Mustachian Car Question: Should I Sell?

[k00kla]

Hello Mustachians!

Question for you.  My wife and I currently have two cars.  Both of them are Honda FITs and both were purchased new (this was before I discovered the Mustachians).  The first one is a 2010 sport model and it is paid off in full.  We just purchased the new one in July because my wife needs transport of her own.  It was a last year's model and I put $5000 down and got a 6 year loan at .9% interest, which I figured was a pretty good deal.  Now, my wife desperately wants to quit one of her two part time jobs because it's a really bad environment and she needs to get out of there.  She is afraid to leave because of the car payment.  So, now that I'm reading this blog, I'm thinking of ways to resolve this issue.  We could go ahead and pay off the car, but .9% is really cheap and it frees up our money for other things.  The other solution I'm considering is to buy a $5000 used car with cash, then sell the new car and take whatever hit comes from the depreciation but no longer have a car payment and still have two cars.  OR, just keep the car and hold things together until she gets another job, which I can easily afford to do.  Any thoughts?

Thanks!

[Dicey]

1. If you have the money to pay off the car, why not just continue making the payments?

2. Why not consider selling the older car (less of a depreciation hit) instead of the newer one?

3. Most importantly, what does this payment represent as a percentage of your budget?

My thought is that the car is not the real issue, if you actually have the savings to pay it off. Time to sit down and have a heart-to-heart with your wife. You say you can survive on the lower income until she lands another PT gig. Unless your wife has a habit of desperately wanting to quit jobs, I'd say encourage her to listen to her gut. That's what savings are for.

[nereo]

Hello K00kla

My first suggestion would be to ask yourself whether you can get by with only one car.  Often people think they absolutely "need" two cars, but find there many ways to get by with just one (bike, bus, walk, carpool, etc).  That's the route my and my SO took.
That said, 0.9% is a fantastic loan but what you probably paid, what, ~$18k for a new Fit?  You could sell the one you have, purchase a used fit for $8-10k and put several grand in your pocket.  IF you keep the second car at all.

N

[RWD]

Welcome to the forums!

I like to think of cars and their respective loans as separate things. It helps with perspective. So disregard how much is owed and decide if you want the car(s) given their current market value. In your case (values are approximate):

Cars:
2010 Honda Fit - $11k
2013 Honda Fit - $13k

Loan - $11k

So, let's say you had $13k in cash ($24k minus $11k) but no cars. Would you go out and buy your two Honda Fits again?

My personal suggestion would be to let your wife quit and then sell one of the Fits. With your low interest rate and similar market values between the two I'd keep the newer Fit and sell the 2010. Then if you find yourself in need of another car again in the future look for a nice used one.

[k00kla]

Thanks for the welcome and thanks so much for the thoughtful answers.  Maybe you're right, Diane.  Maybe the car isn't the problem.  And good point two of you made about selling the older one for less depreciation damage.  That's a good idea.  Unfortunately, we do need both cars.  We got by with one for 2 years and believe me, the wife is so much happier now that she can get around on her own.  I've looked for public transit routes to work, but they aren't practical from where live.  I'm even planning to try to find a safe bike route to work when spring comes.  It's about 18 miles each way.  If that doesn't work, I'm prepared to buy a scooter and use that.  Anyway, all these suggestions are really helpful.  Thanks again.

[CanuckExpat]

I'm even planning to try to find a safe bike route to work when spring comes.  It's about 18 miles each way.  If that doesn't work, I'm prepared to buy a scooter and use that.  Anyway, all these suggestions are really helpful.  Thanks again.

I think this is a good idea and point here. The fundamental problem isn't that you don't know what your second car is, it's that you are in a situation where you "need" two cars. I would re-asses, one car is a wasteful luxury that is nice to have for some purposes, but two cars is just pushing the limit, especially if you are not in a situation to afford it.