Author Topic: Dad bought me a car. Now he can't handle the $350 payment. What to do?  (Read 9479 times)

lightthefuse

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Hi Mustachians!  I'm new to the community and relatively new to the concept of early retirement.  I'm trying to set up my finances to place myself on that path, but this is a significant obstacle.  (I've bolded the important parts since this is a bit long.)

About me:
I'm a 20-year-old woman.
I live with my parents.
I'm currently unemployed, but I have a few prospects that have good chances of panning out with salaries around $30,000 pre-tax.
I have no savings.
Limited to no public transportation in my city (depending on exactly where you're going)


About my financial goals:
Resume undergrad sooner rather than later and pay my way through to avoid more student loans (currently I have just over $5,000), or at least greatly limit additional loans
Pay down a ~$2,000 debt I owe to a family member. There's no hard deadline; I'd just rather get it done.
Establish an emergency fund and other savings so that I can move out
Of course, begin working towards FIRE


About the car:
2011 Ford Focus in good condition with 31,500 miles
Financed ~$22,000 (horrible!) at 4.9% APR; monthly payment of ~$350
72 month term with 31 payments remaining; 56% payment progress; final payment Nov 2016
Payoff amount is slightly over $10,000
Private buyer value (KBB.com) is slightly under 10.5K


My dad is in his mid-70s, does physical labor full time, and brings home slightly under $30,000 a year. My mother (mid-50s) doesn't contribute much to the income as she's in school for her BSN/RN with slightly over a year to graduation, at which point my dad will stop working. As far as I know, they have incredibly limited retirement savings.

I love my car, but it was a terrible financial decision, and my dad is struggling to make the payments and handle all their other expenses. I was in college when the car was bought (surprise birthday gift). My dad bought the car because he anticipated that I'd complete my bachelors with consecutive semesters (not that I was made aware of this). I've been out of school for close to 2 years, and I'm aware that he now at least somewhat resents having to pay for the car, especially with their low income.

I truly don't want to take on the burden of this bad decision, but my parents could really use the extra money, and I'm the one who uses the car, after all. Should I...

- sell the car? As the payoff amount and the valuation are about equal, there would be no profit. We have one working car right now, so I'd need to buy myself another one (unless I find employment within ~10 miles, at which point I'd bike).  I'm prepared to get something very cheap and unattractive as long as it's reliable.
- keep the car, assume the loan from my dad, pay it off, and run the car into the ground?
- do something else?


I'm heavily leaning towards selling the car.  A well-known consumer finance advisor said that that the APR is reasonable for the term of the loan and that since I need a car, I shouldn't sell it.  He said that it would take only 45 hours a week at a part time job [EDIT: 45 hours is more than part time.  Doh.  Perhaps I misheard him.] to pay for the car.  He suggested that I take over the payments because it would teach me financial responsibility.  He also said that perhaps I should take out loans for school (when I go back) and pay for the car with that.

Two thumbs up if you got through that novel.  I'd appreciate any advice about this (or about student loans/finances in general).
« Last Edit: April 26, 2014, 06:47:33 PM by lightthefuse »

CarDude

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"- keep the car, assume the loan from my dad, pay it off, and run the car into the ground?"

This one. That Focus should last you 200,000 miles if you maintain it. It's true that there are plenty of cheap and reliable cars you can get for much less than 10k, but to get the safety features that come with the Focus (in particular, ESC and head/torso airbags) along with said reliability, you'll need to spend at least 8k (e.g., 2006 CR-V or 2005 Odyssey), and will be purchasing a vehicle with many more miles than your Focus has. Of course, if safety doesn't matter to you and you're simply looking for cheapness and reliability, something like a Tercel, Corolla, or Civic from the 90s can be had for around 2k in most parts of the country. If that sounds like what you're after, then yes, selling the car would be the better option.
« Last Edit: April 26, 2014, 06:23:27 PM by CarSafetyGuy »

phred

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A part time job doesn't generate 45 working hours a week.  Are you sure you didn't misunderstand?

Sell the car.  Get at least two, maybe three, pt-time jobs (or one full time combined with one part-time)- even McDonalds  within biking distance.  Save all you earn - no new fashions, no nights out with the girls.

