Buying & Leasing a Car

Skip the Car With the Big Red Bow

Kiplinger's senior online editor -- and resident car guru -- David Muhlbaum joins Ryan and Sandy to discuss buying a new car over the holidays. Our hosts also take a look at what's new in the world of charitable giving and crack each other up with more truly bizarre PR pitches.

Ryan: We've all seen the ads, snow gently falling, children playing and a brand new luxury car with a red bow sitting in the driveway. But are the holidays really a wise time to buy a new car? Kiplinger's resident car guide, David Muhlbaum has the answer in our main segment. On today's show, Sandy and I discuss what's new in charitable giving and wrap up with more of our wildest PR pitches. That's all ahead on today's episode of Your Money's Worth. Stick around.

Ryan: Welcome to Your Money's Worth. I'm Kiplinger's staff writer Ryan Ermey joined by senior editor Sandy Block. Sandy, something that's on a lot of minds this time of year is charitable giving. We covered it a little bit in our discussion of year in tax moves, but I guess we wanted to delve a little bit deeper into it as people get solicitations toward the end of the year.

Sandy: That's right. This is a time of year when people just get tons and tons of mail, email, phone calls from charities because they know most people do the bulk of their giving during the holidays. Both because they feel good about it and also because they're expecting a tax deduction. Now, that very well could change because the tax overhaul doubled the standard deduction. And so the number of people who itemize is going to drop quite a lot. The problem is, people aren't really going to know that until they do their taxes in April.

Sandy: So the first piece of advice I would give is if you are making charitable donations now, keep the receipts. You don't know for sure whether you're going to deduct them or not. So you're going to want to have those records going forward. So you can particularly if you're close to the threshold from itemizing, you're going to want to be able to claim all of the contributions that you made.

Ryan: So in terms of tax strategies, we talked a little bit before about this idea that some people might want to bunch together a few years worth of charitable giving in one year and then take the standard deduction in other years. so what's going on with that?

Sandy: That's actually a strategy that people have used in the past but I think it's going to become more popular now. Basically, the idea is you make double your charitable deductions in one year so you have enough to itemize. The next year you don't make any charitable contributions or a minimal and you claim the standard deduction. So you get to give to charity and you get the tax break.

Ryan: Right. So another strategy that we talk about in terms of donating a lot up front is donor-advised funds.

Sandy: Right. And this solves two problems. One is if you follow this bunching strategy, that can really hurt the charities because they're getting a lot of money one year and not any money the next, and charities need a regular source of revenue just like any business. Donor-advised funds sort of solved the problem in that you can make a large contribution now to one of these donor-advised funds and decide later how you want to give the money. So maybe you make a large contribution before the end of the year enough that you can deduct it, then you decide later which charities you want to support. It also takes the pressure off trying to decide which charities you want to support during the busy holiday season.

Sandy: The other advantage to donor-advised funds is they're not limited to just cash. You can give appreciated securities which are a really smart thing to give. Particularly now, a lot of people we've been through a long bull market and it's going to . . .

Ryan: It's going to be a lot of appreciation now.

Sandy: A lot of appreciated securities and when you give it to charity, they can sell those securities and they don't have to pay taxes on the gains. Neither do you. So that's a good give. You can give ... Some donor-advised funds will even take real estate, all kinds of things. So they solve a lot of problems for people. They used to be really expensive, have high minimums, but now many of them will let you start for as little as $5,000, and a lot of families use these as a way to get the whole family involved. It's sort of creating your own foundation without going all the trouble to set one up.

Ryan: Right. So you can have sort of a multi-generational thing going on where you could donate this sort of you make grants from a donor-advised fund, right, to charities throughout the years. Just to clarify a little bit, you can set one of these up through fidelity, through Schwab, through major brokerages that have charitable accounts. They have a few thousand dollar minimums and up and they are going to charge you a little bit to operate them.

Sandy: They will but the fees are fairly modest and the other advantage is they will invest your contributions until you decide where to give them. So you will earn some returns depending on how that money is invested until you decide which charities you want to support.

