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Author: bmore Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 308881  
Subject: Should I sell my car? Date: 11/24/2013 7:50 PM
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Hi, everyone,

I need advice on whether or not (and if so, how) to sell my car.

Here's the background:

A little over two years ago, I hit bottom financially due to a combination of a loss of the primary breadwinner's income (DH), huge debt and a separation. But in the last 14 months, I found a new job (not a career, but good benefits, decent pay @ $42k annually + another $110-$150/month in freelance work), moved out-of-state and rented an apartment. I rented a room for eight months before moving out on my own, so getting an apartment was significant to me.

About two months ago, I decided to buy a car. I'd been playing with the idea, but looking back, I'm concerned that I made an impulsive, emotional decision. I couldn't afford to pay cash, and my credit was bad, but I convinced myself that I needed it.

Here are the numbers:

2009 Honda Civic, certified pre-owned with good gas mileage
Financed $15,874
12.45% APR
$316 per month (paid 2x/month, auto-draft from checking)
$92/month for insurance

Right now, I'm living at my limit. About $300/month goes to my daughter, who's in college. And I have credit cards, also about $300/month. Utilities, rent and other misc expenses are around $1,300/month. This is before food, emergencies (no fund), etc. I'm only contributing 1% to my retirement plan now. When I ran the numbers, purchasing the car seemed doable because I was spending so much on eating out and groceries--or I wanted it to seem doable.

DH and I are reconciling, and he's moving in with me since he doesn't have his own apartment. We're going to split the utilities and rent (approx. $490/month from him). Once that happens, I thought I could snowball the credit cards, pay them off in 18 months and increase the contributions to my retirement plan.

There are a few things at work in my situation, many of them emotional. I don't like being dependent on DH given our history, but that's the situation I'm in now. His income is much higher than mine, but he has financial problems that I know nothing about. We're essentially going to be roommates, not mixing our finances to achieve any joint goals for at least the next year.

When I bought the car, I felt like I 'should' have one at this stage/age in my life. Everyone I know is accomplished and settled, and I still have to take the bus or train to work in my 40s. I know how that sounds, but I'm admitting it so I don't end up on TMF a year from now with the same problems.

I know I won't get $16,000+ for the car if I sell it, which means I'll still owe the finance company. But I won't have to pay for gas, insurance, maintenance, etc. And the consistent payments should help my credit score, correct?

If I sell the car, should I do it on Craigslist? Take it to a used car dealer like CarMax? It has several scratches now. Should I get them repaired first, even though that will cost me?

Thanks in advance.

bmore
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Author: LLRinCO Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 307496 of 308881
Subject: Re: Should I sell my car? Date: 11/24/2013 8:07 PM
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Doesn't DH pay half the rent and utilites since moving in? If not, he needs to or boot him out and find a roommate who will pay.
Is your daughter working? If not, she needs to. My 16 year old makes $10 an hour babysitting. Your daugther can do that at night and on weekend and make enough so that you don't have to give her money, or at least give her less.
I would think that would be enough to make the car payments doable until the car is paid off. Then keep it.....forever. Why is your insurance so high? Tickets? Call around and see if you can get a better deal - try Geico.
If you sell it for less then you owe (and why is the price suddenly much lower when you just bought it yourself 2 months ago?) how will you make up the difference?

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Author: fredinseoul Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 307497 of 308881
Subject: Re: Should I sell my car? Date: 11/24/2013 9:53 PM
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I'm not going to address selling, but rather other ways for you to work the budget. I see a couple of things that should let you rework your spending.

First thing I see is $300 to daughter. If she is in college, she could find work. That would let you move 300 to other categories.

As to not having a car? Taking the train costs money too. Then there is the suck factor on rainy days, cold, etc. The car may be worth that, even if it isn't monetarily.

With DH moving in, (good luck here) You will be splitting rent. That should free up $490 for you right there. Whether or not you become dependent on him, its $490 for you to use.

fredinseoul

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Author: YewGuise Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 307498 of 308881
Subject: Re: Should I sell my car? Date: 11/24/2013 10:59 PM
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... new job (not a career, but good benefits, decent pay @ $42k annually...

Congrats, that's great!

Regarding the car, a 2009 Civic is a good car. Since you bought it certified, and given the interest rate you're paying, you didn't get a bargain; but you didn't grossly overpay either. I would recommend keeping it if you can, but that's your question, isn't it: can you keep the car? That depends on add'l info: What would your commute be like without a car, compared to how it is now? What are your other obligations, e.g., do you have other children? Why do you have "huge debt," and (more importantly) have the reasons for that been resolved? Can your parents help, or are you supporting them, or are they not a factor financially? Why are you separated, why reconciled, etc.? Would renting a room again be an option, if you have to choose between having your own apartment and having a car? Obviously, you don't have to answer any of these questions, they're just things that pop into my own mind as things I personally would need to know in order to form an opinion regarding whether it's better to keep or sell the car.

