Last year, Savvy Frugality mentioned that Tata Motors in India was developing a brand new car that would sell for $2,500. Unfortunately (or maybe fortunately, depending upon how you look at it) the ultra-cheap car is only available in ultra-crowded India...until now.

Tata says it is looking at introducing the $2,500 car in the U.S. by 2012. It won't be the same version as the one sold in India, where crash and emission standards aren't as...shall we say, stringent...as they are in the U.S. Of course, that could drive up the price of the $2,500, which is really its main selling point.

The car is definitely not frills. It tops out at 75 miles per hour and has no radio or air bags. But hey...it's $2,500. GM is said to be working on smaller cars, now that is owned by the U.S. taxpayers and has filed for bankruptcy. It Tata enters the U.S. market, could this possibly spur a "micro car" battle amongst automakers?

I like the price...but I also like my radio and airbags.

I mentioned previously that Hyundai is offering a "job loss insurance" deal to get customers back on the lot: buy or lease a new Hyundai, and if you lose your job during the first year you have it you can take it back to the dealer and stop making payments with no penalties. Other dealerships are offering "buy one, get one free" deals...yes, on cars. Some are offering big rebates or "pay what our employees pay" deals. It all sounds pretty good, but is it REALLY a good deal.

The answer is, it depends. If you're in the market and you REALLY need a car, the Hyundai deal isn't so bad, but you should probably steer clear of the "buy an SUV, get a free car" deal. Depending on the make and model of the car, it may not be a great deal. After all, if your car is spending a lot of time in the repair shop, is it really a good deal?

Savvy Frugality's recommendation: if you are in the market for a new car and you can afford it, good deals can be had, but read the fine print. If you are struggling from paycheck to paycheck, look for another alternative. Good used cars can always be found, and if worse comes to worse and your city has a great public transportation system, you may not need a car at all (if I still lived in New York or Norfolk, VA...two cities with good bus systems, I wouldn't even bother owning a car).

Check out more on these car deals in the video:

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How desperate are automakers to to sell their cars? One of them will take the car back if you get canned at work.

Hyundai has started something new this week called the "Hyundai Assurance Program". Basically, if you buy or lease a new Hyundai using their finance program at the dealership and then lose your job within a year of taking the keys, Hyundai will take the car back with no penalties. It's their way of offering a little peace of mind during this uncertainly economy, when people are steering clear of large-ticket purchases like cars.

Hyundai says the program is complementary and available to everyone who buys or leases a new Hyundai automobile. If, God forbid, you lose your job within a year of buying the car, you just bring it back to the lot, hand over the keys, and stop paying the loan.

Job-loss insurance is certainly nothing new in the car sales industry. For example, I have something similar with my Kia, although a portion of my loan payments cover the job-loss plan. Also, I don't get to give the car back. It simply covers my payments while I'm unemployed. Once I get a job, the payments start back up again.

It's actually not a bad idea. If you really need to get a car, I suppose it's one way of gaining some peace of mind. However, if I absolutely had to buy a car right now, I'd probably opt for a used vehicle rather than a new one, and I would pay for that sucker in cash. It would certainly be cheaper in the long run.

I predict you'll see other automakers follow suit (are you listening, GM?). To survive during 2009, a year predicted to see a further deepening of the current recession, automakers will have to try new things to get customers back on the sales lot again.

Savvy Frugality Recommended Reading: 2009...just like 2008, only worse.

Sometimes I wished I lived in a major metropolitan city like New York, Chicago or San Francisco. It's not for the pizza, sausage or seafood...and it's not because they all have great skylines. No, each of these cities have pretty good public transportation systems. If I lived in one of these cities, I would not have to own a car.

But, I live in a suburb of Oklahoma City which does not have its own public transportation system. Oklahoma City has a bus system, but it doesn't travel out to my 'burb. Hence, every time I need to run an errand which requires me to go to Oklahoma City, I have to drive.

