The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: valerieinthegallery on March 19, 2015, 08:54:58 AM
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I have been lurking here for a while - you guys are so smart, I registered just to ask you for advice!
I have had my car for 3.5 years - it's a 2005 Subaru Forester. These are great cars, especially with Northeast winters!
When I bought the car, the dealership lied to me, telling me that the head gaskets, water pump, timing belt had all been done already at 100,000 miles. They were wrong, because within a year of buying the car, it needed all of these things replaced.
Right now, I owe $2,600 on it, and could sell it private-party for about $4,500. Aside from my car loan, I owe $1700 on a credit card. My only other debt is my mortgage which I have no intention of trying to pay off as I plan on selling in a few years, so I view my monthly house payment as rent, basically.
So, I was thinking of selling my car to pay off the loan and get rid of my car payments and buy a beater for $2,000 or less.
I know the risk that buying an older, cheaper car might come with a lot of repairs, but this car did too (I have put $4,000 into it in just straight up repairs since I have had it).
My monthly payment is $150. If I just paid that, it would be paid off in 18 months. I can't guarantee that I can put much extra toward it as I am underemployed and have two teenagers at home who are involved in a lot of different things - my budget is pretty strict and when I do have extra, it goes to the credit card, as my car loan is only 4% interest.
I love the idea of getting rid of my car loan, so that my total debt (aside from mortgage) is only $1700! But would I just be inheriting more problems? My car is stickered until October, and may need some brake work to pass again. I need to have a reliable car as I am basically a taxi service to my family. I live in a rural location so there is no public transportation or anything like that - nor do I have friends or family that could loan me a car if mine has to be in the shop, etc.
I feel kind of torn. My son is a new driver, and the Subaru has been good to us in the winter, plus the safety ratings are fantastic, which is no small thing with a 16 year old driver in the house. I keep thinking I'll just go ahead and keep making the payments, but with all the repairs on top of the payments.. sometimes it's overwhelming. So if I sold it and bought a beater, I might have to do some repairs, but there wouldn't be a car payment. And maybe I would luck out and find a car that didn't have a bunch of problems? Or is that a pipe dream? I would love to be able to get a small little sedan with good mpg, but I need something that will fit skis. (Not for me, for the boy - and once he graduates or gets his own car, I can then buy my little sedan)
What do you guys think? Am I close enough to having it paid off that I should just do it? Or should I sell it and get rid of that debt, putting me so much closer to having it all paid off?
Thanks so much for reading this and for any opinions you want to share!
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Since part of having a vehicle is to accommodate your 16 year old, can he contribute to the payment? I'd be hesitant to get rid of a car that has already had all the major repairs yours has had.
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Ya seems like you are not gaining enough.
Sell a 2012 car worth 20k to buy a beater? Sure.
Sell a 2005 car for 4.5k to buy a beater? Meh. If beater needs 1k of maintenance in it, you didn't really win. Beater will need replaced sooner than the 2005.
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stashetastic - My son is looking for employment, but is having a hard time finding any (as am I!) so I am not sure if him contributing is going to happen at any time soon. He will have to pay 1/2 insurance if he wants to drive the car once he gets his license though, as once I add him, my insurance rates are going to triple.
WhatIsFrugal - Yeah, that is where my head is at too. Selling a car you owe a ton of money on to get rid of the loan and buying a beater while you save for a better car seems smart. I wasn't sure about selling a car you only owe a few thousand on. It would get rid of the loan, but would it be worth it in the long run? The other thing is that my savings is quickly being depleted right now. Any car repairs (on this car or a new beater) would be put on the credit card. So maybe the devil I know is better than the devil I don't?
Maybe I should focus my energies on gaining more income and just paying the loan off as quickly as possible. My hope, before I lost one of my jobs, was to get the car paid off by the end of summer, and drive it for the next 2 years with no car payment and then give it to my son when he graduates if he doesn't have his own vehicle at that point, as the resale value of it will be pretty dang low by then anyway. At least I would know he's driving something really safe!
My gut was leaning in this direction.. just holding onto it. Thanks for the replies and helping to validate that!
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It sounds like more of an income versus expense problem than it does a car problem. Like you said, work on the income side of the equation and check your expenses. Not to scold, but a loan on a 10 year old car is rather pathetic (tough hugs :)).
As far as skis, your options are to fold down one of the two rear seats in a sedan, in which case you can drive 3 persons with gear. Otherwise, get a ski rack or a capsule type roof rack. It's not worth owning a wagon type vehicle just for skiing.
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Well, it was only 6-7 years old when I got it and in Subaru years, that's just a baby! ;)
But you're right, it should have been paid off by now. Up until this past fall, I was of the mind that it wasn't a big deal because "everyone has a car payment". Obviously, I know better now. :P