Think back to elementary school, can you remember how many times your school had a fire drill? They were never announced ahead of time, the bells just rang, everyone got up, lined up, and left the building in an orderly fashion. Everyone knew what they were supposed to do because it was scripted ahead of time. No one panicked because we always assumed it was a drill, even when it wasn’t. (which puzzles me why all of my employers pre-announced rare fire drills)

When was the last time you had a financial fire? Maybe the car broke down or you broke a window in your house. Maybe you were one of the many millions who lost your job last year. I bet, in most cases, you weren’t sure what to do afterwards.

That’s why I’m recommending that you conduct a financial fire drill.

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Toyota announced yesterday that they would recall 3.8 million cars in the United States in what is the largest ever U.S. recall. The removable floor mats can cause the accelerator to stick and push vehicles to speeds in excess of 120 miles per hour. Toyota is working with the National Highway Traffic Safety Administration for a fix.

They advise that you remove the floor mat on the driver’s side immediately.

The following vehicles are affected:

• 2007-2010 model year Toyota Camry
• 2005-2010 Toyota Avalon
• 2004-2009 Toyota Prius
• 2005-2010 Tacoma
• 2007-2010 Toyota Tundra
• 2007-2010 Lexus ES350
• 2006-2010 Lexus IS250 and IS350.

Their advice, if the car is accelerating out of control, is to step on the brake pedal with both feet, then try to put the car into neutral and switch the ignition to accessory power (where only the radio is on). Don’t turn off the power or the steering wheel will lock up. If you have a start/stop button, like in the Prius, you can hold the button down for three seconds to shut off the engine.

Toyota to recall 3.8M vehicles over floor mats [Associated Press]

(Photo: alexdixon )

CNN Money played with the 2008 Census data released on Monday and discovered that the nationwide average commute is 25.5 minutes. If you work five days a week and fifty weeks a year, that’s 12,750 minutes spent in the car. For the math whizzes out there, that’s 212.5 hours or 8.85 days.

The average American spend over a week sitting in his or her car driving to or from work. It’s no wonder driving is more dangerous than flying, we spent over a week in the car just getting to and from work. This doesn’t count the time we spend on vacation, going out, whatever.

The longest commute belonged to citizens of East Stroudsburg, PA where many of the residents commute the 60 miles to work in NYC, spending 40.6 minutes a trip. The shortest belonged to folks of Grand Forks, ND where the average commute was a scant 14.3 minutes each way.

When I used to drive to work, mine was about 25 minutes to the home office each way. At one point I supported a client around the Washington DC area and my commute ranged anywhere from 45 minutes to several hours if the weather or traffic wasn’t cooperative. I passed the time listening to some audiobooks, sports talk radio, and/or NPR shows.

How long is your commute? And what do you use to kill the time?

(Photo: ethandb)

If you took advantage of the Cash for Clunkers program to buy yourself a brand new vehicle, you might be wondering about how you deal with the taxes involved in getting that $3,500 or $4,500 voucher. The IRS isn’t in the business of letting you get something for nothing!

Federal Taxes

You might be surprised to learn that there are no federal tax consequences. The IRS does not consider the voucher as income so you won’t need to pay any taxes on it. You can also take advantage of any State and Federal tax incentives for buying hybrid vehicles, the Cash for Clunkers voucher doesn’t cancel that out (something the dealer probably told you if you purchased a qualifying hybrid vehicle). For a full list of those vehicles, as well as how much of a credit you receive, visit Fueleconomy.gov’s Energy Tax Credits for Hybrids page.

State & Local Taxes

You may have to pay taxes to the state or local government on the tax voucher though. For example, in Maryland, you pay a 6% sales/excise tax on the price of a car when you register it. If you purchased a car with a voucher, you have to pay the 6% tax on the full purchase price of the vehicle including the voucher. So on a $3,500 voucher, Maryland residents pay $210. On the $4,500 voucher, Maryland residents pay $270. The voucher is not recognized as income in the state of Maryland, but you still pay taxes through sales tax.

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When you buy a car, the biggest number you see is the price. The sticker price, the invoice price, and the price you paid to get that car onto your driveway or into your garage. Savvier buyers also look at the total cost of ownership, which includes the price but also adds in the cost of driving, maintaining, and insuring the car.

The easiest way to determine the total cost of ownership on a car is to turn to online calculators, like this True Cost to Own calculator from Edmunds.

If you’re curious just from an insurance perspective, Forbes has published a list of the least and most expensive cars to insure according to data provided by Insure.com. They quoted rates for a 40-year-old male who commutes 12 miles to work with your fairly standard insurance limits. $300k/$100k injury limits, $50k property damage, and $500 deductibles on collision and comprehensive.

