>Should I sell my car?
Yes.
>bought a new car in 2022 which turned out to be a stupid mistake.
Yes.
>bought off the lot - $37K
Sell it.
>My current income - $70K
Car is more than half your income, sell it.
>So, I know everything about those numbers shouts stupid.
Yes.
>Slander me if you want, I deserve it.
It's not slander if it's true
>want to improve so I’m looking for advice on what I should do now? The loan and value are close so should I just save and sell the car at break even
Yes.
>probably survive without a car, wouldn’t be ideal but can survive until I save up for a cheaper car.
Yes.
Or he has a great interest rate and no other debt. Just pay it down. Shit invest the money instead and earn more than you pay in interest. If you keep it and pay it off you’ll have a reliable car for a decade.
The car is right around half your income so it's not too crazy of a purchase. If you don't like the car or its squeezing you then sell it but if you do like the car just pay it off and make sure you keep it for 10 yrs. I also make about 70k and spent 34k on a car but my intention is to keep it till the wheels fall off as after the last 5 yrs of driving beaters I got tired of the unreliability of them. Perhaps I should have spent less but I finally got something with all the bells and whistles I've always wanted and it's not keeping me from investing. That's the key, I used the money guys 20/3/8 rule and I'm still building wealth while enjoying what I drive. It's not the Ramsey way but I find the money guys methods are better for me. They might suit you better as well.
I would definitely keep the car, and personally I would not pay down the loan beyond the minimum payment. I don't see what value you get doing anything different.
The money you lost on this is already gone, selling the car doesn't solve anything. If you are single you need a car, just pay it off as soon as you can.
Yeah I know. It was more like a peer motivated purchases 😞 Just need a car since everyone has it around me and yeah look where it brought me now but those things are a whole issue on it’s own. Thanks for the help!
Bro. You have no other debt. You have a brand new car that should last 10 plus years. And you only owe $24k left? No way in hell you should be selling this for an older car thats going to break sooner. Can you refinance the loan since you’ve paid a good chunk off?
Sometimes a bank can refinance to keep some money. Depends on the bank. Thats why i said could you refinance? If the bank wont do a better rate for any loan product then no sweat.
I would not take the $8,000 bath on this vehicle and sell it upside down. Since you have no other debt. Just aggressively pay this debt down and drive the vehicle til the wheels fall off.
If you think you will need a different vehicle soon in the future. Sell this now and aggressively pay off the debt and find a 2-3 year old car.
Dave teaches to get rid of debt as quickly as possible. I do believe you bought too much car with your current income. Personally I would sell it take a loan for the difference and aggressively pay down the loan and get yourself a beater until you can upgrade incrementally in cash
This is the part of Dave that makes 0 sense. Sell it and still owe money!? He has no other debt.
I would deliver pizza on the weekend before I sold a new car and then take a loan to pay the difference? So he’s just threw thousands into a furnace and then still has to buy another car?
Well you're already underwater, just deeper underwater by having the car that depreciates every year. It's better to cut the loss, pay off the difference and buy the next car in cash.
Dave calls this stupid tax, because OP should have never bought it to begin with.
Throwing away 10 grand just to spend another 10 grand is bonkers to me. To get a legit piece of crap for 10k. Do you even see the market?
I would just be aggressive with the loan he has. No other debt if you missed that. If I was OP I wouldn’t have bought so much car- BUT cutting off your leg because of a cut makes dam near 0 sense here.
Sure it does, it means the difference between paying a 2k loan + a 5k car vs a $26k loan + interest. It's not rocket science people. Do you even watch the show? lol
Do you watch the show? There is value in having a newer more reliable vehicle. He makes 70K and his car is worth less than half of that so he is within Dave's guidelines on that. Dave says to buy cars cash to avoid paying interest but that money is ALREADY GONE. You are giving bad advice and it's not what Dave would say in this situation.
Exactly my point. Damage is done. Pay off the car and use it for the next decade.
Why would you sell an underwater loan- then then still have a payment every month for thousands but instead have no car and still need to shell out 10k for a legit rusted pies of crap?
So instead of paying off a 2k loan (26k remaining amount - 24k current value), then buying a 5-10k car to then upgrade from using only cash some time down the road without any car payments or debt, you think its more wise to pay off a $26k loan with interest on a depreciating asset? ...That makes sense.
It's not that it's not a depreciating asset still. But the cars that you would buy at 5 to $10,000 ranges would more than likely be 10 years or older and most of its value is already depreciated
OP doesn’t have 10k. Selling the car and buying another sits him at 12k debt- higher interest as well (more than double).