Ryan: So as we mentioned before, this is a time of year when a lot of people are being solicited to give to charitable causes and we've definitely done some coverage of how you vet charities to make sure that your dollars are being put to work in the right way.

Sandy: That's right. Again, one of the advantages I think of donor-advised funds is they give you time to go through this process instead of trying to decide between now and December 31st which charities you want to support. But just in general, there are a lot of good resources online, Charity Navigator, GiveWell is another one. They will help you look and see whether the charity is meeting its goals. A lot of people say you should treat a charity like a business in the sense that charities should have certain goals, certain objectives and they ought to be able to show you oftentimes in very specific numerical numbers and that's one thing that GiveWell really emphasizes. How many people did they help? What problem did they solve? So you actually think of it as a return on your investment.

Ryan: And not only what problem did they solve, but how did they go about solving it.

Sandy: That's right. What method did they use.

Ryan: Right. Maybe they're giving out vaccines, maybe they're educating people. It's worth looking at exactly how a charity might address whatever pet project you like to make sure that your dollars are being deployed in a way that is consistent with what you want.

Sandy: The other thing I recommend and this is something I've done myself is, if it is a local charity, volunteer and then you really get an inside look. There's a charity in the DC area I have supported for years called So Others Might Eat that helps the homeless and marginalized people and I've worked for them. So I see what they do and I think that's a really good way to gauge the effectiveness as a charity as well.

Ryan: It's a fantastic way. Now, we should note that your time volunteering for a charity is not tax deductible.

Sandy: No. No matter how valuable you think your labor is, you cannot deduct the value of your time. You can, however, assuming you still itemize, deduct mileage and any materials that you contribute. For example, if you cook for a soup kitchen, you can deduct the cost of the stock and the vegetables and stuff, assuming that you still itemize. But again, I would keep good records of all that stuff.

Ryan: The only other sort of tax point I would want to hit here is that a lot of people probably see GoFundMe on their Facebook or whatever campaigns to help raise money for any number of good causes. But it should be noted that personal campaigns such as those are considered gifts and are therefore not are not tax deductible.

Sandy: They are not deductible. Now, some charities may use GoFundMe to raise money and in that case if it's a registered charity, yes, you can deduct it. But we've seen a lot of this with the wildfires in California, people have set up GoFundMe campaigns, they can be very moving, they can be very poignant but they are not tax deductible.

Ryan: Alright. Any other advice for a year in giving here Sandy?

Sandy: No. I would just say, don't not give. Don't assume that you're not going to be able to deduct so you shouldn't give to charity. Two-thirds of people didn't itemize even before the tax overhaul, which means a lot of people were still giving to charity. It's a good thing to do. I think still give but pay attention to who you give to. Really vet the charities. There's just so many causes out there and there are so many good reasons to give. You'd hate to waste your money on a charity that is ineffective or even potentially sketchy.

Ryan: Very much getting essence of the holiday spirit here. Thanks so much, Sandy.

Sandy: Thank you.

Ryan: Up next, Kiplinger's car columnist joins us to talk holiday car shopping. Don't go anywhere.

Ryan: All right and we're back in our guest today is David Muhlbaum. He's the senior online editor at He's also a resident car guy here at Kiplinger's. He writes the Drive Time column that appears online and in the magazine, so thanks for coming on David.

David: My pleasure.

Ryan: So the topic today is car buying around the holidays, and I think the impetus is that there's these ubiquitous commercials that everyone has seen by now with a Lexus and people coming home to find the big red bow on the car.

David: Yeah, they've been running that campaign for 19 years now.

Ryan: It certainly raises the question, is it a good idea to buy someone a car?

Sandy: For Christmas.

David: As a present?

Ryan: As a surprise present.

David: Probably not. I mean, if your spouse has dropped a million hints that he or she wants a Mustang convertible to replace the minivan, now the kids are off to college, and you still have the funds for that in addition to the tuition bills then maybe. But did they tell you that it has to be black over black with the appearance package but not the fancy sound system. I mean, unless they're going to give you that kind of specificity and then the question is, it a surprise at all? Your chances of finding that model that's going to overjoyed them aren't all that great, and also the price you pay for will probably be higher.

