Debt help please!!

[tokenlubav]

There is a saying one lives and learns....
I am living, learning and now regretting a stupid financial decision I made a few years ago, and would
appreciate some help on how best to deal with my dilemma.

The good side is I now realize that what I did was stupid and I surely won't make the same mistake again.
That's positive isn't it? I'm 40, soon to be 41. I'm married with 3 kids and have been a realtor for the past
2 years, working hard every day at building my business. My wide is at school working towards a social worker's
degree. We need two cars in our family, with 25-mile (one way) car pools, school etc.

In May 2012, I was living in Chicago and purchased an overpriced 2009 VW EOS 2-door convertible from
a dealer in Chicago. At the time, I had a nice 2005 Honda Accord that ran well and that I owned free
and clear - it was a gift to me from a family member. I sold the Honda to Carmax for $8k and used $3,000
of the money I received as a down payment on the EOS. The rest was spent on living expenses etc.
I took a 6-year car note with payments of $376 per month at 4.6% interest. I know, I know, I know....
what I did was very stupid. I didn't think so then, but I absolutely realize that now. But that's why I'm here...
After spending some time and partaking of financial wisdom on this board and others, I decided that
perhaps I should try and get out of this car note if at all possible. My payoff as of today is $12k and I have
34 months of payments left at $376 a month. The car has 50k miles. It is clean, but not in pristine condition
- it has a couple of small door dings, a few small scratches, some normal signs of minor wear and tear.
It lived in Chicago from 2009 to 2013 and was driven in the snow and salt, although that doesn't seem noticeable.
More problematic is the fact that the car was in a freeway accident a few years ago and the repair bill came
to about $6k - honestly the damage was very minor overall, front fender, headlights, etc. No frame damage at all.
It was repaired by the dealer. Looking at Craigslist, other cars of similar vintage are selling for between $5,000 - $10,000.

My payoff is $12,000, but I don't believe I will get that for the car. I'd be lucky to get $10,000, but a more
realistic figure is in the $8,000 - $8,500 range. So, I will most likely have to pay in somewhere between $2,000 and $4,000
to get out of this car note. Also, I need the car on a daily basis and it may have to spend a day or two in a shop
getting detailed buffed and polished if I were to attempt to sell it.

My thought going forward is to buy a cheap higher mileage, Japanese or Korean car for under $3,000 to use
in my real estate business for the next couple of years. Of course, the thought of being a realtor driving in this type of car
is not exactly super appealing even though it may be financially prudent. You know, Realtor, image, etc.

I have about $20,000 in savings invested in a Vanguard....account.

As I see it, I have three options:

OPTION 1. Keep the EOS and keep making payments of $376 per month for the next 34 months.
I will then have paid a total of $31k for the car by the time the note is paid off. Wow - that's a lot!
I should be able to get about $3,500 if I sell it in 3 years time. I like the car - it's fun to drive, although not practical
as a family car and if I have more than 1 adult passenger, but it sure is nice when the roof's down!

OPTION 2. Spend a few hundred dollars getting the car cleaned up nicely, buffed etc. and try to sell
it for as much as I can get. If there's a shortfall, I will have to withdraw between $2,000 - $5,000 from my savings
to pay off the car loan and pay for the stupid decision I made in 2012. Then I would buy a car to replace it, which will cost
me the price of purchase plus the debt payoff, and probably be a significant downgrade in the type of car I drive.

OPTION 3. Try to lease/buy another car and roll the negative equity in the EOS into the new car. This is my least
favorite option, as I am pretty gun-shy about getting into another car-payment deal right now.

My wife's car is a 2001 Toyota Sienna mini van with 130,000 miles - she has to transport 8 kids in this car in a
carpool arrangement every day. The Sienna is not doing so well mechanically - we have to add 3 quarts of oil to it
every week. The timing belt hasn't been changed. There are squealing fan belt noises upon start up. The shocks and struts
need to be replaced. The car smells bad inside - mold or mildew in the carpets that we've never been able to get rid of.
The car is paid off, and isn't really costing us anything (Jiffy Lube gives free top offs, even 3 qts a week). My wife really would
like out of this car and I can't blame her. However, she wants a Honda Pilot, which has 8 seats and doesn't have the minivan
stigma. Just not sure how we are going to do this all. We have "car issues", I'm sure you'll agree!

I have not brought up my student loan debt that has been in deferment status for years. That will be the next topic of discussion.