This jumped out at me: <DH's> income is much higher than mine...

If DH's income is higher, can he, instead of you, send the $300/mo to college daughter? Or is he already paying the lion's share, and the $300/mo is your own agreed-upon contribution? It just seems to me that if he's bringing only $490/mo to the table, you might be better off going back to renting a room.

...but he has financial problems that I know nothing about.

Even if you keep your finances separate (to that extent that's even possible when married, which depends in part on your state of residence), one person's problems will affect the other, so full disclosure is important. I suggest that you & DH visit a financial planner, who can review your entire financial situation and suggest (and help you weigh) different options. Try www.napfa.org

Of course, the more info you post here, the more suggestions you'll get here. Take what's useful, leave the rest.

Good luck!

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Author: vkg Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 307499 of 308881
Subject: Re: Should I sell my car? Date: 11/25/2013 12:46 AM
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I know I won't get $16,000+ for the car if I sell it, which means I'll still owe the finance company.

Do you have the cash to pay off the difference? You need the finance companies approval to sell. I have my doubts that you can sell the car without paying the balance of the loan.

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Author: jeffbrig Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 307500 of 308881
Subject: Re: Should I sell my car? Date: 11/25/2013 8:59 AM
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I know I won't get $16,000+ for the car if I sell it, which means I'll still owe the finance company.

It may not be quite that simple. With a lien on the car, I don't think they will release the title to be transferred to the buyer unless you find a way to pay the remaining balance. Remember, the loan is secured by the car.

I'm also a little curious how you ended up with a 12.5% loan. That seems exorbitant, even on a used car. When I bought my car (a 2006) last year, I was able to get 2.75% through my credit union. Regular banks were a couple of percent higher, but not double digits.

Insurance is very regional, and $92/mo doesn't seem unusual for places I've lived - especially if you don't have multi-car or multi-line discounts.

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Author: MetroChick Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 307501 of 308881
Subject: Re: Should I sell my car? Date: 11/25/2013 11:59 AM
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Others have given good advice, so I'm not going to add on topics they've already covered, but 1 item I would add is:

See if the new employer you're working for belongs to a credit union employees can join and if so, see if they would refinance the car loan at a lower rate.

Also, if you don't want to completely cut off the allowance you're giving the daughter, I think you should discuss with her dropping it by at least 50%. Unless there's a strong reason why she can't pick up some p/t work, she should certainly be able to make-up at $150/month reduction in allowance.

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Author: bmore Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 307502 of 308881
Subject: Re: Should I sell my car? Date: 11/25/2013 2:34 PM
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Thanks, everyone. It sounds like I have to keep my car since there's a lien and the finance company must approve the sale.

Here are the answers to some of the questions posed above:

--My daughter works for her school newspaper (Journalism major). The pay is minimal, but it helps. Her father pays most of her monthly bills as he makes about $30k more than I do. We split her expenses 2/3 and 1/3. She lives off campus, which is significantly less expensive than paying for a dorm and meal plan (she lives in another state). The school only has one or two upperclass dorms. Most students live off campus. The money is for rent, food, utilities, gas, etc.

--I filed bankruptcy two years ago, which is why my interest rate is so high. And the huge debt was a combination of credit cards, medical bills and back rent from an eviction (DH couldn't find a job for 10 months.).

--Since I live in the city, I actually expected my insurance to be much more expensive. I was prepared to walk away from the sale if the insurance was too high, but I was pleasantly surprised to get this rate. It's only about $15 more per month than what my daughter pays and she lives in a small southern town.

--My mom is retired, but lives on a low, fixed income. So she can't help. My father died when I was very young.

--Yes, DH is paying rent and utils. But he's also paying for other things right now like almost all of the groceries. I've been behind since struggling to come up with the $1,500 deposit on the car. I took out a loan to cover part of it, and he's helping me pay that back, too. So he's doing a lot. I regret that I didn't haggle for a lower deposit. I could go back to renting a room, but I would have to find someone to take over my current lease, and I'd have to be on the bus/train line.

--I'm about 15 minutes walking distance from the train, and I commuted before I bought my car. So it's doable. But it was becoming more and more of an issue not to have transportation. All of my friends are in the suburbs. I can't visit them unless they pick me up at the station and drive me home. I'm limited in where I can shop. I sprained my ankle and had to walk to the train station to get to the hospital because I had no car to drive downtown. DH has a car that I can use, but it's stick shift (a Jeep with no heat or ac), so I'll need a refresher. My car is definitely better on gas, reliability, etc.

--I don't have the cash to pay off the balance on the car if I sell it.

--I am a member of a credit union, but I thought I'd have to wait a year before another bank, etc. would consider refinancing me.

