 into a depreciating asset, basically gonna torch $10,000 to $15,000 if you pay cash for that vehicle. It’s always a better idea to take about if you can, 15% to 20%, put it down on the car, and then finance the balance.

Because again, if I took money out of my 401k or out of whatever account I have it in for my retirement or whatever I’m gonna do, and I’m gonna pay the finance rates, at least recently, and it may not be in the future, but have been low, you’re gonna lose money, say $50,000, that’s making you a 7% or 8% return to pay cash for a vehicle that you could’ve get a loan at 2%. Yeah, and this is no different for any dealership. As soon as you drive that car off the lot, it’s depreciating immediately. And it is a depreciating asset. It’s constantly being weared on, teared on, losing value.

And for someone to get a 2% And finance rate, obviously, your credit score has got to be in at least the 800s or more. So what would you suggest for those with scores of 650 to, say, 750? So here’s the big thing with people who have challenges in their credit. If you can plan ahead, so you can buy yourself a better tier. That’s what we call it in the business.

You can buy yourself an A tier. So essentially, what you can do is if you have challenges in your credit, you’re a 650, you’re a 660, 670 credit score, you can put down $8,000, $9,000 on a $25,000 or $30,000 car. If you can do that, you can get yourself a good finance rate. It’s not going to be. I mean, there are people that are out there that, unfortunately, are in a situation where they have bad credit.

They’ve had some issues, and they don’t have any money to put down, and they have to buy a car. Those rates can go into the 18%, 19%, 20%. We’ve seen it. You’re paying almost double by the time you pay off the car. And this is why, when we talk to consumers, we’re talking to our listeners, you can’t be in a situation where you’re harming yourself.

And that’s why you can’t be desperate. That’s why we promote savings, six months of your bills, et cetera, because an 18% rate for a vehicle, a depreciating asset, if you’re in the situation, you have to do it. It’s one thing. It’s not the seller’s opportunity to tell you what range you should be purchasing. And that’s your choice.

That’s your plan. You have to make sure that you’re the master of that plan and put it together so that you’re doing it affordably. Now, we’re running out of time. So before we go, can you please tell our listeners where they can find you and anything else you’d like to say about Toyota and LIA cars? So I am in Northampton, LIA Toyota.

I am the finance manager there. So if you do have any questions or anything like that, I’m always there to help. And I am always willing to help, especially if you have some challenges in your credit. I came from a place where that’s really all we dealt with. So I consider myself a little bit of an expert on that.

With Toyota, they’re obviously a great brand. I’ve been with them for a little while. And again, the one thing that I would want to point out to everybody is hydrogen-powered cars, I think, are going to be the wave of the future. The hydrogen engine that Toyota is testing in California right now. So keep that in mind.

Hydrogen-powered cars for the future. You heard it here on tape on The Cambridge Connection. We’re talking about hydrogen-powered cars. Hydrogen power. We’re going to take a quick break.

We’re going to close up the show. This is The Cambridge Connection. We’ll be right back. Go down and see the team at Lea Toyota of Northampton, your electric and hybrid vehicle headquarters. Easy to get to right off I-91 at 280 King Street.

It’s National Pet Month, and the animal-friendly staff at Lea Toyota of Northampton is celebrating by giving discounted services all month long with a donation of sealed pet food or supplies. That’s Lea Toyota of Northampton. Lea cars for life. Lea. Welcome back, everyone.

This is The Cambridge Connection. I’m your host, Gordon Oliver, here with my co-pilot, Tina Marie. And we’ll have Dominic back on again. And for our listeners, again, there are plenty of people that buy vehicles that can afford it, businesses, luxury, et cetera. But there are many, many people in regular life that need a vehicle for transportation, need to get to work, need to get the kids to school, et cetera.

And you’ve got to have a plan. You’ve got to be within your means. And distinguish your wants from your needs. I thought that was very important. And the worst thing I could do is walk through a dealership right now and see all the shiny, polished cars, because I’d be like, I want one.

I want one. I want one. I want one. But do you need it? Right.

Do I need it at the moment? No, I don’t. We want to thank our listeners for being with us this week. And I’m going to close the show with a quote. Human well-being is not a random phenomenon.

It depends on many factors, ranging from genetics to neurobiology to sociology and economics. But clearly, there are scientific truths to be known about how we can flourish in this world. Wherever we can have an impact on the well-being of others, questions of morality apply. Sam Harris. Huge thank you to our producers, Leah and Lisa.

As you can see, we always have great experts on the show and on the horizon. m. com. com, click podcasts, and you can see any of our past episodes. Or you can find us where you listen to your favorite shows.

And once again, we want you to be part of the conversation with these guests that we bring on and the topics that we cover. org. And if you’re struggling with any of your finances, feel free to call 1-800-CAMBRIDGE.