If your major was something practical, spend the summer reviewing what you've already learned - before & after work. Return to college; no car & live in dorm

lightthefuse

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CarSafetyGuy - It's true that a similarly-featured used car would cost nearly as much as the current balance on the loan.  I wouldn't say that I don't care at all about the safety features (I'd like to avoid death for a very long time), but the prospect of shelling out 2K and not having to think about a car payment again is incredibly enticing.

phred - Thanks for pointing that out.  I didn't pay much attention to that portion of his advice and thus didn't catch the error.

"New fashions" and "nights out with the girls" have never been a problem for me, though my food budget has been out of control in the past due to eating out.

My intended course of study is definitely practical.  In my experience, dorm living is more expensive than apartment living.  Besides that, dorm living was barely tolerable for me for various reasons.  I know that convenience is snubbed around here, but dorm living is one of the few inconveniences I'd be willing to pay more (if necessary) to avoid.

Thank you both for your input.

Thegoblinchief

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You're not underwater, which is unusual. Considering you have ZERO income, sell it.

Get a job. Any job.

Commissioned retail and restaurants are probably going to be the best bet for $/hr. If you are mainly looking for seasonal work, landscape-related work pays okay ($10/hr).

pipercat

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Ideally, I think you should get a job and keep the car; HOWEVER, getting a job is imperative in this scenario.  If you look at the job prospects and truly feel like it may be awhile before you get one, sell the car.


Another Reader

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You left school two years ago.  What have you been doing since then?  How are you paying that student loan of $5,000 if you are not working?  In your folks' shoes, I would be more concerned about you not working and not pulling your weight than I would be about the car.

What you need to do is get a job and fast.  Take over the payments or sell the car if it's feasible to do so.  But the car isn't the real issue.  It's your lack of employment and no concrete plan for the future that is disturbing to me and probably to your parents as well.

mc6

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- keep the car, assume the loan from my dad, pay it off, and run the car into the ground?

I vote for this one.  It sounds like you live in such a place where you need a car to get work and get to school.  You need to get into both places ASAP.  This option can help keep peace within the family, which may also be worthy goal.

arebelspy

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I also vote to keep it (unless you're walk/bike distance from everything), simply to save on the insurance and gas.  But if you need a car, keep it and start paying it off like mad.

Also I want to throw out a guess that the advisor said "4 to 5 hours a week" at a part time job, not 45.  "4 to 5" sounds a lot like "45" if you say it out loud.

4-5 hours/week = 18-23 hours per month, which to make a payment of 350 means you'd have to be earning $15-20 an hour.  Maybe doable, maybe a slight exaggeration.  At minimum wage, you'd have to work 8-10 hours/week to make that $350/mo. payment.
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Beckyemerson

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SELL! You can't afford to spend 10k on a car.

Buy an old low mile small car. In my experience the best cars come from the following scenario. Grandma died and now their family inherited the car. They don't want/need it. It has low miles but it's old. Grandma was a stickler for taking care of it and she drove it twice a week and never drove over 35. I love this type of car. I had one and my friend just bought one. Just make sure you buy a small car not a boat sized car.

fixer-upper

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Re: Dad bought me a car. Now he can't handle the $350 payment. What to do?
« Reply #10 on: April 26, 2014, 09:14:52 PM »
Also I want to throw out a guess that the advisor said "4 to 5 hours a week" at a part time job, not 45.  "4 to 5" sounds a lot like "45" if you say it out loud.

4-5 hours/week = 18-23 hours per month, which to make a payment of 350 means you'd have to be earning $15-20 an hour.  Maybe doable, maybe a slight exaggeration.  At minimum wage, you'd have to work 8-10 hours/week to make that $350/mo. payment.

Assuming $7.25/hr, 48 hrs/month would pay the car note.  Rounding up for expenses, gas, taxes, etc, 15 hrs/wk would be a safe estimate.

lightthefuse

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Re: Dad bought me a car. Now he can't handle the $350 payment. What to do?
« Reply #11 on: April 26, 2014, 09:59:32 PM »
You're not underwater, which is unusual. Considering you have ZERO income, sell it.
Yes - before getting a look at the actual payoff amount, I expected the loan to be upside down, so that was a pleasant surprise.  Your phrasing suggests that your advice would be different if I had an income.  At what income level would you suggest I keep the car and pay for it?

