When Adison of Gray’s Anatomy got a spin-off show, I was skeptical but quickly became a fan.

In the season premiere of ABC’s Private Practice, there was a financial disaster - Naomi (one of the doctors and also the administrator of the practice) refinanced the mortgage on their building without consulting anyone else.  When the balloon payments came due, there was no money. Over time, Naomi becomes increasingly distracted and makes a mistake with one of her patients. She eventually tells Addison, who tells Naomi’s ex-husband (also a doctor in the practice). Together, they confront Naomi and tell all of the doctors. Naomi is very upset with Addison for telling on her.

I like this series, and I really liked the end of this episode when everything blows up. This is what I was thinking about as the story unraveled.

• Smart people make financial mistakes, too.
  
• Be honest because the truth comes out anyway. Might as well get the painful part over with and start getting help from other people.
• I had noticed that the doctors have a lot of free time: they go shopping, out to eat, on lots of dates, and always talk in the break room. Where are the patients? Turns out the doctors were not billing enough patients, which contributed to the financial problem.
• Throughout the episode, the characters talked about how they planned to spend their bonus checks. Since doctors tend to have high salaries, I was surprised that doctors would be so dependent on an annual windfall to pay for a vacation. Turns out the talk of bonus checks was a plot point building up to the overall financial problems.
• How timely! Much of the news has been focusing on troubled residential loans, but the same thing is happening with commercial loans, as well.

Private Practice is on Wednesday evenings. I will be watching tomorrow night to see what happens next.

Time for a new car?

Your current car is dead or nearly dead.

Your current car is “more car than you need.”

I am moving to a congested area. When we visited with my SUV, I dreaded parking in narrow spaces. Also, I do not need to haul much, and I hardly use the capacity of an SUV.

You’ve been a one car family, and with a job change or a move, you need two cars.

New baby? or all the kids have left home?

Selecting a car

Strictly by the numbers, used is the way to go. I have had one new car and one family hand-me-down. I am buying my next car new. Not all decisions are based solely on the numbers.

Minimum Requirements List. What do you absolutely need? What would be nice to have? If you are buying the car with a partner, what is on his/her list?

My list: small and easy to park, has an MP3 connection, 4 doors, decent gas mileage

Safety. Will children be riding in the car? Check government crash tests.

Compare costs. Figure out what you can afford and what you can expect to pay or negotiate. This information is available at a number of websites, such as Consumer Reports and KBB.

Gas. Before trading in your car to get a Prius or another car with better gas mileage, figure out if it will really save you money and consider that everyone else is thinking the same thing.

Insurance premiums. That red convertible is going to cost more to insure than a Toyota Corolla.

Financing

Lease or Buy. To buy a car, you can pay the total amount in cash, or make a down payment and take out a car loan with a fixed amount each month for up to 5 years. To lease a car, you may or may not need a down payment and have a monthly payment typically lower than the payment on a car loan. The catch is that the leased car must be returned after a set time, typically 3 years. To keep the car, a balloon payment is due, which could be half the price of the car. Strictly by the numbers, it is better to buy.

For a small minority, it makes sense to lease. If you know you will only be in the country for a few years and want a new car, it might make sense to lease. Going back in time three years, for some people it would have made more sense to lease rather than buy a large SUV. Car dealerships are writing down huge losses of SUVs coming off leases because they are being sold at much lower prices than was anticipated.

Down payment. When buying a car, you can get the best financing deals by making a large down payment. This could be pain in cash or by trading in your old vehicle.

Loans. To help you buy a car, a dealership will be ready to offer you a loan. Since some dealers offer loans at high interest rates, research current rates before you go (www.bankrate.com lists current interest rates). Banks and credit unions also offer car loans, for which you can be pre-approved before even picking out the exact car you want.

At the dealership

Shop around — pit dealerships against each other. This is easier with the internet because many dealers will give quotes through email.

Be prepared to walk away. This is not possible if you need the car yesterday, but if your current car runs fine, you can take your time negotiating.

If you are a woman, bring a man along. Sexist? Yes. Does it kill the feminist in me to say that? Yes. You do not need a husband or boyfriend (or even a father, though that is who I am taking) — any man will do.

My Car Shopping Experience

I am looking for a Honda Fit — it has four doors and is 1.5 feet shorter than most sedans (= easy to park). Most of the ‘08 models are sold, and dealers that have some in stock are charging over MSRP. Since there is little room to negotiate on these few remaining ‘08 models, I am waiting until the ‘09 models come out because I expect to get a better deal on an ‘09.

The vehicle I want to trade in (a low mileage 2006 Hybrid Ford Escape) is worth more than the vehicle I want to buy (2008/9 Honda Fit Sport). This is a funny situation because I expect the dealer to cut me a check. When shopping for an ‘08 model, a salesman offered me $500 in cash for the trade. But going by KBB, I could get $2,000 back (before state taxes).

Financial markets have been reeling for months after large losses in subprime mortgages. My take on the subprime mess is that too much credit went to too many people too easily.

• Individuals qualified for more credit by taking out an ARM (adjustable rate mortgage) than they could have borrowed with the more traditional 30-year FRM (fixed rate mortgage).
• Lending was extended more readily to “subprime” borrowers. A subprime borrower has a lower credit score, which indicates he may not have used credit carefully in the past (many late payment, etc.).
• Some lending institutions required little or no documentation. Joe Shmoe could walk in off the street and claim an income of $100,000, qualifying him for a larger mortgage than his $60,000 income could actually afford.

Now some of these people cannot pay their monthly mortgage — a larger number than was anticipated by the housing and mortgage experts. ARM interest rates can reset to higher values, and, ahead of time, no one knows quite how high (or low) the rates will reset.

Because a lot of these people’s homes are being foreclosed, more houses are on the market. Also, because banks have made it harder to qualify for a mortgage without a substantial down payment and strong credit history, there are fewer buyers. With more supply than demand, housing prices are heading lower.

With so many bad loans, lenders are being pickier about who gets money, affecting large corporations, small businesses, individuals and families, and students.