Poorer Than You » Cars

Moving: Titling, Registering, and Insuring Your Car

Stephanie — Tue, 15 Sep 2009 18:16:21 +0000

One of the fun things about moving from state to state in the US is that you now have a car with “out of state” plates! And by “fun” I mean “oh crap, this stinks.” Out-of-state plates can make you a target for cops, and some states even require that you title and register your car within 30 days of moving or else face a penalty. But there’s so much to do to get your car titled and registered! It’s a little maddening, and definitely a touch overwhelming.

I just had to go through all of this, moving from New York to Virginia. As such, my experience is going to be Virginia-focused. But at the end of this, I’ve given you links to the Department of Motor Vehicles websites of all 50 states. So read over the general process, and then check out your state’s DMV website for specific information.

Keep in mind that this process can take a while, and will probably require at least two trips to a DMV branch. It’s best to start the process rolling before you even move!

Get Insured

Get car insurance and renters insurance too, while you’re at it. Most insurance companies that offer both will offer you a package deal or discount for getting both. A friend of mine once went into an insurance agent to inquire about car insurance for his new car, and found that adding renters insurance actually lowered the total cost of his insurance! Yep, it was cheaper to get both auto and renters insurance than just auto on its own. Even for me, renters insurance cost a measly $84/year for $20,000 in coverage. So worth it.

You can work up quotes online, but know that you will get emails and phone calls when you do this. Still, its worth it to shop around at least a little. Insurance quotes can be confusing, but there are plenty of guides online to help you figure out the coverage you need.

As long as you have your future address, you can start shopping for insurance before you move. Then you’ll have the quotes with you and be able to pick something quickly once you’re in your new digs. Before you make the final decision, make sure you’re ordering enough coverage. Check your state DMV’s website (see below) to see what the minimum required coverage is.

Get Your License

Smile! (Actually, no, don’t smile. At least, not in Virginia. We aren’t allowed to smile on Virginia licenses.) In some states, this will be as easy as filling out a form and getting your picture taken, as long as you have a valid license from your previous state. In others, an out-of-state license may not be enough, and you may be required to take a written exam as well. Check your state’s DMV website first, and download the driver’s manual to read up on local laws. You’d be surprised at the differences between states.

Before you go in to get your license, make sure you have all of the identifying information you need with you. Again, checking the DMV website for your new state is a big help here. Generally, you’ll need some combination of: previous state license, Social Security card, valid passport, birth certificate, and “proof of address” (a USPS “change of address confirmation” worked for this in Virginia). Don’t worry if you don’t have all of those things, just figure out what it is you do need, and make sure to have it with you.

Tip: Take your official papers with you in a folder or envelope, so that they’re not hanging out for all of the world to see! Also, see what DMV forms you can download from the website, and print them out ahead of time. Showing up with an already-filled-out form can save you a lot of time.

Get Inspected

Many states require a safety inspection before you can register your car. Some states will also require an “emissions inspection” as well. The DMV website should have information about this for you, and in some cases, you can use your previous state’s inspection sticker. For example, I could have used my New York emissions inspection when registering my car in Virginia. But my New York emissions inspection was set to expire in six months, and a new Virginia inspection would last for two years. So I ponied up $28 to get the Virginia inspection at a local mechanic.

Title and Register Your Car

You can probably title your car before you get it inspected, and possibly even before you get your license. But some states allow you to title and register at the same time, with the same form, so find out ahead of time. The fewer trips you have to make to a physical DMV branch, the better! Titling and registering your car can require quite a bit of paperwork, too. If your car was previously titled and registered to someone else (e.g. your parent, like mine was), you’ll need the title signed over to you, and possibly notarized. I also needed a second notarized form, one that said I didn’t have to pay sales tax because the car was a gift from parent to child.

At the risk of sounding like a broken record, the information you need about titling and registering your car should be available on your state DMV’s website. Once your car is titled and registered, you’ll get your new license plates and possibly some stickers to put on them. Then, all that’s left is to get a screwdriver and replace your plates! Oh, and check your old state’s DMV website – you may need to return your old plates, as well.

DMV Websites by State

Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington State, West Virginia, Wisconsin, Wyoming, District of Columbia

This article is a part of a series of posts on moving out on your own.

How Much Should You Spend on a Car?

Stephanie — Fri, 24 Jul 2009 19:43:38 +0000

Remember when we all got together and discussed whether my boyfriend should trade in his rust bucket for something a little less… rusty? Well, the car is still going strong, but with an upcoming move out of state and a new job on the horizon, the rust bucket’s retirement looms near. We’re not rushing off to the dealership to test drive BMWs or anything yet… well, maybe, but only because we like test driving BMWs!

