Author Topic: Newb here  (Read 3410 times)

StartSmallDreamBig

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Newb here
« on: May 26, 2015, 11:12:27 AM »
Okay, to start off, I'm 24 and do my own online exchange currency business which I started around december, Thus far to this day I've netted around 28-29k. I'm still staying at my parents house trying to live frugal as possible to save up $. I have a credit union bank savings with decent interest just letting it sit. But one thing happened recently that kinda changed my idea on everything. Some months were worse than others and/or I just spent money on lots of useless stuff I didn't need. Anyways I made a big purchase of buying a car(10k). I got into a car accident where a guy hit me an took off, I took off after him finally got him to pull over, pressed charge's ect. Now I see doc,chiropractor 3 days/week for lawyer purpose. I owe 1k deductible on my PIP. I also owe a additional 2k on my car, Cash wise I'm not doing so well and currently have about 3. The pip payment won't be due for maybe another 6-8 month's, Meanwhile I still have full coverage costing me roughly 250/month. Would it be the best option to payoff the car and downgrade insurance to basics to save $? Or just keep paying high $ on my insurance and wait for the lawyer to cut check for my injuries,damage to car,diminished value of car? Remember I have about 3k. So if I spend the 2 I have 1k left and I would probably get a new insurance and pay 6 months upfront(500-700$), or monthly at 100 or less a month. What to do?

Cliffs:
I'm 24
I made a big purchase of buying a car(10k).
I got into a car accident [but legal proceedings are still pending]
I owe 1k deductible on my PIP. I also owe a[n] additional 2k on my car, Meanwhile I still have full coverage costing me roughly 250/month(Just recently bumped up to 538$/month)
I have $3k in a savings account
Would it be the best option to payoff the car and downgrade insurance to basics to save $?
« Last Edit: May 26, 2015, 12:09:26 PM by StartSmallDreamBig »

nereo

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Re: Newb here
« Reply #1 on: May 26, 2015, 12:06:23 PM »
Quote
I'm 24
I made a big purchase of buying a car(10k).
I got into a car accident [but legal proceedings are still pending]
I owe 1k deductible on my PIP. I also owe a[n] additional 2k on my car, Meanwhile I still have full coverage costing me roughly 250/month.
I have $3k in a savings account
Would it be the best option to payoff the car and downgrade insurance to basics to save $?
note: OP edited for clarity

I had to clear out the clutter in order to make sense of the post.  First, sorry to hear about your accident.  I hope you are getting better.  The best answer is that you should see if you can give up your car entirely - it's a giant money pit, especially with $250/mo insurance ($3k/year).  If that is not possible, then I would recommend decreasing your coverage to liability only.  If possible, sell the car and purchase something that costs about half what you currently have - that will at least limit how much you loose annually in depreciation.

You stated that you still owe $2k on the car, but didn't mention what your interest rate was. 
« Last Edit: May 26, 2015, 12:17:00 PM by nereo »

StartSmallDreamBig

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Re: Newb here
« Reply #2 on: May 26, 2015, 12:10:50 PM »
interest rate's at a buy here pay here rate like 17% because my credit is horrendous. Today I actually just opened a letter from my insurance that there bumping my monthly payments to 538$/month. So its already settled in my mind, Gotta pay car off then get cheaper insurance asap.

nereo

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Re: Newb here
« Reply #3 on: May 26, 2015, 12:26:24 PM »
interest rate's at a buy here pay here rate like 17% because my credit is horrendous. Today I actually just opened a letter from my insurance that there bumping my monthly payments to 538$/month. So its already settled in my mind, Gotta pay car off then get cheaper insurance asap.
Wow. ok... wow.

Alright, you've got more going on here than your post suggests.  Time for a slash of cold water here - you should not have bought this car.  NO CAR is worth 17% interest, and if you are paying that much because your credit is horrendous... well there's a reason for that.
I'm also guessing that your monthly insurance bills of $250/mo is because your driving record is not very good either? 

If you absolutely must have a car right now, it needs to be a car you own outright (no 17% loans!!!) and isn't worth much and has the most basic level of insurance.  Then there's work to be done with improving your credit score.  Plus, according to your OP you are putting all of your savings into a savings account 'with decent interest'.  Here's a fact: no savings account anywhere offers decent interest rates right now.  You say you live at home to maximize savings and have netted ~$28-29k since December and you are trying to live "as frugally as possible"  but only have $3k available.... I see big red flags waving. Something isn't adding up if you have income like this and no rent to pay.

You chose the name "StartSmallDreamBig" - let us help you.  Post a case-study and we'll make suggestions on how to get off this train-wreck of finances and towards something that is sustainable and will move you towards Financial Independence (FI).

forummm

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Re: Newb here
« Reply #4 on: May 26, 2015, 01:34:58 PM »
17% is terrible. Pay it off or sell it.