It is said that most people who own cars travel less than 40 miles a day with them. That's not really a whole lot of driving. My car payments are $340 per month. That means it costs me about 28 cents per mile to drive my car, assuming I drive 40 miles per day, which I don't. I actually drive a lot less than that, so it really costs me more than 28 cents a mile to drive my car, and that's just taking into account the car payment, not the gas, oil, maintenance, etc.

That means that my car is the most expensive thing that I own. Each month, it costs me money just to own it, drive it and maintain it. Sure, I get transportation out of it, but when you get right down to it...it's a money pit. Even if I owned the car free and clear, it would still cost me money to use it. It's enough to make me long for the trains and buses in NYC.

In the past, before adopting a life of Savvy Frugality, when I had an emergency expense, it usually involved my car. It either broke down, needed new tires or just plain died by the side of the road. So, how do we minimize our pain of owning and operating a motor vehicle? I'm glad you asked!

1. How often should you change your oil? Opinions on this vary, but you can never change your oil too often. However, it is possible to not change it often enough. The manufacturer says to change your oil every 3,000 miles. My mechanic says every 7,000. I say a happy medium is every 5,000 miles. Do make sure that you follow the manufacturer's recommendations about what KIND of oil to use.

2. Yes, you do need to check your tire pressure. That advice about maintaining proper tire pressure isn't just a suggestion. You really should make sure your tires are properly inflated. Sure, there's the whole "you get better gas mileage" thing, but if your tires aren't properly inflated, they won't last as long. A new set of tires is more than a couple of hundred dollars. You don't want to change those more often than you need to, now do you?

3. Ditch the additives. Those bottles of additives at the automotive store promise they will clean your engine of oil sludge, remove water from your gas tank, etc. They aren't necessary, and if used improperly will actually cause more problems for your car than they will solve. I damaged the oxygen sensor on my Saturn by adding gasoline additive to the tank. The mechanic never could figure out how to fix it.

4. Streamline your car. Want better gas mileage? Get rid of all the junk in your car. That's added weight that you don't need. Also, if you have a luggage rack on your car and you don't use if for luggage, that adds more drag to your vehicle. I've read about some people who remove their side view mirrors to reduce drag on their car. That's stupid. However, the luggage or bike rack isn't an absolute necessity.

5. Heed the lights. I'm not talking about the traffic lights at the intersection, but the warning lights in your car. Have you been driving the past 2,000 miles with the "check engine" light lit up on your dashboard? That's bad news. Time to take the car to a mechanic.

I designate a percentage of my emergency fund to regular auto maintenance. I suppose you could also just open a savings account specifically for your car maintenance, and deposit $25 to $50 in it every month. When it's time to get something fixed, you have the money for it. The car repair doesn't become a dire emergency.

Happy motoring!

I recently moved to a nearby suburb of Oklahoma City, and I managed to do so for a grand total of $80. That was just the move itself. However, as I have mentioned earlier, I also encountered some unexpected expenses AFTER the move, such as higher utility bills at the new home, the need to pay the final utility bill at the old home and the new utility bill at the new home....in the same month. On top of that, I can't participate in the average monthly billing program I was taking advantage of with the gas utility. Now, a new expense has reared its ugly head.

I called my insurance agent to notify him of my change of address for my auto and renter's insurance (I'm not renting, but I don't own the home, either. It's my father-in-law's, and he's letting us live in the place rent free until he moves here in a few years. Thanks, Dad!) My agent's secretary took my information, and then informed me my auto insurance rates just increased by $100 every six months. Huh?

Did I have an accident recently? Nope. Was I given a traffic ticket in the past year? No. Was I convicted of DUI? Absolutely not. My rates went up because of my new zip code.

Mind you, I moved a grand total of 15 miles. It's not like I moved to a high crime area where auto thefts are common. In fact, I moved to a much nicer neighborhood where SUVs and luxury sedans are the most-spotted vehicles on the street. Me? I drive a KIA.