David: I mean, the main problem is this, unlike a pair of cufflinks or a handbag, a new car is difficult if not impossible to return. So this car as a gift thing is fraught with downside. I mean, you could really be taking a bath if they walk out there and go, honey, you really shouldn't have. No, I mean, you shouldn't have.

Ryan: With our joint bank account. I do remember reading, if not in Kiplinger then elsewhere, that the end of the year is somewhat of a good time to buy a new car. I mean, is there any credence to that if you're actually shopping and not surprising someone with a gift?

David: Yeah. I mean, if you have new car on the radar, yes, then this is a good time. The whole thing is a bit anecdotal. I can't tell you and nobody really can that you'll pay 3% less in the week after Christmas. There's way too much variation by region and brand and all sorts of things. But the two main factors are, it's the end of the year which like for so many other things is used as the end of a measurement period for dealerships and their sales staff.

Ryan: Right. Everyone's got to hit a quota.

David: Yeah. They got a hit numbers and, again, for new car dealers, they are balancing the question of number of sales versus profit per individual sales. So they can get additional incentives, they can get additional money or better terms from the manufacturer if they make certain numeric sales goals. So that can make them more eager to give up money on an individual sale, I mean, ideally yours to make a volume number. And then of course is simply supply and demand. I mean, between vacations and after Christmas sales, there's not a lot of people walking through the doors at the dealership. So quiet times Tuesdays, Thursdays they favor you, the customer.

Sandy: So David, we need a car and we've been putting it off and I'm leaning towards maybe buying a used car because you've written so much and others about how much a car depreciates when you drive it off the lot. Does this also apply to used cars or is this mainly a strategy for new car buyers?

David: I would say it's mainly for new but the idea of supply and demand and quiet times at the dealership still apply to a used car transaction, not so much the incentive deals that you will essentially have to pry out at the dealer.

Sandy: If I do decide to go with a new car, will my selection be somewhat limited because it's the end of the year.

David: Yes and no. This is a question of, are you looking for a new model that is essentially a relaunch of an existing model? That may be more prevalent but more expensive. The deals are more likely to be on the one that's been sitting on the showroom or on the lot that they want to move, an older model. There's not necessarily scarcity and even the question of model year has gotten a bit vague over time. There's not like this business of like, all the new cars are out in August anymore. It's kind of a rolling thing.

Ryan: If I've put together my sort of ideal car online and I think all the sites have tools that you can sort of build, all the different trim you like and all the different features you like. What should my strategy be before I go into the dealership and then what should be my strategy when I finally get in there?

David: So those build the car tools that the manufacturers offer and some third-party sites offer as well, they're helpful because they will show you what you could get on a car. But when you get out and actually shop around, you will find that the cars available are different because the dealers have chosen to essentially purchase and add to their inventory cars that are configured the way they think they will sell.

Ryan: Sure.

David: So if you want car exactly the way it says on the site, you'll probably have to order it and that generally doesn't translate to the best price. Let's assume that's not the strategy. If we're looking for the best price, it's best to shop from dealer inventories. Use your sort of built model as a guide and go look around the dealer inventories and look for models that are close to what you want in terms of the trim and options and colors they have. I find that this quickly gets overwhelming in terms of data. I've always built a spreadsheet to keep track of it. The most important bit of data that you're going to put on that spreadsheet is going to be the individual VIN, the Vehicle Information Number of a car in dealer inventory. Because that proves that there is a car . . .

Ryan: That means the specifications that you want.

David: There is a car. It exists. That meets the specifications you want. So if you're call it a dealer and having them say, you want a red one with the appearance? Yeah, we can get that for you. That doesn't mean they have the car. That means they may order it or they may go looking around to find one at someone else's lot to sell to you.

Sandy: Or they may try to talk you into taking . . .

David: Yeah. Come on in and let's talk. Ultimately, you are going in. You need to come in and you need to go into the dealership. But just as you are out there collecting data and informing yourself, dealers understand that when a person comes in, they're usually . . .

Ryan: Fairly wise to the game.

