Thursday, May 29, 2008

5 things you should never rent

By Liz Pulliam Weston

Renting often gets a bum rap.

Renting a home is certainly preferable to buying if you plan to move within a couple of years. And renting a car occasionally can make more sense than owning one if you live in an urban area with good public transportation.

But at other times, renting is a big financial trap. Seemingly low payments disguise the fact you're shelling out more and getting less than if you'd bought outright.

How to know the difference? Here are five situations where renting is a terrible idea, along with five where it's the right one:

Rims. You can blame it on MTV's "Pimp My Ride" or simply a car culture gone crazy, but flashy chrome wheels are big. They're also expensive, typically costing $1,000 and up for a set. So a bunch of "rent to own" stores hawking rims and tires have sprung up to cater to those with expensive tastes and bad credit.

For example: At Rent A Wheel in Van Nuys, Calif., you can pay the cash price of $1,612 for a set of VCT Grissini wheels, or you can pay $62 a week for a year -- and pay for them exactly twice ($62 times 52 weeks is $3,224). But hey, there's no credit check involved -- or common sense, apparently.

Honestly, if you fall for this scheme, you deserve to stay broke. If you really must have the baddest wheels, you can save up for them in six months (or less, since you're likely to find a better deal if you shop around).

Furniture. Speaking of broke, you'll get there even faster and stay there longer if you decide to "upgrade" to rent-to-own furniture.

At Rent-A-Center in North Hollywood, Calif., you can rent an overstuffed Klaussner couch, love seat and coffee table for $44.99 a week for 83 weeks, which works out to about $2,000 more than the $1,657 the set would cost if you paid cash.

On a recent day on Craigslist's Los Angeles board, there were 1,453 listings selling couches, 2,269 listings for sofas and 542 listings for love seats. Plenty were gently used and selling for $100 or less, sometimes a lot less. If you wanted the same brand, there was a listing for a Klaussner couch for $200.

Another Rent-A-Center, this one back in Van Nuys, had perhaps the saddest offering I've seen: a used bunk bed set for $22.96 a week for 65 weeks, or nearly $1,500, compared with a cash price of $663. Of course, Craigslist is littered with ads for used bunk beds for a fraction of that.

You can even buy a set new for far less. Ikea sells a bunk bed set for just $149. Mattresses start at $69. You could save up for it by putting aside $23 a week and get what you need in a little more than three months.

Computers. If you own a small business, leasing computers can make sense. You preserve precious capital, are able to upgrade more frequently and often get tech support from the leasing company.

When you're a consumer, though, renting is usually a terrible idea, especially if you're renting to own. Because there's usually no credit check, you get the worst possible terms on an overpriced computer. At the Van Nuys Rent-A-Center, a middling Dell computer rents for $39.99 a week for 62 weeks, or a total of $2,479. (The cash price is $1,100.)

Your alternatives? Head back to Craigslist. Check with friends who are upgrading to see whether you can buy their old units. Or check out eMachines, which specializes in low-cost computers. A brand-new desktop with monitor costs as little as $480. You could save $40 a week for 12 weeks and own it outright. (Here are the low-cost favorites of the editors of PC World, all under $750.)

Televisions. You can find a 50-inch Toshiba TV for around $1,200, sometimes less. At the Van Nuys Rent-A-Center, the cash price is $1,800. Or you can pay $34.99 a week for 116 weeks, or more than $4,000, for the beast.

There is no excuse for this, people. Go without, get a $25 set from your local Goodwill or take the 27-inch reject your idiot neighbor puts out on the curb when he gets his rental monster.

Your paycheck. If you fall into the clutches of a payday lender, your paycheck is no longer your own. These places work by lending you cash for a fee. The fee may not seem like much -- $45 to cash a $300 check -- but it works out to annual interest rates of over 400%. (Read "Loans with triple-digit interest" if you need more details.)

If you can't pay back the loan when payday comes around, another fee is added. Fall into this trap, and it's hard -- sometimes impossible -- to climb back out again.

Borderline cases

The five no-rents are pretty black and white. I found two more that have some shades of gray:

Tuxedos. If the only two times you'll ever rent a tux are your prom and your wedding -- and those events are separated by more than a few years -- then renting makes sense. If you're a male urban professional who gets invited to black-tie events, though, you need to buy your own penguin suit. You won't pay that much more to purchase a decent tuxedo than you would to rent one a couple of times, and it will fit you a heck of a lot better.

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Handbags. When I first heard of this idea -- renting designer handbags from sites such as Bag Borrow or Steal and From Bags to Riches -- I thought it was the female equivalent of the flashy-rims scheme.

Turns out it's not -- not quite. The point isn't to own (and overpay for) the purses, although these outfits will certainly sell them to you if you want. The point really is to rent a piece of fashion and turn it back in so you can rent another one. You might pay $50 a month to rent a bag that retails for $500, then exchange it in a couple of months for something new(er).