I asked why my insurance rates had increased so much in the span of 24 hours, when none of my driving history had changed. The secretary explained that I now lived in an area where the rates are higher. I protested.

"But, my commute to work has dropped from 15 miles to less than a mile. How could the rates go up so much?" She responded it was the price of moving to a new area where the rates are higher. I say it's just not fair.

Before I moved to Oklahoma, I lived in areas where the insurance rate was based on one's driving history, not some crummy zip code. In some states, such as California, legislation has been enacted requiring insurance companies to do just that.

At least I don't live in Louisiana. That state has the highest auto insurance rates in the U.S., edging out New York, according to Insurance.com's 2007 Auto Insurance Pricing Report. The Ten Most Expensive States for auto insurance are:


1. Louisiana
2. New York
3. New Jersey
4. Washington D.C.
5. Delaware
6. Rhode Island
7. Kentucky
8. Maryland
9. West Virginia
10. Nevada

The Ten Least Expensive States for auto insurance are:

1. Ohio
2. Wisconsin
3. Iowa
4. Maine
5. Idaho
6. Indiana
7. Vermont
8. Oregon
9. Kansas
10. Illinois

So, a word to the wise: if you plan to move and want to estimate your new budget in your new home, be sure to check with your auto insurer to see how the relocation might affect your auto insurance rates...even if it's just a few miles.

With oil prices recently hitting $100 a barrel, and gasoline expected to average $4 a gallon for regular unleaded, driving a car is about to become a lot more expensive. As I filled the tank of my mini-van last night, and paid $53 for the privilege, I fondly thought back to the days when I didn't even own a car.

I'm not talking about my high school days, although I didn't own a car then, either. In fact, I didn't own my first car until I was 23 years old, and I was just fine without one. I had lived in Norfolk, Virginia, which has a great public transit system. Back then, a five mile trip on the bus from the Navy base to Military Circle Mall was 50 cents. If the place I needed to go to was within a mile or two, I walked. I walked a lot, and I was in great shape back then, too.

I lived in New York for awhile as well, and there are literally millions of people in the city who don't own cars. They either take a train, a bus, a taxi or they walk to get to where they need to go. It wasn't until I moved to Minneapolis that I needed to buy a car. They have buses there, too...but I needed a car for my job and to drive home on the weekends, which was 120 miles from Minneapolis. For the most part, in a major city, you probably can get by without a car.

Our cars represent a bit of independence, a "home away from home" and many people are reluctant to think about not having a car, or using theirs less. But, that's exactly what I have decided to do. I do need my mini-van so my wife can get to doctor appointments and for work-related activities, but we will be using it a lot less. After I spent $53 buying gas last night, I informed my wife we would be grouping our errands for the week into one day. Grocery shopping, doctor appointments, errands around town...they all need to be scheduled on the same day as much as possible, to cut down on individual trips all over town.

In about two weeks, I will move to a new home which is located about half a mile from my job. I will be walking to work most of the time, and riding my bike in the summer. The gas in the van can be used for errands and to take my son to school, which is located about 10 miles from where we will live.

In Oklahoma City, where I live, there are other options to driving as well. The city's transit system has a bus pass which allows people to ride the buses an unlimited number of times for $40 per month. That's less than what I paid for a tank of gas. I'm going to get one of these for my son, so he can take the bus from school to his job. It will save me plenty of money in the long run. A tank of gas currently lasts me about five days. Since a tank of gas costs about $50, well...you can do the math. I'd rather not continue to pay $300 a month for gasoline.

With gas prices on the rise, now is the time to develop alternative transportation plans. If you can't give up your car altogether through public transit, carpooling, walking or bicycling, you can at least use some or all of these methods to CUT BACK on your reliance on your car. It's not as convenient, but it will save money...and you might even get into shape while you're at it.