David: They're wise to the game and they're generally ready to make a deal. Frankly, I would say the process has gotten better for the consumer.

Sandy: Speaking of being wise to the game, I think you said that one of the reasons giving a car as a gift isn't a good idea is because it's really better to shop with your partner. Do you think you get a better deal if you go in with your spouse?

David: A spouse can be ideal, it depends on your relationship, but a spouse can be ideal or sort of a designated wingman, someone ... I get called on for this sometimes. It's like, ask Dave, the car guy. He'll go, well? And sometimes I do. But in terms of . . . actually, my own personal situation, I'm a terrible negotiator and my wife is stupendous at it. So I do all the legwork. All that spreadsheeting and knowing, this one's got this and this one's got that and this dealership has this. And she goes in there and you know . . .

Ryan: Closes the deal.

David: Yeah, she's the closer. She gets the coffee.

Sandy: She's the hammer.

Ryan: So for the people who don't have a good negotiator in their household, is using a car buying service probably the way to go?

David: Definitely. I've played around with them a few times but ultimately I have my wife. One that we have at Kiplinger definitely have used over the years is CarBargains. It's run by Consumers' Checkbook. The way they work is essentially you pay them. You pay them $250 to go get you five written quotes from dealerships. I think that's important that you pay them because unlike some other services where no money's changing hands, this is very clear. You pay them for a service. You're not just giving your information so that a million car dealers can call you and know that someone wants a car.

Ryan: Right. So there's some skin in the game.

David: Yes, exactly. Right.

Sandy: So David, just in case people are too busy to go to a car dealership during the holidays, are there any other times of the year that are better than others for car shopping, do you think?

David: Slow times. I mean, that's the premise of the end of the year. Again, we're trying to exploit the idea that, no one's coming in, no one's buying, there's no ... Things aren't looking good, better make a sale. To the extent that matters, slow times always help. Not the weekends, Tuesdays, Thursdays, maybe late afternoon.

Ryan: The day after Christmas.

David: Yeah. That sort of thing. Day before Christmas, Christmas Eve. That's how Mark Solheim.

Ryan: Christmas Eve?/p>

David: Yes. Got a car Christmas Eve.

Sandy: Did he put a bow on it?

David: No.

Ryan: Who sells the bows, do we know?

David: Yeah. There's a company . . .

Ryan: Amazing that you know.

David: There's a company that they got their thing wrapping the Lexus and so it became such a thing that they sell King Size Bows, that's the name of the company. You can buy them retail too, but like the new car, the sales are final.

Ryan: So if any of our listeners, and we're going to let you get back to work, but if any of our listeners are going to the car dealership over this holiday season and like we said, don't surprise your spouse with a car . . .

Sandy: Or a big bow.

Ryan: Or a big bow. But if you're looking to get a new car around the holidays, are there any other sort of tactics that people should maybe keep in mind?

David: Don't be in a rush, don't come in with a bunch of shopping bags.

Ryan: Like pretty woman. They're going to know you're rich.

David: Where can I put down my Tiffany bag? One of the funniest ones is I've actually known a couple people including Mark who have used this tactic, consider bringing your children. They add a certain tension to the . . . that may work in your favor.

Sandy: Because the dealer wants to get you and the little ones out of . . .

Ryan: Yeah. And getting their little fingerprints all over the windows.

David: Randy, here's a candy bar. Now go check out those cars.

Ryan: All right. Well, sage advice for more car coverage head to After the break, Sandy and I discuss some PR pitches that were just a bit outside. Its wild pitches next.

Ryan: All right. Before we go, we wanted to share some of our wackiest and wildest PR pitches. The first one comes to us from another staff writer on Kiplinger's magazine and our occasional tech columnist, that's Kaitlin Pitsker. So the pitch is, are you working on any last-minute gift guides for the techy, gadgety hard to buy for person? Yes. Maybe. I don't think we are but we could be. But the product in question is a $75 anklet that you wear to ward off sharks when you're in the water using patented magnetic technology. What I find so amazing about this particular product which is available on Amazon and if you want to go look it up, you can look it up maybe it is literally the perfect thing for someone in your life.

