AUGUST 2011 ;e Costco Connection 19 Living large Consumer expert Clark Howard wants you to take control
By Steve Fisher
PEOPLE LISTEN TO Clark Howard. The
Atlanta-based consumer advocate and Costco
member has found national renown with a
syndicated radio show, a newspaper column
and a weekly television program on HLN. He
attributes his success, and his trustworthiness,
to one thing.
“The only thing I can think of,” he says,
“is that I really am the same in any situation.
You see me in person, you hear me on the air,
you watch me on TV, I’m not playing a role.
I’m just being me.”
Despite having achieved a comfortable
income, Howard practices the frugality he
preaches, and his media appearances and
books help to spread the gospel. His ninth
book, Clark Howard’s Living Large in Lean
Times, was getting ready to roll out when he
spoke on the phone with The Connection.
car-buying programs you will definitely get a
low price. Probably cheaper than 80 percent
to 90 percent of people are getting. To me
that’s good enough.
CC: If you get a large infusion of cash, is it
better to pay off debts completely or to invest
CH: More often than not, extinguishing
debt is a better thing than putting the money
aside. If you’re paying an average credit-card
interest rate of 12 percent, and you wipe that
debt out, that’s fantastic, because you’re done
paying that 12 percent. But if debts are relatively small, [you’re] probably better off
building some form of investment portfolio
for long-term needs.
The Costco Connection: What do you
say to the person who says, “I don’t have time
to go bargain hunting?”
Clark Howard: I would say, “Are you
occupying every hour of your day every day
of the week?” If you look at time as productive
hours, the hours we’re awake, we’re truly not
productive all of them. There’s downtime,
there’s leisure time.... That’s time that we can
productively put to work saving money.
CC: At what point do you say, I’ve done
enough research; it’s time to buy?
CH: The first wave of research is really
illuminating. The second wave of research is
really confusing. People will get to where they
overthink it. If you have done your homework and you have compared prices, and you
feel reasonably confident that the item you’re
buying is a good selection, go ahead and do it.
And don’t sweat the fact of whether you could
have gotten something 3 percent cheaper or 5
percent or 10 percent; the big news is the 90
or 95 percent that you saved.
CC: Is it OK to walk away from an underwater mortgage?
CH: Worst-case scenario, you say, “I’m
done with this, here are the keys, I’m going
away.” How much would it cost you to live in
an equivalent property, renting? More often
than not, you’ll find there’s not a huge savings from walking away. Then we move on
to the moral equation: How do you feel
walking away from an obligation? Added
to the moral equation is whether ... the
IRS may tax you. Here is the deal: If your
mortgage(s) ... were just for buying the
home or improving it, you get full tax
forgiveness. However, if you did a cash
out refi or borrowed other money
against the house to buy stuff or take
vacations, the money is taxed when you
CC: What about something like the Costco
Auto Program, which promises that they do all
the work so you don’t have to?
CH: The Costco Auto Program is great.
For a lot of people, the car-buying process is
horribly intimidating. And the Costco car-buying program is a great leveler. If you use
CC: What is the biggest obstacle to
saving for the American consumer?
CH: It’s not [saving] as the first
thing they do with their check. The
key to developing a new habit is to
save before you get your check. If you
think about the mentality of modern
banking, it’s about getting your kids to
have a debit card in their hand, or a credit
card. Not the idea of savings.
CC: This is your ninth book. Is it getting
harder to come up with things to write about?
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