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When we were looking at houses a few years ago, I was paying about $600 a month in rent. I was splitting a $1189 per month, 2-bedroom apartment with a friend and my half was a little less than half. $600 a month in rent is fantastic in the Baltimore-Washington D.C. area and I was thrilled to be able to save up some cash for a house, despite housing prices soaring back then. So, when I started looking, the prospect of paying a $1500 mortgage was downright scary.

That’s when I learned the technique of “pretending” as a way of preparing yourself for major purchases. I should “pretend” I currently have that mortgage and see how it affects my financial situation.

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I just learned that it’s National Consumer Protection Week and the featured resource is the very book I mention below, the Consumer Action Handbook!

Did you know that the U.S. General Services Administration’s Federal Citizen Information Center offers hundreds of publications that you, as a consumer, could benefit from? Each year, they send out a catalog of their pamphlets and booklets and I received mine last week. I now receive it because I once ordered a copy of their Consumer Action Handbook, yet another entirely free publication. I never order anything because all the documents are available online (and if it’s available online, why waste the paper printing it out and the fuel on shipping it to me?).

Let’s take a look at some of the publications in their “Cars” category:
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A few years ago, I was driving from one office building to another when a Dodge Durango ran a red light and totaled my car. I was fine, as the Durango hit me at a forty-five degree angle, but my car was destroyed. The passenger door was dented in, the front quarter-panel was crushed, the frame was bent, and the wheel was crooked on the axle. If that wasn’t enough, both airbags deployed – my Acura Integra was kaput. I was fortunate in that accident because I wasn’t at fault, the other driver was calm, a witness stopped, and the police handled the situation expeditiously. The end result was that I got a check and needed a new car, but the process as quick as could be expected.

There was one good thing about that experience, it taught me how to properly respond in the event of an accident. Accidents are very scary and it’s very easy to lose your calm. They are exactly like those “controversial” Volkswagon “Safe Happens” commercials (I embedded two at the end of this article, they are very shocking). One minute you’re minding your own business, the next you’re being violently interrupted.

Here’s what I do immediately following an accident, I’ve written little notes down to myself on a piece of paper in my wallet to remind me. (In fact, I got the idea from Geico, which writes a sub-set of these instructions on what you should do immediately following an accident)

Never Admit Fault

No matter what happens, don’t ever admit you were at fault in the accident. This isn’t so that you can get away with something that you did but it’s to protect you in the event your memory of events or your understanding of who is at fault is wrong. When my car was totaled after the other driver ran a red light, I was a little dazed and unsure what had happened. I was turning and had a dedicated turn arrow but at the time I wondered if I only had a regular green and should’ve yielded. The police and the insurance companies can sort that stuff out and they know all the laws.

Don’t Get Out

If your car is smoking or on fire, get out immediately. If everything seems to be fine, just sit for a minute and collect your thoughts. You may have gotten a concussion or hurt something in your body, you don’t want to be moving around too much unless it’s absolutely necessary. Take this time to collect your thoughts, try to figure out what happened, and look at the other driver. If the other person looks furious, unbalanced, whatever… lock your doors, call the police immediately. It’s not uncommon for someone to be upset and have that anger turn into blows.

Call The Police

If it’s more than a little bump and superficial scratches, call the police. If you need emergency assistance, such as a tow, call the police before you call a tow. If the accident is severe, you’ll want the police to write a record and issue a ticket. The ticket is an indication of who the police find at fault, having one of those makes it much easier to deal with insurance companies. Police can also diffuse hot tempers. If the other person looks like they’re going to do something, you’ll want the police there.

Get Driver’s License & Insurance Info

When you collect the other driver’s information, copy down everything from his or her driver’s license. You’ll want everything from the state it’s issued to their address to the ID number. There is no such thing as having too much information. Also remember to get their phone number as well, confirm if you must (call them). Get all of their insurance information as well, essentially carbon copying the data on their card (ask for a card, not just for them to recite it). Also get the make, model, and license plate of their car. If you have any problems, call the police if they aren’t there already.

Call Your Insurance Company

If you have comprehensive and collision insurance, which is insurance for your own vehicle in an accident, call your insurance company and let them know what happened. They are responsible for paying for the repairs on your car if the other driver is found to be not at fault, which means they will work hard at proving the other driver is at fault (if they are). This ultimately means less work for you, so take advantage of it (you are paying them for this anyway!).

Don’t File A False Claim

Whenever insurance is involved, there’s always the opportunity for fraud. You may be tempted to file a damage claim for something that happened a few months ago, please don’t. Fraud is a serious crime, don’t throw your future away for a few dollars in repairs in the present.

Volkswagon Commercials

The two commercials I promised are after the jump.

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Everyone knows about the cheap Costco gas and the wonderful Costco return policy (though on electronics it has certainly lost some of its teeth), but there are a lot of lesser known perks that members should try to take advantage of. Here are just five of them.