You left school two years ago.  What have you been doing since then?  How are you paying that student loan of $5,000 if you are not working?  In your folks' shoes, I would be more concerned about you not working and not pulling your weight than I would be about the car.
I was employed full time within a few months of leaving school.  I have been living off of and paying the student loan with what I earned during that time.  The car payments (and insurance) constitute the vast majority of what my parents spend on my "needs," if you will.  I pay for my own gas, car maintenance, and 95% of the food I eat (which is very little) and I've consciously and stringently minimized my consumption of every other resource.  All this to say - besides the costs associated with the car, I've made sure I that I don't "weigh" very much.  I'm eager to make that final portion disappear.

I also vote to keep it (unless you're walk/bike distance from everything), simply to save on the insurance and gas.  But if you need a car, keep it and start paying it off like mad.

Also I want to throw out a guess that the advisor said "4 to 5 hours a week" at a part time job, not 45.  "4 to 5" sounds a lot like "45" if you say it out loud.
My car currently gets 28 to 30 MPG.  I'll have to compare that to the fuel economies of some cheap used car options.  Regarding the insurance, I was under the impression that newer and more expensive cars are associated with higher premiums, so wouldn't getting a beater reduce my insurance bill?

RE: the "45" misunderstanding - that's what I figured, as well.  Either that or it was an estimate for a month's worth of work and not a week's (as fixer-upper suggested).

SELL! You can't afford to spend 10k on a car.
That's what I think, too.  The type of income I could reasonably expect to garner in the next few years before I earn my degree would not be sufficient to reach my savings goals, provide for living expenses, and comfortably handle that payment.

Quote
Buy an old low mile small car. In my experience the best cars come from the following scenario. Grandma died and now their family inherited the car. They don't want/need it. It has low miles but it's old. Grandma was a stickler for taking care of it and she drove it twice a week and never drove over 35. I love this type of car. I had one and my friend just bought one. Just make sure you buy a small car not a boat sized car.
Although it would be a dream if I could find this type of car, I think my desired budget of $3-4000 reduces the probability of getting low mileage.  What would count as low miles, in your opinion?  What's the highest mileage you'd recommend for a used car?
« Last Edit: April 26, 2014, 10:54:06 PM by lightthefuse »

arebelspy

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Re: Dad bought me a car. Now he can't handle the $350 payment. What to do?
« Reply #12 on: April 26, 2014, 10:10:28 PM »
Sorry, scratch what I said about insurance and gas. Typing and thinking too quickly and two separate thoughts merged together so it said the opposite of what I wanted to say. :)
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CarDude

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Re: Dad bought me a car. Now he can't handle the $350 payment. What to do?
« Reply #13 on: April 26, 2014, 10:29:49 PM »
CarSafetyGuy - It's true that a similarly-featured used car would cost nearly as much as the current balance on the loan.  I wouldn't say that I don't care at all about the safety features (I'd like to avoid death for a very long time), but the prospect of shelling out 2K and not having to think about a car payment again is incredibly enticing.

I completely understand, and have been there. If 2k is where you want your budget to be, there are definitely reliable cars you can find there that shouldn't cost more than a few hundred a year in maintenance to keep on the road. If you were to take this path, however, you'd want to make sure you put the money you saved to work in building an emergency fund, if you don't already have one, and then knocking out that student loan.

lightthefuse

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Re: Dad bought me a car. Now he can't handle the $350 payment. What to do?
« Reply #14 on: April 26, 2014, 11:16:40 PM »
Certainly - I consider establishing an emergency fund and other savings to be a priority.  Should I continue to pay the student loan while I am enrolled in school or should I defer the loan upon reenrolling?

Much thanks to all who have responded so far.  Suggestions to keep the car surpass those to sell it 5 - 3.

La Bibliotecaria Feroz

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Re: Dad bought me a car. Now he can't handle the $350 payment. What to do?
« Reply #15 on: April 27, 2014, 06:20:05 AM »
Whether you should pay or defer depends on the interest rate, size of the monthly payment, and the rest of your financial picture. Personally, I always accepted the deferment because my interest rate was extremely low (1.68%) and our budget was very tight when I was in school and couldn't work as much.

onehappypanda

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Re: Dad bought me a car. Now he can't handle the $350 payment. What to do?
« Reply #16 on: April 27, 2014, 06:46:15 AM »
This seems like a pretty clear case of "sell the car". You can't afford it, he can't afford it, and it's a much nicer car than you need at this point in your life. You aren't saving on insurance if there's a loan on the car, because insurance on a cheap car that you own outright will be even less. Fuel economy is nice, but isn't going to make up for the money the car is costing in interest, especially if you get an old small beater and avoid driving unless you absolutely have to.