I would appreciate some input as to the best solution for me at this point.

[seemsright]

With the recent VW scandal...I think you might have a hard time selling your car for anything.

Your wives car needs some work. Take it in and see what the cost would be to fix the issues it is having.

With you being a Realtor...how much money is in your Hill and Valley account? And how many months can you go if you sold no houses?

I think there is way more factors to your equation than to just trade cars around. Yes you need to figure out how to get out from under your car payment there is no doubt about that but your wives vehicle moves 8 children around with engine issues...this to me (I am a mom of one) would be a much bigger issue than a $400 month car payment.

An idea...this situation is a kick in the butt and needs to drive you to hustle and sell more houses than you ever have to earn some extra cash, do side work, what ever you can to get out from under both cars.

I am not sure I would touch the investment accounts personally.  I would not want to take away from my future for my actions today...esp when you could 'just' sell more.



 

[lbmustache]

So, a few things.

VW scandal means the price of VWs has dropped slightly. Not by much (at least the gas ones) but it's still a slight hit.

Are you living in a cold place? This means that no one wants a convertible in the winter, meaning it will be harder to sell.

VW was offering a $2000 owner loyalty bonus if you traded in to another VW. You could get a base Jetta (maybe around $16k all said and done?) but I don't know how that will affect your payments or anything like that, and it means you still have a car payment.

Why did you let the Sienna get to that condition... I would first check how much all the repairs are going to cost. And why would she want a Pilot when she has to transport 8 kids; it only holds 7? Can you get a cheaper Korean minivan or something like that?

I'm going to follow to see what others advise. Basically you have two shitty cars and not a whole lot of money.

[Guses]

Would you buy your current used EOS for 12,784$ (minus whatever you would get for selling it in the far future) right now? If you don't think it is a good value, you basically have to sell it because it will cost you at least this to keep it another 34 months.

With the VW scandal, the convertible in winter...etc, probably the dealer is the one that would pay the most for the car if you trade-in. With a base used golf or jetta, you might be able to simply trade in and not owe extra money. YMMV. I don't think buying a new car is a good solution.

Downgrading to a privately sold used car means paying for the car AND the difference between the note and the EOS sale price + transaction fees (if applicable). Unless you go really low end, the final "price" of the used car is likely to be pretty high still.

Can you reconsider the two car setup? Any chance your kids can carpool with other kids' moms?

Sorry I cant be more helpful, it seeems to be a pretty tough situation.

[Argyle]

I'd keep the car and drive it forever.  Keep it looking spiffy so you can drive clients in it.  Pay off the loan early if that saves you interest.  Meanwhile, attack the debt in other parts of your life.  Write this one off as "Now I know."

[Jack]

Everybody, please note that an Eos is a hardtop convertible, so it's not as bad in winter as y'all are assuming.

However, I say sell it because, as both a family man and a real estate agent, a 2-door car does not fit your needs. (I assume you drive your clients around to view houses, and that at least some of them get annoyed at having to climb into the back seat.)

This is going to sound slightly crazy, but I suggest capitalizing on the VW scandal by trading your de-valued Eos in for an even-more-devalued (used) TDI Jetta or Passat. Being a real estate agent means (I think) that you unfortunately need slightly more "prestige" than a Hyundai or Toyota offers, but an actual luxury car would be irresponsible. (For a real estate agent not in the midst of a financial crisis, I'd suggest a (used) BMW 328d or Mercedes E-class BlueTEC.) Of course, if you don't drive clients around, none of this applies and you should get a $3K Hyundai Accent or something.

You should replace your wife's van with another minivan (not SUV or full-size van, unless you get an absolutely screaming deal) that's not necessarily newer or with fewer miles, but which is at least less broken.

[tokenlubav]

Yes, it is a hard-top convertible. I live in South Florida so the winter is actually the only time when having the top down is enjoyable. From November to February its amazing. Rest of the year it's pretty hot.

I typically don't drive lots of people around - I try to be a listing agent - but there is are occasions for sure. Either way, I'm still going to be pulling up to and away from client's houses and yes, unfortunately image is something that some people consider when choosing an agent. Side note: A really successful guy in my company once told me that when he got started he bought a nice (used) Mercedes, a fancy watch, and a fancy pen. Those 3 things seemed to have some sort of role in his becoming successful, based on other peoples perception of his image.