That certainly makes more sense than paying hundreds or thousands of dollars for a handbag and then just tossing it in the closet when the fashion inevitably changes. If you're a fashionista and your finances are otherwise in good shape (on track for retirement, no credit card debt), then maybe I can see it.

I still think most people are better off not trying to ape a lifestyle they can't afford. And don't get me started on Birkin bags. Renting them for $4,800 a month is no less obscene than buying them at $48,000.

When to rent

Now we come to the final section, the five things you should always rent. They include:

Pickup trucks. If you're a cowboy or work in construction, you get a pass. But everybody else should think hard about how much they actually use that bed to haul stuff. (When you're young, it's particularly dangerous to own a truck, because your friends will be moving a lot -- and everybody will want you to help.)

If you really only need a pickup a few times a year, rent one and buy a car that gets decent gas mileage instead.

Vacation homes. You visit a beautiful place, you're enchanted, and the next thing you know you're dreaming about owning a little cottage tucked in the woods or by the lake or near the beach. Snap out of it, honey. Owning two homes is more than twice the hassle of owning one. The second home will have to be maintained, repaired and insured just like your first, but it will be empty for long periods, so things can go terribly wrong when no one will notice (bursting pipes, rat infestations, termite damage, etc.).

And if it's not sitting empty, it's being (ab)used by strangers or by freeloading friends. Most likely, you'll start feeling obligated to spend time there so you feel like you're getting your money's worth, even when you or your family would rather be somewhere else. Let other people deal with the hassle and rent their vacation homes.

Anything you use once a year or less. Floor buffer? Lawn aerator? Power washer? Really expensive power tools? If you drag it out annually or less, it's usually better to rent. If you'll use a tool or appliance more often than that, but still infrequently, think about sharing or swapping with a neighbor. You could buy a carpet steamer together, or you could get the steamer and she could get the sewing machine you'll use once or twice a year.

DVDs. Yes, I know they're cheap, but how often are you really going to watch the same movie? If you've got kids and it's a Disney flick, the math works, but otherwise, sign up for Netflix, dude.

The next car you plan to buy. This won't always work, because the nation's rental agencies don't stock every conceivable car. But there's no better way to get the feel for a vehicle than to drive it around for a few days without a salesman yapping in your ear.

So, what are the things you never or always rent? Share your thoughts on the Your Money message board.

Liz Pulliam Weston's latest book, "Easy Money: How to Simplify Your Finances and Get What You Want Out of Life," is now available. Columns by Weston, the Web's most-read personal-finance writer and winner of the 2007 Clarion Award for online journalism, appear every Monday and Thursday, exclusively on MSN Money. She also answers reader questions on the Your Money message board.

Original here

Saudi Arabia pumps extra oil to match demand

(Adds quotes, background)
By Summer Said
DUBAI, May 28 (Reuters) - Top oil exporter Saudi Arabia has boosted supply to help meet the world's need for fuel and may further increase output later if needed, a senior Gulf OPEC source said on Wednesday.
OPEC's 13 members, especially core Gulf producers, are taking their output cues from global oil demand rather than sticking to production targets, said the source familiar with Saudi thinking.
"Whenever there is demand it will be met by OPEC," he said. "The majority of OPEC producers definitely don't like this high oil price because it is neither in their interest nor in the interest of the global economy, and it's especially painful for the developing world."
U.S. crude hit a record above $135 a barrel last week, prompting consumer countries such as the United States to renew their plea for more oil from the Organization of the Petroleum Exporting Countries.
OPEC's leading producer Saudi Arabia has been adjusting supply to match demand since August last year when prices were around $60 and it was pumping around half a million barrels per day (bpd) less than now.
Saudi Oil Minister Ali al-Naimi said earlier this month output would rise by 300,000 bpd and hit 9.45 million bpd in June. Riyadh is pumping about 9.1 million bpd this month, the source said.
Global demand is likely to increase this year by about one million bpd, with demand picking up in the third quarter, the senior Gulf OPEC source said, which explains the current Saudi production increase.
Last September OPEC agreed a 500,000 bpd increase in its formal output targets, with Saudi Arabia providing the greatest share. The group holds its next official conference on Sept. 9 in Vienna.
Most OPEC members would like to see lower prices, but there was little they could do as the market was responding to factors beyond supply and demand, the source said.
If those fundamentals dictated the price, oil would cost around $60 to $70 a barrel, the source said. The world oil market balance is similar to that in 1999, when the price was less than $20, he added.
The oil market has risen in large part because of increasing doubt over production capacity and global oil reserves, the OPEC source said.
That concern was unwarranted, he said, but helped to explain a roughly $5 premium for crude prices for delivery in 2016 compared with the prompt contract now trading at about $126 a barrel.
A wave of investment activity has also been fuelled by the weakness of the U.S. currency and lower U.S. interest rates, which adds to the appeal of dollar-denominated commodities.
"This big rush to oil futures is definitely leading to higher and higher prices," he said.
"So adding more or taking less oil from the market will not change the oil price since the sentiment of investors in the futures market is pushing for higher prices." (Reporting by Summer Said, writing by Simon Webb; editing by Peg Mackey)

Original here Iranian leader

John McCain's botched attempt yesterday to say "Ahmadinejad"...