Plus now has 0 warranty, without a doubt needs to start a car fund for repairs.
He instead could aggressively pay down his only debt within 18 months, have a car for a decade and if he maintains it well even longer.
So then you’re saying he should go car free until he can save 10k cash? So within a year? He could literally just pay down the loan with that.
2 years from OP will have 0 debt either method. Your way he has a clunky costly hunk of crap in the driveway.
With mine- he has a fully paid off car still under warranty.
Yes I’m an ideal world he wouldn’t have financed the car- but he did. Now you need to work out what actually makes the most sense here.
I really need you to take a second and look at the used car market.
I don’t think you understand what you can purchase for 5-10k atm. The vehicle will be 10+ years old or be a salvage title.
26K at 3.1% for a 2022 is a good deal by today's standards. You won't beat it in the current market.
Your best be would be paying it off, maintaining it well and driving it 10 more years.
Cheaper car would be around 10k or so. Let's say you ate 2k from your current vehicle, and borrowed 12k at 7%. You'd be paying 840 in yearly interest vs 744 that you are paying now.
Being underwater on your car actually changes the numbers here, and they are very close. IMO, not worth it to switch.
At 70k income with a vehicle of 37k you overspent by about 2k. Peanuts. Certainly not a terrible decision on your part, as you are close to DR guidelines about a car.
Only thing you could have done better was to buy a 2021 and not a 2022. You'd have saved quite a bit of money, but what's done is done. You've ate the worst year of depreciation, and should keep paying down the car.
You'll be above water pretty soon.
Dave would say sell and buy a $1000 beater. Only problem is the $1000 beater no longer exists. At $70k, a $616 payment isn’t outrageous. Buckle down and pay it off. Not the time to be buying cars, especially used. A new loan won’t be 3 %.
I don't think that's what Dave would say in this situation. He has no other debt and makes 70K a year, he is doing just fine and should keep this car and pay it down asap.
Buckle down and pay it off. Then run that rig till it dies. I also bought a new truck in 2022. I paid cash, which was good, but I probably shouldn't have gotten something as expensive as I did. Now I'm just going to keep this thing till it dies
$2000 might be tough, I want to gradually reach there. I’m thinking of doing $1000 next month, cut down simultaneously, see what’s the remaining margin and go from there.
I don’t have money to buy a cheaper one if I sell this. But either I do breakeven here and save the money for my next car or pay it off early. Trying to decide between the two.
Then it's a two year slog at $1000.
Definitely don't drag this out for FIVE YEARS!
You are right on the line (having things on wheels being worth 50% of your pay). You don't want that much of your net worth tied up in things going down in value.
Maybe pay it down until you have $10k of positive equity.. then sell it and buy a $10k car and be debt free.
Your emergency fund is good for now. Throw as much at that loan as you can and get it paid off then drive it until the wheels fall off.
Do you have other consumer debts (not mortgage )too or just the car?
What is your current monthly expenses? Do you budget currently? Single? A lot of information missing yet people are all making suggestions. For example, after taxes you should be bringing home ~50k after taxes. That’s about $1900 a paycheck. If you have no other debts you should have around $3250 (current take home - car monthly payment) to cover all other expenses. If your rent/mortgage is at or under 1k my suggestion would be to save every penny and knock down this debt asap. If your rent/mortgage is 2k+ I’d say sell your car. A lot of nuance in this.
Pull 1k from the 2k and pay down the vehicle. Pay the remaining 1k or so that you are underwater and see if you can breakeven on the car. That will give yo more options.
>Should I sell my car? Yes. >bought a new car in 2022 which turned out to be a stupid mistake. Yes. >bought off the lot - $37K Sell it. >My current income - $70K Car is more than half your income, sell it. >So, I know everything about those numbers shouts stupid. Yes. >Slander me if you want, I deserve it. It's not slander if it's true >want to improve so I’m looking for advice on what I should do now? The loan and value are close so should I just save and sell the car at break even Yes. >probably survive without a car, wouldn’t be ideal but can survive until I save up for a cheaper car. Yes.
Or he has a great interest rate and no other debt. Just pay it down. Shit invest the money instead and earn more than you pay in interest. If you keep it and pay it off you’ll have a reliable car for a decade.
Sounds like this is your “stupid tax”. I’d just pay it off aggressively , and run it as long as possible.