Sharebuilder New Account Promotion

Sharebuilder, recently acquired by ING Direct, is a popular dollar cost averaging brokerage. All members can get a $55 account bonus when they open a new account and make one purchase through a special Costco Sharebuilder landing page. Less valuable is the quarterly rebate on automatic transaction fees – Executive Members are eligible for a 25% quarterly rebate while Goldstar and Business members are eligible for a 10% rebate. There are some other terms and conditions that you’ll need to review if you’re seriously considering signing up for their automatic investing program.

Periodically Costco will spotlight a “Service of the Month” and when they choose Sharebuilder, it often comes with some nice perk like a cash card or something like that.

It’s a nice promotion because the $55 beats the typical $50 Sharebuilder promotions that run all the time.

Capital One Direct Banking Member Bonus

There’s another signup bonus available for members and this time it’s with Capital One Direct Banking. Executive members get $60 and Gold Star/Business members get $20 when they open an account and deposit $5,000 within 30 days. Their online savings account is yielding a solid 3.66% APY on balances over $5,000 too, which is a nice bonus. If you’re looking to lock in a CD, they have an 18 month CD at 4.46% APY and a 7-year CD offering 5.55% APY. The online savings rate is certainly one of the better high yield savings account rates and the CD rate is also among the best CD rates.

The eagle eye’d may notice that Costco members also get higher yields on both products. The standard online savings account rate only gets as high as 3.55% APY (and that’s if you have a daily balance above $10,000) while the standard 18-month CD rate is 4.41% APY. It’s important that you let them know you’re Costco members if you decide to bank with them!

Car-Buying Service

I’ve read stories about people having a good experience using Costco’s car buying service. I don’t know how it differs from ones I’ve seen offered at credit unions though I imagine they are similar. The website claims no haggle pricing with “special manufacturer rebates & incentives.”

I chose a 2009 Honda Civic Sedan and it listed a 5 Speed Manual DX for $15,405. I looked on Cars.com and the lowest list price they had on that vehicle was $16,825 – a difference of over $1400. I didn’t compare all the features but that’s looking pretty solid just to start. If you’re a Costco member and looking for a car, you definitely want to check out the car buying service.

Bank Checks

Costco also offers check printing services that are pretty competitively priced versus some of those mailers (and you have the confidence you’re working with someone vetted by Costco). 2 boxes (400 checks) of their singles costs $10.59 ($8.47 if you’re an executive member) plus shipping. The same thing costs $13.92 at Wal-Mart, so you save a few dollars.

I personally try to limit the number of personal checks I use because they’re one of the most insecure methods of payment available. All the information someone needs to steal your identity is available on those checks – your name, your address, your bank, your bank’s ABA routing number, your account number, and even your check number (if you ever wondered why sometimes checks start with 1001 or 501 rather than 1, that’s a “security feature”). But, if you like checks, Costco can get them for you cheaper.

Photo Printing

The fact that you can print photos at Costco is nothing special. What’s nice is that you can orders prints and pick up photos up to 12×18 in size within an hour at your local Costco, while paying Costco prices. Their prices won’t knock your socks off when you compare them with online photo printers but they easily beat any other photo printers you know of. Here are their prices as of today:

* mail order only

What’s your favorite Costco perk?

(Photo: greenwenvy)

A classic tip for those looking to lower their cable television bills or their credit card interest rates may work in the world of auto insurance. I was reading a Consumerist post about USAA’s website technical issues and their response to, for a few hours, “losing” a woman’s IRA when I saw this little gem in the comments:

xspook: I had their auto insurance for many years. I decided to shop around and found a much cheaper (over $600 a year savings) policy elsewhere. When I called to cancel, they offered to lower my policy, but couldn’t match the price I got elsewhere. That actually pissed me off, because, as a 10 year loyal customer I should’ve been getting the best price. Now that I tell them I’m leaving, they reward my loyalty with a lower price. Adios USAA. (emphasis mine)

Insurance is a tricky business that I know only a little about. In reading the Berkshire Hathaway Letters to Shareholders, the traditional payout on insurance premiums always seems to be in the 90’s (they make money by investing the float between when premiums are collected and claims are paid). That confirmed something I’ve always believed, that a large component of my car insurance premiums were dictated by risk. Riskier car? Higher premiums. Some accidents or speeding tickets? Higher premiums. Fair enough, that’s why I get insurance, to protect me.

But this little anecdote showed that threatening to leave your car insurance (or any insurance provider) can lower your premiums. I imagine the game that gets played is that all the organizational discounts, good driver discounts and such are up for grabs if a CSR can get you to stay. Who knows?

Either way, shop around for insurance and try twisting some arms to see if you can get a better rate.