If you were in a better financial position, I'd say keep it and put extra money toward paying it off early. Since you're unemployed and in debt, you can't afford to do that. Sell it, get a beater, keep a little money in the emergency stash in case the beater breaks down. Put the rest of your money toward debt or going back to school.

tariskat

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Re: Dad bought me a car. Now he can't handle the $350 payment. What to do?
« Reply #17 on: April 27, 2014, 07:35:32 AM »
If you return to school and live off campus, you should probably not have payments at that point (sell car, get beater). I preferred off campus efficiency apartment living to dorm living, like you, but wouldnt have been able to do it had I had car payments, and I had reasonable rent for living alone. I have an old 96 ford that still brings me where I want to go most of the time;  it was 1400$ five or six years ago.

If you took over payments, how long could you afford to pay them without a job?  That might help you decide. Eg, if that's six months, it seems keeping while you look for jobs. If it's one month... Maybe not.

Daleth

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Re: Dad bought me a car. Now he can't handle the $350 payment. What to do?
« Reply #18 on: April 27, 2014, 09:36:30 AM »
I actually don't think your emergency is having this car. I think your emergency is not having a job. How long have you been unemployed? Have you been getting, or did you get, unemployment?

My advice would be to get a job--and if the prospects you mention don't pan out ASAP, then just get any job, including waitressing or stocking shelves at a grocery store or whatever; you can quit that job instantly if one of your prospects or some future one ends up panning out--and then assess your situation after you're employed. You may get a job that requires you to have a car, so don't ditch the car just yet. And since you don't have a job, DO NOT waste time right now going online or to car places looking for a reasonably priced used car--spend that time looking for a job. That is your #1 problem.

Once you're working, then you can reassess the car situation and make plans about your future education (what's your field, BTW?). For instance, it might make sense to keep the car and work until you go back to school, at which point you'd sell the Focus and replace it with a bike or a cheap beater of a car.

ShortInSeattle

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Re: Dad bought me a car. Now he can't handle the $350 payment. What to do?
« Reply #19 on: April 27, 2014, 11:14:02 AM »
Your Dad sounds like a generous man. Good for you for wanting to lift that burden.

I can see two possibilities:

1) Immediately get thee to a temp agency and to Craigslist and line up a paid gig, even if it is crummy and low paid and temporary.  This is just a stopgap. Put your money towards the car payment first and then use the remainder to save up for your eventual move-out.  Continue to work towards your desired job. As soon as you secure a regular job, pay off the loan before you move out from Mom and Dad's house. A $350 car payment plus housing would overwhelm your 30k income.

2) Immediately sell the car. Get thee to a temp agency and work towards your desired job. Save up for a lower cost car 3-4k and pay for it in cash.

On the one hand, you have more car than you can afford. On the other hand, you may need a reliable car to secure employment.

Good luck!

Daleth

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Re: Dad bought me a car. Now he can't handle the $350 payment. What to do?
« Reply #20 on: April 27, 2014, 12:33:34 PM »
Your Dad sounds like a generous man. Good for you for wanting to lift that burden.

I can see two possibilities:

1) Immediately get thee to a temp agency and to Craigslist and line up a paid gig, even if it is crummy and low paid and temporary.  This is just a stopgap. Put your money towards the car payment first and then use the remainder to save up for your eventual move-out.  Continue to work towards your desired job. As soon as you secure a regular job, pay off the loan before you move out from Mom and Dad's house. A $350 car payment plus housing would overwhelm your 30k income.

2) Immediately sell the car. Get thee to a temp agency and work towards your desired job. Save up for a lower cost car 3-4k and pay for it in cash.

On the one hand, you have more car than you can afford. On the other hand, you may need a reliable car to secure employment.

That's exactly the thing--since there's no good public transport in her town and she may not find a job within bikeable distance, I think it'd be shooting herself in the foot to prioritize getting rid of the car. Look at it this way: if she got rid of the car she would save $350 a month (and not really even that, once you factor in the need to come up with another few grand to buy a beater car). But if she got a job, even a minimum wage job, she would net at least $950/mo after taxes. What's better--saving $350/mo or earning $950/mo?! It's a no brainer!