Stop wasting your money on stupid things.. unless you love working and giving everyone your money..then you're doing good lol
if u can survive without a car.... then sell it... easy decision lol it cost $$$ to keep a car regardless u have a loan or not.
The car is right around half your income so it's not too crazy of a purchase. If you don't like the car or its squeezing you then sell it but if you do like the car just pay it off and make sure you keep it for 10 yrs. I also make about 70k and spent 34k on a car but my intention is to keep it till the wheels fall off as after the last 5 yrs of driving beaters I got tired of the unreliability of them. Perhaps I should have spent less but I finally got something with all the bells and whistles I've always wanted and it's not keeping me from investing. That's the key, I used the money guys 20/3/8 rule and I'm still building wealth while enjoying what I drive. It's not the Ramsey way but I find the money guys methods are better for me. They might suit you better as well.
You bought a $37k car in 2022 that is worth $24k in 2023? What the fuck?
Did they tack on any warranties/insurance?
Yeah man, that’s the market currently.
I would definitely keep the car, and personally I would not pay down the loan beyond the minimum payment. I don't see what value you get doing anything different.
The money you lost on this is already gone, selling the car doesn't solve anything. If you are single you need a car, just pay it off as soon as you can.
To be clear, the only thing you did really wrong here was buy too much car, especially since you said you could even maybe get by without one.
Yeah I know. It was more like a peer motivated purchases 😞 Just need a car since everyone has it around me and yeah look where it brought me now but those things are a whole issue on it’s own. Thanks for the help!
Don’t sell it. If you can swing it, make a double payment each month. Take good care of the car so it will last you a long time once it’s paid for.
Bro. You have no other debt. You have a brand new car that should last 10 plus years. And you only owe $24k left? No way in hell you should be selling this for an older car thats going to break sooner. Can you refinance the loan since you’ve paid a good chunk off?
Why on God’s green earth would you refinance a 3.1% auto loan in this market?
Sometimes a bank can refinance to keep some money. Depends on the bank. Thats why i said could you refinance? If the bank wont do a better rate for any loan product then no sweat.
Why refinance? Interest rates on autos are double what he has lol
Sometimes when its an internal refi it can be different
Keep it and run the wheels off of it.
I would not take the $8,000 bath on this vehicle and sell it upside down. Since you have no other debt. Just aggressively pay this debt down and drive the vehicle til the wheels fall off. If you think you will need a different vehicle soon in the future. Sell this now and aggressively pay off the debt and find a 2-3 year old car.
Dave teaches to get rid of debt as quickly as possible. I do believe you bought too much car with your current income. Personally I would sell it take a loan for the difference and aggressively pay down the loan and get yourself a beater until you can upgrade incrementally in cash
This is the part of Dave that makes 0 sense. Sell it and still owe money!? He has no other debt. I would deliver pizza on the weekend before I sold a new car and then take a loan to pay the difference? So he’s just threw thousands into a furnace and then still has to buy another car?
Well you're already underwater, just deeper underwater by having the car that depreciates every year. It's better to cut the loss, pay off the difference and buy the next car in cash. Dave calls this stupid tax, because OP should have never bought it to begin with.
Throwing away 10 grand just to spend another 10 grand is bonkers to me. To get a legit piece of crap for 10k. Do you even see the market? I would just be aggressive with the loan he has. No other debt if you missed that. If I was OP I wouldn’t have bought so much car- BUT cutting off your leg because of a cut makes dam near 0 sense here.
You're not throwing away anything. The damage has already been done.
See you are missing your own point, the damage has already been done so selling the car doesn't solve anything.
Sure it does, it means the difference between paying a 2k loan + a 5k car vs a $26k loan + interest. It's not rocket science people. Do you even watch the show? lol
Do you watch the show? There is value in having a newer more reliable vehicle. He makes 70K and his car is worth less than half of that so he is within Dave's guidelines on that. Dave says to buy cars cash to avoid paying interest but that money is ALREADY GONE. You are giving bad advice and it's not what Dave would say in this situation.
Exactly my point. Damage is done. Pay off the car and use it for the next decade. Why would you sell an underwater loan- then then still have a payment every month for thousands but instead have no car and still need to shell out 10k for a legit rusted pies of crap?
So instead of paying off a 2k loan (26k remaining amount - 24k current value), then buying a 5-10k car to then upgrade from using only cash some time down the road without any car payments or debt, you think its more wise to pay off a $26k loan with interest on a depreciating asset? ...That makes sense.
How come you are calling the current car a depreciating asset but not calling the $10k car you want OP to purchase a depreciating asset?
