Not to stir a controversy here or anything. Yet, I like to hear from you on what is your definition of a need and a want is.

Typically, I like to think of a need as what we need to sustain life: basic food, clothing, shelter, etc. I do this to show people that we have a lot more choices in life and budgeting than we realize. I look at the issue as what does a person need to eat to sustain life? Basically, it is beans, rice and some fruits and vegetables. What is it for housing? For many, this may mean an apartment or house. For others, it may be a tent or a car. As a society, we debate the minimal standard of living that we should help others with to maintain a minimal standard for quality of life. So we set the bar between what is a need and what is a want that may be a little higher than basic need to sustain life based on our definition of quality of life.

Quality of life is interesting to define because every one has a different definition. Thus, I write this for people to think about their quality of life. For some, the first words that come up may be based on having a space to live in a safe neighborhood. For others, it may be having enough to eat so people do not go hungry at night. Others may say it is to be happy and to be able to enjoy life.

So I thought that it may be easier to define if it from a life and death perspective (medical care). However, as I thought about it, hoping to find a clear answer to blog about, the gray area became even grayer. Recently, my grandfather in-law passed away after a stroke. He had been having health problems for the last few years, so it was probably his time to go. However, after the stroke, he was maintained by life support systems and his daughters had to decide whether to continue life support. Years ago, there would not be a decision if life support was a need or a want because there would not be any an option. Now, with all our technological improvements, the level of health care that is a need versus a want has become grayer.

There is the argument that if we have the technology to help the patient and if the patient may be able to have some quality to life after the procedure, that we should employ it, no matter the cost. There is a debate on what is quality of life that I do not want to get into here. So let’s assume, their quality of life is considered “normal” life with no health problems for the reason that brought the patient to the hospitals (yet there could be pre-existing conditions). This argument is probably an easier one to make to use the life-saving medical procedure for a 5 year old patient than it is for a 95 year old patient that probably only had a few months or years to live at most due to his pre-existing conditions. It also probably makes a difference if the procedure is a simple on or a complicated one that will take many medical professionals to take care of the patient and thus raising its costs.

Hold it. I know that some readers are questioning what does cost have to do with saving a life? Money should not be an object when we are talking about a human being with a soul. Yet, if we assume that every one in health care (pharmacies, hospitals and companies making health care equipment) are not in it for the money (no profit motives), then the cost of health care is equivalent how many hours a doctor and nurse have to work and how much the medical supplies and use of the equipment costs. Now, it may seem reasonable to save a life no matter what the cost, especially if we have the time and money to do it. However, there comes a point where “no matter what the cost” means that the medical staff can not go home because they need to take care of the overload of patients on life support measures for months and years at a time. The question is should we factor in how this affects the quality of life for the medical professionals who are working 80 hours weeks, years at a time, and can not see their family? Is it worth them giving up their quality of life (time with children and family) to support someone who may or may not live and with no certainty, if they live, for how long (maybe 1 day, 2 years or 5 years)? And, what if that patient would probably be in a coma the entire time?

Doesn’t this bring up an interesting medical debate?

If you think that the current medical staff can not get stretched so thin that they are working all the time, consider the debate over residents working a standard 80 hour work week a few years ago. Part of the reason they worked so long was done to help them learn everything that they needed to know in their few years as a resident which is hard to do if they just work 9 to 5 without seeing a critical patient from start to finish. Yet, the long hours from residents also helped a hospital to be able to keep its doors open to patients that the staff could not do without an extra set of hands. Think about how the waiting lists of patients waiting for surgeries in other countries who decide to come to the U.S. or other countries like India because they do not want to remain on a waiting list for several months before it is their turn. Also, many of our hospitals are running at 95% to 100% capacity already with the growing needs of baby boomers waiting to hit our medical facilities in just a few years.

I do not mean this to be a question on whether we should have universal health care in the U.S. or if the price of health care is too high. We can save that for later. Rather, I ask to raise a question for readers on what is quality of life and where the minimal line should be drawn. In particular, if you could to make a decision today to work 2 additional years (60+ hours a week) to afford to live an additional 2 years beyond where your life would currently end via the assistance of advanced medical care, would you do it?

It may be an easier question to ask if you made it at the end of your life, if you had to decide to have a surgery to extend your life because it is a life or death decision. It is easier if you did not have to pay for it and harder if you when you need to pay for it and work harder and longer to do it ahead of time.

No matter what health system we have (government pay, company pay or patient pay), it ends up costing us as a tax payer, consumer or directly as a patient, one way or another. Thus, in a sense we are paying for it now.

For myself, I would want to live a balanced life today rather than work extra on a consistent basis, giving up time with my family, to afford to pay the few extra years at the end of my life. However, I do enjoy the benefits that our health care systems provide. Thus, my wife and I work to afford basic health insurance to have the opportunity to have a normal life after a car crash. However, there is a line we have talked about on where to cut off life support based on the prognosis of quality of life.

