Author Topic: Financial dilemma advice appreciated.  (Read 3028 times)

AustinCP

  • 5 O'Clock Shadow
  • *
  • Posts: 3
Financial dilemma advice appreciated.
« on: November 05, 2014, 09:43:24 AM »
Hello,

First I would like to say thanks for viewing my thread and to mention that I am in just a bit of a difficult situation. As it sits right now I'm going to college full time while I work, pursuing an Accounting degree. My financial situation isn't exactly horrible but it could definitely be better. I'm 24 years old and I co own a house with my sister.

My financials look like this currently I have an income of 2400 a month. I have a car note for 430 the car is valued at about 15000 and I'm down to 14604 with an interest rate of 4.39 3 years left on the loan. I have a personal loan with about 7200 left with 2 years remaining I make a monthly payment of 300. Here comes the tough part, I also have a credit card with a balance of 5200 I try to pay around 150-200 a month. Insurance isn't bad it's 78.00 a month. The rent that I split with my sister is 550.

Now my issue is that for the longest time I've been trying to develop a plan of attack on with to tackle first in order to achieve financial freedom. I should mention i also have a payment of about 175 a month for my half of utilities.
I do not live close to school so selling the car and riding a bike would not be an option. We also do not have public transit, although I have often contemplated selling it and buying a car from Craigslist cash. I have about 4000 saved. Any positive advice is appreciated.

AustinCP

  • 5 O'Clock Shadow
  • *
  • Posts: 3
Re: Financial dilemma advice appreciated.
« Reply #1 on: November 05, 2014, 09:48:46 AM »
Also would like to mention that I've been a long time lurker of the blog and forgive me if I should have posted an intro first.

skunkfunk

  • Handlebar Stache
  • *****
  • Posts: 1057
  • Age: 34
  • Location: Oklahoma City
Re: Financial dilemma advice appreciated.
« Reply #2 on: November 05, 2014, 10:05:45 AM »
Pull the trigger on selling that car. That's a ridiculous car payment, ludicrous even. This is a bit of the pot calling the kettle black, as I have a car payment for my wife's car that is $200 (it's the one battle I didn't win her over on), but the full coverage is a killer too. $79/month insurance is huge.

So after it's sold, pay cash for a decent beater. Old honda civic or ford festiva, something with great mileage to limp you along while you pay down debt. You'll have to learn to work on it (probably will need brakes, oil change, shocks, that kind of thing.) Buy a bike, I know you say you're too far away but you can use it to get around campus, or even e-bike your way there, whatever. Get one and use it whenever you can. If you're too far to bike anywhere, you live too damn far away from whatever you're doing and might need to move.

Cut other expenses. Might need a full case study.

After making all those cuts, use the money on a debt snowball. Start with highest interest, which is probably the credit card. Pay every dime you can get on it, then when it's done move on to the next debt. After that high interest debt you've got is all gone, you can worry about what to do with your suddenly enormous amount of cash flow. After selling the car, I figure you should have ~$1k extra to throw at debts per month at the beginning of the snowball.

AllieVaulter

  • Bristles
  • ***
  • Posts: 304
  • Age: 36
  • Location: Portland, OR
Re: Financial dilemma advice appreciated.
« Reply #3 on: November 05, 2014, 10:08:01 AM »
I would do whatever you possibly can to get rid of your debt as fast as possible:  http://www.mrmoneymustache.com/2012/04/18/news-flash-your-debt-is-an-emergency/

Sell your car and get a decent used car.  Start paying down your highest interest rate loans next.  If you can tutor or something on the side to make some extra money, do it and put all that extra money towards your debt.  Stop buying things (new clothes, coffee, eating out, movie theater tickets, etc) until you've gotten rid of your debt. 

Obviously it's going to be uncomfortable, but being debt free feels amazing.  And it opens up all sorts of opportunities that you're missing out on.  Good luck!

AustinCP

  • 5 O'Clock Shadow
  • *
  • Posts: 3
Re: Financial dilemma advice appreciated.
« Reply #4 on: November 05, 2014, 10:29:39 AM »
Thank you for the great responses, I would have thought to target the credit card debt first. However the vehicle does seem like a much larger issues. I will take care of that and do as suggested and then go in order from highest to least.
Any tips on selling a car with a loan on it, Should I go through a dealer or post it on Craigslist and wait for someone to contact me?

RichMoose

  • Pencil Stache
  • ****
  • Posts: 965
  • Location: Alberta
  • RiskManagement
    • The Rich Moose | A Better Canadian Finance Blog
Re: Financial dilemma advice appreciated.
« Reply #5 on: November 05, 2014, 10:54:22 AM »
Thank you for the great responses, I would have thought to target the credit card debt first. However the vehicle does seem like a much larger issues. I will take care of that and do as suggested and then go in order from highest to least.
Any tips on selling a car with a loan on it, Should I go through a dealer or post it on Craigslist and wait for someone to contact me?

I would find a fair market value and post it on CL. When you sell it, pay off your loan. Try and avoid dealerships like the plague, you will be better off financially. After you sell, buy a beater. I still smile whenever I see my friend drive her 198- Mazda 323 hatch that she saved from the crusher for $200 in high school. She spent less than $500 fixing it up and hasn't done anything other than oil changes since.

Then with the leftover cash, pay off your highest interest loan (likely your credit card). See if you can take advantage of a 0% balance transfer promo to help maximize your payments.

You have a bit of a "hair on fire" situation here and now's the time to fix it!

mike3725

  • 5 O'Clock Shadow
  • *
  • Posts: 12
Re: Financial dilemma advice appreciated.
« Reply #6 on: November 05, 2014, 07:51:30 PM »
I second the other responses ...sell the car first.  :)  Also, when you get that new used car, be sure to shop around for insurance...prices can vary widely.  Maybe it's just the area you live in, but the utilities seem high to me...maybe you can hack some of that to shovel towards the debt?