While it’s not on the top of his list of things to worry about, Zack is still making preliminary plans for replacing the car. It’s a good idea for anyone to start thinking about this long before you actually need to – give yourself time to really evaluate what you can afford, and what you want, so you can save up a down payment and be fully prepared when you finally walk into a dealership (or a used car lot or start answering ads on Craigslist… whichever).

How much money is appropriate to spend on car expenses each month? Heuristic (“rule-of-thumb”) percentages don’t work for everyone, but they’re a good place to start, especially if you’ve never had a car payment before. I went a-Googling to see what heuristics I could find… but I wasn’t entirely impressed with what I found.

10% of Gross Income

According to a post on the Letters Unlimited blog, columnist Liz Pullium Weston wrote in one of her “Money Talks” columns that "Most people are smart to limit their total transportation costs, including car payments, insurance, maintenance and fuel, to no more than 10 percent of their gross income." The Letters Unlimited blogger, Tammy Rosboril, concluded that this is unrealistic for most people, and I tend to agree. If your car is paid off already, this number would be easy to achieve, especially if your gross salary is $50,000 or more. But throw a car payment into it, and it all falls apart… that is, unless you spend nothing on gas and let the car sit in the driveway all the time. Or you make a lot more money.

Using a $50,000 gross salary, a 10% figure gives you $5,000 per year for car expenses. Tammy Rosboril assumes $213.67 eaten up by gas (a high number, but she was calculating this during $4/gallon gas prices, which we may see again), $83.34 per month for insurance, and a conservative $250 per year for maintenance… which would leave you only $98.82 for a car payment. Even with a large down payment, that doesn’t buy you a lot of car.

Total Debt Payment No Greater Than 36% of Gross Income

Consumer Reports offers a different take on the issue, choosing to look at debt payments as a whole. Interestingly enough, they include rent as a “debt” for these purposes, which makes sense because if you had a mortgage, you would include that as a debt. So total debt payments, including rent/mortgage, car payment, credit cards, and any installment loans should all total up to less than 36% of gross monthly income.

Which is made completely insane by the metric I use to judge housing costs: total housing costs should be no more than 27% of gross income. So let’s say that your rent is 25% of your gross income, and utilities and such are 2%. If we ignore utilities, that only leaves 9% of your gross income for all debts, which is less than the 10% above from Liz Pullium Weston… and if you have student loans? You’re screwed.

Real Life

So, forget heuristics. If you find one that works for you, go with it. Otherwise, figure out what you need and what you feel comfortable with. Taking things back to my boyfriend Zack, here’s the deal: his rent costs will be 22.4% of his gross income. He doesn’t have any other debt payments (which makes me very jealous, what with my huge student loan bills), so he’s got more wiggle room than most of us. If he uses the 36% rule, he’s got 13.6% of his gross income to work with.

13.6% of Zack’s gross income is probably enough, especially if he comes up with a decent down payment. But it sort of proves my point about the 36% rule not working for most people – most people aren’t like Zack, because most people have student loans or some other debt besides housing. And many people spend a greater percentage of their income on housing than he does.

(One thing he will have to keep in mind is that he’ll have to pay a car tax while living in Virginia, a point that was brought up by reader Kamantha in a comment on my earlier post about ditching my car entirely.)

What do you guys think? Is there a good rule-of-thumb out there for how much to spend on transportation? Let me know in the comments!

Should You Ditch Your Car to Save Money?

Stephanie — Fri, 17 Jul 2009 12:10:00 +0000

It’s been two-and-a-half years since I started this blog about being really, really broke. In that time, one suggestion has been given to me over, and over, and over again:

Get rid of your car! Save on gas money, insurance, and maintenance! Walk/bike/use public transportation instead!

Partly this is due to some confusion about where, exactly, I live. Some people see the “New York” part of my location, and they think skyscrapers and subways and taxi cabs. Which couldn’t be further from the truth: I’m from Rochester, New York, 256 miles away from New York City. And I’m not even really from Rochester; I grew up in a tiny town 20 miles outside of Rochester. So what they really should have been thinking was “log cabin across the street from a corn field.”

So ditching my car back while I was living in the middle of nowhere was never really an option. There were literally zero jobs within walking distance, unless I owned a tractor (which would have been more expensive than the car). But now I live in a suburb, and I’m moving to the D.C. area. It’s hard to say, not knowing at all what my life will be like down there, whether or not I’ll really need my car.