This is going to become an important issue for our politicians and voters to decide on as our baby boomers reach their 70’s and 80’s. Before, we automatically paid for health care because we had many people working to support Medicare for a few elderly. Thus, costs did not really factor into the decision, too much. In the future, we will have to pay for their health care with a few workers supporting each elderly patient on Medicare. It may seem easy to say pay for health care no matter what the cost. Yet, even if we did use money to pay for health care, there may be a point where the health care needed strains the resources we have available.

Thus, for me, the current political discussion on health care should not only be if we keep the system we have or go to a universal health care system but also should be how to clarify our expectations on what is quality of life. It is one thing to discuss how to extend our quality of life if cost was not a factor. However, it is another decision when we are the ones paying for it whether it as taxpayers or directly as the patient or whether we consider the doctors and nurses who may be the ones expected to do more for less (which has already been going on with Medicare cost cutting measures).

This also raises other questions as consumers on how we make purchases to help our quality of life especially if it means working longer in a job we do not enjoy. Where do we draw the line on working harder (especially if it is in a job we do not like) or making by with less?

Again, I do not mean to raise an argument on whether insurance companies, drug companies or hospitals are greedy or not. I meant it for a philosophical debate on if your quality of life is measured more on quantity (length of life) or quality (doing more of what we want in the time we have, even if it means a shorter life).

I know most people would like to have quality of life mean sitting on a beach sipping a margarita (instead of working), yet who would be at the hospital taking care of the sun burns and skin cancer?

Sorry for the lack of posts the last few weeks. A list of things have popped up for me, including a trip to Florida, my son getting sick when we got back and now I injured my wrist where I can only type with one hand. It will be a few more days before I can get back to typing again instead of pecking with one finger.

I just wanted to wish all my loyal readers a happy Memorial Day weekend. I will be spending mine with my in-laws celebrating my son’s second birthday.

And, as we are traveling, let’s pay attention to how many people are on the roads. The news here in Cleveland has been focused on how consumers are going to continue there driving habits even if gas prices go higher (even up to $4 and beyond). It has even been suggested that our thirst for gas will not be quenched until the regular non-SUV driver pays over $100 to fill his tank. Thus, the news is still expecting a booming holiday travel weekend.

I bring this up because we all hate how high the gas prices are going. Yet, we seem to be doing little to nothing about it this time around, other than demand Congress to investigate the oil companies. Congress battling the oil companies has been attempted several times in the past with no impact on the gas companies or the price of gas. Some will blame Bush and Cheney. Yet, to prove price fixing, it takes a lot of evidence which is not available (if price fixing is even going on). And, complaining about this issue has done nothing to lead Congress and oil companies to find a solution to the problem like agree on EPA regulations changes to get a few additional refineries built ASAP to make up for the lack of supply on the market or require an increase in the fuel efficiency standards for new cars.

The first time gas spiked over $3 a gallon at the time of Katrina was right before Labor Day weekend in 2005. At that time, I noticed how barren the drive from Cleveland to Chicago and back seemed to be for a holiday weekend. It appeared that because the price of gas increased so rapidly, many people choose to stay close to home to conserve gas and their money. Thus, the price of gas came down soon thereafter even with all the refinery issues. However, this time, it seems that because the price increased on a slower pace where consumers feel that nothing can be done (I have seen several drivers interviewed on the news saying what can they do, nothing but pay the prices). Thus, because demand is not changing, the price continues to increase. This is similar to a frog’s reaction to a boiling pot of water. If the frog is put into a pot of hot water, the frog will take immediate action to get out. If the frog is put into a pot of cool water which is then heated, the frog will stay in no matter how hot the water becomes (or high gas prices go).

Note, consumers have the most power to influence the price of gas. It is all in our choice on how much traveling we want to do and in what kind of cars we drive. We have tended to want bigger cars for the power and safety features that the car has. We made a push in early 2006 for smaller hybrid cars after the spike of gas prices from Katrina. Yet, as price of gas decreased from consumers rethinking their choices (and no hurricanes hitting the Gulf Coast last fall), we have became complacent and have gone back to our motto bigger is better. Well, it has caught up to us again. Until we choose to affect the long-term demand for gas we will continue to fight the high price of gas. So, as you travel this weekend, just notice how many people are on the roads. There is nothing wrong with wanting to travel; we just need to be aware how each of our choices is affecting the price of gas.

There are several things that we can each do to have an impact, including making sure our tires are properly inflated, driving the speed limit and buying more efficient cars. I find it interesting that people buy SUVs for their safety yet speed putting themselves and their precious passengers at higher risk of an accident.

Footnote – just as I am publishing this, ABC News came out with a survey that 3 out of 10 families are planning on not taking a summer driving vacation due to the price of gas. I do not know if these 3 families who changed their plans were the families who usually stay close to home anyways and thus were not really serious about a vacation anyways. Or, if these families were planning a trip like they have taken in the past and cancelled their plans, indicating a deviation from past practices. We will see how consumers respond. For my wife and I, we have not changed our driving habits as of yet. However, when we bought my wife’s car in Fall 2005, we choose a Subaru station wagon over a SUV due to the gas mileage.