StartSmallDreamBig

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Re: Newb here
« Reply #5 on: May 26, 2015, 02:27:38 PM »
Your correct, driving record in the past 5 years hasn't been the best, past 3 years has been clean. I'm 24 still at home. I put about 7300 down on the car then made 2 different payments of 1000$ and one $500 within a month an going to pay the rest off today as my insurance bumped me up due to an accident where I was given no fault in it as I was rear ended sitting at a light and he attempted to flee, Which the scumbag ended up being a retired MD with a 1.12mil house, who woulda thought. So now its going from 223$ to 538$ so I'm dropping them asap and getting a new one with basic nessesity's till I can afford otherwise. Its not a fancy car, Its a 08 chrysler 300, I just wanted a newish car I can put a good 50-100k on before it dies..but yea I wasted some money on stupid stuff like stuff for girlfriend,cloths,watchs,shoes,ect...Stuff that wasn't needed hence lack of funds...But what I want is to start down the FI way's and start investing. I was considering vanguard. But I feel were in a 5 year bubble thats about to pop again and I'm waiting for that to happen till I buy back in to make more.

interest rate's at a buy here pay here rate like 17% because my credit is horrendous. Today I actually just opened a letter from my insurance that there bumping my monthly payments to 538$/month. So its already settled in my mind, Gotta pay car off then get cheaper insurance asap.
Wow. ok... wow.

Alright, you've got more going on here than your post suggests.  Time for a slash of cold water here - you should not have bought this car.  NO CAR is worth 17% interest, and if you are paying that much because your credit is horrendous... well there's a reason for that.
I'm also guessing that your monthly insurance bills of $250/mo is because your driving record is not very good either? 

If you absolutely must have a car right now, it needs to be a car you own outright (no 17% loans!!!) and isn't worth much and has the most basic level of insurance.  Then there's work to be done with improving your credit score.  Plus, according to your OP you are putting all of your savings into a savings account 'with decent interest'.  Here's a fact: no savings account anywhere offers decent interest rates right now.  You say you live at home to maximize savings and have netted ~$28-29k since December and you are trying to live "as frugally as possible"  but only have $3k available.... I see big red flags waving. Something isn't adding up if you have income like this and no rent to pay.

You chose the name "StartSmallDreamBig" - let us help you.  Post a case-study and we'll make suggestions on how to get off this train-wreck of finances and towards something that is sustainable and will move you towards Financial Independence (FI).

nereo

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Re: Newb here
« Reply #6 on: May 26, 2015, 02:36:57 PM »
...But what I want is to start down the FI way's and start investing. I was considering vanguard. But I feel were in a 5 year bubble thats about to pop again and I'm waiting for that to happen till I buy back in to make more.

Your last sentence is classic market-timing, which is a sucker's bet.  If you want to start saving for retirement, the correct time to do it was  yesterday.  The next best time is today.  This is hashed out again and again on this forum and elsewhere.  Statistically if you wait for a market correction you will loose, and if you are saving for 20+ years down the road a difference of 10-20% in starting price isn't a big deal.

At the very least you can (and should) start saving in an IRA in addition to having some emergency funds.

forummm

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Re: Newb here
« Reply #7 on: May 26, 2015, 04:07:43 PM »
...But what I want is to start down the FI way's and start investing. I was considering vanguard. But I feel were in a 5 year bubble thats about to pop again and I'm waiting for that to happen till I buy back in to make more.

Your last sentence is classic market-timing, which is a sucker's bet.  If you want to start saving for retirement, the correct time to do it was  yesterday.  The next best time is today.  This is hashed out again and again on this forum and elsewhere.  Statistically if you wait for a market correction you will loose, and if you are saving for 20+ years down the road a difference of 10-20% in starting price isn't a big deal.

At the very least you can (and should) start saving in an IRA in addition to having some emergency funds.

And you have a guaranteed 17% return sitting right there for you. Guaranteed! You can't get that anywhere else. Ditch the car loan.

StartSmallDreamBig

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Re: Newb here
« Reply #8 on: May 27, 2015, 10:55:43 PM »
Paid off the car note, Now looking for a basic minimum state law's,ect because I've been rejected everywhere else for collision,ect because of ongoing accident. So I gotta do basic PIP only somewhere. I owe 1000k on my PIP deductible with my accident. Currently only have about 1k to my name, Adding 200-500/week (depends on how business is). Once I have that, pay it off for 3 months. Wait for lawyers to settle. get settlement, Invest every penny of it (with a 2k buffer emergency fund of course)