Ryan: But it's the rare product that seems at once too expensive and too cheap. Like, it's too expensive to give to someone as like a gag gift or just for fun and 75 bucks like it's not nothing. But for someone who's swimming in shark-infested waters, 75 bucks, I'm not trusting it and its patented magnetic technology. Maybe it works, I don't know. But for 75 bucks, I think I need something a little bit more substantial.

Sandy: It kind of reminds me years ago, there used to be ... I don't know if they still make them but they used to sell something. It was a deer whistle you'd put on your car. It was supposed to deter deer. But the problem is, even where I come from West Virginia where deer collisions are pretty common, it doesn't happen that often. So they could say the deer whistle is working just fine because you didn't hit a deer. It seems to me even after this past summer when there actually were some well publicized shark attacks on Cape Cod, where I have been and I suspect that's the genesis of this product, I don't think that many people. The chance that you'll get bitten by a shark is very, very low. So they could claim huge success of this anklet just because hundreds of thousands of people went in the ocean and none of them got eaten.

Ryan: I should have gone and read the one-star Amazon reviews. Like, I was wearing this thing and my leg got torn from my body. The actual advice that I wanted to convey with this particular pitch were some of my money smart tips for a holiday gift giving. I have five rules. I actually have many more rules on an expert holiday gift giver, but these are the money-smart ones.

Ryan: So number one is budget and prioritize. Once you come up with what you can actually afford to spend on gifts this year, make a list of everyone that you're going to buy for with the most important people, your mother, your spouse. Those people go first and all the way down to the mailman and spend on the important people first. That way, if you overspend, you're not like leaving your mother without a good gift. So that's number one.

Ryan: Number two is don't spend more than you can afford. I mean, it seems like common sense but it's something that, I mean, a rule I've certainly broken before. But it's really it's bad etiquette. It puts everyone in a bad position. It puts you in a position of overspending, it puts the person receiving it in a position of feeling bad about having received something that got you in trouble.

Ryan: Number three is resist the urge to re-gift unless it's like an absolutely perfect situation. Obviously, never regift anything within the same social circles. So if your mom got you a shark anklet, it's not going to work for you, you give it to your brother, he's going to know. If it's an item in perfectly pristine condition, if it's something that you know that someone else in your life is going to enjoy, maybe you got a gift card for a store that you don't shop at but your friend is super into it, then that might be an okay time to regift. Otherwise, it's really not worth it, you're going to get caught.

Ryan: Number four is give what I call a two-way gift. A gift for someone else, that's also a gift for yourself, which works two ways. One, you get to enjoy the gift. So like getting concert tickets for you and your boyfriend. It's a way that you can benefit from the gift as well but also it shows that person that you love them and want to spend time with them. But the number one thing, and this is I guess less a financial thing but it kind of is, is write a card. The reason I say it's kind of a financial thing is that a good well-written card, and I'm not talking like the kind that you buy at the gas station and do it on the dashboard of your car on the way over to Christmas. Like, actually buy a blank card, write it like a letter, take like half an hour.

Ryan: If you write like an actual heartfelt, handwritten nice card, the gift becomes secondary. So for my mom's birthday this past year, I print out a picture of us that cost two buck, I bought a frame that costs five bucks, but I wrote a long lovely card and that really makes all the difference.

Sandy: That sounds great Ryan. Those are all great tips.

Ryan: Thank you. So, on to your wild pitch.

Sandy: My wild pitch is not nearly as much fun as the shark anklet but it could be dangerous.

Ryan:Equally dangerous.

Sandy: This is a pitch I received suggesting that you should set up an IRA for bitcoins. I see where this is coming from, bitcoins have done very well, some people are probably thinking if I put some bitcoins in my IRA now, 30 years later I can retire in great comfort. I don't mind being aggressive and there are tax benefits to putting bitcoins in your IRA because you don't have to pay taxes on them until you cash out the IRAs.

Ryan: Right.

Sandy: If you just google Bitcoin IRA, you'll see lots of companies offering them. Now, here are the problems. One obviously is as we've discussed before, bitcoins are incredibly volatile, very risky, and if you're 30 years away from retirement I would argue you just don't know whether bitcoins are going to be around.