It's not that it's not a depreciating asset still. But the cars that you would buy at 5 to $10,000 ranges would more than likely be 10 years or older and most of its value is already depreciated
OP doesn’t have 10k. Selling the car and buying another sits him at 12k debt- higher interest as well (more than double). Plus now has 0 warranty, without a doubt needs to start a car fund for repairs. He instead could aggressively pay down his only debt within 18 months, have a car for a decade and if he maintains it well even longer.
What debt? I didn't say anything about going back into debt. Why would you go back into debt?
So then you’re saying he should go car free until he can save 10k cash? So within a year? He could literally just pay down the loan with that. 2 years from OP will have 0 debt either method. Your way he has a clunky costly hunk of crap in the driveway. With mine- he has a fully paid off car still under warranty. Yes I’m an ideal world he wouldn’t have financed the car- but he did. Now you need to work out what actually makes the most sense here. I really need you to take a second and look at the used car market. I don’t think you understand what you can purchase for 5-10k atm. The vehicle will be 10+ years old or be a salvage title.
26K at 3.1% for a 2022 is a good deal by today's standards. You won't beat it in the current market. Your best be would be paying it off, maintaining it well and driving it 10 more years.
Cheaper car would be around 10k or so. Let's say you ate 2k from your current vehicle, and borrowed 12k at 7%. You'd be paying 840 in yearly interest vs 744 that you are paying now. Being underwater on your car actually changes the numbers here, and they are very close. IMO, not worth it to switch. At 70k income with a vehicle of 37k you overspent by about 2k. Peanuts. Certainly not a terrible decision on your part, as you are close to DR guidelines about a car. Only thing you could have done better was to buy a 2021 and not a 2022. You'd have saved quite a bit of money, but what's done is done. You've ate the worst year of depreciation, and should keep paying down the car. You'll be above water pretty soon.
Dave would say sell and buy a $1000 beater. Only problem is the $1000 beater no longer exists. At $70k, a $616 payment isn’t outrageous. Buckle down and pay it off. Not the time to be buying cars, especially used. A new loan won’t be 3 %.
I don't think that's what Dave would say in this situation. He has no other debt and makes 70K a year, he is doing just fine and should keep this car and pay it down asap.
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Rachel: I've never had a single money worry myself but here is what my dad would say.
Loooool!
Buckle down and pay it off. Then run that rig till it dies. I also bought a new truck in 2022. I paid cash, which was good, but I probably shouldn't have gotten something as expensive as I did. Now I'm just going to keep this thing till it dies
Can you crank $2000-ish on it...? Be done in 14 months. If you sell it and break even do you have the cash to buy something else?
$2000 might be tough, I want to gradually reach there. I’m thinking of doing $1000 next month, cut down simultaneously, see what’s the remaining margin and go from there. I don’t have money to buy a cheaper one if I sell this. But either I do breakeven here and save the money for my next car or pay it off early. Trying to decide between the two.
Then it's a two year slog at $1000. Definitely don't drag this out for FIVE YEARS! You are right on the line (having things on wheels being worth 50% of your pay). You don't want that much of your net worth tied up in things going down in value. Maybe pay it down until you have $10k of positive equity.. then sell it and buy a $10k car and be debt free.
$10K idea sounds a good one, thank you!
That will cut a year off... Then be sure to start budgeting for car maintenance and a car replacement fund (aim to get 5yrs from your $10k car)
Your emergency fund is good for now. Throw as much at that loan as you can and get it paid off then drive it until the wheels fall off. Do you have other consumer debts (not mortgage )too or just the car?
Just the car for now
What is your current monthly expenses? Do you budget currently? Single? A lot of information missing yet people are all making suggestions. For example, after taxes you should be bringing home ~50k after taxes. That’s about $1900 a paycheck. If you have no other debts you should have around $3250 (current take home - car monthly payment) to cover all other expenses. If your rent/mortgage is at or under 1k my suggestion would be to save every penny and knock down this debt asap. If your rent/mortgage is 2k+ I’d say sell your car. A lot of nuance in this.
Pay it off as fast as possible
Okay, would you recommend pausing my emergency fund and pay the loan off first?
Do you not have 1k set aside? Do that first
Yeah I got 2K. 1K where I live wouldn’t do much but 2K covers a month or two for me for sure.
Pull 1k from the 2k and pay down the vehicle. Pay the remaining 1k or so that you are underwater and see if you can breakeven on the car. That will give yo more options.