Seemed Like a Good Idea at the Time

Mom had an ancient old van that had traveled all over the country in it's day. May have been worth $500. It had gotten to the point where she was afraid to drive it anywhere far by herself and my brother had gotten a "wild hair" for her to get a new car.

She ended up getting an absolutely great deal, but she felt a little sad that the old van was going to be destroyed.

She got one of the first deals on the Cash For Clunkers and waltzed out of the dealership with a nifty Ford Focus.

I'll admit this was one idea that I first thought made sense. I could see that it got some people to buy new cars who weren't quite in the market yet, it generated a ton of business for the car dealerships, got more fuel efficient cars on the road and even made business for the junk yards.

By Friday of the first week, the small dealership where she bought it was suspending their program. They had over $50k in outstanding cash, even though they had made sure they followed every detail of the plan. There simply was no one to process all the claims and give the dealers their cash quickly.

What kills most small business is NOT a lack of profit, it's the lack of cash WHEN you need it. You can make a huge profit, but if you don't have the cash when it's due, you will fail.

Then I started feeling it at home.

You see, Bob has a little side business. He buys a few trade-ins and sells them retail. Most of the cars he sells will retail under $5k. You know, the kind most American's buy for their kids' first cars. You know, the kind of car that was being traded-in for the Cash For Clunkers deals. He knows alot of the dealers and car guys. They are all hurting. Badly.

The dealerships that were participating are out of cash, the people that need some cheap car for their kids or themselves cannot find any decent used cars and the small dealers who profit from the trade-ins now have no inventory.

But Mom sure looks good tooling around in her new Ford Focus and we don't have to worry so much about her being out on the road with unreliable transportation.