I completely agree with you that she should look for temp jobs. Great idea.


Cpa Cat

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Re: Dad bought me a car. Now he can't handle the $350 payment. What to do?
« Reply #21 on: April 27, 2014, 12:52:25 PM »
Short term, I don't see how selling the car helps you unless you have money saved already for a cheaper car. So I suggest getting a job, covering at least $200 per month of the car loan to ease the burden on your father. Save any excess money to either pay off the loan or buy a different car when you sell this one. I lean toward selling this one, but you need a plan in place for replacing it.

While waiting for job leads to pan out, do the following: Solicit for odd jobs in the neighborhood. House cleaning, dog walking, lawn mowing, helping old ladies with errands. With a little effort, you should be able to find immediate opportunities to make $50 a week to contribute. In your spare time, make sure you are also doing these chores in your own home. Your parents will be less resentful if they see that you're making an effort to contribute to the household.

Clear up the car situation first. Then start saving for school. And try to continue to contribute to the household while living there. Once the car loan is cleared off, even $100 a month will be appreciated by your parents.

AccidentalMiser

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Re: Dad bought me a car. Now he can't handle the $350 payment. What to do?
« Reply #22 on: April 27, 2014, 01:04:14 PM »
Since you're just about even on the car (you can sell it for what you owe), you need to ask yourself just one question.

If I didn't own this car and I could buy it for 10k, would I even consider doing it?  If yes, keep it.  If not, SELL!!!

Continuing down a path just because it's uncomfortable to change is usually a bad idea.

I love, love, love my Focus, but you're in a bad spot.

lightthefuse

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Re: Dad bought me a car. Now he can't handle the $350 payment. What to do?
« Reply #23 on: April 27, 2014, 04:51:36 PM »
Whether you should pay or defer depends on the interest rate, size of the monthly payment, and the rest of your financial picture.
That makes sense.  I'll have to wait and see, then.

How long have you been unemployed? Have you been getting, or did you get, unemployment?

You may get a job that requires you to have a car, so don't ditch the car just yet.
I've been unemployed for nearly a year.  I didn't get unemployment.  I wouldn't sell the car before ensuring that I absolutely won't require it.

Quote
Once you're working, then you can reassess the car situation and make plans about your future education (what's your field, BTW?).
  I plan for my formal education to be in mechanical or electrical/computer engineering or computer science.

That's exactly the thing--since there's no good public transport in her town and she may not find a job within bikeable distance, I think it'd be shooting herself in the foot to prioritize getting rid of the car. Look at it this way: if she got rid of the car she would save $350 a month (and not really even that, once you factor in the need to come up with another few grand to buy a beater car). But if she got a job, even a minimum wage job, she would net at least $950/mo after taxes. What's better--saving $350/mo or earning $950/mo?! It's a no brainer!
That last part is especially salient.  It is true that even taking into account my low standards for employment, there are very limited options within biking distance.

While waiting for job leads to pan out, do the following: Solicit for odd jobs in the neighborhood. House cleaning, dog walking, lawn mowing, helping old ladies with errands.
This is a good idea - thanks.

Since you're just about even on the car (you can sell it for what you owe), you need to ask yourself just one question.

If I didn't own this car and I could buy it for 10k, would I even consider doing it?  If yes, keep it.  If not, SELL!!!

Continuing down a path just because it's uncomfortable to change is usually a bad idea.
This is a good way of looking at it.  The answer is no, I wouldn't consider buying this car for 10K.  I definitely agree about the pitfalls of avoiding necessary change.

--  --  --  --  --

The posters who have given reasons that I should sell - from a strictly financial standpoint, I agree with all of you.  However, most recently, CarSafetyGuy's post got me thinking more about the aspect of safety.  Again, I don't relish the prospect of taking over this payment, and swapping out for a beater is the best choice financially.  But what about reducing death risk?

You know how a lot of people think "It won't happen to me?"  I'm almost the opposite.  I tend to consider certain dire and grave possibilities.  The people who "it" (i.e., maiming, serious injury, and/or death from car accidents) happened to most likely didn't think it would happen to them...and, guess what?  It did.

It's pretty morbid, but it's just the truth.  It's going to happen to some people; it happens all the time.  And outside of how I conduct myself in my own car, I have very limited control over whether that happens to me.  Since this is the truth, would it not be most prudent to drive a death-trap that's at least outfitted with as many safety elements as I can afford?

