First off, hello mustachians! Please refrain from too many face punches :)
So I'll go ahead and dive right in. I'm 26 years old and I've been living a fairly non-mustachian lifestyle for roughly two years as an engineer. Over those two years, I have been able to eliminate about $9k worth of debt from a variety of sources (credit cards, a small auto loan, and some student dept). So, up until last December the only source of dept I had was student loans which was about $18k. And this is where my predicament begins. I purchased a 2013 Subaru WRX hatchback for $26,361.68 in total from the dealer. I put $7,500 down, so I financed $18,861.68 at my credit union at 2.9% for 48 months. What pushed me to make this purchase? My previous car, a 2000 VW Cabrio, had just hit me for a third round of extensive repair/maintenance (over $2,000 each) during the previous 12 months. I was fed up and wanted a different vehicle. I figured "why bother sinking money into the piece of junk anymore? This is practically like having a car payment!". The vehicle drained my savings a couple of times during the year. The previous owner did nothing but oil changes, so many of the parts began to fail or were dangerously worn down. They've all been replaced/repaired. I got the car for free from my parents in exchange for my 1999 V8 explorer.
So today I have my new vehicle and I still have my Cabrio but it has been put up for sale. I haven't gotten any bites yet, but that's probably because I've got it priced above KBB.
Anyway, today, two months down the road I'm thinking to myself "WTF MAN?!". I took a loan out to buy a new car that was equal in magnitude to the loans I took out to get my engineering degree.
So my question is: Should I sell my 2013 WRX hatchback and take a loss of about $2k - $3k to rid myself of this debt-burden? My cabrio is completely drivable and gets better mileage, but I'd eventually like a hatchback for its practicality (I at least got that part right). If I sold the WRX, the next plan of action would be to save up enough cash to either purchase a used car (maybe a Toyota Yaris) completely with cash or at least with a very healthy down payment (>50%) depending on the urgency of the matter.
So to help you answer my question, here are my finances at this point:
$6k - 401(k)
$2k - Savings
Monthly income (take-home after taxes, 401(k), etc): $4,000
Here's my budget:
Rent $835.00
Electric $50.00
Water $18.00
Phone $88.09
Car Insurance $255.21 ($150 for WRX, $100 for Cabby)
Renter's Insurance $29.50
Internet $22.00
Car Payment $412.82
Student Loan Payment $240.76
Health Insurance $67.95
Food $425.00
Gas $250.00 (I commute 50 miles total each day)
Pets $60.00
Dept Payments $772.81 (Lately this has been much lower because I've been stashing cash for an emergency fund instead)
Everything Else $300.00 (This is just a cushion for expenditures I can't predict and also some room for blow money)
Savings $200.00 (Been much higher recently because I'm stashing cash for an emergency fund instead of paying extra debt).
Thanks in advance! Be nice :)