Selling car, need encouragement

[sammygators]

Reading the MMM posts and forums has changed my mindset about my family's finances, and provided me with a lot of hope regarding our financial situation.  Here's the short version:

- $21,000 Credit Cards
- $12,000 Car Loan
- $35,000 Student Loans
- I live 0.6 miles from my office, with a nicely paved sidewalk in between.
- My wife is a stay at home mom/part-time college student
- I make $120,000/year
- I have a brand new bike that I bought in April and haven't ridden yet

I am preparing to sell my car, which is a 2011 Honda Accord Coupe, and only has 34K miles on it.  As mentioned above, I owe $12,000 on the car loan, and should be able to sell it for at least enough to cover that.  Once the car is sold, I will bike to work for the foreseeable future.  Our family should have no trouble getting by as a one-vehicle family, as we survived just fine with one vehicle for an entire year just a few years ago. 

Selling my car will save the $362/month car payment, about $55/month car insurance, $22/month personal property tax, plus a small amount of gas (again, I only drive 0.6 miles to work).  This should save me about $450/month.  In addition, it will reduce our debt (excluding the house) from $68K down to $56K right off the bat.

No brainer, right?  Also, I'm going to cut off the cable and save $125/month from that. 

I know that this is what I need to do, and my wife is totally on board with it.  I guess what I'm asking for is some encouragement from my new MMM community.  Please take a few minutes to help me take the leap!

Thank you!!

[humbleMouse]

Obviously sell the car, you don't need it.  Baffles me why this would even be a question.  Nice lifestyle choice living by the office by the way, sounds great. 

[mturn]

What kind of car does the wife have? Can you get rid of both? :) :) No, in all seriousness, congrats on getting rid of your car. Sounds like a smart move. My husband and I went down to one car. He works a few miles away from home and I work from home, so it seemed obvious. We ended up selling our old cars and using the money to put towards a 2014 Mitsubishi mirage. I can't recommend this car enough. I can get 60 mpg and it came with an amazing warranty. Plus, it was under $11,000.

[Bob W]

You can do it! 

 Further,  at you income level you can be debt free in a short time if you choose to be.   google up rootofgood.com for his post on paying virtually no taxes on 150KI income per year.

IMHO if you have a decent rate on the SL,  pay the minimum forever but set up a separate investment account labeled  "paid off SL."    Typically rates are low on these or refi through SOFI.     They have the advantage of being forgivable in event of death or disability.   Disability is actually fairly common. 

So let's make some major assumptions and give unsolicited advice.   

$120K income
$110 after SS/Medicare
you max out IRAs,  401Ks,  HSAs etc.   so net taxes 10K
Take home approximately 60K with approx. 40K invested.
Annual expenses = 40K   Net to throw at debt = 20K.

2.5 year debt is paid off and you have an additional 70+ K   ---  You're living in sweetville at that point.

Typically cost cutting measures suggested on MMM  --

Phone -  Cut to $25 per month
Cable --

Groceries -- shoot for $2 per person per day --- fail and end up at $3 per person per day
Insurance -- shop it for home and car
Misc garbage --- gym memberships,   identity protection,  expensive vacations,  eating out,  clothing.

You wife is a SAHM so you need to be on page with her.   She can leverage her time to prepare fresh healthy meals,  shop for lightly used clothing and maybe do something on the net to pick up $800 per month.

I have a very good feeling about you! Rock on --- be healthy,  walk and peddle. 

[TechMike]

Do it! Sell that car!

I just recently sold my car and we're back down to being a one car family. I work from home all but one day a week, and live close enough to bike to work on the day I spend in the office. My wife is a full time Ph.D. student and has plenty of transit/bike options for her. Our kids go to a day care that is half a mile away and we easily walk it with the kiddos or put them in the bike trailer. Very easy to get by on one car.

With the details you gave, it makes absolutely no sense to have two cars. You can absolutely do it, you'll save money each month and you'll retire sooner.

Do it.

[svndezafrohman]

Wow..ok i thought i read 6 miles from work. but 0.6!!!!!! why is this even a question??? you could probably crawl to work and get their faster than it take me to get to work.

[ketchup]

Do it.  Sell the car.  With your kind of income, you could wipe out the remaining debt quite quickly.

$21,000 of CC debt is a symptom of a different problem though.  Hopefully one that's been solved with your mentioned new financial mindset.

And yes, cut the damn cable.  You have better things to do with your time, never mind your money.

[jooles]

You know the right thing.  You've planned to do the right thing.  Your wife agrees with you.  Time to follow through on your well laid out plans.

After you see your $$ piling up in the savings column or knocking down your debt in a much bigger hurry you will get all the encouragement you need to stay the course.

Best of luck.  You're on the right track.

[KarefulKactus15]

0.6 Miles, I'm jealous.    Yes sell the car.  Whatever your fears are,   you will overcome them.   And in the end, you will be a smarter more resourceful person.   

+ You'll be padding your wallet nicely as well and be in better shape health wise.

Do it last week, don't wait.

[sammygators]

Thank you all for your replies and encouragement.  I sold the car yesterday, and got an extra $1,500 leftover after paying off the car loan.  However, I'm not going the route of being a single car family, just yet.  My wife was on board with me selling the car, but was insistent on me getting another (cheaper) vehicle, so that's what I'll do.  I'm taking babysteps with her on this whole MMM thing, and this is good progress, so I'm okay with that.  I'm using the $1,500 from the sale and putting that towards a used Honda Accord that I'm buying for $3,000.  I'll pay all cash for that car this weekend, so when all is said and done, the result is as follows:

Eliminated $12,000 from my debt total by selling the car.
Eliminated the $362/month car payment.
Reduced car insurance by approximately $22/month
Reduced personal property tax by approximately $13/month.

Total monthly savings = $397
Total debt reduction = $12,000

I will continue to ride my bike to work quite often, so that will save some on gas, but again it's only 0.6 miles to work and gas prices are low, so that will not result in huge savings.  Nevertheless, every dollar counts.

Oh, and my wife is interviewing for a job tomorrow.  She is looking for a part-time job while the kids are in school.  That income along with the aforementioned monthly savings will help accelerate paying off these debts.

Again, thanks for the encouragement. I'm excited about the progress we have made, and the direction we are heading.

[FLBiker]

What a great situation!  Good income, very walkable / bikable commute.  You're very fortunate!