I just keep thinking about if I got rid of the car and the beater I bought didn't have ESC or curtain airbags...and 7 months down the road, that's what would have saved my life.

...this thread just took a dark turn.  I truly appreciate the advice that everyone has offered.  It looks like at this point, my decision will be most influenced by what I conclude about the relative values of cash/comfortable finances and life-extension precautions.

If you believe that I'm mistaken about the life-saving value of airbags and other safety features, or if you have any opinions about my paranoid-ish outlook, please share!  I'll also seek scientific studies about the effect of safety implements on the rates of injury and mortality.
« Last Edit: April 27, 2014, 05:22:55 PM by lightthefuse »

fixer-upper

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Re: Dad bought me a car. Now he can't handle the $350 payment. What to do?
« Reply #24 on: April 28, 2014, 12:03:01 AM »
The posters who have given reasons that I should sell - from a strictly financial standpoint, I agree with all of you.  However, most recently, CarSafetyGuy's post got me thinking more about the aspect of safety.  Again, I don't relish the prospect of taking over this payment, and swapping out for a beater is the best choice financially.  But what about reducing death risk?

Safety features are a nice "luxury" to have in a car, but they're not a necessity.  The time to decide on the safety features is when you can afford to put a roof over your head and pay for the car on your own (preferably in cash).

La Bibliotecaria Feroz

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Re: Dad bought me a car. Now he can't handle the $350 payment. What to do?
« Reply #25 on: April 28, 2014, 06:02:29 AM »
I agree with the posters who recommended getting a job first, then thinking about getting rid of the car. Personally, I am comfortable with driving an older car, yes, even with my kids the backseat. (They're certainly safer than I am in those space-age carseats.) Within a few months, I think you'll have an idea whether you can realistically pay off the loan or would be better off downsizing or at least getting an earlier model.

And I second the suggestion to try a temp agency. I used to work for one "when I was your age" (literally!) and it was great experience and made for some great stories.

Daleth

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Re: Dad bought me a car. Now he can't handle the $350 payment. What to do?
« Reply #26 on: April 28, 2014, 06:28:43 AM »
Safety features are a nice "luxury" to have in a car, but they're not a necessity.  The time to decide on the safety features is when you can afford to put a roof over your head and pay for the car on your own (preferably in cash).

I could not disagree more. Being alive and not disabled is much more important--incomparably, exponentially more important--than being financially secure. And even from a strictly financial perspective, there is no faster or more devastating way to be financially screwed FOREVER than by becoming disabled, especially if it happens when you're too young to have disability insurance or good savings--and disability is a MUCH more likely outcome of a car crash than death.

My vote is to try and keep this car, at least for the short term, and use it to make money. In other words use it to get to job interviews and jobs; perhaps sign up for Lyft, if that exists in your area, and use it to ferry paying passengers around; use it to help you do odd jobs (like bringin yourself and some cleaning supplies to people's houses to clean).

Because, again, the real financial emergency is NOT that you have a $350/mo car--it's that you don't have a job. And you will probably need a car to get and keep a job, so just focus on fixing the job situation. When the time comes to go back to school, you may not need a car at all anymore, in which case you can sell it then.

DoctorOctagon

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Re: Dad bought me a car. Now he can't handle the $350 payment. What to do?
« Reply #27 on: April 28, 2014, 08:30:00 AM »
I also received a 'new-expensive-car' gift like you did.  2013 Subaru Impreza limited, great vehicle with great safety features.  I really appreciate the gift from my family, but have considered selling it because of how much cars depreciate in value... and this car was a gift paid for in cash.

If you sold your ford focus, bought a $3,000 honda civic, and put the $300 a month extra you'd have left over into a taxable stock portfolio just buying shares of index funds, you'd knock off three working years from your career.

The fact that the car is new, reliable, and safe makes it a harder decision to sell, but ALL of that is trumped by the fact that it was financed and not paid cash.  Your car will be worth $2,000 in today's money in ten years, but if you traded your car NOW for a $2,000 used vehicle and invested the saved money relentlessly in value stocks, you might end up with $50,000+ in ten years.