So maybe I will end up ditching my car. But I stand by my thought that offering “ditch your car!” to people in financial trouble is pretty poor advice. Not terrible, but pretty poor. If you could live without your car, you probably already know that you could. I already knew that taking the bus in Rochester was not a viable option for me, but still the advice persisted.

Which is not to say the advice is without some merit. Yesterday, Matt Jabs wrote about his experience as a part of a one-car couple. And Alan Schram calculated that it would cost him $8,535 per year to switch from pedestrian to driver. And like I said, if I find my lifestyle in D.C. to be amenable to carlessness, than I might ditch the Oldsmobile. (But shhh, don’t let my car hear me say that. She might decide to take revenge on me while I’ve still got her!)

What do you think? Is “ditch your car!” good advice to give to someone who’s in financial trouble?

Ask the Readers: Replace the Car, or What?

Stephanie — Fri, 29 Aug 2008 13:01:51 +0000

Car troubles seem popular right now – not for my car, actually, but the high volume of friends complaining of costly repairs has left me resorting to voodoo rituals to keep my own car running smoothly (and boy, is my cat mad at me for it!).

People come to me looking for guidance, but I don’t always have the best answer. My answer is usually just to run the numbers and see what makes sense according the math. But that isn’t always the best solution for a person’s total well-being. So maybe you guys can help me brainstorm on this one.

The Problem

The Boyfriend’s car came back from a routine check-up with the diagnosis of “rust.” Rust on the rocker panel, rust on the fuel tank, rust on the brake lines. Inspection time isn’t until March, and there’s a snowy, salty winter between now and then, so he’ll be very lucky if the rust doesn’t eat through

His mechanic says it’s probably not worth the money to repair it – he’d just end up replacing everything underneath. So what should be done?

Suggestions

Here are the ideas that were tossed around – all are viable, but of course there’s no “clear right path” among them.

Get a “new” car (used, new to him), with a loan, in the $7,000 – $10,000 range. Pay off the loan within a year, year and a half of graduation. The con for this, besides the cost, is that he doesn’t have much of a credit history, due to getting through school loan-free. Who thought that would have a downside?
Get the underside of the car oiled, and then drip oil everywhere for a while. Won’t stop the rust, but will slow it down some, maybe long enough to pass the inspection in March.
Drive as little as possible. Thankfully he lives with a house full of people that are all primarily headed to the same place on a daily basis: campus! If he can keep the car off the salty roads over the winter, maybe it will last through inspection.
Move back on campus, and avoid driving nearly altogether. However, the school is in a housing crisis, so this might not even be possible. Even if it is possible, all of the places worth living on campus are likely taken, since classes start Monday. Also, I get the sense that he’s very happy living where he is, and rightly so – it’s a great place with good friends as housemates. Once again, if he does this, maybe the car will make it to inspection time.

So, who has thoughts and opinions? He’s one year away from finishing grad school, take that into account. And if you share “what I would do” type advice, please make it what you would really do. We can all say that we would literally live in a cardboard box in the basement of a building on campus, but we don’t mean it.

My Take

It doesn’t make “numbers sense,” but a “new” car seems like the best idea to me. Because even if the car makes it to inspection, it’s slightly dangerous to drive around a car that could rust out at any moment. Also, it would be more than a little inconvenient if when it rusted out – he could get stranded somewhere, or just stuck without a car while he shops for a new one.

JFK said “The time to repair the roof is when the sun is shining.” So, you know, buy a new car when you find out that you’ll need one – not when you’re stranded on the side of the road with a bottomed-out fuel tank.

So what do you guys think? Maybe someone with more car experience can lend some insight – I’m lucky I know where the gas pedal is!

Photo credit: freeparking

Be Cool – Buy Your First Car from a Grandparent

Stephanie — Mon, 09 Jul 2007 22:18:50 +0000

It doesn’t necessarily have to be your grandparent, but buying your first car from a member of the elderly community has some awesome perks. My car (nicknamed Fity Thou’) serves as the example of what a sweet deal you could land.

Why My Granny Car Ownz:

I got it for $2000 and was allowed to pay monthly, with no interest. Grandmas are so sweet!
Low mileage. I got it in November and it didn’t even hit 50,000 miles until yesterday (see the sweet picture I forced my passenger to take).
Taken care of well. When my grandfather was alive, he made sure it saw regular checkups. My grandmother continued the trend, and she didn’t drive it much anyway (see “low mileage” above).
All leather interior.
Random perks left inside, specifically for me. I think she gave me two ice scrapers and three boxes of tissues.

If you’re shopping for a first car for yourself or (heaven help you) a teenage child, consider moseying your way up to the nearest retirement community.