...inspires this helpful set of links:

BBC News: How to say: Mahmoud Ahmadinejad (mah-MOOD ah-mad-in-uh-ZHAAD)

UnCyclopedia: How To Pronounce Mahmoud Ahmadinejad (mp3) (mach-MOOD ah-mah-dee-neh-JAHD)

Pussycat (bumper) stickers: Ahmadinejad Wants to Nuke Us Because We Can Not Pronounce His Name

Helpful versions from pronouciation Websites:

A rather Anglicized version from

And one with a middle Eastern flavor from

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Original here

Think Gas is High? Try Europe

A truck driver makes a call during a blockade of the A40 road on May 27, 2008 in London. Hundreds of truckers protested at the increasing cost of fuel.

American motorists are understandably grumbling over skyrocketing gas prices as the summer travel season approaches. But their pain hardly registers against the rage afoot in Europe these days. Fishermen, truck drivers and farmers are threatening to bring entire economic sectors to a halt with protests against crippling fuel costs. The wave of angry action is expected to spread further across Europe in coming days, despite efforts by political leaders to feel the pain and figure out how to alleviate it.

Strikes and blockades staged over the past three weeks by French fishermen spread this week to Spanish ports; Italy, Portugal, and Greece expect more of the same on Friday as mariners seek to force national governments to offset marine diesel prices, which have shot up by 40% since January. Single boat owners and entire trawler fleets face a real threat of bankruptcy.

Matters are no better on land. On Tuesday, hundreds of British truck drivers in London and Cardiff brought traffic to a crawl in a campaign to get their government to lower taxes on diesel fuel, which now costs over $11 per U.S. gallon (3.8 liters). Other businesses owners who rely heavily on gas use — including farmers, ambulance and taxi drivers, and private bus companies — have joined the protest movement or are preparing to do so.

Those labor protests reflect the hit millions of Europeans are taking at the gas pump. As American drivers groan over prices nearing $4 a gallon, the French are paying $8.67 for a gallon of super, compared to $7.10 in January, 2007. A gallon of diesel in French gas stations averages $8.54, up from $5.35 just a year ago. And in the U.K. diesel costs $11.50 per gallon, compared to around $3.90 in the U.S. Across the European Union, the average cost of a gallon of gas runs to about $8.70 — more than twice what Americans are shelling out to fill up. And Europe's dizzying fuel costs would be even worse if it weren't for the considerable appreciation of the euro and the British pound against the dollar over the past year, which has partially offset the price escalation in dollar-traded oil.

One big reason for the difference is that European governments put a much higher tax burden on fuel than the U.S. does. State and federal taxes currently make up just 11% of the pump price in the U.S., according to the Energy Information Administration; in France and the U.K., taxes account for an average of around 70%.

Given the growing chorus of angry protests, it isn't surprising that leaders across Europe have begun scurrying for ways to provide some relief at the pump. But their margin for maneuver is limited. On Tuesday, for example, French President Nicolas Sarkozy proposed suspending most value-added tax (VAT) on gas, a measure he said would mean as much as $267 million in savings per quarter to those hit hardest by fuel price increases. VAT rates on gasoline across Europe range from 15% to over 20%, so it's little wonder that Sarkozy's proposal was backed by leaders in Italy and Spain as a painless way to lower prices.

But as Sarkozy himself acknowledged, no nation among the European Union's 27 member states can make such a move without the unanimous approval of the others. Meanwhile, some observers warn that suspending VAT, like the proposed "gas holiday" for U.S. drivers, would deprive governments of sorely needed tax revenues and encourage producers to soak up most of the temporary cost cut. "Changing taxation on fuels in order to combat increasing prices would send a wrong message to producing countries," said E.U. energy spokesman Ferran Terradellas. "This would show them they could increase prices and that the citizens would have to pay."

Others suggest that such short-term efforts to reduce fuel costs send the wrong message anyway to drivers who need to cut consumption. Polls show that 70% of gas-rattled British voters are now unwilling to pay higher taxes to combat climate change. That hasn't stopped some European leaders from taking the bitter pill approach, arguing that today's pain over surging gas prices should be used to encourage longer-term environmental gain. "We don't need one-shot measures," Nathalie Kosciusko-Morizet, the French secretary of state for the environment, told parliament following Sarkozy's proposal, "but rather to free ourselves from oil." True enough. But that's cold comfort for truck drivers, fishermen, and summer vacationers who can't afford to fill up in the meantime.

Original here