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Author: bmore Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 307503 of 308881
Subject: Re: Should I sell my car? Date: 11/25/2013 2:45 PM
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I also don't have any other children or extended family (aunts, uncles, etc.). Very tiny family.

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Author: Fuskie Big funky green star, 20000 posts Top Favorite Fools Old School Fool Ticker Guide SC1 Red Winner of the 2010 Rule Breakers Challenge Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 307504 of 308881
Subject: Re: Should I sell my car? Date: 11/25/2013 5:48 PM
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It never hurts to talk to the credit union, so don't wait a year until they say you have to.

Fuskie
Who thinks there is no point is dwelling over at why you are in the situation you are in, your focus should be on minimizing your expenses to ensure you have the resources going forward to meet all your obligations...

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Author: determinedmom Big red star, 1000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 307505 of 308881
Subject: Re: Should I sell my car? Date: 11/26/2013 1:57 AM
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I won't repeat most of what you already heard. I did want to talk about the value of the car. At this point you have no real idea what it would sell for. It would cost you nothing to go to CarMax and see what they would offer for it. I've gotten offers on a couple of cars from CarMax and was surprised at how high they were, generally higher than what I got from dealers who were offering me a trade in price.

I'm not saying that you should or shouldn't keep the car. I am saying that you don't know now if you could sell it for what you paid for it or not. I would think it was worthwhile to check.

If you could sell the car, an alternative might be to sell it and to buy another much less expensive used car if you are struggling to make the payments. You could potentially buy a much less expensive used car, and work on building up some savings and then potentially trading up that car later on.

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Author: Windowseat Big funky green star, 20000 posts Top Favorite Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 307506 of 308881
Subject: Re: Should I sell my car? Date: 11/26/2013 5:10 PM
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This has nothing whatsoever to do with selling your car, but I've been pondering this point and I want to say something.

My daughter works for her school newspaper (Journalism major).

With the job market the way it is, please urge your daughter to take a minor in a Non-Liberal Arts field. Something in the computer field, science, pharmaceuticals, something that will give her some skills she may be able to turn into a job. Journalism is getting hit hard, and I hate to think of her hunting for a job in a field that is declining.

Nancy

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Author: AmericanIdle Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 307507 of 308881
Subject: Re: Should I sell my car? Date: 11/26/2013 8:50 PM
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With the job market the way it is, please urge your daughter to take a minor in a Non-Liberal Arts field. Something in the computer field, science, pharmaceuticals, something that will give her some skills she may be able to turn into a job. Journalism is getting hit hard, and I hate to think of her hunting for a job in a field that is declining.

With the risk of going even further out on a tangent, I hope you all realize that math and science consisted of 3-4 of the original 7 Liberal Arts (depending on how you classify logic - let's say 3.5).

The point here is that any "Liberal Arts" education *should* already consist of a healthy dose of math and science. Now, "should consist" doesn't necessarily mean "does consist", but the world is an imperfect place.

AI

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Author: Windowseat Big funky green star, 20000 posts Top Favorite Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 307508 of 308881
Subject: Re: Should I sell my car? Date: 11/26/2013 9:27 PM
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With the risk of going even further out on a tangent, I hope you all realize that math and science consisted of 3-4 of the original 7 Liberal Arts (depending on how you classify logic - let's say 3.5).

Yes, I did know that. But I was using the term as generally understood in modern colleges and universities.

And I have lots of relatives who got their degrees in non-liberal-arts fields, and some of them are having a hard time finding work, so science, math and engineering aren't necessarily shoo-ins for jobs, either. But journalism is a declining field, and I worry about those who are majoring in it.

Nancy

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Author: ThyPeace Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 307509 of 308881
Subject: Re: Should I sell my car? Date: 11/27/2013 10:41 PM
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Funny, I agreed with the statement even though I knew the liberal arts include both math and science. They're great fields, but both highly impractical.

ThyPeace, BA in physics.

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Author: SeattlePioneer Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 307521 of 308881
Subject: Re: Should I sell my car? Date: 12/1/2013 6:43 PM
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<<When I bought the car, I felt like I 'should' have one at this stage/age in my life. Everyone I know is accomplished and settled, and I still have to take the bus or train to work in my 40s. >>

As you have discovered, once you spend money it can be hard to unspend it.

At a minimum, you need to think of some ways to put the brakes on impulse spending before things like this happen again.


Your reasoning above is that you should buy a car because you "deserve" it. That's poor decision making.


Regardless of what you do about the car, I think you should do a LOT of careful thinking about what you spend money on. You need to learn to make shrewd and smart decisions about spending money --- to have your rational side in charge of that rather than the emotional side.

But good luck! If buying the car proves to be a wake up call that causes you to think more clearly about spending, it may prove to be a good investment!


Seattle Pioneer

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