I'm reaching out to this community because my friends and family are giving me the normal "just trade it in for a something different and roll the negative equity into the new car" type advice. I have been reckless with my spending over the past few years and only recently have I started to turn things around. The thing that I am really wanting to curb is my excessive car payment, which is something I have always had since turning 18. Nice, shiny new cars.
My Husband and I recently paid off all of our credit cards and we both some debts remaining that we are hoping to pay off within the next few years (student loans, etc). I currently have a 2012 Volkswagen GTI that I leased brand new. My car payment is $500 a month and I have approximately 30 payments left on my 4 year lease. Since I started reading about MMM, I have attempted to get rid of my car several times. The current payoff on the vehicle is around $26,500 and I have received offers of $19,000 and $20,000 from different dealerships. I currently work from home, but I'm not sure how much longer I'm going to have my job since I moved in June and the company I worked for at the time wanted to keep me around so they offered me a "temporary" remote position (the length of my employment has not been disclosed, despite me asking several times). I would look for something more long term, but I'm moving again at the end of January so my hands are tied as far as my employment goes. I figure if they let me go, I can rely on unemployment for a little while until I can find something new once we arrive at our next destination. My Husband is active duty in the military and is getting out at the end of May 2014. So both of us are potentially looking at a loss of income sometime in 2014. To prepare for this change, we have decided to start putting as much money in savings as we can (rather than throwing it at our debt). We paid our credit cards off last month and are hoping to put back around $3000 a month starting this month which is more than doable based on our current income and monthly obligations.
My car loan is currently our highest monthly obligation (besides rent) and I would really like to get out of it. I have roughly $14,500 left for my portion of the lease (the amount not including the residual). I feel like sucking it up and forking out the $6,500 to get out of the car and then saving up a little to buy a beater would be the best option for me, but at the same time I'm hesitant to empty our savings since our situation (income, location, etc) is all changing in 2014.
Carmax offered me $20,000 to buy my car, so I could sell it to them, pay for as much of the $6,500 as I can with the cash that we have, and then maybe use the overdraft line of credit tied to our checking account to cover the rest. I feel like saving the $500 a month (from no longer having that car payment) would enable us to pay this off quickly. I can go without a car for a few months since I currently work from home, but I am moving to Alaska in February (my husband won't be joining me until June) and I will need a car to get around, especially so I can apply/interview for new jobs if my current employer decides to let me go between now and then.
I'm planning on living with family upon my arrival in February, so I'm not looking at any housing expenses until my husband gets to Alaska in June. At that point, we can either continue to live with family ($0 housing fees) or rent a cheap place and continue to try to pay off our debt. With no housing expenses or a $500 a month car payment, we are looking at monthly obligations totaling around $1200 (my husband's car payment, student loan payments, furniture loan, and cellphones). I feel as though my unemployment alone will cover that and my husband will still have his military income until June 2014 so we are looking at a few months where we could potentially save a lot of money (roughly $3000-$5000 a month).
I'm just trying to make the right decision to get out of an expensive FWD car that I don't feel would be well suited for Alaskan winters. Should I wait it out and wait until I owe closer to what the car is worth? Or GTFO now?
Any advice would be appreciated.