Cpa Cat

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Re: Dad bought me a car. Now he can't handle the $350 payment. What to do?
« Reply #28 on: April 28, 2014, 08:47:56 AM »
I think people are overstating the safety of newer cars. Is a 2011 Ford Focus safer than a 1974 MG? Ok, yeah, I can get behind that. But those aren't the only two choices.

Is a 2011 Ford Focus safer than a 2005 Honda Civic? Now the difference is not so certain. And yet the Honda Civic will cost less than $5000. Less if you can find one with a few scratches and dents.


Exflyboy

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Re: Dad bought me a car. Now he can't handle the $350 payment. What to do?
« Reply #29 on: April 28, 2014, 09:05:49 AM »
I bought a '99 Dodge Neon last year for $350... It needed some work (which I did myself) but even if I had done mothing it would have lasted a couple of years.

neons (Prior to 2000) get 36 mpg!

Thats just one example... Selling the car is the obvious choice.

Frank

James

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Re: Dad bought me a car. Now he can't handle the $350 payment. What to do?
« Reply #30 on: April 28, 2014, 09:27:01 AM »
I think the pros and cons have been well hashed out in this thread, so I won't make this long.

My suggestion is to get a bit more of "hair on fire" urgency to your situation, which it sounds like you have to some extent already. My gut (after reading all you have said above) is to recommend selling the car. But obviously first figure out your transportation plan. Can you bike? Scooter? Should you buy a cheap car before selling? etc

Safety is not a real issue here, unless there is more that you haven't said. No, death is not likely a result of you not keeping this car.

As others have said, income should be your top priority at this point, but when your hair is on fire you have a lot of top priorities. You can work on multiple aspects at the same time to get you on track financially, and get your father off the hook for this vehicle.


Best of luck!

lightthefuse

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Re: Dad bought me a car. Now he can't handle the $350 payment. What to do?
« Reply #31 on: April 28, 2014, 10:37:40 AM »
And I second the suggestion to try a temp agency. I used to work for one "when I was your age" (literally!) and it was great experience and made for some great stories.
I'll definitely consider this in my ongoing job search.

If you sold your ford focus, bought a $3,000 honda civic, and put the $300 a month extra you'd have left over into a taxable stock portfolio just buying shares of index funds, you'd knock off three working years from your career.

The fact that the car is new, reliable, and safe makes it a harder decision to sell, but ALL of that is trumped by the fact that it was financed and not paid cash.  Your car will be worth $2,000 in today's money in ten years, but if you traded your car NOW for a $2,000 used vehicle and invested the saved money relentlessly in value stocks, you might end up with $50,000+ in ten years.
Yes, there's definitely a steep opportunity cost involved with keeping the car.  Thanks for pointing this out with numbers.

Is a 2011 Ford Focus safer than a 1974 MG? Ok, yeah, I can get behind that. But those aren't the only two choices.  Honda Civic will cost less than $5000. Less if you can find one with a few scratches and dents.
Of course, I acknowledge that these aren't my only two options.  Actually, directly after I made that post, I looked into the IIHS data for my car and for a few others.  A 2006 Civic has a better safety rating than my car does, and it looks like I'll be able to find it for around 5 grand or less in my area, just as you said.  This way, I'll get rid of the payments (after saving up in cash, of course) and not have to sacrifice safety features.

I bought a '99 Dodge Neon last year for $350... It needed some work (which I did myself) but even if I had done mothing it would have lasted a couple of years. neons (Prior to 2000) get 36 mpg!
Wow, that's quite a deal.  I wasn't aware they have such good fuel economy.  Hopefully I'll have such good fortune in my car search.

Safety is not a real issue here, unless there is more that you haven't said. No, death is not likely a result of you not keeping this car.
I'd agree that death is not necessarily a consequence of getting rid of this particular car.  I was mostly concerned about the greater risk associated with a lack of certain safety features.

-- -- -- -- --

I think the route I'll go with is to earn enough money as quickly as possible to buy a car outright.  At that point, I'll sell my car.  I didn't think I'll be able to find a car with comparable safety features for cheap, but that's not the case.  In particular, if I can find an '06 Civic, I should be much better off.

Thanks again to all!

homeymomma

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Re: Dad bought me a car. Now he can't handle the $350 payment. What to do?
« Reply #32 on: April 29, 2014, 01:41:36 PM »
Good decision! Selling your sole means of transportation to employment without income/money to get a new one would be foolish in the extreme!