The other day, I read a news article that said a car is one of the 5 things that you should not buy new. I also had a friend ask me a few days earlier if it was a wise decision for her son to buy a new car now before he enters medical school. It got me to think about how accurate the financial advice that buying a new car was a bad move due to a new car depreciating immediately once driven off the car lot. This may have been true in the past yet may be more folk lure now because no one has questioned the advise recently.

In the old days when the market was limited to car dealerships that made a larger profit on a new cars and low balled used car trade-ins, the difference in new and used cars could have been significant, especially if you bought a new car every few years and received a bad deal on the trade-in. Yet, now that the car market has gotten more efficient with the internet, a lot of the financial disparities in new vs. used cars and dealer vs. 3rd party cars have diminished.

Yes, there may be a cost for buying a new car versus a used car. However, it may not be as big of deal as we once thought. For example, looking at a Toyota Camry LE, the suggested Kelly Blue Book retail value for the base LE package in excellent package was:

Year………..Value……Difference
2007……$20,515
2006……$18,550…..$1,965
2005……$16,830…..$1,720
2004……$15,265…..$1,565
2002……$11,965…..$3,300 ($1,650 per yr)
2000……..$9,090…..$2,875 ($1,438 per yr)

Looking at the difference in value, it does not seem to be a large difference in driving the car for the first year. Yes, there is a larger amount depreciated in the first few years, yet that is to be expected as the warranty period and parts start to wear away. The only thing that is needed in the first year is the basic oil change. After that, tires, brakes and other things need to be replaced and are thus reflected in the price.

In later years, the depreciation of the car from year to year is less, however, so is the cost to maintain the car increases. If you are a mechanic (or mechanically inclined), you may benefit from buying an older car and keeping it running because you have a talent that other don’t. The prices of cars reflect that the older the car gets, the more likely people like me will trade it in because the probability of an expensive car repair goes up (including the risk of being stranded on the side of the road on your way to a meeting). Ask my friend’s son who as put around $1,000 into his old used car during the past year and that was with doing most of the repairs with his dad. If he went to a mechanic, the bill would have been at least double this amount.

The comparison of new and used car prices will differ between makes and models. For example, those who buy a Camry are probably buying it for its reliability and not for the “new” status symbol. If someone buys a car for a status symbol like a Jaguar or Lexus, the depreciation value of driving it of the lot may be greater as people are more willing to pay for the “new” tag. For example, a 2007 Jaguar S-class runs $48,755 per Kelly Blue Book while the used 2006 model in excellent condition is $34,630 and 2005 model is $29,365. At first, I thought that the 2007 could have added some new equipment like a GPS system, so I looked up the new 2006 value for a comparison. The new 2006 model (if there is one still out there) was $43,173 which is still a lot higher than the used 2006 model at $34,630. Thus, there is a huge price tag for driving it off a Jaguar off the lot. Yet, I do not think those that buy a Jaguar really mind this.

However, for other cars the new car price is minimized because people have become aware of the invoice price of new cars and used cars, so they know the value of a new car and what they are paying for. This has brought the value of the new car premium down significantly because many people do not want to pay for “new” when they can get a 2-3 year old used car at a reasonable price. Thus, new car dealers and automakers can not increase their prices significantly without sales dropping dramatically as people hit the used car lots for a better deal.

Thus, the reason to buy a used car have diminished and should not be based on the depreciation in the car alone. Rather the decision is the cost of tying up $20,000 in a new car versus $10,000 for a 7 year old used car and the cost of maintaining an older car. For myself, I like reliability. I choose to buy a new car and then drive it for 7-10 years before trading it in. In my mind, this maximizes the reliability factor without having to pay a dealer or 3rd party every few years for a new or used car.

This doesn’t mean that you shouldn’t look around for year-end deals that make a new car a better deal than it would have been when they first come out. My last car was a salesperson’s car driven for a year. Thus, the dealer gave a steep discounted offer for taking a slightly used car off their hands so that their salesperson could have the newer model to show off. It also does not mean that a used car is not a good deal either. You may be able to find a good used car from a third party at a discount. You may find a car from a 3rd party that is $500 to $1,000 less than what you can at the dealer. In deciding between a dealer or 3rd party, you need to consider if the extra fee added on by the car dealership is worth the cost of not running around town all day test driving cars and wondering if the 3rd party is ripping you off with a lemon that he will not fix when it goes bad 10 days after you drive it away.

The benefits of used cars have been well documented as well. A friend found a 10+ year old car for $500 and was able to fix it up to be a reliable used car until a snow plow backed into it. Yet, the cost of fixing the car up himself was significantly less than having it fixed by a mechanic.

The moral of this story is with market pressure from the internet today, car dealerships had to significantly change their prices making the premium for driving a new car (non-luxury model) significantly less than it once was. If they did not adapt their prices, they would have gone out of business. So, the old advice of buy used may not work for everyone especially if they need to rely on a high priced mechanic to keep a 10+ year old used car running or prefer reliability because they can not afford to wait for a tow truck on the side of the road when they have a meeting to be at. Yet, if you are mechanically inclined and want to save a few bucks, a used car may still be the way to go. So, check the prices of a new car versus used car and factor in the cost of upkeep and repairs in making your decision.