Ryan: Right. You don't want to be speculating with your retirement money.

Sandy: That's right. It is your retirement money and there's nothing wrong with being aggressive with your retirement money, but when I say aggressive, I'm thinking about buying lots of stocks. Not something that has potential liquidity problems, that could even disappear. We've suggested that if you invest anything in bitcoins, it should be a very, very small part of your portfolio.

Ryan: Correct.

Sandy: So it doesn't really make it appropriate for your retirement plan. But even if you get over that hurdle, there are some logistical issues to investing your IRA in bitcoins. You cannot walk into Fidelity or Vanguard and swab and say, hey, I'd like to buy some bitcoins for my IRA. They will say, get lost. You have to set up what's called a self-directed IRA. This is an IRA, these have been around for a while, that people set up for alternative investments. Basically, things that aren't stocks, bonds and cash.

Sandy: People want to invest in real estate in their IRA have to set up a self-directed IRA. They have their own rules but more worryingly they have their own fees. And with bitcoins because there's not that many companies doing this, the fees can be quite high. There's one provider that charges you 15% of your investment to set up a Bitcoin IRA. Now, one thing that we at Kiplinger say time and time again is, you cannot control returns, you cannot control the stock market, but you can control fees.

Ryan: Correct.

Sandy: And if you're starting out paying somebody 15% of your investment just to set up the IRA, you're already way behind the ball. So that to me is maybe one of the biggest negatives. Finally, if you want to put crypto currencies or any kind of bitcoins in your IRA and you already have some, you can't just go set up an IRA and move them into them. You have to set up an IRA and have them buy them for you, which again adds to the fees. If you have some crypto currencies that you wanted to invest in an IRA, you would have to sell them and give the IRA provider cash to buy you new ones, which could potentially expose you to large capital gains taxes. So it's just not a good idea, it's just not the way to treat your retirement funds. If you want to take a flyer on these things, go ahead, but don't expose your retirement security to untested an extremely volatile product.

Ryan: Well, there you have it. So avoid the financial sharks and of course the real ones as well. That's just about it for this episode of Your Money's Worth and another huge thanks to David Muhlbaum, the senior online editor at For show notes and more great Kiplinger content on the topics we discussed on today's show, visit You can stay connected with us on Twitter, on Facebook or by emailing us at If you like the show, please remember to rate, review and subscribe to Your Money's Worth wherever you get your podcasts. Thanks for listening.

Links and resources mentioned in this episode

Most Popular

Your Guide to Roth Conversions
Special Report
Tax Breaks

Your Guide to Roth Conversions

A Kiplinger Special Report
February 25, 2021
The 12 Best Consumer Discretionary Stocks to Buy for 2022
stocks to buy

The 12 Best Consumer Discretionary Stocks to Buy for 2022

Consumer discretionary stocks may be among 2022's most challenging places to invest in. But these picks could overcome several sector headwinds.
January 4, 2022
How to Know When You Can Retire

How to Know When You Can Retire

You’ve scrimped and saved, but are you really ready to retire? Here are some helpful calculations that could help you decide whether you can actually …
January 5, 2022


11 Winter Car Maintenance Tips
Buying & Leasing a Car

11 Winter Car Maintenance Tips

Cold temperatures put stress on your car. Get ahead of the situation and keep winter woes from hurting your ride or your wallet.
November 22, 2021
Renting a Car Over the Holidays Will Be a Trip

Renting a Car Over the Holidays Will Be a Trip

Chip shortages, the pandemic and a surge in demand will combine to make renting a car a challenge. Here’s our best advice to find a rental you can aff…
November 17, 2021
After Storms, Beware of Flooded Cars for Sale
Buying & Leasing a Car

After Storms, Beware of Flooded Cars for Sale

There's a chance the used car you have your eye on could have been damaged. Here’s what to watch out for.
October 29, 2021
Car Buying for Beginners
Buying & Leasing a Car

Car Buying for Beginners

Haggle over the price of the car and the terms of the loan to keep your monthly payments in check.
October 27, 2021