Need car / debt advice. What to do?

[wands]

Hi folks, long time reader and first time poster.

I own a 2010 Silverado Crew Cab with 90k miles on it.  I currently owe 20,200 on it.  Trade in value is about 14000 and street value approx 15500.  I purchased this as part of my investment in helping a friend with a business.  Long story short, business got sold and i am left with the truck.  (I am glad that part is over)

Now, i have asked to be compensated for my investment that happened on good faith and was ultimately a poor choice on my part.  Lessons learned.  I will be receiving approx. 5k in the next few weeks to help offset the price of the car.  I am thinking i might need another 1k safety to make sure i can get rid of this horrible 448 payment. 

Also, i would need to purchase a new car for about 3k.  (scion, toyota, etc with 35+ mpg)

So that is about total 8k of expenditures to right this wrong. 

The other option, and i think i know the answer, is that i pay off some of our current credit card debt which is at 17% (approx 13k left.  We have paid off about 7k in the last few months) and continue to pay for the truck through my own business as i have so far until my debt on it is more inline with what i owe.  Either way i paying for it and its poor mileage. 

So
20200 owed on car
approx 5 to 6k to get out of it and its 15mpg fuel efficiency
spend another 3k on a new used car with higher efficiency
Total approx 9k.

vs

Send all that money to credit debt and continue to make payments on truck through my company.

I think i know the answer, stop the bleeding now, but all the money will be gone.

Any thoughts? 
( i know i am not counting lower insurance costs and higher maintenance on the bigger vehicle.)

Thanks in advance everyone.

[NoStacheOhio]

Are you able to take the truck as a tax write off? I think you really need to run the numbers on the different scenarios. Gas is cheaper than usual at the moment, so the 17% interest might be the first thing to eliminate, but you're going to need to run the numbers yourself.

[ketchup]

Are you able to take the truck as a tax write off? I think you really need to run the numbers on the different scenarios. Gas is cheaper than usual at the moment, so the 17% interest might be the first thing to eliminate, but you're going to need to run the numbers yourself.

Conversely though, trucks and SUVs are a bit overvalued and easy-to-sell with low gas prices.  So it could be a bit of a wash.

[Frankies Girl]

Holy crap, dude. 17% interest on a credit card and underwater on a ridiculous giant truck. Wow.

What is the interest on the truck payment? If it's under 17%, then it is not the priority and you should be using every penny that is not for absolute necessities to pay the credit card off ASAP. Like no going out to eat, no new anything, no beers with the buddies... every single penny on that credit card debt.

And then sell the stupid truck for whatever you can get for it and every single penny towards whatever amount you'd have left on the loan ASAP.

I would seriously be freaking the hell out about this - working two jobs or all the overtime I could get, selling off any toys I had that could bring in money and living on beans and rice until both debts were gone. This is crazy hair on fire debt - time to get really serious about killing it.

ETA: I would save back about 1K for emergency funds if you don't have any, but yeah, all money on debts otherwise.

[wands]

Truck interest rate is at 6.5%

All the toys are for sale, though there aren't many as I have been slowly selling off things for the last 18 months.

We barely do dinner and I don't go out with the buddies.

We are even moving out of our rental and in with the in laws at the end of this month.   (55k in school loans also, but one thing at a time).

I don't freak out about things. Make a plan and move ahead. I don't regret past decisions just looking forward to correcting to a better sustainable course.

All areas of expenses are getting looked at, but these two are my priorities.



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[lthenderson]

If it was me, I would get rid of the credit card debt first and keep the truck. It isn't the most efficient on gas mileage but we have cheap gas prices right now and it is still functions for getting too and fro.

[wands]

The credit cards can be gone in 2 months if i apply the 5k plus money from my taxes.  (It would probably make us feel better)  It pains me to know i would need about 6k just to get out of the car.  But, its either now or later.  Financed car means more insurance and in this case, more gas.  (448 payment a month sucks too)

[Conjou]

I like your attitude about making a plan and moving forward. Nothing to be gained by regret or worry anyway. There is something super sucky about a bad vehicle choice and paying monthly on it, but like the others here have said, I think you gotta hit the credit card debt first. Chip away. Lots of stories on this forum about people in similar circumstances getting it all on track again. Good luck!

[JLee]

I would transfer your outstanding credit card balance to something like this and close all of your other cards.  Stop using credit cards for anything and pay $1k/month towards this one, so it'll be completely paid off before the 0% period ends. Pay anything extra towards the truck loan.  Once you get to the point where you would be able to pay the truck off if it were to be sold, list it for sale (e.g. if you can get $15k for it and you owe $19k when it sells, make sure you have $4k available to pay it off upon sale). Put the extra $5k you will be receiving towards the truck as well, since your credit card debt is no longer causing you interest fees.